Author: Matthew G. Saroff

There is a Cease Fire in Georgia, Sort of

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It looks like there has been a cease fire accord signed between the Russians and the Georgians.

As to the net result of the accord, the Washington Post, being the paper that Bushies leak to when they want credibility (Moonie Times does not cut it), strongly suggests that Moscow capitulated to Western demands, because they were concerned about their role in international bodies.

I think that the reporting of the Los Angeles Times and the The Guardian, which see this as a Georgian capitulation.

The Georgian army has largely disintegrated, and the conditions of the terms are highly favorable to Moscow:

The key demands are that the Georgian leader pledges, in an agreement that is signed and legally binding, to abjure all use of force to resolve Georgia’s territorial disputes with the two breakaway pro-Russian provinces of South Ossetia and Abkhazia; and that Georgian forces withdraw entirely from South Ossetia and are no longer part of the joint “peacekeeping” contingent there with Russian and local Ossetian forces.

(emphasis mine)

The Russians are also maintaining their right to “additional security measures” until foreign monitors were in place.

This would support the reports that the Russians are still advancing (see also here, here, here, and here), and that the Russians had destroyed Georgian naval vessels.

Some of the reports had a convoy heading from Gori to Tbilisi, but this was denied by the Russian military, who said that they were, “Demilitarizing the area near the South Ossetia border so that Georgia could not launch new attacks.”

I don’t see the Russians entering Tbilisi, though I could see them setting up artillery in range of the city as a means of intimidation.

We are also getting reports of burining and looting in areas under Russian control.

It appears that the Russians are not doing this, but that Ossetian militias are, and the Russians are taking no action, to stop them.

Economics Update

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Let’s start with the really scary numbers that you need to know:

Meanwhile in Japan, their economy contracted at a 2.4% annual rate, once again showing that decoupling from the US economy is a failed theory.

Still, the president of the ECB, Jean- Claude Trichet is sending out signals that imply that there will be no Euro zone rate cuts, which would imply that the dollar may not have much strengthening left in it.

I would note that businesses don’t put much stock in the economy right now. Inventories increased, but at a less than ½ the rate than the rebate juiced spending by consumers in June, implying that they are expecting a major slowdown.

The saying that, “When the US economy gets the sniffles, the rest of the world gets a cold,” still applies, and so we are still seeing capital flight into the US dollar, which is why it strengthened today.

In energy, oil rose on thighter than expected inventory reports, and retail gasoline has continued its unbroken downward streak.

Bad Idea, Barack

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Woah, this is a full metal pander:

Obama appeared to agree, saying, ‘I have consistently called for deepening relations between Georgia and trans-Atlantic institutions, including a Membership Action Plan for NATO, and we must continue to press for that deeper relationship.’

It was this sort of statement that encouraged Georgia to get its war on and level a city full of women and children.

Additionally, it makes him look weak, because it makes him look like he is triangulating and that McCain is taking the lead on foreign policy.

And Sometimes Thomas “The Mustache of Pablum” Friedman is Right

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Such as when he criticizes McCain for not even bothering to show up for votes on energy policy, he has missed all 8 votes this year, while demagoguing the drilling issue for Bikers taking a break from a topless beauty contest:

Everything else is just bogus rhetoric designed by cynical candidates who think Americans are so stupid — so bloody stupid — that if you just show them wind turbines in your Olympics ad they’ll actually think you showed up and voted for such renewable power — when you didn’t.

Even a stopped clock is right twice a day, I guess.

Thomas “The Mustache of Pablum” Friedman is Proved Wrong Again

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Back in 1996, Thomas “The Mustache of Pablum” Friedman had a theory:

So I’ve had this thesis for a long time and came here to Hamburger University at McDonald’s headquarters to finally test it out. The thesis is this: No two countries that both have a McDonald’s have ever fought a war against each other.

The McDonald’s folks confirmed it for me. I feared the exception would be the Falklands war, but Argentina didn’t get its first McDonald’s until 1986, four years after that war with Britain. Civil wars don’t count: McDonald’s in Moscow delivered burgers to both sides in the fight between pro-and anti-Yeltsin forces in 1993.

You know, you would do more for the betterment of humanity, if you flipped burgers, as opposed to writing OP/EDs for the Times.

H/T Matthew Yglesias, who gives us this picture of the Tbilisi McDonalds:

Out of the Mouth of der Spiegel

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Jürgen Habermas, writing in der Speigel, understands the problem with the proposed changes in EU organization:

The failed referendums are a signal that the elitist mode of European unification is, thanks to its own success, reaching its limits. These limits can only be surmounted if the pro-European elites stop excusing themselves from the principle of representation and shed their fears of contact with the electorate.

This is the basic problem. You create a, “referendum over a treaty that is too complicated to be understood,” and when it fails, the solution is to eliminate the democratic element of the decision making.

Michael Mukasey is a Completely Corrupt Bastard

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The US Civil Service was created because a disgruntled federal job seeker shot a president (Garfield), but in the matter of Bush Administration Minions using political appointees, Michael Mukasey won’t pursue any charges.

He says that it is just a “civil” violation, not a “criminal” one.

That is crap. They committed criminal conspiracy, just as surely as the thousands of wives and girlfriends who are in jail now because their guy dealt dope, and they took a phone message or two.

He will not prosecute because there is a real chance that folks like Monica Goodling and Kyle Sampson might flip on folks higher up, and work their way up the chain, to the White House.

He won’t because if he did, some of the people would flip on higher ups. Thanks a lot, Charles Schumer, for vouching for this bit of human excrement.

Georgia Daily Update

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First, let’s go meta and explain why no nation on earth should trust Bush and His Evil Minions™ in a diplomatic context:

US Secretary of State Condoleezza Rice has also been noticeably absent on the diplomatic scene, having failed to interrupt her holidays to fly to Tbilisi in support of the Georgian government.

This is actually easily understood. She’s an academic, which means never allow reality to alter your view of the world, and never cut a vacation short.

In any case, the Russians have officially declared an end to military operations, though there is clearly some combat still going on.

Hopefully, it will die down in the next few days.

Of interest is the fact that Georgia must remove its troops from the area and sign a binding renunciation of force against both South Ossetia and Abhkazia.

If they don’t get that, then the Russians are saying, “no deal”, and if they do get that, then Saakashvili is done as a political force in Georgia.

I think that he’s done in any case.

Interestingly enough, I see a pattern of tribalism in this description of Georgian Mikheil Saakashvili’s comeuppance.

Specifically, it appears that much of his credibility in terms of the actions that he has taken, and the west’s view of him, come from the fact that he got his law degree at the George Washington University Law School, and when he purged the civil service and universities, he replaced them with other western trained personnel.

When I look at coverage he has received, and for that matter the coverage of other leaders of dubious records, it appears that those old school ties make a very big difference as to who the press covers what they do, particularly when it is less than savory.

Economics Update

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The U.S. trade deficit unexpectedly fell in June, though I wonder how much of that will go away now that the dollar is about 6% stronger than it was that month.

I just wonder when people are going to start noticing that the Fed is printing money like a SOB with it’s aid to the financial industry.

Today’s bit of additional money comes to $25 billion with their financial toxic waste for cash exchange program, better known as the, “discount window borrowing facility”.

The dollar is down a bit today, but I see it as profit taking, as opposed to the realization that we in the US print more money than toilet paper though.

In energy, oil is down, even though BP closed its Georgia pipeline as a precaution.

Gasoline is down tow, by about $0.30 from peak.

Real estate, on the other hand, is beginning to look grim, with people finally noticing that prime mortgages are defaulting at higher rates too.

It explains why JP Morgan lost $1.5 billion on mortgage backed securities in July.

Just When You Thought that Zimbabwe Could Not Get Any More Screwed Up….

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There are now reports that Arthur Mutambara, whose party, the MDC-Mutambara, has 7 seats, and thus the margin of majority in the Zimbabwean parliament, may have cut a deal with Mubame, though his representatives are denying this, or claiming that there is a deal, but that it would not take effect unless Morgan Tsvangerai, or at least the MDC-Tsvangerai, was also a part of the agreement.

If this is a sellout by MDC-M of MDC-T, which I see as likely, then we know why Mugabe agreed to talks, because he needed time to stack the deck.

UAL Pilot Union Demanding Removal of CEO

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They are saying that CEO Glenn Tilton has steered the airline, “down a path to poor customer service, employee morale and financial performance.”

I’m not sure if this is a negotiating tactic, or a legitimate concern for the company.

My guess is a bit of both. He’s an oil man, and the requisite skills in that industry are not really producing anything or providing a service, but rather schmoozing people so that you can put holes in their ground.

That skill set does not translate well into any other field of endeavor, see Bush, GW, and Cheney, R.

Was the Fix in on Bear Stearns?

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This is weird. A week before Bear imploded, someone bought $1.7 million worth of put options, 5.7 million at $30 and 165,000 shares at $25, expiring in a week.

The thing was, when he placed the put options, Bear was trading at $62.97.

Which meant that the only way that he could win was if the stock fell by more than 50% in a week:

“Even if I were the most bearish man on Earth, I can’t imagine buying puts 50 percent below the price with just over a week to expiration,” said Thomas Haugh, general partner of Chicago-based options trading firm PTI Securities & Futures LP. “It’s not even on the page of rational behavior, unless you know something.”

…

John Olagues, who started trading options 30 years ago, said he has never experienced anything like it. Olagues, who runs a New Orleans consulting company called Truth in Options, also manages more than $1 million for a client who had a stake in Bear Stearns, which plummeted 94 percent in value on March 17. The drop prompted Olagues to start poring over options trading records and call officials at the CBOE.

“In just one tick, the company’s share price lost nearly all its value, a steeper drop than Enron’s right before its de- listing in 2001,” said 63-year-old Olagues, referring to the bankruptcy of Houston-based energy trading company Enron Corp. “I’ve never seen a stock perform like that in my life.”

Olagues, who was an options market maker at the Pacific Exchange and then the CBOE from 1976 to 1984, said he knows all about so-called time decay, implied volatility, arbitrage and the complexities of options trading. The former all-conference pitcher at Tulane University, who started Truth in Options in 2003, said he has found options transactions that convince him Bear Stearns was the victim of insider trading.

“I would stake my reputation on that,” he said.

But will anyone go to jail? Of course not. Jails are for little people.