Month: December 2008

So My Prediction on the Ukraine and the Crimea…..

So, I make a prediction that Russia will use the Ukrainian gas debt to get the Crimea, and it looks like I’ve been proved wrong in less than a week…..Narf!

It appears that Ukraine has agreed to pay their old gas bill, and a new deal for 2009 is ready….Only both sides are disputing whether Ukraine has actually paid the debt:

Russia has said it will turn off the taps to Ukraine if it
does not receive $2 billion in arrears and conclude a new supply
deal, a threat that has alarmed European states which receive
their Russian gas via pipelines passing through Ukraine.

OK, maybe I haven’t been proved wrong yet…..Narf!

Gazprom is threatening to cut off gas to the Ukraine, it appears that the dispute is now their late fees, and not the actual gas themselves.

I’m wondering when Russia will construct a pipeline through Belarus.

Economics Update

It’s the last day of the year, and we are finally getting a picture of how retail did during the holiday season, and it is not pretty.

ShopperTrak is revising its original holiday sales figures downward, from a sales increase of 0.1% and a traffic drop of 9.9%. which was already pretty grim, to a sales decrease of 2.3% with a 16% drop in traffic.

The estimates now are that 2009 is not going to be good either and that over ¼ of all retailers are at significant risk for bankruptcy (see graph pr0n above), which will hose suppliers too.

The unemployment claims numbers from last week were better than recent reports, 492,000 new applications, down 94,000 from the last week’s 586,000, and the 4 week moving average fell by about 1%.

I would note, however, that there are two things that make this news less good than it sounds, first, we are talking about the week of Christmas which means that everything was shut down on last Thursday, and, perhaps more significantly, continuing jobless claims continued to rise, hitting a 26 year high of 4.5 million.

Real estate still appears grim, with Manhattan office rents down about 25% (h/t Calculated Risk), though mortgage application activity remains at a 5 year high.

My real question though would be as to the number of mortgages granted, not the number of applications, which are likely multiple refi applications driven by even lower mortgage rates.

Additionally, the Federal reserve is to start buying mortgage backed securities, so they are going even deeper into the sh&%pile.

In currency, the dollar is up, and infact it’s up against the Euro this year, the first time 2005 that this has happened.

I guess that investors still think of the US Dollar as a safe haven, though the same cannot be said about the Ruble, which is down again.

In the stock market the VIX, the Chicago Board Options Exchange Volatility Index, fell below 40 for the first time since October 2, to 39.9, which indicates that traders are a bit less twitchy.

But that’s only a bit, because before the Lehman collapse, it was around 25, and a year and a half ago, it hung around 10-15.

In energy, oil rose about 5½ bucks/bbl, to settle at $44.60/bbl.

What a Twofer from the WaPo Editorial Page

So today, on the last day of the year, they give us Amity Shlaes and Ruth Marcus.

Let’s start with the skinny on Ms. Shlaes: she is simply the beneficiary of wingnut welfare. After graduating with a bachelors in English, she proceeds to spout the most predictable right wing economic theory imaginable, and following her marriage to the right wing founder the New York Sun, gets herself columns, and becomes a senior fellow at the CFR. As Matthew Yglesias notes:

I have a really, really, really hard time imagining the CFR doing something comparable for a liberal with so little in the way of relevant qualifications or track-record outside an ideological cocoon.

That being said, some of the beneficiaries are not outright stupid, and Amity Shlaes is either naturally or deliberately so.

Because in her WaPo OP/ED, she continues with riffing on her thesis, pulled from lord knows where, that the the 1937 recession was a result of rich people tucking their money back in their mattresses.

Not even Milton Friedman believed that. He blamed then Fed Chairman Marriner Eccles for tightening credit requirements.

The stupid, it burns us.

That being said, Amity Shlaes is in this instance not the columnist most deserving of opprobrium today, that honor belongs to Ruth Marcus, who does not merely set herself up as an advocate for stupidity and ignorance, but instead advocates for the aggressive protection of evil.

After getting what I am sure is hundreds of outraged emails for her last justification of letting the architects of a torturer regime go free, she thinks that she step up to the plate again 11 days later.

How, some readers asked, could future law-breaking be prevented if past misdeeds go unpunished?

First, criminal prosecution isn’t the only or necessarily the most effective mechanism for deterrence. To the extent that they weigh the potential penalties for their actions, government officials worry as much about dealing with career-ruining internal investigations or being hauled before congressional committees. Criminal prosecution and conviction requires such a high level of proof of conscious wrongdoing that the likelihood of those other punishments is much greater.

Second, the looming threat of criminal sanctions did not do much to deter the actions of Bush administration officials. “The Terror Presidency,” former Justice Department official Jack Goldsmith’s account of the legal battles within the administration over torture and wiretapping, is replete with accounts of how officials proceeded despite their omnipresent concerns about legal jeopardy.

This is because there is already a culture of impunity among Republicans in Washington, DC, and it’s been there ever since Gerald Ford pardoned Richard Nixon before even an indictment was handed down.

These people knew that George W. Bush would pardon them, like he pardoned Libby, because he was protecting his own neck.

The cycle of impunity, which appears to extend only to Republicans, needs to stop.

Third, punishment is not the only way to prevent wrongdoing. If someone is caught breaking into your house, by all means, press charges. But you might also want to consider installing an alarm system or buying stronger locks. Responsible congressional oversight, an essential tool for checking executive branch excesses, was lacking for much of the Bush administration.

I’m sure that the guy with the electrodes attached to his genitals is happy that you are considering closing that barn door after the arsonist has set fire to the cow.

There was no good will here. There were no honest mistakes. Waterboarding is torture, and has been considered so for hundreds of years, what’s more, the people with experience in the field have been saying consistently that torture does not work.

Bush and Cheney and Rumsfeld were torturing not because there was a ticking bomb, there wasn’t, and not because they were desperate for information, because it wasn’t getting good intel, they were torturing because it made them feel like they were taking it to the terrorists.

They authorized torture because it made them feel good, and they continued it after they were shown that it did not work because it made them feel good, this is a classic definition of sadism, and absent some jail time, the sadism will be institutionalized.*
*No intention to condemn the S&M crowd. Where informed consent is present, the moral equation is different.

Crazy Misha

So on the way out, one group of batsh%$ insane people, Bush and His Evil Minions, are going to saddle us with someone who is even crazier, Mikhail Saakashvili, President of Georgia, because they intend to sign a sign a strategic partnership treaty on January 4.

Just another of those gifts to America from George W. Bush….Because leaving all 300 million of us barefoot and pregnant is logistically difficult.

This is a bad idea because the Georgian state security apparatus has been completely penetrated by the Russians, so any information that we give to the Georgians is heading straight to Moscow, and it’s a bad idea because President Mikhail Saakashvili is simply crazy.

When I say crazy, I’m not speaking metaphorically. We have a report of Saakashvili throwing punches and a telephone at his Prime Minister.

While the above report is Fox News, and should thus be treated as if it came from…well…Fox News, we are seeing similar reports of erratic behavior in the New York Times, which reports his statements of grandiose plans (teaching every Georgian to speak and read English in the next 2 years), and pulling facts out of the air (claiming that the Russians invaded before he attacked).

The article also raises concerns about his increasingly dictatorial grip on the apparatus of the state, and his comparing himself to Georgian King, and Saint, David the Builder and George Washington.

I think that this report is saying, in a low key way, two things, that he’s nuts, and that his continued political survival is in doubt.

Robert J. Samuelson: F$#@ You White Man

Some background here, I belong to a membership only* BBS called Stellar Parthenon.

On December 21, 2003, I posted a thread on SP, called We are Unbelievably Screwed, which has continued to this day, with more than 3500 posts.

5 Years before Robert J. Samuelson wrote “hoocoodanode”, I said:

  • US Society was entering into unsustainable debt.
  • Housing prices were at unsustainable levels.
  • That finance and housing were creating a phony economy.
  • A reckoning was at hand.

While I was wrong on some stuff:

  • Predicting that the dollar would fall off a cliff.
  • Assuming that this would cause a spike in interest rates which would destroy housing.

That being said, I have evidence that I was predicting the problems, and their basic causes, 5 years ago (actually I was doing this even earlier, but my posts on the Netslaves BBS went away when the website got shut down).

So now Mr. Samuelson, who rarely misses an opportunity to bash labor protections interfering with free trade, and to suggest that the only way our society will ever be prosperous is to gut the social safety net, particularly Medicare, Medicaid, and Social security, is wringing his hands and asking what went wrong, and why was everyone caught by surprise.

Well, I have 4 Words to Robert J Samuelson: F@#$ You White Man!!!!!

What is this “we” shit about anyway?

Roubini predicted this, Krugman predicted this, Dean Baker predicted this, and I predicted this!!!

I’m not an economist. I’m not a Wall Street type. I’m not a business writer.

I’m just an engineer with a background in design, and I recognized the problem.

Humbled By Our Ignorance

By Robert J. Samuelson
Monday, December 29, 2008; A15

It’s the end of an era. We [what do you mean we, f@#$ you white man] know that 2008, much like 1932 or 1980, marks a dividing line for the American economy and society. But what lies on the other side is hazy at best. The great lesson of the past year is how little we understand and can control the economy. This ignorance has bred today’s insecurity, which in turn is now a governing reality of the crisis.

Go back to the onset of the crisis in mid-2007. Who then thought that the federal government would rescue Citigroup or the insurance giant AIG; or that the Federal Reserve, striving to prevent a financial collapse, would pump out more than $1 trillion in new credit; or that Congress would allocate $700 billion to the Treasury for the same purpose; or that General Motors would flirt with bankruptcy?

Me, that’s who you pig felching soak the poor putrescence! The system was a lie, and it was created to extract savings from the poor and give them to the rich.

In 2008, much conventional wisdom crashed.

No, conventional stupidity crashed. People were willfully blind because it made them money, and it got them cushy gigs writing for the Washington Post or Newsweek.

It was once believed that the crisis of “subprime” mortgages — loans to weaker borrowers — would be limited, because these loans represent only 12 percent of all home mortgages. Even better, they were widely held, diluting losses to individual banks and investors.

And again, Alt-A and all the rest of the exotic mortgage products were headed for a crash, and the rent to own ratio was out of whack, while people like you and Alan “Bubbles” Greenspan (remember him?) were suggesting that people really should go with adjustable rate, negative equity mortgages from Mars.

Roubini predicted this, Krugman predicted this, Dean Baker predicted this, and I predicted this, you festering lump of pig droppings.

Wrong. Subprime mortgage losses (20 percent are delinquent) triggered a full-blown financial crisis. Confidence evaporated, because subprime loans were embedded in complex securities whose values and ownership were hard to determine. Similar doubts afflicted other bonds. Demand for all these securities shriveled. Lenders hoarded cash and favored safe U.S. Treasuries. Because investment banks and others relied on short-term debt (a.k.a. “leverage”), a loss of confidence and credit threatened failure. Lehman Brothers failed. The financial system had overborrowed and underestimated risk.

It was once believed that American consumers could borrow and spend more, because higher home values and stock prices substituted for annual savings. Consider: From 1985 to 2005, the personal savings rate dropped from 9 percent of disposable income to almost zero. But over the same years, households’ net worth (assets minus liabilities) quadrupled, from $14 trillion to $57 trillion.

Which, of course, means nothing, because for 90% of the population, that net worth went to other people.

That growth in net worth was mostly going to the top 1% in our society.

What you speak so glowingly of was nothing more than the efforts of the connected to extract the wealth of those who work for a living, and put it in their back pocket.

Wrong. In recent years, consumers increasingly overborrowed, especially against inflated home values.

Wrong….People borrowed because contemptible greed heads like you have spent the past thirty years waging an assault on wages and the social safety net.

People borrowed because they could not earn the money they needed, because of a war on labor and labor rights.

With the housing “bubble” now collapsed, net worth is falling. Homeowners’ equity in their homes — the share not borrowed — is at a record low of 45 percent, down from 59 percent in 2005. Consumers have responded by retrenching big-time. Retail sales have dropped for five straight months; vehicle sales are a third below 2006 levels.

It was once believed that the rest of the world would “decouple” from the United States. As Europe, Asia and Latin America expanded, their buying would cushion our recession. A better-balanced world would emerge, with smaller U.S. trade deficits and lower surpluses elsewhere.

Wrong. The crisis has gone global; economic growth in 2009 will be the lowest since at least 1980. Even China has slowed; steel output was down 12 percent in November from a year earlier. The crisis has spread through two channels: reduced money flows and reduced trade. Global financial markets are interconnected. Customer redemptions forced U.S. mutual funds and hedge funds to sell in emerging markets (such as Brazil or Korea), whose stocks have dropped about 60 percent from their peak. Credit has tightened, as money flowing into developing countries is expected to shrink 50 percent in 2009 from 2007 levels, estimates the World Bank. The bank expects trade, up 7.5 percent in 2007, to fall in 2009 for the first time since 1982.

So much that has happened was unexpected that the boom and bust’s origins are obscured. These lie in the side effects of declining inflation that started in the 1980s and, in the process of reducing interest rates, boosted stock prices and housing values.

Only the dropping inflation was a fiction created by the BLS with the acquiescence of Alan “Bubbles” Greenspan (remember him?), who has been calling for even more extreme massaging of the inflation numbers since at least 1980.

Recall that in 1981, when inflation was 9 percent, 30-year mortgages averaged 15 percent. As rates fell (mortgages were 10 percent by 1990, 7 percent by 2001), home prices rose. People could afford more. With lower interest rates, stocks became more valuable.

Homes did not become more affordable, people buy on monthly payment, not price, so falling interest rates just raised the price of the house, and falling interest rates did not make stocks more valuable, it chased people away from other, more secure, investments because their returns fell…It’s basic economics, but I guess that it’s beyond you.

All the bad habits of recent years — excessive borrowing by consumers and money managers, careless and reckless lending — grew in a climate when gains seemed ordained. Even after the “tech bubble” burst in 2000, stock prices at year-end 2002 were seven times their year-end 1981 level. Home prices increased steadily; in the 1990s, they rose 45 percent.

Prosperity, apparently forgiving of mistakes, bred the complacency that undid prosperity. On bad mortgages, losses could be recovered by selling the homes at higher values. Thus rationalized, bad loans were made. Some stocks might decline, but over time, most would rise. Risk seemed to recede, so investors and money managers undertook riskier strategies.

People undertook risky strategy because, like the people at Long Term Capital Management, because Alan “Bubbles” Greenspan (remember him?), was always there to bail them out, and they undertook riskier strategies.

So, you were arguing that that regulation was the problem, when it turned out all you were doing was handing our economy to sociopaths with capital.

What will emerge from these shattered illusions? Will the crash stir social unrest, abroad if not here? Will Americans become so thrifty that they hamper recovery? Will economic nationalism surge? How will capitalism be reshaped? Much depends on whether the frantic policies to combat the recession succeed. Probably they will, but there are no guarantees. Our ignorance [your ignorance, not mine, I spotted this, as die Mssrs Roubini, Krugman, Baker, Ritholtz, Tanta, etc.] is humbling.

(end of OP/Ed)

No sir, you are just stupid and venal, and because you cannot see … because you refuse to see that the policy of supporting the phony economy of Wall Street and basic shelter as a revenue stream was an illusion just as certain as the Dutch Tulip mania.

You did so because because you and yours benefited from the system, even as it hollowed our society and our nation.

*It’s membership only because it was started by refugees from the old Netslaves board when it was torn apart by right wing trolls. SP is a chatty community with a decidedly liberal bent, with a refreshing absence of trolls, though there are still arguments, but there are good faith exchanges of opinion…Which is good…I like to argue.
The trolls were never dealt with because the sysop, Splat ,was getting paid off by one of the worst trolls who fed him consulting contracts.
F$#@ You Lauren Bandler, aka “Uncle Meat”.

Election Update

Well, there is now a number for the absentee ballots that the counties mistakenly rejected, and that number is 1350.

So Franken wants all the ballots that were positively identified as being incorrectly excluded to be counted, which is fair, unless you are a Republican, in which case, I guess that it is communism, because Coleman only wants 136 of those ballots counted….and a “review” of another 654 ballots that aren’t identified as improperly excluded.

I’m shocked, shocked to find that gambling is going on here!

Gee, you think that Coleman is trying to ensure only absentee ballots in precincts that went for him get counted? (Cue Captain Renault)

In the meantime, Amy Klobuchar is suggesting that once the vote is certified, that the winner be seated without prejudice by the Senate.

Of course, Senator John Cornyn (R-Taliban) is insisting that this would be outrageous and without precedent, despite the fact that the House seated a representative without prejudice in 2007 (Vern Buchanan), and the Republican controlled Senate did this in 1997 (Mary Landrieu), but Cornyn also believes that there are people out there who want to have sex with box turtles.

BTW, for a quick primer of what the heck has been going on, the St. Paul Pioneer-Press has this useful FAQ.

Economics Update

It’s a heavy news day. I know this because I was not sure whether or not consumer confidence falling to its lowest level ever recorded, and the Conference Board’s sentiment index began in 1967.

Economists were predicting an increase from 44.9 to 45.5.

This probably explains why the International Council of Shopping Centers says that this has been the weakest holiday sales season since 1970.

Well, the Standard & Poor’s/Case-Shiller home price index fell 18% from October 2007 to October 2008, so the index is now at March 2004 levels, and by all indications, it’s still headed down.

Will the last realtor please turn off the lights?

Finally, in 4th place in the competition for which story should be the lede, we have
assets in mutual funds falling 3% in November, they are down 22.7% since December 2007.

What we are seeing here is a slow run on mutual funds by investors who are fleeing to quality.

Banks are fleeing to quality too, with banks cutting lending this year by 55%, to the lowest level since 1994.

In currency, Russia has devalued the ruble again, it’s now down about 18.6% from its peak.

The dollar fell again against the Yen and Euro, though it rose against the Pound, largely because the UK appears to be in worse shape than the US.

I wonder if this might give additional impetus for the UK to move from the Pound to the Euro.

The fall of both the USD and the Pound are largely because of “quantitative easing”, otherwise called printing money, by the central banks.

One bit of financial news that surprises me is that the
Israeli Shekel just had it’s biggest pop vs. the dollar in 10 years, and this was despite the fact that the central bank cut its benchmark rate by 75 basis points (¾%).

The claim is that it’s year end repatriation of profits that drove the Shekel up, but my guess is that it’s people who think that the current fighting will calm things down in the short term (3-18 months) and are trying to flip the currency for a quick buck.

In energy, both oil and retail gasoline were down today, and this picture is from today. (Click picture for link)

Why Yes, We Are A Bunch of Racists

Today’s Republican party, where not only does a candidate for chairman of the RNC, Chip Saltsman, release a holiday Christmas CD with “Barack the Magic Negro” on it, but it now appears that doing so help his bid to succeed current Republican National Committee Chairman Mike Duncan.

Of course, former Ohio Secretary of State, Ken Blackwell, decided to weigh in in favor of Mr Saltsman, cementing his role as the biggest Tom of the century in an attempt to use this in his bid to become RNC chair.

When this crap is so toxic that Michael Steele (also looking for the chair) is keeping his head down, Ken Blackwell is bringing Tomfoolery to a new level.

Gaza Upate

First, something we can all agree on, that this clusterf&$% is Bush and Condi’s gift to the middle east.

You remember, first they insisted on elections in the territories, and then when Hamas won, because the PA is corrupt and incompetent at governing even by the standards of the Arab world, they proceeded to encourage Israel and the PLO to go after Hamas, which led to Hamas kicking the PLO out of Gaza, because the PLO is the worst army ever.

In breaking news, it looks like there may be a 48 hour cease fire, though both sides are currently acknowledging any negotiations.

Also I have one report of a ground offensive starting, it’s an eyewitness account, but it has since been corrected to say that tanks are shelling from over the Green Line.


The only governor to give Sarah Palin a run for her money in the “just plain nuts” department Rod Blagojevich has named former Illinois AG Roland Burris to replace Barack Obama.

Given that the Senate Dems have already said they won’t seat him, it guts ugly, particularly since the precedent of Adam Clayton Powell indicates that they may have to.

Furthermore, we have reports on him, and we know that he is 71, that he is the first Black man to be elected to state wide office in Illinois, that it appears that he is not interested in running for reelection in 2010, and he has excoriated Blago:

Burris has also condemned Blagojevich and supported his removal,and that he’s said he would not seek another term.”

The Illinois secretary of state is trying to reject the paperwork, though the legality of that is unclear.

The initial reports on Burris is that he’s squeaky clean, and he ran against, and lost to, Blagojevich in the primary. See here:

My home state’s culture of political corruption is well documented. Roland Burris managed to build a career in politics in this state without falling into that muck. He is, to the best of everyone’s knowledge, squeaky clean, and he’s highly respected. He’s 71 years old, so I wonder if he intends to serve as a caretaker. But he’s an honorable guy, well liked by people across the state in both parties. It’s a stroke of brilliance by Blagojevich in my opinion.”

A Photograph of Him in a Mariachi Outfit?

Peter S. Goodman and Gretchen Morgenson have what might be the single most entertaining account of bank mismanagement of the year.

They recount the story of WaMu, and start by quoting former CEO Kerry K. Killinger”

We hope to do to this industry what Wal-Mart did to theirs, Starbucks did to theirs, Costco did to theirs and Lowe’s-Home Depot did to their industry. And I think if we’ve done our job, five years from now you’re not going to call us a bank.

Well, he’s right, it’s 5 years later, and nobody is calling Washington Mutual a bank anymore.

But it gets even better when they interview a former supervisor at a WaMu mortgage processing center, John D. Parsons, who is now in prison on drug charges:


Yet even by WaMu’s relaxed standards, one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer.

Mr. Parsons could not verify the singer’s income, so he had him photographed in front of his home dressed in his mariachi outfit. The photo went into a WaMu file. Approved.

(emphasis mine)

Yog-Sothoth’s Yam Yogurt, this is eerily reminiscent of the Tulip Mania of 1637.

H/T Wallstreetjackass for noticing this bit of absurdity.

The Post-Soviet Politicians are Dancing to a Non-Existent Tune

I used to think that John Paul II’s jihad against the church working for the poor, going so far as to expel priests who were causing right wing despots grief, which pretty much repudiated 1800 years of church history was an anomaly.

JP2 clearly hated the Soviets, he hated communism, and it left him with an antipathy to anti-poverty action by the Roman Catholic Church.

I had kind of hoped that other folks who objected to the excesses of Communism, and those excesses are legion, had found perspective if they had remained in leadership positions.

Now, in the middle of the greatest economic crisis in 3 generations, we are seeing leaders who grew up in former communist nations trying to turn to Hoovernomics, because they have a visceral revulsion to anything that remotely looks like economic management by the state.

It doesn’t matter if the most successful model in fixing this has been the Swedish model, state capitalization and take over followed by sale when the conference is over, it’s just too pink for them.

In the first case, we have Czech President Vaclav Klaus, who appears to be trying his level best to destroy any coherent EU response to the economic crisis:

Klaus, an admirer of Milton Friedman and Margaret Thatcher, says “excessive state intervention” and “irresponsible increases of state expenditures” are behind the global financial crisis, according to an October commentary he wrote for Mlada Fronta Dnes newspaper.

Hoovernomics as driven by what are now archaic anti-Soviet and anti-Communists.

And let us not forget Angela Merkel, who is content to (mis)manage the largest economy in the EU, and also continues to go the Hoovernomics route:

With battle lines sharpening, the German government appears determined to resist calls to spend an additional €40 billion to fight its way out of the recession, according to officials attending a meeting in the Chancellery in the past week.

It appears that in the case of Merkel, there has been extensive lobbying from what amounts to the German Chamber of Commerce to lower taxes, but that is were she wanted to be in the first place, until other EU members dope slapped some sense into her.

I’m wondering how true this is of a generation that lived through a revolution.

If the US founding fathers were the exception, we were very, very lucky.

Gaza Update

The here lede is that Israel is calling up reservists, and armored units are massing on the border.

I would assume that infantry units are massing as well, as sending unsupported armor into an urban combat situation is suicidally stupid.

In terms of tactics and technoligy (I really wish that the War Nerd were not on vacation), we have a report that IDF chief of staff Lt. Gen. Gabi Ashkenazi demanded a clear exit strategy during the planning of this action.

It shows that he’s rather a bit more together than the flyboy who screwed up in Lebanon in 2006.

It also appears that Israel navy is heavily involved too, though it’s unclear if they are shelling, enforcing a blockade, or using the ships as bases for UAV flights. (My guess would be all three)

We are also getting some reports on the use of sophisticated multi-spectral sensors to locate targets. (The top image is post strike imagery of an underground missile launch site, the bottom image is pre-strike imagery of a Hamas military post)

We also have a “News” story from Haaretz making rather a big deal of the fact that this operation has been actively planned for months:

Sources in the defense establishment said Defense Minister Ehud Barak instructed the Israel Defense Forces to prepare for the operation over six months ago, even as Israel was beginning to negotiate a ceasefire agreement with Hamas. According to the sources, Barak maintained that although the lull would allow Hamas to prepare for a showdown with Israel, the Israeli army needed time to prepare, as well.

It’s not really news. It’s the job of the military to plan for contingencies, and to keep their mouth shut about it.

It would be news if the Defense minister and the Chief of Staff weren’t planning for a breakdown in negotiations. It’s their job.

Politically, it appears that the Israeli right wing is seeing the immediate benefit of combat operations, with Israel Beiteinu, which advocates redrawing the borders of Israel so that predominantly Arab areas of Israel are included in a Palestinian entity (I call it ethnic cleansing, but you are moving lines, not people so pedants may disagree), picking up support.

I imagine that the same thing is happening on the Palestinian side.

Finally, as to the report in the comments (BTW, go to the commenter’s blog, it’s cool) that Israel sent SMS warnings to warn civilians living near Gaza that they needed to get out and keep their heads down, I now have two links, one from (Google translation that reads a bit like a Salvadore Dali paintint) and one from The Forward, though the latter says that it’s voice mails:

Late Saturday, thousands of Gazans received Arabic-language voice mails on their cell phones from the Israel Defense Forces, urging them to leave homes where militants might have stashed weapons.

While identifying the appropriate recipients of message is involved, it’s by no means impossible, particularly when the basic directory information should be available to Israeli telcos.

Note that this sort of action has been policy, and documented by independent sources going back to the 1948 war for independence.

One of the things in the coverage that has surprised me is that Guardian Columnist Seth Freedman has come down fairly hard on Hamas.

I reviewed his articles, and his beat seems to be largely Israel, Palestine, and the NGOs therein, and he generally hews fairly close to the Guardian editorial line, which has been unsympathetic to Israel for about 30 years.

Economics Update

It appears that credit is still easing, with the 3 month LIBOR (London interbank offered rates) falling.

The spread between LIBOR and Treasuries is still awful, but it’s a bit better, largely because the Treasuries are effectively 0% right now.

On the other hand, the Chicago Federal Reserve Bank’s Midwest factory index dropped to the lowest level in 12 years.

I’m a mechanical engineer, so I believe that manufacturing and services, and not banking, are the core activities of the economy, so I tend to believe the factory index more than LIBOR spreads.

In international currencies, Pound hit an all time low vs the Euro £0.9798:€1.000, nearly parity.

The experts are saying that they believe that the Pound will gain vs the Euro in the coming because the Bank of England won’t be lowering rates much more.

This makes sense. The BOE is already bumping up against zero interest rates.

The US dollar is down too, largely on concerns that the Gaza conflict will drive up oil prices and because the Fed’s zero target lending rate makes it a less attractive currency.

The conflict in Gaza has also driven oil up, though retail gasoline is near a 5-year low at $1.619/gal.

Yowza, I gots to buy me a Hummer!

More Pushback on Caroline Kennedy

Basically, her critics are starting to pile on, and it comes down to not voting Democratic party primaries more often than not, her refusal to endorse whichever Dem opposes Bloomberg, not making donations to the party at the state level, her unwillingness to disclose financial data, her unwillingness to talk to the press, and the increasing sense that Governor Patterson is completely unimpressed with her tactics regarding him.

Of course, she has finally done an interview, and it’s been pretty widely panned, you know.

In fairness, I think that her statement that, “Have you guys ever thought about writing for, like, a woman’s magazine or something?” was justified. The entire bit with the interviewer asking her, “Could you, for the sake of storytelling, could you tell us a little bit about that moment, like, where you were, what you said to him about your decision, how that played out?” was trivial bullsh%$.

That being said, it pissed off the press, because it was not sufficiently deferential.

She increasingly sounds to me like the second coming of Kathleen Kennedy Townsend, who was the worst political candidate in the history of…well…history.

Tom Friedman, Suck on This: Part II

The Buksbaum family, one of whose members is Tom Friedman’s wife, has been ejected from the management of General Growth Properties Inc., after financial irregularities were discovered.

Basically, what happened here is that GGP fueled its growth by leveraging itself up to its eyeballs:

Rather than apply for bank loans, General Growth began taking out short-term mortgages on its malls. As the mortgages came due, the company would replace them with even larger mortgages to provide cash for additional acquisitions.

This is what happens when you let the finance folks drive your business, rather than the other way around….It’s also why people wonder how different Bernie Madoff was from business as usual in the US financial system.