If anyone is curious what's going on with that, you can get the whole run-down at Defense Industry Daily - just read "Desert Leopards: Germany Selling Heavy Armor to the Saudis?".
As a bonus, DJ Elliott offers "The Missing Links: A Realistic Appraisal of the Iraqi Military."
On the 11th hour, of the 11th day, of the 11th month, in 1918, the guns ceased. During Remembrance Day, the British Commonwealth countries remember those who came before, and those who came after, and all who have given in their nation's service. John McCrae's poem "In Flanders Fields" is a common accompaniment at ceremonies, where the wearing of poppies is customary (on the left lapel, or as close to the heart as possible), and organizations like the Royal British Legion, Royal Canadian Legion, et. al. are supported.
There's one more kind of remembrance I'd like to point out, and ask you to consider on this day. It's a remembrance of the Bloodlands...
Anne Appelbaum explains in "The Worst of the Madness":
"Murder became ordinary during wartime, wrote Milosz.... young boys from law-abiding, middle-class families became hardened criminals, thugs for whom "the killing of a man presents no great moral problem." Theft became ordinary too, as did falsehood and fabrication. People learned to sleep through sounds that would once have roused the whole neighborhood: the rattle of machine-gun fire, the cries of men in agony, the cursing of the policeman dragging the neighbors away.
For all of these reasons, Milosz explained, "the man of the East cannot take Americans [or other Westerners] seriously." Because they hadn't undergone such experiences, they couldn't seem to fathom what they meant, and couldn't seem to imagine how they had happened either. "Their resultant lack of imagination," he concluded, "is appalling."1
But Milosz's bitter analysis did not go far enough. Almost sixty years after the poet wrote those words, it is no longer enough to say that we Westerners lack imagination. Timothy Snyder, a Yale historian whose past work has ranged from Habsburg Vienna to Stalinist Kiev, takes the point one step further. In Bloodlands, a brave and original history of mass killing in the twentieth century, he argues that we still lack any real knowledge of what happened in the eastern half of Europe in the twentieth century. And he is right.... Snyder's ambition is to persuade the West - and the rest of the world - to see the war in a broader perspective.... The title of this book, Bloodlands, is not a metaphor. Snyder's "bloodlands," which others have called "borderlands," run from Poznan in the West to Smolensk in the East, encompassing modern Poland, the Baltic states, Ukraine, Belarus, and the edge of western Russia (see map on page 10). This is the region that experienced not one but two - and sometimes three - wartime occupations. This is also the region that suffered the most casualties and endured the worst physical destruction."
All that, and north to Finland, too. The Bloodlands are where the great wars started, and in those wars their name was earned. They are what so many fought for, and failed to fight for, and beyond the effect of those choices on us, lies their own story. Of war, and soldiers. Heroes, and villains. And remembrance.
Their stories, too, must be part of our remembrance. Lest we forget.
UPDATE: See also Canada's National Post today, as Father De Souza makes a similar point in "Karol Wojtyla's War."
Over in Canada, Energy Probe has an article that neatly underlines the cheating swindle at the heart of Europeans' promotion of the Kyoto accord in 1997. The first swindle involves Europe using a 1990 baseline. The closure of socialist industry in eastern Europe, a massive Scandinavian economic crisis, and mad cow disease's effect on livestock production crashed emissions by 1995. Result?
"In 1997 in Kyoto, the EU27 signed on to an aggregate cap on their GHGs that was 14% ABOVE the member states' aggregate 1995 actual emissions. [From 1997 to 2008]... Spain, +32.8%; Latvia, +27.4%; Cyprus, +23.1%; Estonia, +21.0%; Greenland (a Danish colony), +16.6%; Luxembourg, +16.2%; Lithuania, +13.6%; Ireland, +13.0%; Ukraine, +11.5%; Malta, +9.0%; Austria, + 7.5%; Bulgaria, +8.4%; Italy, +5.9%; Belgium, +4.0%; Netherlands, +3.2%; Portugal, +4.2%; France, +1.5%; Finland, -1.6%, United Kingdom, -2.9%.
It should be noted, further, that 100% of the emission "reductions" claimed by EU member states to date derive from offshoring manufacturing of goods and services EU demand, which has actually increased."
As their name suggests, they approach this thing from a different angle than I do. But the facts noted in the post are independent of point of view.
1) Swiss Gov't comes to accommodations with various Islamist groups for internal security reasons - do what you want here, but no attacks;I've predicted in the past that Europe wasn't at risk of becoming Islamic, but instead that there would be a right-wing xenophobic reaction that risked Europe going to something that looks a lot like fascism (violent, racist nationalism). I'm standing by that prediction, and I'll suggest that's as bad an outcome as any Eurabia.
2) Islamist groups use Swiss facilities with increasing visibility;
3) Non-Islamist Muslim population grows;
4) Non-Muslim Swiss population (who are, like the French, stunningly racist by nature) is PO'ed at the government actions and at the increasing visibility of both the Islamist and benign Muslim populations and performs a gratuitous act of foot-stomping. Or, as Otter put it, "a really futile and stupid gesture..."
As Winds readers almost certainly know, the Swiss voted in a referendum to ban the construction of new minarets in Switzerland. At present, only 4 of Switzerland's 150 mosques have minarets, and none are used for the call to prayer because of strict noise-pollution rules. Those minarets would be allowed to stay.
Rise of the Fjordmen? A little, yeah. The Minarets aren't required parts of a mosque, are seen as big "eff you!" raised finger of Islamic supremacism, and people reasonably don't want even the potential of some idiot yelling a public call to prayer of any sort at whatever hour of morning or day. Local noise regulations can be repealed, after all, by a local majority vote. Referenda cannot. Auto-dialers and opt-in cell phones, please!
Imam Hargey of Oxford has some sensible suggestions...
"Switzerland's referendum vote to ban minarets is needlessly xenophobic but it does not infringe the religious liberty of Swiss Muslims. Minarets remain emblematic of mosques in the Muslim heartlands but there is no theological reason why houses of worship in the West have to incorporate such towers.... European mosques should stop mindlessly mimicking Eastern design and create prayer halls that blend into the landscape.
Muslims who have settled in Switzerland (and elsewhere in Europe) should not confuse culture with creed.... They should practice a Swiss Islam that is rooted in the society in which they live.... When European Muslims unthinkingly endorse this warped [Wahabbi] theology by desiring medieval Sharia, defending honour killings, stoning to death, forced marriages, Muslim exceptionalism and a separatist society, they only invoke fear and exacerbate anti-Muslim sentiment. When Europe's Muslims extol such un-Koranic doctrines as the niqab (face veil), they exclude themselves from the mainstream.
Only when Muslim immigrants and converts in Europe reject the twisted ideology of a fundamentalist male clergy will the chief causes of anti-Muslim prejudice in Europe recede."
The Swiss Muslim community, whose reaction has been measured and restrained, would do well to take his advice, because this vote is not the end.
The minaret vote was about 57-58% for, and the organizations behind the referendum campaign are targeting burqas and forced marriages next. Which will resonate widely, and is good political tactics by the the Swiss People's Party.
The latter initiative may also upset any Jewish Hassidic communities in Switzerland, but really, after reading some of the stories within the Jewish community about that, I have zero sympathy. Cardinal principle: people must not be disposable as property, under any framework - it will always be abused. Tough new laws around forced marriages are a nearly surefire winner in Switzerland, and even attempting to oppose that proposal will raise a lot of eyebrows and concern levels.
Incidentally, a referendum to ban Swiss arms exports, held at the same time, went down in flames, with 68% against.
We'll start with Spain. From The Telegraph:
"The Madrid research group RR de Acuña & Asociados said the collapse of Spain's building industry will cause the economy to contract for the next three years, with a peak to trough loss of over 11pc of GDP. The grim forecast is starkly at odds with claims by premier Jose Luis Zapatero.... RR de Acuña said the overhang of unsold properties on the market, or still being built, has reached 1,623,000. This dwarfs annual demand of 218,000, and will take six or seven years to clear. The group said Spain's unemployment will peak at around 25pc, comparable to the worst chapter of the Great Depression.... Separately, UBS said unemployment will reach 4.8m and may go as high as 5.4m if the job purge in the service sector gathers pace....Roberto Ruiz, the bank's Spain strategist.... said the construction sector will shrink from 18pc of GDP at the peak of the boom to around 5pc, making it unlikely that there will be any significant recovery before 2012. Even then growth will be "slow, weak, and fragile". The Spanish government can do little to cushion the downturn....
"The root cause of Spain's trouble is that it joined monetary union before its economy was ready. EMU halved Spanish interest rates almost overnight. Real rates were minus 2pc for much of this decade. Combined private and corporate debt reached 230pc of GDP, funded by French and German savings. The credit boom masked a steady decline in productivity over the last decade. Spain's unit labour costs have risen by about 30pc compared to Germany. The Bank of Spain made heroic efforts to counter the effects of the bubble by forcing banks to put aside extra reserves, known as dynamic provisioning, but the sheer scale of the problem has washed over the defences. Spain no longer has the escape valve of devaluation to claw back market share. It cannot resort to emergency monetary stimulus - as Switzerland, Britain, the US, and Japan are doing to prevent the onset of debt deflation. Prices are already falling at a rate of 1.2pc."
Ow. Sorry to see it happen to Spain. Not at all sorry to see it happen to Zapatero and his cronies. Meanwhile, in Ireland, they're taking a different approach to their banking crisis. Is it better? Not sure, but I'll throw it out there...
The basic concept is that toxic mortgages will be bought from banks outright. Not at the banks' own valuation, but not at the bottom mark-to-market rate either. Last week, Irish Finance Minister Brian Lenihan announced that a special agency would buy EUR 77 billion ($113 billion, bank valuation) of assets from 5 lenders at about 70% of the assets' carrying value based on independent valuations of legacy loans, paying about EUR 54 billions. Mark to market value if banks tried to sell them on the market is estimated at around EUR 47 billion. So the banks take a 30% penalty to their books, which is sharp but not bankrupting, and the government owns the assets. The transaction is paid for with government-backed bonds, and banks who wish/need to do so can pledge the bonds to the European Central Bank in return for cash.
There are some attractive features to that, and it does acknowledge the lessons of recent Latin American and Japanese crises, which is that allowing toxic debt to sit on financial institutions' books impairs capital markets, can strangle recoveries, and has led to "lost decades."
Now, here's the catch in the room. If property values over the next 10 years rise from their current spot by a total of 10% or so, or just under 1% per year on average, the plan breaks even. If they don't, or in fact continue to fall due to a widespread foreclosure/ ghost town new-builds glut and/or over-valuation in the market, then the Irish government is about to take a big bath. Bloomberg's David Reilly:
"Recapitalizations that make creditors and shareholders share in the pain, such as debt-for-equity swaps, should be an option. Ireland, like other countries, has to get over the notion that creditors are a sacred group who must be spared at all costs. At the very least, the government shouldn't ask taxpayers to wager so much on the hope that things will stop getting worse."
I pretty much agree with that. But creditors aren't the only group who can't be sacred cows. Which is why I generally agree with the broad thrust of this New Republic piece, which looks at the issue of senior bankers' compensation and treatment in these situations through a useful lens:
What happens to people like this in other bankruptcy-type proceedings? And the answer is, they don't do nearly as well on a personal level as the bankers have.
But then, they probably don't give as much, in personal financial contributions, to the people who are running the bankruptcy and setting terms. It's good to be the government.
Read my 2002 post "Pipeline Politics: The Caspian Front" for an intro, and "NATO's German/Eastern Question" to understand the limits of American power and influence. Now, RIA Novosti RussiaProfile.org's July 24/09 "Russia Profile Weekly Experts Panel: A Battle of the Pipelines"...
"The last three weeks have been rich in developments in the unfolding "battle of the pipelines" to supply natural gas to Europe. Russia, the EU and the United States are locked in a tough struggle to secure domination over the natural gas supply lines to Europe from Russia and Central Asia. Why is there such heated competition for building alternative gas pipelines to Europe? What are Russia's objectives in the "battle of the pipelines"? What are the EU and American objectives? Why is the United States trying to play such an active role in decisions that will not in any way affect the energy supplies to the United States?"
"Russia's energy giant Gazprom has signed a $2.5bn (£1.53bn) deal with Nigeria's state operated NNPC, to invest in a new joint venture. The new firm, to be called Nigaz, is set to build refineries, pipelines and gas power stations in Nigeria."Uh huh. "No, no, it's Frahnk-en-shteen..."
With debt in the USA quickly headed for unsustainable levels, the signs I'm seeing point to Carter-era stagflation as our next economic stop. Now throw in this Bloomberg report:
"After already more than doubling its balance sheet to $2.1 trillion [from about $800 billion], the Fed has pledged to buy $1.25 trillion of mortgage-debt and $300 billion of Treasuries, and finance a $1 trillion consumer-loan program."
This is another bubble in the making, folks - a federal debt and obligations bubble. It was been building for some time thanks to off-balance sheet obligations, and some are now coming home to roost. Even as other items are being piled on. The rocket-powered boosts that bubble has received lately, ups the risk that significant creditors are going to start balking in various ways. The "global reserve currency" rumblings from China are tremor #1.
Ultimately, the choices start to line up between "impose punishing long-term obligations to pay and service this debt," or "inflate it away, and make everyone's dollars worth less." Including yours, of course. Now and Futures has a bunch of useful overall charts that illustrate our slightly bumpy but fairly certain path toward significant inflation. Along with a cogent argument that the rejiggered post-Boskin report CPI index significantly undercounts inflation over the past few years, in terms of most peoples' day-to-day experience and expenses.
How far can this go? My confidence in the sooper-geniuses who brought us to this point, and are now being depended on to get us out, is not wildly high. The good news is that systems tend to have some level of self-regulation, even if it isn't that obvious. But an online historical study has shaken some of my confidence in a couple of key assumptions. It's worth reading...
If you want to peek into the abyss of hyperinflation, there are certainly South American examples like Argentina and Brazil. But the definitive economic cases are European - Germany, Austria, and Hungary during the 1920s, when people took wheelbarrows of bank notes to buy a loaf of bread. Staring down the daily devolutions in those examples is instructive.
"When Money Dies: The Nightmare of the Weimar Collapse" is now available online, for free, which a lot less than Amazon will charge. It's an interesting book, for a lot of reasons.
Instead of dry economics, it offers snapshots of daily life as inflation destroys peoples' savings, and then their daily lives, and finally their livelihood. The accounts include significant excerpts from British Foreign Office records and reports, with a few appearances by Ernest Hemmingway (who wrote for the Toronto Daily Star!).
If nothing else, reading it will help make some of the events in the 1930s make a lot more sense. Madness, it was - but not madness without antecedent.
The other thing that makes it interesting is the very quality that makes it so thriller-like. Every time you think it can't get worse, every time you think that the effects should finally be obvious, the widely-respected "smart people" in charge plunge in deeper, and make things worse. All without serious examination by mainstream opinion, no matter how low things go. After a while, it's like a firestorm, unstoppable by any internal force, and spent only when it runs out of fuel (i.e. willing and coerced creditors). As the book's final pages note:
"Much as it may have been recognised that stability would have to be arranged some day, and that the greater the delay the harder it would be, there never seemed to be a good time to invite trouble of that order.... The conflicting objectives of avoiding unemployment and avoiding insolvency ceased at last to conflict when Germany had both.... The take-off point in the inflationary progress, after which the advent of hyperinflation was but a matter of time, the point indeed when it became self-generating and politically irreducible except for short periods.... lay on the falling curve of political possibility, with which was closely linked the degree of political power and courage that the government, sorely pressed as it was, was able to muster.
What really broke Germany was the constant taking of the soft political option in respect of money. The take-off point therefore was not a financial but a moral one; and the political excuse was despicable, for no imaginable political circumstances could have been more unsuited to the imposition of a new financial order than those pertaining in November 1923, when inflation was no longer an option. The Rentenmark was itself hardly more than an expedient then, and could scarcely have been introduced successfully had not the mark lost its entire meaning. Stability came only when the abyss had been plumbed, when the credible mark could fall no more, when everything that four years of financial cowardice, wrong-headedness and mismanagement had been fashioned to avoid had in fact taken place, when the inconceivable had ineluct-ably arrived."
Weimar Germany is the most extreme example. Understand that I'm not saying we're headed for hyperinflation (though I am willing to predict 15%+ interest rates by the end of Obama's first term), or that Weimar's fate shall be ours. History depends on a lot of specifics, and does not repeat itself. But it does rhyme some, and so watching how things devolved in Germany et. al., and the effects on daily life, are instructive. Instructive in America, and also instructive in Europe as their demographic bubble and debt bubble become mutually reinforcing over the next 2 decades.
Some of my take-aways:
None of these bullet points can convey the impact of reading the actual story, and watching it unfold on page after page. Read it yourself, and decide what you take away...
Q Thank you, Mr. President. In the context of all the multilateral activity that's been going on this week -- the G20, here at NATO -- and your evident enthusiasm for multilateral frameworks, to work through multilateral frameworks, could I ask you whether you subscribe, as many of your predecessors have, to the school of American exceptionalism that sees America as uniquely qualified to lead the world, or do you have a slightly different philosophy? And if so, would you be able to elaborate on it?
PRESIDENT OBAMA: I believe in American exceptionalism, just as I suspect that the Brits believe in British exceptionalism and the Greeks believe in Greek exceptionalism. I'm enormously proud of my country and its role and history in the world. If you think about the site of this summit and what it means, I don't think America should be embarrassed to see evidence of the sacrifices of our troops, the enormous amount of resources that were put into Europe postwar, and our leadership in crafting an Alliance that ultimately led to the unification of Europe. We should take great pride in that.
And if you think of our current situation, the United States remains the largest economy in the world. We have unmatched military capability. And I think that we have a core set of values that are enshrined in our Constitution, in our body of law, in our democratic practices, in our belief in free speech and equality, that, though imperfect, are exceptional.
Now, the fact that I am very proud of my country and I think that we've got a whole lot to offer the world does not lessen my interest in recognizing the value and wonderful qualities of other countries, or recognizing that we're not always going to be right, or that other people may have good ideas, or that in order for us to work collectively, all parties have to compromise and that includes us.
And so I see no contradiction between believing that America has a continued extraordinary role in leading the world towards peace and prosperity and recognizing that that leadership is incumbent, depends on, our ability to create partnerships because we create partnerships because we can't solve these problems alone.
I've just had my attention drawn to a blog called the Smart Globalist. A current feature talks about the economic crisis underway, and some of its global aspects that aren't receiving a lot of discussion yet. From "Asia and Germany Need to Wake Up":
"The Anglos had a party by living beyond their means, and Asia began to get rich while Germany got even richer. But the Anglo consumers were borrowing heavily against their credit cards and the equity in their houses to pay for the party. There was bound to be a moment when they couldn't borrow any more.... It is because stimulus alone would simply perpetuate this unsustainable dynamic that rebalancing must be its companion.
....But the surplus countries need to boost their domestic demand as well. Indeed, because they have excess production capacity that can no longer be easily exported, they actually need more stimulus than the trade deficit countries. And this is where things are getting very difficult. So far, the surplus countries have been resisting.... Of course, friendly persuasion and enlightened self-interest are the preferred avenues. However, if China and other surplus countries insist on doubling down on their export-led growth strategies and resisting currency revaluation, the United States uniquely does hold and ace that can force their hands. It can export inflation...."