Monday, September 15, 2008

I Didn't Make This Up-2

"Public service casts a flattering light. Given Wall Street's reputation these days, any image-burnishing is welcome. The small army Goldman Sachs Group [GSG] has sent to Washington--led by the Treasury's Mr. Paulson--has made it look like an incubator of the great and good. Now, Morgan Stanley [MS] is advising Mr. Paulson on how to aim his bazooka. ... Chief Executive John Mack has volunteered some of his top people, including top bankers Robert Scully and Ruth Porat, to help sort out the mess at Fannie Mae and Freddie Mac. ... After all, [MS] is undertaking true pro bono work. It is foregoing some advisory and capital-rasing work for the mortgage companies and, other than expenses, it is getting paid zip", my emphasis, Richard Beales and Dwight Cass (B&C) at the WSJ, 25 August 2008.

See my 18 August 2008 post about MS. Did we learn nothing from the Trojan War? As Virgil said in the Aeneid, "Do not trust the Trojans. Whatever it is [wooden horse], I fear the Greeks even when they bear gifts". "Free" service from MS? Wall Street is a small world. Fannie and Freddie's (F&F) banker, MS, will work "pro bono" to "sort out the mess". Really? Or to push for a F&F bailout? Did F&F give MS permission to take this assignment? I've seen the name John Mack before. See my 29 February 2008 Stephen Cutler post. B&C's article is precious. I laughed reading it. In rereading it, I concluded B&C wrote it tongue in cheek. I note B&C called the GSG Washington contingent a "small army". I've written of GSG's 'bloodless coup". Yes, B&C, GSG took over without firing a shot; brilliant! GSG followed Sun Tzu's Art of War, written 2,500 years ago: 1. "To subdue the enemy without fighting is the supreme excellence". 2. "Nothing is more difficult than the art of maneuvering for advantageous positions". I was so impressed with B&C's article, I thought, "Hmm. We can really terrify the Russians now. Have Condoleeza Rice and Robert Gates swap positions with Henry Paulson (HP)". HP can be our SecDef and SecState simultaneously! GSG sent our troops to Iraq and Afghanistan so it could capture Washington unopposed! The HP-Rice-Gates position swap should scare Czar Putin, who will immediately see he's facing a dangerous adversary in HP and the GSG army, not the clowns who see "training" as a serious military career path, see my 25 August 2008 post.

On 9 September 2008 at 5:09 PM Houston time, Michael Savage began talking about the fact that we no longer have a constitution, except that of Goldman Sachs. That "whatever Goldman wants, Goldman gets". Amen Michael Savage!

Asarco Followup-5

"Mexican mining company Grupo Mexico SAB [GMSAB] has unveiled its plan to win back control of Asarco LLC and take the copper-mining company out of bankruptcy, a proposal that calls for investing $2.7 billion in Asarco to repay creditors. ... In its bankruptcy plan [GMSAB] calls [Vendanta's] proposed sale 'improper' because it has made a higher offer for Asarco", David McLaughlin at the WSJ, 28 August 2008.

"A U.S. judge found that Mexican mining company [GMSAB], the world's third biggest copper company by production, commited fraud against U.S. mining company Asarco LLC--the latest twist in a long-running legal battle over control of the U.S. firm. Judge Andrew Hanen in Brownsville, Texas said the Mexican company defrauded the U.S. firm's creditors when, in 2003, it transferred Asarco's stake in its valuable Peruvian copper company to another [GMSAB] unit shortly before Asarco declared bankruptcy. In Saturday's decision, disclosed on Tuesday, the judge said the Mexican company acted 'to structure and accomplish the ... transfer, knowing that the transaction as contemplated would constitute a transfer in fraud of Asarco's creditors. ... For years, critics of the Asarco maneuver have argued that [GMSAB] put its U.S. unit into Chapter 11 to avoid paying Asarco's liabilities, which amount to paying extensive environmental clean-up charges as a result of more than a century of mining and refining across the Western U.S. ... Attorneys for ... Asarco claimed victory and the company's bankruptcy-court appointed directors are asking for damages of $8 billion following the ruling. [GMSAB] issued a statement highlighting the judge's ruling to deny the plaintiffs punitive damages. ... But the court did find [GMSAB] hindered payment to some of Asarco's creditors. That opens the possibility that Juge Hanen could rule Asarco deserves to get its SPCC shares back. [GMSAB] is appealing that part of the ruling", my emphasis, Joel Millman at the WSJ, 3 September 2008.

I'll say again, GMSAB should never have been permitted to propose anything in this case.

There is less to Hanen's ruling than meets the eye. Absent a punitive damages award, what incentive has a "big shot" like GMSAB to avoid bad behavior? Again, where are the indictments? Hey Johnny Sutton, Texas most hated US Attorney, where are you? Didn't you decline to indict a Mexican national who had 743 pounds of marijuana in his car for drug smuggling, but sent Ramos and Compean, the "Border Patrol Two" to prison? Why haven't Asarco's executives and attorneys been indicted? Did Bush's direct this to secure favor with Mexico? Or is bankruptcy fraud, 18 US 152, only prosecuted against nobodys like Switzer? Hanan should have granted Asarco summary judgment on this one and ordered the SPCC shares returned. Here are my previous posts mentioning Asarco:

http://skepticaltexascpa.blogspot.com/2008/06/bankruptcy-finagling.html.
http://skepticaltexascpa.blogspot.com/2008/06/asarco-followup-2.html.
http://skepticaltexascpa.blogspot.com/2008/07/asarco-followup-4.html.

Sunday, September 14, 2008

Which is the War Party?

Many people believe the Republicans are our "War Party", not the Democrats. Is this true? Let's review the historical record since 1900. Here are: the presidents, each's educational background and wars fought during each's administration.

William McKinley: Albany Law School (LS), Spanish-American War, 6 weeks.
Theodore Roosevelt: Harvard College, Columbia LS, no wars of substance (NWOS).
William Howard Taft: Yale, Cincinnati LS, NWOS.
Woodrow Wilson: Princeton, Johns Hopkins PhD, World War I.

Warren Harding, Ohio Central College, NWOS.
Calvin Coolidge: Amherst, NWOS.
Herbert Hoover: Stanford, NWOS.
FDR: Harvard College, Columbia LS, World War II.
Harry Truman: No college, Korea.
Dwight Eisenhower: West Point, NWOS.
John Kennedy: Harvard, Vietnam. In 1963 we had 16,000 men in Vietnam.
Lyndon Johnson: Southwest Texas State Teachers College, Vietnam.
Richard Nixon: Whittier College, Duke LS, Vietnam.
Gerald Ford: U of Michigan, Yale LS, NWOS.
James Carter: Annapolis, NWOS.
Ronald Reagan: Eureka College, NWOS.
George Bush I: Yale College, Iraq.
William Clinton: Georgetown, Yale LS, NWOS.
George Bush II: Yale College, Harvard MBA, Iraq and Afghanistan.

What do I conclude from this, if anything? Most of our larger wars, WWI, WWII, Korea and Vietnam started during Democratic administrations. Only Iraq I and II and Afghanistan started during Republican administrations. WWI, WWII, Vietnam, Iraq I and II and Afghanistan started during Ivy League college graduates' administrations. Only Korea did not. That Obama has Columbia and Havard degrees is no guarantee he will not take us to war. His anti-military procurement bias is an especially ominous omen! Conclusion: if you want war, elect the Ivy League party candidate.

I remember a popular saying during the 1968 election which shows how little a nominee's promises mean. "They told me if I voted for Goldwater, we would have a half a million men in Southeast Asia. They were right! I voted for Goldwater in 1964 and we have a half a million men in Southeast Asia". Laugh! I thought that was funny in 1968!

California in Crisis

"Arnold Schwarzenegger floated to the governor's office in California on the foam of a fiscal crisis in 2003. ... Everyone knows that when the nation is going to hell in a hand cart, California usually gets there first. But for those who have failed to notice the looming crisis shaping up--not just in California but in a number of states--we provide a summary. ... Meanwhile, the productive, private part of California's economy has been cyclical for decades, while the unproductive government part keeps growing, and spending money it doesn't have. The size of the gap is not a record, but $15.2 billion is nothing for Sacramento to sneeze at. ... The state constitution requires a two-thirds majority in each legislative house to pass a tax increase. ... Schwarzenegger hasn't even been with the Republicans in spirit. He has been more interested in a package of long-term 'reforms,' such as giving the governor power to make budget cuts by decree if deficits loom in the middle of a fiscal year. In addition to the sales-tax hike, his other idea for fixing the immediate crisis was to borrow $15 billion against the putative future profits of the state lottery. ... The Republican legislators, meanwhile, haven't proposed any spending cuts to take the place of the tax increases they so abhor", Thomas Donlan at Barron's, 1 September 2008.

Consider what this portends for California muni bonds.

Saturday, September 13, 2008

Russia's a Big Girl Now

"The recent conflict between Russia and Georgia has brought to the surface a latent conflict among conservatives in the West, one which has proven surprisingly bitter and acrimonious, and which often verges on the irrational. I am neither a Russophile nor a Russophobe, so I have tried to stay out of the fight. ... However, there is another way to view the situation. ... A Russian leader who truly represents the people of his country will do what is in their interests, which will not necessarily accord with those of the USA or the UN or the EU. ... With these ideas in mind, consider the contributions made by Russkiy, a new Russian commenter at Gates of Vienna. ... 'A lot of criticism has been leveled against the current "regime" in the Russian Federation. ... The Russian role in the current "clash of civilizations" is not clear yet. What is definite is that Russians have a deeply seated dislike, bordering on hatred, towards Islam. ... I know that Russia is assissting Iran. I really hate that, but to be honest Russians know well enough what they are playing with; they don't really want a strong Iran. They wouldn't mind America going at it, but it [Iran] is a useful ally when Russia's own interests are threatened by Western powers.' Russkiy illustrates quite clearly what so many people have said here in recent comment threads: the West and Russia have a natural common interest in containing Islam. Russia has an even more immediate problem in that regard, and--in a rational world--would be a natural ally. ... Working with Russia definitely involves making sausages, and the fastidious would need to avert their eyes. ... In a similar vein, it would be prudent to revisit the Balkans and recognize our policy failures there concerning Serbia, Bosnia, and Kosovo. But don't hold your breath. Common sense would tell the West to sit down at the table with the Bear and cut a deal, but common sense is sorely lacking these days", my emphasis, Baron Bodissey (BB) at Gates of Vienna, 1 September 2008, the link: http://gatesofvienna.blogspot.com/2008/09/russias-own-interests.html.

"Pipsqueak Georgia's harebrained and disastrous attack on tiny South Ossetia has produced a full-blown crisis pitting the US and NATO against Russia. In an act fraught with danger, US and NATO warships are delivering supplies to Georgia, watched by Russian men of war. The US Congress may soon vote $1 billion for America's embattled Georgia satellite. ... Russia has some 6,600 strategic nuclear weapons, mostly aimed at North America and Europe,. Besides, the U.S. which invaded Afghanistan and Iraq, and whose air force just killed 90 Afghan civilians, 60 of them children, is in no position to lecture Moscow about aggression. ... Poland agreed to emplace a US antiballistic missile system only 184 km from Russia's border, provoking Moscow's fury. Ukraine and Poland are loudly backing Georgia. ... Topping off this war of words, two of Sen. John McCain's closest rightwing allies, senators Joseph Lieberman and Lindsay Graham, went to Georgia and called for 'tough' meaures against Moscow. They urged isolating Russia for 'aggression' and admitting Ukraine and Georgia to NATO. ... This ugly mess recalls how the great powers blundered into both World War I and II over obscure locales like Bosnia-Heregovina and the Danzig Corridor. The obvious lesson: act with extreme caution. But few are listening as rhetoric sharpens. ... Not only did the clumsy US attempt to expand its influence into Moscow's backyard backfire badly, Washington's childish, petulant response is as inflammatory as it is powerless. The Georgian crisis and empty threats against Russia have aroused strong nationalist passions in Russia, which sees itself increasingly isolated and surrounded by the US and NATO", my emphasis, Eric Margolis (EM) at Lew Rockwell, 2 September 2008.

"Prime Minster Vladimir Putin said Tuesday that Russia will respond calmly to an increase in NATO ships in the Black Sea in the aftermath of the war with Georgia, but promised that 'there will be an answer.' ... 'We don't understand what American ships are doing on the Georgian shores, but this is a question of taste, it's a decision by our American colleagues,' Mr. Putin reportedly said. 'The second question is why the humanitarian aid is being delivered on naval vessels armed with the newest rocket systems'," WSJ, 3 September 2008.

I agree with BB, who agrees with Spengler, see my 24 and 28 August 2008 posts. Our Russia policy is insane We should accept the fact Russia's interests are not ours. Vladimir the Great's public approval ratings are in the 80s. Why? Because Russians believe, rightly or wrongly he represents them. Not: the US, UN, EU, oligarchs or anyone or anything else. How many Americans believe George Bush is "their" president?

Newsflash: It is an act of war to deliver war materials to a belligerent except on a "cash and carry' basis". Where are our international lawyers on this one? Does anyone remember one thing which drew us into WWI? Extending credit to France and England from 1915 to 1917! EM uses some of my very words: backyard, backfire, childish, petulant, inflammatory. Yes, EM! We are in big trouble here. If Obama, AB Columbia, JD Harvard, wins, the war party wins! War party? McCain, would be more likely to avoid war. Unless the current White House occupant, George Bush, AB Yale, MBA Harvard, drags us into a war before 21 January 2009. Stay tuned.

Good questions Czar. Perhaps the Czar remembers the 1964 Gulf of Tonkin incident and is not looking to repeat it.

The DOJ and Attorney-Client Privilege

"The [DOJ] Thursday formally barred prosecutors from pressuring companies and individuals under investigation to waive legal protections, the same day as an appeals court dealt a blow in a case that helped galvanize criticism of the government's aggressive methods. ... Deputy Attorney General Mark Filip ... said the changes 'reflect the department's commitment to two goals that I believe we share: safeguarding the attorney-client privilege, which is so central to our criminal justice system, and preserving the department's ability to investigate corporate wrongdoing effectively.' ... The [Second Circuit] upheld a ruling by New York U.S. District Court Judge Lewis A. Kaplan, who had dismissed charges against 13 former partners and empoyees of KPMG LLP because prosecutors, who were weighing charges against the firm, pressured the firm to cut off payment of the employees' legal fees. ... 'The [DOJ's] track record of five different policies in ten years cries out for a permanent solution that cannot be revised at the whim of each new Deputy Attorney General,' says a statement issued by an advocacy group, the Coalition to Preserve Attorney-Client Privilege. In the KPMG ruling, a three-judge panel unanimously upheld a lower court's decision to dismiss the case after finding that prosecutors had violated the rights of the 13 former executives of accounting firm KPMG who were charged with selling and marketing illegal tax shelters. The judges said they agreed with Judge Kaplan, who had found that prosecutors coerced accounting firm KPMG into refusing to pay legal costs for the executives. ... 'KPMG faced ruin by indictment and reasonably believed it must do everything in its power to avoid it,' the circuit court wrote in its 68-page decision. 'The government's threat of indictment was easily sufficient to convert its adversary into its agent'," my emphasis, Evan Perez and Amir Efrati at the WSJ, 29 August 2008.

"Congratulations to Lewis D. Kaplan, the federal judge whose withering critique of prosecutorial abuse in the KPMG tax-shelter case was vindicated yesterday by the Second Circuit Court of Appeals. ... The practice [cutting off legal fees] also bludgeoned middle-level employees into premature plea deals, lest they be bankrupted merely for trying to defend themselves. .... Justice's long delay in admitting error here doesn't speak well of prosecutorial discretion these days. There is legitimate doubt about the substance of the KPMG cases", my emphasis, Editorial at the WSJ, 29 August 2008.

I am ambivalent about this decision; agreeing the indictments should have been dismissed. The 2nd Circuit apparently missed this: "was easily sufficient to convert"? The DOJ seems to work this way: an AUSA meets "Big Shot" at the supposed "target" company or "Big Shot's Big Law Partner". They decide who "target" will give the DOJ as scapegoat(s) to "avoid indictment". The DOJ and "target" now "kabuki dance" to look as if they are adversaries, when they never were. The designated scapegoat(s) face ruin, under any circumstance. If they fight, each could spend $1-$3 million in attorneys' fees. Then lose. Few middle managers can afford that. The designated scapegoat(s) either: plea bargain, with a small fine and short prison sentence, or the DOJ seeks something to charge them with bearing a potential say, 20-year sentence. "Target" company walks and the AUSA handling the case gets a "Big Law" partnership in 3-5 years. And the cycle continues. The 2nd Circuit found the Feds "violated the rights" of the defendants. Really? Can they sue under 42 USC 1983, conspiracy to violate civil rights? Why should individual AUSAs or for that matter, the responsible US Attorney be exempt from such suits? Why should KPMG's attorneys not be named defendants in such a case? Will the NY State Bar begin disbarment proceedings against all responsible parties? If not, why not?

Admitting error? Give me a break WSJ, the Feds knew exactly what they were doing.

Friday, September 12, 2008

KKR's Product

"Does Kohlberg Kravis Roberts & Co. represent Wall Street at its best? Or at it worst? ... Fourteen times throughout its SEC filing, KKR mentions plans to align its interests with potential shareholders. It gleefully contrasts itself to rival Blackstone Group, stressing how its partners won't be cashing out in the ostentatious style of Blackstone's founders. ... Then there's the KKR that the firm would prefer you forget: That it already has two publicly traded investment vehicles. They've both performed miserably and have needed restructuring. ... Outside investors have put $2.4 billion into KFN since 2004. Its market cap is now just over half that. ... Perhaps one reason for that discount [26.2%] is investors' continued worries about KFN's fee structure, which looks like a remnant of a bygone era. For example, KFN investors pay a 1.75% management fee based on the size of KFN's equity", Dennis Berman (DB) at the WSJ, 2 September 2008.

Let's see if DB's KFN discount conjecture makes sense. Discounting KFN's 1.75% at say 8.5% yields 20.6%. The 26.2% discount may be reasonable, if the market thinks KFN's assets are overvalued and its managment worthless. See my 12 December 2007 post about dual-fund pricing.

California Sprawl

"California lawmakers passed a bill aimed at cutting carbon-dioxide emissions by requiring cities and counties to prevent urban sprawl and improve public transportation. ... Transportation experts say they expect the bill to become a model for state and national policy makers. ... Compact projects built close to public-transportation options are rewarded with fewer regulatory hurdles. ... The bill is an example of how environmental concerns--and the regulatory burdens they entail are forcing opposing factions to hammer out compromises. ... At first, city governments opposed the bill, fearing it would encroach on their authority to determine land use. Home builders said it would raise the costs of bulding and owning a home. But after tough negotiations and much back-and-forth on the bill's wording, both groups are now among the legislation's supporters", my emphasis, Ana Campoy at the WSJ, 2 September 2008.

The bill will do nothing if it does not override local zoning restrictions. Why do small houses west of the Los Angeles "405" sell for $700,000+? Because of their site values! For the state of California to reduce urban sprawl, it must relax zoning restrictions and let multiple dwellings replace one-family homes. "Home builders ... are now among the legislation's supporters". Wow! If home builders support the bill, how can it serve the "people" of California's interests?

Thursday, September 11, 2008

Foreign Policy and Other Realists

"I was one of the National Guardsmen stationed in Hunt Armory in Pittsburgh, Pa., on Oct, 28 and 29, 1962, when the Russian supply ships were heading to Cuba during the Cuban Missile Crisis. ... President Bush did not pay attention to lessons on military strategy or diplomacy when he served in the Texas National Guard. Unless we want a Polish missile crisis, we had best not install so-called anti-ballistic missiles batteries in Poland, when anyone knows that, to be effective, you must also install artillery batteries and missile launchers with a strong compliment of troops to protect them in the event of attack", Irving Rothman (IR) letter to the Houston Chronicle, 27 August 2008.

"Where are the realists? When Russian tanks rolled into Georgia, it ought to have been their moment. Here was Vladimir Putin, a cold-eyed realist if ever there was one, taking advantage of a favorable opportunity to shift the European balance of power in his favor--a 21st century Frederick the Great or Bismarck, launching a small but decisive war on a weaker neighbor while a surprised and dumbfounded world looked on helplessly. ... Yet where are Mr. [Hans] Morgenthau's disciples to remind us that Russia's latest military action is neither extraordinary nor unexpected nor aberrant but entirely normal and natural, that is but a harbinger of what is yet to come because the behavior of nations, like human nature, is unchanging? ... Rather than talk about power, they talk about the United Nations, world opinion and international law. They propose vast new international conferences, a la Woodrow Wilson, to solve intractable, decades-old problems. ... Power is no anwer to the vast majority of the challenges we face, they insist, and, indeed, is counterproductive because it undermines the possibility of international consensus. ... Mr. [Dean] Acheson, as Harry Truman's Secretary of State, had nothing but disdain for the [UN] and for most international efforts to solve problems. As his biographer, Robert L. Beisner, has shown, he considered such efforts evidence of the naive hopefulness of 'people who could not face the truth about human nature' and 'preferred to preserve their illusions intact.' ... Today the elder Bush is hailed by realists because he went to the [UN]Security Council, while the younger George W. Bush is condemned because he treated the U.N. as the delusion Dean Acheson said it was. Realism has pulled itself inside out. ... The original realists had no patience for such Candide-like optimism about the inevitable upward progress of mankind", Robert Kagan at the WSJ, 30 August 2008.

"At the beginning of the 21st century, the West is the sick man of the world. We provide our enemies with the technology and medicine to multiply, give them the transportation and legal rights to move to our countries (after we first showed them through TV and movies how much better life is in our part of the world). On top of this, we pay them to colonize our countries and harass our children, while our so-called leaders ban opposition to this as intolerance, discrimination and racism. ... 'We have now had two generations of Westerners, almost three, who have never known real poverty, hunger, war, or "the knock on the door in the middle of the night." Without a need for survival skills, we had the time and money to focus on ever-more insane political and cultural ideologies. ... But that's what we are now--obsessing about how to be good, not on being powerful. And our "goodness" isn't worth much if the rest of the world is focused on becoming powerful.' ... The 'diversity' industry in the U.S. is worth billions--people with little skills or ability are being given comfy well-paid jobs because of it. ... All you have to do is scream 'racism' and your ticket is punched for life. .. But my blonde, blue-eyed daughter must step aside for the progeny of a Mexican illegal immigrant who deliberately got pregnant and gave birth here so she could access the schools, welfare state, and infrastucture that my ancestors fought, bled and died for. ... That all of this is building up to a mass genocide of our people, no one seems to care, except for the Marxists, who of course, eagerly look forward to it", Baron Bodissey (BB) at Gates of Vienna, 30 August 2008, the link: http://gatesofvienna.blogspot.com/2008/08/what-went-wrong-with-west-and-what-can-html.
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"I have written several essays before on the damaging effects of Western feminism. The massive wave of violence and especially rapes in Western cities now is a form of warfare against whites, and it's about time it is recognized as such. ... 'As in war, the winners seize the indigenous women all the while protecting their own. ... Are not the notorious 'gang rapes' another example of collective violence to European women, just as Russian soldiers did when they seized German women in a devasted Berlin in 1945. A tribe that does not protect its women is behaving as they have already lost the war. Many of us don't know this. But our enemies do.' ... As a Western man, I would be tempted to say that Western women have to some extent brought this upon themselves. They have been waging an ideological, psychological, and economic war against white men for several generations now, believing that this would make you 'free.' The actual result is that you have less freedom of movement and security than ever, as a direct result of the immigrant policies supported by you and your buddies. ... The truth is that any nation is always protected from external aggression by the men. The women can play a supporting role in this, but never more than that. For all the talk about 'girl power' and 'women kicking ass' which you see on movies these days, if the men of your "tribe' are too weak or demoralized to protect you, you will be enslaved and crushed by the men from other 'tribes' before you can say 'Vagina Monologues'. Which means that if you break down men's masculinity, their willingness and ability to defend themselves and their families, you destroy the country. That's exactly what Western women have done for the last forty years", BB at Gates of Vienna, 31 August 2008; here's the link: http://gatesofvienna.blogspot.com/2008/08/failure-of-western-feminism.html.

"One idea that you will never hear expressed by either Barack Obama or John McCain in this presidential race is the notion that a chief task of US foreign policy in the next administration will be to gracefully manage an adversely shifting global power balance and significantly diminished US influence. This is not a hypothetical issue, but one that stares us in the face today. ... Since the Yeltsin years, the US has had a series of policy differences with the Russians, including Nato expansion, the Balkans, missile defense, policy towards Iran and human rights in Russia iteself. Diplomacy, such as it was, consisted of persuading Russia to accept all of the items on our list and telling them their fears and concerns were groundless. The US never regarded the relationship as a bargaining situation in which it would give up things it wanted in return for things the Russians wanted. Like the proverbial Englishman speaking to a foreigner, we thought we could make them understand us by repeating ourselves in a louder voice. ... If we could roll the clock back to before February when Kosovo declared independence with US support, the elements of a bargain were there. .... Nato membership is not a talisman that magically confers protection. It requires operational planning and expensive defense commitments. ... An understanding that may have been possible a year ago is not workable now. ... The fact that Russian feelings of resentment are understandable does not make them morally right. ... We will have to think of ways of supporting Georgia and Ukraine other than by new alliance commitments. And we need to plan in concrete terms how to defend exisiting Nato members--particularly Poland and the Baltic states--from an angry and resurgent Russia", my emphasis, Francis Fukuyama (FF) at ft.com, 2 September 2008. Thanks YS for bringing this article to my attention.

Would IR prefer being Secretary of Defense or State in the next administration?

Indeed.

BB states what many, perhaps most in the West are not even able to think about!

BB refers to what in France is called "tourante", i.e., "taking turns". Many Moslems who emmigrated to Europe believe they have the right to rape European women. This has also been Australia's experience. They see women as "war booty". Read the Koran for Islam's position on "war booty". We are fed nonsense by people like Karen Armstrong, who I believe is owned by the Saudis. These Moslems see welfare as "jiyza" they are entitled to. Moslems make up about 6% of Western Europe's population, but in some countries, like say Sweeden, commit 70-85% of all rapes and robberies! Among the more outspoken persons about the problems caused by Islamic immigration to Europe are: Brigette Bardot (the 1950s "sex kitten") and Oriana Fallaci.

For my money, FF, John Hopkins professor, is a fool. Morality is irrelevant to foreign policy, even if you "channel" Woodrow Wilson. How to defend Poland and the Baltic states? Is FF crazy? I'll say again: did we learn nothing from England's 1939 Polish corridor guarantee? Has FF seen a map of Europe? "Nato ... requires ... expensive defense commitments". Indeed. How do we meet them? With 30-year old F-15s? With a 276-ship Navy? FF should have learned long ago: ignore "intentions", only capabilities count. As George Washington said, "If we desire to secure peace, ... it must be known that we are at all times ready for war". "Fools," said Bismarck, "say they learn by experience. I prefer to profit by other people's experience". We should end Nato. Now! I had more sense than FF in 1960! Whaaaaat? I specifically remember a civil war in progress in the Congo-Leopoldville (now, DRC) over Katanga province's secession. Patrice Lumumba had been deposed in a coup d'etat, but not yet executed, which Wikipedia states was on 17 January 1961. Dag Hammarskjold, UN Secretary General, died in an airplane crash a few months later in September 1961. Living in the United Nation's home, New York City, mankind's "last great hope for peace" we were sent to the UN to see "peace at work" or some such thing. I suppose being sent to the UN was better than Siberia, or a Cambodian reeducation camp. I place my visit in late October 1960. Khrushchev's UN shoe banging incident was 12 October 1960. We were told that the UN let people of various countries come together to talk and avoid war. I remember telling my teacher, "that's nonsense. Whichever country has the biggest army decides. If President Eisenhower and Premier Khrushchev agree, that settles it. And if some country doesn't like it, either we'll drop a bomb on them, or Khrushchev will drop a bomb on them or we'll both drop bombs on them. What the other countries in the world think doesn't matter. If Eisenhower and Khrushchev disagree, either Eisenhower blinks or Khrushchev blinks or we'll have a war. That's it. What the rest of the countries in the world think doesn't matter". Not very evolved by today's standards. My teacher was horrified at what I said. I said this at the UN! I haven't "grown" much in the last 48 years. Having admitted this, I just removed myself from consideration as next US ambassador to the UN. I might like the job. It would be a laugh a minute. And it would give me the right to doublepark in New York City, a very valuable perk.

Mike Garcia Gets Nailed Again

"More guilty pleas were vacated in the long-running prosecution of allegedly improper trading at the [NYSE]. ... In separate orders Monday, U.S. District Judge Sidney Stein in Manhattan vacated the 2006 guilty pleas of Patrick McGagh and Joseph Bongiorno, both formerly of Van Der Moolen, to securities fraud after prosecutors didn't opposed the men's motions to have their convictions overturned. ... A spokeswoman for the U.S. attorney's office in Manhattan, which brought the cases, declined to comment Monday", WSJ, 26 August 2008.

Hey Mike, get a life. Is there anyone in your office who has the good sense to ignore cases like these? See my 14 August 2008 post.