The Standard

Russia Loses Iraqi Oil Contract

Iraqis Nix Saddam-Era Deal

The Iraqi government has voided a contract with the Russian company LukOil to develop the West Qurna oil field.

The field is estimated to hold 11 million barrels of untapped reserves.

The contract was signed in 2002 while Saddam Hussein was still in power.

It was then rescinded by the Hussein government shortly before the American invasion.

Mr. Hussein had been angered that LukOil brokered agreements with opposition groups in the event that his regime might fall.

The Russian government has called the decision an "outrage."

Energy, Politics and Russian Nationalization

There has been growing concern in the West about the role of state-run energy companies in serving the Kremlin's political interest.

In August, the Kremlin leveraged the last independent oil entrepreneur, Mikhail Gutseriev, out of the country and swallowed up RussNeft, a company that represented a mere 3% of the Russian oil production market.

Last October the state-run gas monopoly GazProm suddenly announced an unpaid $1.3 billion Ukrainian debt and threatened to cut off Ukrainian gas supplies.

The surprise debt was announced the day after after pro-West parties triumphed in Ukrainian parliamentary elections.

UN: Address Climate Change "Head On"

Moon and Schwarzenegger Stress Global Responsibility

Secretary General Ban Ki-Moon opened a UN meeting in New York on Monday with a call for aggressive action to solve the problem of climate change.

Moon urged more than 80 leaders to show the world they would "shoulder the responsibility" of reducing carbon emissions and combating warming trends.

These trends are changing global weather patterns and threatening the infrastructure of human civilization.

The governor of California, Arnold Schwarzenegger added later in the day: "...one responsibility we all have is action."

The words come at a time when many nations are failing to make and meet commitments that address human causes of climate change in an effective way.

The first international attempt to limit carbon emissions has largely been thwarted by the refusal of the US to sign on to the Kyoto Protocol.

Many have also expressed frustration that the Kyoto agreement failed to place responsibility on China.

In addition, it is expected that the UK will miss its target for cutting emissions in 2010 by more than half.

Clinton: Economic Benefits Come With Aggressive Action

Many leaders, including US President George W. Bush, have made the claim that a rapid response to combat global warming will entail increase costs that will harm national economies.

Speaking to the Financial Times on Sunday, former US President Bill Clinton refuted this notion.

He emphasized that new job markets created from investment in new energy-efficient technologies will help US economic growth.

President Clinton made news in May when he structured a deal that saw major banks including Citi and JP Morgan provide financing for US cities to make buildings energy efficient at no net cost.

Giuliani: Every Day is Sept 11 Anniversary

FARK has once again succeeded in leading me to the ridiculous.

US presdiential candidate Rudy Giuliani:

"For me every day is an anniversary of Sept. 11," Giuliani said after reviewing emergency response equipment at the Pinellas Sheriff's Office with Attorney General Bill McCollum and Sheriff Jim Coats. "If we don't talk about Sept. 11, you can't prepare to try to avoid another Sept. 11."

Truly, Mr. Giuliani, your commentary is right on.

The failure to talk about terrorists and 9/11 all across the United States puts US foreign policy into peril.

I also don't feel the US has taken enough measures to alert the American public to the threat that at any moment the fluffy peaceful clouds in the land of opportunity might again sizzle with the hate-filled jihadist fireballs of 9/11.

Did I mention that every day is my birthday?

US 'global force for the normalization of torture', says Daily Dish

Andrew Sullivan calls out President Bush, pointing to the fact that methods of interrogation that the current administration has attempted to legally justified were regarded as uncivilized as far back as 1830.

I would add that the use of cheap legal language to justify the holding of Guantanemo prisoners without trial disgraces the tradition of Habeas Corpus -- the legal mainstay of British and American government for hundreds of years.

In short, President Bush has pushed the US backwards along a path the nation once trod beside its European allies with pride -- one toward a more enlightened government whose goals were the preservation of peace, the defense of rule of law, and the general improvement of human civilization.

Does the US Need A Recession?

The Economist has asked whether the US economy would not benefit in the mid- to long-term from a recession.

Indeed, if it did not threaten my unending faith that everything must be perfect all of the time everywhere for my country to work, I would call it a sensible, intriguing, and well-written article.

Debate: The Economist vs. Michael Nal

Here are some of my favorites parts (commentary included, of course):

Economist: "Contrary to popular wisdom, it is not a central bank's job to prevent recession at any cost. Its task is to keep inflation down (helping smooth out the economic cycle), to protect the financial system, and to prevent a recession turning into a deep slump."

Me: But recessions are unpleasant.

Economist: "The economic and social costs of recession are painful: unemployment, lower wages and profits, and bankruptcy. These cannot be dismissed lightly. But there are also some purported benefits."

Me: "Pain? Aaaah! Write me a prescription for something. My health insurance card? Sure. It's right... hey, wait a minute...

Economist: A recession now would reduce America's trade gap as consumers would at last be forced to trim their spending.

Me: You speak these words "trim spending". You speak these words and I am deeply, deeply confused.

Economist: Of course, even if a recession were in America's long-term economic interest, it would be political suicide. A central banker who mentioned the idea might soon be out of a job.

Me: Watch it. This sentence could lead some to believe that there are moral responsibilities accorded to governmental and financial leaders. Next thing you know, they will start making policy decisions that are in the best interests of America and the American people even if its politically dangerous.

That's called something. Let's see here... 'Courage,' is it?

Oh, sorry. Did I swear?

Parting Shots

In conclusion, I'm not sure.

Perhaps The Economist has written a reasonable article with the overall stability of the American system in mind.

Then again, maybe they are a bunch of disguised Al-Qaeda terrorists trying to destroy freedom.

YOU DECIDE!!!

Defaults and Debt Threaten US Economy

According to a survey of economists, the alarming rate of American mortgage defaults and enormous amount of US household and corporate debt are the greatest short-term threat to the US economy.

American consumers have never let the absence of cash get in the way of spending, but the fear seems to be that credit could dry up. And that... Well. It's not very pleasant to discuss such things in public, now is it?

One would assume that if you can't make a mortgage payment, you're having trouble buying other things, but consumer spending still remains strong. Maybe we would chalk it up to pure American spirit?

At any rate, the concern is that if all this bad stuff keeps up, even after smiling and popping Lexapro, consumer spending could weaken.

Also...

As usual, a closer look at the statistics reveals something ridiculous.

Apparently, 20% of the respondents still see terrorism as the greatest threat to the US economy in the short term.

Mind you, these are economists.

18% say sub-prime defaults are the largest problem.

14% chalk it up to household and corporate debt.

So fear not, terrorism is still officially the cause of everything bad.

The Wall Street Journal and I are really just fiddling with the numbers.

And breaking from Washington... (or is it Iowa?) A staffer has announced that should the sub-prime concern engender more fear in the US than the terrorist threat, Rudy Giulliani will officially combust.

That was joke.

(you have to be careful these days)

US Candidates Present Foreign Policy Positions

The good folks at 2Blowhards have given us a peak at the US presidential candidates' foreign policy platforms.

Let's see...

Over-consumed with the 'war on terror'? Check.

Completely ignoring the emergence of Russian and Chinese power and resulting erosion of a free market capitalism indepedent of the whims of dictators? Check.

A complete disregard for the necessity of American and European unity to conquer the great geopolitical challenges of the 21st century? Check.

Oh well.

I enjoy challenges.

Send an American friend a link to my blog.

OK?

The Ethics of War

I prefer to post links with context, but sometimes a piece is written that needs no context.

From The Economist:

"...Even in the hell of Iraq, however, it is important to look at some things straight. And one of those things is that not all kinds of killing are equal. Some are less acceptable than others. This is not a callous or nit-picking legal point: it concerns a vital distinction between legitimate and illegitimate violence that has long been spelled out under the laws and moral requirements of war and must not be fudged.

George Bush is rightly criticised for lumping together as “terrorists” anyone who takes up arms against America or its allies. This is a simplistic formula that blurs necessary distinctions and makes for clumsy policy. Yet some opponents of the superpower's occupation of Iraq make an equal mistake when they lump together—and condone—as “resistance” all of the violent acts committed by America's foes in Iraq.

No excuses

This is profoundly mistaken. Military attacks against foreign soldiers who have come uninvited into your country can certainly be classified as resistance, whether you think such resistance justified or not. But the mass murder of Iraqi civilians can make no such dignified claim. The most lethal atrocities are those carried out by suicide-bombers, most of them from Saudi Arabia, who have imbibed some version of the al-Qaeda idea of war to the end against the unbelievers, who in their minds include Iraq's Shia Muslims. Many Iraqi Sunnis have in their turn been killed—for revenge or as part of a campaign of ethnic cleansing—by Iraqi Shias, sometimes acting alone and sometimes at the bidding of organised militias, often with links to a political party or to Iraq's government.

Under all established norms and laws of war (and by most accounts under Islamic law, too) the deliberate targeting of civilians for no direct military purpose is just a crime. This remains true regardless of the justice of the cause, and whether the killing is done by states, armies, groups or individuals. The world should never tire of condemning such deeds."

Here's the link for the full article.

Journalism lives on...

Tax Cuts Fan US Mortgage Crisis Flames (I Respond)

In this post, I respond to a comment from LibSocialistssuck.

Dear LibSocialistssuck,

Thanks for your comment.

I'll respond.

1) You say: "you..say that pepole only use income from investments to pay mortgages."

I don't say that people only use investment income to make mortgage payments, but I see why you say I did. The post wasn't too clear here. Thanks for alerting me.

Obviously, people pay their bills with whatever cash or credit they have, whether a consumer credit card, income from investments or work, etc... Money is money, right?

2) You say "People have MORE money due to tax cuts."

This is true if you get caught up in one statistic. But a broader look at statistics suggests the opposite.

It's doubtful the middle class has more money overall, and they certainly have less spending power. As I wrote in the post (and as the NYT article detailed) incomes have gone down over the past five years when adjusted for inflation by $476. So, according to the limited statistics we have, incomes actually went down $158.

And, even if this weren't true, you'll at least agree with me that $318 really doesn't buy much these days? Won't you?

3) You say: "People have the freedom to spend their money how they choose"

I agree with you completely. But I don't see how this relates to the post or the current volatility in world markets. Perhaps you will clarify in a new comment?

4) You say: "People CHOSE to get mortgages on variable rates/ballon payments... ...it's Bush's fault how?"

It's not Bush's fault that people took variable rate loans. I don't say that.

You're right. They did choose. And now they're feeling the consequences. Nowhere do I mean to gloss over their mistakes.

The broader point is that a tax-code that leaves the debt-saddled middle class down to their very last dollar at the end of every month sets a trap for economic implosion when both they and others make financial mistakes. The defaulters borrowed irresponsibly, true. But lenders also lent irresponsibly. Wall Streeters rated bonds irresponsibly. In short, a lot of wild stuff has happened.

Problems have many causes. I picked this cause because no one else seems to be making the connection.

To tell you the truth, I'm really not too concerned about whether its Bush's fault.

But a tax system that does not leave room for the errors of ordinary citizens in finance is a tax system that ignores reality and makes the larger American system more susceptible to shocks.

My concern is that the United States have a tax codes that supports the economic system through tough times. A good tax code would push a bit more money into the pockets of the middle class so they could make their debt payments, while only raising capital gains a tad, so that cash could move (again) at the top.

That would preserve stability.

Tax Cuts Fan US Mortgage Crisis Flames

News continues to come in that the sub-prime mortgage crisis is not a sub-prime mortgage crisis, but a crisis more deeply affecting the American system.

The property firm RealTrac has announced that there was a foreclosure or repossession of 1 out of every 693 US households in July. The hard number 179,599, is up 93% from last year.

It was also reported that "troubled assets" at federally regulated savings and loan associations were up 49%.

It's important to understand what "troubled assets" means in this report.

First, they're mortgages that are more than 90 days late or repossessed.

Second, and most importantly, they are prime or jumbo mortgages. In other words, they're mortgages to people and companies who have good credit histories (unlike sub-prime borrowers who are more likely to default).

And there's carnage on the layoff front.

Accreditted Home Lenders, a mortgage company, announced it will cut 1,600 jobs, 62% of its current work force. And, for the record, that will be down from 2,600 as of today, which is whole lot less than the 4,200 employees at the start of the year.

It's also stopped taking loan applications.

This, of course, is in addition to the increase in volatility in the financial markets as banks have grown more and more nervous about lending to each other.

It's at points of near (or is it full on?) crisis like this where I like to try to find the cause of the problem.

True, the housing bubble exploded. True, Wall Street did some fairly foolish rating of credit derivatives and bonds.

But are there any other factors surrounding why middle-class Americans, pehaps the world's most nimble debtors and consumers, suddenly can't pay their mortgages?

Well, I found an answer.

The new tax code.

Apparently a mere 11,433 of the total 134 million US taxpayers saved $1.9 million on investments as a result the Bush tax cuts. That would be $21.7 billion in total. One imagines that might go pretty far toward making a few monthly mortgage payments.

What about the 90% of Americans making less than $100,000 a year? (Yes, those people). They saved a wopping $318 on their investments. That's a whole extra $26.50 to put toward a monthly mortgage. And, however small, that $26.50 will be at least a little helpful as the average income for this same group went down.

But, hey, if the middle class can't make their mortgage payments, what's the worst thing that can happen? Life's not always fair, you know... And cutting taxes on the hyper-rich just a wee bit would decrease liquidity all around, bankrupt corporations, cause lay-offs, cripple investment funds, and ruin our economy...

Oh wait...

There's a serious conclusion here.

I'll acknowlege that there are other factors involved, but I'll also say this: this tax code is nowhere near a failed attempt at "trickle down," it's an invitation for the American system to explode in all directions.

And that's not populist. It's in defense of a system that sustains us all.