Monday, March 17, 2003


I have decided to move away from Blog*Spot and get my own domain, etc. I am in the process of moving things over, but please don't hesitate to visit me at my new home:

I will resume regular blogging tonight and will move archives and links gradually...

Sunday, March 16, 2003


From Azores Island summit...

(more to follow).

Saturday, March 15, 2003


Blogger's block-- all weekend!

Friday, March 14, 2003


Yesterday and today will be most likely a bit light, as the markets are handing it to us...I will, however, provide an analysis of what has happened over the past few days in the evening or tomorrow morning.

Wednesday, March 12, 2003


You have to read this to believe it (via Bloomberg):
Berlin, March 12 (Bloomberg) -- Don Johnson, the American star of the 1980s television series ``Miami Vice,'' is under investigation after credit notes and other securities for about $8 billion were found in the trunk of his car, German customs said. Customs officers stopped Johnson and three people a few miles into Germany on Nov. 6 when they drove over the border from Switzerland, Joerg Groener, spokesman for the Customs Investigation Department in the state of Baden-Wuerttemberg said. ``There's a reasonable suspicion that Mr. Johnson was working for others,'' Groener said. ``If everything is legal, you don't have to transport documents worth this amount in a car.'' The actor and his companions haven't been charged, Groener said. German officials informed U.S. tax and customs authorities and asked for information about the documents, Groener said. Johnson told the officers he was on his way to the Maybach plant of DaimlerChrysler AG, Groener said. It is located outside the city of Stuttgart in Baden-Wuerttemberg, bordering on Switzerland. Johnson, 53, played Sonny Crockett, one half of a detective duo who spent their time busting drug cartels in Miami. Johnson is believed to be back in the U.S., Groener said.

I think $8bn is an inconceivable amount to be had in the trunk!!!


I love this game.


(via World Tribune)

TEL AVIV - The U.S. military has been ordered to launch a war against Iraq on March 18, an Israeli official said in a televised report. Israeli government monitor, Michael Gurdus, reported on late Tuesday that the order was relayed by U.S. Central Command to all American forces in the Persian Gulf. Gurdus told Israel's Channel 2 television that he heard the order being relayed to U.S. fighter-jet pilots and others over U.S. military radio communications he intercepted. Gurdus is regarded as the leading munications monitor in the Middle East and works for Israel radio and television. He has broken numerous stories because of his ability to intercept and understand foreign-language civilian and radio broadcasts and communications. He said the U.S. military, in its radio communications, refers to Iraq as "bad cows" and "kabab", Middle East Newsline reported.

On Monday, Israel's media reported that the United States had demanded that senior Israeli officials stop issuing predictions of when the war would erupt. Israeli defense officials have concluded that the United States plans to strike Iraq after March 17, the deadline set for Iraq to answer questions regarding its missile and weapons of mass destruction programs.

Erdogan--a not so subtle newly appointed Turkish PM-- flat out refused yesterday to unconditionally allow US troops and ships on his country's soil:
Recep Tayyip Erdogan, head of the ruling Justice and Development Party and slated to become prime minister on Wednesday, said Ankara must first form a new government, wait for the Security Council and then complete negotiations for U.S. economic and military aid prior to a parliamentary vote. Erdogan said he could not predict when a parliamentary vote would be scheduled, Middle East Newsline reported.

Northern Iraq is in play!

Tuesday, March 11, 2003


(via BRIDGE)
WASHINGTON (AP)--A federal appeals court Tuesday upheld a lower court ruling that the 600 suspected Taliban and al-Qaida fighters being held in the
Guantanamo Bay Naval Base have no right to hearings in U.S. courts. The U.S. Court of Appeals for the D.C. Circuit ruled that the prisoners are aliens being held outside U.S. sovereign territory and therefore aren't entitled to constitutional rights such as being charged with a crime or having access to a lawyer.

The biggest victory for Bush Administrations is seen in the fact that the ruling spans accross categorizations, e.g. apparently one doesn't have to be categorized as an enemy combatant to not have the rights...

I am not a lawyer, so I don't really get that last part. The way I interpret it is that, coupled with a new Patriot Act II, one can be detained with no explanations given and no information divulged. No access to basic rights, etc. Scary...

Looks like our ships didn't waste that time standing by the shores off Turkey in the past month or so...As Abdullah Gul, the "outgoing" Turkey PM makes headway for the Recep-- Tayyip Erdogan-- expectations of a more favorible to America vote abound. Mr. Erdogan is very much in favor of letting the American troops use Turkish soil for launching a second front against Saddam Hussein and is expected to "make changes" in the cabinet. However, after taking the office, the newly formed PM didn't rush into the opened Bush's arms, but rather asked' money, ehhem-- "more assurances" from Washington.

I guess it's back to the good ole sticks and carrots. We feed carrots ($15bn aid package to Turkey) to the good guys and show sticks (no food for N.K.? boycott of French products?) to the bad guys.

Oh, what a tangled web we weave...

According to UNICEF, North Korea will run out of food supply by June. UNICEF's appeals for more food have not been successfull thus far, as contributors are reluctant to give food. The food levels are on extreme lows, as floods, droughts and famine exhausted North Korea's supply. The largest food contributor (more than half) of food supplies to NK is...America.

So, it looks like North Korean government wants to bite the hand that feeds them...again.

CNN has a piece on us...

Monday, March 10, 2003


I am feeling sick at the moment, either with cold or allergies, of sorts. Got a lot to say, but too drowsy to formulate...

Josh Marshall's explicit change of stance on war to anti has proved to be a necessary catalyst for the "fence-sitters" to finally switch into that camp. The liberal -hawks have "agonized" (as they like to say) over being pro war and have finally caved in. Kevin, Josh and Sean-Paul have now all officially changed their war stance to "opposed". It should be interesting to see the extent to which it'll change their posts. In all honesty, I think probably by not much.

Saturday, March 08, 2003


It's a beautiful & crispy, end of winter-like day in New York today. The sun, out early as days are getting longer, is brightly lighting up the skies and building rooftops. I can still see some snow lingering out there, trying to desperately hold on to the last of of winter days, but it knows the spring is near. I can smell it in the air. I can see it in people's eyes. I can see it on some people, as the first ray of sun in New York usually means you'll see some people wearing shorts, tank tops and open toe shoes...

As I was looking outside my window a minute ago, I was suddenly overcome with sentimental, nostalgic feeling. It's the same feeling I had when I landed in NYC for the first time-- twelve years ago. I looked outside the plane window and felt that I was home. I dreamt about coming to NYC as a child, picturing myslef on the streets of the city as I was looking at the photographs taken by my uncle, who emigrated earlier. I thought of New York as America; America was New York! Now, having lived here for over a decade, essentially having lived here my whole adult life here thus far, I have a sense of belonging. This is my city! The city, which opened it's door for a Russian refugee, wearing white socks with a suit and thinking "cleenex" was the greatest invention of mankind, is my home now. I am a New Yorker! Proud and loud! No matter where I go, no matter what I see-- I always bring New York with me, I always come back to New York in my thoughts.

So, I decided to snap a photo and share it with all of you. This is New York as I see it now...home.

According to this NYTimes editorial, the worst-case scenario of a "deadlock" in UNSC over passing another resolution authorizing the use of force in Iraq is...the "deadlock" itself:
With yesterday's barely veiled French and Russian threat to veto a war resolution, the United Nations Security Council appears to be rapidly approaching a crippling deadlock over Iraq. That would be the worst of all possible outcomes. It would lift the diplomatic pressure on Iraq to disarm and sever the few remaining restraints that have kept the Bush administration from going to war with its motley ad hoc coalition of allies.

Surely, having an amicable circle jerk over at the Council is more important that disarming Hussein, stabilizing the region and sending a clear powerfull message to all potential would be proliferators that they better think twice before embarking on the path of defiance.

Yesterday's Blix testimony before UNSC produced some worrisome facts:
A key piece of evidence linking Iraq to a nuclear weapons program appears to have been fabricated, the United Nations' chief nuclear inspector said yesterday in a report that called into question U.S. and British claims about Iraq's secret nuclear ambitions.

Documents that purportedly showed Iraqi officials shopping for uranium in Africa two years ago were deemed "not authentic" after careful scrutiny by U.N. and independent experts, Mohamed ElBaradei, director general of the International Atomic Energy Agency (IAEA), told the U.N. Security Council.

This discovery will, surely, be detrimental to US/UK & allies effort to remove Saddam. Read about it in Washington Post or Guardian. The only difference (crucial)between the two sources is that WaPo gives a a more accurate, complete citing of Blix's testimony, where he acknowledges that even though the purchases seemed to be forged, the documents themselves were delivered to inspectors for investigation by US/UK authorities in "good faith".

Friday, March 07, 2003


Here’s Russian communist Pravda’s (“truth”) credible report on how America has been killing Iraqis for the past decade. And a bullet point summary for those who’s got no time to waste (unlike me) for reading the whole thing:

• Viruses and mice dropped by parachute against Iraqi agriculture
• Chemical weaponry deployed by the United States of America
• Depleted Uranium has caused hundreds of thousands of deaths

Have a read.

Now, the rumor is US is denying the capture of OBL's sons...

Zehir (from Pakistan) says Saad and Hamza were captured, the former being a potential OBL's replacement...Washington has disputed the rumors...

Bin Laden's sons are arrested in Afghanistan.

NK just announced its planning to step up its anti-ship missile testing this weekend in the Sea of Japan. US announced its plans to resume reconnaisance flights this weekend over the Sea of Japan.

Japan announced its plans to have a nice and relaxing weekend on the beach and have a little swim in the Sea of Japan.
The CIA and Pakistani Army are electronically tracking the large caravan of people on foot and horseback through the rugged mountain area of Pakistan between the borders with Iran and Afghanistan. Osama bin Laden may be traveling with the caravan and may be on foot.

Postscript: I wonder whether OBL's presense there will expedite Iraq's conflict?

Totally unexpected report today vis-à-vis yesterday. Yesterday’s economic data came in as fully expected: non-farm productivity, unit labor costs, jobless claims, and factory orders all seemed to line up with economists’ predictions and it was largely a non-event for the markets.

In overnight trading, the dollar got hammered after Bush’s speech last night. Th “we don’t need UN’s backing” sentiment filtered through currency markets immediately and “greenback” fell to 4-year lows against “euro”. In the morning (pre-numbers) we were at about $1.1040/euro.

So, what happened today? Devastating Labor Report!

1. Unemployment Rate: 5.8%
2. Non-farm Payrolls: -308k
3. Manufacturing Payrolls: -53k
4. Avg. Hourly Earnings: 0.7%

Unemployment Rate
No surprises here. Still 8.5mm Americans are unemployed and the rate rose by a tenth of percent. This is discouraging news, especially given the breakdown:

Private employment down 321k (from up 174k last month)
Goods producing employment down 104k (from up 19k last month)
Civilian employment down 127k (from up 1,097k last month)

Non-farm Payrolls/ Manufacturing Payrolls
Some of this is attributed to reservists. Department of Defense cites about 175k being called up (BLS says it’s 150k), so that would impact the labor force. However, even after taking this conservative estimate out, the decline is enormous and is, certainly, beyond any expectations. Leading indicators signal further continued slump, which is bound to create income pressures.


There are significant risks to US economy in falling back into recession:

• Energy prices, staying at these levels can take off 1% off GDP
• Credit tightens, as EBITDA of major industrials and manufacturers can be halved due to rising operating costs
• Rising unemployment puts strain on household income, further eroding confidence
• Consumer resilience will abate and retail sales will suffer
• Geopolitical pressures will exacerbate any economic slump and will make it hard to treat economic and political impacts as two discrete variables.

Fixed Income markets have skyrocketed post-numbers today: Eurodollar futures are up 9bp-12bp with curve steepening. Fed funds futures have implied at least “bias” change in March FOMC and 25bp cut by summer. I think once the cut happens, the bloodthirsty market will look for more. 50bp is not out of the question, although not priced in yet.
5 year UST yield dropped to 48 year! Lows.
The dollar is still bleeding and is breaking $1.1062/euro all morning (after-numbers).

We lost 308k jobs-- worse than after September 11th...(more later)

Pakistani and American agents apparently arrested 9 prominent al-Qaeda members, one of which is speculated to be either Bin Laden or his son:
Islamabad, Pakistan, March 7 (Bloomberg) -- Pakistani and U.S. agents arrested yesterday nine `prominent' members of al-Qaeda near the Pakistani border with Afghanistan, Spanish news agency Efe reported, citing unidentified members of the Pakistani security forces.Some Pakistani government officials said one of the people arrested is ``very important'' and may be Osama bin Laden or his son, and other Pakistani officials denied that information, Efe reported. Pakistani and U.S. forces have intensified their search for bin Laden along Pakistan's southwestern border with Afghanistan, the Associated Press said, citing unidentified Pakistani intelligence and military officials.The troops, acting on information from captured al-Qaeda leader Khalid Sheikh Mohammed, are searching for bin Laden and his
son Saad along a 560-kilometer (350-mile) stretch from the town of Chaman in Baluchistan province to the Iranian border, AP said, citing a Pakistani military official.

Thursday, March 06, 2003


This week, Guinea has replaced Germany at the helm of UNSC. It's close ties with US and cautious ex-colonial relationship with France should buy America a cheap ($29mm in economic aid) vote...

Guardian says the Brits built Falluja's chemical plant in Iraq:
The Falluja 2 chlorine plant, 50 miles outside Baghdad, near the Habbaniya airbase, has been pinpointed by the US as an example of a factory rebuilt by Saddam to regain his chemical warfare capability. Last month it featured in Colin Powell's dossier of reasons why the world should go to war against Iraq, which was presented to the UN security council.

Spy satellite pictures of Falluja 2 identifying it as a chemical weapons site were earlier published by the CIA, and a report by Britain's joint intelligence committee, published with Tony Blair's imprimatur last September, also focused on Falluja 2 as a rebuilt plant "formerly associated with the chemical warfare programme".

This might be an interesting program to watch. Ichy and Scratchy Bill and Bob will debate whether one can cut taxes and fight the war at the same time. Mkay...

This article in Slate says it all:
With war against Iraq approaching, it is well to bear in mind that "rumors I heard from people who sort of know this stuff" is the sourcing for 95 percent of speculation about what is in store. Nevertheless it seems possible to make reasonable forecasts of how an assault on Iraq might go. The air campaign is likely to be dramatically different from the Gulf War, because air weapons and tactics have evolved significantly since 1991. A land campaign, by contrast, may not differ materially from 1991. Army and Marine weapons have not changed much, although advances have been made, including new technology for what the Pentagon internally calls "network-centric warfare," a catchphrase you may hear often this spring.

This piece talks about everything from timing to tactics to using high precision guided JDAMs to anti-tank "skeet" munition. It also discusses pros/cons and differences between Kosovo, Afghanistan. I think the article is both pretty good and scary: we have a lot more of a lot letter stuff.

Sean-Paul has gives his take on invading vis-à-vis not invadingrisks/rewards in this post.

I am not sure whether reward is an appropriate noun to use in this case, i.e. I can’t see how rewarding the “possible repair of US-‘old’ Europe relations” would be; or what kind of reward the “American image improves globally” point brings to us. The rewards of this scenario are a tough nut to crack. I think that the rewards of non-invasion need to be filtered through the “opportunity cost”-like risks, thereby, making the crystallization of the former much more difficult.

Semantics aside, however, I agree with most of Sean-Paul’s pros/cons and disagree with some:


This scenario risks, I agree, lie in: significant loss of credibility; psychological empowering of extremists; will deal a strategically devastating blow to our interests in Middle East; destabilize the region. I also think that this scenario might jeopardize deterrence and containment of North Korea, as a logical consequence of credibility loss.

The rewards, as I mentioned, are mainly factors that will allow America to more effectively shift the focus elsewhere. However, in my opinion, this requires enormous assumption that once we retract our war bid for Iraq, the latter will seize to be an imminent threat or problem. I think this is impossible and containment of Iraq will be a huge burden as well. I also think that “better focus n war on terror” and the question of (non) invasion are two discreet and independent variables.


In the risks portion, of course, the arguments are abundant, but nonetheless, not all of them I perceive as risks. For example, I think that all of the “image” arguments are largely irrelevant and “NATO blows up” anyway.

I see “economic consequences” as risk only maybe in the context of “US is forced to absorb the full cost of the war and reconstruction effort”. Other than that, economic risks will be more pronounced in the non-invade argument (oil prices volatility will remain and at these price levels a full percentage point in GDP might be taken off).
In the case of invasion and, arguably, quick resolution, energy prices are likely to come off.

The rewards of invasion are also self-explanatory. The only quibble I have is again semantically. In the ninth point, the use of word “imperial” assign a negative connotation, thereby undermining the reward factor itself and implying further colonization opportunities, which I disagree with.

European Central Bank (ECB) lowered interest rates today by 25bp, which took dealers by surprise. The expectation was 50bp, but ECB is ECB.

Swiss National Bank (SNB) unexpectedly cut rates by 50bp and narrowed the band to 0-75bp!!! The statement didn't come out till 10min. later and euroswiss futures (normally lethargic) were propelled by 17-20bp initially and now settled at 11bp up (with front March contract up 17bp)!

U.S. Equity futures are down before the open on the back of lowe DAX, which should be ECB's lesson for dissappointing markets...

Wednesday, March 05, 2003


Here I was, browsing my favorite blogs, after I had a couple of free minutes to post something, as I realized that I was neither timely nor original. I've been beaten to the punch by OxBlog. What's even worse, I've late on the news by a day! So, rather than trying to wallow in my pity, I would like to rationalize it. What can I blame it on...The fact that I am working and can't get a free minute? Or that I am outweighted by 3:1 ratio? I think I could use those excuses, but that would be a blatant lie: OxBlog-ers are better and smarter. Oh, but are they better looking as well? ;-) (kidding)

So here are the timely links:
T.A.T.U post link
VILLEPIN post link
T.A.T.U.: almost slipped below my radar

It's sort of funny to see how this "bubblegum duo" as New York Times called them has swept the world of pop music. I saw this lesbian couple in their original video, in Russian, which was ran over and over on NTV-- Russian Television station, that my parents subscribe to. I must admit that I was impressed. Russian pop music estrada usually imitates Western, primarily American singers' styles, songs, and even music melodies. These girls, however, had what I thought could be a "one song wonder", but worldwide. Sure enough, they're everywhere in Europe. Their single is being played on all radio stations in England, etc. and I am thinking: "pretty cool". Russians once again have been able to stake a claim on originality.

You can also imagine my surprise, when I unexpectdly saw them during Grammy's, wearing these same exact t-shirts (as above), which use "a potent Russian expletive to denounce the possible war in Iraq". Now, as I remember, the Awards show had been very closely monitored for any potentianl anti-war messages. The artists have been instructed not to use airtime for any political statements. Yet, T.A.T.U managed to make a splash. I guess sometimes it's good, when the market is not overly saturated, huh?

An interesting article about Dominique De Villepin from WaPo, which reads almost like an ode. Here's an excerpt:
In a sense, the French should be thanking Bush. They haven't had a foreign policy success like this in years, and they seem ready to lead their own coalition of the willing in challenging U.S. policy. De Villepin suggests that Russia will join this coalition -- becoming a nation of old Europe at last. "I don't want to speak for the Russians," he says, "but I think their choice is for a multipolar world . . . and they are very attached to the idea that the U.N. should make decisions."

Washington needs the world more than it may realize, de Villepin argues. "America can't do it alone," he contends. "If America could all alone solve terrorism, stop proliferation, make peace in the Mideast, solve the problem of AIDS, then I'll sign on the bottom line."

Both Non-Manu ISM and Beige Book released today were almost a non-event:

Non-Manufacturing ISM came in as expected at 53.9
Beige Book offered no new insights on the state of economy:

- economic activity subdued
- geopolitical pressures
- high energy costs
- caution in hirings
- slow spending

Fixed income markets, I think reacted more to Powell's speach and are up 2-3bp on it...Equities are flat...

According to the published UN study on world population and migration trends, European demographics are looking anything, but boring. Matthew Lynn from Bloomberg reports:
Over the next half-century, the Continent's population is likely to change more than at any time since the mass emigration to the U.S. in the late 19th and early 20th centuries.

UN’s forecast goes out to year 2050 and bases its findings off both “fertility rates” and “immigration trends”. Here’s the breakdown of countries expected to have the most impact:

Italy: The population is estimated to dwindle down from 57mm to 44mm. Italians seem to be reluctant to have babies.
Germany: Set to take a 4% hit population (from 82mm to 79mm)
Spain: An almost 8% change is expected over the next 47 years.
France: French population is expected to increase by circa 8%-9%
Britain: There will be more of those (66mm from 58mm)

Eastern European countries seem to be in big trouble: Baltic republics’ population is expected to halve! So should populace of other recently added to EU ex-communist countries. Remember: migration plays significant role in this study, which implies certain economic forecast for the region (more on that later).

Another surprising finding from the report is that European, particularly Eastern, population is growing older. The average age by 2050 is estimated to be 50…. In France and Germany, 10% of the population is expected to be over 80 years old!

As UN is projecting the world population to actually grow by over 3bio by 2050, where is this growth coming from? And are the geopolitical and economic implications of the aforementioned changes?

Eastern and South-East Asian countries will contribute the most. The top six are: India, China, Pakistan, Nigeria, Bangladesh and Indonesia. America is seventh, with 80% growth attributed to immigrants and their families.

Economic Implications
The “cause-and-effect” relationship gets blurry when trying to understand the primary impact: are population changes the outcome of weakening regional economies or visa versa? One thing is clear—forward looking prognosis is grim:

1. Italy, Spain and Eastern European economic expansion is limited, if not halted. As EU become more and more flexible with border controls, the westward migration is bound to be massive.
2. Investing in those countries’ assets or real estate will not be profitable. However, if one is in the market to own outright—“cheap” is the buzzword.
3. Germany is in particularly peculiar situation. Double digit unemployment and budget deficit already in breach of Maastricht Treaty and growing might be a trap for the country’s economy.
4. Economic rift is likely to occur between “growing” and “contracting” European countries.

Geopolitical Implications
1. Slow birth rate in European countries and increasing immigration implies structural demographical changes—in all likelihood, Arabic demographical increase will filter through emigration from Arab countries to Europe.
2. As assimilation process of the aforementioned ethnicities is virtually non-existent (they’re “fifth columnists” as one of my friends put it), this brings instability to the host countries’ political arena.
3. Old alliances will be broken, as they deem irrelevant and new ones will be formed based on necessities, e.g. Italy, Spain and Eastern European (NEW EUROPE)

I have never done a demographical study before, nor have I any expertise in it. However, I found this newly acquired knowledge fascinating and would be interested in learning more. Any references are appreciated.

Tuesday, March 04, 2003


George F. Will from Washington Post wrote this amazing article today. I highly urge everyone to read it, please. It's called "Permission From the Powerless" and here's an excerpt:
As the world waits to see whether the United Nations will cudgel Iraq with a "second" resolution, which actually would be the 18th, President Bush weighs when, not whether, he will order an attack on Iraq that Congress authorized by much larger majorities than his father achieved on Jan. 12, 1991, authorizing the Gulf War. And the president's domestic and foreign critics, showing an amazing tolerance for cognitive dissonance, fault him simultaneously for acting as though the United States can be the world's constable -- and for allowing Iraq to divert him from the task of solving the North Korean crisis.

America has had "the most successful foreign policy of any major country" not just because of its strength but because "it has never had any objective except not to be threatened and when threatened, to remove the threat." And it "does not believe in durable coexistence with a mortal threat."

...from Paul (via Centerpoint).

Here's Saddam Hussein's message to Iraqis on the eve of Muslim New Year...Did anyone see the "happy new year" wishes? All he talks about is Bush, "the tyrant of this age". I wonder if it'll stick...

This just in (via Paris (AP) ):
Le Canard Enchaine quoted President Jacques Chirac as telling a small private gathering on Feb. 26 that a veto would be pointless because it wouldn't stop U.S. President George W. Bush from launching military action. "France is doing everything it can, but the problem is that it is impossible to stop Bush from pursuing his logic of war to the end," Chirac was quoted as saying by Le Canard, a satirical newspaper that is known to have well-informed sources. Le Canard also quoted Foreign Minister Dominique de Villepin as privately telling a group of conservative lawmakers on Feb. 25 that "using the right of veto would be shooting the Americans in the back."

This just in (via Bloomberg--Fox News):
U.S. is sending B-1, B-52 squadrons to Guam.

David Adesnik from OxBlog has a very thorough (as always) response on "liberal hawk" discussion floating around in the Blogosphere (see here and here: I think all relevant articles are re-linked there as well).

I also would like to add some more facts that speak to Bush's dedication to "promoting democracy" in Middle East and "liberating Iraq" (in addition to the ones listed in David's article), in hopes preventing this :

1. I have written about post-war Iraq management here, where I provide some useful links, e.g. CFR and Marc Grossman.
2. Stephen J. Hadley, Assistant to the President and Deputy National Security Advisor (via CFR)
3. Bush's speach at AEI.
4. Bush's recent radio address, where he reiterates his intentions again.
In order to minimize the suffering of Iraq's people, the United States and our coalition partners stand ready to provide vital help. We will deliver medicine to the sick, and make sure that Iraq's 55,000 food distribution sites, operating with supplies from the oil-for-food program, are stocked and open as soon a possible. We are stockpiling relief supplies, such as blankets and water containers, for one million people. We are moving into place nearly three million emergency rations to feed the hungry. The United States and Great Britain are providing tens of millions of dollars to the U.N. High Commissioner for Refugees, and to such groups as the World Food Program and UNICEF, so they will be ready to provide emergency aid to the Iraqi people.

Monday, March 03, 2003


Over the past weekend Iraq destroyed 10 of the illegal Al Samoud missiles. Some see it as “proactive” move. I see it as another “strategic” move.

Iraq has once again shown its utter contempt for UNSC, which underscored the latter’s irrelevancy (and this is not my hawkish rant), by claiming that:
Iraq may stop destroying the missiles, banned because they fly farther than allowed by the United Nations, if it believes Washington is determined to go to war anyway.

Maybe it’s just me, but here’s my take on it:

Saddam has built and been in possession of illegal long-range missiles for the past 12 years. He has successfully lied to and avoided UN inspections during that period. Currently, giving in to consistent US pressure to disarm under direct threat of imminent war, Saddam has chosen to destroy the missiles. However, he demands an explicit guarantee that US will withdraw the very threat that makes disarmament possible?
In a nutshell, Saddam is telling us that seventeen UNSC resolutions are meaningless and utterly irrelevant to disarmament process.

Saddam says he will disarm only if he secures a “non-attack” guarantee from US.
A threat of attack, however, is the only guarantee US has for potential disarmament.

What next?

As the geopolitical uncertainty weights in on the consumer confidence and the economic rebound might be deferred later due to looming prospects of war in Middle East, today’s economic releases are nothing short of my expectations.

First things first: Capture of one of al-Qaeda’s leaders and alleged mastermind behind 9/11, coupled with Iraq’s destruction of 10 al-Samoud missiles over the weekend gave a strong bid in Fixed Income markets. Eurodollar futures were up 3bp-4bp.

As we eased into the pit opening, Fixed Income braced for a flurry of releases:

• Personal Income/Spending
• Construction Spending
• Manufacturing ISM

Personal Income/Spending Income grew 0.3%, which was worse than expected by the dealers (and previous moth was revised down too). Disposable income rose the same, but it marked a sixth consecutive stable increase, so it wasn’t at all disappointing. Consumption decreased by 0.1% and boosted personal savings rate to 4.3 (3.9 previously). All this suggests a somewhat healthy growth in salary and wages, but the numbers still remain suspect. As energy costs continue to come under upward pressure, the discretionary spending might very well dissipate.

I heard one economist mention that since durable spending dropped 5.4% from 7.2% in December is the first time in a decade. Although the decrease was partly driven by lack of “auto incentives”, it might be a warning sign of future slower growth.

Construction Spending rose 1.7%, which was better than 0.5% expected by dealers. Not being a very heavy market impact index, the attention was shifted towards ISM, which came out at 10am as well…

Eurodollar futures retraced few ticks and volumes were light before the numbers.

Manufacturing ISM was very disappointing. As it printed 50.5, Fixed Income took off again and were up 4bp on the day. The curve was flattening, as we digested the numbers.

Basically, ISM suggested there is no growth. Every component was weaker across the board. Prices paid went up to 65.5% from 57.5% previously. That was big! Employment fell to 42.8% from 47.6. What does it mean? Cost pressures! High oil prices are choking the market and all industrials and manufacturers are coughing up the dough for operating capacities.

As I was writing this at around 2:40pm, a flash across Bloomberg prints the following headline:
North Korean Jet fighters intercept U.S. spy plane

Fixed Income immediately takes a clue and the news propels us even higher…Now, even though trading on the back of equities all day was strong, we are up additional 3bp and total of 6bp-8bp, flattening even further.

However, this news seemed to have been hauling at us from this past weekend, where a couple of MIGs came withing few hundred feet of our plane flying over international waters. Nothing big happened, but the market had a very strong "close", nevertheless. So, to all of you- Thanks for playing!

Sunday, March 02, 2003


I have been introduced to and became an active member of the Blogosphere in December 2002. I am a Democrat (I think). For three months now, I have watched a so-called “liberal hawk” contingent oscillate between “pro” and “against” war mode based on the flavor of the day.

If UNSC or Hans Blix provided a more or less “hawkish” sentiment, liberal hawks would grow talons. However, it wouldn’t take much for them to immediately switch to chicken feet: a very direct statement by Bush administration perceived to be “harsh”; a European country’s (France or Germany) discontent with American leadership in the “war on terror” wrapped in a “unilateralist” argument; or a disagreeable with Democrats and liberals domestic agenda Bush is pushing for.

It’s quite simple actually-- I think that “liberal hawks” suffer from this Jekyl and Hyde syndrome on a purely emotional level, as the real reason for their discontent with war bears explicitly party partisan notions. Consider this statement from Matthew Yglesias:
I feel like the main thing we liberal hawks have been agonizing about is the various process issues surrounding the more-or-less inept manner in which the Bush administration has handled the build-up for war. Another important issue, however, is that a successful war would likely empower the administration to ram even more of its appalling domestic agenda through the congress. Perhaps even more interesting, however, is the converse fact.

The “converse” would, of course, require a very realistic, almost “cynical” (as Matt puts it) answer to this question, posed by Matt to Kevin Drum of “Calpundit”, Sean-Paul of “The Agonist” and Josh of “TPM”?): Is opposing the war justified, if it’s motivated only by trying to hurt Bush’s chances of getting re-elected in 2004?

Or, conversely, I’d ask: How much personal responsibility is one willing to accept for taking a risk of jeopardizing American national security and preventing possible democratic processes around the world, while trying to undermine current administration’s credibility and play partisan party politics? Or better yet, what is the price one’s willing to pay for getting rid of Bush’s tax cut?

Kevin responds with a post and answers Matt’s question:
So if I thought that opposing the war had a chance of hurting Bush's re-election, it would probably be all the nudge I'd need to actually switch sides and oppose it. I've never thought that Saddam Hussein posed an immediate threat, so postponing war for a while would have little downside, while getting rid of Bush would have a big upside.

Wow! If that’s not a hard and cold realist’s assessment, then I don’t know what is? But only for a domestic portion of it, as this “liberal hawk” is sitting on the foreign policy fence and waiting for its domestic policy prey to materialize. Another words, being a “liberal hawk” in this sense is just having a flexible war sentiment “exit” strategy, should an opportunity present itself. Luckily, those opportunities abound, thanks to Dubya and his warmongering neocons, with their poorly chosen rhetoric, finger pointing, names calling and general lack of style.

Sean-Paul also answered the kettle call:
I'm so close to throwing the towel in on this one. Kevin pretty much has it right. Lies, arrogance, the bullying of our allies, the shifting rationales, all of which are justified by so many damn warbloggers as, 'hey, this is what nations do,' is a crock. Yeah, some nations do it. But we are America. We're supposed to be different. And this administration is tearing down an international system designed to prevent nations from acting in just this sort of way.

Granted, this has not been the smoothest war preparation and alliance building. Granted, the diplomacy tactics used now aren’t the most ethical ones. However, as Sean-Paul is a student of International Affairs and a self described subscriber to Realism’s approach to IA , I’d like to remind that one of the three foundations of thereof is that “politics is not a function of ethics, but rather, that ethics is a function of politics, and morality is the product of power.” (E.H. Carr The twenty years’ crisis 1919-1939). Nevertheless, I see that too much importance is given to Bush’s, Rumsfelds, Wolfowitz’s, etc. personalities and how they’re not…nice? Well, again, realist deals with human nature as it is, not as it should or could be. That is a key distinction between a “realist” and “idealist”.

Ideally, Bush could assemble an alliance, rally up support of all countries behind us, get UNSC to eagerly pass yet another resolution authorizing use of force and everything would go smoothly. Better yet, Saddam would go into exile and gave up. Ideally…

Morgenthau, in his “Politics among nations” points out:
“realism believes in the possibility of distinguishing in politics between truth and opinion…between what is illuminated by reason, and what is only a subjective judgment, divorced from the facts as they are and informed by prejudice and wishful thinking.”

Like I said-- I am a Democrat, but I am not a “liberal hawk”. I will not switch because of partisan party politics or because I don’t like the Bush squints his eyes and points a finger when he calls Saddam an “evildoer”. I do not support war because I am a “neocon”, nor will I switch because Bush suggested to pay for war expenses with oil. I do not support war because it’s a popular, nor will I switch for exactly the same argument.

I do not support war because strengthens current administration’s domestic sphere of influence, nor will I switch because it’ll undermine it.

Update: Prof.Drezner's similar take on the topic.

On February 26th, I analysed Saddam Hussein's strategies under a "game theory" framework. I outlined the tactic of "threats" and "promises" he is using to add credibility to his unconditional strategic moves. Part of the "promise" strategy, which is nothing more than a sugar coated threat was Saddam's promise not to burn the oil fields in case of war...

Echoing my concerns about Hussein's promises and assurances and drawing a parallel to "scorched earth" strategy used by Stalin in WWII as well is Aydeh Rashed, the deputy chairman of Kuwait Oil Co.'s emergency operations committee (via Bloomberg, February 28th):
Rashed wrinkles his face at the prospect of Iraqi President Saddam Hussein igniting any portion of the 112 billion barrels of oil and 110 trillion cubic feet of natural gas percolating beneath his soil, the second-largest proven oil reserves in the world behind Saudi Arabia. Although Hussein told the U.S. television network CBS that he will not destroy Iraq's energy wealth during any armed conflict with the almost 100,000 U.S. and British troops now massed along the frontier, Rashed warns that ``only an army of fools'' would trust the vow. ``Saddam has done it before and will do it again,'' Rashed cautions. ``Do not believe his promises.''

The article is quite long, but very insightful and conveys the preparadness of our forces for every possible contingency, such as biologicl or chemical contamination; cluster bombs; well fires, etc.
CAPTURED: Khalid Sheikh Mohammed

Wow! This is major:

Khalid Sheikh Mohammed, who has been on the run for a decade, was turned over to US custody and taken to an undisclosed location outside the country within hours of his capture, Pakistani officials say.
The 37-year-old Kuwaiti was arrested with two other men in a joint Pakistani-CIA operation in a pre-dawn raid in Rawalpindi, near the capital Islamabad.

This dude is high up on the al-Qaeda food chain, with 1993 WTC bombing and few other anti-Amercian terrorist acts under his belt.

The Observer printed the meme which, I am fairly confident, is going to get lots of liberal, VRWC believers' panties in a bunch. Personally, I have absolutely no faith in the aforementioned media source. The Observer's propensity to print "all the news unfit to print" rivals Holywood tabloids and it hardly qualifies as a credible source.

The article is an alleged document leaked exclusively(?) to The Observer and it's a to secret NSA document authorizing spying on UNSC memebrs, except for US and UK. There's also another link in the article, which took me to another article, where the editors describe how they called Frank Koza's (NSA's Chief of Staff, who allegedly wrote the memo) office, got hung up on, etc. Few things that I found really odd in both the memo and editorial:
...the whole gamut of information that could give US policymakers an edge in obtaining results favourable to US goals or to head off surprises

• the use of ou vis-a-vis o in the word "favourable".
• the leaking of the top secret document from a top secret agency to The Observer no less-- the least credible British publication. This is bound to be a non-event (except for Blogosphere's blinded by the left, anti-Bush conspiracy theorists).
• Consider this statement from the aforementioned article (emphasis added):
The disclosures were made in a memorandum written by a top official at the National Security Agency - the US body which intercepts communications around the world - and circulated to both senior agents in his organisation and to a friendly foreign intelligence agency asking for its input.

Looks like NSA is just doing its job, same thing they're supposed to be doing: spies are supposed to be spying, no?

I don't want to get off on a jingoistic rant and beat my chest till it's "red, white and blue", but seriously: Who can be so naive about current diplomacy, as to think that it's done over a cup of tea and a biscuit? It seems that, all of a sudden, age old tactics used by every remotely intelligent intelligence agency is getting heat, but only if it's American? C'mon people, wake up and smell the gun powder!