August 29-31, 2008 -- UPDATE 1X. Sarah Palin choice met with shock and bewilderment
publication date: Aug 29, 2008
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August 29-31, 2008 -- UPDATE 1X. Sarah Palin choice met with shock and bewilderment
John McCain's surprise choice of Alaska Republican Governor Sarah Palin, who, just two years ago was mayor of the small town of Wasilla, Alaska, population of 5400, was met with shock and bewilderment by a former top Alaska office holder with whom WMR spoke this morning.
The source said that while Palin has a record of fighting corruption involving the Ted Stevens and Don Young oil bribery scandals -- she broke publicly with both and criticized them -- she is way too inexperienced for the vice presidency.
The veteran Alaska pol summed up McCain's choice of Palin with one word: "crazy."
McCain bypassed other, more experienced Republicans for the Veep slot, including Minnesota Governor Tim Pawlenty and former Massachusetts Governor Mitt Romney. Some pundits are suggesting that McCain is aiming to pick up disenchanted women who supported Hillary Clinton. However, Palin is extremely anti-choice, pro guns, and a major supporter of the anti-choice Feminists for Life, the counsel for which is Jane Sullivan Roberts, the wife of Chief Justice John Roberts. Palin's husband Todd, a native Yupik Eskimo, is an employee of British Petroleum and works on oil projects on Alaska's North Slope.
UPDATE 1X. It is not often that small town municipal politics become issues of national importance but McCain's presumptive vice presidential running mate, Alaska Governor Sarah Palin, has a bit of a track record while serving as mayor of Wasilla, Alaska, a town of 5400 people. In 1997, Mayor Palin fired Wasilla police chief Irl Stambaugh, who had served as police chief since the town's founding in 1993.
Stambaugh sued Palin, McCain's "feminist for life," for, of all things, gender discrimination, in addition to violating his employment contract and wrongful termination. Palin's firing of Wasilla's police chief will not sit well with police unions across the nation. Palin fired Stambaugh because the chief supported her opponent, John Stein, in the election. Stein, a former mayor of Wasilla, guaranteed that Stambaugh could not be fired without just cause. Palin, in a case of judge shopping, found one in U.S. District Judge James Singleton, who, in 2000, dismissed Stambaugh's suit against Palin and the city of Wasilla. Singleton was appointed by President George H. W. Bush in 1990.
Palin could not run for re-election in 2002 due to term limits. However, an attempt by Palin's stepmother-in-law Faye Palin to keep a Mayor Palin in Wasilla was unsuccessful as Faye Palin was defeated by a vote of 402-256 by Dianne Keller, who had worked for Alaska's Division of Emergency Services.
Sarah Palin, who has a reputation as a "Mrs. Clean" in politics by taking on the GOP powerhouses of Senator Ted Stevens and Representative Don Young for pork barrel spending and back room deals has had her own experience with such politics. As Mayor, Palin attracted to Wasilla an airplane manufacturing plant for Kinetic Aviation of Livermore, California. The grants administrator for the cash-flush Alaska Science and Technology Foundation held a powerful carrot for investors in Alaska. And it just so happened that grants administrator Jim Palin was Sarah Palin's father-in-law.
In 2004, former Mayor Palin dismissed Alaska's anonymous political attacks in remark to the AP, saying that while mayor, a woman told Palin that the mayor had been seen having an affair on a train to Seward and that one of her two daughters, ages 5 and 2, had been seen smoking pot.
Comments
Marlys (Seattle)
She'll bring in the Alaska vote (yawn)
Bill Wade (Exeter)
Strange choice indeed. I suspect if he wins we'll get Lieberman as Sec of Def.
JM (Pine Ridge)
Instead of going with his gut instinct and choosing Ridge who was clearly the one who he had the longest, closest relationship with on his short list (as well as someone who brings vastly more experience), McCain miscalculated and overstepped his political decision. He may think that choosing a woman who doesn't carry much political baggage and shares the narrow-minded views of the Republicans may help him, but he will likely be surprised at the lackluster support he receives. I believe this will cinch the deal for Obama's presidency. And good riddance to the Republican siege on our Executive branch.
Chekas Gonna Getcha (WhoVille)
she is pretty though
liberty antigone (?)
It will make my own father think voting for McCain is "forward" thinking, since it has a woman in the ticket, something Obama didn't do.
Very smart, actually. Only one smarter would have been Powell.
jeanruss (pitts)
I think this is the Republican's way of throwing the election. We know that the economy is FAR worse than they are permitting to be told to most Americans. I don't think after the type of convention the Democrats had, serious politicians didn't want to be on this losing ticket. They want the Democrats to take the fall for what they have created. I don't think Georgia went the way Rove hoped. I am not sure that anyone can save this economy now. The upside is that when there is great suffering, deep change can happen.
Dupree (Columbus)
Only one smarter would have been Powell.
I cannot believe you said that.
But you may be right that a black Neo-Con would draw in more Bozo American votes than a Jewish one(Joe LIEberman).
bluedogs (olympia)
Chekas from (WhoVille): You really nailed it. Youth and beauty gets 'um everytime. McCain's campaign will be like American Idol only political. Kinda like those stupid adds compairing Obama to Brittany Spears.....maybe McCain and what's her face will do a dance around the podium.....I will take bets right here that What's her face will wear a very sexy dress for her speach...any takers?
Dupree (Columbus)
For those with short term memory loss:
bluedogs (olympia)
Jeanruss, you are right. The economy is in far worse shape than anybody knows. There isn't anyway this mess can be pinned on the Democratic party. oooopps I forgot Pelosi and others who have voted time and time again to enable the Criminal.
bluedogs (olympia)
Jeanruss, you are right. The economy is in far worse shape than anybody knows. There isn't anyway this mess can be pinned on the Democratic party. oooopps I forgot Pelosi and others who have voted time and time again to enable the Criminal.
JM (Pine Ridge)
Instead of going with his gut instinct and choosing Ridge who was clearly the one who he had the longest, closest relationship with on his short list (as well as someone who brings vastly more experience), McCain miscalculated and overstepped his political decision. He may think that choosing a woman who doesn't carry much political baggage and shares the narrow-minded views of the Republicans may help him, but he will likely be surprised at the lackluster support he receives. I believe this will cinch the deal for Obama's presidency. And good riddance to the Republican siege on our Executive branch.
uhClem (Keene)
This makes sense. Mc. figures on losing. Since he hates women, he can blame her!
Chemtrail breather (London,ON)
Truly, will there be any diff between DEM or GOP?
Your on about the sexy dress.
I'm thinking a backless number made in China with Muk Luks.
bluedogs (olympia)
Har, har, on the "made in China and the Muk Luks!
This also covers for the fact that Cindy will not speak at the convention (decision of her wonderful and loving husband, who called her a c--t in front of the press) so that no one will notice really that she is sidelined. You know, everyone will be looking at the pretty woman making speeches (Rush will really like her) and no one will listen to what she is saying. I love it. Could be made into a tv serial.
I think that this time there will be a difference between the two parties. Howard Dean has started a movement in building the party from the grassroots up, getting rid of the party boss mentality. It will take time though.
liberty antigone (?)
I only said that because my own father suggested Powell as "perfect" for McCain to get elected, and he is actually considering McCain, after Hillary Clinton wasn't elected. You can't change everyone, you know, even your own parents.
I, myself, am not happy with how "right" neocon even Obama is, let alone Wetstart Mademan Kiss McCain.
liberty antigone (?)
also, She is YOUNG. Remember, young means no baggage. And McCain has baggage. I predicted in April and again many times since then on this blog that Obama would pick Biden, to compensate for 'too inexperienced' comments about Obama ticket. Biden is owned by the crime families of fascism and those MIC who care about power and money and not the people or the Bill of Rights.
So YOUNG (Palin) + TOO OLD (McCain), MADE MAN (McCain) +BIMBO (Palin)= a Good old time politician in the new American Empire.
Think of it like a tv show, and then you see the sense of the RUIM casting team choice. Rove works for RUIM?
Saturday, August 30, 2008
Friday, August 29, 2008
War With Russia Is On The Agenda
War With Russia Is
On The Agenda
By Paul Craig Roberts
8-26-2008
Thinking about the massive failure of the US media to report truthfully is sobering. The United States, bristling with nuclear weapons and pursuing a policy of world hegemony, has a population that is kept in the dark--indeed brainwashed--about the most important and most dangerous events of our time.
The power of the Israel Lobby is an important component of keeping Americans in the dark. Recently I watched a documentary that demonstrates the control that the Israel Lobby exercises over Americans' view of the Israeli-Palestinian conflict. The documentary is available here:
http://www.informationclearinghouse.info/article14055.htm
As a result of the US media's one-sided coverage, few Americans are aware that for decades Israel has been ethnically cleansing Palestinians from their homes and lands under protection of America's veto in the United Nations. Instead, the dispossessed Palestinians are portrayed as mindless terrorists who attack innocent Israel.
If one reads Israeli newspapers, such as Haaretz, or publications from Israeli organizations, such as the Israeli Committee Against House Demolitions, one gets a radically different view of the situation than the propagandistic version delivered by US media and evangelical pulpits.
Most Americans know of the 2000 attack by Muslim terrorists on the USS Cole in Aden harbor that resulted in 17 dead and 39 wounded American sailors. But few have heard of Israel's 1967 attack on the USS Liberty that left 34 American sailors dead and 174 wounded. Pressured by the Israel Lobby, President Johnson ordered Admiral McCain, father of the Republican presidential nominee, to cover up the attack. To this day there never has been a congressional investigation.
The failure of the American media is again evident in the coverage of the Georgian-Russian conflict. The US media presented the conflict as a Russian invasion of Georgia, whereas in actual fact the American- and Israeli-trained and equipped Georgian military launched a sneak attack to kill and to drive the Russian population out of South Ossetia, a separatist province.
Russian peacekeepers, together with Georgian ones, had been stationed in South Ossetia since the early 1990s. On orders from Mikheil Saakashvili, the American puppet "president" of Georgia, the Georgian peacekeepers turned their weapons on the unsuspecting Russian peacekeepers and murdered them.
This action by Saakashvili, elected with money from the neoconservative National Endowment for Democracy, an election-rigging tool of US hegemony, was a war crime. In truth, the Russians should have hung Saakashvili, as he is far more guilty than was Saddam Hussein. But it is Russia, not Saakashvili, that the US media has demonized. [MM: Since Israel has total control of the "U.S. media" and Congress, this is a no-brainer. After Putin gutted Russia of the Zionist parasitical scum (for instance "oligarch" Mikhail Khodorkovsky, who thankfully is rotting in a Siberian prison) that nearly destroyed her, Israel/U.S. hatred of Russia hath no bounds!]
Americans have become perfect subjects for George Orwell's Big Brother. They sit stupidly in front of the TV news or the New York Times or Washington Post and absorb the lies fed to them. What is wrong with Americans? Why do they put up with it? Are Americans the nation of sheep that Judge Andrew P. Napolitano says they are? Americans flaunt "freedom and democracy" and live under a Ministry of Propaganda.
Two decades ago, President Reagan reached agreement with Soviet president Mikhail Gorbachev to end the dangerous cold war. But every one of Reagan's successors has sought to pick a new fight with Russia. In violation of the agreement, NATO has been taken to Russia's borders, and the US is determined to put former constituent parts of Russia herself into NATO. In an effort to neutralize Russia's nuclear deterrent and compromise her independence, the US is putting anti-ballistic missile bases on Russia's borders.
The gratuitously aggressive US military policy toward Russia will lead to nuclear war. I am confident that if Americans elect John McCain, or the Republicans steal another presidential election, there will be nuclear war in the second decade of the 21st century. The [Zionist]neocon lies, propaganda, macho flag-waving, and use of US foreign policy in the interests of a few military-security firms, oil companies, and Israel are all leading in that direction.
The November election is perhaps the last chance to avoid nuclear war. But the opportunity might already have been missed. The Republicans have chosen as their candidate one of the most ignorant warmongers alive. The Democrats' choice was between one of the most divisive women in America and a man of mixed race with a funny name. Considering American's taste for war, the Democratic candidate could fail to defeat the GOP war candidate.
Many Americans will vote against Obama because he is black. Why does mixed ancestry confer the black label? If America's population was predominantly black, would Obama be considered white?
Race and propaganda are more likely to determine the outcome of the November election than any awareness or consideration of real issues by voters.
The real issues are suffocated by the media. The American middle class is being destroyed by jobs offshoring and work visas for foreigners, while the incomes of the super rich are soaring. The US dollar's reserve currency status is eroded. The US is massively in debt at home and abroad. Health insurance is unaffordable for the vast majority of the population. Injured veterans are being nickeled and dimed, while Halliburton's profits escalate. Americans are losing their homes, while the US government bails out banks. Wars with Iran, Russia, and China are being planned in order to secure US hegemony.
Americans no longer have a government that is for the people and by the people. They have a government for and by special interests and an insane ideology. [A government by and for Israel.]
But Americans have war, which lets them take out all their frustrations, resentments, and disappointments on "Muslim terrorists" and "Russian aggressors." Few Americans are disturbed that 1.25 million Iraqis and an unknown number of Afghans have died as a result of American invasions based on Bush regime lies and deceptions. Even Americans, like Senator Biden, Obama's selection for vice president, who understand that the wars are based on lies, still want the US to win. So, it was all a mistake and a deception, but let's win anyway and keep on killing.
I know people who still complain that the US did not nuke North Vietnam. When I ask why Vietnam should have been nuked, they reply, "if we had nuked them we would have won."
What would America have won? The answer is world loathing and the loss of the cold war.
For many Americans, war is like a sports contest in which they take vicarious pleasure and cheer on their side to victory. Millions of Americans are still bitter that "the liberal media" and war protesters caused America to lose the Vietnam war, and they are determined that this won't happen again. These Americans have no realization that there was no more reason for the US to be fighting in Vietnam 40 years ago than to be fighting today in Iraq and Afghanistan or tomorrow in Iran. [MM: Yep, still dumbed-down and brainwashed about "spreading democracy" and "fighting to keep America and the world free"...LOL!!!!!!!!!!!!]
Obama, if elected, is no guarantee against nuclear war. Obama has shown that he is as much under the Israel Lobby's thumb as McCain. Obama's foreign affairs advisor, Zbigniew Brzezinski, is not a neocon, but he was born in Warsaw, Poland, and has the Pole's animosity toward Russia. The Bush administration has already changed US war doctrine to permit preemptive nuclear attack. With the US government determined to ring Russia with puppet states and military bases, war is inevitable.
Presidential appointees face confirmation in the Senate. Any of Obama's appointees who might be out of step with plans for US and Israeli hegemony could expect opposition from large corporations and the Israel Lobby. There is no assurance that an Obama administration would not be positioned on "the issues" by the same special interests that have positioned the Bush administration.
Americans are filled with hubris, not with knowledge. They have no awareness of the calamity that their government's pursuit of hegemony is bringing to themselves and to life on Earth.
On The Agenda
By Paul Craig Roberts
8-26-2008
Thinking about the massive failure of the US media to report truthfully is sobering. The United States, bristling with nuclear weapons and pursuing a policy of world hegemony, has a population that is kept in the dark--indeed brainwashed--about the most important and most dangerous events of our time.
The power of the Israel Lobby is an important component of keeping Americans in the dark. Recently I watched a documentary that demonstrates the control that the Israel Lobby exercises over Americans' view of the Israeli-Palestinian conflict. The documentary is available here:
http://www.informationclearinghouse.info/article14055.htm
As a result of the US media's one-sided coverage, few Americans are aware that for decades Israel has been ethnically cleansing Palestinians from their homes and lands under protection of America's veto in the United Nations. Instead, the dispossessed Palestinians are portrayed as mindless terrorists who attack innocent Israel.
If one reads Israeli newspapers, such as Haaretz, or publications from Israeli organizations, such as the Israeli Committee Against House Demolitions, one gets a radically different view of the situation than the propagandistic version delivered by US media and evangelical pulpits.
Most Americans know of the 2000 attack by Muslim terrorists on the USS Cole in Aden harbor that resulted in 17 dead and 39 wounded American sailors. But few have heard of Israel's 1967 attack on the USS Liberty that left 34 American sailors dead and 174 wounded. Pressured by the Israel Lobby, President Johnson ordered Admiral McCain, father of the Republican presidential nominee, to cover up the attack. To this day there never has been a congressional investigation.
The failure of the American media is again evident in the coverage of the Georgian-Russian conflict. The US media presented the conflict as a Russian invasion of Georgia, whereas in actual fact the American- and Israeli-trained and equipped Georgian military launched a sneak attack to kill and to drive the Russian population out of South Ossetia, a separatist province.
Russian peacekeepers, together with Georgian ones, had been stationed in South Ossetia since the early 1990s. On orders from Mikheil Saakashvili, the American puppet "president" of Georgia, the Georgian peacekeepers turned their weapons on the unsuspecting Russian peacekeepers and murdered them.
This action by Saakashvili, elected with money from the neoconservative National Endowment for Democracy, an election-rigging tool of US hegemony, was a war crime. In truth, the Russians should have hung Saakashvili, as he is far more guilty than was Saddam Hussein. But it is Russia, not Saakashvili, that the US media has demonized. [MM: Since Israel has total control of the "U.S. media" and Congress, this is a no-brainer. After Putin gutted Russia of the Zionist parasitical scum (for instance "oligarch" Mikhail Khodorkovsky, who thankfully is rotting in a Siberian prison) that nearly destroyed her, Israel/U.S. hatred of Russia hath no bounds!]
Americans have become perfect subjects for George Orwell's Big Brother. They sit stupidly in front of the TV news or the New York Times or Washington Post and absorb the lies fed to them. What is wrong with Americans? Why do they put up with it? Are Americans the nation of sheep that Judge Andrew P. Napolitano says they are? Americans flaunt "freedom and democracy" and live under a Ministry of Propaganda.
Two decades ago, President Reagan reached agreement with Soviet president Mikhail Gorbachev to end the dangerous cold war. But every one of Reagan's successors has sought to pick a new fight with Russia. In violation of the agreement, NATO has been taken to Russia's borders, and the US is determined to put former constituent parts of Russia herself into NATO. In an effort to neutralize Russia's nuclear deterrent and compromise her independence, the US is putting anti-ballistic missile bases on Russia's borders.
The gratuitously aggressive US military policy toward Russia will lead to nuclear war. I am confident that if Americans elect John McCain, or the Republicans steal another presidential election, there will be nuclear war in the second decade of the 21st century. The [Zionist]neocon lies, propaganda, macho flag-waving, and use of US foreign policy in the interests of a few military-security firms, oil companies, and Israel are all leading in that direction.
The November election is perhaps the last chance to avoid nuclear war. But the opportunity might already have been missed. The Republicans have chosen as their candidate one of the most ignorant warmongers alive. The Democrats' choice was between one of the most divisive women in America and a man of mixed race with a funny name. Considering American's taste for war, the Democratic candidate could fail to defeat the GOP war candidate.
Many Americans will vote against Obama because he is black. Why does mixed ancestry confer the black label? If America's population was predominantly black, would Obama be considered white?
Race and propaganda are more likely to determine the outcome of the November election than any awareness or consideration of real issues by voters.
The real issues are suffocated by the media. The American middle class is being destroyed by jobs offshoring and work visas for foreigners, while the incomes of the super rich are soaring. The US dollar's reserve currency status is eroded. The US is massively in debt at home and abroad. Health insurance is unaffordable for the vast majority of the population. Injured veterans are being nickeled and dimed, while Halliburton's profits escalate. Americans are losing their homes, while the US government bails out banks. Wars with Iran, Russia, and China are being planned in order to secure US hegemony.
Americans no longer have a government that is for the people and by the people. They have a government for and by special interests and an insane ideology. [A government by and for Israel.]
But Americans have war, which lets them take out all their frustrations, resentments, and disappointments on "Muslim terrorists" and "Russian aggressors." Few Americans are disturbed that 1.25 million Iraqis and an unknown number of Afghans have died as a result of American invasions based on Bush regime lies and deceptions. Even Americans, like Senator Biden, Obama's selection for vice president, who understand that the wars are based on lies, still want the US to win. So, it was all a mistake and a deception, but let's win anyway and keep on killing.
I know people who still complain that the US did not nuke North Vietnam. When I ask why Vietnam should have been nuked, they reply, "if we had nuked them we would have won."
What would America have won? The answer is world loathing and the loss of the cold war.
For many Americans, war is like a sports contest in which they take vicarious pleasure and cheer on their side to victory. Millions of Americans are still bitter that "the liberal media" and war protesters caused America to lose the Vietnam war, and they are determined that this won't happen again. These Americans have no realization that there was no more reason for the US to be fighting in Vietnam 40 years ago than to be fighting today in Iraq and Afghanistan or tomorrow in Iran. [MM: Yep, still dumbed-down and brainwashed about "spreading democracy" and "fighting to keep America and the world free"...LOL!!!!!!!!!!!!]
Obama, if elected, is no guarantee against nuclear war. Obama has shown that he is as much under the Israel Lobby's thumb as McCain. Obama's foreign affairs advisor, Zbigniew Brzezinski, is not a neocon, but he was born in Warsaw, Poland, and has the Pole's animosity toward Russia. The Bush administration has already changed US war doctrine to permit preemptive nuclear attack. With the US government determined to ring Russia with puppet states and military bases, war is inevitable.
Presidential appointees face confirmation in the Senate. Any of Obama's appointees who might be out of step with plans for US and Israeli hegemony could expect opposition from large corporations and the Israel Lobby. There is no assurance that an Obama administration would not be positioned on "the issues" by the same special interests that have positioned the Bush administration.
Americans are filled with hubris, not with knowledge. They have no awareness of the calamity that their government's pursuit of hegemony is bringing to themselves and to life on Earth.
2008 Threat Season Heats Up
from STRATFOR
2008 Threat Season Heats Up
August 27, 2008
Graphic for Terrorism Intelligence Report
By Fred Burton and Scott Stewart
Summer has arrived, bringing with it rumors of attacks against the U.S. homeland. Currently, we are hearing unconfirmed word of plans in place for jihadists to be dispatched from Pakistan to conduct coordinated suicide attacks against soft targets in as many as 10 U.S. cities.
This year, the rumors seem to be emerging a little later and with a little less fanfare than last year, when we saw a number of highly publicized warnings, such as that from Homeland Security Secretary Michael Chertoff and a National Intelligence Estimate saying al Qaeda was gaining strength. Last year also brought warnings from a former Israeli counterterrorism official that al Qaeda was planning a simultaneous attack against five to seven American cities, and of a dirty bomb attack against New York.
These warnings were followed by the Sept. 7, 2007, release of a video message from Osama bin Laden, who had been unseen on video since October 2004 or heard on audiotape since July 2006. Some were convinced that his reappearance — and veiled threat — signaled a looming attack against the United States, or a message to supporters to commence attacks.
However, in spite of all these warnings — and bin Laden’s reappearance — no attack occurred last summer or autumn on U.S. soil. As we discussed last October, there are a number of reasons why such an attack did not happen.
We are currently working to collect more information regarding this summer’s rumors. So far we cannot gauge their credibility, but they pique our interest for several reasons. First is the issue of timing, and second is the ease with which such attacks could be coordinated.
Timing is Everything
It is a busy time in U.S. politics. The Democratic National Convention (DNC) takes place this week in Denver, and the Republican National Convention (RNC) takes place next week in St. Paul, Minn. After these conventions, politics will be on the front page until the November elections. In addition, Americans are returning from summer vacations, with schools and universities resuming classes. The anniversary of the 9/11 attacks is also coming up.
While the al Qaeda core generally conduct operations when they are ready — rather than according to external calendars and anniversaries — their pattern of releasing statements on the 9/11 anniversary demonstrates their awareness of its significance and the painful emotions it evokes in the American psyche.
In 2004, just days before the U.S. presidential election, Osama bin Laden made a rare video appearance. In the video, he said al Qaeda’s problem was not with the two candidates, George Bush or John Kerry, but with U.S. policy regarding the Muslim world and the situations in Iraq and Israel. Bin Laden also pointed out that neither Bush nor Kerry could be trusted to keep the United States secure from more attacks. By creating such a message and releasing it at that time, bin Laden was demonstrating his organization’s understanding of the U.S. presidential election dynamic.
Furthermore, the al Qaeda core has historically planned or supported substantial operations in advance of elections. In 2004 we saw this with the Madrid train bombings, which took place prior to Spanish elections. Several other plots might also fall into category. In the summer of 2004, for example, we saw a plot to target a number of financial targets in the U.S. thwarted.
Another election-year attempt was the 2006 al Qaeda-tied plot against a series of airline flights originating from London’s Heathrow airport. While the plot was hatched in the United Kingdom, the selection of flights bound for Washington, Chicago, San Francisco and New York meant that the attack was actually targeted primarily against the United States. For perspective, we look at Operation Bojinka in the mid-1990s, the predecessor to the 2006 plot. Although planned to be launched from Asia, the plot was clearly an attack against the United States.
In another example, Jose Padilla was arrested in May 2002, a congressional election year, as he attempted to enter the United States. Padilla, according to the interrogation of captured al Qaeda member Khalid Sheikh Mohammed, had been sent to there to conduct attacks.
Attacks certainly occur in non-election years (and plots have been thwarted in off years), but the fact remains that jihadists appear mindful of election cycles in the United States. And al Qaeda is not alone in this thinking. Grassroots al Qaeda sympathizers have also attempted to interfere in election-related events. In August 2004, on the eve of the RNC in New York, authorities arrested a Pakistani man and his Pakistan-born U.S. citizen accomplice who claimed they were planning to attack a subway station in Manhattan two blocks from RNC site. The men were later convicted for the plot, with the main organizer receiving a 30-year sentence.
Speaking of elections, it is also interesting to consider that the last two U.S. presidents were forced to deal with jihadist strikes on American soil shortly after assuming office. Bill Clinton was inaugurated in January 1993, and the World Trade Center was bombed in late February 1993. George W. Bush was inaugurated in January 2001, and the World Trade Center and Pentagon were attacked in September 2001. In all likelihood this is a coincidence, but it is worth watching to see if the trend continues in 2009.
Of course, let’s put this in perspective. In the last 15 years — election year or not –- there has rarely been a time when some jihadist somewhere was not planning an attack against the United States. However, the al Qaeda core organization clearly attempted to conduct major attacks in 2002, 2004 and 2006, all of which were election years. These attempts (other than Madrid) were all thwarted. The fact that we haven’t seen an attempt during this year’s election cycle has us watchful — we sense that there must be plot out there somewhere.
Ease of Attack
Another thing that interests us about recent rumors is the concept behind the alleged plot: the simple and elegant idea of sending 10 independent actors to 10 cities. One factor that has sunk many past jihadist plots against the United States has been poor operational security and poor terrorist tradecraft. These mistakes have allowed U.S. authorities to identify and shut down the militant networks involved.
By using compartmentalized operatives, militants could more easily circumvent counterterrorist efforts. Furthermore, even if one or more of the operatives were detected and arrested by authorities, details of the operation at large would not be compromised. Each operative would only know about his own particular targeting instructions and would be unable to provide other details if captured.
In such a case, al Qaeda would most likely attempt to dispatch 10 “clean skin” operatives (those not obviously associated with the group) who are trained to construct improvised explosive devices using readily available materials and ultimately willing to undertake martyrdom missions. Due to changes in the immigration processes since the 2001 attacks, these operatives will likely be Westerners — U.S., Canadian or European citizens able to travel to the United States without the need to obtain a visa.
Recruiting such operatives could be easier that one might expect. Thousands of potential candidates who currently attend militant madrassas in Pakistan (including somewhere from 500 to 1,000 U.S. citizens) fit this description. In fact, no one really knows how many of these potential jihadist operatives exist at present. The government of Pakistan has not been forthcoming in answering requests from the United States and United Kingdom for lists of their citizens currently attending these institutions. Regardless, the idea of al Qaeda recruiting 10 “clean skins” for such an operation is not beyond the realm of possibility. Consider past recruits such as Mohammad Siddique Khan, the leader of the cell behind the July 7, 2005, London bombing, shoe bomber Richard Reid and Adam Gadahn (aka Azzam al-Amriki), or even the warnings o f German Muslims planning to conduct attacks in the West.
Levels of Severity
If this rumored operation is in fact legitimate, it would be the first one conducted using only operatives sent from the core al Qaeda group in Afghanistan or Pakistan since the 9/11 attacks. This is what we refer to as an al Qaeda 2.0 operational model. However, while sending operatives to work solo rather than in a group or with local grassroots jihadists increases operational security, it also reduces operational ability. Quite simply, it is more difficult for an individual to arrange a large attack than it is for a group working together. This means that lone operatives are unlikely to assemble major explosive devices like the truck-borne IED used in the 1993 World Trade Center bombing. Instead we would anticipate attacks similar in scope to grassroots undertakings; suicide bombings such as the July 7, 2005, London bombings or the 2002 armed assault on the El Al Ticket counter in Los Angeles. These the oretical attacks also would likely be conducted against soft targets such as buses, subways or shopping malls, where they can create a high number of casualties, rather than harder targets like the White House or Pentagon, where they would prove ineffective.
The October 2005 incident in Norman, Okla., in which a University of Oklahoma student detonated an IED outside a packed football stadium highlights the ease with which a device can be manufactured from readily available items without detection. But suicide operatives could undertake a number of different types of attacks. Recently we have seen Palestinian suicide operatives embarking on extremely simple plots, such as driving heavy vehicles into crowds.
While the individual attacks themselves would likely be small in magnitude, when combined and spread across the country they could have a far larger impact, similar to past attacks in places such as Madrid, London, Amman in Jordan, the Sinai Peninsula and Bali, Indonesia. Although the botched attacks in London and Glasgow last summer were conducted by the same cell, the planners also clearly sought to use multiple devices in geographically diverse locations. While such attacks would not be a strategic threat to U.S. existence, they would certainly kill people and create a great deal of fear and confusion.
We are not attempting to hype anything here and we do not want to create any kind of panic. These are just rumors, and unconfirmed ones at that. We have not seen any formal announcements from the U.S. government raising the alert level. However, it certainly seems to us to be a prudent time to increase situational awareness and update contingency plans in anticipation of the worst.
Tell Stratfor What You Think
This report may be forwarded or republished on your website with attribution to www.stratfor.com
2008 Threat Season Heats Up
August 27, 2008
Graphic for Terrorism Intelligence Report
By Fred Burton and Scott Stewart
Summer has arrived, bringing with it rumors of attacks against the U.S. homeland. Currently, we are hearing unconfirmed word of plans in place for jihadists to be dispatched from Pakistan to conduct coordinated suicide attacks against soft targets in as many as 10 U.S. cities.
This year, the rumors seem to be emerging a little later and with a little less fanfare than last year, when we saw a number of highly publicized warnings, such as that from Homeland Security Secretary Michael Chertoff and a National Intelligence Estimate saying al Qaeda was gaining strength. Last year also brought warnings from a former Israeli counterterrorism official that al Qaeda was planning a simultaneous attack against five to seven American cities, and of a dirty bomb attack against New York.
These warnings were followed by the Sept. 7, 2007, release of a video message from Osama bin Laden, who had been unseen on video since October 2004 or heard on audiotape since July 2006. Some were convinced that his reappearance — and veiled threat — signaled a looming attack against the United States, or a message to supporters to commence attacks.
However, in spite of all these warnings — and bin Laden’s reappearance — no attack occurred last summer or autumn on U.S. soil. As we discussed last October, there are a number of reasons why such an attack did not happen.
We are currently working to collect more information regarding this summer’s rumors. So far we cannot gauge their credibility, but they pique our interest for several reasons. First is the issue of timing, and second is the ease with which such attacks could be coordinated.
Timing is Everything
It is a busy time in U.S. politics. The Democratic National Convention (DNC) takes place this week in Denver, and the Republican National Convention (RNC) takes place next week in St. Paul, Minn. After these conventions, politics will be on the front page until the November elections. In addition, Americans are returning from summer vacations, with schools and universities resuming classes. The anniversary of the 9/11 attacks is also coming up.
While the al Qaeda core generally conduct operations when they are ready — rather than according to external calendars and anniversaries — their pattern of releasing statements on the 9/11 anniversary demonstrates their awareness of its significance and the painful emotions it evokes in the American psyche.
In 2004, just days before the U.S. presidential election, Osama bin Laden made a rare video appearance. In the video, he said al Qaeda’s problem was not with the two candidates, George Bush or John Kerry, but with U.S. policy regarding the Muslim world and the situations in Iraq and Israel. Bin Laden also pointed out that neither Bush nor Kerry could be trusted to keep the United States secure from more attacks. By creating such a message and releasing it at that time, bin Laden was demonstrating his organization’s understanding of the U.S. presidential election dynamic.
Furthermore, the al Qaeda core has historically planned or supported substantial operations in advance of elections. In 2004 we saw this with the Madrid train bombings, which took place prior to Spanish elections. Several other plots might also fall into category. In the summer of 2004, for example, we saw a plot to target a number of financial targets in the U.S. thwarted.
Another election-year attempt was the 2006 al Qaeda-tied plot against a series of airline flights originating from London’s Heathrow airport. While the plot was hatched in the United Kingdom, the selection of flights bound for Washington, Chicago, San Francisco and New York meant that the attack was actually targeted primarily against the United States. For perspective, we look at Operation Bojinka in the mid-1990s, the predecessor to the 2006 plot. Although planned to be launched from Asia, the plot was clearly an attack against the United States.
In another example, Jose Padilla was arrested in May 2002, a congressional election year, as he attempted to enter the United States. Padilla, according to the interrogation of captured al Qaeda member Khalid Sheikh Mohammed, had been sent to there to conduct attacks.
Attacks certainly occur in non-election years (and plots have been thwarted in off years), but the fact remains that jihadists appear mindful of election cycles in the United States. And al Qaeda is not alone in this thinking. Grassroots al Qaeda sympathizers have also attempted to interfere in election-related events. In August 2004, on the eve of the RNC in New York, authorities arrested a Pakistani man and his Pakistan-born U.S. citizen accomplice who claimed they were planning to attack a subway station in Manhattan two blocks from RNC site. The men were later convicted for the plot, with the main organizer receiving a 30-year sentence.
Speaking of elections, it is also interesting to consider that the last two U.S. presidents were forced to deal with jihadist strikes on American soil shortly after assuming office. Bill Clinton was inaugurated in January 1993, and the World Trade Center was bombed in late February 1993. George W. Bush was inaugurated in January 2001, and the World Trade Center and Pentagon were attacked in September 2001. In all likelihood this is a coincidence, but it is worth watching to see if the trend continues in 2009.
Of course, let’s put this in perspective. In the last 15 years — election year or not –- there has rarely been a time when some jihadist somewhere was not planning an attack against the United States. However, the al Qaeda core organization clearly attempted to conduct major attacks in 2002, 2004 and 2006, all of which were election years. These attempts (other than Madrid) were all thwarted. The fact that we haven’t seen an attempt during this year’s election cycle has us watchful — we sense that there must be plot out there somewhere.
Ease of Attack
Another thing that interests us about recent rumors is the concept behind the alleged plot: the simple and elegant idea of sending 10 independent actors to 10 cities. One factor that has sunk many past jihadist plots against the United States has been poor operational security and poor terrorist tradecraft. These mistakes have allowed U.S. authorities to identify and shut down the militant networks involved.
By using compartmentalized operatives, militants could more easily circumvent counterterrorist efforts. Furthermore, even if one or more of the operatives were detected and arrested by authorities, details of the operation at large would not be compromised. Each operative would only know about his own particular targeting instructions and would be unable to provide other details if captured.
In such a case, al Qaeda would most likely attempt to dispatch 10 “clean skin” operatives (those not obviously associated with the group) who are trained to construct improvised explosive devices using readily available materials and ultimately willing to undertake martyrdom missions. Due to changes in the immigration processes since the 2001 attacks, these operatives will likely be Westerners — U.S., Canadian or European citizens able to travel to the United States without the need to obtain a visa.
Recruiting such operatives could be easier that one might expect. Thousands of potential candidates who currently attend militant madrassas in Pakistan (including somewhere from 500 to 1,000 U.S. citizens) fit this description. In fact, no one really knows how many of these potential jihadist operatives exist at present. The government of Pakistan has not been forthcoming in answering requests from the United States and United Kingdom for lists of their citizens currently attending these institutions. Regardless, the idea of al Qaeda recruiting 10 “clean skins” for such an operation is not beyond the realm of possibility. Consider past recruits such as Mohammad Siddique Khan, the leader of the cell behind the July 7, 2005, London bombing, shoe bomber Richard Reid and Adam Gadahn (aka Azzam al-Amriki), or even the warnings o f German Muslims planning to conduct attacks in the West.
Levels of Severity
If this rumored operation is in fact legitimate, it would be the first one conducted using only operatives sent from the core al Qaeda group in Afghanistan or Pakistan since the 9/11 attacks. This is what we refer to as an al Qaeda 2.0 operational model. However, while sending operatives to work solo rather than in a group or with local grassroots jihadists increases operational security, it also reduces operational ability. Quite simply, it is more difficult for an individual to arrange a large attack than it is for a group working together. This means that lone operatives are unlikely to assemble major explosive devices like the truck-borne IED used in the 1993 World Trade Center bombing. Instead we would anticipate attacks similar in scope to grassroots undertakings; suicide bombings such as the July 7, 2005, London bombings or the 2002 armed assault on the El Al Ticket counter in Los Angeles. These the oretical attacks also would likely be conducted against soft targets such as buses, subways or shopping malls, where they can create a high number of casualties, rather than harder targets like the White House or Pentagon, where they would prove ineffective.
The October 2005 incident in Norman, Okla., in which a University of Oklahoma student detonated an IED outside a packed football stadium highlights the ease with which a device can be manufactured from readily available items without detection. But suicide operatives could undertake a number of different types of attacks. Recently we have seen Palestinian suicide operatives embarking on extremely simple plots, such as driving heavy vehicles into crowds.
While the individual attacks themselves would likely be small in magnitude, when combined and spread across the country they could have a far larger impact, similar to past attacks in places such as Madrid, London, Amman in Jordan, the Sinai Peninsula and Bali, Indonesia. Although the botched attacks in London and Glasgow last summer were conducted by the same cell, the planners also clearly sought to use multiple devices in geographically diverse locations. While such attacks would not be a strategic threat to U.S. existence, they would certainly kill people and create a great deal of fear and confusion.
We are not attempting to hype anything here and we do not want to create any kind of panic. These are just rumors, and unconfirmed ones at that. We have not seen any formal announcements from the U.S. government raising the alert level. However, it certainly seems to us to be a prudent time to increase situational awareness and update contingency plans in anticipation of the worst.
Tell Stratfor What You Think
This report may be forwarded or republished on your website with attribution to www.stratfor.com
Kosovo Independence at the Heart of Georgia Russia Crisis
http://marketoracle.co.uk/Article6007.html
Kosovo Independence at the Heart of Georgia Russia Crisis
By George Friedman, STRATFOR, Aug 28, 2008
The Russo-Georgian war was rooted in broad geopolitical processes. In large part it was simply the result of the cyclical reassertion of Russian power. The Russian empire — czarist and Soviet — expanded to its borders in the 17th and 19th centuries. It collapsed in 1992. The Western powers wanted to make the disintegration permanent. It was inevitable that Russia would, in due course, want to reassert its claims. That it happened in Georgia was simply the result of circumstance.
Moscow did not have to concern itself with the potential response of the United States or Europe; hence, the invasion did not shift the balance of power. The balance of power had already shifted, and it was up to the Russians when to make this public. They did that Aug. 8.
Let's begin simply by reviewing the last few days.
On the night of Thursday, Aug. 7, forces of the Republic of Georgia drove across the border of South Ossetia , a secessionist region of Georgia that has functioned as an independent entity since the fall of the Soviet Union. The forces drove on to the capital, Tskhinvali, which is close to the border. Georgian forces got bogged down while trying to take the city. In spite of heavy fighting, they never fully secured the city, nor the rest of South Ossetia.
On the morning of Aug. 8, Russian forces entered South Ossetia , using armored and motorized infantry forces along with air power. South Ossetia was informally aligned with Russia, and Russia acted to prevent the region's absorption by Georgia. Given the speed with which the Russians responded — within hours of the Georgian attack — the Russians were expecting the Georgian attack and were themselves at their jumping-off points. The counterattack was carefully planned and competently executed, and over the next 48 hours, the Russians succeeded in defeating the main Georgian force and forcing a retreat. By Sunday, Aug. 10, the Russians had consolidated their position in South Ossetia.
On Monday, the Russians extended their offensive into Georgia proper , attacking on two axes. One was south from South Ossetia to the Georgian city of Gori. The other drive was from Abkhazia, another secessionist region of Georgia aligned with the Russians. This drive was designed to cut the road between the Georgian capital of Tbilisi and its ports. By this point, the Russians had bombed the military airfields at Marneuli and Vaziani and appeared to have disabled radars at the international airport in Tbilisi. These moves brought Russian forces to within 40 miles of the Georgian capital , while making outside reinforcement and resupply of Georgian forces extremely difficult should anyone wish to undertake it.
The Mystery Behind the Georgian Invasion
In this simple chronicle, there is something quite mysterious: Why did the Georgians choose to invade South Ossetia on Thursday night? There had been a great deal of shelling by the South Ossetians of Georgian villages for the previous three nights, but while possibly more intense than usual, artillery exchanges were routine. The Georgians might not have fought well, but they committed fairly substantial forces that must have taken at the very least several days to deploy and supply. Georgia's move was deliberate.
The United States is Georgia's closest ally . It maintained about 130 military advisers in Georgia, along with civilian advisers, contractors involved in all aspects of the Georgian government and people doing business in Georgia. It is inconceivable that the Americans were unaware of Georgia's mobilization and intentions. It is also inconceivable that the Americans were unaware that the Russians had deployed substantial forces on the South Ossetian frontier. U.S. technical intelligence, from satellite imagery and signals intelligence to unmanned aerial vehicles, could not miss the fact that thousands of Russian troops were moving to forward positions. The Russians clearly knew the Georgians were ready to move. How could the United States not be aware of the Russians? Indeed, given the posture of Russian troops, how could intelligence analysts have missed the possibility that the Russians had laid a trap, hoping for a Georgian invasion to justify its own counterattack?
It is very difficult to imagine that the Georgians launched their attack against U.S. wishes. The Georgians rely on the United States, and they were in no position to defy it. This leaves two possibilities. The first is a massive breakdown in intelligence, in which the United States either was unaware of the existence of Russian forces, or knew of the Russian forces but — along with the Georgians — miscalculated Russia's intentions. The second is that the United States, along with other countries, has viewed Russia through the prism of the 1990s, when the Russian military was in shambles and the Russian government was paralyzed. The United States has not seen Russia make a decisive military move beyond its borders since the Afghan war of the 1970s-1980s. The Russians had systematically avoided such moves for years. The United States had assumed that the Russians would not risk the consequences of an invasion.
If this was the case, then it points to the central reality of this situation: The Russians had changed dramatically , along with the balance of power in the region. They welcomed the opportunity to drive home the new reality, which was that they could invade Georgia and the United States and Europe could not respond. As for risk, they did not view the invasion as risky. Militarily, there was no counter. Economically, Russia is an energy exporter doing quite well — indeed, the Europeans need Russian energy even more than the Russians need to sell it to them. Politically, as we shall see, the Americans needed the Russians more than the Russians needed the Americans. Moscow's calculus was that this was the moment to strike. The Russians had been building up to it for months, as we have discussed, and they struck.
The Western Encirclement of Russia
To understand Russian thinking, we need to look at two events. The first is the Orange Revolution in Ukraine . From the U.S. and European point of view, the Orange Revolution represented a triumph of democracy and Western influence. From the Russian point of view, as Moscow made clear, the Orange Revolution was a CIA-funded intrusion into the internal affairs of Ukraine, designed to draw Ukraine into NATO and add to the encirclement of Russia. U.S. Presidents George H.W. Bush and Bill Clinton had promised the Russians that NATO would not expand into the former Soviet Union empire.
That promise had already been broken in 1998 by NATO's expansion to Poland, Hungary and the Czech Republic — and again in the 2004 expansion, which absorbed not only the rest of the former Soviet satellites in what is now Central Europe, but also the three Baltic states, which had been components of the Soviet Union.
The Russian Periphery
The Russians had tolerated all that, but the discussion of including Ukraine in NATO represented a fundamental threat to Russia's national security. It would have rendered Russia indefensible and threatened to destabilize the Russian Federation itself. When the United States went so far as to suggest that Georgia be included as well, bringing NATO deeper into the Caucasus, the Russian conclusion — publicly stated — was that the United States in particular intended to encircle and break Russia.
The second and lesser event was the decision by Europe and the United States to back Kosovo's separation from Serbia . The Russians were friendly with Serbia, but the deeper issue for Russia was this: The principle of Europe since World War II was that, to prevent conflict, national borders would not be changed. If that principle were violated in Kosovo, other border shifts — including demands by various regions for independence from Russia — might follow. The Russians publicly and privately asked that Kosovo not be given formal independence, but instead continue its informal autonomy, which was the same thing in practical terms. Russia's requests were ignored.
From the Ukrainian experience, the Russians became convinced that the United States was engaged in a plan of strategic encirclement and strangulation of Russia. From the Kosovo experience, they concluded that the United States and Europe were not prepared to consider Russian wishes even in fairly minor affairs. That was the breaking point. If Russian desires could not be accommodated even in a minor matter like this, then clearly Russia and the West were in conflict. For the Russians, as we said, the question was how to respond. Having declined to respond in Kosovo, the Russians decided to respond where they had all the cards: in South Ossetia.
Moscow had two motives, the lesser of which was as a tit-for-tat over Kosovo. If Kosovo could be declared independent under Western sponsorship, then South Ossetia and Abkhazia , the two breakaway regions of Georgia, could be declared independent under Russian sponsorship. Any objections from the United States and Europe would simply confirm their hypocrisy. This was important for internal Russian political reasons, but the second motive was far more important.
Russian Prime Minister Vladimir Putin once said that the fall of the Soviet Union was a geopolitical disaster. This didn't mean that he wanted to retain the Soviet state; rather, it meant that the disintegration of the Soviet Union had created a situation in which Russian national security was threatened by Western interests. As an example, consider that during the Cold War, St. Petersburg was about 1,200 miles away from a NATO country. Today it is about 60 miles away from Estonia, a NATO member. The disintegration of the Soviet Union had left Russia surrounded by a group of countries hostile to Russian interests in various degrees and heavily influenced by the United States, Europe and, in some cases, China.
Resurrecting the Russian Sphere
Putin did not want to re-establish the Soviet Union, but he did want to re-establish the Russian sphere of influence in the former Soviet Union region. To accomplish that, he had to do two things. First, he had to re-establish the credibility of the Russian army as a fighting force, at least in the context of its region. Second, he had to establish that Western guarantees, including NATO membership, meant nothing in the face of Russian power. He did not want to confront NATO directly, but he did want to confront and defeat a power that was closely aligned with the United States, had U.S. support, aid and advisers and was widely seen as being under American protection. Georgia was the perfect choice.
By invading Georgia as Russia did (competently if not brilliantly), Putin re-established the credibility of the Russian army. But far more importantly, by doing this Putin revealed an open secret: While the United States is tied down in the Middle East, American guarantees have no value. This lesson is not for American consumption. It is something that, from the Russian point of view, the Ukrainians, the Balts and the Central Asians need to digest. Indeed, it is a lesson Putin wants to transmit to Poland and the Czech Republic as well. The United States wants to place ballistic missile defense installations in those countries, and the Russians want them to understand that allowing this to happen increases their risk, not their security.
The Russians knew the United States would denounce their attack. This actually plays into Russian hands. The more vocal senior leaders are, the greater the contrast with their inaction, and the Russians wanted to drive home the idea that American guarantees are empty talk.
The Russians also know something else that is of vital importance: For the United States, the Middle East is far more important than the Caucasus, and Iran is particularly important. The United States wants the Russians to participate in sanctions against Iran. Even more importantly, they do not want the Russians to sell weapons to Iran, particularly the highly effective S-300 air defense system. Georgia is a marginal issue to the United States; Iran is a central issue. The Russians are in a position to pose serious problems for the United States not only in Iran, but also with weapons sales to other countries, like Syria.
Therefore, the United States has a problem — it either must reorient its strategy away from the Middle East and toward the Caucasus, or it has to seriously limit its response to Georgia to avoid a Russian counter in Iran. Even if the United States had an appetite for another war in Georgia at this time, it would have to calculate the Russian response in Iran — and possibly in Afghanistan (even though Moscow's interests there are currently aligned with those of Washington).
In other words, the Russians have backed the Americans into a corner. The Europeans, who for the most part lack expeditionary militaries and are dependent upon Russian energy exports , have even fewer options. If nothing else happens, the Russians will have demonstrated that they have resumed their role as a regional power. Russia is not a global power by any means, but a significant regional power with lots of nuclear weapons and an economy that isn't all too shabby at the moment. It has also compelled every state on the Russian periphery to re-evaluate its position relative to Moscow. As for Georgia, the Russians appear ready to demand the resignation of President Mikhail Saakashvili. Militarily, that is their option. That is all they wanted to demonstrate, and they have demonstrated it.
The war in Georgia, therefore, is Russia's public return to great power status. This is not something that just happened — it has been unfolding ever since Putin took power, and with growing intensity in the past five years. Part of it has to do with the increase of Russian power, but a great deal of it has to do with the fact that the Middle Eastern wars have left the United States off-balance and short on resources. As we have written, this conflict created a window of opportunity. The Russian goal is to use that window to assert a new reality throughout the region while the Americans are tied down elsewhere and dependent on the Russians. The war was far from a surprise; it has been building for months. But the geopolitical foundations of the war have been building since 1992. Russia has been an empire for centuries. The last 15 years or so were not the new reality, but simply an aberration that would be rectified. And now it is being rectified.
By George Friedman
Kosovo Independence at the Heart of Georgia Russia Crisis
By George Friedman, STRATFOR, Aug 28, 2008
The Russo-Georgian war was rooted in broad geopolitical processes. In large part it was simply the result of the cyclical reassertion of Russian power. The Russian empire — czarist and Soviet — expanded to its borders in the 17th and 19th centuries. It collapsed in 1992. The Western powers wanted to make the disintegration permanent. It was inevitable that Russia would, in due course, want to reassert its claims. That it happened in Georgia was simply the result of circumstance.
Moscow did not have to concern itself with the potential response of the United States or Europe; hence, the invasion did not shift the balance of power. The balance of power had already shifted, and it was up to the Russians when to make this public. They did that Aug. 8.
Let's begin simply by reviewing the last few days.
On the night of Thursday, Aug. 7, forces of the Republic of Georgia drove across the border of South Ossetia , a secessionist region of Georgia that has functioned as an independent entity since the fall of the Soviet Union. The forces drove on to the capital, Tskhinvali, which is close to the border. Georgian forces got bogged down while trying to take the city. In spite of heavy fighting, they never fully secured the city, nor the rest of South Ossetia.
On the morning of Aug. 8, Russian forces entered South Ossetia , using armored and motorized infantry forces along with air power. South Ossetia was informally aligned with Russia, and Russia acted to prevent the region's absorption by Georgia. Given the speed with which the Russians responded — within hours of the Georgian attack — the Russians were expecting the Georgian attack and were themselves at their jumping-off points. The counterattack was carefully planned and competently executed, and over the next 48 hours, the Russians succeeded in defeating the main Georgian force and forcing a retreat. By Sunday, Aug. 10, the Russians had consolidated their position in South Ossetia.
On Monday, the Russians extended their offensive into Georgia proper , attacking on two axes. One was south from South Ossetia to the Georgian city of Gori. The other drive was from Abkhazia, another secessionist region of Georgia aligned with the Russians. This drive was designed to cut the road between the Georgian capital of Tbilisi and its ports. By this point, the Russians had bombed the military airfields at Marneuli and Vaziani and appeared to have disabled radars at the international airport in Tbilisi. These moves brought Russian forces to within 40 miles of the Georgian capital , while making outside reinforcement and resupply of Georgian forces extremely difficult should anyone wish to undertake it.
The Mystery Behind the Georgian Invasion
In this simple chronicle, there is something quite mysterious: Why did the Georgians choose to invade South Ossetia on Thursday night? There had been a great deal of shelling by the South Ossetians of Georgian villages for the previous three nights, but while possibly more intense than usual, artillery exchanges were routine. The Georgians might not have fought well, but they committed fairly substantial forces that must have taken at the very least several days to deploy and supply. Georgia's move was deliberate.
The United States is Georgia's closest ally . It maintained about 130 military advisers in Georgia, along with civilian advisers, contractors involved in all aspects of the Georgian government and people doing business in Georgia. It is inconceivable that the Americans were unaware of Georgia's mobilization and intentions. It is also inconceivable that the Americans were unaware that the Russians had deployed substantial forces on the South Ossetian frontier. U.S. technical intelligence, from satellite imagery and signals intelligence to unmanned aerial vehicles, could not miss the fact that thousands of Russian troops were moving to forward positions. The Russians clearly knew the Georgians were ready to move. How could the United States not be aware of the Russians? Indeed, given the posture of Russian troops, how could intelligence analysts have missed the possibility that the Russians had laid a trap, hoping for a Georgian invasion to justify its own counterattack?
It is very difficult to imagine that the Georgians launched their attack against U.S. wishes. The Georgians rely on the United States, and they were in no position to defy it. This leaves two possibilities. The first is a massive breakdown in intelligence, in which the United States either was unaware of the existence of Russian forces, or knew of the Russian forces but — along with the Georgians — miscalculated Russia's intentions. The second is that the United States, along with other countries, has viewed Russia through the prism of the 1990s, when the Russian military was in shambles and the Russian government was paralyzed. The United States has not seen Russia make a decisive military move beyond its borders since the Afghan war of the 1970s-1980s. The Russians had systematically avoided such moves for years. The United States had assumed that the Russians would not risk the consequences of an invasion.
If this was the case, then it points to the central reality of this situation: The Russians had changed dramatically , along with the balance of power in the region. They welcomed the opportunity to drive home the new reality, which was that they could invade Georgia and the United States and Europe could not respond. As for risk, they did not view the invasion as risky. Militarily, there was no counter. Economically, Russia is an energy exporter doing quite well — indeed, the Europeans need Russian energy even more than the Russians need to sell it to them. Politically, as we shall see, the Americans needed the Russians more than the Russians needed the Americans. Moscow's calculus was that this was the moment to strike. The Russians had been building up to it for months, as we have discussed, and they struck.
The Western Encirclement of Russia
To understand Russian thinking, we need to look at two events. The first is the Orange Revolution in Ukraine . From the U.S. and European point of view, the Orange Revolution represented a triumph of democracy and Western influence. From the Russian point of view, as Moscow made clear, the Orange Revolution was a CIA-funded intrusion into the internal affairs of Ukraine, designed to draw Ukraine into NATO and add to the encirclement of Russia. U.S. Presidents George H.W. Bush and Bill Clinton had promised the Russians that NATO would not expand into the former Soviet Union empire.
That promise had already been broken in 1998 by NATO's expansion to Poland, Hungary and the Czech Republic — and again in the 2004 expansion, which absorbed not only the rest of the former Soviet satellites in what is now Central Europe, but also the three Baltic states, which had been components of the Soviet Union.
The Russian Periphery
The Russians had tolerated all that, but the discussion of including Ukraine in NATO represented a fundamental threat to Russia's national security. It would have rendered Russia indefensible and threatened to destabilize the Russian Federation itself. When the United States went so far as to suggest that Georgia be included as well, bringing NATO deeper into the Caucasus, the Russian conclusion — publicly stated — was that the United States in particular intended to encircle and break Russia.
The second and lesser event was the decision by Europe and the United States to back Kosovo's separation from Serbia . The Russians were friendly with Serbia, but the deeper issue for Russia was this: The principle of Europe since World War II was that, to prevent conflict, national borders would not be changed. If that principle were violated in Kosovo, other border shifts — including demands by various regions for independence from Russia — might follow. The Russians publicly and privately asked that Kosovo not be given formal independence, but instead continue its informal autonomy, which was the same thing in practical terms. Russia's requests were ignored.
From the Ukrainian experience, the Russians became convinced that the United States was engaged in a plan of strategic encirclement and strangulation of Russia. From the Kosovo experience, they concluded that the United States and Europe were not prepared to consider Russian wishes even in fairly minor affairs. That was the breaking point. If Russian desires could not be accommodated even in a minor matter like this, then clearly Russia and the West were in conflict. For the Russians, as we said, the question was how to respond. Having declined to respond in Kosovo, the Russians decided to respond where they had all the cards: in South Ossetia.
Moscow had two motives, the lesser of which was as a tit-for-tat over Kosovo. If Kosovo could be declared independent under Western sponsorship, then South Ossetia and Abkhazia , the two breakaway regions of Georgia, could be declared independent under Russian sponsorship. Any objections from the United States and Europe would simply confirm their hypocrisy. This was important for internal Russian political reasons, but the second motive was far more important.
Russian Prime Minister Vladimir Putin once said that the fall of the Soviet Union was a geopolitical disaster. This didn't mean that he wanted to retain the Soviet state; rather, it meant that the disintegration of the Soviet Union had created a situation in which Russian national security was threatened by Western interests. As an example, consider that during the Cold War, St. Petersburg was about 1,200 miles away from a NATO country. Today it is about 60 miles away from Estonia, a NATO member. The disintegration of the Soviet Union had left Russia surrounded by a group of countries hostile to Russian interests in various degrees and heavily influenced by the United States, Europe and, in some cases, China.
Resurrecting the Russian Sphere
Putin did not want to re-establish the Soviet Union, but he did want to re-establish the Russian sphere of influence in the former Soviet Union region. To accomplish that, he had to do two things. First, he had to re-establish the credibility of the Russian army as a fighting force, at least in the context of its region. Second, he had to establish that Western guarantees, including NATO membership, meant nothing in the face of Russian power. He did not want to confront NATO directly, but he did want to confront and defeat a power that was closely aligned with the United States, had U.S. support, aid and advisers and was widely seen as being under American protection. Georgia was the perfect choice.
By invading Georgia as Russia did (competently if not brilliantly), Putin re-established the credibility of the Russian army. But far more importantly, by doing this Putin revealed an open secret: While the United States is tied down in the Middle East, American guarantees have no value. This lesson is not for American consumption. It is something that, from the Russian point of view, the Ukrainians, the Balts and the Central Asians need to digest. Indeed, it is a lesson Putin wants to transmit to Poland and the Czech Republic as well. The United States wants to place ballistic missile defense installations in those countries, and the Russians want them to understand that allowing this to happen increases their risk, not their security.
The Russians knew the United States would denounce their attack. This actually plays into Russian hands. The more vocal senior leaders are, the greater the contrast with their inaction, and the Russians wanted to drive home the idea that American guarantees are empty talk.
The Russians also know something else that is of vital importance: For the United States, the Middle East is far more important than the Caucasus, and Iran is particularly important. The United States wants the Russians to participate in sanctions against Iran. Even more importantly, they do not want the Russians to sell weapons to Iran, particularly the highly effective S-300 air defense system. Georgia is a marginal issue to the United States; Iran is a central issue. The Russians are in a position to pose serious problems for the United States not only in Iran, but also with weapons sales to other countries, like Syria.
Therefore, the United States has a problem — it either must reorient its strategy away from the Middle East and toward the Caucasus, or it has to seriously limit its response to Georgia to avoid a Russian counter in Iran. Even if the United States had an appetite for another war in Georgia at this time, it would have to calculate the Russian response in Iran — and possibly in Afghanistan (even though Moscow's interests there are currently aligned with those of Washington).
In other words, the Russians have backed the Americans into a corner. The Europeans, who for the most part lack expeditionary militaries and are dependent upon Russian energy exports , have even fewer options. If nothing else happens, the Russians will have demonstrated that they have resumed their role as a regional power. Russia is not a global power by any means, but a significant regional power with lots of nuclear weapons and an economy that isn't all too shabby at the moment. It has also compelled every state on the Russian periphery to re-evaluate its position relative to Moscow. As for Georgia, the Russians appear ready to demand the resignation of President Mikhail Saakashvili. Militarily, that is their option. That is all they wanted to demonstrate, and they have demonstrated it.
The war in Georgia, therefore, is Russia's public return to great power status. This is not something that just happened — it has been unfolding ever since Putin took power, and with growing intensity in the past five years. Part of it has to do with the increase of Russian power, but a great deal of it has to do with the fact that the Middle Eastern wars have left the United States off-balance and short on resources. As we have written, this conflict created a window of opportunity. The Russian goal is to use that window to assert a new reality throughout the region while the Americans are tied down elsewhere and dependent on the Russians. The war was far from a surprise; it has been building for months. But the geopolitical foundations of the war have been building since 1992. Russia has been an empire for centuries. The last 15 years or so were not the new reality, but simply an aberration that would be rectified. And now it is being rectified.
By George Friedman
Biggest Oil Find Ever
-> Subject: biggest oil find ever
>
> THIS WILL AMAZE YOU !
> Ever heard of the Bakken Formation? GOOGLE it.
> I did, and again, BLEW my mind. The U.S. Geological Service issued a
> report in April ('08) that only scientists and oilmen
> knew was coming, but man was it big. It was a
> revised report (hadn't been updated since '95) on
> how much oil was in this area of the western 2/3 of North
> Dakota; western South Dakota; and extreme eastern Montana
> ... Check THIS out:
>
> The Bakken is the largest domestic oil discovery since
> Alaska's Prudhoe Bay, and has the potential to
> eliminate all American dependence on foreign oil. The
> Energy Information Administration (EIA) estimates it at 503
> billion barrels. Even if just 10% of the oil is
> recoverable... At $107 a barrel, we're looking at a
> resource base worth more than $5.3 trillion. 'When I
> first briefed legislators on this, you could practically
> see their jaws hit the floor. They had no idea.' says
> Terry Johnson, the Montana Legislature's financial
> analyst. 'This sizeable find is now the
> highest-producing onshore oil field found in the past 56
> years,' reports The Pittsburgh Post Gazette. It's a
> formation known as the Williston Basin, but is more commonly
> referred to as the 'Bakken.' And it stretches from
> Northern Montana, through North Dakota and into Canada.
>
> For years, U.S. Oil exploration has been considered a dead
> end. Even the 'Big Oil' companies gave up searching
> for major oil wells decades ago. However, a recent
> technological breakthrough has opened up the Bakken's
> massive reserves... And we now have access of up to 500
> billion barrels. And because this is light, sweet oil,
> those billions of barrels will cost Americans just $16 PER
> BARREL!
>
> That's enough crude to fully fuel the American economy
> for 41 years straight.
>
> 2. And if THAT didn't throw you on the floor, then
> this next one should - because it's from TWO YEARS AGO!
>
> U.S. Oil Discovery- Largest Reserve in the World!
> Stansberry Report Online - 4/20/2006
>
> Hidden 1,000 feet beneath the surface of the Rocky
> Mountains lies the largest untapped oil reserve in the
> world is more than 2 TRILLION barrels. On August 8, 2005
> President Bush mandated its extraction.
>
>
> They reported this stunning news: We have more oil inside
> our borders, than all the other proven reserves on earth.
>
> Here are the official estimates:
>
> 8-times as much oil as Saudi Arabia
> 18-times as much oil as Iraq
> 21-times as much oil as Kuwait
> 22-times as much oil as Iran
> 500-times as much oil as Yemen - and it's all right
> here in the Western United States.
>
> HOW can this BE!? HOW can we NOT BE extracting this!?
> Because we've not D E M A N D E D Legislation to come
> out of Washington allowing its extraction, that's why!]
>
>
> James Bartis, lead researcher with the study says we've
> got more oil in this very compact area than the entire
> Middle East -more than 2 TRILLION barrels. Untapped.
> That's more than all the proven oil reserves of crude
> oil in the world today, reports The Denver Post.
>
> ----
> Don't think 'Big Oil' will drop its price -
> even with this find? Think again! It's all about the
> competitive marketplace, and if they can extract it (here)
> for less, they can afford to sell it for less - and if they
> DON'T, others will. It will come down - it has to.
>
> Got your attention/ire up yet? Hope so! Now, while
> you're thinking about it ... And hopefully P.O'd, do this:
>
> 3. Take 5-10 minutes and compose an e-mail; fax or good
> old-fashioned letter to our elected officials in Washington
> .. And their respected leaders. We'll start with them,
> and here's how you can send them your e-mail/fax,
> DEMANDING the immediate Legislation/an Energy PLAN that
> calls for tapping into these (OUR OWN!) Reserves, as well
> as allowing for the offshore drilling for OUR oil, in OUR
> offshore waters and Inter-continental shelf .. Not to
> mention Alaska. Technology ain't what it used to be
> people (ever had arthroscopic surgery?). They can
> surgically extract OUR oil, and get us on the way to at
> least some measure of Energy independence.
>
> If you don't take a little time to do this, then you
> should stifle yourself the next time you want to complain
> about gas prices ... Because by doing NOTHING, you've
> forfeited your right to complain.
>
>
> Contact your Congressional and Senate Leadership NOW!
>
> THIS WILL AMAZE YOU !
> Ever heard of the Bakken Formation? GOOGLE it.
> I did, and again, BLEW my mind. The U.S. Geological Service issued a
> report in April ('08) that only scientists and oilmen
> knew was coming, but man was it big. It was a
> revised report (hadn't been updated since '95) on
> how much oil was in this area of the western 2/3 of North
> Dakota; western South Dakota; and extreme eastern Montana
> ... Check THIS out:
>
> The Bakken is the largest domestic oil discovery since
> Alaska's Prudhoe Bay, and has the potential to
> eliminate all American dependence on foreign oil. The
> Energy Information Administration (EIA) estimates it at 503
> billion barrels. Even if just 10% of the oil is
> recoverable... At $107 a barrel, we're looking at a
> resource base worth more than $5.3 trillion. 'When I
> first briefed legislators on this, you could practically
> see their jaws hit the floor. They had no idea.' says
> Terry Johnson, the Montana Legislature's financial
> analyst. 'This sizeable find is now the
> highest-producing onshore oil field found in the past 56
> years,' reports The Pittsburgh Post Gazette. It's a
> formation known as the Williston Basin, but is more commonly
> referred to as the 'Bakken.' And it stretches from
> Northern Montana, through North Dakota and into Canada.
>
> For years, U.S. Oil exploration has been considered a dead
> end. Even the 'Big Oil' companies gave up searching
> for major oil wells decades ago. However, a recent
> technological breakthrough has opened up the Bakken's
> massive reserves... And we now have access of up to 500
> billion barrels. And because this is light, sweet oil,
> those billions of barrels will cost Americans just $16 PER
> BARREL!
>
> That's enough crude to fully fuel the American economy
> for 41 years straight.
>
> 2. And if THAT didn't throw you on the floor, then
> this next one should - because it's from TWO YEARS AGO!
>
> U.S. Oil Discovery- Largest Reserve in the World!
> Stansberry Report Online - 4/20/2006
>
> Hidden 1,000 feet beneath the surface of the Rocky
> Mountains lies the largest untapped oil reserve in the
> world is more than 2 TRILLION barrels. On August 8, 2005
> President Bush mandated its extraction.
>
>
> They reported this stunning news: We have more oil inside
> our borders, than all the other proven reserves on earth.
>
> Here are the official estimates:
>
> 8-times as much oil as Saudi Arabia
> 18-times as much oil as Iraq
> 21-times as much oil as Kuwait
> 22-times as much oil as Iran
> 500-times as much oil as Yemen - and it's all right
> here in the Western United States.
>
> HOW can this BE!? HOW can we NOT BE extracting this!?
> Because we've not D E M A N D E D Legislation to come
> out of Washington allowing its extraction, that's why!]
>
>
> James Bartis, lead researcher with the study says we've
> got more oil in this very compact area than the entire
> Middle East -more than 2 TRILLION barrels. Untapped.
> That's more than all the proven oil reserves of crude
> oil in the world today, reports The Denver Post.
>
> ----
> Don't think 'Big Oil' will drop its price -
> even with this find? Think again! It's all about the
> competitive marketplace, and if they can extract it (here)
> for less, they can afford to sell it for less - and if they
> DON'T, others will. It will come down - it has to.
>
> Got your attention/ire up yet? Hope so! Now, while
> you're thinking about it ... And hopefully P.O'd, do this:
>
> 3. Take 5-10 minutes and compose an e-mail; fax or good
> old-fashioned letter to our elected officials in Washington
> .. And their respected leaders. We'll start with them,
> and here's how you can send them your e-mail/fax,
> DEMANDING the immediate Legislation/an Energy PLAN that
> calls for tapping into these (OUR OWN!) Reserves, as well
> as allowing for the offshore drilling for OUR oil, in OUR
> offshore waters and Inter-continental shelf .. Not to
> mention Alaska. Technology ain't what it used to be
> people (ever had arthroscopic surgery?). They can
> surgically extract OUR oil, and get us on the way to at
> least some measure of Energy independence.
>
> If you don't take a little time to do this, then you
> should stifle yourself the next time you want to complain
> about gas prices ... Because by doing NOTHING, you've
> forfeited your right to complain.
>
>
> Contact your Congressional and Senate Leadership NOW!
Stupid Is NOT Going To End Until There Is A Huge Crash
http://www.rense.com
Stupid Is NOT Going To End
Until There Is A Huge Crash
By Karl Schwarz
8-27-2008
Well, well, well, Georgia and their Zionist West backers are still provoking the Russian Bear. A *really* stupid idea. I think I will vacation West of where I am rather than East. I was thinking about checking out Sochi where the 2014 Olympic games are to be held but will pass on that for now. I do not want to be anywhere around the kill zone when the Bear decides he has had enough of the Zionist West bullshit in Georgia.
Did you know that Central Asia Georgia was part of the coast of the United States? A United States COAST GUARD ship has docked in the port of Batumi, and has pulled back on its announced intention to dock in Poti. A wise choice.
What are we Americans to think? Is Central Asia Georgia now our 51st state of East Georgia? Does George Bush have a clue what he is doing? Don't answer that. Will Central Asia Georgia have a mascot like the Georgia Bulldogs? Will the bulldog have to eat both a Kosher and non-pork diet to satisfy the Zionist-Israeli thugs who control the government of this aberration of East Georgia?
Are we watching a really strange remake of 'Midnight in the Garden of Good and Evil' and Batumi, Ajaria, Georgia is now Savannah as in 'Gone with the Wind' on Quaaludes? Damn, does Savannah, Georgia know that their US Coast Guard protection is on the other side of the world? Is Batumi about to be renamed 'Savannah'? BBC said the US Coast Guard ship decided to not test the Russian navy and armor that is in the Poti area, so they docked at a third breakaway region of Georgia.
Most Americans do not know that Josef Stalin was born in Gori, Georgia. There are many former Georgian Christians now living happily and peacefully in Russia. That city of Gori is very close to the New South Ossetia and the protective zone Russia established to insulate the Russian Orthodox Christian citizens of South Ossetia. Yeah, Georgia was part of Russia for centuries and now this moron Saakashvili thinks Central Asia is Europe. He must have learned that in the US where he went to school.
Evidently, the diaper meister lunatic in the Oval Office thinks Central Asia Georgia is on the East Coast of the US. Mick Saakashvili thinks Central Asia is in Europe and accuses Russia of trying to force the boundaries of Europe to change by force?
Are all of these people on massive psychotropic drugs?
David Miliband, Zionist heir apparent to 'Gorgon' Brown was in Ukraine on Wednesday to "build the broadest possible international 'coalition' against this Russian aggression." Uh, oh, GW and the twit Brits are going to assemble another useless COALITION. To quote him: "Russia must be taught a lesson that aggression will not be tolerated in this century." [LOL!!!!!!!!!]
Huh? Thanks David, how about getting your own genocidal, thieving asses out of Iraq and Afghanistan before trying to threaten Russia. The hypocrisy of the Zionist West is crushing.
Of course, the Miliband visit was made because the puppet Ukraine regime feels 'threatened' now that its joint venture caper with Georgia, the US and Zionist Israel has exploded in its face. Davey boy is out reassuring all that the Zionist West will overcome this by joining hands and photo ops and trash-talking Russia.
These slimebags attack innocent civilians and then blame the defenders for the W FUBAR they stirred up. They are criminally insane.
They are losing, they are desperate, and it is showing.
The Zionist New World Order is on the ropes thanks to the resolve of those who refuse to bow down...and to Russia for standing firm on truth and reality.
I have no problems whatsoever understanding Putin, Medvedev, Ivanov or Lavrov. The US, Zionist Israel and its asinine puppet government in Georgia screwed-up big time, and there will be Hell to pay for that.
And speaking of such, what in Hell is a US Coast Guard ship doing in Batumi, Ajaria on the Black Sea?
Most of you have probably seen the news that NATO ships were headed towards Poti, Georgia. They had to either divert, stay in the West end of the Black Sea or zig and zag a lot because Russia decided to have 'live fire' drills with their Black Sea fleet with missiles that can sink a ship with one shot from hundreds of miles away.
Bush might have missed the 'hint' but I guarantee the commanders of those NATO vessels did not. [LOL!!!!!!!!!]
Russia is patiently waiting for the next dumbass who wants to get his butt kicked.
NATO seems to be having second thoughts about declaring Central Asia (or Eurasia) Georgia a full-status NATO and EU member. NATO, of course, has tried to push itself to the borders of Mother Russia for years under a doctrine of 'get used to it'. Reality check: Russia has the EU by the throat and groin when it comes to their energy supplies of oil and natural gas.
I can just imagine many in the EU seeing the US Coast Guard ship in Batumi, Ajaria and asking: "What the Hell is this???" I am also getting some feedback from across Europe that the official EU public response to Bush right now can be summed up in one word: 'IDIOT!' [LOL!!!!!!!!!]
Most Americans would get a kick out of how Europeans say that word: 'IDGYOT!' I hear 'idgyot Bush' everywhere I go. [MM: Hey, give GWB
a break...he's still got a "shock and awe" 12% approval rating here!]
The cooler and wiser heads in the EU are starting to contemplate how cold it might be in the EU this fall and winter in this new BushCo-Zionist-created Cold War. Hopefully, Russia will decide to lower the temperatures in all homes and offices in the EU this winter as a reminder of who their energy supplier is.
Russia's response regarding Georgia is abundantly clear: GET USED TO IT! Russia has made it 100% plain that security and peace matters in Georgia, from this point forward, are the province of Russia...and not Georgia, not Zionist Israel, not NATO, not the EU trying to expand into Central Asia, not the US.
Paybacks are lousy. Revenge is a dish best served cold and the Russians do know how to serve it up properly when people act as if they are friend and then knife them in the back - as they did in South Ossetia in August 2008. The knifers include Georgia, NATO, EU, OSCE, the US, Israel, US and Israeli mercenaries, Ukraine, et al. Even those illegal German automatic weapons will be remembered. Got that Merkel-Ferkel?
Russia has decided to prove to the world how much of the Ukraine is Russian right now.
They are not only offering Russian passports to Ukrainians in the eastern third of Ukraine known as the Crimea. It goes even further than that.
Due to demographics and realities, most Americans do not know that many of the people in the eastern third of Ukraine are already Russian-born, Russian citizens and already have Russian passports.
The Bush, Soros, Zionist New World Order-types do not want Americans to know too much about all of this. They are trying to paint the picture that the new Zionist Ukraine is totally dead-set on separating from Russia permanently. Wrong. The pensioners in Ukraine receive their monthly checks from Moscow, not Kiev. Much of the medical needs of Ukraine are paid by Moscow, not Kiev.
Most of the oil and natural gas is supplied by Russia, not the Soros-BushCo-Zionist West team.
The Ukraine economy would be much worse off than it is now if not for Russian tourists coming to the Black Sea for summer holiday, andUkraine ripping them off with absurd prices. Russia has a 'beach deficit' and Russians have vacationed in the Black Sea area for generations. One of our team spent two weeks in the Crimea this summer. It's a beautiful place, indeed.
Remember, the port Ukraine told Russia it can no longer use is Sevastopol...part of the Crimea region. Just north of the Sea of Azov, an adjunct of the Black Sea, are many Russian airbases...packed, racked and stacked with Russian fighter jets and strategic bombers ready for any BushCo, Israeli or NATO stupidity.
The point: much of Ukraine is already inhabited by Russian-born Russian citizens, not just Ukrainians. Just because BushCo says so don't make it so.
If you watched the Olympics, one of the higher moments was Russian pole-vaulter Elena Isinbaeva (Yelena Isinbayeva) winning the Gold medal and setting a new world record. And she did so in the face of being trash-talked by the classless American who finished second with the Silver. Elena rose above the American's abuse with the greatest dignity imaginable and literally brought down the house in Beijing.
Even though Isinbaeva has set 23 world records in the women's pole vault, this was her second Olympics Gold medal at the age of 26. [MM: She also
won gold in 2004.]
Truly, a legendary superstar and a tribute to the best in athletic morality and integrity.
There were 90,000 people in that stadium watching the American's lowlife behavior. When Elena cleared the bar in her record vault, the stadium erupted more than it did for any other event in the Olympics. Elena wrapped a Russia flag around her and WALKED around the entire length of the 400m track while 90,000 people from all over the world gave her a roaring, standing ovation for winning the gold...and putting the American in her place. She did not have to jog, she walked...and the crowd stayed standing and applauding the entire time.
Folks, you have to get this straight in your head. The rest of the world is leaving the US behind in its own [Zionist] dirty sandbox.
I have noticed while in Europe that Americans seem to lack common manners and the ability to refrain from making complete ASSES of themselves. Perhaps the American pole-vaulter took her lead from Bush....who also made a consummate (and drunken) ass of himself inBeijing.
Elena was born in Volgograd, Russia.
That is the fat-mouthed American on the left in the photo. Russia took both Gold and Bronze in this event. I cannot remember [Jenn Stuczynski] the American's name nor do I wish to. She embarrassed our country...and fortunately was put in her place in front of 90,000 people in Beijing and a worldwide television audience of over a billion. [MM: Rumor has it that both Jenn Stuczynski and her coach are Jewish, which would account for the trash-talking Chutzpah.]
Elena Isinbaeva (Yelena Isinbayeva in their alphabet) LIVES IN DONETSK, UKRAINE in the eastern part of Ukraine. She is one of many Russians living in the Eastern part of the Ukraine.
Get it?
If you want to get a 'real picture' of this world get out of that recliner, get as far away from O'Reilly and Hannity, and the Wolf Blitzer types as fast you can and see the truth for yourself with your own eyes.
Karl
Stupid Is NOT Going To End
Until There Is A Huge Crash
By Karl Schwarz
8-27-2008
Well, well, well, Georgia and their Zionist West backers are still provoking the Russian Bear. A *really* stupid idea. I think I will vacation West of where I am rather than East. I was thinking about checking out Sochi where the 2014 Olympic games are to be held but will pass on that for now. I do not want to be anywhere around the kill zone when the Bear decides he has had enough of the Zionist West bullshit in Georgia.
Did you know that Central Asia Georgia was part of the coast of the United States? A United States COAST GUARD ship has docked in the port of Batumi, and has pulled back on its announced intention to dock in Poti. A wise choice.
What are we Americans to think? Is Central Asia Georgia now our 51st state of East Georgia? Does George Bush have a clue what he is doing? Don't answer that. Will Central Asia Georgia have a mascot like the Georgia Bulldogs? Will the bulldog have to eat both a Kosher and non-pork diet to satisfy the Zionist-Israeli thugs who control the government of this aberration of East Georgia?
Are we watching a really strange remake of 'Midnight in the Garden of Good and Evil' and Batumi, Ajaria, Georgia is now Savannah as in 'Gone with the Wind' on Quaaludes? Damn, does Savannah, Georgia know that their US Coast Guard protection is on the other side of the world? Is Batumi about to be renamed 'Savannah'? BBC said the US Coast Guard ship decided to not test the Russian navy and armor that is in the Poti area, so they docked at a third breakaway region of Georgia.
Most Americans do not know that Josef Stalin was born in Gori, Georgia. There are many former Georgian Christians now living happily and peacefully in Russia. That city of Gori is very close to the New South Ossetia and the protective zone Russia established to insulate the Russian Orthodox Christian citizens of South Ossetia. Yeah, Georgia was part of Russia for centuries and now this moron Saakashvili thinks Central Asia is Europe. He must have learned that in the US where he went to school.
Evidently, the diaper meister lunatic in the Oval Office thinks Central Asia Georgia is on the East Coast of the US. Mick Saakashvili thinks Central Asia is in Europe and accuses Russia of trying to force the boundaries of Europe to change by force?
Are all of these people on massive psychotropic drugs?
David Miliband, Zionist heir apparent to 'Gorgon' Brown was in Ukraine on Wednesday to "build the broadest possible international 'coalition' against this Russian aggression." Uh, oh, GW and the twit Brits are going to assemble another useless COALITION. To quote him: "Russia must be taught a lesson that aggression will not be tolerated in this century." [LOL!!!!!!!!!]
Huh? Thanks David, how about getting your own genocidal, thieving asses out of Iraq and Afghanistan before trying to threaten Russia. The hypocrisy of the Zionist West is crushing.
Of course, the Miliband visit was made because the puppet Ukraine regime feels 'threatened' now that its joint venture caper with Georgia, the US and Zionist Israel has exploded in its face. Davey boy is out reassuring all that the Zionist West will overcome this by joining hands and photo ops and trash-talking Russia.
These slimebags attack innocent civilians and then blame the defenders for the W FUBAR they stirred up. They are criminally insane.
They are losing, they are desperate, and it is showing.
The Zionist New World Order is on the ropes thanks to the resolve of those who refuse to bow down...and to Russia for standing firm on truth and reality.
I have no problems whatsoever understanding Putin, Medvedev, Ivanov or Lavrov. The US, Zionist Israel and its asinine puppet government in Georgia screwed-up big time, and there will be Hell to pay for that.
And speaking of such, what in Hell is a US Coast Guard ship doing in Batumi, Ajaria on the Black Sea?
Most of you have probably seen the news that NATO ships were headed towards Poti, Georgia. They had to either divert, stay in the West end of the Black Sea or zig and zag a lot because Russia decided to have 'live fire' drills with their Black Sea fleet with missiles that can sink a ship with one shot from hundreds of miles away.
Bush might have missed the 'hint' but I guarantee the commanders of those NATO vessels did not. [LOL!!!!!!!!!]
Russia is patiently waiting for the next dumbass who wants to get his butt kicked.
NATO seems to be having second thoughts about declaring Central Asia (or Eurasia) Georgia a full-status NATO and EU member. NATO, of course, has tried to push itself to the borders of Mother Russia for years under a doctrine of 'get used to it'. Reality check: Russia has the EU by the throat and groin when it comes to their energy supplies of oil and natural gas.
I can just imagine many in the EU seeing the US Coast Guard ship in Batumi, Ajaria and asking: "What the Hell is this???" I am also getting some feedback from across Europe that the official EU public response to Bush right now can be summed up in one word: 'IDIOT!' [LOL!!!!!!!!!]
Most Americans would get a kick out of how Europeans say that word: 'IDGYOT!' I hear 'idgyot Bush' everywhere I go. [MM: Hey, give GWB
a break...he's still got a "shock and awe" 12% approval rating here!]
The cooler and wiser heads in the EU are starting to contemplate how cold it might be in the EU this fall and winter in this new BushCo-Zionist-created Cold War. Hopefully, Russia will decide to lower the temperatures in all homes and offices in the EU this winter as a reminder of who their energy supplier is.
Russia's response regarding Georgia is abundantly clear: GET USED TO IT! Russia has made it 100% plain that security and peace matters in Georgia, from this point forward, are the province of Russia...and not Georgia, not Zionist Israel, not NATO, not the EU trying to expand into Central Asia, not the US.
Paybacks are lousy. Revenge is a dish best served cold and the Russians do know how to serve it up properly when people act as if they are friend and then knife them in the back - as they did in South Ossetia in August 2008. The knifers include Georgia, NATO, EU, OSCE, the US, Israel, US and Israeli mercenaries, Ukraine, et al. Even those illegal German automatic weapons will be remembered. Got that Merkel-Ferkel?
Russia has decided to prove to the world how much of the Ukraine is Russian right now.
They are not only offering Russian passports to Ukrainians in the eastern third of Ukraine known as the Crimea. It goes even further than that.
Due to demographics and realities, most Americans do not know that many of the people in the eastern third of Ukraine are already Russian-born, Russian citizens and already have Russian passports.
The Bush, Soros, Zionist New World Order-types do not want Americans to know too much about all of this. They are trying to paint the picture that the new Zionist Ukraine is totally dead-set on separating from Russia permanently. Wrong. The pensioners in Ukraine receive their monthly checks from Moscow, not Kiev. Much of the medical needs of Ukraine are paid by Moscow, not Kiev.
Most of the oil and natural gas is supplied by Russia, not the Soros-BushCo-Zionist West team.
The Ukraine economy would be much worse off than it is now if not for Russian tourists coming to the Black Sea for summer holiday, andUkraine ripping them off with absurd prices. Russia has a 'beach deficit' and Russians have vacationed in the Black Sea area for generations. One of our team spent two weeks in the Crimea this summer. It's a beautiful place, indeed.
Remember, the port Ukraine told Russia it can no longer use is Sevastopol...part of the Crimea region. Just north of the Sea of Azov, an adjunct of the Black Sea, are many Russian airbases...packed, racked and stacked with Russian fighter jets and strategic bombers ready for any BushCo, Israeli or NATO stupidity.
The point: much of Ukraine is already inhabited by Russian-born Russian citizens, not just Ukrainians. Just because BushCo says so don't make it so.
If you watched the Olympics, one of the higher moments was Russian pole-vaulter Elena Isinbaeva (Yelena Isinbayeva) winning the Gold medal and setting a new world record. And she did so in the face of being trash-talked by the classless American who finished second with the Silver. Elena rose above the American's abuse with the greatest dignity imaginable and literally brought down the house in Beijing.
Even though Isinbaeva has set 23 world records in the women's pole vault, this was her second Olympics Gold medal at the age of 26. [MM: She also
won gold in 2004.]
Truly, a legendary superstar and a tribute to the best in athletic morality and integrity.
There were 90,000 people in that stadium watching the American's lowlife behavior. When Elena cleared the bar in her record vault, the stadium erupted more than it did for any other event in the Olympics. Elena wrapped a Russia flag around her and WALKED around the entire length of the 400m track while 90,000 people from all over the world gave her a roaring, standing ovation for winning the gold...and putting the American in her place. She did not have to jog, she walked...and the crowd stayed standing and applauding the entire time.
Folks, you have to get this straight in your head. The rest of the world is leaving the US behind in its own [Zionist] dirty sandbox.
I have noticed while in Europe that Americans seem to lack common manners and the ability to refrain from making complete ASSES of themselves. Perhaps the American pole-vaulter took her lead from Bush....who also made a consummate (and drunken) ass of himself inBeijing.
Elena was born in Volgograd, Russia.
That is the fat-mouthed American on the left in the photo. Russia took both Gold and Bronze in this event. I cannot remember [Jenn Stuczynski] the American's name nor do I wish to. She embarrassed our country...and fortunately was put in her place in front of 90,000 people in Beijing and a worldwide television audience of over a billion. [MM: Rumor has it that both Jenn Stuczynski and her coach are Jewish, which would account for the trash-talking Chutzpah.]
Elena Isinbaeva (Yelena Isinbayeva in their alphabet) LIVES IN DONETSK, UKRAINE in the eastern part of Ukraine. She is one of many Russians living in the Eastern part of the Ukraine.
Get it?
If you want to get a 'real picture' of this world get out of that recliner, get as far away from O'Reilly and Hannity, and the Wolf Blitzer types as fast you can and see the truth for yourself with your own eyes.
Karl
Tuesday, August 26, 2008
t's more than Fannie and Freddie
t's more than Fannie and Freddie
By: John Mauldin, Millennium Wave Advisors
-- Posted Sunday, 24 August 2008 | Digg This ArticleDigg It! | Source: GoldSeek.com
The US Banking System Is in Trouble
$500 Billion and Counting
Fannie, Freddie, and the Credit Crisis
Baltimore, La Jolla, and South Africa
Yet another crisis confronts us, as we will have to deal with the aftermath of a rather large number of bank failures over the next year, which is likely to overwhelm the ability of the FDIC to insure your bank deposits. Today we look at the banking system, the FDIC, and Freddie and Fannie. It's not pretty, but as realists we must know what we are facing.
But first, I just want to say I am glad that Richard Russell is doing fine. For those who do not know, he suffered a mild stroke last Friday. I talked to him yesterday, and he was a little tired but doing better. He has decided to cut back his writing schedule and relax a bit more, which is a good thing. At 84, he has written a daily (and sometimes lengthy) commentary and has been writing the monthly Dow Theory Letter since 1958. He is the dean of newsletter writers. He has forgotten more than most of us will ever know about the markets.
His doctor told him he needed to seek some balance in his life and cut down on the stress. I know how much it takes to write my one letter each week; I can't imagine what it takes to write five. Basically, his plan is now to post his stats and only write about the markets when something important is happening, about every two weeks. I hope he sticks with that plan, as I want to be sharing dinner and drinks with him for many years to come. I am sure you join me in wishing him and his lovely wife Faye all the best and a healthy and quick recovery.
The US Banking System Is in Trouble
A few weeks ago when I was in Maine, I met Chris Whalen. Chris is the managing director of a service called Institutional Risk Analytics, whose primary business is analyzing the health of banks and financial institutions. If you are one of their clients, you can go to their web site and drill quite deep into all aspects of every bank in America. And what they have done is come up with various metrics which compare how well-capitalized a bank is, how much risk it is taking, and what kind of losses (or profits) it can expect. It is a one of a kind firm, and the data gives Chris a very special perspective on the US banking system.
And what he sees is not pretty. There is a crisis brewing. He expects 100 banks to fail between now and July of 2009. Most of them will be small, but there will be a few large banks. The total assets of those banks he estimates to be $850 billion (not a typo!). Those are the assets the FDIC is going to have to cover when they take over the banks.
Take Washington Mutual as an example. There are problems there. Their debt now trades at 20%, which is worse than junk. There is no way they could issue preferred stock to recapitalize their business. And they are going to need more capital, as they have writedowns in their future due to the slowing of the economy. Any common issue would have to seriously dilute existing shareholders almost to the point of nothing. There are circumstances in which they can survive, but it would take a remarkable recovery for the US economy, which is not likely. Maybe management can pull a rabbit out of the hat, but it will need some strong magic to get the capital they need at a cost they can live with.
The FDIC has about $50 billion. These reserves have been built up over the years from deposit insurance paid by banks that are part of the program. They are going to need an estimated $20 billion just to cover the failure of Indy Mac. The FDIC will have to cover only a small percentage of the $850 billion, as some of those assets will surely be good. But if they have to cover 10%, then the FDIC would need another $50 billion. Does that sound like a lot? Chris thinks a more conservative number for planning purposes would be 20-25% potential losses, and you hope it does not get there.
Sometime in the next few quarters, Congress and the President, either the current group or early in the term of the next President, are going to have to address that potential shortfall, before we see bank runs as people fear that FDIC insurance reserves may not be enough. The very sad fact is that taxpayers are going to be on the hook for some time. What is likely to happen is that a loan facility will be made to the FDIC so they can borrow as much as they need, and pay it back from future bank insurance payments.
You can't make up the shortfall just by raising fees. Chris points out that raising fees right now is not really a winning option, as that just makes the financial books of marginal banks even worse. You can raise rates as the banking system returns to health.
If Congress and the President wait too long, there could be a very serious problem, as depositors could start moving their funds under $100,000 (the insured amount) to what they perceive may be a safer bank than their current bank. Rumors could run rampant. This is something that needs to be addressed now. Frankly, this should be addressed right after the elections AT THE LATEST, in consultation with Congress and the new President.
If you are worried about your bank, you can go to Chris's web site and pay $50 for a brief analysis of your bank and an update for the next four quarters. If you have less than $100,000 in your accounts, you should not worry. But for businesses with large deposits and cash flows, it might be worth checking on the health of your bank. The link is http://us1.institutionalriskanalytics.com/Cart/Request.asp?affiliate=bmg123.
You can click on the link that says "Click here for the free samples" in the lower right corner of the page to see if the format of what they offer is something you would find useful.
$500 Billion and Counting
We have seen some $505 billion in bank write-offs so far in this credit crisis. It is serious naivete to assume that this will be the extent of it. Most of the write-offs have been mortgage-related. We have not yet seen the write-offs that will come as consumers start defaulting on credit cards, auto loans, and other consumer debt. Neither have we seen the losses that will come from commercial real estate or corporate loan as the recession progresses. You can't write off something until it goes bad, although you can increase your loan loss provisions. This of course hits earnings and your stock price and thus your ability to raise new equity. It presents a very difficult dilemma for bank managers and investors deciding whether to invest or go away.
Sober-minded analysis from the IMF suggests that the total write-offs by all banks may be $1 trillion. Dr. Nouriel Roubini is much more alarmed and puts the potential losses at closer to $2 trillion. That means that banks over time are going to have to increase their loan loss provisions, hitting both earnings and capital. And that means they will have to raise more investment capital and equity at a time when their stock prices are low.
It is a vicious spiral. Banks have less capital, so they are able to lend less to the very businesses that need the money; and without said money the businesses will be less capable of paying their current loans, which means that banks have less capital. Rinse and repeat.
That only prolongs the recession and Muddle Through Economy, which hurts consumers and corporate profits, which in turn puts more pressure on banks. Ultimately it means that banks are going to have to raise a lot more capital than anyone who is buying financial stocks today imagines. And it is largely going to be expensive capital. Look at this note from Bennet Sedacca of Atlantic Advisors:
"Financial entities like banks, broker/dealers, regional banks, finance companies, and insurance companies need credit at reasonable rates in order to finance themselves. I have been concerned for many years that the door would finally shut on banks, brokers and others to raise new capital in the debt markets.
"For many regional banks like KeyCorp, Zions, Regions, and National City, the door has already shut on them--if they wanted to raise capital in the debt market at levels where their outstanding issues regularly trade, they would have to pay 12-15%, hardly economic levels. GM bonds trade near 27% yields. Washington Mutual trades north of 15%.
"Then there are the 'good banks', like J.P. Morgan and Wells Fargo. J.P. Morgan recently sold $600 million of preferred stock at 8 3/4 % and Wells Fargo sold $1.3 billion at 8 5/8%, plus underwriting fees.
"Below I offer up a few guesses of what other issuers would have to pay to issue preferred stock.
* Lehman Brothers--11-13%.
* Merrill Lynch--11-12%.
* Morgan Stanley--9-10%.
* Citigroup--9 1/2-10 1/2%.
* CIT Group--12-15%.
* Fannie Mae/Freddie Mac---15%
* Keycorp--11-13%.
* National City--13-15%.
* Wachovia--10-12%.
* Zions Bancorp--13-15%.
* GM/GMAC--not possible.
* Washington Mutual--not possible.
* Ford--not possible."
Bennet does note a good point. Banks that conserved capital and managed their risks well will be in good shape to take over weaker brethren. They will have access to the capital markets for the money they need for expansion. My own bank was acquired recently by another small regional bank. Deals are getting done.
In another note, and to illustrate this point, Sedacca points out that it is not just Freddie and Fannie. Besides Washington Mutual, mentioned above, "RF (Regions Financial) needs to raise $2 billion says Sanford Bernstein. Let's see, what are their options? They can sell debt. The problem here is that you couldn't sell debt if you wanted. The last reported trade in RF paper was 2 weeks ago nearly +700 to the 30 year or close to 12%. Their preferreds trade at 10% and the stock is now a 'single digit midget' near $8 a share. So if you could even get a deal done, shareholders would get a 50% haircut."
Fannie, Freddie, and the Credit Crisis
Let's turn to Freddie and Fannie. There must be some people who think there is some way that the shareholders of Fannie and Freddie will not lose everything, as their shares actually trade. This just simply goes to show that you can fool some of the people some of the time. And as we will see, some of those people are very serious institutions.
It is almost a forgone conclusion that the US Treasury will have to step in and for all intents and purposes nationalize the two government-sponsored enterprises. The estimated losses in these two firms are far beyond what they could raise in a traditional market. And the longer the government waits, the worse the situation is likely to get.
Moody's downgraded the preferred stock in these firms to almost junk level because of the increased likelihood of "direct support" from the US Treasury, which, depending on the nature of the support, could wipe out both the holders of the common and the preferred. The preferred shares have already lost half their value since June 30 on speculation that an intervention would mean a stop in dividend payments (highly likely) and issuance of new preferred that would take preference over current preferred.
Interestingly, this would put more pressure on the banking system, as many banks hold the GSE preferred shares as assets, choosing to get a little extra return over traditional and more conservative assets. But then of course, Fannie and Freddie preferred were considered safe just a few months ago, with the best ratings from Moody's.
"Regional banks including Midwest Bank Holdings Inc., Sovereign Bancorp and Frontier Financial Corp., may have the most to lose. Melrose Park, Illinois-based Midwest has $67.5 million, or as much as 23 percent of its risk-weighted assets, in the preferred stock, while Philadelphia-based Sovereign owns about $623 million and Everett, Washington-based Frontier about $5 million." (Bloomberg)
It is doubtful that banks which hold these assets have written them down yet, but with a downgrade they will almost certainly be forced to do so in the near future. For the record, Fannie Mae has 17 classes of preferred stock, with more than 600 million shares outstanding. Freddie Mac has 24 classes of preferred stock, with about 460 million shares outstanding. The existing shares are trading worse than junk bonds, paying 17-19%.
And it may be a total write-off. It is hard to imagine how Treasury Secretary Paulson, or a new Treasury Secretary next year, could put US taxpayer money into the companies at risk without wiping out the current common and preferred shareholders. The justified outrage would be huge.
The basic problem is that without Freddie and Fannie the US mortgage market would go from crippled to moribund, if not dead. We have created a system that could not function in the short term without them, and the pain of allowing them to collapse would be another 1930s-style Depression, the era in which these firms were first created. They were never designed to take on the huge leverage they did, or to use hundreds of millions in lobbyist money and campaign contributions to create a massive payment scheme for management and shareholders. Congressional estimates are that this could cost US taxpayers $25 billion, a significant multiple of their current market caps.
Fannie and Freddie will not be able to raise capital on their own. At this point, why would any rational investor put that much money into a company with such a convoluted preferred share scheme, without government guarantees? That estimated loss assumes that the housing market does not get worse from this point. Losses could be much worse, or things could get better. Who knows? Why invest in something with so much uncertainty?
But there are more problems. You can't just take someone else's property, and that is what stock is, without some serious reasons. You almost are forced to wait for a crisis, otherwise shareholders would sue, saying that they suffered unnecessary losses. You can certainly expect the preferred shareholders to sue. That is why Paulson hired JP Morgan to figure out how to recapitalize the banks. I don't envy the people who are working on that one. Maybe there is some magic somewhere, but as we saw with Bear Stearns, at the end of the day it is all about adequate capital.
The GSE companies should be adequately capitalized and broken up into much smaller firms that would not be too big too fail in the future, and put under a regulator that would enforce reasonable leverage limits, with the profits going to pay back the US taxpayer before any profits or dividends are paid to any other future owners.
That is, if the government takes the two GSEs and puts capital (probably in the form of loans and guarantees) into them, which puts taxpayers at risk, then allows a public offering of the smaller entities to raise capital to repay the loans, any shortfall should be made up by the issuance of preferred shares, and the common shareowners would wait until the government loan was repaid before they would be eligible for a dividend.
And the people responsible for creating the leveraged systems, the board, et al., should be forced to resign. New top management all around.
The ultimate goal should be for taxpayers to get their money back and any guarantee, implicit or explicit, to be removed. No mortgage bank should ever again be allowed to be too big too fail.
Now, taken as a part of the total credit crisis, which will run to over $1 trillion (at least), $25 billion may not seem like a lot. But I hope this is a wake-up call for better regulations and safeguards.
And before I go, let me reiterate my call for regulators to force banks to move their credit default swaps to an exchange. The potential for a blow-up is serious, and it could dwarf the current credit crisis. I am not saying it will happen, just that it could. Even a low-risk event should be protected against. Credit default swaps are legitimate business transactions. They are very useful. They should just be put on an exchange, like futures or options, where there is 100% transparency as to counterparty risk.
Baltimore, La Jolla, and South Africa
I am home for a few weeks, enjoying the tail end of summer. On September 6, Tiffani and I will head to Baltimore to be with Bill Bonner, founder of Agora Publishing, and a host of friends, to celebrate his 60th birthday. It is hard to believe that we have known each other for 26 years. What an incredible business model he has created. He has adapted with the times, letting his business evolve into a multi-hundred-million-dollar enterprise. I remember first going to his offices in Baltimore, which were definitely in a very bad part of town. I was nervous just walking two blocks in broad daylight; but the offices were inexpensive, I suppose.
He is the one of the best pure writers I know. You can read some of his essays and subscribe to the free Daily Reckoning (be warned: Bill is quite bearish) by clicking on this link: http://www.dailyreckoning.com/rpt/mauldin.html.
Tiffani and I will then be going to La Jolla September 15 to meet with my partners at Altegris, and meet some new potential associates. Right now, drinks with Richard and Faye Russell is on the calendar, and I really look forward to it.
Then a few weeks later I will head off on a quick trip to South Africa, where I will be speaking for an investment group in Cape Town, then maybe stop off in London for a day and then hurry home in time to do my regular letter.
That is enough to make me tired, so I think I will hit the send button and go home and see who is there. Have a great week.
Your needing to seek my own balance analyst,
John Mauldin
John@frontlinethoughts.com
Copyright 2008 John Mauldin. All Rights Reserved
By: John Mauldin, Millennium Wave Advisors
-- Posted Sunday, 24 August 2008 | Digg This ArticleDigg It! | Source: GoldSeek.com
The US Banking System Is in Trouble
$500 Billion and Counting
Fannie, Freddie, and the Credit Crisis
Baltimore, La Jolla, and South Africa
Yet another crisis confronts us, as we will have to deal with the aftermath of a rather large number of bank failures over the next year, which is likely to overwhelm the ability of the FDIC to insure your bank deposits. Today we look at the banking system, the FDIC, and Freddie and Fannie. It's not pretty, but as realists we must know what we are facing.
But first, I just want to say I am glad that Richard Russell is doing fine. For those who do not know, he suffered a mild stroke last Friday. I talked to him yesterday, and he was a little tired but doing better. He has decided to cut back his writing schedule and relax a bit more, which is a good thing. At 84, he has written a daily (and sometimes lengthy) commentary and has been writing the monthly Dow Theory Letter since 1958. He is the dean of newsletter writers. He has forgotten more than most of us will ever know about the markets.
His doctor told him he needed to seek some balance in his life and cut down on the stress. I know how much it takes to write my one letter each week; I can't imagine what it takes to write five. Basically, his plan is now to post his stats and only write about the markets when something important is happening, about every two weeks. I hope he sticks with that plan, as I want to be sharing dinner and drinks with him for many years to come. I am sure you join me in wishing him and his lovely wife Faye all the best and a healthy and quick recovery.
The US Banking System Is in Trouble
A few weeks ago when I was in Maine, I met Chris Whalen. Chris is the managing director of a service called Institutional Risk Analytics, whose primary business is analyzing the health of banks and financial institutions. If you are one of their clients, you can go to their web site and drill quite deep into all aspects of every bank in America. And what they have done is come up with various metrics which compare how well-capitalized a bank is, how much risk it is taking, and what kind of losses (or profits) it can expect. It is a one of a kind firm, and the data gives Chris a very special perspective on the US banking system.
And what he sees is not pretty. There is a crisis brewing. He expects 100 banks to fail between now and July of 2009. Most of them will be small, but there will be a few large banks. The total assets of those banks he estimates to be $850 billion (not a typo!). Those are the assets the FDIC is going to have to cover when they take over the banks.
Take Washington Mutual as an example. There are problems there. Their debt now trades at 20%, which is worse than junk. There is no way they could issue preferred stock to recapitalize their business. And they are going to need more capital, as they have writedowns in their future due to the slowing of the economy. Any common issue would have to seriously dilute existing shareholders almost to the point of nothing. There are circumstances in which they can survive, but it would take a remarkable recovery for the US economy, which is not likely. Maybe management can pull a rabbit out of the hat, but it will need some strong magic to get the capital they need at a cost they can live with.
The FDIC has about $50 billion. These reserves have been built up over the years from deposit insurance paid by banks that are part of the program. They are going to need an estimated $20 billion just to cover the failure of Indy Mac. The FDIC will have to cover only a small percentage of the $850 billion, as some of those assets will surely be good. But if they have to cover 10%, then the FDIC would need another $50 billion. Does that sound like a lot? Chris thinks a more conservative number for planning purposes would be 20-25% potential losses, and you hope it does not get there.
Sometime in the next few quarters, Congress and the President, either the current group or early in the term of the next President, are going to have to address that potential shortfall, before we see bank runs as people fear that FDIC insurance reserves may not be enough. The very sad fact is that taxpayers are going to be on the hook for some time. What is likely to happen is that a loan facility will be made to the FDIC so they can borrow as much as they need, and pay it back from future bank insurance payments.
You can't make up the shortfall just by raising fees. Chris points out that raising fees right now is not really a winning option, as that just makes the financial books of marginal banks even worse. You can raise rates as the banking system returns to health.
If Congress and the President wait too long, there could be a very serious problem, as depositors could start moving their funds under $100,000 (the insured amount) to what they perceive may be a safer bank than their current bank. Rumors could run rampant. This is something that needs to be addressed now. Frankly, this should be addressed right after the elections AT THE LATEST, in consultation with Congress and the new President.
If you are worried about your bank, you can go to Chris's web site and pay $50 for a brief analysis of your bank and an update for the next four quarters. If you have less than $100,000 in your accounts, you should not worry. But for businesses with large deposits and cash flows, it might be worth checking on the health of your bank. The link is http://us1.institutionalriskanalytics.com/Cart/Request.asp?affiliate=bmg123.
You can click on the link that says "Click here for the free samples" in the lower right corner of the page to see if the format of what they offer is something you would find useful.
$500 Billion and Counting
We have seen some $505 billion in bank write-offs so far in this credit crisis. It is serious naivete to assume that this will be the extent of it. Most of the write-offs have been mortgage-related. We have not yet seen the write-offs that will come as consumers start defaulting on credit cards, auto loans, and other consumer debt. Neither have we seen the losses that will come from commercial real estate or corporate loan as the recession progresses. You can't write off something until it goes bad, although you can increase your loan loss provisions. This of course hits earnings and your stock price and thus your ability to raise new equity. It presents a very difficult dilemma for bank managers and investors deciding whether to invest or go away.
Sober-minded analysis from the IMF suggests that the total write-offs by all banks may be $1 trillion. Dr. Nouriel Roubini is much more alarmed and puts the potential losses at closer to $2 trillion. That means that banks over time are going to have to increase their loan loss provisions, hitting both earnings and capital. And that means they will have to raise more investment capital and equity at a time when their stock prices are low.
It is a vicious spiral. Banks have less capital, so they are able to lend less to the very businesses that need the money; and without said money the businesses will be less capable of paying their current loans, which means that banks have less capital. Rinse and repeat.
That only prolongs the recession and Muddle Through Economy, which hurts consumers and corporate profits, which in turn puts more pressure on banks. Ultimately it means that banks are going to have to raise a lot more capital than anyone who is buying financial stocks today imagines. And it is largely going to be expensive capital. Look at this note from Bennet Sedacca of Atlantic Advisors:
"Financial entities like banks, broker/dealers, regional banks, finance companies, and insurance companies need credit at reasonable rates in order to finance themselves. I have been concerned for many years that the door would finally shut on banks, brokers and others to raise new capital in the debt markets.
"For many regional banks like KeyCorp, Zions, Regions, and National City, the door has already shut on them--if they wanted to raise capital in the debt market at levels where their outstanding issues regularly trade, they would have to pay 12-15%, hardly economic levels. GM bonds trade near 27% yields. Washington Mutual trades north of 15%.
"Then there are the 'good banks', like J.P. Morgan and Wells Fargo. J.P. Morgan recently sold $600 million of preferred stock at 8 3/4 % and Wells Fargo sold $1.3 billion at 8 5/8%, plus underwriting fees.
"Below I offer up a few guesses of what other issuers would have to pay to issue preferred stock.
* Lehman Brothers--11-13%.
* Merrill Lynch--11-12%.
* Morgan Stanley--9-10%.
* Citigroup--9 1/2-10 1/2%.
* CIT Group--12-15%.
* Fannie Mae/Freddie Mac---15%
* Keycorp--11-13%.
* National City--13-15%.
* Wachovia--10-12%.
* Zions Bancorp--13-15%.
* GM/GMAC--not possible.
* Washington Mutual--not possible.
* Ford--not possible."
Bennet does note a good point. Banks that conserved capital and managed their risks well will be in good shape to take over weaker brethren. They will have access to the capital markets for the money they need for expansion. My own bank was acquired recently by another small regional bank. Deals are getting done.
In another note, and to illustrate this point, Sedacca points out that it is not just Freddie and Fannie. Besides Washington Mutual, mentioned above, "RF (Regions Financial) needs to raise $2 billion says Sanford Bernstein. Let's see, what are their options? They can sell debt. The problem here is that you couldn't sell debt if you wanted. The last reported trade in RF paper was 2 weeks ago nearly +700 to the 30 year or close to 12%. Their preferreds trade at 10% and the stock is now a 'single digit midget' near $8 a share. So if you could even get a deal done, shareholders would get a 50% haircut."
Fannie, Freddie, and the Credit Crisis
Let's turn to Freddie and Fannie. There must be some people who think there is some way that the shareholders of Fannie and Freddie will not lose everything, as their shares actually trade. This just simply goes to show that you can fool some of the people some of the time. And as we will see, some of those people are very serious institutions.
It is almost a forgone conclusion that the US Treasury will have to step in and for all intents and purposes nationalize the two government-sponsored enterprises. The estimated losses in these two firms are far beyond what they could raise in a traditional market. And the longer the government waits, the worse the situation is likely to get.
Moody's downgraded the preferred stock in these firms to almost junk level because of the increased likelihood of "direct support" from the US Treasury, which, depending on the nature of the support, could wipe out both the holders of the common and the preferred. The preferred shares have already lost half their value since June 30 on speculation that an intervention would mean a stop in dividend payments (highly likely) and issuance of new preferred that would take preference over current preferred.
Interestingly, this would put more pressure on the banking system, as many banks hold the GSE preferred shares as assets, choosing to get a little extra return over traditional and more conservative assets. But then of course, Fannie and Freddie preferred were considered safe just a few months ago, with the best ratings from Moody's.
"Regional banks including Midwest Bank Holdings Inc., Sovereign Bancorp and Frontier Financial Corp., may have the most to lose. Melrose Park, Illinois-based Midwest has $67.5 million, or as much as 23 percent of its risk-weighted assets, in the preferred stock, while Philadelphia-based Sovereign owns about $623 million and Everett, Washington-based Frontier about $5 million." (Bloomberg)
It is doubtful that banks which hold these assets have written them down yet, but with a downgrade they will almost certainly be forced to do so in the near future. For the record, Fannie Mae has 17 classes of preferred stock, with more than 600 million shares outstanding. Freddie Mac has 24 classes of preferred stock, with about 460 million shares outstanding. The existing shares are trading worse than junk bonds, paying 17-19%.
And it may be a total write-off. It is hard to imagine how Treasury Secretary Paulson, or a new Treasury Secretary next year, could put US taxpayer money into the companies at risk without wiping out the current common and preferred shareholders. The justified outrage would be huge.
The basic problem is that without Freddie and Fannie the US mortgage market would go from crippled to moribund, if not dead. We have created a system that could not function in the short term without them, and the pain of allowing them to collapse would be another 1930s-style Depression, the era in which these firms were first created. They were never designed to take on the huge leverage they did, or to use hundreds of millions in lobbyist money and campaign contributions to create a massive payment scheme for management and shareholders. Congressional estimates are that this could cost US taxpayers $25 billion, a significant multiple of their current market caps.
Fannie and Freddie will not be able to raise capital on their own. At this point, why would any rational investor put that much money into a company with such a convoluted preferred share scheme, without government guarantees? That estimated loss assumes that the housing market does not get worse from this point. Losses could be much worse, or things could get better. Who knows? Why invest in something with so much uncertainty?
But there are more problems. You can't just take someone else's property, and that is what stock is, without some serious reasons. You almost are forced to wait for a crisis, otherwise shareholders would sue, saying that they suffered unnecessary losses. You can certainly expect the preferred shareholders to sue. That is why Paulson hired JP Morgan to figure out how to recapitalize the banks. I don't envy the people who are working on that one. Maybe there is some magic somewhere, but as we saw with Bear Stearns, at the end of the day it is all about adequate capital.
The GSE companies should be adequately capitalized and broken up into much smaller firms that would not be too big too fail in the future, and put under a regulator that would enforce reasonable leverage limits, with the profits going to pay back the US taxpayer before any profits or dividends are paid to any other future owners.
That is, if the government takes the two GSEs and puts capital (probably in the form of loans and guarantees) into them, which puts taxpayers at risk, then allows a public offering of the smaller entities to raise capital to repay the loans, any shortfall should be made up by the issuance of preferred shares, and the common shareowners would wait until the government loan was repaid before they would be eligible for a dividend.
And the people responsible for creating the leveraged systems, the board, et al., should be forced to resign. New top management all around.
The ultimate goal should be for taxpayers to get their money back and any guarantee, implicit or explicit, to be removed. No mortgage bank should ever again be allowed to be too big too fail.
Now, taken as a part of the total credit crisis, which will run to over $1 trillion (at least), $25 billion may not seem like a lot. But I hope this is a wake-up call for better regulations and safeguards.
And before I go, let me reiterate my call for regulators to force banks to move their credit default swaps to an exchange. The potential for a blow-up is serious, and it could dwarf the current credit crisis. I am not saying it will happen, just that it could. Even a low-risk event should be protected against. Credit default swaps are legitimate business transactions. They are very useful. They should just be put on an exchange, like futures or options, where there is 100% transparency as to counterparty risk.
Baltimore, La Jolla, and South Africa
I am home for a few weeks, enjoying the tail end of summer. On September 6, Tiffani and I will head to Baltimore to be with Bill Bonner, founder of Agora Publishing, and a host of friends, to celebrate his 60th birthday. It is hard to believe that we have known each other for 26 years. What an incredible business model he has created. He has adapted with the times, letting his business evolve into a multi-hundred-million-dollar enterprise. I remember first going to his offices in Baltimore, which were definitely in a very bad part of town. I was nervous just walking two blocks in broad daylight; but the offices were inexpensive, I suppose.
He is the one of the best pure writers I know. You can read some of his essays and subscribe to the free Daily Reckoning (be warned: Bill is quite bearish) by clicking on this link: http://www.dailyreckoning.com/rpt/mauldin.html.
Tiffani and I will then be going to La Jolla September 15 to meet with my partners at Altegris, and meet some new potential associates. Right now, drinks with Richard and Faye Russell is on the calendar, and I really look forward to it.
Then a few weeks later I will head off on a quick trip to South Africa, where I will be speaking for an investment group in Cape Town, then maybe stop off in London for a day and then hurry home in time to do my regular letter.
That is enough to make me tired, so I think I will hit the send button and go home and see who is there. Have a great week.
Your needing to seek my own balance analyst,
John Mauldin
John@frontlinethoughts.com
Copyright 2008 John Mauldin. All Rights Reserved
Georgia and Kosovo: A Single Intertwined Crisis
FROM STRATFOR
Georgia and Kosovo: A Single Intertwined Crisis
August 25, 2008
Graphic for Geopolitical Intelligence Report
By George Friedman
The Russo-Georgian war was rooted in broad geopolitical processes. In large part it was simply the result of the cyclical reassertion of Russian power. The Russian empire — czarist and Soviet — expanded to its borders in the 17th and 19th centuries. It collapsed in 1992. The Western powers wanted to make the disintegration permanent. It was inevitable that Russia would, in due course, want to reassert its claims. That it happened in Georgia was simply the result of circumstance.
There is, however, another context within which to view this, the context of Russian perceptions of U.S. and European intentions and of U.S. and European perceptions of Russian capabilities. This context shaped the policies that led to the Russo-Georgian war. And those attitudes can only be understood if we trace the question of Kosovo, because the Russo-Georgian war was forged over the last decade over the Kosovo question.
Yugoslavia broke up into its component republics in the early 1990s. The borders of the republics did not cohere to the distribution of nationalities. Many — Serbs, Croats, Bosnians and so on — found themselves citizens of republics where the majorities were not of their ethnicities and disliked the minorities intensely for historical reasons. Wars were fought between Croatia and Serbia (still calling itself Yugoslavia because Montenegro was part of it), Bosnia and Serbia and Bosnia and Croatia. Other countries in the region became involved as well.
One conflict became particularly brutal. Bosnia had a large area dominated by Serbs. This region wanted to secede from Bosnia and rejoin Serbia. The Bosnians objected and an internal war in Bosnia took place, with the Serbian government involved. This war involved the single greatest bloodletting of the bloody Balkan wars, the mass murder by Serbs of Bosnians.
Here we must pause and define some terms that are very casually thrown around. Genocide is the crime of trying to annihilate an entire people. War crimes are actions that violate the rules of war. If a soldier shoots a prisoner, he has committed a war crime. Then there is a class called “crimes against humanity.” It is intended to denote those crimes that are too vast to be included in normal charges of murder or rape. They may not involve genocide, in that the annihilation of a race or nation is not at stake, but they may also go well beyond war crimes, which are much lesser offenses. The events in Bosnia were reasonably deemed crimes against humanity. They did not constitute genocide and they were more than war crimes.
At the time, the Americans and Europeans did nothing about these crimes, which became an internal political issue as the magnitude of the Serbian crimes became clear. In this context, the Clinton administration helped negotiate the Dayton Accords, which were intended to end the Balkan wars and indeed managed to go quite far in achieving this. The Dayton Accords were built around the principle that there could be no adjustment in the borders of the former Yugoslav republics. Ethnic Serbs would live under Bosnian rule. The principle that existing borders were sacrosanct was embedded in the Dayton Accords.
In the late 1990s, a crisis began to develop in the Serbian province of Kosovo. Over the years, Albanians had moved into the province in a broad migration. By 1997, the province was overwhelmingly Albanian, although it had not only been historically part of Serbia but also its historical foundation. Nevertheless, the Albanians showed significant intentions of moving toward either a separate state or unification with Albania. Serbia moved to resist this, increasing its military forces and indicating an intention to crush the Albanian resistance.
There were many claims that the Serbians were repeating the crimes against humanity that were committed in Bosnia. The Americans and Europeans, burned by Bosnia, were eager to demonstrate their will. Arguing that something between crimes against humanity and genocide was under way — and citing reports that between 10,000 and 100,000 Kosovo Albanians were missing or had been killed — NATO launched a campaign designed to stop the killings. In fact, while some killings had taken place, the claims by NATO of the number already killed were false. NATO might have prevented mass murder in Kosovo. That is not provable. They did not, however, find that mass murder on the order of the numbers claimed had taken place. The war could be defended as a preventive measure, but the atmosphere under which the war was carried out overstated what had happened.
The campaign was carried out without U.N. sanction because of Russian and Chinese opposition. The Russians were particularly opposed, arguing that major crimes were not being committed and that Serbia was an ally of Russia and that the air assault was not warranted by the evidence. The United States and other European powers disregarded the Russian position. Far more important, they established the precedent that U.N. sanction was not needed to launch a war (a precedent used by George W. Bush in Iraq). Rather — and this is the vital point — they argued that NATO support legitimized the war.
This transformed NATO from a military alliance into a quasi-United Nations. What happened in Kosovo was that NATO took on the role of peacemaker, empowered to determine if intervention was necessary, allowed to make the military intervention, and empowered to determine the outcome. Conceptually, NATO was transformed from a military force into a regional multinational grouping with responsibility for maintenance of regional order, even within the borders of states that are not members. If the United Nations wouldn’t support the action, the NATO Council was sufficient.
Since Russia was not a member of NATO, and since Russia denied the urgency of war, and since Russia was overruled, the bombing campaign against Kosovo created a crisis in relations with Russia. The Russians saw the attack as a unilateral attack by an anti-Russian alliance on a Russian ally, without sound justification. Then-Russian President Boris Yeltsin was not prepared to make this into a major confrontation, nor was he in a position to. The Russians did not so much acquiesce as concede they had no options.
The war did not go as well as history records. The bombing campaign did not force capitulation and NATO was not prepared to invade Kosovo. The air campaign continued inconclusively as the West turned to the Russians to negotiate an end. The Russians sent an envoy who negotiated an agreement consisting of three parts. First, the West would halt the bombing campaign. Second, Serbian army forces would withdraw and be replaced by a multinational force including Russian troops. Third, implicit in the agreement, the Russian troops would be there to guarantee Serbian interests and sovereignty.
As soon as the agreement was signed, the Russians rushed troops to the Pristina airport to take up their duties in the multinational force — as they had in the Bosnian peacekeeping force. In part because of deliberate maneuvers and in part because no one took the Russians seriously, the Russians never played the role they believed had been negotiated. They were never seen as part of the peacekeeping operation or as part of the decision-making system over Kosovo. The Russians felt doubly betrayed, first by the war itself, then by the peace arrangements.
The Kosovo war directly effected the fall of Yeltsin and the rise of Vladimir Putin. The faction around Putin saw Yeltsin as an incompetent bungler who allowed Russia to be doubly betrayed. The Russian perception of the war directly led to the massive reversal in Russian policy we see today. The installation of Putin and Russian nationalists from the former KGB had a number of roots. But fundamentally it was rooted in the events in Kosovo. Most of all it was driven by the perception that NATO had now shifted from being a military alliance to seeing itself as a substitute for the United Nations, arbitrating regional politics. Russia had no vote or say in NATO decisions, so NATO’s new role was seen as a direct challenge to Russian interests.
Thus, the ongoing expansion of NATO into the former Soviet Union and the promise to include Ukraine and Georgia into NATO were seen in terms of the Kosovo war. From the Russian point of view, NATO expansion meant a further exclusion of Russia from decision-making, and implied that NATO reserved the right to repeat Kosovo if it felt that human rights or political issues required it. The United Nations was no longer the prime multinational peacekeeping entity. NATO assumed that role in the region and now it was going to expand all around Russia.
Then came Kosovo’s independence. Yugoslavia broke apart into its constituent entities, but the borders of its nations didn’t change. Then, for the first time since World War II, the decision was made to change Serbia’s borders, in opposition to Serbian and Russian wishes, with the authorizing body, in effect, being NATO. It was a decision avidly supported by the Americans.
The initial attempt to resolve Kosovo’s status was the round of negotiations led by former Finnish President Martti Ahtisaari that officially began in February 2006 but had been in the works since 2005. This round of negotiations was actually started under U.S. urging and closely supervised from Washington. In charge of keeping Ahtisaari’s negotiations running smoothly was Frank G. Wisner, a diplomat during the Clinton administration. Also very important to the U.S. effort was Assistant Secretary of State for European and Eurasian Affairs Daniel Fried, another leftover from the Clinton administration and a specialist in Soviet and Polish affairs.
In the summer of 2007, when it was obvious that the negotiations were going nowhere, the Bush administration decided the talks were over and that it was time for independence. On June 10, 2007, Bush said that the end result of negotiations must be “certain independence.” In July 2007, Daniel Fried said that independence was “inevitable” even if the talks failed. Finally, in September 2007, Condoleezza Rice put it succinctly: “There’s going to be an independent Kosovo. We’re dedicated to that.” Europeans took cues from this line.
How and when independence was brought about was really a European problem. The Americans set the debate and the Europeans implemented it. Among Europeans, the most enthusiastic about Kosovo independence were the British and the French. The British followed the American line while the French were led by their foreign minister, Bernard Kouchner, who had also served as the U.N. Kosovo administrator. The Germans were more cautiously supportive.
On Feb. 17, 2008, Kosovo declared independence and was recognized rapidly by a small number of European states and countries allied with the United States. Even before the declaration, the Europeans had created an administrative body to administer Kosovo. The Europeans, through the European Union, micromanaged the date of the declaration.
On May 15, during a conference in Ekaterinburg, the foreign ministers of India, Russia and China made a joint statement regarding Kosovo. It was read by the Russian host minister, Sergei Lavrov, and it said: “In our statement, we recorded our fundamental position that the unilateral declaration of independence by Kosovo contradicts Resolution 1244. Russia, India and China encourage Belgrade and Pristina to resume talks within the framework of international law and hope they reach an agreement on all problems of that Serbian territory.”
The Europeans and Americans rejected this request as they had rejected all Russian arguments on Kosovo. The argument here was that the Kosovo situation was one of a kind because of atrocities that had been committed. The Russians argued that the level of atrocity was unclear and that, in any case, the government that committed them was long gone from Belgrade. More to the point, the Russians let it be clearly known that they would not accept the idea that Kosovo independence was a one-of-a-kind situation and that they would regard it, instead, as a new precedent for all to follow.
The problem was not that the Europeans and the Americans didn’t hear the Russians. The problem was that they simply didn’t believe them — they didn’t take the Russians seriously. They had heard the Russians say things for many years. They did not understand three things. First, that the Russians had reached the end of their rope. Second, that Russian military capability was not what it had been in 1999. Third, and most important, NATO, the Americans and the Europeans did not recognize that they were making political decisions that they could not support militarily.
For the Russians, the transformation of NATO from a military alliance into a regional United Nations was the problem. The West argued that NATO was no longer just a military alliance but a political arbitrator for the region. If NATO does not like Serbian policies in Kosovo, it can — at its option and in opposition to U.N. rulings — intervene. It could intervene in Serbia and it intended to expand deep into the former Soviet Union. NATO thought that because it was now a political arbiter encouraging regimes to reform and not just a war-fighting system, Russian fears would actually be assuaged. To the contrary, it was Russia’s worst nightmare. Compensating for all this was the fact that NATO had neglected its own military power. Now, Russia could do something about it.
At the beginning of this discourse, we explained that the underlying issues behind the Russo-Georgian war went deep into geopolitics and that it could not be understood without understanding Kosovo. It wasn’t everything, but it was the single most significant event behind all of this. The war of 1999 was the framework that created the war of 2008.
The problem for NATO was that it was expanding its political reach and claims while contracting its military muscle. The Russians were expanding their military capability (after 1999 they had no place to go but up) and the West didn’t notice. In 1999, the Americans and Europeans made political decisions backed by military force. In 2008, in Kosovo, they made political decisions without sufficient military force to stop a Russian response. Either they underestimated their adversary or — even more amazingly — they did not see the Russians as adversaries despite absolutely clear statements the Russians had made. No matter what warning the Russians gave, or what the history of the situation was, the West couldn’t take the Russians seriously.
It began in 1999 with war in Kosovo and it ended in 2008 with the independence of Kosovo. When we study the history of the coming period, the war in Kosovo will stand out as a turning point. Whatever the humanitarian justification and the apparent ease of victory, it set the stage for the rise of Putin and the current and future crises.
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Georgia and Kosovo: A Single Intertwined Crisis
August 25, 2008
Graphic for Geopolitical Intelligence Report
By George Friedman
The Russo-Georgian war was rooted in broad geopolitical processes. In large part it was simply the result of the cyclical reassertion of Russian power. The Russian empire — czarist and Soviet — expanded to its borders in the 17th and 19th centuries. It collapsed in 1992. The Western powers wanted to make the disintegration permanent. It was inevitable that Russia would, in due course, want to reassert its claims. That it happened in Georgia was simply the result of circumstance.
There is, however, another context within which to view this, the context of Russian perceptions of U.S. and European intentions and of U.S. and European perceptions of Russian capabilities. This context shaped the policies that led to the Russo-Georgian war. And those attitudes can only be understood if we trace the question of Kosovo, because the Russo-Georgian war was forged over the last decade over the Kosovo question.
Yugoslavia broke up into its component republics in the early 1990s. The borders of the republics did not cohere to the distribution of nationalities. Many — Serbs, Croats, Bosnians and so on — found themselves citizens of republics where the majorities were not of their ethnicities and disliked the minorities intensely for historical reasons. Wars were fought between Croatia and Serbia (still calling itself Yugoslavia because Montenegro was part of it), Bosnia and Serbia and Bosnia and Croatia. Other countries in the region became involved as well.
One conflict became particularly brutal. Bosnia had a large area dominated by Serbs. This region wanted to secede from Bosnia and rejoin Serbia. The Bosnians objected and an internal war in Bosnia took place, with the Serbian government involved. This war involved the single greatest bloodletting of the bloody Balkan wars, the mass murder by Serbs of Bosnians.
Here we must pause and define some terms that are very casually thrown around. Genocide is the crime of trying to annihilate an entire people. War crimes are actions that violate the rules of war. If a soldier shoots a prisoner, he has committed a war crime. Then there is a class called “crimes against humanity.” It is intended to denote those crimes that are too vast to be included in normal charges of murder or rape. They may not involve genocide, in that the annihilation of a race or nation is not at stake, but they may also go well beyond war crimes, which are much lesser offenses. The events in Bosnia were reasonably deemed crimes against humanity. They did not constitute genocide and they were more than war crimes.
At the time, the Americans and Europeans did nothing about these crimes, which became an internal political issue as the magnitude of the Serbian crimes became clear. In this context, the Clinton administration helped negotiate the Dayton Accords, which were intended to end the Balkan wars and indeed managed to go quite far in achieving this. The Dayton Accords were built around the principle that there could be no adjustment in the borders of the former Yugoslav republics. Ethnic Serbs would live under Bosnian rule. The principle that existing borders were sacrosanct was embedded in the Dayton Accords.
In the late 1990s, a crisis began to develop in the Serbian province of Kosovo. Over the years, Albanians had moved into the province in a broad migration. By 1997, the province was overwhelmingly Albanian, although it had not only been historically part of Serbia but also its historical foundation. Nevertheless, the Albanians showed significant intentions of moving toward either a separate state or unification with Albania. Serbia moved to resist this, increasing its military forces and indicating an intention to crush the Albanian resistance.
There were many claims that the Serbians were repeating the crimes against humanity that were committed in Bosnia. The Americans and Europeans, burned by Bosnia, were eager to demonstrate their will. Arguing that something between crimes against humanity and genocide was under way — and citing reports that between 10,000 and 100,000 Kosovo Albanians were missing or had been killed — NATO launched a campaign designed to stop the killings. In fact, while some killings had taken place, the claims by NATO of the number already killed were false. NATO might have prevented mass murder in Kosovo. That is not provable. They did not, however, find that mass murder on the order of the numbers claimed had taken place. The war could be defended as a preventive measure, but the atmosphere under which the war was carried out overstated what had happened.
The campaign was carried out without U.N. sanction because of Russian and Chinese opposition. The Russians were particularly opposed, arguing that major crimes were not being committed and that Serbia was an ally of Russia and that the air assault was not warranted by the evidence. The United States and other European powers disregarded the Russian position. Far more important, they established the precedent that U.N. sanction was not needed to launch a war (a precedent used by George W. Bush in Iraq). Rather — and this is the vital point — they argued that NATO support legitimized the war.
This transformed NATO from a military alliance into a quasi-United Nations. What happened in Kosovo was that NATO took on the role of peacemaker, empowered to determine if intervention was necessary, allowed to make the military intervention, and empowered to determine the outcome. Conceptually, NATO was transformed from a military force into a regional multinational grouping with responsibility for maintenance of regional order, even within the borders of states that are not members. If the United Nations wouldn’t support the action, the NATO Council was sufficient.
Since Russia was not a member of NATO, and since Russia denied the urgency of war, and since Russia was overruled, the bombing campaign against Kosovo created a crisis in relations with Russia. The Russians saw the attack as a unilateral attack by an anti-Russian alliance on a Russian ally, without sound justification. Then-Russian President Boris Yeltsin was not prepared to make this into a major confrontation, nor was he in a position to. The Russians did not so much acquiesce as concede they had no options.
The war did not go as well as history records. The bombing campaign did not force capitulation and NATO was not prepared to invade Kosovo. The air campaign continued inconclusively as the West turned to the Russians to negotiate an end. The Russians sent an envoy who negotiated an agreement consisting of three parts. First, the West would halt the bombing campaign. Second, Serbian army forces would withdraw and be replaced by a multinational force including Russian troops. Third, implicit in the agreement, the Russian troops would be there to guarantee Serbian interests and sovereignty.
As soon as the agreement was signed, the Russians rushed troops to the Pristina airport to take up their duties in the multinational force — as they had in the Bosnian peacekeeping force. In part because of deliberate maneuvers and in part because no one took the Russians seriously, the Russians never played the role they believed had been negotiated. They were never seen as part of the peacekeeping operation or as part of the decision-making system over Kosovo. The Russians felt doubly betrayed, first by the war itself, then by the peace arrangements.
The Kosovo war directly effected the fall of Yeltsin and the rise of Vladimir Putin. The faction around Putin saw Yeltsin as an incompetent bungler who allowed Russia to be doubly betrayed. The Russian perception of the war directly led to the massive reversal in Russian policy we see today. The installation of Putin and Russian nationalists from the former KGB had a number of roots. But fundamentally it was rooted in the events in Kosovo. Most of all it was driven by the perception that NATO had now shifted from being a military alliance to seeing itself as a substitute for the United Nations, arbitrating regional politics. Russia had no vote or say in NATO decisions, so NATO’s new role was seen as a direct challenge to Russian interests.
Thus, the ongoing expansion of NATO into the former Soviet Union and the promise to include Ukraine and Georgia into NATO were seen in terms of the Kosovo war. From the Russian point of view, NATO expansion meant a further exclusion of Russia from decision-making, and implied that NATO reserved the right to repeat Kosovo if it felt that human rights or political issues required it. The United Nations was no longer the prime multinational peacekeeping entity. NATO assumed that role in the region and now it was going to expand all around Russia.
Then came Kosovo’s independence. Yugoslavia broke apart into its constituent entities, but the borders of its nations didn’t change. Then, for the first time since World War II, the decision was made to change Serbia’s borders, in opposition to Serbian and Russian wishes, with the authorizing body, in effect, being NATO. It was a decision avidly supported by the Americans.
The initial attempt to resolve Kosovo’s status was the round of negotiations led by former Finnish President Martti Ahtisaari that officially began in February 2006 but had been in the works since 2005. This round of negotiations was actually started under U.S. urging and closely supervised from Washington. In charge of keeping Ahtisaari’s negotiations running smoothly was Frank G. Wisner, a diplomat during the Clinton administration. Also very important to the U.S. effort was Assistant Secretary of State for European and Eurasian Affairs Daniel Fried, another leftover from the Clinton administration and a specialist in Soviet and Polish affairs.
In the summer of 2007, when it was obvious that the negotiations were going nowhere, the Bush administration decided the talks were over and that it was time for independence. On June 10, 2007, Bush said that the end result of negotiations must be “certain independence.” In July 2007, Daniel Fried said that independence was “inevitable” even if the talks failed. Finally, in September 2007, Condoleezza Rice put it succinctly: “There’s going to be an independent Kosovo. We’re dedicated to that.” Europeans took cues from this line.
How and when independence was brought about was really a European problem. The Americans set the debate and the Europeans implemented it. Among Europeans, the most enthusiastic about Kosovo independence were the British and the French. The British followed the American line while the French were led by their foreign minister, Bernard Kouchner, who had also served as the U.N. Kosovo administrator. The Germans were more cautiously supportive.
On Feb. 17, 2008, Kosovo declared independence and was recognized rapidly by a small number of European states and countries allied with the United States. Even before the declaration, the Europeans had created an administrative body to administer Kosovo. The Europeans, through the European Union, micromanaged the date of the declaration.
On May 15, during a conference in Ekaterinburg, the foreign ministers of India, Russia and China made a joint statement regarding Kosovo. It was read by the Russian host minister, Sergei Lavrov, and it said: “In our statement, we recorded our fundamental position that the unilateral declaration of independence by Kosovo contradicts Resolution 1244. Russia, India and China encourage Belgrade and Pristina to resume talks within the framework of international law and hope they reach an agreement on all problems of that Serbian territory.”
The Europeans and Americans rejected this request as they had rejected all Russian arguments on Kosovo. The argument here was that the Kosovo situation was one of a kind because of atrocities that had been committed. The Russians argued that the level of atrocity was unclear and that, in any case, the government that committed them was long gone from Belgrade. More to the point, the Russians let it be clearly known that they would not accept the idea that Kosovo independence was a one-of-a-kind situation and that they would regard it, instead, as a new precedent for all to follow.
The problem was not that the Europeans and the Americans didn’t hear the Russians. The problem was that they simply didn’t believe them — they didn’t take the Russians seriously. They had heard the Russians say things for many years. They did not understand three things. First, that the Russians had reached the end of their rope. Second, that Russian military capability was not what it had been in 1999. Third, and most important, NATO, the Americans and the Europeans did not recognize that they were making political decisions that they could not support militarily.
For the Russians, the transformation of NATO from a military alliance into a regional United Nations was the problem. The West argued that NATO was no longer just a military alliance but a political arbitrator for the region. If NATO does not like Serbian policies in Kosovo, it can — at its option and in opposition to U.N. rulings — intervene. It could intervene in Serbia and it intended to expand deep into the former Soviet Union. NATO thought that because it was now a political arbiter encouraging regimes to reform and not just a war-fighting system, Russian fears would actually be assuaged. To the contrary, it was Russia’s worst nightmare. Compensating for all this was the fact that NATO had neglected its own military power. Now, Russia could do something about it.
At the beginning of this discourse, we explained that the underlying issues behind the Russo-Georgian war went deep into geopolitics and that it could not be understood without understanding Kosovo. It wasn’t everything, but it was the single most significant event behind all of this. The war of 1999 was the framework that created the war of 2008.
The problem for NATO was that it was expanding its political reach and claims while contracting its military muscle. The Russians were expanding their military capability (after 1999 they had no place to go but up) and the West didn’t notice. In 1999, the Americans and Europeans made political decisions backed by military force. In 2008, in Kosovo, they made political decisions without sufficient military force to stop a Russian response. Either they underestimated their adversary or — even more amazingly — they did not see the Russians as adversaries despite absolutely clear statements the Russians had made. No matter what warning the Russians gave, or what the history of the situation was, the West couldn’t take the Russians seriously.
It began in 1999 with war in Kosovo and it ended in 2008 with the independence of Kosovo. When we study the history of the coming period, the war in Kosovo will stand out as a turning point. Whatever the humanitarian justification and the apparent ease of victory, it set the stage for the rise of Putin and the current and future crises.
Tell Stratfor What You Think
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This analysis was just a fraction of what our Members enjoy, Click Here to start your Free Membership Trial Today!
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Pushing Russia Into the Cold
Pushing Russia Into the Cold
By Patrick J. Buchanan
August 26, 2008
A year after taking power, in June 1934, Adolf Hitler made his
first visit abroad -- to his idol Benito Mussolini in Venice.
Babbling on incessantly about "Mein Kampf "and the Negroid strain
in Mediterranean peoples, the Fuhrer made a dismal impression.
"What a clown this Hitler is," Mussolini told an aide.
Two weeks later, Hitler executed the Roehm purge and murdered
scores
of old Stormtrooper comrades. In late July, Austrian Nazis,
attempting a coup, assassinated Chancellor Engelbert Dollfuss, a
friend of Mussolini whose wife and child were then his guests.
Il Duce ordered four divisions to the Brenner Pass and flew to
Vienna to vent his rage and disgust with Hitler. He called a summit
at Stresa with Britain and France to agree on military action
should Hitler make any new move in violation of Versailles.
At the time, however, Il Duce was also plotting revenge on
Abyssinia for a bloody border clash with Italian Somaliland.
Mussolini thought his Allies would understand if he invaded the
Ogaden to add an African colony to his new Roman Empire, just as
the British and French had so often done in previous decades.
Mussolini miscalculated. Morally outraged, Britain and France went
before the League of Nations and had sanctions imposed on Italy
that were too weak to
defeat her but punitive enough to insult her.
Friendless, isolated and condemned as an aggressor by Europe, Italy
and Mussolini had nowhere to turn now but Hitler's Germany.
Thus, over the fate of an Abyssinian slave empire, Britain drove
her faithful World War I ally into the arms of a Nazi dictator
Mussolini loathed and had wished to confront beside Britain. And
Abyssinia was overrun.
Are we making the same mistake in the Caucasus?
Mikheil Saakashvili started this war with his barrage attack and
occupation of South Ossetia. Russia's war of retribution was far
less violent or excessive than the U.S. bombing of Serbia for 78
days over Kosovo, or our unprovoked war on Saddam Hussein's Iraq,
which has brought death to scores of thousands, or Israel's 35 days
of bombing of Lebanon for a border skirmish with Hezbollah.
Yet, declared John McCain of Russia, "In the 21st century, nations
don't
invade other nations." Even Dick Cheney must have guffawed.
Russia must get out now, adds Bush, for South Ossetia and Abkhazia
belong to a sovereign Georgia. But when did Bush demand that Israel
get off the Golan Heights or withdraw from the birthplace of Jesus,
which Israelis have occupied for 41 years, as he demands that
Russia get out of the birthplace of Joseph Stalin, which Russia has
occupied for two weeks?
As Israel was provoked in 1967, so, too, was Russia provoked.
Russians died in Saakashvili's attack, as American died in Pancho
Villa's raid on New Mexico in 1916. We sent "Black Jack"
Pershing,
future Gen. George Patton and a U.S. army 300 miles into Mexico to
kill Villa. Was this proportionate?
If we proceed on a course of isolating Russia from the West,
keeping her out of the World Trade Organization, throwing her out
of the G-8 and ending cooperation with NATO, where do we
think
Russia will go? Where did Il Duce go, when he was excommunicated
from the West?
Condi Rice compares Vladimir Putin's action in Georgia to Leonid
Brezhnev's crushing of the Prague Spring in 1968. She raced to
Warsaw to ink a deal to put 10 anti-missile missiles and U.S.
Patriot missiles manned by Americans into Poland.
Does the Stanford provost have any idea where the end of this road
lies, upon which she and Bush have started the United States?
What do we do if Russia responds to our Patriots in Poland with the
Russian S-300 anti-aircraft system in Iran and Syria?
If the United States intends to bring Georgia and Ukraine into NATO
and arm them to fight Russia, why should Russia not dissolve the
Treaty on Conventional Forces in Europe and move her tank armies
into Belarus and up to the borders of Estonia, Latvia and Lithuania?
Would we send U.S. troops into the Baltic republics to
signal that
we will fight Russia to honor our NATO war guarantees? Which NATO
allies would fight alongside us against a nuclear-armed Russia?
If we bring Ukraine into NATO, what do we do if Russified east
Ukraine secedes and Russia sends troops to back the rebels? Do we
send warships into Russia's bathtub, the Black Sea, and commit to
fight as long as it takes to restore Ukraine's territorial integrity?
In March 1939, Britain pledged to declare war and fight Germany to
the death to guarantee the sovereignty and territorial integrity of
Poland. How did that one turn out for Britain and Poland?
Before we start down the road of isolating and encircling Russia
with weak NATO allies, let us think through Gen. Petraeus' question
in 2003 about Iraq, "Tell me, how does this thing end?"
But, then, these folks never seem to think anything through.
SOURCE:
http://www.buchanan.org
*|||||*****|||||*****|||||*****|||||*
Please forward this email to friends, family
and colleagues... For the Cause!
By Patrick J. Buchanan
August 26, 2008
A year after taking power, in June 1934, Adolf Hitler made his
first visit abroad -- to his idol Benito Mussolini in Venice.
Babbling on incessantly about "Mein Kampf "and the Negroid strain
in Mediterranean peoples, the Fuhrer made a dismal impression.
"What a clown this Hitler is," Mussolini told an aide.
Two weeks later, Hitler executed the Roehm purge and murdered
scores
of old Stormtrooper comrades. In late July, Austrian Nazis,
attempting a coup, assassinated Chancellor Engelbert Dollfuss, a
friend of Mussolini whose wife and child were then his guests.
Il Duce ordered four divisions to the Brenner Pass and flew to
Vienna to vent his rage and disgust with Hitler. He called a summit
at Stresa with Britain and France to agree on military action
should Hitler make any new move in violation of Versailles.
At the time, however, Il Duce was also plotting revenge on
Abyssinia for a bloody border clash with Italian Somaliland.
Mussolini thought his Allies would understand if he invaded the
Ogaden to add an African colony to his new Roman Empire, just as
the British and French had so often done in previous decades.
Mussolini miscalculated. Morally outraged, Britain and France went
before the League of Nations and had sanctions imposed on Italy
that were too weak to
defeat her but punitive enough to insult her.
Friendless, isolated and condemned as an aggressor by Europe, Italy
and Mussolini had nowhere to turn now but Hitler's Germany.
Thus, over the fate of an Abyssinian slave empire, Britain drove
her faithful World War I ally into the arms of a Nazi dictator
Mussolini loathed and had wished to confront beside Britain. And
Abyssinia was overrun.
Are we making the same mistake in the Caucasus?
Mikheil Saakashvili started this war with his barrage attack and
occupation of South Ossetia. Russia's war of retribution was far
less violent or excessive than the U.S. bombing of Serbia for 78
days over Kosovo, or our unprovoked war on Saddam Hussein's Iraq,
which has brought death to scores of thousands, or Israel's 35 days
of bombing of Lebanon for a border skirmish with Hezbollah.
Yet, declared John McCain of Russia, "In the 21st century, nations
don't
invade other nations." Even Dick Cheney must have guffawed.
Russia must get out now, adds Bush, for South Ossetia and Abkhazia
belong to a sovereign Georgia. But when did Bush demand that Israel
get off the Golan Heights or withdraw from the birthplace of Jesus,
which Israelis have occupied for 41 years, as he demands that
Russia get out of the birthplace of Joseph Stalin, which Russia has
occupied for two weeks?
As Israel was provoked in 1967, so, too, was Russia provoked.
Russians died in Saakashvili's attack, as American died in Pancho
Villa's raid on New Mexico in 1916. We sent "Black Jack"
Pershing,
future Gen. George Patton and a U.S. army 300 miles into Mexico to
kill Villa. Was this proportionate?
If we proceed on a course of isolating Russia from the West,
keeping her out of the World Trade Organization, throwing her out
of the G-8 and ending cooperation with NATO, where do we
think
Russia will go? Where did Il Duce go, when he was excommunicated
from the West?
Condi Rice compares Vladimir Putin's action in Georgia to Leonid
Brezhnev's crushing of the Prague Spring in 1968. She raced to
Warsaw to ink a deal to put 10 anti-missile missiles and U.S.
Patriot missiles manned by Americans into Poland.
Does the Stanford provost have any idea where the end of this road
lies, upon which she and Bush have started the United States?
What do we do if Russia responds to our Patriots in Poland with the
Russian S-300 anti-aircraft system in Iran and Syria?
If the United States intends to bring Georgia and Ukraine into NATO
and arm them to fight Russia, why should Russia not dissolve the
Treaty on Conventional Forces in Europe and move her tank armies
into Belarus and up to the borders of Estonia, Latvia and Lithuania?
Would we send U.S. troops into the Baltic republics to
signal that
we will fight Russia to honor our NATO war guarantees? Which NATO
allies would fight alongside us against a nuclear-armed Russia?
If we bring Ukraine into NATO, what do we do if Russified east
Ukraine secedes and Russia sends troops to back the rebels? Do we
send warships into Russia's bathtub, the Black Sea, and commit to
fight as long as it takes to restore Ukraine's territorial integrity?
In March 1939, Britain pledged to declare war and fight Germany to
the death to guarantee the sovereignty and territorial integrity of
Poland. How did that one turn out for Britain and Poland?
Before we start down the road of isolating and encircling Russia
with weak NATO allies, let us think through Gen. Petraeus' question
in 2003 about Iraq, "Tell me, how does this thing end?"
But, then, these folks never seem to think anything through.
SOURCE:
http://www.buchanan.org
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