Madoff and the global economy

For years, Bernie Madoff, all-around nice guy, pulled billions of dollars of foreign and domestic money into his investment fund. His lure? He promised the implausible combination of good returns and low risk—and people believed him.

Painfully, the allegations of fraud surrounding the Madoff affair are also exposing the fundamental fallacy of the global economy. Like Madoff’s trusting investors, the rest of the world was willing to assume that the U.S. economy as a whole was a low-risk, good-return investment. This belief drove the entire structure of global trade and finance for the past 10 years. And when the subprime crisis showed this assumption of low risk to be false, the financial crisis resulted. [continued…]

Face to face with the Taliban

“Salar is the new Falluja,” declared Qomendan Hemmet emphatically. “The Americans and the Afghan army control the highway, and five metres on each side. The rest is our territory.”

Salar district in Wardak province is 80km (50 miles) south of Kabul. The ­Kandahar-Kabul road that passes through this district is a major supply line for US and Nato troops. The road is reminiscent of the road from Baghdad to Falluja: littered with IED [improvised explosive devices) holes and the carcasses of burnt-out Nato supply trucks and containers.

The frequency of Taliban attacks is higher this year than at any time since 2001. Four British marines were killed last week, three of them when a 13-year-old boy blew himself up in Helmand province. Meanwhile, the area controlled by the Afghan government is shrinking to the fortified islands of the cities. [continued…]

America concedes

On 27 November the Iraqi parliament voted by a large majority in favour of a security agreement with the US under which its 150,000 troops will withdraw from Iraqi cities, towns and villages by 30 June next year and from all of Iraq by 31 December 2011. The Iraqi government will take over military responsibility for the Green Zone in Baghdad, the heart of American power in Iraq, in a few weeks’ time. Private security companies will lose legal immunity. US military operations will only be carried out with Iraqi consent. No US military bases will remain after the last American troops leave in 2011 and in the interim the US military is banned from carrying out attacks on other countries from within Iraq.

The Status of Forces Agreement (SOFA), signed after eight months of rancorous negotiations, is categorical and unconditional. America’s bid to act as the world’s only super-power and to establish quasi-colonial control of Iraq, an attempt that began with the invasion of 2003, has ended in failure. There will be a national referendum on the new agreement next July, but the accord is to be implemented immediately, so the poll will be largely irrelevant. Even Iran, which had denounced the first drafts of the SOFA, fearing that any agreement would enshrine a permanent US presence in Iraq, now says that it will officially back the new security pact after the referendum: a sure sign that America’s main rival in the Middle East sees the accord as marking the end of the occupation and the end of any notion of Iraq being used as a launching-pad for military assaults on its neighbours. [continued…]

Change or deja vu? Obama divides Iran

Iranian national security officials and political leaders have been carrying out an internal debate over how much freedom President-elect Barack Obama will have to change US policy toward Iran, and those who have argued that he will not be able to do so have gained the upper hand since Obama’s announcement of his national security team, interviews with Iranian officials and their advisers reveal.

The outcome of that debate, which is very sensitive to signals from Obama and his national security team, could be a key factor in how far Iran goes in indicating its own willingness to make concessions to Washington next year.

Two different views of Obama and his administration’s likely policy toward Iran emerged within the regime in the first weeks after his election, according to the officials interviewed in Tehran. One interpretation was that Obama’s election is the result of a fundamental shift in US politics and offers an opportunity for Iran to find a way out of its decades-long conflict with the United States.

The other view sees Obama as subject to the control of powerful forces – especially the pro-Israel lobby – that are inherently hostile to Iran. That interpretation implies that Iran should make no conciliatory move toward the Obama administration. [continued…]

The torture presidency

President George W. Bush has launched “Operation Legacy,” which he placed in the hands of his ultimate advisor, indeed his “brain,” Karl Rove. Remember Rove? He’s the man who refused to testify under oath when summoned by Congress to do so and was recently identified in a Congressional report as the plotter behind the U.S. Attorneys scandal, among other trainwrecks. The Rove effort features a 2-page set of talking points which have been circulated to members of the administration’s team highlighting the supposedly major Bush accomplishments which have begun to fill the American media. They start with the contention that “Bush kept us safe” by preventing any further attack on American soil after 9/11. Really?

Let’s just take a look at some of that “deranged” criticism. Indeed, let’s start with the criticism from the man tapped by Bush’s fellow Republicans to succeed him, John McCain. This week the Senate Armed Services Committee issued a powerful report, released jointly by chair Carl Levin and ranking member John McCain, that received the unanimous support of its Democratic and Republican members. The report concluded that Donald Rumsfeld and other high-level officials of the administration consciously adopted a policy for the torture and abuse of prisoners held in the war on terror. It also found that they attempted to cover up their conduct by waging a P.R. campaign to put the blame on a group of young soldiers they called “rotten apples.” Lawyers figure prominently among the miscreants identified. Evidently the torture policy’s authors then enlisted ethics-challenged lawyers to craft memoranda designed to give torture “the appearance of legality” as part of a scheme to create the torture program despite internal opposition. A declassified summary of the report can be read here; the full report is filled with classified information and therefore has been submitted to the Department of Defense with a request that the materials be declassified for release. (Don’t expect that to happen before January 20, however). [continued…]

The perils of Pakistan’s militant crackdown

Pakistan is acting decisively against the militants blamed for the Mumbai massacre: Last weekend, it arrested some key leaders of the banned Lashkar e-Toiba (LeT) organization identified by India and by U.S. officials as implicated in the terror attack; on Thursday it followed that up with a crackdown on the Jamaat ud Dawa (JuD), an Islamic charity that has allegedly functioned as a front organization for LeT since it was banned in Pakistan in 2002. Pakistani authorities froze bank accounts, closed a number of offices and detained dozens of members of the JuD. But while the crackdown may demonstrate the government’s firm resolve to tackle jihadist extremism within Pakistan, moving against the JuD is unlikely to significantly alter Pakistan’s militancy problem — and could even exacerbate it by generating sympathy for those against whom the authorities have acted. [continued…]

Jet-incursion flap highlights India-Pakistan tensions

A purported midnight incursion of Indian air force jets into Pakistani airspace Saturday brought tensions between the two nuclear-armed neighbors to an even higher pitch in the wake of the attacks on India’s financial capital of Mumbai that killed 171 last month. Within minutes, the Indian jets were chased back by the Pakistani air force, say Pakistani officials, and retired air force commanders interviewed on Pakistani TV swore to defend their nation. The Pakistani air force claimed that Indian planes intruded as much as 2 miles (4 km) into the country, but the government says it accepted Indian assurances that the incursions were inadvertent; the Indian government, for its part, denied publicly that an incursion took place at all. Pakistani President Asif Ali Zardari dismissed the incident at a joint press conference with British Prime Minister Gordon Brown on Sunday, calling it a “technical incursion — two planes flying 50,000 miles up in the air; when they turned, they slightly entered Pakistan soil.” Brown was in Islamabad after visiting India and Afghanistan to discuss security in the wake of the Mumbai attacks. [continued…]

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