Practice makes perfect. US forces are going to try to gain control of Kandahar again.
In theory, the Afghan government is in place in Kandahar, but its authority is nominal. Bombings and assassinations have left the government largely isolated behind concrete barricades and blast walls. In the latest burst of violence, a suicide squad struck across the city late Saturday, detonating bombs at a recently fortified prison, the police headquarters and two other sites, the Associated Press reported. At least 30 people were killed.
For the first time in years, however, the U.S. military again has Kandahar in its sights.
American troops are seeking to reclaim the city and surrounding province, where the Taliban has proved resurgent, more than eight years after the U.S.-led invasion forced the group from power. But a visit here last week made clear that American forces will face an insidious enemy that operates mainly in the shadows and exercises indirect control through intimidation and by instilling fear. The provincial governor remains mostly behind barricades. The provincial council has trouble convening because many members have fled to Kabul. The police are viewed as ill-trained, corrupt and possibly in league with criminal gangs.
"We will begin that transition no later than July 2011, but the pace will depend also on conditions on the ground," Gates said after watching training exercises at Camp Blackhorse, where U.S. and British forces train Afghan soldiers.
Michael O'Hanlon and Hassina Sherjan say Afghanistan is pretty mild stuff compared to Iraq.
Also, the violence in Afghanistan today is far less severe than it was in Iraq. Before the troop surge in 2007, more Iraqi civilians were killed every month than have been killed from war-related violence in Afghanistan each year. In other words, Afghanistan is less than a tenth as violent as the Iraq of 2004-07. Communities were displaced and sectarian tensions were inflamed far more in Iraq than they have been in Afghanistan.
But low level violence is more business as usual in Afghanistan than it is in Iraq.
The major US goal in Afghanistan appears to be to leave a government in power that won't be overthrown by the Taliban when the US leaves. I do not see how the US can accomplish that goal. The Taliban families make new babies in large numbers. Defeat them now and in a few years a new generation will be old enough to take up the fight.
Why should defeating them this time be more effective? The creation of the Afghan Army is supposed to be the crucial difference that will allow US and NATO forces to withdraw. But will that army become an effective and loyal fighting force?
The Marine approach -- creative, aggressive and, at times, unorthodox -- has won many admirers within the military. The Marine emphasis on patrolling by foot and interacting with the population, which has helped to turn former insurgent strongholds along the Helmand River valley into reasonably stable communities with thriving bazaars and functioning schools, is hailed as a model of how U.S. forces should implement counterinsurgency strategy.
But the Marines' methods, and their insistence that they be given a degree of autonomy not afforded to U.S. Army units, also have riled many up the chain of command in Kabul and Washington, prompting some to refer to their area of operations in the south as "Marineistan." They regard the expansion in Delaram and beyond as contrary to the population-centric approach embraced by Gen. Stanley A. McChrystal, the U.S. and NATO commander in Afghanistan, and they are seeking to impose more control over the Marines.
This report relays complaints from US Army officers and other nations that the US Marines are doing their own thing. But if all the military forces follow the same strategy then only one strategy can be tested at once. Better the Marines try something different in case the main approach fails.
All crises end – this is actually Larry Summers’s famous line. We avoided a Great Depression primarily because, compared with 1929-31, we have a government sector that is large relative to the economy – and which does not collapse when credit goes into freefall. What exactly did the Obama administration do in ending the crisis that a Clinton or McCain administration – or even Bush – would not have done? The most plausible answer is: Nothing.
Geithner insists, according to John Cassidy, that the Obama administration has “proposed the biggest regulatory overhaul in seventy-five years.” This is the worst conceit. The sad and unfortunate truth is quite the opposite – because Mr. Geithner and his colleagues refused to seize the moment and didn’t break the economic and political power of anyone who mattered, they have doomed us to re-run the same horrible credit loop as before. Legislation may tweak the details, but the regulation and control of systemic risk remains just as weak as before.
Johnson believes that since the "too big to fail" banks are becoming even bigger we are setting up for a far larger crisis that might exceed the capacity of the US government to handle in a crisis.
If we continue to allow banks to grow, as they have over the last 30 years – and did again through the latest boom-bailout-rescue cycle – we head towards a day when Mr. Geithner or his successor will try to save the financial system and will fail.
You might think that is a good thing and for sure it will bring on a big change in creditor attitudes and presumably much stronger regulation. But, just as in the 1930s, first we will have to dig out from under a lot of economic rubble – and we’ll lose a lot more than 8 million jobs.
In a post entitled "Way Too Big To Save" Johnson argues that in the next financial crisis we might find ourselves faced with bailing out a future Citigroup that has assets equal to 100% of the US GDP.
Let’s take that leap of faith and say we use the favorite scheme of Gerald Corrigan from Goldman Sachs – he is widely promoting conservatorship as a transition to wind-down for large complex financial institutions – and let’s say that it “works”. Presumably this would mean something like the situation with AIG since September 2008, run somewhat more effectively –perhaps without the obnoxious bonuses. But would that really lower the fiscal costs of stabilizing the economy in the face of a major financial shock? And could we afford those fiscal costs?
Maybe. But the experience in Europe is definitely not encouraging. The Irish state is in serious trouble because major banks failed and were “saved”; let’s not even talk about Iceland (where banks assets peaked around 11-13 bigger than GDP, i.e., the size of the entire economy). And Switzerland faces serious risks – with banks that had peak assets over 8 times GDP – that the international community apparently just wants to ignore (perhaps because Switzerland is not in the G20 or the even the European Union).
In the UK, one bank (RBS) had assets that were more than GDP (1.25 times, by some estimates). Ask yourself this: if Citigroup, which was around $2.5 trillion before the crisis (including the off-balance sheet commitments, let’s call that just under 20 percent of GDP) had actually been $5 trillion, would our problems now be larger or smaller? What if Citigroup – or whoever becomes our biggest bank – reaches $10 trillion or $15 trillion in today’s dollars and then fails, how would you feel about that?
What would US government policy makers do? The Federal Reserve would be tempted to inflate away the debt. We could experience 20+% inflation for a few years. Debt holders would be forced to take a very big haircut as a way to avoid an explicit national bankruptcy.
When Peak Oil hits what I would like to know: Will the resulting downturn be inflationary or deflationary? With declining tax revenues and mounting sovereign debt I expect governments to heavily pressure their central banks to expand their money supplies so as to allow inflation to cut the cost of paying interest on existing debt. A government wanting could prepare for the Peak Oil financial crisis by issuing debt with longer maturity dates. That way when monetary policy becomes inflationary and the market demands higher interest rates a government can ride along paying low interest rates on debt issued before the crisis.
Peter Boone and Simon Johnson lay out arguments for why the Greek debt crisis is not in our rear view mirror.
By the end of 2011 Greece’s debt will around 150% of GDP (the numbers here are based on the 2009 IMF Article IV assessment; we make some adjustments for the worsening economy and the restating of numbers since that time – for example, the fiscal deficit in 2009 will likely turn out to be about 8 percent, which is double what the IMF expected until recently). About 80 percent of this debt is foreign owned, and a large part of this is thought held by residents of France and Germany. Every 1 percentage point rise in interest rates means Greece needs to send an additional 1.2 percent of GDP abroad to those bondholders.
What if Greek interest rates rise to, say, 10% – a modest premium for a country which has the highest external public debt/GDP ratio in the world, which continues (under the so-called “austerity” program) to refinance even the interest on that debt without actually paying a centime out of its own pocket, and which is struggling to establish any sustained backing from the rest of Europe? Greece would need to send at total of 12% of GDP abroad per year, once they rollover the existing stock of debt to these new rates (nearly half of Greek debt will roll over within 3 years).
This is simply impossible and unheard of for any long period of history. German reparation payments were 2.4 percent of GNP during 1925-32, and in the years immediately after 1982, the net transfer of resources from Latin America was 3.5 percent of GDP (a fifth of its export earnings). Neither of these were good experiences.
Boone and Johnson say the Greeks and other European countries have got to decide whether they are willing to pay the price to keep Greece in the Euro currency zone. Without guarantees by Germany, France, or the IMF on Greece's debt the debt interest costs will go too high and Greece will default.
But I'm less clear on how abandonment of the Euro helps. A withdrawal of Greece from the Euro zone could happen before or after a default. If Greece withdraws then its debt servicing problem remains. Greece would still have lots of outstanding debt denominated in Euros and the Greek drachma currency would drop against the Euro - making payment of existing Euro-denominated debt even harder.
What's interesting about their claims: They portray the European leaders as deceptive for pretending that the crisis is easing. They see the basic financial numbers as so bleak that the crisis looks set to escalate.
Tyler Cowen calls the article a a grim but realistic report. Paul Krugman argues that if the markets were willing to treat Greece as a very low default risk then Greece could easily afford to pay much lower interest costs on 150% GDP debt. So the question becomes: Can Greece convince the markets to treat it as a low default risk? If the markets decide Greece is a high default risk then Greece really is a high default risk.
I see another problem here: How can the Greek government maintain popular support for the austerity measures needed to prevent even higher debt accumulation if the markets decide to treat Greece as a low default risk? Absent a crisis various political factions in Greece will push for more spending for their benefit. Then the market will once again see Greece as high default risk. Interest rates demanded on new Greek debt issues will force Greece back down the path toward default.
Update: Sounds like the Eurozone countries will bail out Greece after all.
Plans for a bailout for Greece totalling €20 to €25 billion will be put to a meeting of Eurozone finance ministers on Monday.
A system of co-ordinated bilateral moves has been agreed behind the scenes by major players among the 16 countries in the single currency, led by Germany. They will step in as a last resort if Greece requests help in meeting its huge sovereign debt repayments.
The package has been formulated to work around a "no bailout" clause in EU rules, and would amount to an agreement to facilitate loan guarantees if Athens finds the price of selling its debt pushed too high by speculators.
But this doesn't kick in immediately. The goal here appears to be to discourage the markets from driving up the interest rate of new Greek debt issues.
Wolfgang Schauble, German finance minister, has a surprisingly sensible op ed in today’s Financial Times. As we suggested yesterday, first the relevant Europeans should decide if they want to keep the euro - more precisely, who stays in and who leaves the currency union – then policy must be adjusted accordingly.
Mr Schauble is obviously correct that existing economic self-policing mechanisms are badly broken; the eurozone can only survive if there are effective monitors and appropriate penalties for fiscal and financial transgression. He is also right to fear that involving the IMF in Greece would necessarily give the Fund greater rights to kibbitz on European Central Bank monetary policy. Given the fear and loathing expressed for the IMF’s “4 percent inflation solution” (or is it 6 percent?) in eurozone policy circles, you can see why this gives the Greek prime minister some bargaining power – the Germans will do whatever it takes to keep him away from the IMF in the short-term.
If the Greeks do not get bailed out and the market senses they are going to default then the EU's rules allowing free movement of capital will allow a huge flight of capital out of Greece due to fear that Euros will get converted into Drachma. If I was a Greek right now I'd be opening a bank account outside of Greece and maybe even outside of the EU. Time to get money out of the reach of a desperate government.
Happy pledges lead to happy outcomes.
JALALABAD, Afghanistan — Six weeks ago, elders of the Shinwari tribe, which dominates a large area in southeastern Afghanistan, pledged that they would set aside internal differences to focus on fighting the Taliban.
This is Afghanistan which is part of the planet Earth and we are all in a Global Village and all really similar to each other. Anyone who dares to say differently will get called bad names. We are all really similar. We can all just get along, live in the present, imagine all the people, and so on.
But something went wrong? How could that be?
This week, that commitment seemed less important as two Shinwari subtribes took up arms to fight each other over an ancient land dispute, leaving at least 13 people dead, according to local officials.
The story includes accusations of police giving weapons to one of the factions. The disagreement degenerated into the use of rocket-propelled grenades and mortar launchers. Obviously Afghanistan needs gun control. Probably a government program to control gang violence too.
Official US policy has been damaged by this incident. Oh my.
The fighting was a setback for American military officials, some of whom had hoped it would be possible to replicate the pledge elsewhere. It raised questions about how effectively the American military could use tribes as part of its counterinsurgency strategy, given the patchwork of rivalries that make up Afghanistan.
The US government wouldn't make policy for a country based on unjustified asumptions about human nature, would it?
According to the report, Lehman used what amounted to financial engineering to temporarily shuffle $50 billion of troubled assets off its books in the months before its collapse in September 2008 to conceal its dependence on leverage, or borrowed money. Senior Lehman executives, as well as the bank’s accountants at Ernst & Young, were aware of the moves, according to Mr. Valukas, the chairman of the law firm Jenner & Block and a former federal prosecutor, who filed the report in connection with Lehman’s bankruptcy case.
Richard S. Fuld Jr., Lehman’s former chief executive, certified the misleading accounts, the report said.
Are these actions illegal? If so, will anyone do jail time for their role in the deception?
Mosab Hassan Yousef, son of Hamas founder Sheikh Hassan Yousef, secretly converted to Christianity and became a secret agent for Israeli intelligence agency Shin Bet. In a Wall Street Journal profile he makes a great point about the problem with Islam.
Do you consider your father a fanatic? "He's not a fanatic," says Mr. Yousef. "He's a very moderate, logical person. What matters is not whether my father is a fanatic or not, he's doing the will of a fanatic God. It doesn't matter if he's a terrorist or a traditional Muslim. At the end of the day a traditional Muslim is doing the will of a fanatic, fundamentalist, terrorist God. I know this is harsh to say. Most governments avoid this subject. They don't want to admit this is an ideological war.
"The problem is not in Muslims," he continues. "The problem is with their God. They need to be liberated from their God. He is their biggest enemy. It has been 1,400 years they have been lied to."
The problem with Islam is in the base texts. We do not have even more problems with Islam only because most Muslims are less than total in their embrace of Islam.
He has written a book: Son of Hamas: A Gripping Account of Terror, Betrayal, Political Intrigue, and Unthinkable Choices.
Our political rulers are well paid.
The country may have started its long haul back to economic recovery--if recent news that consumer spending increased slightly in January is any indication. But even so, most Americans still aren't ready to brag about their paychecks.
Except, perhaps, in Loudoun County, Va., where median household incomes are higher than anywhere else in the country. This affluent suburb of Washington, D.C., where families take home a median $110,643 annually, tops our list of America's 25 richest counties.
Many of America's wealthiest counties are centered around Washington DC.
Like Loudoun, a number of the country's wealthiest households are tightly concentrated in counties around the nation's capital. Six of the richest counties lie on the outskirts of Washington: Fairfax County, Va., Arlington County, Va., Stafford County, Va., Prince William County, Va., Charles County, Md., and Alexandria City, Va.
I would prefer that our wealth was concentrated around more wealth-producing areas of the country. But I'm old fashioned.
The New York Times reports that Toyota has done no recalls in Japan for car unexpected acceleration problems.
Toyota has recalled eight million cars outside Japan because of unexpected acceleration and other problems, but has insisted that there are no systemic problems with its cars sold in Japan. The company recalled the Prius for a brake problem earlier this year.
Critics say many companies benefit from Japan’s weak consumer protections. (The country has only one full-time automobile recall investigator, supported by 15 others on limited contracts.)
One lady in the article came under pressure by police to sign a document stating that her car accident was caused by her mistakenly stepping on the gas pedal. She claims she didn't make that mistake.
Japan's equivalent of Ralph Nader was convicted of blackmail for his efforts to force Japanese car companies to fix their safety defects.
The most active was the Japan Automobile Consumers Union, led by Fumio Matsuda, a former Nissan engineer often referred to as the Ralph Nader of Japan. But the automakers fought back with a campaign discrediting the activists as dangerous agitators. Mr. Matsuda and his lawyer were soon arrested and charged with blackmail. They fought the charges to Japan’s highest court, but lost.
The willingness of Japanese to conform has costs as well as benefits. One of the costs is weak consumer protection. The Japanese government is just now taking some steps toward more monitoring and investigation of Japanese car companies. This comes 40+ years after the US government got serious about car design defect problems. Ralph Nader didn't have to become a convicted felon in order to spark that change.
Update: Other things about Japanese society are, um, unusual in Western experience.
