Endogenous Risk

Jon Danielson and Hyun Shin of the London School of Economics, wrote a 21 September 2002 paper, "Endogenous Risk", which distinguishes endogenous and exogenous risk, i.e, risks within and system and those "that arrive from outside the system". The distinction is worth keeping in mind, link: http://risk.lse.ac.uk/rr/files/HSS-JD-02-9-22-1032695086-15.pdf.

Keynesian Claptrap, Again

Michael Shedlock kills some Keynesian claptrap at Mish's on 7 January 2009, link: http://globaleconomicanalysis.blogspot.com/2009/01/families-start-saving-does-this.html.

It's amazing how the same fallacies keep resurfacing.

Meaghan Moron

WC Varones' 8 January 2009 post has a link to a New York Post article about Meaghan Cheung (MC), former New York enforcement division SEC branch chief who supposedly could not understand what Harry Markoplos (HM) told her about Bernard Madoff's operations. How stupid does MC want us to believe she is? MC went to Yale, then Fordham Law School. Let's give MC a pass, she only has only one Ivy League degree. "As for Markopolos' reference to her supposed lack of mathematical acumen, Cheung said, 'Investigations are conducted by lawyers and examiners and investigators. We have experts available to help us'." Link:

http://wcvarones.blogspot.com/2009/01/why-more-regulation-wont-work-meaghan.html.

"Mr. [Arthur] Levitt then states that broker-dealers can no longer be allowed to be audited by 'any CPA' or 'mom-and-pop auditor.' I would remind Mr Levitt that Enron, Fannie Mae and Freddie Mac were all audited by major CPA firms while they issued fraudulent financial statements. It takes one good auditor to discover fraud", Kevin Rosenberg letter to the WSJ, 10 January 2009.

"On the beach a few miles south of Palm Beach, I ran into a hedge-fund manager who was mystified that nobody caught on--not because of the steady returns, but because of the apparently low cost. 'Madoff didn't charge any fees!' he practically yelled, piercing the calm of the gentle waves. And nobody--from shoe shiners to CEOs of investment banks--on Wall Street does anything without collecting a fee. ... They didn't bother to ask or find out how Madoff racked up his reliable returns, and didn't demand statements audited by a reputable accounting firm", Daniel Gross at Newsweek, 12 January 2009.

Did MC ever live in the real world? "'[HM] has no basis to judge what we did or did not do in any investigation because we're not able--as we told him at the time--we were not able to give him updates as to what we were or were not doing with his information. And that is a strong commssion policy, that we do not disclose what is happening in a confidential non-public investigation. And that is for the benefit of everyone'." Meaghan Baby, will you suggest the SEC voluntarily give HM its files?

One SEC problem: it employs too many lawyers, the vast majority of whom are innumerate. So MC has experts. If you are so incompetent you don't know when to call them, what good are they, my 22 December 2007 post: http://skepticaltexascpa.blogspot.com/2007/12/us-injustice-system-at-work.html.

MC is right on the SEC's policy. So? "For the benefit of everyone"? Please. It's to facilitate concealing whatever the SEC wants to conceal. Congress should get off its arse and tell the SEC give HM your files. Now. Let HM, if he is willing, look into this. Then let HM give Congress his findings. And let the heads roll! Call Goldman Sachs (GSG) for a few CNC guillotine rentals. MC, step up, your date with eternity is almost here! My experience with the SEC and (in)Justice Department (DOJ) is like that in the Post article, "Brad Friedman, a lawyer for Madoff's victims, called the SEC's failure to find the fraud stunning. 'They had every red flag in the world,' Friedman said. 'Even with a map and a flashlight, they couldn't find it'." I am sure if GSG's general counsel called Chris Cox saying Madoff defrauded GSG of say $1 million, the SEC and DOJ would have been all over it. Even Linda Thomsen and Michael Garcia would have acted. These agencies are only interested in who the "relator" is, not what's "related".

I agree with Rosenberg. Go through the list. Which major financial fiasco in recent years did not have a large CPA firm auditor? Who will select the CPA firms to audit broker-dealers? The PCAOB, a Big 87654 cartel enforcer? The SEC which runs a rating agency cartel and is hopelessly compromised? Who Mr. Levitt, you? Do you want the CPAs for: Satyam, Freddie, Fannie, Citigroup, AIG, Countrywide, Lehman or Bear doing your audits?

No fees?! Wow. Which accounting firms does Gross consider reputable? Surely none of the Big 87654.

False Precision

"Whirring away at the center of the mortgage meltdown that prompted the current crisis were those theoretical constructs known as financial models. ... What went wrong? As modelers, we see the fantasy of perfection as the fatal flaw seducing both developes and users. The invisble worm of financial modeling is a dark love of theoretical elegance and excessive precision. ... The growing options market created demand on Wall Street for 'rocket scientists,' as the quants were called (in the mistaken assumption that rocketry was the cutting edge of physics). ... Physics, because of its astonishing success at predicting the future behavior of material objects from their present state, has inspired most financial modeling. ... The method works. The discovered laws of atomic physics are accurate to more than 10 decimal places. ... There are no fundamental laws in finance. And even if there were, there is no way to run repeatable experiments to verify them. Financial theories written in mathematical notation--aka models--imply a false sense of precision. Good modelers know that. ... Financial markets are alive. A model, however beautiful, is an artifice. To confuse the model with the world is to embrace a future disaster in the belief that humans obey mathematical principles", Emanuel Derman & Paul Wilmott at Businessweek, 12 January 2009.

Yes. Derman is a professor at Columbia, Wilmott is an author. See also:

http://skepticaltexascpa.blogspot.com/2007/12/of-quants-faith-and-alcoholics.html. http://skepticaltexascpa.blogspot.com/2008/11/ge-unravels.html.

Iran's Caucus Race

"'You'd have to be an idiot to trust the North Koreans,' Secretary of State Condoleezza Rice said recently. Apparently unaware of the irony, she then predicted eventual success for the six-party talks on the North's nuclear weapons program. ... Mr. Obama has pledged more negotiation and multilateralism--less sabre-rattling and 'take it orleave it' unilateralism. While Iraq was Mr. Obama's focal point in the campaign, the biggest problem ahead is countering the proliferation of weapons of mass destruction. ... And where Mr. Obama differs with Mr. Bush, he is only more accomodating to the intractable rogues running Pynogyang and Tehran. This is decidedly bad news. ... The talks are classic multilateral diplomacy, pursued since 2003 with notable deference to North Korea. There's been about as much engagement with Pyonyang as consenting adults can lawfully have. ... On Iran, also for over five years, Mr. Bush has endorsed vigorous European diplomacy. The Europeans offered every imaginable carrot to pursuade Iran to drop its nuclear program in exchange for a different relationship with Europe and America. This produced no change in Iran's strategic objective of acquiring deliverable nuclear weapons. The only real consequence is that Iran is five years closer to achieving that objective. It has now indigenous mastery over the entire nuclear fuel cycle. ... What does Mr. Obama think Mr.Bush and the Europeans have been doing? Does he really think his smooth talking will achieve more than Europe's smoothest talkers, who were in fact talking for the whole time? ... Mr. Bush's flaw was believing that negotiation and mutual concession could accomplish the U.S. objective--the end of proliferation threats from Pyongyang and Tehran--while the objectives of our adversaries were precisely the opposite. They sought to buy valuable time to improve their nuclear programs, extract as many carrots as possible, and play for legitimacy on the world stage", my emphasis, John Bolton (JB) at the WSJ, 2 January 2009.

Not everthing JB. We have not dropped H-Bombs on Tel Aviv, Haifa and Jerusalem. Look into Putin's heart. Is our State Department so stupid it did not realize why Iran talked to us? These talks were endorsed by the Dodo who ran the Caucus Race in Wonderland.

Financial World-RIP

"[C]onsider the strange story of Harry Markopolos [HM]. [HM] is the former investment officer with Rampart Investment Management in Boston who, for nine years, tried to explain to the [SEC] that Bernard L. Madoff couldn't be anything other than a fraud. Mr. Madoff's investment performance, given his stated strategy,was not merely improbable but mathematically impossible. And so, [HM] reasoned, Bernard Madoff must be doing something other than what he said he was doing. ... He had no direct financial interest in exposing Mr. Madoff--he wasn't an unhappy investor or a disgruntled employee. ... To judge from his letter, [HM] anticipated mainly downsides for himself: declined to put his name on it for fear of what might happen to him and his family if anyone had found out he had written it. And yet the S.E.C.'s cursory investigation of Mr. Madoff pronounced him free of fraud. What's interesting about the Madoff scandal, in retrospect, is how little interest anyone inside the financial system had in exposing it. It wasn't just [HM] who smelled a rat. ... The fixable problem isn't the greed of the few but the misaligned interests of the many. ... Our financial catstrophe, like Bernard Madoff's pyramid scheme, required all sorts of important, pluffed-in people to sacrifice our collective long-term interests for short-term gain. ... Everyone now knows that Moody's and Standard & Poor's botched their analyses of bonds backed by home mortgages. But their most costly mistake--one that deserves a lot more attention than it has received--lies in their area of putative expertise: measuring corporate risk. ... The American International Group, Fannie Mae, Freddie Mac, General Electric and the municipal bond guarantors Ambac Financial and MBIA all had triple-A ratings. ... These oligopolies, which are actually sanctioned by the S.E.C., didn't merely do their jobs badly. ... In pursuit of their own short-term earnings, they did exactly the opposite of what they were meant to do: rather than expose financial risk they systematically disguised it. ... As far back as 2002, a hedge fund called Gotham Partners published a pursuasive report, widely circulated, entitled: 'Is MBIA Triple A?' (The answer was obviouly no.). ...The SEC now promises modest new measures to contain the damage that the rating agencies can do--measures that fail to address the central problem: that the raters are paid by the issuers. But this should come as no surprise, for the SEC itself is plagued by similarly wacky incentives. Indeed, one of the great social benefits of the Madoff scandal may be to finally reveal the SEC for what it has become. Created to protect investors from financial predators, the commission has somehow evolved into a mechanism for protecting financial predators wth political clout from investors. ... The instinct to avoid short-term political heat is part of the problem; anything the SEC does to roil the markets, or reduce the share price of any given company, also roils the careers of the people who run the SEC. ... Preserving confidence, even when that confidence is false, has been near the top of the SEC's agenda. ... If you work for the enforcement division of the SEC, you probably know in the back of your mind, and in the front too, that if you maintain good relations with Wall Street you might soon be paid huge sums of money to be employed by it. The [SEC's] most recent director of enforcement is the general counsel at JPMorgan Chase; the enforcement chief before him became general counsel at Deutsche Bank; and one of his predecessors became a managing director for Credit Suisse before moving on to Morgan Stanley. A casual observer could be forgiven for thinking that the whole point of landing the job as the SEC's director of enforcement is to position oneself for the better paying one on Wall Street. ... 'In [HM] conversations with [Meagan Cheung, SEC NY branch chief], I did not believe that she had the derivatives or mathematical backgrond to understand the violations.' ... The problem is systemic. The new director of risk assessment was no more likely to grasp the risk of Bernard Madoff than the old director of risk assessment because the new guy's thoughts and beliefs were guided by the same incentives: the need to curry favor with the politically influential and the desire to keep sweet the Wall Street elite", my emphasis, Michael Lewis and David Einhorn, 4 January 2009, at http://www.nytimes.com/.

Similarly, isn't the SDNY US attorney's job to get a NY BigLaw partnership? Let's ask Mary Jo White. My experience with the SEC and DOJ is: everyone I encountered at either agency was innumerate. IRS agents are much better at what they do. Further, I never encountered an IRS agent who I felt had a hidden agenda. Never have I questioned an IRS agent's integrity. SEC and DOJ employees are interested in who is the "relator" and if the "relator" can do something for or to them. The underlying facts are irrelevant. The SEC opened 671 cases, my 9 December 2008 post, mostly insignificant, not 67 cases, each involving over $1 billion. The rating agencies are paid by the issuers. Aren't CPA firms? What has the SEC done about CPA firm compensation in 32 years? Spawned the absurd PCAOB! A related post, 20 December 2007:

http://skepticaltexascpa.blogspot.com/2007/12/monolines-end-of-the-line.html.

Gaza Madness

"There is little doubt that Israel is morally justified in its offensive against Hamas. No nation can sit by and allow its territory to be rocketed with impunity. Not if it wishes to remain a nation for long. ... Even as Israeli troops push into Gaza following a week of air strikes, it seems highly unlikely that they will be able to decisely defeat the terrorist organization on their souther border. Achieving total victory would require waging war in the way that America fought Germany and Japan--all out and on many fronts until the enemy has no more capacity to resist. ... None of this is beyond the Israeli's military capacity (and Israel could do it without using nuclear weapons). They could also impose a peace at gunpoint. That is, essentially what they did between 1967, when the Gaza Strip was won from Egypt, and 1994, when the Palestinian Authority was created. They could do it again if necessary. ... The generally accepted estimate is that no more than 1,200 Lebanese died, half of them Hezbollah fighters. Even that relatively miniscule toll of 0.03% of Lebanon's population of 3.9 million--probably comparable to the damage now being inflicted on Gaza--evoked world-wide condemnation and accusations that Israel was committing war crimes. ... The Russians have inflicted World War II-level carnage in Chechnya since the mid-1990s, and they don't care what anybody else says. ... Israel is a liberal democracy in the modern age whose miltary operations are conducted under the intense scrutiny of lawyers, judges, opposition politicians, reporters and human-rights activists. And those are just its own internal watchdogs. To these must be added the 'international community,' which monitors Israeli actions with a degree of interest and antipathy reserved for no other state in the world. For all the accusations of brutality that are routinely flung at Israel's armed forces, their conduct has been exemplary by historical standards. ... We now know the settlers' departure did not mollify the extremists. it only emboldened them. ... Israel has always been a state that is one battle away from destruction, and it cannot allow its enemies to think it can be attacked with impunity. ... Israelis have to discard Gen. Douglas MacArthur's famous maxim: 'War's objective is victory--not prolonged indecision. In war there is no substitute for victory.' They will have to settle for a substitute because from their standpoint 'prolonged indecision' is better than the alternatives--the annihilation of themselves, which would be unthinkable, or of their enemices, which would be unconscionable", my emphasis, Max Boot (MB) at the WSJ, 5 January 2009.

"Israel's assault on Hamas is just the latest in a long chain of military clashes, the scripts of which are always the same. ... Sooner or later, the tactics of the Palestinian terrorists work. The voices of protest in response to Palestinian suffering grow louder until international pressure stays Israel's hand. ... Palestinian children are dying today not because of Israeli brutality, but because their own leaders have chosen to use their children as human shields, and their pain as a battering ram against Western sensibilities. ... This reflexive 'understanding' for the Palestinian leaders' abuse of their own people is the heart of the problem. For decades the international community has actively assisted in building the terrorists' unique system of control--over where Palestinians live and in what conditions, and over what they think--by allowing terrorists to turn the refugee camps into the center of the Palestinian war machine. ... With the Palestinians, the U.N. does exactly the opposite, granting refugee status to the great-grandchildern of people who were displaced in 1948, doing nothing to dismantle the camps, and acting as facilitators for the terrorists' goal, of grinding an entire civilian population under their thumb. Nowhere on earth do terrorists get so much help from the Free World", Natan Sharansky at the WSJ, 6 January 2009.

"No phrase represents more of a triumph of hope over experience than the phrase 'Middle East peace process.' A close second might be the once-fashionable notion that Israel should 'trade land for peace.' Since everybody seems to be criticizing Israel for its military response to the rockets being fired into their country from the Gaza strip, let me add my criticisms as well. The Israelis traded land for peace, but they have never gotten the peace, so they should take back the land. ... So called 'world opinion' has been largely a negative factor in the situation. Nothing is easier than for people living in peace and safety in Paris or Rome to call for a 'cease fire' after the Israelis retaliate against people who are firing rockets into their country. The time to cease fire was before the rockets were fired. What do calls for 'cease fire' and 'negotiations' do? They lower the price of launching attacks. This is true not only in the Middle East but in other parts of the world as well. ... Anywhere in the world, attacks such as those on Israel today would not only have risked retaliation but invasion and annihilation of the government that launched those attacks. Today, so-called 'world opinion' not only limits the price to be paid for aggression or terrorism, it has even led to the self-indulgence of third parties talking pretty talk about limiting the response of those who are attacked to what is 'propotionate.' ... Or is the real agends to engage in moral preening from a safe distance and at someone else's expense. Those who think 'negotiations' are a magic answer seem not to understand that when A wants to annihilate B, this is not an 'issue' that can be resolved amicably around a conference table", Thomas Sowell, 13 January 2009 at http://townhall.com/.

"Sentimental attachment to Third World cultures, though, is a Western phenomenon; in the Third World as it actually exists, one encounters other cultures and kills them. It remains to be seen whether the president-elect is a Western sentimentalist, or a Third World anthroplogist who has talked his way into the leadership of the United States. ... Governance in Africa is not about ideology, but about the raw exercise of power. Confronted with multiple crises that threaten the power of the United States, this clever Luo from Hawaii by way of Indonesia may defend his prerogatives more ferociously than anyone expects", my emphasis, Spengler, 12 January 2009 at http://www.atimes.com/.

Michael Savage (MS) on 5 January blasted Jordan's Queen Noor (QN) claiming she lied about 1970's "Black September" movement and Jordan's response. MS said QN said 10,000 Palestinians were killed by Jordan's army in 1970. Wikipedia claims it was 7,000 to 25,000. Contemporaneous estimates were about 100,000. QN's future husband forced about 300,000 Palestinians into the West Bank, then under Israeli control. Let's cut QN some slack. In 1970 she was 19 and at Princeton so may not have heard about the events until years later. QN does not thank Israel for giving the "Palestinian Refugees" a place to live. In two Chechen wars, Russia may have killed 100-250 thousand Chechens out of 1.3 million. Also 300-500 thousand Chechens were "displaced". Where are the UN, EU and OIS protests?

We support the PLO, Hamas, etc. We support terrorism.

Sowell, an economist at Stanford's Hoover Institution explains things in terms evan economists can understand. Or an Uncle Miltie would say, "If you want more terrorism, reward it. You want less, penalize it".

Quoted without comment.

We Ain't Got No Enemies

"As America has been targeted by Islamic forces, America's political establishment refuses to see Islam as an enemy. In fact, today's Western culture adroitly fends off the notion that traditional Islam signifies universal submission to the will of Allah. Regardless of the fact that nominal Muslims readily coexsist with Westerners, the teachings of Islam are unequivocal. The only reason Europe is not under Islamic law today, is because Europe's military power surpassed that of Islam in the sixteenth century. This point is lost on nearly everyone, and shows the extent to which emnity has been marginalized in the West. As noted above, the West has a societal motive for marginalizing enmity. First and foremost, we have become a commercial civilization, increasingly Epicurean. From the perspective of commerce, war is less and less thinkable as the methods of warfare become more and more terrible. ... From the standpoint of atomic warfare, however, commerical civilization is absurd--in the same sense that mounted chivalry was absurd in the face of effective archery or gunpowder. For those who have deep bomb shelters, plenty of underground supplies, and the ruthlessness to sacrifice billions of lives, nuclear war might be viewed as an effective tool for sweeping away commercial civilization in favor of another type of civilization. ... Why would today's totalitarian governments, in Moscow and Beijing, refrain from using nuclear weapons to achieve their objectives in the twenty-first century? What is to stop them? It is well known that the West leaves itself open to annihilation, relying on a retaliatory version of the Maginot Line (i.e., 'mutual assured destruction'). For that matter, the West is not building bomb shelters; neither are they determined to build an effective missile defense. In the dead reckoning of commercial civilization, the price tag on survival is too high. Better to eat, drink and be merry--and hope the fatal day is many years off. ... On the other side of the Great Divide, the haters of the western bourgeoise, the grandchildren of Stalin's and Mao's revolutionary cadres, will never give up their nuclear weapons in favor of genuine peace. If they pretend to disarm, we should not believe them. Nuclear weapons as essential tools in their calling. ... The first 'relevant question' should not be 'which weapon threatens mankind.' The first relevant question should be 'who are our enemies.' ... Fear of nuclear weapons has overtaken fear of the enemy. ... 'Today,' writes [Dianne] Feinstein, 'there are enough nuclear weapons to destroy the world hundreds of times.' This statement is sadly misinformed. Today's U.S. arsenal cannot even guarantee the destruction of the main military targets in Russia", my emphasis, underlined original emphasis, JR Nyquist (JRN), 3 January 2009 at http://www.financialsense.com/stormwatch/geo/pastanalysis/2009/0103.html.

"I read Sen. Dianne Feinstein's Jan. 3 opinion piece, 'Let's Commit to a Nuclear-Free World' in horrified fascination. Please tell me she doesn't think that a 'nuclear-free' U.S. would inspire North Korea's dictator and Iran's mullah's to give up their pursuit of nuclear weapons. I'm certain Vladimir Putin would also welcome such a situation", Bill Brockman letter to the WSJ, 7 January 2009.

"Sen Feinstein makes an unsubstantiated claim that nuclear weapons are 'not a deterrent'. I respectfully, but strongly, disagree with her", Steven Stevens letter to the WSJ, 7 January 2009.

JRN is spot on. I read the Dianne Feinstein (DF) piece JRN refers to which appeared in the WSJ. I had difficulty believing a US Senator, a Stanford graduate, could be so ignorant of America's strategic arsenal's capabilities. DF is a dangerous ignoramus.

I agree with Brockman.

Unlike Stevens, I disrespectfully disagree with DF.

Yves Smith on VAR

Yves Smith (YS) has a 4 January 2009 post at her Naked Capitalism about Joe Nocera's (JN) NYT value at risk (VAR) model article with a link to the underlying article, link: http://www.nakedcapitalism.com/2009/01/woefully-misleading-piece-on-value-at.html. YS's post stands well. I am less favorably disposed to VAR than YS. I see VAR as scientism. Economists try convincing the public they are scientists, when that is untrue. They use mathematics to impress people as if they are nuclear physicists, or mechanical engineers or some such. No one who got an MBA from any of our quantitatively oriented MBA schools: Chicago, Wharton, MIT, Stanford, etc., in the last 35 years should have been taken in by VAR. VAR is technical stock market analysis (TSMA) in drag! If the efficient markets hypothesis did nothing else, it should have convinced people TSMA doesn't pay. Why should applying TSMA techniques to other markets work? Some excerpts from JN article YS left out, "At the very least, the risks that VaR measured did not include the biggest risk of all" the possibility of a financial meltdown". VAR does not measure "risk" at all. It assumes if the world continues as is, the likelihood of returns over a period of time is knowable. It isn't, that's why there is risk! "David Einhorn, who founded Greenlight Capital, a prominent hedge fund, wrote not long ago that VaR was 'relatively useless as a risk-management tool and potentially catastrophic when it creates a false sense of security among senior managers and watchdogs. This is like an airbag that works all the time, except when you have a car accident'." VAR justified financial institutions taking more risks. If traders knew they would be financially ruined if their positions blew up, they would take different positions. "Taleb says that Wall Street risk models, no matter how mathematically sophisticated, are bogus". I agree with Taleb. JN asked Taleb, "If he knew the people at RiskMetrics, a successful risk-management consulting firm that spun out of the original JPMorgan quant effort in the mid-1990s. 'They're intellectual charlatans, he replied dismissively, 'You can quote me on that'." Taleb sees these people more favorably than I. Taleb must believe they believe what they are saying, i.e., they are fools as opposed to knaves. Taleb may be right. "'VaR is not just one invention,' [Till Guldiman, JPMorgan banker] said. 'You solved one problem and another cropped up. At first is seemed unmanageable. But as we refined it, the methodologies got better'." Shades of epicycles. "Aaron Brown ... the risk manager at AQR said, In peacetime, you think about other people's intentionas. In wartime, only their capabilities matter. VaR is a peacetime statistic'." Fool, only consider capabilities. Anyone who knows military history could tell you "intentions" are masked or as Sun Tzu and the Prophet (PBUH) told us, "Deception is the essence of warfare". "Guldiman, the great VaR proselytizer, sounded almost mornful when he talked about what he saw as another of VaR's shortcomings. To him, the big problem was that it turned out VaR could be gamed". Had Guldiman asked me, I could have told him this. "Taleb says that because VaR didn't measure the 1 percent, it was worse than useless--it was downright harmful. But most of the risk experts said there was a great deal to be said for being able to manage risk 99 percent of the time, however, imperfectly, even though it meant you couldn't account for the last 1 percent". These "risk experts" are fools. They are accountants, historical cost accountants! They aren't "managing" anything. They are just playing accounting games using historical data.

Jan Danielson (JD), a London School of Economics, attacks risk measurement on 5 January 2009, here: http://voxeu.org/index.php?q=node/2753. Way to go JD!

The Bleat Goes On

"Be afraid; be very afraid. Not of the rabid jihadis, whether towelhead or the latest, clean-cut version. Those can be dealt with easily--in a healthy Western society, though far less so in India. Be afraid of our ruling elite. The weasels in the legislature, the do-gooder one-worldists in the executive, and the eunuch sophisticates who interpret it all for the rest of us plebs. ... Luckily, less august media than the BBC still exist, with Cambridge PhD international security 'experts' still not on staff. And so the alert reader still had a chance to get a glimpse of the truth without high-level dhimmi varnish: 'Face of evil: Azam Amir Kasab, the only terrorist to be captured alive, has confessed to being a member of Pakistani terror group Lashkar-e-Taiba.' In the West, it's relaqtively easy to guard against jihadis. All it takes is common sense, starting from recognizing Muslim immigrants' fundamental incompatability with the West, and the evil wrought to them and to us by bringing them to the West. But who will guard us from our guardians? ... The see-no-evil syndrome is by no means a British specialty. Naveed Afzal Haq, the Pakistani-American who shot up the Jewish Federation of Seattle in July 2006, murdering two and wounding four while screaming, 'I am a Muslim American, angry at Israel, was not tried as a terrorist but as a murderer with 'bipolar disorder'," my emphasis, Takuan Seiyo, 1 December 2008 at http://gatesofvienna.blogspot.com/2008/12/you-say-mumbai-i-say-bombay.html.

"The obvious is sometimes the most difficult thing to discern, and few things are more amusing than the efforts of our journals of record to keep 'open' minds about the self-evident, and thus to create mysteries when the real task of reportage is to dispel them. ... To get an additional if oblique perspective on this riddle that is an enigma wrapped inside a mystery, take a look at Joshua Hammer's excellent essay in the current Atlantic. The question in its title--'Is Syria Getting Away With Murder?'--is at least asked only at the beginning of the article and not at the end of it. ... Hammer's article is good for a laugh in that is shows just how much trouble the international community will go to precisely in order not to implicate the Assad family in this string of unfortunate events. ... Given these grim and worsening states of affairs, perhaps it is only small wonder that we take consolation in the illusions and in comforting doubts--such as the childlike wonder about whether Jews are deliberately targeted or just unlucky with time and place. This would all be vaguely funny if it wasn't headed straight toward our own streets", Christopher Hitchens, 8 December 2008 at http://www.slate.com/id/2206233/.

"Let's stop being hypocrites; until Muslims started the terrorist attacks, we in the West did not give a darn if they killed their women for adultery or not, if they violated their rights or not, if they hang their thieves, criminals or gays in the main squares--or not. ... And tell me, why should I care about how many times a day some Abdullah from Saudi Arabia 'prostrates' raising his ass to the sky and hitting the ground with his head? As far as I am concerned, he can do this 10 or 20 times a day, or even stay in this position 24 hours, if he likes: the more the better, at least he will not have time to try to commit the terrorist attack. ... We started to notice the violence and intolerance of Islam only when this violence and intolerance started to touch our precious skins. ... 'Let Them Hate, So Long as They Fear'--Caligula. The Ancient Romans were famous for the exactness of their wordings. ... Rome fell when the Romans melted the Golden Statue of Military Virtue in order to pay the ransom to these barbarians. Rome fell when it gave the right of Roman citizenship to the barbarians in exchange for the defense of Rome against other barbarians. ... Guys, the world is never ruled by material wealth and cultural riches. The world is ruled by the Faith and Resoluteness, by the Cruelty to enemies and the Readiness to defend friends at any costs, by the Defiance to death and danger and by Ambition. ... For thousands of years this is what the white people, the Europeans, were famous for. And today--it's not so. ... Yes, some 200 or even 100 years ago our forefathers would reduce to ashes all these ridiculous Al Qayeda, Hezboallah, Hamas and other smaller groups of bandits who dare throw a challenge to the most powerful country of the world. ... together with all their supporters, followers, and simply those who happen to be close to its training camps and bases. ... And those who live in Europe today on their own will, without any pressure, substitute their religion and their entire civilization with the more primitive one and hide their own cowardice and lack of will to fight behind the nice phrases about 'violence can not be fought by violence' and 'if we act like them, we shall cease to be civilized European people, and this is exactly what they want.' ... On the contrary, what they want is that we do not become like them, that we go on thinking as we are thinking now and that we go on letting them kill us. ... If we go on thinking that 'human life is sacred', that 'violence can not be defeated by more violence', that 'human rights have priority' over anything, and similiar neo-liberal nonsense; we shall be attacked again and again, because, yes, Muslims today are dumb, illiterate, poor, stubborn, but they also are cruel, brave, amibitious and resolute. And they have a clear and simple goal: destroy the rival civilization and substitute it with theirs", Cherson, 28 December 2008 at http://www.news.faithfreedom.org/index.php?name=News&file=article&sid=2220.

"The Israelis just struck back hard at Hamas in Gaza. In response, the United Nations, the European Union and the Arab world (at least publicly) expressed their anger at the killing of over 300 Palestinians, most of whom were terrorists and Hamas officials. ... Watching both this week's war and the world's predictable reaction to it, we can recall the Gaza rules. Most are reflections of our postmodern age, and completely at odds with the past protocols of war. First is the now-familiar Middle East doctrine of proportionality. Legitimate military action is strangely defined by the relative strength of the combatants. World opinion more vehemently condemns Israel's countermeasures, apparently because its rockets are far more accurate and deadly than previous Hamas barrages that are poorly targeted and thus not so lethal. If America had accepted such rules in, say, World War II, then by late 1944, we, not the Axis, would have been the culpable party, since by then once-aggressive German, Italian and Japanese forces were increasingly on the defensive and far less lethal than the Allies. Second, intent in this war no longer matters. ... Third, culpability is irrelevant. The 'truce' between Israel and Hamas was broken once Hamas got its hands on new stockpiles of longer-range mobile rockets--weapons that are intended to go over Israel's border walls. Yet, according to the Gaza rules, both sides always deserve equal blame. Indeed, this weird war mimics the politically correct, zero-tolerance policies of our public schools, where both the bully and his victim are suspended once physical violence occurs. According to such morally equivalent reasoning, World War II was only a tragedy, not a result of German aggression. ... But when the payback comes, suddenly warriors are transmogrified into weeping victims, posing teary-eyed for the news camera as they deplore 'genocide' and the 'Palestinian Holocaust.' At least the Japanese militarists did not cry out to the League of Nations for help once mean Marines landed on Iwo Jima. By now, these Gaza asymmetrical rules are old hat. We know why they persist--worldwide fear of Islamic terrorism, easy anti-Westernism, the old anti-Semitism, and global strategic calculations about Middle East oil--but is still doesn't make them right", my emphasis, Victor David Hanson, 1 January 2009, at http://www.realclearpolitics.com/articles/2009/01/the_gazarules.html.

"Maybe this column would get a better reception if it were titled, 'No Endgame for Israel.' Because the quantity of commentary cannot possibly achieve any kind of successful outcome in Gaza is already approaching pre-surge levels of Iraq defeatism. ... Is Mahmoud Abbas's hand strengthened by the mockery Hamas makes of his claims to presidential authority? And, speaking of Palestinian moderates, shouldn't the test of their moderation be a willingness to stand up to Hamas, if only rhetorically? ... Critics of military action point to this damned-if-Israel-does, damned-if-it-doesn't scenario as evidence of the folly of the war. ... Israel will have to practice a more consistent policy of deterrence than it has so far done. One option: for every single rocket that falls randomly on Israeli soil, an Israeli missile will hit a carefully selected target in Gaza", Bret Stephens at the WSJ, 6 January 2009.

"The world-wide protests against Israel's ground incursion into Gaza are so full of hatred that they leave me with the terrible feeling that these protests have little to do with the so-called disproportionality of the Israeli response to Hamas rockets, or the resulting civilian casualties. My fear is that the rage we see in the protestors marching in the streets is far more profound and dangerous than we would like to believe. There are a great many people in the world who, even after Auschwitz, just can't bear the Jewish state having the same rights they so readily grant to other nations. These voices insist that Israel must take risks they would never dare ask of any other nation-state--risks that threaten its very survival--because they don't believe Israel should exist in the first place", Marvin Heir at the WSJ, 8 January 2009.

Quoted without comment.

Quoted without comment.

What does our professoriate not understand? To end terrorism we must kill terrorists and their supporters. In economic terms, raise terrorism's "price" until it no longer pays. If we must sit and watch millions stave to death, so be it. Machiavelli and Caligula would laugh at our "War on Terrorism". Martin Feldstein, my 6 January 2009 post, please read this. Absent cruelty to enemies, the West will not survive. As Michael Savage has said many times, "Only a more savage nation will survive". So it has been and so it is. I read drivel about the Middle East and wonder if the writers read the Koran and Hadith and know anything of the history of Arabia? Either they don't or they're traitors.

I don't care what Europe or the UN thinks. Paraphrasing a statement attributed to Hitler and Stalin, "How many divisions has the UN and how many has Europe it would use"? What do Westerners not understand about "waqf", "hudna" and "takiwa"? Genocide? What happened in East Pakistan in 1971? Or Armenia in 1915? How many Christians were victims of pogroms in what was once Yugoslavia while UN "blue helmets" watched? For that matter, how many Christians were driven out of Iraq since we deposed Saddam? How many chairs of Islamic studies did the Saudis endow at: Columbia, Harvard, Georgetown and who knows where else? Does anyone remember 2002's Jenin massacre? The PLO said 10,000 died. The Israelis, 52. Then the PLO said: thousands, 500 and hundreds. Now the body count. Drumroll please, 55! I have no sympathy for the Palestinians. They're Arabs. By Western standards they are pathological liars. War story time. Before the 1967 war I listened to radio Damascus on an old Hallicrafters S-38B tube shortwave radio, made in about 1950. Every day for three months Damascus said Syria will drive the Israelis into the sea. All of them. The war came. Syria lost. Now Syria's ambassador to the UN appears on Barry Farber's (BF) WOR 710 AM radio show. The Syrian says nothing Syrians say should be taken seriously. Syrians are Arabs. Arabs are very emotional and exaggerate when they speak. We never intended to kill all the Jews. Oh, by the way, return the Golan Heights and control of Lebanon. BF listens politely for a while, then asks the Syrian about current Syrian radio broadcasts. The Syrian temporizes. The BF says something in Arabic, tells the Syrian stop lying, that BF is fluent in Arabic! The Syrian doesn't know what to say. He leaves. Then BF's show ended. If you hold Lenin's concept of "truth", all is accceptable to further the cause of the Ummah.

Israel left Gaza in 2005. What do the Gazans want now? What they always wanted: the death of all Jewish Isrealis. What's so difficult to understand? I would make one change in Stephens "tit-for-tat" program. I sugggest Israel launch one rocket or artillery strike for the first Hamas rocket launched in a day. Two for the second, four for the third, eight for the fourth and so on. Israel should also release footage to the absurdly pro-Palestinian BBC and the US's own NPR, National Palestinan Radio, of each rocket landing site's location. It should leave the rocket there until both organzations have had a chance to inspect it or 24 hours have passed when Israel posts the photos and a map of the site on the Internet with this comment, "At XXXXX on XXX January we notified BBC and NPR of this rocket landing site. At XXXXX on XXX+1 January, BBC and NPR having sent no 'inspectors' to the site we posted this video. This being the second rocket which landed in Israel on XXX January, we fired two artillery shells at Gaza at XXXXX + 30 minutes and XXXXX + 60 minutes". Will the world's bleaters then say, "The second shell was disproportionate. Bad Israel"? The conduct of BBC. NPR and the rest of the world's bleaters reminds me of Walter Duranty's in the 1930s, see my 29 April 2008 post: http://skepticaltexascpa.blogspot.com/2008/04/bushs-walter-durantys.html.

Heir is a Rabbi in Los Angeles. I await the world's bleaters to attack Pakistan's legitimacy. Many people know Pakistan was carved out of India in 1947 to give the Moslems their own state. I have no problem with the existence of Pakistan. Why is it legitimate and not Israel? Study sharia to find out. Whenever I hear of the "two-state solution", I cringe. Why? Because creating a Palestinian state would make a "three-state solution". Whaaaat? Jordan, once known as Trans-Jordan, was created in 1946. Why did the British create Jordan in 1946 and not settle the Palestine Mandate partition? Because there is no partition that has ever been acceptable to Moslems. It's that simple. As Hamas has said it will not rest "as long as Israel controls one square meter of the land between the river and the sea".