Since the end of the cold war the US has been encircling Russia by bringing the old Warsaw Pact countries into NATO. It's also been putting missles in these former Soviet states. This always struck me as a pretty stupid thing to do. How do you think the US would react if Russia made Mexico part of the Warsaw Pact or put missiles in Cuba. Oh...they already did that. What the dumbshits running this country don't understand is that Russia has been invaded numerous times in the past 300 years and isn't going to let that happen again. They have repeatedly made their concerns known and have been ignored. The line has been drawn in the sand. We are looking at at World War. I haven't been this scared since the Cuban Missile Crises. And we don't have Kennedy in charge, we have Bush. This is the Cuban Missile Crisis in reverse.
Ian has a post everyone should read. Also, as a reminder, give this show Ian and I did with noted Russia specialist Anatol Lieven, where we discuss at length Russia and the Ukraine and NATO a listen.
Everything which transpired over the last week has been about one issue, and one issue only: the Ukraine. Russia will never let the Ukraine join NATO. Not now, especially as they have the power and the means and quite clearly the will to thwart its accession.
Why is Ukraine important? Other than the key points Ian makes there is one other key point that must be made. Had Charles XII, or Napoleon or Hitler had a Western friendly country with borders less than a few hundred kilometers from Moscow their invasions would have ended in a drastically different fashion. It's called 'strategic depth' and the Russians will never give up the Ukraine for that reason. If you think nations change, well they do, but not nearly as fast as you think. And for the Russians the Mongols, the Swedes, the French and the Germans are still very, very real in their collective memory.
We are at a very dangerous point right now. The US is over-extended and to some extent paralyzed by the election that is upcoming. The next 12 months are the perfect time frame, as Ian notes, for Russia to make it very clear that it will not tolerate a Ukraine in NATO.
It won't happen, and if the West persists, Europe will have some damn cold winters ahead and maybe even a fighting war on its hands.
Stay out of the Ukraine. America has its red-lines; the Israelis have theirs, and so do the Russians. We'd be wise to remember that in all our flag waving jingoistic glory.
Hold onto your boots, because this may only be one of a number of "Russian Wars of Reunification." Why do I say so? Well, read this:
Upping the ante, Ukraine said it reserved the right to bar Russian warships from returning to their nominally Ukrainian - formerly Russian - base of Sevastopol , on the Crimean peninsula. On Saturday, Russia accused Ukraine of "arming the Georgians to the teeth."
Given the cease fire, this threat may no longer be immenent, but the situation in Sevastopol is highly flammable.
Sevastopol was founded in 1783 as a naval base by the Russians. In 1954 Russia gave Sevastopol and the Crimea, which it's a part of, to Ukraine, then a province of the USSR. When Ukraine separated it claimed both Crimea and Sevastopol. Russia disagreed and there was some violence over the issue.
In 1991 Crimea voted for independence. In 1994 a referendum passed again for independence and for Crimeans to be able to take Russian citizenship. The Russian parliament voted to rescind the 1954 transfer.
In 1997 a bilateral treaty granted Ukraine both Sevastopol and the Crimea, while another treaty gave Russia the right to use Sevastopol as a naval base for 20 years, though that could be renewed.
This year, the Ukrainian president announced that the Ukraine is presently not planning on renewing the lease. If that happens, Russia loses control of a naval base it had had for over 200 years. It won't be without an outlet to the Black Sea, mind you, but Sevastopol is a superior base.
More importantly, the majority of the population in Crimea (about 60%) identify as Russian. About 70% of the population of Sevastopol identifies as Russian.
I think this is one of the best Nelson Reports I've yet read:
SUMMARY: it may be that a cease-fire now being negotiated by France's Sarkozy will provide Moscow, Tbilisi and Washington with face-saving ways out of the mess in Georgia.
But certain to remain a work in progress is how the US and Europe move to address the legitimate great power concerns...and behavior...of Russia. Ten years of not doing so fed directly the current crisis.
Remember..."legitimate" does not have to mean "good"...we're talking about power here, not morality. Morgenthau rules, post Soviet collapse, something the Bush Administration had to learn the hard way, and McCain may not yet grasp.
McCain's statements today apparently seek to "beat" Russia, and recreate the simple, happy days of the Cold War. Obama's statements continue to be unemotional. Whether US voters think "tough" is "smart" could be a decisive question this November.
"Perspective" tonight is from the Nixon Center's Demetri Simes, who knows a thing or two about Soviet brutality. We use it not necessarily because he is 100% right about Georgian provocation, but because if HE sees it this way, so does Russia, and it's Russia we have to deal with here.
"Payback" for Kosovo, NATO expansion, missiles in Poland? Why? If you don't work it out now, will it be easier after a disaster in Ukraine? Lithuania?
The neoconned Bush Regime and the Israeli-occupied American media are heading the innocent world toward nuclear war.
Back in the Reagan years the National Endowment for Democracy was created as a cold war tool. Today the NED is a neocon-controlled agent for US world hegemony. Its main function is to pour US money and election-rigging into former constituent parts of the Soviet Union in order to ring Russia with American puppet states.
The neoconservative Bush Regime used the NED to intervene in Ukrainian and Georgian internal affairs in keeping with the neoconservative plan to establish US-friendly and Russia-hostile political regimes in these two former constituent parts of Russia and the Soviet Union.
The NED was also used to dismember the former Yugoslavia with its interventions in Slovakia, Serbia, and Montenegro.
Allen Weinstein, who helped draft the legislation establishing NED, told the Washington Post in 1991 that much of what the NED does “today was done covertly 25 years ago by the CIA.”
The Bush Regime, having established a puppet, Mikhail Saakashvili, as president of Georgia, tried to bring Georgia into NATO.
For readers too young to know, the North Atlantic Treaty Organization was a military alliance between the US and Western European countries to resist any Soviet move into Western Europe [and to ensure European countries lined up behind the US, and bought its weapons systems. Editors] . There has been no reason for NATO since the Soviet Union’s internal political collapse almost two decades ago. The neocons turned NATO into another tool, like the NED, for US world hegemony. Subsequent US administrations violated the understandings that President Reagan had reached with Mikhail Gorbachev, the last Soviet leader, and have incorporated former parts of the Soviet empire into NATO. The neocon goal of ringing Russia with a hostile military alliance has been proclaimed many times.
The Russian invasion of the South Ossetian enclave in Georgia should call into question a basic component of US foreign policy – the integration of Eastern Europe and former Soviet republics into NATO. This policy has been pursued by Democratic and Republican administrations, but with no public debate and with little thought as to the long-term consequences. The consequences are now becoming clear, and they are unpleasant.
The attack signals several Russian positions. Russia will intervene in foreign countries to protect ethnic Russians living there. Russia can readily control or even cut off important oil pipelines connecting the resources of Central Asia to western markets, one of which of course runs through Georgia. The attack also signals Russia’s displeasure with NATO expansion into Eastern Europe and former Soviet Republics. Since the collapse of the Soviet Union in 1991, NATO has taken under its increasingly expansive wing Latvia, Lithuania, Estonia, Poland, the Czech Republic, Hungary, Bulgaria, Romania, and Slovenia. Georgia plans to join in the next few years.
This process has been going on for fifteen years, under the Clinton and Bush administrations. And it is as ill thought out as any foreign policy the US has pursued in decades. The American public greeted each new NATO member as though they were new neighbors, not as distant and even remote countries we were now obliged to defend. NATO is a mutual defense pact. Members are required to go to war if a member is attacked.
Nor was the effect on Russia thought out. As is well known – though not well comprehended – Russian history is filled with periodic devastating invasions, from Germany (twice), France, Sweden, and the Mongols. Russian governments, and the public as well, look upon events on their periphery with concerns and fears that people of a country sharing borders with Canada and Mexico cannot understand. NATO forces, pressing steadily deeper into what Russia thought to be a defensive glacis from a resurgent Germany, set off alarms in the Russian bureaus and public alike, thereby contributing to the return to authoritarian government based on national security and militarism.
When I blogged about the Ossetia crisis Sunday, I wrote that one thing it clearly showed was that "The 'west' is hopelessly over-stretched, what with all its current commitments of troops in Iraq, a crisis-ridden Afghanistan, and (still) in the Balkans..."
Today, McClatchy's dogged reporter Jonathan Landay gives us more details of that over-stretch. (HT: Dan Froomkin.) Landay quoted one US official as saying that the US military authorities had not really understood the seriousness of the preparations the Russian military had recently made along the Georgian border-- because US spy satellites and other means of technical espionage were "pretty well consumed by Iraq, Afghanistan and now Pakistan."
That, you could describe as logistical over-stretch. But there has also been political over-stretch. You'll recall that back last year, shortly after the Bush administration announced that portions of its new "ballistic missile defense system" would be placed in Poland and the Czech Republic, Russia announced that it would withdraw from the 1990 Treaty on Conventional Forces in Europe (CFE). Few people paid much heed at the time, or thought thaqt Moscow's exit from that older treaty was very important. But one of the key provisions of the CFE Treaty was that signatories were committed to engaging in regular exchanges of information about troop movements and submitting to challenge inspections from other treaty participants.
Guess what. After Russia withdrew from the CFE, they no longer had to do that.
And guess what else. It truly seems that no-one in the Pentagon was on duty last week as Russia's troop build-up gained momentum.
This is too cool! George Orwell (Animal Farm and 1984) has a blog. And he's been dead since 1950!
‘When one reads any strongly individual piece of writing, one has the impression of seeing a face somewhere behind the page’, wrote George Orwell, in his 1939 essay on Charles Dickens.
From 9th August 2008, you will be able to gather your own impression of Orwell’s face from reading his most strongly individual piece of writing: his diaries. The Orwell Prize is delighted to announce that, to mark the 70th anniversary of the diaries, each diary entry will be published on this blog exactly seventy years after it was written, allowing you to follow Orwell’s recuperation in Morocco, his return to the UK, and his opinions on the descent of Europe into war in real time. The diaries end in 1942, three years into the conflict.
Very hot in the morning. In the afternoon sudden thunder-storm & very heavy rain. About 50 yards from the gate the road & pavement flooded a foot deep after only 1 1/2 hours rain. Blackberries beginning to redden.
"War is the great auditor of institutions," the historian Corelli Barnett once observed. Since 9/11, the United States has undergone such an audit and been found wanting. That adverse judgment applies in full to America's armed forces.
Valor does not offer the measure of an army's greatness, nor does fortitude, nor durability, nor technological sophistication. A great army is one that accomplishes its assigned mission. Since George W. Bush inaugurated his global war on terror, the armed forces of the United States have failed to meet that standard.
In the aftermath of September 11, 2001, Bush conceived of a bold, offensive strategy, vowing to "take the battle to the enemy, disrupt his plans, and confront the worst threats before they emerge." The military offered the principal means for undertaking this offensive, and U.S. forces soon found themselves engaged on several fronts.
Two of those fronts --- Afghanistan and Iraq -- commanded priority attention. In each case, the assigned task was to deliver a knockout blow, leading to a quick, decisive, economical, politically meaningful victory. In each case, despite impressive displays of valor, fortitude, durability, and technological sophistication, America's military came up short. The problem lay not with the level of exertion but with the results achieved.
In Afghanistan, U.S. forces failed to eliminate the leadership of Al Qaeda. Although they toppled the Taliban regime that had ruled most of that country, they failed to eliminate the Taliban movement, which soon began to claw its way back. Intended as a brief campaign, the Afghan War became a protracted one. Nearly seven years after it began, there is no end in sight. If anything, America's adversaries are gaining strength. The outcome remains much in doubt.
In Iraq, events followed a similar pattern, with the appearance of easy success belied by subsequent developments. The U.S. invasion began on March 19, 2003. Six weeks later, against the backdrop of a White House-produced banner proclaiming "Mission Accomplished," President Bush declared that "major combat operations in Iraq have ended." This claim proved illusory.
Writing shortly after the fall of Baghdad, the influential neoconservatives David Frum and Richard Perle declared Operation Iraqi Freedom "a vivid and compelling demonstration of America's ability to win swift and total victory." General Tommy Franks, commanding the force that invaded Iraq, modestly characterized the results of his handiwork as "unequalled in its excellence by anything in the annals of war." In retrospect, such judgments -- and they were legion -- can only be considered risible. A war thought to have ended on April 9, 2003, in Baghdad's al-Firdos Square was only just beginning. Fighting dragged on for years, exacting a cruel toll. Iraq became a reprise of Vietnam, although in some respects at least on a blessedly smaller scale.
America is on vacation from its financial, fiscal, and economic problems, having left the centers of power in Wall Street and Washington for a Nantucket-of-the-mind, where, in a haze of artisanal vodka and bong smoke, it's out in the cool dune grass watching imaginary whalefishes blow, leaving only the TV Bubbleheads behind back home. Larry Kudlow of CNBC was practically drooling into his cufflinks on screen last week when the dollar popped against the Euro, and crude oil slumped, and the equity markets climbed up a flagpole.
This sort of euphoria is actually an alarming pre-crash symptom, in this case of a patient (the US) entering the terminal phase of sclerosis. Our society and all its playerz -- especially the appointed communicators -- just can't fathom the reality of the threats we face, which are 1.) the loss of primary energy resources, 2.) the loss of technological potency, and 3.) the loss of a comfortable standard of living.
As the boys over at the Financial Sense News Hour podcast have been saying for months, we're caught in a paradigm shift and we're trying desperately to prove (to ourselves) that we can get back to the way things used to be. This is a broad cultural phenomenon and helps to explain why even the greenest captains of environmentalism strive to find groovy new ways to run all our cars, while their counterparts on Wall Street strive desperately to salvage a set of "innovative" financial rackets based on getting something for nothing. It also explains the foolishness of the "drill drill drill" crowd, which believes we could be back to 99-cent gasoline if only Exxon-Mobil were allowed to prospect offshore where the codfish used to swim. (By the way, I'm in in full favor of granting them permission to do so, if only to put an end to this foolish debate.)
Reality, meanwhile, strives to take us in another direction. Our destination is a far less complex society in a larger, rounder, and less economically-integrated world. We will be leaving a lot of our technological comforts behind, staying closer to home, living in smaller cities and reactivated small towns, working the land more intensively to produce the food we need, and possibly organizing our governance at something less than the continental scale our dwindling riches used to afford. That is, if we're lucky enough to avoid the real possibility of social disorder and violence that would attend a fullblown economic collapse scenario.
For as long as I've been alive the old Confederacy has been a land without closure, where history keeps coming at you day after day, year after year, decade after decade, as if the past were the present, too, and the future forever. Cities grew and populations changed in the South, but the Civil War lurked somehow in the shadow of mirror-sided skyscrapers; the holocaust of slavery and the sweet-bitter victories of the civil-rights movement lingered deep in the minds of people on both sides of the color line. Yes there was change, progress, prosperity, and a lot of it. Southerners put their faith in money and jobs and God Almighty to get them to a better place and better times—and for a lot of them, white and black, those times came. The South got to be a more complicated place, where rich and poor—which is pretty much all there was before World War II—gave way to a broad-spectrum bourgeoisie with big-time aspirations. But as air conditioning conquered the lethargy-inducing climate and Northerners by the millions abandoned the rust belt for the sun belt, the past wasn't forgotten or forgiven so much as put aside while people got on with their lives and their business.
Now this part of the country, where I have my deepest roots, feels raw again, its political emotions more exposed than they've been in decades. George W. Bush and Barack Hussein Obama have unsettled the South: the first with a reckless war and a weakened economy, the second with the color of his skin, the foreignness of his name, the lofty liberalism of his language. Suddenly the palliative prosperity that salved old, deep wounds no longer seems adequate to the task.
Last month I set out driving through Tennessee, Georgia and the Carolinas, roughly retracing the deepest scar in the country—the blazing track of total war left by Union Gen. William Tecumseh Sherman in 1864 and 1865. After many years away I was exploring my own blood ties (which include an ancestor named after Sherman by his slave-owning-yet-Unionist parents), but also gauging the tenor of a region that has been critical to every U.S. presidential election since 1932, and may be again. "If you don't win anything in the South, you need 70 percent of the rest of the country," says Merle Black, a political scientist at Emory University in Atlanta. "If you can win some of the South, that gives you breathing space." Polls suggest Virginia is in play. And the Obama campaign is approaching North Carolina and Georgia as if they might be, although like most people, Black (who is white, and from east Texas, which is deep in Dixie) thinks John McCain will win in both those states if only as the default candidate, the un-Obama.
The South I saw was troubled by changes that go well beyond this "change" election. A generation is growing up with traumas more immediate than those of the 1860s—or the 1960s. Shana Sprouse, 21 and white, and born and raised in Spartanburg, S.C., says she's going to vote for Obama because her 26-year-old boyfriend is racked with cancer and she and he have spent the last two years trying to find ways to pay for his treatment or, now, his hospice. Jobs are disappearing to places that are truly foreign, not mock-strange states like California. New immigrants are introducing brown into a color map that has long been dominated by black and white. There is a sense that a world is ending, maybe not this year but inevitably.
It was shortly after the bipartisan Iraq Study Group issued its recommendations to Congress in late 2006 that a directive came down from the highest levels of the Pentagon: an order for another war game involving Iran.
The study group had proposed that the Bush administration engage in direct diplomatic talks with its nemesis, a nation that Washington says supports terrorism, encourages attacks on U.S. troops in Iraq, and, most ominously, is developing nuclear weapons. The Chairman of the Joint Chiefs of Staff at the time, Gen. Peter Pace, asked the Defense Department's top war gamers to construct a scenario to be played out in early 2007. "We postulated that the president of the United States actually took the advice of the Iraq Study Group seriously and tried to engage diplomatically with Iran," says one defense analyst who took part.
Talks stall. There may be few greater symbols, senior officials point out, than the nation's military gaming diplomacy to illustrate the Pentagon's wariness of war with Iran. Such a conflict remains among the options "on the table," as President Bush reiterated in July, if Iran continues its nuclear program. The alternative approach, the European-led multilateral talks with Iran, stalled this month after the deadline expired on yet an-other offer of economic incentives. Iranian President Mahmoud Ahmadinejad vowed that his country would not surrender its "nuclear rights" in the face of U.S. and European demands to halt uranium enrichment, the process that produces fuel for generating electricity and making nuclear bombs. He has also threatened to shut down the Strait of Hormuz, the strategic waterway through which some 40 percent of the world's oil passes, in the event of any American military attack.
In the wake of these events, the Bush administration expressed its exasperation. "In case he hasn't noticed," White House Press Secretary Dana Perino quipped, "we are trying to talk to them."
The Pentagon has noticed, well aware that the White House is capable of doing more than throwing up its hands in frustration. Military leaders recognize the precarious ambiguity of America's red line with Iran—and that of Israel, which says Iran's nuclear program poses an "existential threat." Mindful of these dynamics and engaged in wars on two fronts, there have been few greater proponents for U.S. diplomatic overtures than the Department of Defense.
While everyone's looking at Iraq's effect on American politics -- and whether or not John McCain and Barack Obama are converging on a policy that combines a flexible timetable with a vague, and long-lasting, residual force -- let's take a look instead at Iraqi politics. The picture isn't pretty.
Despite the Optimism of the Neocons, which has pushed mainstream media coverage to be increasingly flowery about Iraq's political progress, in fact the country is poised to explode. Even before the November election. And for McCain and Obama, the problem is that Iran has many of the cards in its hands. Depending on its choosing, between now and November Iran can help stabilize the war in Iraq -- mostly by urging the Iraqi Shiites to behave themselves -- or it can make things a lot more violent.
There are at least three flashpoints for an explosion, any or all of which could blow up over the next couple of months. (Way to go, Surgin' Generals!) The first is the brewing crisis over Kirkuk, where the pushy Kurds are demanding control and Iraq's Arabs are resisting. The second is in the west, and Anbar, where the US-backed Sons of Iraq sahwa ("Awakening") movement is moving to take power against the Iraqi Islamic Party, a fundamentalist Sunni bloc. And third is the restive Mahdi Army of Muqtada al-Sadr, which is chafing at gains made by its Iranian-backed rival, the Islamic Supreme Council of Iraq (ISCI).
Everyone has some kind of place that makes them feel transported to a magical realm. For some people it’s castles with their noble history and crumbling towers. For others it’s abandoned factories, ivy choked, a sense of foreboding around every corner. For us here at Curious Expeditions, there has always been something about libraries. Row after row, shelf after shelf, there is nothing more magical than a beautiful old library.
The final countdown Time is fast running out to stop irreversible climate change, a group of global warming experts warns today. We have only 100 months to avoid disaster. Andrew Simms explains why we must act now - and where to begin
If you shout "fire" in a crowded theatre, when there is none, you understand that you might be arrested for irresponsible behaviour and breach of the peace. But from today, I smell smoke, I see flames and I think it is time to shout. I don't want you to panic, but I do think it would be a good idea to form an orderly queue to leave the building.
Because in just 100 months' time, if we are lucky, and based on a quite conservative estimate, we could reach a tipping point for the beginnings of runaway climate change. That said, among people working on global warming, there are countless models, scenarios, and different iterations of all those models and scenarios. So, let us be clear from the outset about exactly what we mean.
The concentration of carbon dioxide (CO2) in the atmosphere today, the most prevalent greenhouse gas, is the highest it has been for the past 650,000 years. In the space of just 250 years, as a result of the coal-fired Industrial Revolution, and changes to land use such as the growth of cities and the felling of forests, we have released, cumulatively, more than 1,800bn tonnes of CO2 into the atmosphere. Currently, approximately 1,000 tonnes of CO2 are released into the Earth's atmosphere every second, due to human activity. Greenhouse gases trap incoming solar radiation, warming the atmosphere. When these gases accumulate beyond a certain level - often termed a "tipping point" - global warming will accelerate, potentially beyond control.
Faced with circumstances that clearly threaten human civilisation, scientists at least have the sense of humour to term what drives this process as "positive feedback". But if translated into an office workplace environment, it's the sort of "positive feedback" from a manager that would run along the lines of: "You're fired, you were rubbish anyway, you have no future, your home has been demolished and I've killed your dog."
In climate change, a number of feedback loops amplify warming through physical processes that are either triggered by the initial warming itself, or the increase in greenhouse gases. One example is the melting of ice sheets. The loss of ice cover reduces the ability of the Earth's surface to reflect heat and, by revealing darker surfaces, increases the amount of heat absorbed. Other dynamics include the decreasing ability of oceans to absorb CO2 due to higher wind strengths linked to climate change. This has already been observed in the Southern Ocean and North Atlantic, increasing the amount of CO2 in the atmosphere, and adding to climate change.
Because of such self-reinforcing positive feedbacks (which, because of the accidental humour of science, we must remind ourselves are, in fact, negative), once a critical greenhouse concentration threshold is passed, global warming will continue even if we stop releasing additional greenhouse gases into the atmosphere. If that happens, the Earth's climate will shift into another, more volatile state, with different ocean circulation, wind and rainfall patterns. The implications of which, according to a growing litany of research, are potentially catastrophic for life on Earth. Such a change in the state of the climate system is often referred to as irreversible climate change.
The row over US inaction on carbon emissions reached new heights yesterday after the White House allowed Congress to look at last year's government proposal to officially deem climate change a threat to public health – a plan that aides to George Bush refused to acknowledge or read.
America's Economic Free Fall In their haste to do anything Wall Street wants, Congress and the lame-duck President are sowing far more profound troubles for the country. By William Greider
Washington can act with breathtaking urgency when the right people want something done. In this case, the people are Wall Street's titans, who are scared witless at the prospect of their historic implosion. Congress quickly agreed to enact a gargantuan bailout, with more to come, to calm the anxieties and halt the deflation of Wall Street giants. Put aside partisan bickering, no time for hearings, no need to think through the deeper implications. We haven't seen "bipartisan cooperation" like this since Washington decided to invade Iraq.
In their haste to do anything the financial guys seem to want, Congress and the lame-duck President are, I fear, sowing far more profound troubles for the country. First, while throwing our money at Wall Street, government is neglecting the grave risk of a deeper catastrophe for the real economy of producers and consumers. Second, Washington's selective generosity for influential financial losers is deforming democracy and opening the path to an awesomely powerful corporate state. Third, the rescue has not succeeded, not yet. Banking faces huge losses ahead, and informed insiders assume a far larger federal bailout will be needed -- after the election. No one wants to upset voters by talking about it now. The next President, once in office, can break the bad news. It's not only about the money -- with debate silenced, a dangerous line has been crossed. Hundreds of billions in open-ended relief has been delivered to the largest and most powerful mega-banks and investment firms, while government offers only weak gestures of sympathy for struggling producers, workers and consumers.
The bailouts are rewarding the very people and institutions whose reckless behavior caused this financial mess. Yet government demands nothing from them in return -- like new rules for prudent behavior and explicit obligations to serve the national interest. Washington ought to compel the financial players to rein in their appetite for profit in order to help save the country from a far worse fate: a depressed economy that cannot regain its normal energies. Instead, the Federal Reserve, the Treasury, the Democratic Congress and of course the Republicans meekly defer to the wise men of high finance, who no longer seem so all-knowing.
The Bush administration this week predicted that the US budget deficit will hit a record $482 billion in 2009. This means that the next president, whether Democrat Barack Obama or Republican John McCain, will follow a policy of unprecedented austerity, including gutting entitlement programs, such as Medicare and Social Security.
Although the deficit figure is $74 billion higher than what the White House predicted just two months ago, it is widely acknowledged that it severely underestimates the real scope of the coming shortfall. The amount announced by White House budget director Jim Nussle includes only $70 billion for the wars in Iraq and Afghanistan—which could cost at least three times as much.
Moreover, the estimate ignores the $100 billion—or hundreds of billions, which could be the eventual cost—being allocated for the Treasury Department’s rescue of the mortgage finance companies, Fannie Mae and Freddie Mac.
The estimate was based on projections of better-than-expected economic growth, corporate tax revenues, unemployment and inflation estimates and a slowing down of the fall in housing prices. These were quickly discredited by news that real estate prices had fallen by a record 15.8 percent in 20 major US cities over the past year. The same day that the White House released the estimate, Merrill Lynch was forced to write-down $5.7 billion in mortgage-backed assets and was essentially bailed out by investors from Singapore.
“That’s not the real number,” former Bush Treasury Secretary Paul O’Neill said of the deficit in a comment cited in the Washington Post. “It’s upward of $500 billion and counting. It’s a mind-boggling number.”
This staggering rise in government indebtedness—which has more than doubled in the current 2008 fiscal year to $389 billion, from $162 billion in 2007 and will be nearly half a trillion in 2009—further undermines the international creditworthiness of the US and places even greater downward pressure on the US dollar.
According to the New York Times, “When Mr. Bush took office, he predicted that federal debt held by the public—the amount borrowed by the government to pay for past deficits—would shrink to just 8 percent of the gross domestic product in 2009. He now estimates that it will amount to 40 percent.”
In an eerie echo of President Herbert Hoover in 1930, during a Presidential campaign against Roosevelt, following the stock market crash and collapse of numerous smaller banks, Paulson recently appeared on national TV to declare "our banking system is a safe and sound one." He added that the list of "troubled" banks "is a very manageable situation." In fact what he did not say was that the US bank deposit insurance fund, the Federal Deposit Insurance Corporation (FDIC) has a list of problem banks that numbers 90. Not included on that list are banks such as Citigroup, until recently the largest bank in the world.
Both our moms did well last week. My mom is doing better and may be released from the nursing home to go back to an assisted living house. Unfortunately, the place she had been staying at is full. Now my brother Terry has to start looking again. It appears Zoe's mom, Gerry, will be leaving Western State Hospital. Unfortunately it's not because she is doing better (She is doing better but not really better enough.) but because of Medicare bureaucratic changes. Where she is staying is a psychiatric hospital and Gerry no longer qualifies to be there since she can't be cured. Alzheimer's and dementia are psychiatric conditions but not curable ones. She is not the only one. Many of the patients are dementia patients. Now they all have to have new homes found for them. It will take some time to do that so it's not something imminent. As much as we would like Gerry closer what we like more is the care she gets at Western State Hospital. The people are fantastic. Into the unknown. Bah! Humbug!
Yesterday Zoe and I, with the help of our friend Kim, participated in that great American tradition of over consumption: the garage sale. That is where you stick all your junk in front of your house so people can come by and give you pennies on the dollar for it. It keeps the junk in circulation. Thursday and Friday were days of purging. Adding stuff that we no longer used to the pile to sell. Kim was invaluable in organizing it all. Our little community of Honeymoon Lake (right next to Honeymoon Bay, which was Dog Fish Bay (a Dog Fish is a variety of small shark common in these waters) until the develpers got to it) is off the beaten track so it's hard to get traffic to a single garage sale. This year the Honeymoon Lake Community Association put signs up on the highway and advertised in the local papers so there were a number of Honeymoon Lake garage sales for junk bargain hunters to come to. The crowds started driving by at 8:30 even though it was supposed to start a 9. I don't frequent garage sales and haven't participated in one so this was an experience. A lot of people showed up! One man's junk is another's treasure. We got paid for them to remove our junk. They didn't take it all and the rest will go the a local charitable thrift store. It went well be we are exhausted!