Monday, November 10, 2008

Red October Surprise

TPM's Tom Hayden has an excellent article on the Russia/Georgia conflict and the relationship McCain campaign big shot Randy Scheunemann may have played in manipulating it as McCain's October Surprise.

New revelations about Georgia's August war with Russia should send a warning to president-elect Barack Obama about how a commander-in-chief can be manipulated into war.

It now appears that the same neo-conservatives who manipulated the US into the Iraq war on false evidence were directly involved in backing Georgia's ill-fated operation on August 7-8, which eyewitness military observers have described as indiscriminate attacks by Georgia on Russian and civilian positions. The observers reports, first made in August and then October to the Organization for Security and Cooperation in Europe, were disclosed in the New York Times three days after the presidential election. [NYT, Nov. 7]

The new evidence increases the likelihood that the August 7-8 clash between Georgia and Russia was an "October Surprise" that would highlight John McCain's greater foreign policy experience at the height of the presidential election.

The Georgia fighting occurred immediately before the Democratic convention in Denver. McCain, the leading public advocate for Georgia, immediately declared "we are all Georgians now" and promised "to blast Russia." Obama, on vacation in Hawaii, at first called for greater diplomacy, but quickly fell in line with a bipartisan consensus of national security advisers and the mainstream media. Obama's national security adviser, Susan Rice, openly applauded the White House for its rapid response, including support for NATO's inclusion of Georgia and the Ukraine and a one billion dollar emergency appropriation.

The newly-released evidence for the "October Surprise" now deserves deeper reflection by Obama and his advisers, and greater investigation by the mainstream media.
Needless to say, read the whole article. It's pretty sobering even for a very sober news day like today.

The accusations are deadly serious against Scheunemann, but the evidence is compelling enough for a look.

The Bush Doctrine In Action

Of course I'd be remiss if I didn't weigh in on today's NY Times front page story detailing how Bush ordered secret raids in multiple countries since 2004 to go after suspected Al Qaeda terrorists.
The United States military since 2004 has used broad, secret authority to carry out nearly a dozen previously undisclosed attacks against Al Qaeda and other militants in Syria, Pakistan and elsewhere, according to senior American officials.

These military raids, typically carried out by Special Operations forces, were authorized by a classified order that Defense Secretary Donald H. Rumsfeld signed in the spring of 2004 with the approval of President Bush, the officials said. The secret order gave the military new authority to attack the Qaeda terrorist network anywhere in the world, and a more sweeping mandate to conduct operations in countries not at war with the United States.

In 2006, for example, a Navy Seal team raided a suspected militants’ compound in the Bajaur region of Pakistan, according to a former top official of the Central Intelligence Agency. Officials watched the entire mission — captured by the video camera of a remotely piloted Predator aircraft — in real time in the C.I.A.’s Counterterrorist Center at the agency’s headquarters in Virginia 7,000 miles away.

Some of the military missions have been conducted in close coordination with the C.I.A., according to senior American officials, who said that in others, like the Special Operations raid in Syria on Oct. 26 of this year, the military commandos acted in support of C.I.A.-directed operations.

But as many as a dozen additional operations have been canceled in the past four years, often to the dismay of military commanders, senior military officials said. They said senior administration officials had decided in these cases that the missions were too risky, were too diplomatically explosive or relied on insufficient evidence.

More than a half-dozen officials, including current and former military and intelligence officials as well as senior Bush administration policy makers, described details of the 2004 military order on the condition of anonymity because of its politically delicate nature. Spokesmen for the White House, the Defense Department and the military declined to comment.
This is pretty disturbing on a number of levels: Bush ordered the CIA to invade other countries to go after high-value targets when it wasn't "diplomatically inconvenient" to do so, and the order is a tacit admission that anywhere on Earth was a valid target if the intel was right.

This is real Tom Clancy/"24" level stuff here. A secret program to attack anywhere, anytime, in order to hit "terrorists"? This is the kind of stuff you expect to see in video games or cable TV movies with Dean Cain, not actual US foreign policy. And the fact that several of these strikes had to be canceled because they were "too risky, were too diplomatically explosive or relied on insufficient evidence" is ludicrous: the act of invading a sovereign country is an act of war ANYWAY. Since we have plenty of evidence we've done it and other people suspect Bush of doing it, it's kind of annoying to find out that there were strikes even Bush wouldn't authorize.

Does this explain why Bin Laden is still at large? Was he in a country even Bush wouldn't attack? Would President Obama do things differently? How much trouble is Bush in for all this? Where's the "elsewhere" that we did attack?

This raises far more disturbing questions than answers.

Getoutta Gitmo

Obama's first major policy break that will test my "Obama's honeymoon is already over" theory comes courtesy of Spencer Ackermann via Digby: The closing of Gitmo.
It takes guts to leak their plans to do this right out of the gate since I'm pretty sure the right is going to have a monumental hissy fit over it and it could color his relationship with the military and the CIA. And a "controversial new system of justice" sets off a lot of alarms among us civil liberties slags as well. If we get up in arms, we all know it would mean that Obama is being "dragged to the left" by his dirty hippie base. (I hope it turns out to be something that we can all live with.) But bringing the prisoners to the US and giving them a "fair trial" is an opportunity for the wingnuts to try to stage a "gays in the military" style distraction if it's not handled carefully. With the endless gasbag bloviating about Clinton's allegedly monumental leftwingnuttiness in 1992 I expect they are very well aware of this.
I agree. Obama will be ruthlessly hit on closing Gitmo by the new, ultra-galvanized GOP of the 21st century. They will be looking for anything to rally their decimated base and set the tone that Obama is the most dangerous human being on Earth. The only question is will the Village Idiots go along with it? If the Village portrays the Gitmo closing decision as something Obama cannot or dare not do, then he's in trouble. The GOP wants to make Obama 2008 into Clinton 1992 and doom any chance he has of changing any Bush policy whatsoever.

But it's good to see him lead off with something that A) most of the American people want and B) something that could easily backfire on the GOP if they attack Obama too hard on it.

We'll see how this shapes up.

Worst Case Scenario

There's a pretty nasty worst-case scenario for the US Government, and that's the very real possibility it may have to declare bankruptcy at some point during the Obama Administration.
The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.

"The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

"In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off," Hennecke told CNBC.

In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world.

As for a stimulus package, there is not much of an industry left to stimulate back into life, Hennecke said.

Now, this is pretty much the worst case scenario, as I said.

But it's not out of the realm of possibility. We're in THAT much trouble. As Nouriel Roubini notes:

Given this dismal background, let us consider next in more detail the macro outlook for the U.S. and global economy and its implications for financial markets…

General Disarray, General Chaos, And General Motors

GM stock dropped off a cliff today as Reuters is reporting that Barclays Financial forsees a stock value target price of...ZERO.
General Motors Corp (NYSE:GM - News) will likely fall below its minimum cash needs of $11 billion to $14 billion in the first quarter of 2009 if the troubled automaker does not receive additional funding, said an analyst at Barclays Capital, and GM shares fell as much as 31 percent in morning trade.

Barclays' analyst Brian Johnson downgraded GM to "underweight" from "equal weight." Deutsche Bank also cut GM to "sell" from "hold," and saw an equity value of $0 for the stock, according to a report on Reuters could not immediately verify the report.

"While further government assistance would decrease the likelihood of a GM bankruptcy, we believe any government assistance would likely significantly dilute GM's equity," Barclays' Johnson wrote in a note to clients.

Johnson cut his price target on the stock to $1 from $4.

"Of the four broad options for government assistance for GM, we believe that political pressure to protect taxpayers may lead to a solution similar to the 1979 Chrysler bailout, which was accompanied by concessions from debt holders, labor, suppliers and management," Johnson said.

"In any scenario, we see little value for current equity," he added.

In other words, the inevitable bailout of GM will wreck the stock price the way Lehman, Fannie and Freddie, and WaMu went, or the company will go bankrupt anyhow. Either way the stock price is screwed...and we're seeing the market say its last rites as GM about to die.

Here's a sobering thought. It's Deal or No Deal time for GM now. It may not survive the week. This isn't a bank we're talking about here (although GMAC Financing is a big part of the GM issue) this is General Motors. Chrysler is about to fold too, because GM was the company supposed to save it. Now GM is on the brink of folding, and Wall Street is abandoning the company to either a bailout or bankruptcy. Ford may soon follow.

Either way, the pronouncement is grim: the Big Three automakers will be no more shortly.

Bush may have to act on Detroit before Obama is forced to. If the auto industry goes under, millions of jobs could be lost. Even worse, GM seems to be fully expecting a bailout, because it's not even considering filing for Chapter 11 at this point. Officially it's saying it's too big for bankruptcy to handle. Unofficially, it's expecting a massive bailout.

The Price Tag Of Section 382

Via Kevin Drum comes the Washington Post's Amit Paley with an actually interesting story on a little known part of the corporate tax code: Section 382.
The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.

But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.

The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin.

"Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no," said George K. Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartisan congressional authority on taxes. "They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks."

The story of the obscure provision underscores what critics in Congress, academia and the legal profession warn are the dangers of the broad authority being exercised by Treasury Secretary Henry M. Paulson Jr. in addressing the financial crisis. Lawmakers are now looking at whether the new notice was introduced to benefit specific banks, as well as whether it inappropriately accelerated bank takeovers.

Surprise! The Bushies backdoored America once again to give corporate interests $140 billion while the industry was falling apart, and fixing it will of course wreck the proposed bank mergers which in and of itself is now a real problem: these proposed superbank mergers have left just three banks in charge of a disturbing amount of banking market share, and that means fees will go up across the board as banks attempt to recover capital by taking it out of customer's pockets.
he financial crisis that has been sweeping the globe has reshaped nearly every corner of the economy, but no industry has been altered more radically than banking.

Several of the nation's biggest banks have failed or been absorbed by healthier institutions, leaving three giant "superbanks" with an unprecedented concentration of market power: Bank of America, JPMorgan Chase and Wells Fargo.

While that may be good news for emerging giants and the failing companies they helped rescue, the new oligopoly raises troubling questions about regulation and competition, analysts and consumer advocates say.

"Bank fees are going up, up, up, and that’s the danger to consumers as more of these banks consolidate,” says Sally Greenberg, executive director of the National Consumer League. “It’s difficult for the average person to get a bank account that doesn’t involve fees, and if you get into financial distress you’re cooked, and you’ll be ‘fee-ed’ to death.”

According to a recently released banking fee study from, ATM surcharges rose 11 percent this year to an average of $1.97, and the fee for a bounced checks rose 2.5 percent to an average $28.95.

"Consumers are going to be victims of higher and more punitive fees,” Greenberg predicts.

Moreover, many analysts worry about how federal and state authorities, who were unable to prevent the current financial industry meltdown, will be able to monitor the new giant banks that combine a wide range of operations from investment banking to consumer lending.

“Large institutions are impossible to manage prudently, let alone regulate,” says Amar Bhide, a professor at the Columbia Business School.

Gutting Section 382 makes these mergers possible, and these mergers will reduce competition and raise fees for customers. Nice to know you're paying for the bailout coming AND going, as both a taxpayer and a bank customer.

Good work if you can get it.

The Nuclear Reactor In Your Backyard

No, seriously. We're quite literally on the verge of being able to bury a nuclear reactor encased in concrete in a person's backyard actually. We're talking micro-reactors, the newest application of nuclear power.
Nuclear power plants smaller than a garden shed and able to power 20,000 homes will be on sale within five years, say scientists at Los Alamos, the US government laboratory which developed the first atomic bomb.

The miniature reactors will be factory-sealed, contain no weapons-grade material, have no moving parts and will be nearly impossible to steal because they will be encased in concrete and buried underground.

The US government has licensed the technology to Hyperion, a New Mexico-based company which said last week that it has taken its first firm orders and plans to start mass production within five years. 'Our goal is to generate electricity for 10 cents a watt anywhere in the world,' said John Deal, chief executive of Hyperion. 'They will cost approximately $25m [£13m] each. For a community with 10,000 households, that is a very affordable $2,500 per home.'

Deal claims to have more than 100 firm orders, largely from the oil and electricity industries, but says the company is also targeting developing countries and isolated communities. 'It's leapfrog technology,' he said.

The company plans to set up three factories to produce 4,000 plants between 2013 and 2023. 'We already have a pipeline for 100 reactors, and we are taking our time to tool up to mass-produce this reactor.'

With no moving parts and powered by non-enriched uranium, micro-reactors are being sold as a safe and cheap alternative to power remote communities.

Still, it's a freakin' nuclear reactor in your backyard...

Not A Good Day

Well, those 8,000 job cuts I mentioned for DHL are actually somewhat worse: they are closing all domestic delivery services and closing all their domestic hubs resulting in 9,500 lost jobs.

On top of that, Circuit City announced it was filing for Chapter 11.
Circuit City Stores Inc., the No. 2 electronics seller after Best Buy, filed for bankruptcy protection Monday, thus becoming the latest retailer hurt by a worsening economic downturn.

According to the company's Chapter 11 filing with the U.S. bankruptcy court in Richmond, Va., Circuit City (CC, Fortune 500), which currently has 566 operating stores in the United States, will continue to do business and pay its workers while it restructures debt and its business operations.

Circuit City said it decided to file for bankruptcy at this time to ensure that it would have "adequate merchandise flow to stores during the important holiday season."

The November-December holiday shopping months are crucial to retailers since the two months can account for 50% or more of merchants' annual profits and sales.

Just last week the Richmond-based company announced that it would close another 150 stores and cut about 17% of its domestic workforce as it continues to face eroding sales at its stores.

The company said it has negotiated a commitment for a $1.1 billion "debtor-in-possession" (DIP) revolving credit facility to supplement its working capital. The company said the DIP credit will replace the company's $1.3 billion asset-based credit facility provided by its lenders.

The retailer said the credit facility will give it immediate liquidity while it works to reorganize the business and enable it to pay its vendors and its roughly more than 40,000 employees.

This again is only the beginning. You'll see a lot more jobs lost over the next several months. It's important to keep in mind these job losses are on Bush's head...not Obama's.


Village 2.0

While the Village Idiots are still in charge of the DC press and are commanding Obama to let the GOP run the country to show he's "bi-partisan", there's been pushback from some members of the Village, stating Obama should in fact make a bold restructuring of the Federal government, FDR-style.

While you expect that from E.J. Dionne and The Kroog And His Nobel Prize, seeing Newsweek's Fareed Zakaria also say that Obama has a unique chance to reform government totally may mean we could see more Village folks come out for this new path.

I'll have to keep an eye out.


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