Today on Blogcritics
Home » Iran Redux

Iran Redux

Democrats across the land had a major "I told you so" moment this week when a new National Intelligence Estimate reported that Iran stopped their clandestine nuclear weapons program back in 2003. Democrat candidates for president in 2008 renewed their calls for diplomacy with no preconditions, with Edwards taking the opportunity to attack Clinton for her record on hawkishness regarding Iran, and Obama chastising the choice by the Bush Administration to ever rattle the saber. Hillary at least acknowledged the reality that diplomacy requires both carrots and sticks, which gives her even more credibility in my book (but still not enough to bring me to vote for her).

The Tehran Times was quick to point out that the "NIE report [was] a complete fiasco for the US" and the San Francisco Chronicle asked whether "Bush [is] out of touch on Iran? Or willfully ignorant?"

I'm sure some people at Blogcritics felt vindicated by this news as well, especially after the "healthy" debate that followed my September article on Why We Can't Live With A Nuclear Iran. Surely this new NIE is proof positive that the nation of Iran is really a misunderstood, complex sort of fellow who is just another victim of Bush's salacious neocon imperialistic tendencies.

Would you really want to trust this man with nuclear power?I'd prefer a world where we didn't have to worry about an Iranian nuclear threat (or any nuclear threat for that matter). However, the new NIE report, despite mainstream media gullibility, doesn't really change the issues with Iran's nuclear program, nor should it materially change the way the US and the international community deals with Iran. While the NIE has been portrayed as a huge blow to the credibility of the US and its intelligence community, the reality isn't nearly as straightforward. Any lowering of our guard as a result of this information is at our own peril.

First, it's worth pointing out that the NIE confirms that Iran was indeed pursuing a nuclear weapons program as recently as four years ago. This illegal program was under the radar of the IAEA and flouted the law of the international community. That Iran stopped this program in 2003 is curious – while we can never truly know what's in the heart of man, I have a feeling that the U.S. response to Saddam Hussein's (lack of) WMD's may have been a factor in Tehran's decision to abandon, or at least pack away for the moment, their quest for nukes. One thing is clear; the mullarchy didn't halt the program out of the goodness of their hearts.

More importantly, Iran has not stopped their quest for so-called peaceful nuclear energy. Worse, they are not willing to participate in a situation where this "peaceful" effort is monitored and it's fuel and waste managed by international entities.

Why does that matter? It's important to understand what's at play here. One of the by-products of even peaceful nuclear reactors is the manmade element Plutonium. While the massive "city killer" nuclear bombs that were manufactured by the super powers during the cold war were made out of a highly weaponized version of Plutonium (as well as other elements), the Plutonium that is generated as a by-product in nuclear reactors is sufficient by itself to make a substantial nuclear bomb. According to the Nuclear Energy Information Service, "Each year a typical 1000 mega-watt commercial power reactor will produce 300 to 500 pounds of plutonium — enough to build between 25 – 40 Nagasaki-sized atomic bombs." To be clear, even peaceful nuclear technology in the wrong hands can be easily exploited to make full scale nuclear bombs.

About The Obnoxious American

  • Les Slater

    “You do know that to millions those terrorists are liberators.”

    May be, but there are NO liberators in Iraq.

  • alessandro

    “production based on competition is inefficient”

    Who said that? Come….on. I’ve heard and read tenuous comments in my life but this…this is priceless. I need an explanation.

    #97 – Very interesting Baronius. “Anyway, I’ve heard people argue that a regulated market can allocate resources more efficiently. I’ve never seen it, but it’s possible. It’d have to be a very static economy, though.” Agree.

    Regulation is not meant to be efficient and nor should it be its primary goal. To regulate suggests “equalizing” or maintaining some fair level playing field. The minute you interfere with a process you compromise efficiency. Just look at a corporation that throws all sorts of time consuming and wasteful bureaucratic red tape for whatever reasons: in the end productivity suffers. I saw this when I worked in the financial field.

    Zedd, they are terrorists. Plain and simple. The question is: they are seen as “liberators” to who and why exactly? What has it gotten anyone? A BIG FAT ZERO.

    They are nothing but murderous spoilers with bankrupted ideas. They seek power on the backs of the weak. The sooner we can get this in our thick skulls the quicker we can quell it. Iran and Iraq are the thugs in the region as well as Syria. Don’t just single out Israel. That’s plain inaccurate, selective and misuse of facts.

    Iran needing nuclear energy is not a problem per se. The problem is that fanatics want to use it. I’d trust it more if it was a different government in place. Iran does not need defending; they are not innocent.

    Man, my mother bakes a mean sfogliatelle. I’m eating it as I write.

  • http://www.republicofdave.com Dave Nalle

    To go waaay back:

    Hey, I’m disappointed in the BC Politics. Where’s the piece on Chavez’s loss? Anyone? Clavos?

    There’s a story when Chavez is threatening dictatorship. When his threats fall short and things go well in Venezuela the story isn’t as interesting, except maybe for his promises to attempt another referendum, but that’s hardly surprising or enough of a story to stand on its own.

    Dave

  • Zedd

    Les

    You said: May be, but there are NO liberators in Iraq.

    Would you also be referring to the U.S. as well?

    If we apply the same statement to the American presence in Iraq then my point becomes even more relevant. There are no good guys.

  • troll

    Franco and alessandro – an overly simplified example to illustrate my use of ‘inefficient’:

    two brothers have a dry field – there’s a reservoir a mile away – but no ditch to carry to carry to water

    would it be more efficient for them to pair up and work together digging the ditch or to make a race of it and each dig his own – ?….(and just to make it interesting the winner of the game gets the field and all of its produce)

    the wasteful choice is made repeatedly in more complex interactions throughout our competitive economy

    what we ‘should’ be competing with is suffering and need – that alone would motivate ‘progress’

  • Les Slater

    Zedd,

    “Would you also be referring to the U.S. as well?”

    Of course, and especially.

    Les

  • Les Slater

    It’s important that the various bands of thugs operating in Iraq not be called liberators.

    Whatever Iran may be doing in Iraq may be understood from their perspective, but again, they are not liberators. It is however the height of hypocrisy for the U.S. to be complaining about Iranian intervention.

  • troll

    …the US has fallen for its own line: ‘you break it – you own it’

  • Zedd

    alessandro

    What has the U.S. intervention all over the world gotten anyone? We have armed and supported the most heinous of regimes all over the globe. What has THAT gotten anyone?

    You see we are not the good guys. We just know how to spin. Simple.

    Those terrorists exists because of us. Our intervention and manipulation of the politics and economic balance through our cowboys and Indians poison has rendered a lot of the world unable to reach their good ambitions. Off course people will get angry and yes they will want to retaliate. Their wanting to do so is reasonable and rational.

    Again, my point is not that terrorists are good. It is that we can not conduct ourselves in the manner that we do and NOT expect reprisal. If we are set on the course that we have paved for ourselves, let us approach the consequences with sobriety instead of playing good guy or victim. We should acknowledge that we are culpable and much of the disdain that is felt toward us is earned AND if we were on the receiving end of our initiatives, we would be far more punitive.

    This we know sir.

  • Zedd

    Les

    I certainly do not see the actions of any of the invaders of Iraq as liberating.

    It is however important to note that what the terrorists are doing is what we are doing there. They are attempting to prevent a force that they perceive as dangerous from settling in that region. They are trying to gain influence over that nation. In implementing their plans, they are succeeding in a further destabilization of that nation, just as we have.

  • Les Slater

    Zedd,

    “It is however important to note that what the terrorists are doing is what we are doing there. They are attempting to prevent a force that they perceive as dangerous from settling in that region. They are trying to gain influence over that nation. In implementing their plans, they are succeeding in a further destabilization of that nation, just as we have.”

    First, I must protest the use of the word ‘we’. Those that have sent troops there are but a very small minority of the most notorious thugs that have EVER existed on this planet. And those troops are not OUR troops. They are IMPERIALIST troops.

    The other thing is how you look at ‘stability’. The U.S. forces ARE seeking stability, and the various gangs of thugs are increasingly cooperating. This trend will continue. A big part of this is ethnic cleansing which the U.S. is complicit with.

    Les

  • Clavos

    “What has the U.S. intervention all over the world gotten anyone?”

    Therefore, we should leave (among others) the Sudan and its problems in the Darfur region alone, letting them work it out without US intervention.

    I agree.

  • Zedd

    Clavos,

    I would suggest that just because one strategy has not worked that it doesn’t mean that viable solutions should not be explored, especially when extreme human suffering is involved.

    I will assume that you concur.

  • Zedd

    Les

    Is this double speak? “The U.S. forces ARE seeking stability, and the various gangs of thugs are increasingly cooperating. This trend will continue. A big part of this is ethnic cleansing which the U.S. is complicit with.”

  • Les Slater

    “Is this double speak?”

    Not at all. It is the reality. What part(s) don’t you agree with, or think are in contradiction to one another?

  • Clavos

    “I would suggest that just because one strategy has not worked that it doesn’t mean that viable solutions should not be explored, especially when extreme human suffering is involved.

    I will assume that you concur.”

    I do, as long as said “viable solutions” do not include US intervention; since, as you have pointed out, US intervention all over the world is not desirable.

    So let someone else handle it, without US participation.

  • Les Slater

    Zedd, Clavos,

    If the U.S. did indeed, end its intervention ALL over the world, much good would begin to be accomplished, including a resolution of the problems in Darfur.

    Les

  • Clavos

    “If the U.S. did indeed, end its intervention ALL over the world, much good would begin to be accomplished”

    Except pf course, for the US, which would inevitably be overcome by the movements and forces aligned against US worldwide.

    But, most of the world would rejoice at that.

    At least, initially.

  • alessandro

    #117 – “If the U.S. did indeed, end its intervention ALL over the world, much good would begin to be accomplished, including a resolution of the problems in Darfur.”

    No one calculates the good. Reminds me of that scene in the ‘Life of Brian’ when the zealots was it? who asked what have the Romans ever did for them. The libertarian in me says interventionism is never good of any kind is good. Yet, people here probably have no problem with government intervention on the domestic front. The question is whether there is ever “good” interventionism.

    #103 Dave – Yeah but…what about teasing Moonraven?

    #105: Troll, we don’t know. It can be better if they go off on their own: it’s called innovation. However, if they pair up that’s a partnership and can still be productive, and innovative. i.e capitalistic. I see what you’re saying but not fully. Obviously, working together but who says capitalism doesn’t cooperate? Either way, as long as no third wheel do-gooder gets in the way it’s all good. I don’t see capitalism as being bankrupt to the point as mentioned here. It ain’t perfect and it seems to be running away from democratic principles but hardly a reason to “blow it up.”

    #109: Hello Zedd, I would not conclude this so easily but yes it is possible that actions always lead to a consequence. “Again, my point is not that terrorists are good. It is that we can not conduct ourselves in the manner that we do and NOT expect reprisal.” I can’t say this is a bad statement but on the other hand welcome to the world of international relations. This can be applied to all countries.

  • Les Slater

    A side note on the state of finance capital these days:

    The Federal Reserve, European Central Bank, Bank of England, Bank of Canada and the Swiss National Bank have pledged lots of money to banks at no specified minimum interest rate. Trash is accepted as collateral.

    The Bank of Japan has pledged to cooperate.

  • Franco

    Les,

    Thank you for elaborating. You have been part of some very interesting work.

    Look Les, I like capitalism and I am trying to understand why you don’t. Now I am not talking about big shot CEO getting 50 million-dollar parachutes. I know that is an extreme example but you get my point. I think that kind of pay gives corporations a bad name.

    But well over half of the companies is the US today is considered to be small business. Another 30 percent are mid sized with the balance making up the big corps. Now, I am small business. I have worked for several companies over the years and I now work for myself.

    Small businesses create two out of every three new jobs and account for nearly half of America’s overall employment. They play a vital role in helping add millions of new jobs. Small businesses are also vital for supporting local, national, and international communities.

    Women own more than a quarter of all businesses, and the number of women-owned businesses is growing. Hispanic Americans are opening their own businesses at a rate three times the national average.

    The free market is responsive and it offers such an endless array of interests in what ever one could imagine and each offers opportunities. The market place is where you can take your work efforts and sell your product.

  • Franco

    #105 — troll

    two brothers have a dry field – there’s a reservoir a mile away – but no ditch to carry to carry to water

    would it be more efficient for them to pair up and work together digging the ditch or to make a race of it and each dig his own?

    In your example troll, the two brothers already have the dry field together and so working together is rational.

    (and just to make it interesting the winner of the game gets the field and all of its produce)

    That is a completely diffract set of circumstances and becomes a fallacy in comparing to two because this would not apply to the two brothers because the two brothers already both own the dry field.

    Troll, I need for you to give me a real world example. If what you say about compitition being inefficient has substandces to study, then you surly can show a real world example with out the fallacy. I’m not doubting your sincere assertion, but the example you offer is a fallacy.

    Here is something that happened to me. I purchased an acre of land here in Chile in an newly developed industrial park where several people were buying the newly leved arres. I needed to put up a fence all around it and so did those who purchased around me. I made a deal with the owner behind me, and the one on my left and on my right, and we agreed to the kind of fence we wanted and we all splint the cost. Even if long term maintenance for the fences is not shared equally and I have to do it because I like things wording well, I still saved 50% of the installation costs. I’m happier then shit.

    But in my example there is no other condition about who wins my property for putting up the fence fasted as in your example.

    Give me a real-time real-world example without the fallacy condition so I can understand.

  • Franco

    #97 – Baronius

    Allocative efficiency for allocation of recources without a market system

    Like the Utility companies that provide services to homes and business?

    Adaptive efficiency is the capacity to change the distribution of resources correctly.

    Like manufacturing, marketing, sales, wholesale distrabution, transportation, retail? (Chain of distribution)

  • alessandro

    Franco: You go girl!

  • Les Slater

    Franco,

    “You have been part of some very interesting work.”

    A lot more interesting than I’ve been able to relate in a few paragraphs. I’ve been very fortunate. There’s been a lot of luck but much of it because I aggressively went after it.

    “I like capitalism and I am trying to understand why you don’t.”

    I still marvel at what capitalism can do some times, even now in the midst of some of its most corrosive tendencies. Capitalism did have its glory days, and its glory moments, to ignore them would leave you dull and without any sense of what humanity can accomplish.

    I am presently reading ‘City of the Century- the Epic of Chicago and the Making of America’ by Donald L. Miller. I’m in the middle of the story of Armour and Swift and the development of the meat packing industry. How could anyone not marvel? Even with its brutal exploitation of workers, the industry represented an enormous positive development for society, progress. The story goes through the late 19th century. I do not believe that capitalism’s ability to productively organize labor has been subsequently surpassed, or even maintained that level.

    I consider 1898 the year that capitalism shifted from industrial to financial. The likes of Armour and Swift did want to make money, and they did, plenty of it. But they also had a vision, from the start, of society’s needs. That is what they primarily addressed with their ambitions. The separation of the two was inconceivable.

    Today some industries start this way, but sooner or later, serve only the interests of maintaining profits, at the general impediment of progress. Microsoft is a good example of this. I jokingly say that their main poduct is the increasing of entropy.

    The biggest problem is that finance capital is quite removed from any connection with progress. They use armies to threaten, or even attack, their competitors or keep their markets and sources of raw materials to their advantage. This has historically lead to trade wars and then shooting wars which at times result in conflagrations. Some capitalist win, others lose. Out of it though, capitalism recovers to go through the cycle again. Meanwhile enormous human suffering and death.

    The stage of world capitalism now has more similarities to the ‘30s than other periods. It is in a severe, and increasing, crisis. On this post we are, more or less calmly, discussing the use of nuclear weapons, either by, or against Iran. These things are more openly justified by the defenders of capitalism.

    Les

  • alessandro

    Capitalism can possibly use some “cleansing.” There’s certainly much that has been written and said about this. I’d rather work with the system to fix it than go against it.

  • http://www.republicofdave.com Dave Nalle

    The biggest problem is that finance capital is quite removed from any connection with progress. They use armies to threaten, or even attack, their competitors or keep their markets and sources of raw materials to their advantage.

    I think the idea that this is caused by the capitalists is a stretch, as is the idea that this is anything new. Cornelius Vanderbilt bombarded Managua with the cannon on his private warship in the 1850s.

    It’s all about getting fair access to markets and resources. No one likes to be arbitrarily denied opportunity.

    This has historically lead to trade wars and then shooting wars which at times result in conflagrations. Some capitalist win, others lose. Out of it though, capitalism recovers to go through the cycle again. Meanwhile enormous human suffering and death.

    In the very short run. In the long run the result when the international capitalists win is the modernization of economies, growth of opportunities, increased wages, better quality of life and ultimately prosperity. South Korea started as a western ‘project’ state and went through a rough period of war and chaos, but 40 years later it was a model of modernization and economic success and a power in the world.

    Dave

  • STM

    The whole of the British Empire was about opening trade opportunities, even in the lost American colonies before the British really had a concept that what they were heading towards was empire. Their main interest was always trade, not glory.

    They weren’t perfect by a long shot, and we all know that. And to describe the British as anything but a war-like race would be wrong in the extreme. They caused plenty of bloodshed and misery in their quest to turn a profit.

    However, upon the dismantling of that empire, in an age of ne whope, what was left (mostly) were stable and prosperous societies. And the foundation of the freedoms upon which they were built came from out and out capitalism.

    One of those, Malaysia, is a beacon for how an islamic state can function (despite some hiccoughs) and it has one of the world’s highest standards of living – forget about just in Asia.

    Others, including the one I live in, and despite the many ills we’d like to see addressed, shine as a light of hope in a world of darkness.

    How is America any different, really? Americans may kid themselves that their corporate machinations don’t constitute empire, but they’d be wrong. It doesn’t fly the Stars and Stripes at every far-flung outpost of its empire, but America is as imperialist as its English-speaking predecessors of the two centuries before.

    There’s a corporate HQ of just about every major US company flying the flag of American capitalism on every far-flung continent.

    Americans would also be kidding themselves to believe they aren’t as war-like or as arrogant – in a different way – as their British cousins. But let’s hope that the legacy America leaves in this sometimes ill-conceived and misbegotten adventure is at least a measure of stability and prosperity – not just for America, BTW, but for the nations it has conquered.

    Conquered. Tough word to hear, that, if you’re American, but it’s true. There are ways to conquer and ways to conquer, but the outcome is always the same.

    Hamburger imperialism is imperialism nevertheless. Freedom is a McDonald’s on every second street corner, if you susbcribe to the American ethos of empire.

    In the case of the anglo nations, though, it’s always tempered by the hope and the belief that what it replaces is something better than went before.

    Let’s not collapse on the fallback position that America and its “cronies” are responsible for all the world’s ills. They are responsible for the least of them even if they ARE responsible for some of them.

    Tell me with a serious face that an American-backed regime in Iraq is worse than a regime that thought it OK to put people feet first into paper shredders, remembering that it’s not Americans who are blowing up their own people in market places.

    However, in exporting our shared belief in “democracy” (in the modern sense), it’s important to remember that our brand of democracy isn’t always what people want or need.

    And Iran, a democracy, whether we like it or not, is a classic case in point.

    Talking might be the best option right now. Gunboat diplomacy didn’t work a century ago, and it doesn’t work now.

  • Les Slater

    I’m surprised nobody commented on my #120. This is serious folks!

  • troll

    Franco – my comment concerned the inefficiency of production based on competition not how ‘rational’ it is for co-owners to work together

    alessandro – it’s a canard that innovation requires competition

  • alessandro

    Troll: Oh really? It’s a duck eh? How so? I’m stunned at such an assertion. It goes against….aw forget it. Of course, it depends what type of innovation we’re speaking – I’m assuming product/economic? And there are many lenses to look at this from but competition and curiosity my friend is what makes us humans tick and advance.

    #128: STM, you go girl.

    #120 – Les, I don’t know if you mean they are using this as a means to smooth interest rates or you see something more sinister at work?

  • http://www.republicofdave.com Dave Nalle

    There’s nothing more sinister, after all, than banks lending money to other banks. The BASTARDS!

    Dave

  • Franco

    #130 — troll

    Franco – my comment concerned the inefficiency of production based on competition

    I am going to have to disagree with you on this one troll. As alessandro puts it, it,s what makes us humans tick and advance.

    When a company is operating in the competitive free market place, is it a selfish greedy isolated and inefficient island all to itself? That is impossible because each individual company has to purchase materials or services from other companies who are competing for their business too. The outside services each company uses from other companies competing for its business must also offer highly efficient products and or services to get this business.

    The average small business uses the outside services of more then 20 other companies to run efficiently. Out of those 20 there are many more competing to become one of the chosen 20 who service a company. A company is going to choose the most efficient outside provider in can to meet its needs. Remember too that the 20 companies selected as outside service providers, each also has 20 companies servicing each of them and so it goes. 20 x 20 x 20 x 20 etc.

    Now if one of the 20 companies on the select list of suppliers grows inefficient and a bit indifferent to it customers needs resulting from the fact that they themselves have no direct competition in which to loose your business, then you suffers this indifferance which is an inefficient drag on your company. If it’s a critical drag of your overall efficiency and you can not find a local competitor to switch to, you may have to invest the money to incorporate that outside service inside your company yourself.

    If you want to be successfully in a free and competitive market place with your product or service you have to be highly efficient managing that product or service in every step of the process because your competitors are doing the same thing.

    You have to get the very maximum of products produced out of every piece of raw material. Your products must be transported to market in the most efficient and cost effective way you can, and you have to be able to handle returns and or replacements efficiently on your products should they be found defective.

    If your fail to compete efficiently at any step it all comes out of your ass, not the states. For those who fear competition, I can see why they do not like this system. The majority of the American people are not afraid to compete.

    Competition is keen and it is the driving forces that you must yourself display and prove to your customers that they will increase their own chances for success in using your product or service, and when they trust you with that import service, then you must shut up and prove it to them.

    This is neither rocket science nor a diploma hanging on the wall. If you want to be successful in free market economics (capitalism) and have more business then you ever wanted then get in your customers’ face and efficiently service them to death. I guarantee they will positively respond.

    A centrally planed state economy and market place will NEVER generate that kind of drive for efficiency. Look at he US Postal service, one of the governments most efficiently run enterprise and compare it to FedEx and their competitor DHL. They both run circles around the Post Office even though the Post Office has learned from them and tries to compete with them, thy can not reach that lever of efficiency, and you don’t see FedEx and DHL employees shooting each other.

    You mentioned overproduction and recession are not unfortunate side effects of capitalism – they are essential features

    Yes they are, but your only looking at the negative of this event, thus seeing the glass of water half-empty. The pendulum always swings back into growth. Nothing is a constant in business, or the weather, or life itself, and that is how it is, how it should be, and it is where competition excels.

    Additionally, under a socialist state plane economy and market place the same would apply but even much worse as the incentive to be efficient becomes flaccid when someone else is footing the bill like the state.

  • STM

    Yeah, geez, they’ve never done it before … why start now. Oh, wait …

  • Les Slater

    Dave,

    “There’s nothing more sinister, after all, than banks lending money to other banks.”

    There is a concern that the ‘liquidity’ crisis may also be an insolvency crisis. Nobody knows how much bank’s assets are really worth. The reason is that some assets are not trading at all (hense no MARKET value) because everyone is worried that they will be holding the bag when these assets are valued much lower than they are on the books for.

    Banks have been reluctant to go to the fed to borrow funds for fear that it will be seen that they are in trouble. This just continues the liquidity crisis.

    What the fed, in conjunction with much of the West’s central banks, are doing is to pledge funds that can be drawn on, TOTALLY ANONOMOUSLY, while using assets that have NO MARKET VALUE as COLLATERAL.

    The fed is preaching transparency while cloaking who might be insolvent while bailing them out. Loaning with NO REAL COLLATERAL is in reality just pumping money into an institution that is broke.

    It is part of the privatization of profits while socializing losses.

    Dave, you of all people, as a libertarian, ought to be ashamed of yourself for supporting such a scheme.

    Les

  • http://www.republicofdave.com Dave Nalle

    Les, as a libertarian I’m all for banks managing their money as they see fit. This isn’t a case of government forcing the international banks to back up the regional banks, it’s entirely voluntary. And if you think it’s just some goofy scheme to give away money, that seems pretty unrealistic. Banks don’t do things out of pure altruism.

    As for collateral, what about all that property that banks loaned money on? It’s pretty damned real.

    Dave

  • Les Slater

    “As for collateral, what about all that property that banks loaned money on? It’s pretty damned real.”

    Have you been paying any attention to economic news of late? That ‘real’ real estate, is falling in value. An investment grade loan assumes a revenue stream from the borrower at an expected rate. The ones that bought these debt obligations are finding out that they have been sliced and diced and otherwise disguised to make them appear much more sound than they ever were.

    The value of this paper, in reality, depended on the real estate bubble continuing to inflate. That was quite foolish and many bankers have been caught with their pants down.

    No, those inflated property values were never real.

  • Les Slater

    “This isn’t a case of government forcing the international banks to back up the regional banks…”

    Correct, it is more like the banks forcing the government to back THEM up. If the fed action undermines the currency then it will oblige the treasury to print more money. Ultimately it is the government subsidizing the banks.

    “…it’s entirely voluntary.”

    No, it’s been enormous pressure by the markets not to let the current liquidity crisis grow into a full blown monetary crisis and a collapse of the economy.

  • http://www.republicofdave.com Dave Nalle

    Pressure from ‘markets’ amounts to everyone in the financial community agreeing that it’s a good idea.

    As for the declining value of that property, do the math.

    If someone buys a $150K house on credit and makes payments for a typical period of about 2 years with a 30 year note, even if the terms aren’t rapacious, they’ve already paid about $20K in interest. Values haven’t dropped more than about 10% nationwide, so if the houses are foreclosed on, they still retain more than enough value to make up the loan amount with the interest included.

    And if the loan is front-loaded or includes PMI or the buyers were paying on two loans with an 80/20 then the banks got even more money out of the deal over and above whatever they can sell the house for.

    Now I realize the Austin area isn’t typical, but around here, as fast as houses are getting foreclosed on they’re getting resold for about the same price as they sold for originally sometimes even a little more. So the banks pocket all the interest, plus the value of the resale.

    For the loan crisis to be a real crisis we’d need to have a lot of property standing empty for a prolonged period and basically unsellable. In most of the country that’s not the case, in fact new construction is still going on.

    Dave

  • troll

    please explain the efficiency of the destruction of commodities (and the value [derived from labor] embedded in them) to maintain price

    please explain the efficiency (and the ‘half full’ nature) of the overproduction of labor its associated recession

    Franco – it is not surprising that you see the existing relations as based on eternal fundamental psychological laws…you are quite literally living the bourgeois dream as is evidenced even in your chosen proof structure:

    you assume as axiomatic and timeless what is to be demonstrated and then spend your time explaining how the ‘real world’ proves your point – contradictions therefore are explained away as necessary

    and a dream it is

    what you neglect is the fact that everything has a history – nothing never changes

    there is cause for hope that the suffering required by today’s capitalism is not a necessary condition of human existence

    …I understand that you don’t ‘grok’ my meaning – so I suggest that you write me off as crazy

  • troll

    [over production of labor and its associated recession]

  • Silver Surfer

    Les writes: “Have you been paying any attention to economic news of late? That ‘real’ real estate, is falling in value”.

    The thing is Les, in Oz, and I assume the story is the same in America, if you hang on to your place and keep paying the mortgage the price eventually goes up as real-estate prices always move in an up-down cycle. However, the slight downward cycle never quite wipes out the upward cycle, so you just don’t lose – provided of course that you don’t sell. The equity in the home increases, and in America you are lucky enough to have low interst rates (ours are now 8 per cent) and can write off your interest as a tax deduction (we can’t).

    Not that much different to the stock market, but with less greed involved as for the average punter, the prime motivation for investing in bricks and mortar is simply having a place to call your own. Of course with stocks ans shares, if you don’t sell, you don’t lose. Same with housing.

    The problems only arise when the buyer can’t keep paying the mortgage at the agreed rate. Yet it’s amazing how flexible the banks and the non-bank lenders are when it comes to renegotiating the loan or allowing for deferment of payment in genuine circumstances.

    Beacuse in the long run, no one wants to lose, and no one really wants to put anyone out on ths street if there’s another way round it.

    This is just another piece of wall st bullshit that is easily solvable with a (little) bit of government help. When you think about the military budget of the US, the amount needed is dead-set fucking peanuts.

    And as for the falling dollar: an overinflated currency once again created by greed on Wall St. The fall in the dollar takes it to just about where should have been these past 10 years, and is the (minor) correction we all had to have.

    Of course, I’m happy as the $A is now at near paritywith the greenack, which gives me great rates when I’m travelling. Selfish, maybe, but now all you bastards know exactly how it feels – especially when you travel to Europe :)

  • troll

    Franco – I’m sitting in the middle of a snow storm and you’ve worked hard trying to communicate…so you deserve a story:

    in my wayward youth I spent some time as a systems analyst ‘gunslinger’…one assignment that I took on was a job for Bell Labs designing training for them

    the problem that they faced was in their old long lines system which had been pieced together as needed by brilliant engineers based on nonstandard uses of equipment which by the time I came along had begun to fail with increasing frequency due to basic wear and tear

    what the labs wanted was a program to teach employees how to repair the equipment when it broke down

    naturally a big part of my job depended on interviewing ‘subject matter experts’ – the (by then quite old) guys who put the system together in the first place – and one question that I wanted to learn the answer to was why these bright people hadn’t documented the process in the first place…

    this question usually elicited sheepish looks and tales of ‘those heady days building the system’ before there were standards for documentation and when they ‘had to make whatever they had on hand work’ etc etc

    until one day I was sitting with three different broken pieces of long lines each of which seemed to have served the same function in the system (which function was not implied as a use in the specs for any of them) – and one of those old geezers…whose response to my question was that he had ‘kept his notes to himself ‘ to ensure his position as a well paid priest in the temple

    the implication of these interviews was clear and I reported to my project manager that the cost effective approach would be to replace they system…naturally they shot the messenger – but a couple of years and a bunch of bucks later Ma Bell agreed

    get it – ?

  • Les Slater

    Silver Surfer,

    “…the slight downward cycle never quite wipes out the upward cycle, so you just don’t lose – provided of course that you don’t sell. The equity in the home increases…”

    “…the prime motivation for investing in bricks and mortar is simply having a place to call your own. Of course with stocks ans shares, if you don’t sell, you don’t lose. Same with housing.”

    So it might seem. I’ve been around for a long time. I do see how this is evolving. I REMEMBER back in 1948 when a common worker would be able to buy a house. The price of a modest house might be two years wage of the one worker in the household. Taxes were low and savings were high. After saving for the down payment one could get a 20 year mortgage at a 6% interest. The payment amounted to under 14% of HIS wage.

    Now, let’s get into some more modern times. A family has a total income of $40K manages to get a home for 200K and 100% finance it for 30 years at 6%. Their payments would amount to 36% of their gross income and typical real estate taxes another 13% for a total of 49%.

    This trend turns home ‘ownership’ into slavery to the banks.

    Les

  • Les Slater

    troll,

    “…he had ‘kept his notes to himself ‘ to ensure his position as a well paid priest in the temple.”

    I found this true of the majority of the electronics engineering profession. They, of course, were a ‘highly educated’ priesthood. It turned out that much of the mumbo jumbo was nothing more than obscufation.

    This had a number of interesting effects. Of course, one was to maintain the priesthood, and their ‘worth’. Another was to make it difficult for them to design things, especially if the new deviated much from incremental enhancements. Finally it limited the pool of those that could apply their intelligence to the problem.

    Les

  • troll

    Les – I found the same to be true of many of the ‘subject matter experts’ that I dealt with not only those engineers – frequently at no small expense to the business or go’ment agency that employed them

    …but one can hardly blame them for acting in their own best interest I guess

  • Les Slater

    troll,

    “Finally it limit[s] the pool of those that could apply their intelligence to the problem.”

    This is an enormous efficiency issue. Intellectual efficiency. Productivity. The human spirit itself.

    There are in so many fields where an individual has such a stature no one dare think critically of what he pontificates. A good example in this thread is Milton Friedman boosting the absolutely ridiculous (except maybe as a cute trick to blind gullible 10th graders), ‘I, Pencil’. A fuckin’ Nobel Prize winner in ECONOMICS, no less! Sheesh!

    This is just an example of the mediocrity that so many have sunk to. People are not used to thinking critically. The priesthood, those that society ordains, those that relegate the rest to sheep.

    Les

  • bliffle

    troll:

    “…why these bright people hadn’t documented the process in the first place…”

    That’s easy. Because management kept demanding they fix problems and meet unrealistic schedules rather than wasting time documenting. Nobody reads those documents anyhow, they’re always out-of-date and don’t correspond to current conditions. You were probably the first person to express interest.

  • alessandro

    Les, #144 interesting. Taxes have indeed increased but that’s a result of government interventionism. Yes, from what I read economic times back then seemed more fluid however on the other hand our standard of living is unquestionably higher and unemployment is lower. Yin and Yang dude, yin and yang.