Having A Bad Day

Slate today asks the obvious in “When did American companies become incompetent?” (Or least many). Apparently the decade plus of Dilbert was denied access to the rarified airs at Slate. There are so many real reasons to explain this but none of us here are paid to correct Slate.

Moving on, the sense of doom sparked by the fire sale of Bear Sterns is spreading. This beyond lowering the Fed Discount Rate another point. A rate cut is is unlikley to ease commercial credit. Many financial institutions leverages of 20 or 30 times capital. But many many more are as exposed to those unbelievably complex and now obviously reckless sub prime mortgage instruments? No one knows the scale of other Bear Sterns out there. Not even Bob Rubin at City Corp. who said in January of this year that there was no looming crisis. And the Fed’s power is weak anyway. The Bank of Japan, as Bernake knows better than most, literally had a 0% interest rate and it failed to move a moribund Japanese Lost Decade economy. The real question is how do financial markets burdened with deflating assets come to equilibrium in an inflationary environment of possibly staggering dimensions.

Perhaps the Warlord can tap dance again for us. It might raise some badly needed cash.

Also looming along with the strategic implications of the global economy abandoning the dollar in favor of the Euro, etc. the true cost of Operation Iraqi Adventure is far greater than direct outlays. The service lifetime of the U.S. military hardware shortened greatly because of combat deployment. These platforms will require replacement in a remarkable close time frame. It is bordering on lunacy to think even in a normal economic environment that even most of the alleged new mission critical (transformational or not) can be funded. The actual cost in today’s dollar is staggering. In a stagflationary situation. Simply ain’t gonna happen.

One might ponder other demands for attention such as a collapsing public infrastructure nation wide, health care, social security, etc. Quite a challenge even per above competent management. In the end, the Stifung believes that the Fed has a drastically reduced and limited role to play here. Can Congress step up to the plate and pass the necessary legislation to encourage financial institutions exposure by ameliorating the proximate cause re the mortgage exposure. While keeping the moral hazard of giving a get out jail free card to prevent more reckless behavior?

We’ll see sooner than most anticipate. Or are prepared for.

Comments

  1. A Random Quote says

    “The GOP stands for nothing today but looting the national treasury for the rich. George Dubya Bush once addressed them as the “haves and have mores”–clearly he is one of them–but maybe he will have less now that the Carlyle Group is running out of money. Maybe he’ll have a little rachmones for the have-less and have-nots, though I doubt it.

    If anyone in Washington read history, they’d understand that any empire that spends more in war than on its people eventually goes down in flames. The Persians, Greeks and Romans proved it–see Herodotus–and the British, French, Belgians, Dutch and Germans proved it all over again in the nineteenth and twentieth centuries. But does anyone care?

    Apparently not. It’s a rule of history that when an empire gorges on guns and forgets butter, that empire winds up on the scrap heap of history.

    Dubya could have learned this at Yale had he not been drunk or stoned all the time and figuring out ways to avoid going to ‘Nam.”
    ~Erica Jong, HuffPo

  2. Comment says

    We just read Weiss’s blog and he has this running admiration for Tweety that just way over the top describing Matthews as brilliant and brave etc. It’s pretty odd because Matthews is just not brilliant. Weiss even cites today Matthews saying he “wants to know everything” about Obama and HRC and McCain. But this was right after Matthews asked several questions about Obama that he could answer himself in a minuter or two if he re-read Obama’s books – He had claimed they were great books, so presumably he read them. Afterall, they are not difficult and for someone who makes milllions, they should be required reading for his job. At least he could have his staff read them. Anyway Weiss thinks this guy is brilliant/

  3. Comment says

    People are used to those folks saying “folks.” Imagine how weird it would sound if someone kept talking about ‘the workers’ . Everyone would know there was something different about ‘the workers’ than the workers.

  4. Comment says

    It might be interesting to see when Pat use ‘folk’ and look at the context, compare it to when Bill uses ‘the folks’ and that context. There would probably be a slight difference, but both are used in a somewhat dog whistlish code way. Not like ‘volk,’ but like something distinct.

    Tweety tries to tap into something slightly different and slightly similar when he invokes some gritty Philly of his imagination. Sometimes he and Pat and Joe S. – millionaires all – just sit around and pretend to working class. But none of them have the act down.

  5. Comment says

    We think “folks” always has somewhat of a semi-distinct meaning in the American vernacular aside from its literal meaning – depending on the speaker and the context. Maybe s Mencken wrote about it – It used both naturally by some and stylistically by others – Sort of like when Gee Dubs talks about the Murkan Pee-Pohl, he means something slight different from “american people.” Maybe there is some Venn between “folks” and “folks.”

  6. Dr.LeoStrauss says

    Volk as we know had then an internal code meaning that would not be immediately recognizable even to a then contemporary Frenchman or Brit. Folks today in our land of strip malls and Tahoes taps dimly into that inchoate memory.

    Pat, however, is not Alric. He’s something of a comedic dodo bird, carted out by MSNBC primarily for giving good television (and less than $5,000 an hour we suspect). The Human Events mailing list at least gets it. In the metro areas around the Imperial City where anti-immigration fever runs high not just as an ideological manifestation but because of the palpable presence of those brought in to build the McMansions for the Warlord’s reign — they too get it.

    Should the financial world truly collapse and trigger a race to the bottom for the American dream fed on opium from FoxNews et al., the meaning of “Folks” may indeed assume its Old World sinister analog. Someone must pay after all, and Pat will tell many eager to listen who it is. He may even bump David Gregory’s inauspicious start as Tucker’s replacement.

  7. Comment says

    “Folks … folks … folks … folks … folks … folks …” Buchanan used the word “folks” so many times tonight – he should buy a Folksmobile and celebrate the Folksgeist.

  8. Comment says

    We have to give the NY Post credit for coming up with a front page that makes Obama look like the guilty one for others look into his passport. They did a better job of spin than Larry Spymaster Johnson’s clumsy attempt to dismiss the case when he spoke on CNN.

    We doubt there is much to it, but who knows – But Spymaster Johnson, in the course of consulting CNN without revealing he is allied w Hillary, managed to make a few factual errors.

    This goes to cast further doubt on his alleged Intelligence wisdom – He lacks subtlty and he gets basic facts wrong – but not in a good way. Sort of like Joe Wilson really annoying many former allies when he wrote a nasty attack piece against Obama and included half a dozen errors.

    We have to recall Spymaster Johnson used a few basic English words incorrectly on his blog “No Quarter” a while back and we tried to tip him off before it was noticed widely and he was made sport of. So we dropped a blog note and he corrected it.

  9. inquire says

    In the end, the Stifung believes that the Fed has a drastically reduced and limited role to play here. Can Congress step up to the plate and pass the necessary legislation to encourage financial institutions exposure by ameliorating the proximate cause re the mortgage exposure

    Just finished reading the always informative Dr Nouriel Roubini’s blog (who has been months ahead of his colleagues in predicting our current crisis) which gives a sketch of just such a plan. He is advocating for a carefully managed nationalization of vital sectors of the mortgage and capital markets to prevent a total watershed of homelessness and an incapacitation of US financial functionality.

    Debate rages in the comments about the viability/constitutionality of the plan. Most contention hinges on which will promote/preserve greater freedom: nationalization and the risk of a planned economy encroaching (a la Hayek), or the piecemeal approach currently underway by the fed inducing a negative feedback loop that would sink markets well below their inherent value and thus decapitate American finances. The laissez faire proponents are favouring the latter to the former, hoping this option would maintain American ‘liberty’ but fail to note that the excesses of capitalism remain intact as an anchor firmly tied to a drowning man’s neck. Dr. Roubini is emphatic that,

    A market solution to this crisis does not exist; those who believe in such markets solutions are deluding themselves as markets left alone will melt down and enter into the mother of all meltdowns, margin calls, cascading collapse of asset prices, massive credit crunch and liquidity seizure and severe economic recession.” [emphasis mine]

    Either way, neither Dr. Roubini nor the commenters recognize that this ambitious, perhaps necessary, prescription requires – as you rightly note – above average management and leadership. Only in a fantasy world could one imagine ‘the Warlord’ and your hobbled federal government to even recognize a viable plan should it come to their attention, let alone capitalize on it and effectively put it into practice.

    Link: http://www.rgemonitor.com/blog/roubini/250488#readcomments (unfortunately, the comments are behind a subscription/paywall-thing) but they speak very precisely to the topic you raise here.

    Some quotes from Roubini from behind the paywall:

    “Thus the piecemeal approach to crisis management taken by the Fed, the Treasury and other financial authorities is going to fail miserably. A severe recession and a severe financial crisis cannot be avoided at this point. Only much more radical government action will limit the financial meltdown and start to put a floor on the financial markets collapse.” [emphasis mine]

    “Such radical policy action includes a government plan to purchase – at a significant discount to minimize its fiscal cost – hundreds of billions of dollars – possibly trillions – of mortgages, effectively a nationalization of mortgages. Once purchased by the governments at a significantly discounted price these mortgages could be restructured to reduce their face value, reduce the interest rate on the mortgage and allow distressed but solvent borrowers to avoid foreclosure.”

    “This plan would also include the closing and/or nationalization of banks and other systemically important financial institutions that will fail in droves during the current financial crisis (they can then be privatized again after proper restructuring as many countries did after their banking crises). Again moral hazard distortions can be minimized by wiping out 100% the shareholders in these institutions and firing – with no sweet severance packages – all the reckless senior management that created this mess.”

  10. Comment says

    Pretty good exchange between Buchanan and Joe Madison on Tweeety – Buchanan is probably deluding himself if he thinks he has not sat thru horror show sermons over his lifetime of church attendence. Madison let that slide.

    Then Tweety had one of his approved of liberal women, Joan Walsh, come on to talk about some fair settlement to Florida – The importance of

  11. Anon says

    On a slightly more serious note – We note Murray makes a point similar to the one above – That Obama speaks as an adult to adults. This is so far above most political speech that Obama’s often ordinary speeches seem good, if only by comparison. Obama also speaks in mostly normal words – HRC is getting better, but for along time she was only able to speak in canned applause lines (You gotta lover her dated verbing of Xerox, Doc – since we know you have a command of technological history)

  12. Comment says

    Just as an aside – We have long believed the Rev. Wright controversy would help Obama in the long run – The endless unfair repeating of the nasty clips was over the top and we are under no illusion that just as bad stuff from Graham (worse, in many ways), Hagee, et all will harm McCain. But Obama’s campaign is and was far more threatned by Muslim smears (a total dealbreaker with a far higher proportion of voters), than by his controvrsial Christian pastor. This is the blessing in disguise – We just tune into CNN and Cambell Brown is asking guests to respond to ridiculous Jonah Goldbergs objections to Obama – an early sign that Obama won the day. Anyway – a controversy about Obama’s Christianity is one that Obama welcomes. Newt may think Jesus was a white Republican or maybe he thinks others think that (Newt’s religion is unconvincing), but that’s another debate Obama will benefit from – esp now that those very useful Muslim smears have been undermined by Christian controversy/

  13. Comment says

    Just a note – David Gregory’s new show nees some work – The faux-fastball type Q&A segment and the intro graphics are a bore.

    re Obama’s speech – Gergin is correct when he notes Obama speaks as adult to adults. So otherwise ordinary speeches seem fresh and new. Dem Polticians, we have long noted – (esp HRC and Gore) have a tendency to infantalize their rhetoric, whilst Republicans like Bush tend to retard theirs. So you have a result that campaigns either sound pitched to the immature (Dems) or the developmentally disabled (GOP) and so we all forget what normal is.

    re Conrad Black = They’re after his son now …

  14. Comment says

    Mean to say the big issue is delegates – That’s all that counts. Getting the nomination is goal number one – No matter what – That means staying strong re Florida and Michigen and making them live with their rule gamesmanship. The general election is so far off (but so near) – We happen to think McCain is a better shot than most people thinks and he may well win over HRC or Obama. McCain, it should be said, will benefit for being loathed by the venomous right.

  15. Comment says

    The general trust of the political analysis of the speech was wrong, imo. Tweety was full of hollow praise, but he’ll be a semi covert McCain supporter. But many asked whether the speech would help Obama in Penn or Indian – We think not. But it set the parameters of debate and that will help in the general election and he’ll have time to build his case with doubters over time and his troubles now will semi innoculate him. But Penn and Indiana are too soon and HRC is too safe an alternative for white Dems.
    Most other analysts disagreed and thought this speech would help Obama now – But might create problems later – Again, that’s wrong, Imo – He will have problems no matter what – It’s a question of how he’ll depress one set of problems or elevate another set of problems.

  16. Comment says

    We though Obama’s speech was pretty good – Not that it closed any open files, but that it created a basis for further discussion later on. He had to thread many needles and he succeeded more than most politicians could. Obviously it was not perfect – but compared to the drooling banalities of George Bush, it was like lightning.
    Those awful sermons from that Rev are pretty bad indeed. But they are no worse than many Revs that supported Bush, McCain, and HRC. But it’s absurd to blame any politician for views of others, unless they share those views. Unlike many liberals, we’ve never believed GW Bush believed a fraction of what some of his loony ecclesy supporters say in their newsletters or on the radio.. Same with McCain – We even cut McCain slack for his Mom’s on-air anti Mormon cracks – But maybe were being charitable. But Cindy McCain is pressing her luck challanging Michelle O. Cindy Mccain got lots of legal breaks that most Americans, esp blacks, don’t get when they get in trouble.

  17. Dr.LeoStrauss says

    THe Crown Prince’s speech left us unmoved. He is determined to be all things to all people. Almost Bill Clintonion.

  18. Aldershot says

    As far as there being no choice but to pull troops, I found this piece in AT. Not surprisingly the Iraqis are to be basically screwed if this plays out for Bush, Big Oil, and the American public, but it’s interesting to consider how neatly Iran could be put in a box and that ultimately it could lead to stability in the region. Please forgive the length of the quote, but I wanted Bush’s possible salvation from ignominy fully displayed in all of its majesty.

    http://www.atimes.com/atimes/Middle_East/JB16Ak05.html

    And Shahristani is visibly getting ready to negotiate the contracts for Iraq’s “super giants”. In the idiom of Big Oil, “super giants” are fields with at least five billion barrels of oil in reserve. Iraq’s super giants are Kirkuk (in Kurdistan), Majnoon (bordering Iran), Rumaila North and South (in the south), West Qurna (west of Basra) and Zubair (in the southeast) fields, and, possibly, the Nahr Umr and East Baghdad fields. In addition, Iraq is estimated to have 22 “giant” fields, each having more than 1 billion barrels of oil.
    ***
    Big Oil deals in Iraq form the core of Bush’s strategy of creating a legacy for the US in the Middle East that may run for decades. Big Oil needs the assurance of a near-permanent US military presence in Iraq. And Bush is determined to provide that assurance. He is convinced that no serious American politician would defy the wishes of Big Oil. By logic, therefore, Bush is creating a historical legacy of an Iraq that will remain under American control for decades to come.
    ***
    By the end of this year, the Bush administration proposes to altogether dispense with the fig leaf of the current requirement that the United Nations must authorize on an annual basis the presence and role of the US military in Iraq under the relevant UN resolutions. Rice and Gates argue that the Bush administration “would rather have an arrangement that is more in line with what typically governs the relationships between two sovereign nations”. Period.
    ***
    Bush is confident that his troop “surge” strategy in Iraq is working. According to US columnist and author David Ignatius, Bush favors keeping US force in Iraq close to the pre-“surge” level of 130,000 troops. Ignatius wrote, “Bush in effect is redoubling his bet on success in Iraq.” It is a risky course insofar as Iraq is a polarizing issue in an election year. But there is logic in betting that with such high stakes for Big Oil in Iraq – thanks to Shahristani’s deals – no serious US politician with presidential ambitions would undermine Bush’s desire for continuity and his plans to leave behind a stable Iraq.
    ***
    Indeed, the rest of the world has already decided that it is time to take the Bush legacy in Iraq seriously. The alacrity with which Moscow is hurrying to get onto Shahristani’s gravy train is the latest tell-tale sign. Moscow is highly unlikely to waste its time in rhetoric ridiculing the Bush administration by pointing out that the US needs assistance to save face and leave Iraq with dignity or that Russia could help stabilize the situation, and so on.
    ***
    But Iraq is likely to impact Russia’s fortunes in a much more profound way on a second front where Moscow’s ability to influence is virtually nil. Moscow will be watching with anxiety the progress of the energy dialogue that has commenced between the European Union and Iraq. Alarm bells would have rung in Moscow when Shahristani travelled to Brussels and met the EU officials on January 31.
    ***
    EU officials have openly acknowledged that their desire to seek closer energy ties with Iraq is a critical component of their broader strategy to reduce Europe’s dependence on Russian energy supplies. EU countries currently depend on Russia for roughly a quarter of their gas supplies. EU External Affairs Commissioner Benita Ferrero-Waldner told Shahristani, “Iraq is a natural energy partner for the EU, both as a producer of oil and gas and as a transit country for hydrocarbon resources from the Middle East and the Gulf to the EU.”

    She said the EU was keen to see Iraq link into the Arab Gas Pipeline project from Egypt to Jordan near the Syrian border, which is under construction and is expected to allow European customers to tap into supplies from Egypt and other countries along the line via Turkey. The EU’s Arab Gas Pipeline project forms part of the 3,300-kilometer pipeline to transport gas from the Middle East and Central Asia to Europe while bypassing Russia.

    The plan is to transport Iraqi natural gas from a gas field in southern Iraq to the EU through the Arab Gas Pipeline, which, when completed, will connect Syria, Jordan, Lebanon, Egypt and Turkey. Iraqi gas could then reach Europe through the planned Nabucco pipeline, which is to run from Turkey to Austria. Iraq has been invited to an upcoming ministerial meeting on the Arab Gas Pipeline project.

    An interesting sideline is that access to Iraqi energy suddenly makes the Nabucco pipeline viable. Russia, through robust efforts in the recent past had gained the high ground as the key energy supplier for the southern European countries. The Russian efforts had dampened Nabucco’s prospects despite Washington’s vigorous backing for the project. Now, when it appeared that Moscow had all but finished off Nabucco, thanks to Iraqi energy, Nabucco is rising again as a major challenge to Russia’s interests as the major energy supplier for Europe. The implications for Europe’s relations with Russia and even for the trans-Atlantic relations are far-reaching.

    Shahristani told his EU interlocutors in Brussels that Iraq planned to develop its gas fields this year and should be in a position to supply Europe with gas “in two or three years”. Iraq is estimated to have 111 trillion cubic feet of natural gas reserves. Royal Dutch Shell, France’s Total and Italy’s Edison are seeking Shahristani’s approval for a deal to develop one of Iraq’s largest gas fields, Akkas, located near the Syrian border, which could be connected to the Arab Gas Pipeline.

    On the oil front, Shahristani said in Brussels that Iraq is studying the possibility of new pipelines through Turkey. Oil from the Kirkuk fields in northern Iraq is currently exported through a pipeline that links up the Turkish Mediterranean port of Ceyhan.

    India-Israel energy ties
    EU-Iraq energy ties will be a worrisome development for not only Russia but also for Iran. Tehran has been nurturing the hope that the EU’s strategy to diversify its energy imports would eventually give impetus to the European countries to normalize their relations with Iran and that in turn would prompt them to withstand the US pressure to isolate Iran. But Tehran is watching with dismay that Iraq is fast becoming a golden goose for the EU and the expansion of EU-Iraq energy ties may dampen any sense of urgency in the European capitals for building up an energy dialogue with Iran in the near term.

    The virtual “loss” of the EU market – in the near term, at least – compels Iran to turn more toward the Asian region. But here too, US pressure is working on India, one of Asia’s most significant energy markets, from linking up with Iran. Washington is instead encouraging Indian companies to become active in Iraq. Ideally, Washington would like to promote a Turkey-Israel-India energy grid that could tap into the Iraqi reserves. This approach also fits

    in with the US geostrategy of developing Turkey, Israel and India as three “pivotal” states that are Washington’s natural allies in the regions surrounding the volatile Middle East.

    In January, Turkey launched a feasibility study for a natural gas pipeline connecting northern Iraq’s fields to its Mediterranean port of Yumurtalik, which will run parallel to the oil pipelines. Once the northern Iraq gas fields are developed, 353 billion cubic feet of natural gas will flow to Yumurtalik. Turkey hopes to export liquefied natural gas (LNG) by tankers to destinations such as Israel and India. There is strong US backing for the project.

    To the extent that India is kept away from linking with Iran, Washington also hopes to scuttle the prospect of an Asian

    energy grid developing that might involve Iran, Pakistan, India and China alongside Russia and the Central Asian states. Significantly, serious discussions have begun for the first time between Turkey and India on energy cooperation.

    Turkish Foreign Minister Ali Babacan, who visited Delhi recently, has reportedly proposed to his Indian counterpart the possibility of Turkey exporting oil from the Ceyhan port to Israel’s Ashkelon-Eilat pipeline and Indian super tankers sourcing oil from the Israeli port of Eilat in the Gulf of Aquba. A visit by Turkish President Abdullah Gul to India, followed by a visit by Prime Minister Recep Tayyip Erdogan, is in the cards.

    The Indian Oil Corporation is already building pipelines in Turkey. A major Indian company belonging to the powerful Reliance Group (which has collaboration with Chevron) is active in northern Iraq. (By a curious coincidence, the Kurdish leadership in northern Iraq and the Indian government have employed the same lobbying firm – run by Robert D Blackwill, a former deputy national security advisor and ambassador in New Delhi – to canvass for their interests in Washington.)

    Indian companies have traditionally been active in the Iraqi oil sector. But what explains the US’s interest at this juncture is that energy cooperation in Iraq could significantly cement the strategic ties between Israel and India and thereby ease Israel’s regional isolation. On the face of it, it would have made eminent sense for India to connect Iraq via a pipeline through Iran. But Washington’s entire strategy is to cut Iran out of the loop and to instead encourage Turkey, Israel and India to forge an energy grid.

    However, a Turkey-Israel-India energy grid may face domestic opposition within India. The question of India partaking of the economic bonanza of US-occupied Iraq may militate sections of the Indian public opinion. The present Indian Parliament has adopted a resolution which seriously delimits Delhi’s collaboration with US-occupied Iraq. How Indian public opinion reconciles its antipathy towards US “imperialism” with the tantalizing prospect of the country tapping into Iraq’s vast energy reserves will offer an engrossing political and diplomatic spectacle. But, in the short term, the prospect of Iraq as a significant source of energy supply is surely working as yet another damper on India-Iran energy cooperation. In that respect, the US strategy is working.

    Turkey major beneficiary
    In sheer geopolitical terms, the single biggest beneficiary out of all Iraq’s neighbors is going to be Turkey. Shahristani’s projects will catapult Turkey into the status of a crucially important energy hub in the US’s strategy. During his Washington visit last month, Turkish President Gul had meetings with Bush, Vice President Dick Cheney and the secretaries of State and Energy. The agenda of discussions related to the US and Turkey jointly working in Iraq to develop its energy sources.

    US-Turkey energy cooperation in Iraq impacts on the geopolitics of the region in many directions. First, Washington will expect that Turkey go slowly on expanding and deepening its cooperative ties with Iran, a trend that the Bush administration had been viewing with disquiet in the recent past. Turkey can be expected to respond with pragmatism and calibrate its ties with Iran in accordance with the US sensitivity.

    In turn, any recalibration of the dynamics of Turkish-Iranian ties will be a matter of utmost satisfaction for Israel. Correspondingly, therefore, we may expect a revival of warmth in Turkish-Israeli relations. Furthermore, Turkey is now poised to be a conduit for energy supplies from northern Iraq to Israel. Israel already enjoys strong influence in the Kurdistan region in northern Iraq. Thus, there is a tremendous convergence of interests between Turkey and Israel over issues of Israel’s energy security.

    The Israel-Turkey political axis is bound to consolidate in the coming period, thanks to Iraq’s oil. But from Turkey’s point of view, the most important outcome is the readiness on the part of Washington to disengage from its erstwhile Kurdish allies in northern Iraq. This is already giving Ankara a relatively free hand in militarily countering Kurdish militant activities. Washington is not only turning a blind eye to Turkish military incursions into northern Iraq but is even reportedly sharing vital intelligence with Turkey, which makes the Turkish military’s “hot pursuit” of Kurdish militants inside northern Iraq more effective. Washington is definitely leaning on the Iraqi Kurdish leadership to rein in the activities of Turkish militants based in northern Iraq.

    Equally, Turkey is able to exploit the vested interests of Iraqi Kurdish leaders in oil trade. There are signs that Iraqi Kurdish leaders are cooperating with the Turkish military operations in meaningful ways.

    Turkey has certainly influenced the US decision to scuttle on technical grounds the holding of a referendum regarding the status of oil-rich Kirkuk region in December as provided under the provisional Iraqi constitution of 2005. Conceivably, growing US dependence on Turkey could even lead to an indefinite postponement of the referendum beyond June this year. Turkey is pressing for a UN-negotiated “special status” for Kirkuk, making it a region unto itself. Washington may well heed the Turkish suggestion. At a minimum, Ankara can heave a sigh of relief that the specter of an independent Kurdish national identity taking shape in northern Iraq has receded into the background. Without US backing, it is simply not possible for the Kurds in northern Iraq to assert their independence.

    Turkey also finds common ground with the Iraqi Sunni and Shi’ite political blocs, who have made a pact against holding any referendum in Kirkuk until a new law is passed that would firmly establish Baghdad’s control over the province’s oil wealth. This enhances Turkey’s leverage in Baghdad. The Iraqi political alliance challenging the Kurdish separatist aspirations includes as many as 145 legislators in the 275-member Iraqi Parliament.

    Indeed, from the Turkish perspective, all this is far from offering a permanent solution to the Kurdish problem as such. As the prominent Turkish editor Ilnur Cevik pointed out recently, “It is a problem that has to be addressed with pragmatism and with the notion that there are citizens of Kurdish origin who still do not feel they are being treated as first class citizens of the Turkish republic.” But the fact remains that Turkey gains valuable time to set its own house in order while Washington dotes on Ankara as a key ally in Iraq.

    Turkey has played its cards brilliantly. With the correct mix of strategic defiance and realism, Ankara has persuaded the Bush administration to view the northern Iraqi situation through its prism. In fact, out of all Iraq’s neighbors, it is Turkey that the US will have to count on in the coming period. The Turkish-US relationship, which went through a bad four-year period following Ankara’s refusal to assist in the US invasion of Iraq, has certainly regained some of its traditional verve as a key alliance. This adds immensely to Turkey’s regional status vis-a-vis its Arab neighbors, Russia, Iran, and even the European countries.

    Turkey’s influential role in Iraq, in fact, makes it a significant player in the Middle East. But, more important to medium-term Turkish national priorities would be that Europe would be more inclined as time passes to take note of Turkey’s strategic importance. For the EU, Turkey is emerging as a vital energy bridge connecting the Middle East. At some point in the foreseeable future, this should turn to Turkey’s advantage, if only Ankara relentlessly continues to pursue its EU membership.

    M K Bhadrakumar

  19. Comment says

    Interesting that Buchanan is the go-to guy for color commentary on all things Obama Race race related on MSNBC.

    Btw – Buchanana was oddly zealous in the last McLaughlin Group – suggesting the Fed go after Spitzer with “both barrells.”

    Since when does Buchanan get vindicative about such things?

  20. Comment says

    Moral hazarad is old school – John Merriwether had a net profit at the end of the day following the LTCM bailout. Mexico’s disgusting plutocracy was bailed out in the 90s and now this Bear deal seems prudent by comparison.

  21. Comment says

    re Japan’s Lost Decade – Japan got a lot done during that decade – Sure they took a breather,, etc – But lots of building boom and lots of development – from what we read. Ohio, Michigan, Kandas, and Indiana could all use lots of building during these lost years.

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