Author: Matthew G. Saroff

Gaza

OK, Israel has launched a large air strike on Gaza, see here, here, and here, with total reported casualties somewhere in the 225 range.

As to what the eventual death toll will be, FAIR’s report on Jenin noted that similar numbers were initially counted there, but it turned out to be 52, and the original estimates at deaths on 911 were over 6,000, when the final tally was 2974, so the final number is likely to be much lower.

Note that is not meant to minimize what happened, but to note that people who are going to simply spew what are very preliminary numbers by and imply that this constitutes reasoned arguments are ninnies.

I tend to be more hawkish on these things than my other political leanings would indicate, so here is my assessment at this point.

I do not think that this, whether or not it is followed by a ground assault, will solve anything in the long term, but it will have the effect of disrupting the chain of command of Hamas, particularly as the leadership of the organization is likely to go to ground at this point, as they have when similar strikes have been launched against them.

It does not buy peace, but it will buy somewhere between 6 and 18 months of quiet.

I disagree with the rather simplistic assessment at Worldwide War Pigs of, “Don’t like getting bombed? Clean up your act,” particularly when he invokes the rather awful Sly Stallone movie Cobra in the process.

Nothing good ever comes from evoking Sylvester Stallone, and there is no purely military solution.

By the same token, I think that Jeremy Ben-Ami, Executive Director of J-Street is wrong too, where he makes rather mealy-mouthed statements about, “Respecting Israel’s right to defend itself,” but at it’s core is the argument that this will contribute to the, “cycle of violence”, which is such a useless cliche that it borders on the moronic.

Further I disagree with Mr. Ben-Ami’s assertion that, “strong diplomatic intervention by the United States, the Quartet and allies in the region to negotiate a resumption of the ceasefire,” is essential.

The Quartet has been part of the problem, as it has distracted the principals, Israel, the PA, and Hamas, away from dealing with each other, and toward gaming their position vis-a-vis support from the 4 nations. It has taken negotiation, and made it theater.

I believe that the stage given to all parties by the Quartet serves no one except the members of the Quartet, who are allowed to pretend that they are doing something positive.

At this point, the best course is for the rest of the world disentangle themselves from this situation.

As to final status negotiations, I do not believe that Israel can achieve its goals purely through military force, and I do not believe that the Palestinians, either Hamas or the PA are currently able to negotiate in good faith, as any serious good faith negotiations would result in compromises that would delegitimatize whoever made them.

I would also note the lesson of the American Civil War, where ambiguities that were “left for later”, became the basis for conflict. Incrementalism is the enemy of a solution, not a friend.

Pardongate is Coming Early This Year

George W. Bush released 19 pardons, including one for Mr. Isaac Robert Toussie, a crooked real estate developer who victimized minority first time home buyers.

When the details came out, and it was revealed that his father, Robert Toussie, had contributed heavily to the Republican National Committee (RNC), Bush decided to reverse the pardon.

No bit surprise there. It’s embarrassed having been caught selling a pardon, and it makes it very difficult for the ‘Phants to challenge Obama’s AG nominee, Eric Holder, on the Mark Rich pardon.

The interesting thing is that Bush may not have the power to reverse the pardon, maintaining that it had not been “delivered” because the, “Pardon Attorney had yet to “execute and deliver grants of clemency to the named individuals.”

According to the Pardon Power Blog, this may not be true, as “The Office of the Pardon Attorney (OPA) called each grantee (or his counsel) via telephone and told him that he’d been pardoned by the President,” so the pardons may have already been legally delivered and accepted, and that “receiving the president’s warrant and sending notifications to the petitioners is purely ‘a ministerial act of notification.’

So, once again, we are hip deep in a complete f$#@-up courtesy of Bush and His Evil Minions.

Palin In-Law Drug Bust Delayed for Election

Well, this story is interesting.

It appears that the dope-dealing case of Sherry L. Johnston, whose son, Levi is due to marry Bristol Palin, Sarah Palin’s pregnant daughter, has taken a few twists:

  • Ms. Johnston Believed that she was already under surveillance, being caught on wiretap texting to a customer, “”Hey, my phones are tapped and reporters and god knows who else is always following me and the family so no privacy. I will let u no when I can go for cof. [Oxycontin]”
  • That the search warrant was purposely delayed until after the election so that Johnston was, “no longer under the protection or surveillance of the Secret Service.”
    • This last bit is particularly interesting, as the only time that she should be under surveillance or protection of the Secret Service would be when she was with Sarah Palin.

This raises the question as to whether Palin was using her position to delay the execution of a search warrant.

Rumored At The Mountains Of Madness Film

It appears that director Guillermo Del Toro is interested in directing a film based on the H.P. Lovecraft story, at least that’s what he is saying in this interview:

With regard to At the Mountains of Madness, I’d love to see you tackle H.P. Lovecraft in a way that hasn’t been done.

Del Toro: Me too. Me too. … Part of the arrangement with Universal–in being essentially there for now until 2017–part of the arrangement was they would finance research and development for Mountains of Madness. And we are doing it. There are many technical tools in creating the monsters that don’t exist, and we need to develop them. The creatures, Lovecraft’s creatures, the tools that exist for CG and the materials that exist for makeup effects, you need to push them to get there, and we’re going to push them.

I am unfamiliar with Del Toro’s oeuvre, but I would really like to see this made into a film.

It’s my favorite Lovecraft story, and I think that it would translate to film fairly nicely.

More at link about the technical challenges….Yeah….A Shoggoth is “challenging”.

Russia Strategic Missile Forces Update

We are now hearing rumblings that Russia may be putting a nuclear missile installation in Belarus, specifically, the mobile strategic missile the Topol, though it’s unclear from the report as to whether it is the RT-2PM Topol (SS-25 Sickle), or the more advanced RT-2UTTH (SS-27 Sickle B).

In either case, I’m not sure whether this intended to make the strategic missiles targeting the US less vulnerable to the interceptors, or to imply that these could be launched on a depressed trajectory against the European BMD sites, though I would lean toward the latter.

Belarus borders Poland, and so I would think that interception of missiles launched toward the US would be relatively straightforward, though the kinematics of the missiles in question and the intercept solutions are above my pay grade.

Also, we have reports that the Russian military is looking at commissioning 70 new nuclear missiles over the next 3 years, though reports of a failure in the most recent test of the Bulava SLBM (see also here) might throw a monkey wrench into what seems to be a very aggressive timetable.

A Thrust-to-Weight Ratio of 6.6:1

Bill Sweetman teases out some information which sheds some light on the relatively low thrust to weight ratio of the F-35 JSF, the fact that the Pratt & Whitney F135 engine has a thrust to weight ratio of only 6.6:1.

By comparison, the F-100 engine (F-15, F-16), whose contract was awarded in 1970, has a thrust/weight ratio of 7.8:1, and the more modern F414 and EJ2000 (Superbug and Typhoon) exceed 9:1 thrust to weight.

Additionally, he notes that the vertical lift system used on the F-35B weighs 10,472 pounds with a thrust of 40,550 pounds, giving a thrust to weight ratio in that mode of 3.87:1, as compared to 5.6:1 for the Rolls Royce Pegasus used on the Harrier.

There is a saying that you can’t make a race horse out of a pig, but you can get an awfully fast pig, the F-4 Phantom comes to mind, but this is not a fast pig.

Pics of the F135 promotional brochure are from here.

Economics Update

Retail sales tanked in the Christmas shopping season, down 5.5% in November and 8% in December, though ex-retail gasoline sales, where the fall in prices drove things further down, the numbers were -2.5% and -4%, which are pretty worrying too.

I think that when the numbers are adjusted later with more complete data, they will be worse, because customer visits to retailers fell 24% on the weekend before Christmas.

FWIW, it does not look like the rest of the world will be pulling themselves, or anyone else, out of recession soon, as Japanese industrial production fell 8.1% YoY in November, and the Japanese central bank has no where to go with interest rates, having just lowered them to 0.10% (no misplaced decimal).

About the only piece of good news are The Big Picture’s Credit Crisis Indicators, which are showing a bit of improvement, with the TED spread and the LIBOR-OIS spread improving, though rates on Treasuries are still very low.

In the meantime, mortgage rates for a 30 year fixed mortgagehit the lowest number since at least 1971, when Freddie Mac started keeping these records, 5.14%, though there is the caveat that you can get these only if the banks are willing to lend at all.

Note that this is for the “conforming” mortgage, which is packaged and resold by the GSEs, which now have an explicit guarantee from the government, and, as noted earlier, “non-conforming” mortgages are at about 2% more, an all time high.

Oil was up a bit on announcements by suppliers of production cuts by the UAE and House of Saud.

Nothing much happened with currency. The 26th is a day off for most American traders, and Boxing Day in the UK, so there was not much activity.

Afghan Erection Update

Not a typo. They CIA is using Viagra to win friends and influence tribal leaders in Afthanistan:

The Afghan chieftain looked older than his 60-odd years, and his bearded face bore the creases of a man burdened with duties as tribal patriarch and husband to four younger women. His visitor, a CIA officer, saw an opportunity, and reached into his bag for a small gift.

Four blue pills. Viagra.

“Take one of these. You’ll love it,” the officer said. Compliments of Uncle Sam.

The enticement worked. The officer, who described the encounter, returned four days later to an enthusiastic reception. The grinning chief offered up a bonanza of information about Taliban movements and supply routes — followed by a request for more pills.

At least this cannot be turned into an IED.

No, this is not the Onion.

Three Heads, All of Them Firmly Planted Up Their Ass

I am referring to, of course, Cerberus Capital Management LLC, which is now showing signs of distress.

It appears that their plan to buy Chrysler for some beans, and then flip it for a profit has run into some snags, so the good folks named after the 3-headed dog that guards the gates of hell are experiencing some cash flow issues.

So, they are
placing limits on redemptions their hedge fund, because they had been forcing them to liquidate assets at bargain basement prices to generate the cash.

Additionally, one of the big roadblocks in the now completed transition of GMAC into a bank holding company was the feeling that bond holders were being asked to take a haircut while Cerberus wasn’t.

While that has now been resolved, it is unclear what, if anything Cerberus put into the transition.

Additionally, it now appears that they are attempting to cut a deal that will allow them to simply walk away from Chrysler.

There are increasing indications that Cerberus would like to simply dump Chrysler on its creditors, because with flipping an increasing distant option, they simply want to flee.

Rumbles Against Kennedy Koronation

Well, it appears that as time goes on, we are beginning to see real push-back against Caroline Kennedy’s appointment to the US Senate to replace Hillary Clinton.

Among the concerns:

  • That she is too close to Michael Bloomberg, who was a Republican until recently, and might support him running for a 3rd term as mayor.
  • Governor Patterson feels that his openness to her presenting his case to him has been turned into a steamroller by her people.
  • Moves by Kennedy’s people and Bloomberg’s people to announce a replacement immediately, even though Patterson has clearly stated that he will not announce an appointment until Clinton resigns to become Secretary of State.

Something to realize here is that whoever Patterson appoints, they are likely to face a spirited challenge in the general, and based on what I’ve seen so far, Kennedy is a weak campaigner.

Truth be told, a lot of this comes down to Bloomberg, whose strident support for her is not helping with New York Democrats, and the fact that she’s really not making herself particularly available which has drawn Palin analogies from her opponents.

Fair or not, in a post Palin world, she needs to do an interview to show that she has a real clue.

We Will See More of This

We are now starting to see the breakdown of customs in the financial community that would have been unthinkable only a year ago.

Case in point, Deutsche Bank refusing to execute a call option on €1 of subordinated debt, which has the Bank of China ready to cut off all contact with them.

Here is the short version of what just happened:

  • The bank has been offering a bond of relatively low quality which has a maturity date at some point in the future.
  • Typically, at some portion of that maturity date, the bank can call in the bond, i.e. pay off the loan and roll over the loan by selling new loans.
  • Deutsche Bank has decided that money is too expensive right now, and is refusing to call in the bonds.
  • This means people who, for example, bought a 5 year bond with a 1 year call option, now cannot get their money back at the 1 year mark, and have to wait to the 5 year mark.
  • Thus, the investors are very are pissed off.

The thing is that while Deutsche is under no legal obligation to call in the bonds, this sort of rollover has been a routine way of doing business for a very long time.

In some ways these conventions are at least as important in international finance as the actual laws and regulations under which these institutions operate, and we are seeing them break down in significant ways.

One of the Consequences of the Financial Meltdown

Is that it has shown to the world that the Neoliberal economic policies of the IMF and world bank are not applied to Europe and the US.

As such, the parties in power in many parts of the world are becoming far less receptive to “soak the poor” policies that have been foisted upon them by international institutions like the IMF and World Bank.

We are the fruits of that revalation going on in South Africa right now, where South African labor unions have extracted changes in policies from the ruling ANC.

The Congress of South African Trade Unions (COSATU) is getting commitments to poverty reduction in exchange for their support of Jacob Zuma in his confrontation with Thabo Mbeki, and now they want a change in focus for the next government.

Of course, moneyed interests are not amused:

Investors fear the left has gained influence over the African National Congress in the past year and believe it might pressure the government to ditch policies that helped spur nearly a decade of growth in Africa’s biggest economy.

Of course those policies haven’t benefited a majority of the population. The argument is that by keeping social programs sparse, and any minimum wage low, that growth would eventually trickle down.

It hasn’t in South Africa, or anywhere else.

In fact, what is arguably the best example of a formerly poor society becoming well off, Singapore.

Its leader in its formative years, Lee Kwan Yoo, made it clear to its capital class, that it would be unacceptable to take it all, that some of the profits had to find its way to everyone.

Fundamentally, if South Africa wants to follow this path, we aren’t talking going Sweden. Simply by raising the minimum wage, improving the access to health care, and making sure that public school is free, available, and universal, you can improve the lot of everyone.

Economics Update

Ouch. Initial jobless claims for last week hit 586,000, the highest number since Nov. 27, 1982. The 4 week rolling average, which is a better metric, rose as well, to 558,000, though continuing claims declined to 4.370 million.

Even if you do have a job, it’s likely that you are seeing wages and or hour cut….And that 401(k) match, fuggedaboudit.

It’s no wonder that consumer spending fell in November, though it was less than expected, and when adjusted for inflation….OK, adjusted for deflation….It was actually up.

As Calculated Risk notes even as record low mortgage rates are boosting demand, a lot of that ReFi, the spread between “conforming” and “jumbo” 30 year fixed mortgages remain at an all time high of about 2%, which means that in expensive areas, the cheap mortgages are simply not available.

CRE is tumbling too, as we can see from the fact that Manhattan office vacancies hit a two-year high.

In currency, the dollar was down again today, and the Russian central bank devalued the Rubleagain.

I still think that a run on the dollar is a possibility when traders start to realize that the Treasury and Fed are printing money and dropping it from the proverbial helicopter.

In energy, increases in inventory, drove oil to $35.35/bbl.

Election Update

Two rulings from the Minnesota Supreme Court.

In the first they granted an extension on the consideration of absentee ballots, some of whom had been improperly rejected, along with approving the plan for review, which is that both sides still have to agree on a ballot before it is counted.

It’s not a great plan, you could be sure that Coleman and His Evil Minions would object to anything with a pulse, but their second ruling, denying Coleman’s request to reset votes in about a dozen precincts to election night totals, pretty much means that Franken is very likely to hold onto his 50 some odd vote lead.

It appears that, based on an interview Coleman gave last night, Norm Coleman thinks so too.