ALERT: US CHOPPERS ATTACK SYRIAN VILLAGE!

Witnesses: US helicopters attack Syrian village - AP

DAMASCUS, Syria (AP) - Syria’s state-run television and witnesses say U.S. military helicopters have attacked an area along the country’s border with Iraq, causing casualties.

The report quoted unnamed Syrian officials and said the area is near the Syrian border town of Abu Kamal.

Residents reported two helicopters carrying U.S. soldiers raiding a village, Hwijeh, 10 miles inside Syria’s border, killing seven people and wounding five.

Great letter to the rest of the world

Yeah the US has been going down. It’s true, can’t deny that. We have had our financial foibles, our credit crises and real estate bubbles. Our stock market has been getting crushed and many of our leading firms no longer even exist. But you, the rest of the world, your stock markets have been getting even MORE crushed. Your banks are in even MORE precarious positions than ours. Your culture and economy and currency and utopian ideals are all showing cracks and are ready to break. You don’t know what to do and to be honest bro, you’re probably screwed.

And this is by design. Our forefathers claimed America by giving those Indian bros pox infested blankets. And we are claiming the rest of the world by doling out our toxic Mortgage-Backed Securities, our structured products, our overpriced assets and a little friend called contagion. FYI, pox be all in that sh**.

When the US wins, we win. When the US loses, we still win relative to the rest of the world, taking you down more than US. This is why we are the hegemon, bro.

Sincerely,
US

All Your Crash is Belong to US - Long or Short Capital

Free Laptops!

The future of laptops is a lot more similar to the current way we buy cellphones: your laptop’s price will be subsidized depending on contract duration and the monthly price for your wireless data plan (WiMAX, HSPA, LTE).

The future is happening now in India! If you sign up for a R1,500/month ($30) wireless data plan, you get a $299 netbook for free on a 2-year contract!

I wonder if Clearwire/XoHM will bring the same business model to our shores.

Indian Telco Offers Free Netbook With a Wireless Contract - GigaOM

Pakistani Plunge

“Unless something happens quickly, we are about to see what happens when you have a systemic collapse in a nuclear power next door to a terrorist hotbed.”

Uh oh.

Pakistan’s debt has been downgraded by S&P deep into junk status; it has just enough foreign reserves to pay for two months of imports; and will likely default on a major loan on Friday–plus it has $3-billion more in upcoming debt payments. The “badla” rate, Pakistan’s prime interest rate for loaning money to individuals and businesses soared to 100% per annum, which will grind lending (and hence business) to a halt.

Pakistan, The Land That Financial Bad News Forgot: Part II - Paul Kedrovsky

Did the CIA Bomb the Islamabad Marriott?

Pakistan has been making noise about US incursions into its territory lately.

Did the CIA bomb the Islamabad Marriott? Doing so might solidify anti-Taliban sentiment in Pakistan, which could lead to Pakistan’s authorization of more cross-border raids, or perhaps a stronger Pakistani military stance toward the Taliban.

It’s a classic ‘focusing event’, e.g. 9/11.

Just wondering aloud…

Suicide bomb guts Pakistan Marriott hotel; 40 dead - AP

Bye-Bye Musharraf

I’m really happy that Pervez Musharraf has resigned.  Now if we can just get Robert Mugabe (and perhaps Hugo Chavez) to step down, we’d really be in for a treat!

Musharraf Resigns As President - Sky News

Europe Aids Africa (In The Worst Way)

I’ve translated the following from a Spanish-language article from El Blog Salmon: Europa ayuda a Africa de la peor forma

The European Commission has proposed an aid package to poor African farmers in light of rising global food prices.

The idea is to help them with auxiliary goods, including seed and fertilizer, so that they can increase production. In the midst of rising prices, this production bump is to have a double positive-impact for poor farmers: more production and higher prices for their goods.

This all sounds good and fine; however, there are two problems with the announced project.

First, the €1.5 billion that have been announced for the project will come from leftover funds from the EU’s agricultural subsidy fund. If there would have been €2 billion left instead, would that have been the amount of aid given to African farmers? And had there been nothing left in the fund, where would this agricultural aid project’s budget come from?

This is definitely not the way you finance a serious aid project. If the project is legitimate, there would have been a professional evaluation of project cost and financing would come from the pertinent fund, as opposed to being sourced from unplanned leftovers.

It sounds like the authorities are wasting this money that’s ended up in their coffers instead of spending it on a project that’s considered necessary and important.

The second problem: the project changes nothing with respect to the repressive agricultural policy of the EU. Under the proposal, African farmers could indeed produce more and will benefit because global food prices are indeed high, but the EU still won’t let African farmers sell their goods in the EU, so how are we to believe that any of this is helping the Africans in the long-term?

We’re all for aid to the poor in Africa, put this stands as just another botched job by the Europeans.

Tags: african aid, aid, aid to africa, cameron newland, ce, ec, el blog salmon, eu farm subsidies, european commission, farm subsidies

Stocks in Pakistan

At the Karachi Stock Exchange:

In Karachi investors today broke windows, threw plant holders in the parking lot of the building, burned shareholder statements and at least one protester was injured, prompting intervention by police and the paramilitary.

“We demand that all stock prices be frozen at current levels,” said a fellow called Kauser Javed, who heads the Small Investors Association.

Right.

Hopefully, the Small Investors Association will learn their lesson. Stocks are the best tool for building wealth, but at times they can be volatile. The wealth you build in stocks may only be apparent in the long term, when the upside and downside volatility is averaged out.

Pakistani Investors Stone Karachi Exchange as Stocks Plunge
Looking At International Solutions To Falling Stock Prices

Time To Buy Goldman Sachs?

Here are some ideas I’ve been thinking through lately (full disclosure: I have no position in any of the following firms unless specifically noted)

1. Buy Goldman Sachs?
WHY: All of the other investment banks had tons more exposure to debt writedowns than did Goldman, and those banks also managed the crisis poorly once it arrived. Investors are running away from investment banks that teeter near insolvency (Lehman Brothers, et cetera) due to the counterparty risk (if your broker goes bankrupt, your trades with them may be worthless). This means that investors might flock to safe, solvent brokerages, like Goldman Sachs. A price/earnings of less than 9 makes the bank look even more palatable.

2. Short Airlines?
WHY: Oil prices are sky-high. If the airlines raise fares, they’ll find themselves flying empty planes. Also, airlines are particularly f***ed when it comes to cost-cutting: they can’t easily scale-down the size of their fleets during downturns, and the high-fixed costs of operating a fleet equal a noose around their necks as costs rise. (Full disclosure: I’m short more than one airline).

3. Go long Brazil?
WHY: Brazil has the highest ethanol usage of any nation, allowing it to relieve the pain of skyrocketing oil prices. Their sugar ethanol capacity is unmatched, providing both an opportunity and a recession-reducer.

4. Go long China?
WHY: The iShares Xinhua China 25 Index is down more than 36% since its high last fall. In a global recession, China’s low labor costs might effectively pull it through unscathed. (Full disclosure: I’m holding a long position in several Chinese ETFs).

What assets do you think will outperform in the next year or two?

Cold War Tensions Continue

With Iran and Israel on the brink of war and the resurgence of an aggressive Russia, the world doesn’t look so stable anymore.

Considering that Russia supplies Iran with its nuclear materials, and that Russia often defends Iran in matters discussed at the UN, it’s not so hard to imagine Russia defending Iran militarily in a war against the United States and Israel. Russia was poised to enter the 1973 Yom Kippur war in support or Syria and Egypt, and was only kept out of it due to the threat of fully armed American B52s circling Greenland as a deterrent.

Looking on Wikipedia at some of the bombers that might be used, I came upon the Tupolev Tu-95, NATO codename Bear. It was introduced in 1952 — hardly a new plane — yet it’s projected to serve Russia in the long-range bomber role until 2040. The American B52 Stratofortress, which is just as outdated, will be retired from service at the same time.

Here is a surprising list of NATO encounters with the Tu-95, listing only events in this decade:

* April 2002 — two Tu-95s flew within 37 miles of Alaska, were intercepted by two F-15s.
* January 2004 — a Tu-95a flew over the USS Kitty Hawk in the Sea of Japan.
* 29 September 2006 — NORAD scrambled Canadian CF-18s from CFB Cold Lake in Central Alberta and American F-15s out of an airbase in Alaska to intercept a number of the Russian Tu-95 Bear heavy bombers participating in an annual Russian air force exercise near the coast of Alaska and Canada.
* May 2007 — the Royal Air Force scrambled two Tornado fighters from RAF Leuchars in Scotland to intercept a Tu-95 observing the Royal Navy exercise Neptune Warrior.
* 17 July 2007 — two Royal Norwegian Air Force F-16s (from Bodø, Norway) and subsequently two RAF Tornados (from RAF Leeming, England) intercepted two Tu-95s as they made their way down the Norwegian coast towards Scotland.
* August 2007 — two Tu-95s flew towards the U.S. base on Guam, were intercepted by U.S. fighter planes.
* 17 August 2007 — two RAF Typhoons were launched to intercept a Tu-95 that had veered towards British airspace over the North Sea. The Tu-95 later turned away.
* 5 September 2007 — six Russian bombers were intercepted by six F-15s from Elmendorf Air Force Base, 50 miles from the northwest coast of Alaska.
* 6 September 2007 — Two Norwegian F-16s tracked eight Tu-95s over the Barents Sea as they neared Norwegian airspace. The bombers flew past Norway and continued towards British airspace where four RAF Tornados were scrambled from RAF Leeming before the Russian planes turned away. It was the same day that Canadian Forces’ CF-18s were scrambled to escort Russian Tu-95s outside Canadian airspace near Inuvik, Northwest Territories.
* November 2007 — F-22A Raptors performed their first intercept of two Russian Tu-95s in Alaska.
* 9 February 2008 — 24 aircraft including F-15 Eagles and an E-767 AWAC from the Japanese air force scrambled and gave “a notice, then a warning and another a notice and a warning,” as a Russian Tu-95 violated the country’s airspace during a three-minute flyover of Sofugan in the Izu Islands. Japan formally issued a strong protest, demanded prevention of future incidents and presented a protest note to the Russian Embassy in Tokyo. Russian officials conversely stated that four Tupolev Tu-95 bombers completed a 10-hour mission over the Pacific on Saturday, but “our strategic aviation planes did not violate Japanese airspace.”
* 9 February 2008 — in the Western Pacific, a Russian Tu-95 flew over the aircraft carrier USS Nimitz twice, at a low altitude of about 2,000 feet, while another bomber circled about 58 miles out. Four American F/A-18 fighters were scrambled to track the bombers.
* 5 March 2008 — Off the eastern coast of South Korea, a Russian Tu-95 flew over USS Nimitz and was intercepted by two F/A-18 Hornets at an altitude of 2,000 feet at a distance of about 3-5 miles. Four South Korean F-16s were also scrambled to intercept the bomber.
* 26 March 2008 — Off the coast of Alaska, Two U.S. Air Force F-15s escorted two Russian Bear long-range bombers out of an air exclusion zone.
* 24 April 2008 — Two Tu-95 bombers from Engels-2, along with two Il-78 refueling aircraft, were escorted by NATO Tornados and F-16s over the Atlantic.
* 13 May 2008 — Two Tu-95 bombers from Ukrainka air base conducted a 20 hour patrol over the Arctic Ocean, CF-18s intercepted them as the bombers headed towards the Alaskan airspace.

Now, these are only the reported incidents with this particular Russian aircraft. Imagine all the other potential incidents involving fighters or naval assets! Also, notice how Russian incursions into others’ sovereign airspace (or close calls) have increased markedly since 2007. 2002, 2004, and 2006 saw only one incident each, while 2007 showed 7 incidents, and 2008 has already produced 6, and the year isn’t yet halfway over!

It seems somebody is trying to tout their air power.

Israel and Iran Battle It Out

Thomas Friedman writes something worthwhile!:

People vs. Dinosaurs - The New York Times

…in the first quarter of 2008, the top four economies after America in attracting venture capital for start-ups were: Europe $1.53 billion, China $719 million, Israel $572 million and India $99 million [...]. Israel, with 7 million people, attracted almost as much as China, with 1.3 billion.

Iranian President Mahmoud Ahmadinejad professes not to care about such things — because oil prices have gone up to nearly $140 a barrel, he feels relaxed predicting that Israel will disappear, while Iran maintains a welfare state — with more than 10 percent unemployment.

Iran has invented nothing of importance since the Islamic Revolution, which is a shame. Historically, Iranians have been a dynamic and inventive people — one only need look at the richness of Persian civilization to see that. But the Islamic regime there today does not trust its people and will not empower them as individuals.

Iran’s economic and military clout today is largely dependent on extracting oil from the ground. Israel’s economic and military power today is entirely dependent on extracting intelligence from its people. Israel’s economic power is endlessly renewable. Iran’s is a dwindling resource based on fossil fuels made from dead dinosaurs.

So who will be here in 20 years? [...] I’ll bet on the people who bet on their people — not the people who bet on dead dinosaurs.

(Thanks for linking to this article first, Barak).

Disappointment and Hope

Disappointments:

Vladimir Putin has extinguished opposition voices from television, including political humorists. [IHT]

Huge Chávez is stealing an idea from George Orwell by overhauling two intelligence agencies and instituting measures that will force citizens to inform on one another to avoid prison terms. Unfortunately, both new intelligence agencies are directly under his control, which doesn’t bode well for separation of powers. [IHT]

Hope:

Bono has called for the creation of a United States of Africa, saying that a pan-continental identity would serve as a catalyst for resolving its conflicts. It would mark a step in the right direction but doesn’t go far enough: Africa needs a common language, an embrace of science and education, and a shot of western parliamentary democracy. [Agence France Presse]

Shark Attacks

“Surfer Bruce Grimes from Texas was bitten on the arm on Saturday off nearby Playa Linda beach. Grimes, 49, said he paddled madly toward shore on his board after feeling the unmistakable sandy skin of a shark glide across the bottom of his feet as he straddled his surfboard.

“Then it bumped me really hard. I thought, ‘That’s definitely a big shark.’ I took about three more strokes and he grabbed my arm,” said Grimes, who pulled himself free and made it to the beach. He managed to drive himself to a hospital, where he received 100 stitches.”

Two attacks in April and May killed a Mexican and an American — the first shark deaths off Mexico’s Pacific coast in 30 years.

Mexico Navy hunts for sharks after attacks

Realize How Good We’ve Got It

“Uribe, elected in 2002 on the promise to crush [rebel insurgent group FARC], has boosted troop strength by 44 percent and driven the group into a strategic retreat from Colombia’s highways and major cities. Thanks to the offensive, kidnappings fell by 83 percent to 486 last year and terrorist attacks by 76 percent to 387 in 2007, the Defense Ministry says.”

I’m glad we don’t have that kind of violence where I live.

Colombia Rebels Name New Leader to Succeed Marulanda - Bloomberg

Hezbollah Goes High-Tech

A lot of people are unfamiliar with the impetus for the fighting between pro-government forces and Hezbollah last week: telecommunications equipment.

Excerpts from the WSJ:

“Hezbollah was secretly expanding a [fiber-optic] network that could provide secure communications in times of battle.

The drama began developing late last year when engineers working for Lebanon’s telecommunications minister got an odd tip: Someone was mysteriously burying spools of fiber-optic cable near a village in southern Lebanon. Then came a call from the mayor of Choueifat, a suburb of the capital. “There are strange works, unknown to the municipality…on public and private lands,” he said, according to Telecommunications Minister Marwan Hamadeh. He sent engineers to investigate, and soon determined that Hezbollah had a network stretching for more than 200 miles — in a nation only about 140 miles long. It had wireless transmitters, Mr. Hamadeh said, and redundancies so communications could continue even if part of it was damaged.

The government long knew Hezbollah had a network of some sort, but thought it was limited and of little threat to central authority. But after the 2006 war, the government told the U.N., Hezbollah secretly expanded it under the guise of postwar reconstruction, burying cables beneath newly paved roads. The work, the government added, was done with the “participation in the field” of the Iranian Headquarters for the Reconstruction of Lebanon, an Iranian agency that has claimed credit for hundreds of rebuilding projects since the 2006 war. It wasn’t reachable for comment.

For government officials critical of Hezbollah, the system was a clear sign of Hezbollah’s worrisome ambitions. “This,” declared Mr. Hamadeh, pointing to a hand-drawn map of the network, “is the takeover of Lebanon.”

Since the government’s public challenge to the network, Hezbollah leader Hassan Nasrallah has left little doubt of its importance: he’s defended it as a vital weapon against Israel, whose occupation of southern Lebanon from 1982 to 2000 helped give rise to Hezbollah. Calling the system Hezbollah’s “No. 1 weapon,” the black-turbaned leader declared that “it is forbidden to touch [anything] linked to the networks, whether an engineer, a company or a mayor. Touching them is like touching me.”

The more rudimentary system that existed at the time of the 2006 war was considered vital in Hezbollah’s military successes against Israel. Some independent analysts and diplomats worried that enhancement of the network meant Hezbollah is gearing up for another confrontation with Israel.

Mr. Hamadeh, the telecom minister, says his engineers had discovered a Hezbollah fiber-optic cable in the heart of Beirut last year, he said. Confronted about it, Hezbollah reluctantly agreed to remove it from that area, and “things went quiet for a while.” But then, when his engineers investigated the tips from Beirut suburbs and southern Lebanon, they found a greatly expanded Hezbollah system.

On a hand-drawn map, Mr. Hamadeh traced the network’s route: a line south from Beirut to the port of Tyre, then to myriad sites in the southern tip of Lebanon, then north through central Bekaa Valley. Off the main trunk, he sketched what he said were several new branches, reaching toward Christian areas in the north, pro-Syrian Palestinian bases in refugee camps and to areas east of Beirut controlled by the Druze, another sect. His final line reached to a tiny border own called Tufayel, where, he said, the secure network starts to connect with Syria.

Mr. Hamadeh said the government tried three weeks ago to negotiate secretly with Hezbollah about dismantling the network, working through the army intelligence chief and the head of internal security. He said Hezbollah confirmed the existence of the expanded system but “absolutely refused to dismantle it, directing threats against officials” involved.“

Soviets Get Nostalgic

Russia is up to some of its old Soviet tricks: military grandstanding, corruption — even shooting down planes over foreign soil.

None of this prepared me for the sad state of South Ossetia. A breakaway republic formerly part of Georgia, it is not recognized by any foreign governments except for Russia and Abkhazia, its sister breakaway republic. Foreign journalists are harassed, arrested, and often told they need to return to Georgia. Russian troops walk the streets, and much of the population works for the security services or in law enforcement to squelch dissent and end demonstrations. The “security” is paid for by the Russian government. The rest of the population is forced into subsistence farming.

You ought to read the article. The word “former” in the title is, I believe, an attempt at humor:

Travels in the former Soviet Union

Debtor Nation

The United States is a nation of a debtors, and a debtor nation, sporting large budget and trade deficits. We’ve yet to default on our debts.

Don’t ever lend money to Russia, though. Russia famously defaulted on their foreign debt obligations in 1998, sending the world economy into a tailspin.

They’ve avoided payment on other obligations as well.

During the Russo-Japanese war of 1904-1905, the French underwrote much of the Russian war effort with bonds. These bonds became worthless in the Bolshevik Revolution of 1917. French bondholders made noise about the issue for years, but to no avail. Finally, when a post-Communist Russia re-emerged in the 1990’s and wanted access to global debt markets, Russia needed to convince Europe (and the world) that they could be trusted to pay their debts. Russia paid off its debt to France with a one-time $400 million gift in 1996 — equal to roughly 1.5% of what the bonds would have been worth with 79 years of interest.

Don’t get caught in the same deal.

Russia to repay pre-1917 debt - Bloomberg News/NYT

Syria is Stuck (In The Middle Ages)

I’m thinking of traveling through the Middle East this summer, and in the course of my research, I’ve read a ton about Lebanon, Jordan, and Syria.

The U.S. State Department gives an idea of what Syria’s economy is like:

“Syria is a middle-income, developing country with an economy based on agriculture, oil, industry, and tourism. However, Syria’s economy faces serious challenges and impediments to growth, including: a large and poorly performing public sector; declining rates of oil production; widening non-oil deficit; wide scale corruption; weak financial and capital markets; and high rates of unemployment tied to a high population growth rate. In addition, Syria currently is the subject of U.S. economic sanctions…”

Sounds like a basket case. It’s pretty sad when runaway population growth causes increasing unemployment.

“Agriculture [...] accounts for 25% of GDP and employs 42% of the total labor force.”

I’ve got to say, that’s really sad. It’s 2008 — wave of the future and all — and Syria has nearly half its workforce doing the menial labor of growing and gathering food. I’m pretty sure that the characters on the show Lost manage to employ less than 20% of their population gathering food.

In the United States, only 1.8% of of workers are employed in agriculture, which allows the other 98% to pursue whatever it is they choose.

U.S. State Department - Syria: Background Note

The Face of Tragedy

If this doesn’t put a face to the tragic Sichuan 7.9 earthquake, I don’t know what does.

“A mother collapses after identifying the body of her child discovered from the debris of a primary school in Hongbai town in Shifang in southwest China’s Sichuan province Thursday May 15, 2008. Official media estimates the death toll would reach 50,000 in the earthquake.” (AP Photo)

Give to the rescue effort:

UNICEF

Red Cross

Rice Crisis Shows Cracks In Distribution

The worldwide increase in prices for food is a true catastrophe, especially considering its effect upon those in the third world, whose food budgets may not be resilient enough to stomach the rise is prices, and will undoubtedly go hungry.

Confounding the problem is that the world doesn’t have a truly free market for the commodity. Portfolio kindly pointed out the following limitation mandated during WTO negotiations:

“Because of its WTO commitments under the Uruguay Round Agreement, Japan imports a substantial amount of medium-grain rice from the U.S. and long-grain rice from Thailand and Vietnam…But under WTO rules, the government cannot re-export the rice, except in relatively limited quantities as grant aid. So the Japanese government simply stores its imported rice until the quality deteriorates to the point that it is suitable only as livestock feed and sells it to domestic livestock operators…Japan currently has over 1.5 million tons of this rice in storage… Most of this rice is in good condition, and is incurring large storage charges. Japan would be very happy to dispose of this rice to the world market, but it cannot do so without U.S. acquiescence.”

Though 1.5 million tons of rice seems huge, my 10 seconds of Google research indicates it would only provide one day’s worth of global supply to the rice market.

No matter how small the benefit, governments of the world need to work together to alleviate this crisis. Allowing this rice (and all rice) immediately onto the global market should be common sense, and stagnating on this issue could cost lives. One day’s supply might be all that separates a starved village from a living one.

How to Burst the Rice Bubble - Portfolio

Tags: food shortage, rice, rice shortage

Putin Is Portuguese

“…they want the sometimes prickly Putin sidelined, and can’t grasp why he was such a popular president. That’s a question requiring no kremlinology whatsoever. Putin scored stellar domestic ratings because, over the last decade when he was in office, Russia has risen from nowhere to become the world’s ninth largest economy. Income per head has grown ten-fold in dollar terms - with your average Russian now worth $12,012. In 1999, Putin boasted that by 2015, Russians would be as rich as the Portuguese - Western Europe’s poorest economy. Seeing as the average Russian income was then only 9 per cent of the average in Portugal, his claim was widely dismissed. But Russia has since grown so fast that average incomes are now 60 per cent of those in Portugal, and gaining fast. And if the two economies keep growing at the pace they have over the last decade, Russia’s income per head will overtake Portugal’s in 2014 - a year earlier than Putin’s estimate.”

Beijing and Riyadh will call the shots on ailing dollar’s future

Give War A Chance

This was too good not to post:

Is It Time To Invade Burma? - TIME

Would it be worth it, as measured in net lives saved, to invade Myanmar so that the unnecessary “murder” of civilians without adequate international aid is avoided?

Hezbollah Debt Upgraded by Moody’s, S&P

NEW YORK, May 9 (Reuters) - The takeover of the Muslim half of Beirut by the Iranian-backed Lebanese group Hezbollah on Friday reflects increased Hezbollah dominance in the country and has resulted in Hezbollah’s long term debt being upgraded, Moody’s Investors Service said.

The credit ratings agency said on Friday that Hezbollahs “Baa1″ rating, an upgrade from “Ba2″ (speculative, non-investment grade) was due to a an increased tax base in West Beirut and a stable outlook.

“Given that the hostile neighborhood takeover has added roughly 200,000 to the number of people under Hezbollah control, Moody’s believes that the increased tax receipts combined with reluctance on the part of Lebanese Government fighters to put up a real fight encapsulate the risk of continuing severe political turmoil,” Tristan Cooper, sovereign ratings analyst at Moody’s said in a statement.

Hezbollah has never defaulted on its debt, despite experiencing many destabilizing political shocks, including a 15-year civil war between 1975 and 1990 and a devastating month-long war with Israel in 2006, the statement said.

The agency said it recognizes Lebanon’s poor state of public finances, however the central bank still has a large stock of foreign currency reserves, $10.8 billion in February, or about 45 percent of gross domestic product, which could legitimately be seized by Hezbollah and used to bolster security and buy more advanced weaponry from Iran. While legally constrained from being sold, central bank gold reserves worth $8.9 billion in February also acts as a source of wealth that Hezbollah could tap in case of turmoil.

In addition, the world’s penchant for forceful intervention has over the years become increasingly weak, as incursions in Iraq and Afghanistan have turned into overly long ordeals requiring increasing amounts of resources coupled with strong insurgencies. “Lebanon just doesn’t have enough natural resources, like oil — they don’t even have the geography for a potential pipeline that we usually like to see before we liberate a country,” said former UN ambassador John Bolton.

Moody’s said that while these factors have made the international community resistant to physical intervention, it remains concerned about current developments and is monitoring the situation.

Lebanon’s “B3″ credit rating reflects turmoil-Moody’s

Zimbabwe Issues $250 MM Bill

In April, Zimbabwe launched the $50 million bill, as inflation levels there push 165,000% per year and quickly make last week’s paycheck worthless.

A loaf of bread now costs around $80 million; a bunch of five bananas costs close to $100 million.

Now, they’ve gone ahead and launched the $100 million an $250 million bills.

Imagine living in a country where cash has an expiration date! Zimbabwean bills are all “bearer’s cheques”, which have expiration dates — some as little as one or two months from their printing.

Zimbabwe issues 250 mn dollar banknote to tackle price spiral

John McCain is a F@#!ing Hero.

John McCain just told a group of Iowans that he’d veto the farm bill that’s currently going through Congress:

“I do not support it. I would veto it. I would do that because I believe the subsidies are unnecessary and I do not believe we should have tariffs against imported products.”

He’s beginning to sound like the logical, free-thinking John McCain that we knew and loved in 2000.

Crop subsidies go against all reason. They eliminate the existence of sustainable farming in the 3rd world by forcing low-priced American agricultural exports onto foreign shores. Local farmers are unable to compete on price against our subsidized products, and they go bankrupt. This practice is called “dumping”, an anti-competitive practice that is illegal in our country. For some reason, our backwards government continues to support ridiculous subsidies on rice, milk, sugar, cotton, peanuts, tobacco, and more.

I’m glad McCain has the balls to admit that our tariff barriers against foreign goods have the effect of increasing the prices Americans pay for food. All this in front of a group of farmers from one of the states that benefits most from these subsidies.   Why doesn’t one (or both) of the remaining Democrat candidates come out against the farm bill as well?

The article at the Des Moines Register

The Importance of Jimmy Carter

Israel and Palestine can’t seem to agree on anything.

Any agreement that would further the peace process is stifled by two inconvenient realities:

-No agreements can be debated in the first place because one side, Palestine, is politically fractured. The internationally-recognized but impotent Fatah government controls the West Bank, and the universally denounced and politically radical Hamas government controls the Gaza Strip. No government will agree to negotiate with Hamas due to their ties to terrorism, thus hampering discussions.
-Any potential agreement between the two states would be politically infeasible for an Israeli leader to endorse. An Israeli leader calling for the return to 1967 borders or for the return of the Golan Heights to Syria would face strong opposition from both the Knesset and the Israeli media (not to mention residents of settlements). Though advancing the peace process, one might decimate their chances for re-election.

So, how do humans negotiate for progress when nobody is willing to negotiate in the first place?

The only solution is for an outsider to negotiate an agreement, drawing concessions from both sides. The Solution is named Jimmy Carter.

Sadly, the solution is not being welcomed by the arrogant and ignorant Israeli government. Israel’s ambassador to the United Nations called former President Jimmy Carter “a bigot” yesterday for meeting with the leader of the Hamas in Syria.

Are ad hominem attacks the new standard Israeli response to all peacemaking attempts?

Now, I’m not defending Hamas. I don’t think anyone could lay out an argument that legitimizes war or terrorism as they practice it. However, I do believe that to defeat Hamas and bring back support of the relatively reasonable Fatah government in Palestine, Israel must negotiate with Hamas so as to end the suffering of the Palestinean people in Gaza by ending the sea and land blockade that strangles their economy. Ending that suffering will erode the popular support of radical Hamas.

Hamas gets support because the people feel they have no one else to turn to. We saw the same in 1930’s Germany. With this much historical reference, I believe the Solution is before us. Will anyone listen?

Israel’s UN ambassador calls Jimmy Carter ‘a bigot’

Philippine Finance

Dealbreaker posted a pretty funny excerpt from (of all things) a bond prospectus issued by the Republic of the Philippines.

The country’s bond prospectus includes a list of risks, and the following were found under “Recent Political Developments”:

Election Protest of Legarda
Arrests in Connection with Coup Attempts
Impeachment Complaints Filed Against President Arroyo
Communists and Affiliated Groups
Abu Sayyaf and Moro Islamic Liberation Front
Government Expropriation of Ninoy Aquino International Airport Terminal 3
Proposed Amendments to the Constitution

So what, maybe they’ve got a few “risks”?

It reminded me of this exchange between a panelist and an editor during a 1986 stock-picking roundtable for Barron’s, as documented by Peter Lynch:

Ed Goodnow (a panelist touting Philippine Long Distance Telephone Co.): I understand the service is not so good out in the provinces. One of the problems is that it’s hard to get the guys to go up the poles to fix the lines because they sometimes get picked off by snipers. But other than that, they’ve got a very solid operation.
Barron’s Editor Alan Abelson: Do you call that a “long shot”?

Thabo Mbeki Is A Disgrace

(to humanity).

Anyone following the elections in Zimbabwe knows that, according to any impartial count, Morgan Tsvangirai has won. Sadly, the government hasn’t yet released a final count (though local tallies have already been posted on the doors of all polling places). The Movement for Democratic Change, which has won the election, said that about 200 of its polling agents, campaign workers and supporters have been arrested, beaten or kidnapped since the March 29 election.

The honorable thing to do now is to pressure the government to step down and allow the winner’s government to reign. Surrounding nations (and the world) should call for this to take place, and should meet with, congratulate, and declare support for the winner, Mr. Tsvangirai.

From the New York Times:

On Wednesday, the opposition standard-bearer and self-proclaimed winner of the election, Morgan Tsvangirai, traveled to Botswana, where he met that nation’s president, Seretse Khama Ian Khama. The opposition spokesman, Nelson Chamisa, said that Mr. Tsvangirai would meet with heads of state in many of Zimbabwe’s neighbors “to get them to appreciate the magnitude of the crisis in Zimbabwe.”

Sadly, some enemies of democracy have recently shown that they cannot be trusted to call upon Robert Mugabe’s government to do what is right.

But South Africa, the one country most likely to hold sway in Zimbabwe’s crisis, took pains on Wednesday to distance itself from the [winning party]. A spokesman for South Africa’s president, Thabo Mbeki, said he had no plans to meet [election winner] Mr. Tsvangirai, although a spokesman [..] said Mr. Tsvangirai had requested a meeting.

Separately, South Africa dismissed calls for an international effort to address Zimbabwe’s crisis in the United Nations, saying the political situation there was an internal political matter. [...] Mr. Mbeki, Africa’s favored mediator in Zimbabwe’s political crisis, has sometimes been accused of treating Mr. Mugabe’s harsh rule with kid gloves. Asked Wednesday whether South Africa had again rebuffed Mr. Mugabe’s opponents, Mr. Chamisa replied, “Time will tell.”

The outspoken Mr. Mbeki

The world should condemn Thabo Mbeki in his failure to support the election winner. Though I understand that South Africa prefers Zimbabwe’s rule under a dictator to another civil war in the region, Mbeki needs to understand that this election outcome could and should proceed as a peaceful handover of power, not unlike the Orange Revolution in Ukraine, which shared many similarities with this development including vote rigging and a potential runoff.

Update:

According to a breaking MSNBC article, the Southern Africa Development Community (a regional alliance of governments) is to hold a meeting with Mugabe, Mbeki, and Tsvangirai in attendance, and Tsvangirai may meet Mbeki beforehand, contrary to earlier reports:

“Tsvangirai, who was traveling throughout the region to ask Mugabe’s peers to push him to end the standoff, was headed Thursday to South Africa to meet with President Thabo Mbeki, Mlilo said. “If Mr. Tsvangirai is in town and before the president leaves for the next meeting and his program allows it, it is important to hear what Mr. Tsvangirai has to say,” said Aziz Pahad, South Africa’s deputy foreign affairs minister.

Regional Leaders to Meet on Zimbabwe - NYT
Zimbabwe opposition opts out of runoff - MSNBC

Cuba Opening Up

Communist Cuba has lifted its ban on the sale of computers. This development is going to have much bigger consequences than meets the eye.

Cuba’s youth is slowly discovering what the world thinks of its authoritarian dictatorship, and much of the credit goes to technology and the internet.

A growing underground network of young people armed with computer memory sticks, digital cameras and clandestine Internet hookups has been mounting some challenges to the Cuban government in recent months, spreading news that the official state media try to suppress. Last month, students at a prestigious computer science university videotaped an ugly confrontation they had with Ricardo Alarcón, the president of the National Assembly. Mr. Alarcón seemed flummoxed when students grilled him on why they could not travel abroad, stay at hotels, earn better wages or use search engines like Google. The video spread like wildfire through Havana, passed from person to person, and seriously damaged Mr. Alarcón’s reputation in some circles.
-NYT: Cyber-Rebels in Cuba Defy State’s Limits

Increased access to computers and the internet will assist the opposition in communicating with one another, establishing a credible alternative press, and bringing about change by educating Cubans about the alternatives to their political system.