Pakistan: Musharraf Coups Himself.
As you know a second "coup" has happened in Pakistan, and General Musharraf has just "couped" himself, i.e. he has thrown into jail, the very politicians he himself spent all this time gathering into a parliament of his choice.The fighting in Waziristan and the entertainment in Supreme Court and all the demands from America to control Jihadi sentiments, have become a bit much for el Presidente Dictator in Chief etc.. etc... and he has asked for a time out.
As you know a suicide bomber came by Majid's house,and who knows where the suicide bomber will go next.
It is an internal matter of Pakistan.
posted by maverick @ 12:05 PM
24 Comments:
Maverick,
What do you make of the suicide bomb attack on the PAF bus in Sargodha?
According to some initial Pakistani reports, that bus was carrying PAF personnel on its way to the Kirana hills complex. These PAF personnel were supposed to be radar guys but we all know what else is there in that complex.
Was the choice of the target a mere coincidence or am I reading too much into it?
M, as is being read, Uncle signed off on this -if not being the original sponsor for this course of action. What is the other co-sponsor for Pakistan, China saying. Any info or opinions?
thanks,
Pradeep.
Hi Anonymous,
I have no idea who the PAF wallahs really were.
Hi Pradeep,
Uncle Sam used Musharraf's alleged commitment to democracy and better government as window dressing to make their deals with him palatable in the US.
If that window dressing is unsustainable Uncle Sam will revert to "War on Terror" based decorations in the window.
While we are still at the onset of stage 2, it is an amusing time - I intend to have some fun while I can.
As of November 4, Pakistan has ceased to exist. It has been replaced by the Republic of Musharraf. In the Republic of Musharraf, the citizens live at the mercy of the Musharraf. Instead of Rupees, they use Musharrafs, and each Musharraf has atleast 400-500 musharrafian in it (depending on who you ask). In the morning the denizens of the Republic of Musharraf get up and say Good Musharraf to each other as they pass down the street. Seven times a day they offer prayers to Musharraf and the places of worship are adorned with his image. All the boys are named Musharraf and the girls are named Musharrafa. The Government of Musharraf runs ads on each of the Musharraf channels, and the ads repeatedly say, "The musharraficity of this man was his Musharraf".
I personally congratulate His Excellency El Presidente Extraordinary Sir Highly Exalted Pervez Musharraf, Leader Eternal of the Republic of Musharrafistan.
hi Kg,
Citigroup took a hit over the weekend.
A week or so from now another major bank will get it.
Incidently do you understand, why do the fund managers care about instability in Pakistan?
Dear Maverick,
Now who would have thought you would see such mirth at such times? Since you are having fun while you can, here's something to add to it.
Hi Nitin,
"Musharraf is Great"
All right thinking people should now greet each other in this fashion.
After a little ritual barking about how much it dislikes dictators, the US is going to go to business as usual.
I was really keen to go back to ignoring Benazir, I think I can safely do that now.
I want to meet the genius in the US who believed that post 9-11 the US could make an opportunistic alliance with Pervez and then throught this democracy drama create a viable alternative to his leadership.
This person should be given the "most numbers of people chutiya banaoed" award for the decade.
Best Musharrafs,
Maverick.
ps. Musharraf Always Number One.
Nitin,
pps. There is only One "Number One" and that is Musharraf. The rest are all "Number Two"'s.
Maverick,
Even though the question is directed towards KG, let me take a stab at it and you tell me if I understand you right:
Any real instability within the power structures in Pakistan (as opposed to time-pass nautankis put on for show) will cascade into instability in the control and pricing mechanisms of the international opium based narcotics economy, i.e. the quantities and prices of opium based narcotics entering into the international market will no longer be predictable and manageable.
Such uncertainties will disrupt the regular pattern of trade and ultimately disrupt or atleast make uncertain the resultant cash flow through the major transnational banks that manage the money of this economy. These banks will find it difficult to tide over the sub-prime mess without the certainties of such a guaranteed cash flow.
Thats why the hedge fund managers care about stability in Pakistan.
Anonymous,
Yes what you say is plausible.
If indeed drug money is being laundered into home loans in the US domestic market, to what extent will instability in Our Beloved Mushland cause fluctuations?
Given that Musharraf himself has property investments in the US, will he be keen to promote a situation where the price of those investments fluctuates?
Maverick:
I don't think it's just the conflict economy cash - vital though that is, I think the US gave the Pakees a "printing press" a long time ago.
The pakees have used that printing press against us, but it may be possible that nukes weren't the only thing the pakees proliferated.
The US holds the Chinese to be "responsible", so I don't think they care if the schematics of the printing press went to China along with the F-16's schematics a long time ago.
But the question of where *else* those schematics ended up is an open question.
Re: Citigroup:
Things are really bad at the moment. I've been spending some time looking at the US Flow of Funds. They're not pretty.
Give me a day or so. There's something really interesting that the Usual Suspects ought to have a look at, IMO.
Later,
kg.
Maverick,
Musharaff seems to have achieved the impossible by having widely disparate elements such as:
1. The Jamait Ulema
2. The PML-N
3. The Lawyers
all opposing him together. Why did he move when he did? Was there such an imminent threat? Or has he unnecessarily precipitated a crisis? Were all of these disparate elements actually so upset at the orchestrated attempt to fix the elections in favour of Musharaff and BB that the present crisis was the only way out?
Hi Kg,
I have suspected that. I never knew what to make of Omar Saeed Sheikh's "apne dollar bech do" comment in front of the media as he was being paraded to court.
The US problem currently centres on a culture of excess consumption. The rule in the US has been more is good, bigger is better. No one realised or cared to realise that this has a vital flaw in it.
The biggest economic troublemakers are the white upper middle class - the American equivalent of caste Hindus in India. Their desires range from insane luxury akin to the super-rich to ultra high sensitivity to loss of status of the kind seen in black women in urban combat zones. These bewildering notions of social mobility are unsustainable in a low resource environment, however their grip on the policy structure inside and outside the goverment makes it impossible to do anything that corrects for this anomaly. Despite obvious signs of a collapse, they remain wedded to notions of control over the sinews of government and believe that those will eternally constitute usable leverage in any reasonable time frame.
I am reminded of second rung Soviet bureaucrats and apparatchiks who were not in the nomenclatura. There is staggering similarity between their attitudes and those of upper middle class white people in the US. That same disconnect from reality is manifesting here too.
In some sense inducing a credit crunch in the US is perhaps the best way of getting a handle on this problem. Traditionally the way credit has been run in the US, if you were a white heterosexual man of traceable ancestory, you could essentially borrow unlimited amounts of money without ever having to pay it back. This free flow of money fed the cult of overindulgence in the upper middle class. The rest of the population, aped the upper middle class and that created an unmanageable mess in the national finances.
It really does not look pretty.
LDev,
All those people have been under the APDM flag for a while now.
The MMA split its bets, Qazi Hussein stayed with the APDM and Fazlur Rehman moved to engage Bhutto.
Similarly the feudals have split their bets, Bhutto is running with Musharraf, and Nawaz is running against.
The Lawyers are irrelvant. Their power base comes from a constitution that worth toilet paper and a judicial system that sees more action than the girls of heera mandi. While it is true that the feudals have entrenched themselves in the legal system, feudal power bases are being eroded very rapidly elsewhere and this legal battle is mostly a metaphor for bigger problems involving the distribution of land between the feudals and the Army.
The Army basically wants to parcel out land to Musharraf loyalists. The feudals are used to having first dibs on land parcelling and other scams. This is why Lt. Gen. Zarrar Zamin err.. I mean Zarrar Azim made the news. He stepped on a feudal's toes, a feudal who currently serves as a cook in Saudi Arabian king's kitchen.
I am beginning to wonder if this drama will wind down if Musharraf agrees to do some token gesture as Benazir returns, like provide adequate security for her next trip from the Airport to Bilawal house. I am sure that will be enough of a commitment to democracy that will make the US go back to looking the other way.
Or I think probably some starlet in Hollywood will overdose on cocaine and that will make the US move on to other entertainment.
Maverick,
A clarification. Note that I am not saying that money from the opiate economy that flows through the banks is being directly and explicitly laundered into home loans.
What I am saying is that it is possible that instability in that opiate money flow will affect the banks' capacity to tide over difficulties that arise from their other activities such as the sub-prime loans. Hence the concerns with stability in Pakistan.
Hi Anonymous,
I apologise for the misunderstanding, you may be right.
Maverick,
No need to apologize for anything.
Coming back to the topic of Pakistan, here is something that you may find interesting:
http://www.indianexpress.com/story/236583.html
How accurate do you think this article is? It certainly sounds plausible.
Hi Anonymous,
That is an interesting article.
I cannot comment on its veracity but it is true that a sustained LIC/COIN environment is something that the PA is unprepared for and that a certain fraction of the PA's ineffectiveness is due to fatigue and related factors.
Can the PA sustain a shooting war on the western border while still maintaining a defensive posture along the eastern border?
Well... that is a difficult question. Post 1971, the PA has over invested in defensive measures along the eastern border. As there is no east Pakistan to distract it, India can apply its entire strength to resolving issues with West Pakistan.
Also the PA invested in stay behind operations, all this Kashmir Jihad and Khalistan movement etc... to some extent was about keeping the ground under India's feet soft, something that might have prevented it from applying its full strength to Pakistan. At this time the PA's defensive line had been strengthened Jehadi group could be kept free of Indian counter-infiltration operations. Any demands from the western sector are likely to cause a reduction in this excess defensive strength.
It is unclear to me if this constitutes a sufficient shift in the PA's posture that it will no longer be able to provide support to infiltration operations.
It seems to me that the Pakistani Police especially the metropolitan departments are emerging as a highly effective entity in their own right.
In the past, the police have always had a curious relationship with the elite, ultimately without the support of the police, the elite would not have a leg to stand on. The Army broke this trend, it had its own guns and didn't need the police to do any shooting for it... until now that is.
It may be worthwhile to see how the police and the army interact. Though on the face of it, the police have been decentralised with authority over CRs being handed over the hand picked nazims of Musharrafland. A more subtle yet pervasive control is emerging out of the interior ministry and its true representatives in the metropolitan forces.
I have to think more deeply about this, but the ability of the police to retain their place in the Musharrafland is very interesting.
The closest we came to a confrontation between the Police and the Judiciary was a DCP in Bombay shouting in the High Court that the Judge and the Public Prosecutor were in the mafia's pocket. But look, I mean look! in Musharrafland the judiciary is taking a massive beating at the hands of the Police!
This is quite amazing, words fail to describe this mode of state failure - the police turning against the judiciary! It is unheard of!
Pakistan is exploring uncharted territory in state failure.
Hi,
I see the usual suspects (ie. Kathiawari-Krepon, PALS-Albright, etc..) are putting out rubbish about how the safety of the nukes has been enhanced in Pakistan after US intervention.
I think is all part of an opinion control strategy because people are seeing troubles in Pakistan, especially all those "suit and tie", "moderate" lawyers getting the crap kicked out of them and they are getting worried.
People in the US are especially worried after they listen to Bhutto's stories about how she was "kept in the dark" and "clueless" about nuclear developments stage managed by the army.
Hearing stuff like this forces people in the US to confront the possibility that their surveillance mechanisms might be failing inside Pakistan and that Pakistan is turning towards the "Islamist" side and that scares the living shit out them.
I suspect that the debate is perhaps getting a little to excited and unfiltered for the Bush administration's liking and the "reassurance" people are being asked to go on TV and try to calm frayed nerves.
It really does not help matters that the exact same people are being asked to go on TV and scare the living crap out of viewers with the possibility that Iran is going to get a nuke. Spontaneously the viewers are asking questions about Pakistan and so an additional opinion control strategy has to be implemented.
I take note of our friend from Whitehall saying that an internal feud between patronage groups in the PA is underway.
I think it will do well at this point to recognise that this instability and polarisation is not somehow confined to the PA and that it is manifesting at every level of Pakistani society.
There is a complete intellectual bankruptcy in the Pakistani elite on how to deal with this.
Hi Maverick:
Sorry about the delay. I want to use this post for a background on the current financial crisis. I've made it a "stand alone post" but hope to pull together some strands in subsequent posts over the next couple of days.
I think we need this context to understand some of the batty things that the US appears to be doing.
Paulsons aggresive panhandling. . .
Yes. But that's what the entire background on the US' Current account/trade/budget deficits is about.
The way it works is quite simple. The world uses dollars as the reserve currency. International trade is denominated in dollars. Countries keep dollars as their reserves. Everyone gets them from the US, by selling "stuff" to the US or whatever. The US gives them dollars by *deliberately* running deficits. The dollars the world makes can't be used anywhere other to be stored in their vaults. Even if countries trade dollars among themselves, the dollars only have a value in so far as thy can be used to buy things from the US.
But the US don't sell many things the world wants anymore, and those that they do sell the world can get better things from elsewhere at better prices, - other than hi tech weapons. So the only thing to do with those dollars is to give them back to the Americans by buying US debt, i.e. govt bonds. The US doesn't worry about paying this back because they can always print more dollars to pay their debt, i.e. inflate. Hence the "Deficits Don't Matter" chant in the US.
That's the heart of the US' economic dominance. That at some stage those dollars have to go back to the US. Not just that the dollar is the worlds reserve currency, but that those dollars have to, eventually, flow back to the US. Greenspan said recently that he didn't care about the US deficit - that's why. Because the rest of the world simply has to keep buying new US debt and rolling the old ones over.
Because one persons debt is another persons credit, so US debts are basically the rest of the worlds assets and, these days, virtually forms the basis of the worlds credit system. The US uses its dominance to basically tax the rest of the world. The rest of the world works hard and creates real goods which they send to the US which pays then in paper dollars, which they simply print. Money created out of thin air, literally.
The US' trade partners have so many dollars that they're forced to inflate their own currencies even if it weakens their own economies to avoid a dollar crisis and a possible global financial collapse. The US basically plays "financial chicken" with everyone else and everyone else always blinks.
And hence Paulsons aggresive panhandling.
Note: *Financial* collapse. Not an economic collpse. They're not the same things, except for those countries, like China, who essentially export mainly to the US.
This sweet little rent-seeking/making racket has only one flaw. It depends on the US not being stupid enough to over print too many dollars at any one time. Then the Bushies got into the White House . . .
US BUDGETS:
The trick to understanding the US budget is not to look at the official "Budget" which is just a mindlessly shallow political exercise which these days appears more designed to hide things than reveal anything.
The official budget is just a cash in, cash out thing. The real details are actually in the U.S. Treasury Department report called the "Financial Report of the US." This is accounting on an accrual basis and gives the true picture of what's actually happening.
This is where you find out little things like every US household owing a debt of over $750,000 as of the end of 2006.
The US took a couple of centuries to go into it's first trillion dollar debt. Since Georgie got in, the US adds a trillion in debt every 18 months!! Good ol' Dubya has added more debt to the US than all previous Presidents - *combined*.
It's that flood of dollars that's currently sloshing and roiling it's way around the place that's causing so much trouble.
The current problem is a bit like the one the Japanese had in the 90s. The Japanese got caught in a trap where their wages were simultaneously to high and to low. They were to high for Japan to compete effectively with low cost countries like China, S Korea etc, but to low to allow the Japanese to have a consumption led recovery.
The US' problem is like an overproduction problem. They produced way to many dollars. Dollars that kept losing their value because Dubya and his friends were to dumb to stop the printing presses. To get a return on these "losing-value-dollars" put pressure on interest rates, which caused the real-estate bubble to blow.
And now things get nasty. See, the real estate thing was an inverted pyramid. Some poor slob borrows half a mil to buy a house. The mortgage is then sold mortgage is actually an income stream over the life of the mortage backed by the actual house itself.
This by itself wouldn't have been a problem, but the geniuses who bought the mortgage income stream also decided that they were actually an asset that could be used as loan collateral, and since these income streams were backed by actual houses, the rating agencies gave virtually all of them a AAA rating, even the low income mortgage borrowers i.e. the "sub-prime" borrowers, on the rational that defaults were not-correlated statistically.
And since the US Fed droped his requirements for reserve holdings (6 cents per $100!!!!), the bright folk at places like Merril-Lynch, Citigroup etc, could leverage these "assets" to borrow multi-billions. The real estate bubble happened purely on Dubyas printing press basis. Too much liquidity that had to be parked somehwere, and what better than houses, eh?
Note that the billions borrowed on the mortgage income streams being used as collateral all depend on the poor slob paying his monthly mortgage. If he doesn't, then the collateral is valueless, and billions have been lent on, literally, thin air. When interest rates went up, defaults *were* correlated.
And whole asset classes vanished. With collateral disappearing into thin air, and all the big boys holding these valueless assets on their books, that created a chain reaction in the *credit* system because it broke the credit trust chain. No one can trust the others anymore and loan them short term money to overcome current problems because they don't know what's on their books and therefore won't know if they'll get their money back.
Why don't they know what's on their books? Well, technology comes in here. The power of iterative number crunching allowed the creation of highly complex financial instruments, derivatives for example, whose value isn't set by trade, but by the models themselves.
It's crucial to understand that. There is *no* price discovery mechanism. The model sets what the price *should be* and everyone says okey-dokey. This was *aided* by the Fed and the US Congress which not only allowed this "self-regulation" but actually enacted rules to force banks to use derivatives to "control" risk.
Think about that for a minute. Citibank having a spot of bother? No problem, a new model simply says that Citis assets have increased x-amount. Problem over. No kidding. This is fine and dandy in the good times. But it also has other implications. One among them being that that a large part of financial assets have been moved off balance sheet to aid in "confidentiality", i.e. secrecy. Because of this secrecy, and because of the "model-value", *no one* can trust each other.
So the US has a dual crisis. Vast amounts of cash swirling around the place with nowhere to go because most of the big players *can't* (not won't) loan to each other because the other person may already be broke and loaning to them might send you broke if they go belly up.
And note that with the US printing presses still going like bangers, that means any dollar holders are losing money just holding on to their cash!
It's virtually a perfect storm. The GoTUS can't just buy those useless assets because that would mean printing even more money than they currently are. What the US really needs is someone from the outside, who has the billions, to step in and rebuild the credit trust chain.
Hence Paulsons forays . . .
But here's the thing, the US can't be sure the Chinese will play the game they way they want them to. The Chinese have demanded a quid-pro-quo from the US. And they got it.
Little known fact, in March this year after Paulson returned from one of his Chinese trips, *all* US missile proliferation sanctions against the Chinese were removed. The Chinese now have open access to items on the US Munitions list. This happened after Paulson wrote/released a report clearing the Chinese for this.
A sign of real desperation.
You know how we say the pakees negotiate with a gun pointing to their heads? So do the USians. (Where do ya think the Pakees learned that trick from, folks?) That's what the US is doing to the Chinese and us at the moment. Paulson is reminding us and the Chinese that our prosperity and dollar horde depends on the US debt market, which we've done well out of. The price is to ante up when USians say so.
The US has done this before mind you. During the seventies when the US went broke due to Vietnam. Literally. When someone says they can't pay their debts anymore, they're broke. That's what Nixon did when he shut the gold window and told Euroland, "from now dollars are not just 'good as gold', they are gold. If we all pretend its so, its so. And if you don't we'll leave you to the Soviets."
Euroland promptly crumbled. So did the Japanese during the 80s and the various "accords" they were forced into by the US.
But see, in those days there was no alternative and a real Soviet threat. These days there are *alternatives*. And no real existential threat. So the US is finding the whole panhandling thing tougher going than they used to. They actually have to beg - not just demand and command.
Like the Pakees, the US is begging and threatening simultaneously. Either the rest of the world pays up or the global financial system will go into melt down. But they're on a weaker horse than they think. There are real alternatives now. The trend away from the dollar will accelarate markedly if the US' threats to shoot themselves in the head get out of hand.
Then if the US economy does go into meltdown - it'll be like Argentina or the Soviet Union. No one will really give a stuff. It may not even be as bad for the rest of the world as the US thinks, if we and the Chinese introduce direct income support to our poorer sections to support the production capabilities we now have.
kg.
Hi Kg,
There are three generational shifts in the attitude in the US. GHWB's generation believed that you had to have a job to get paid. GWB's generation believes that you can keep taking loans because your daddy had a job. Folks in GWB's kids' generation believe that as long as daddy can take a loan, their credit cards will never "max out" i.e. daddy will take care of the bills.
These attitudes are fueling the culture of excess and the plague of overconsumption.
The only reason we maintain reserves of the dollar is because of the fear that we may have to make rapid purchases of oil and it helps our businesses secure access internationally. If the international access is easier with Euros or Yuan, I imagine we will shift to reserves of those currencies.
I doubt anyone has a problem with keeping the dollar as a currency reserve, if they can buy what they want from the US. The big problem is no one can buy anything from the US and use it.
There is a number of serious economic disconnects we are seeing appear before us. The trust crisis in the credit chain is one example.
Another example is that the US wants the economies of India and China to grow. Unless these economies grow, there can be no stable structure for wealth creation in the world. There will simply be no place for the US to invest what money it does have - i.e. no one to buy their debt.
The US does not want these economies to have too much leverage either, because then they will dictate the price of energy globally. The energy price fixing scams that the US runs won't work and there will be real inflation in the US.
US made products are too energy inefficient. The Americans can't expect the rest of the world to have frustrated access to energy and buy energy inefficient crap from US sources. If the global economy is to function as a place where Americans can invest the loans they have given themselves, then the rest of the world has to be more productive with less energy input - i.e. it has to have higher energy efficiency.
What the Chinese have secured is exactly what we have been bargaining for - an end to curbs on purchases of technology and materials. Their response has been less than encouraging. The bulk of the Americans still think that India wants to make thousands of nuclear weapons just like the US did. They do not grasp that we are not in a position to waste our resources like that.
Today a belated realisation is appearing that the pricing of carbon energy is going to be an exceedingly difficult affair. They are finally admitting to the consumers in the US that the international price of energy will be dictated by market forces - i.e. the growth rates of the economies of China and India.
I am awaiting a growth in the realisation that this sort of bizarre attitude towards India cannot continue.
The last decade has been about one country after another telling the US that their way of doing things has certain limitations and unless they recognise these limitations, other countries will simply have to find review their partnerships with the US.
In some ways Musharraf's unwillingness to play the fool in this farce in Pakistan, and his strong propensity to go off script is evidence of this same tendency.
One wonders when the realisation that overproduction of dollars by the US Mint is a far more serious crisis than any that could be engineered with a few intalgios and fake plates, will sink in.
Perhaps this realisation will only come after the US goes to Iran. Aside of enhancing the desperado image the US seems keen on cultivating, a wider crisis of political trust, will ensue in the US and spiral into something far more time consuming than anything the a few dozen IEDs could manage. Perhaps such a churning inside the US could throw up some much needed new thinking.
Maverick:
>> New thinking
I don't know. The USians are incredibly smug about what they've achieved, and so they should be. But its not indestructable and Dubya and friends have made a spectacularly brilliant effort at bringing it all down. This is genius on a scale that dwarfs Pakee "tactical brilliance" any time.
The US' confidence stems from the fact that they have a number of trip wires in place. Some time back, the US under Reagan, (Ronney Raygun was a lot cleverer than people give him credit for!), set up a system to protect their stockmarket after the '87 crash called, colloquially, the Plunge Protection Team (PPT), and known formally as the "Presidents Working Group on Financial Markets".
These boys job is to ensure that stockmarket crashes are controllable to the extent that capital damage is minimized by ensuring the market a "rallies" quickly so that too much damamge isn't done.
These folks aren't solely govt. handout types. Their real job is to coordinate the big boys (including the japanese and Europeans) buying habits and the various analysts "analysis" to ensure the markets stay sensible. They've certainly been busy recently. Note the number of commentators who profess to be mystified by the stockmarkets behaviour while everything else crashes and burns around them?
See this, for example: http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/10/30/ccview30.xml
But all these trip wires are melting down *simultaneously*.
For example take the Japanese: People always wonder what it is that makes the japanese so loyal to their US Shogun. Well, there's a quite ordinary explanation for it.
After WW2, everyone knows that the US grabbed much of the Germans loot. What isn't as well known, is that they also got most of what the Japanese had looted from Asia. And remember the Japanese were in the looting business for much longer than the Germans, especially in China.
We all know of the famous agreement between the US and the Saudi family after WW2. What is less known is a similar agreement with that segment of the Japanese political class that would go on to become the LDP. And it's based on this loot. Like in Europe, the US used these funds to set up political alliances in Japan.
The loots was even given a name, it was called the "M Fund". They concentrated on those sections of the Japanese decision makers willing to play ball and these guys ended up forming the LDP. The M Fund was initially controlled by the US, then by both the US and Japanese (the LDP).
It was turned over fully to the Japanese, i.e. to the LDP, by Nixon, at which time it was said to be worth some $35 billion. A linear extrapolation of its current value would put that at damn near $500 billion today.
It's the M Fund thats the bedrock of the LDPs dominance in Japan. It's not Japan that looks on the US as its Shogun. It's the LDP. But the LDP is *the* power establishment in Japan. That needs to be kept in mind. When the US talks about the japanese "going their own way" etc, what they mean is a non-LDP govt. No LDP govt would ever do that it was thought.
Well, no LDP govt in prior years. But now the inconceivable is happening. A few straws in the wind. But they're there. For example, yesterday Gates was reduced to *publicly* asking (begging?) the Japanese to please send their naval tankers back to the Indian Ocean to support the refueling needs of the US Navy!!
US Money Flows
According to the US General Accounting Office, (GAO), the US Pentagon had incurred nearly $3.5 trillion of “undocumentable transactions,”. i.e. Money that's disappeared that no one can account for. That was *before* Sep 2001. For a number of years in fact, the US GAO used to publish a report called the "Financial Report of the United States", where you could find all sorts of interesting things. After 911, the US stopped disclosing the amount of "missing money" in the system.
But there is a way of tracking money flows in the US. See, whatever bullshit they tell everyone, they have to have access to the real data themselves. And given the semi-open nature of gross macro money flows, it is possible to figure out whats going on, if people know where to look.
And the place to look is the US Flow of Funds data. The Flow of Funds data is released by the US Fed quarterly and basically tracks financial and cash flows across the US economy on a sectoral basis. Its from here that you can see funds moving from capital sources through intermediaries such as the banks, mutual funds, etc, to end users. It's the most comprehensive data on money sources and sinks (i.e. end users) there is.
And it can be tracked cross sectorally.
For example the whole drugs and conflict economy cash. It was the US Dept of Justice that in the late 90's estimated those funds to be nearly $900 billion annually - that was damn near 7-8% of the then US economy. And it's from the Flow of Funds that you could deduce that a fair degree of the drugs cash was flowing into real estate because its a traditional area to shove cash surpluses into because as an industry it was unregulated and cash payments were both acceptable and traditional so large sums did get laundered through real estate.
And the fact that the Fed releases this regularly allows time series analysis of what's happening. Which is how the information on the role of New York banks in using conflict economy cash, especially the vast sums looted out of the Former Soviet Union during the 90s, to maintain their profibility was discovered.
Once you know where to look, the rest is just detail and some hard work. It also shows the financial catastrophe of the debt bomb in the making - and the mind boggling stupidity of Dubya and his friends.
Prior to Dubya taking over this stuff had clear bipartisan support in the US. For example, Citigroup was formed by Clinton and the Democrats from Citibank, Saloman Brothers and others, and gave the Democrats the same type of money firepower as the Republicans. (That's why they got Rubin back in as Chairman).
Even when Dubya first got in, he kept 4 and only 4 people from the Clinton administration in place. These were John Hawke, Comptroller of the Currency, Charles Rosotti, the IRS commissioner; David Walker the Comptroller General and CIA director George Tenet. i.e. the key folk necessary for the control of US fed credit, finances, audit and intelligence.
I don't think that was an accident. Then 911 happened and Dubya's people went apeshit. Thing is, going apeshit on the "enemy" is one thing, but their over-weening ambition appears to have seriously damaged the US' *own* power base.
>> Fund managers want stability in pakistan
Given thae nature of things at the moment, I ain't surprised. The US has placed itself in a trap. The only thing they have to sell is finance (i.e. us dollars) and weapons tech. But with Iaq, they've grabbed the energy heartland. They don't have to use iraqi oil. All they have to do is prevent us, the Chinese, the Euros and others from accessing cheap energy without their say so.
They, I think, focus on Iran for that reason. That's where the rest of the loot is, with the exception of Russia. And they can't do squat about Russia because of Russian resources and nukes, which makes Russia independent of the US. Their only hope in Russia is to pull a "color" revolution type trick and get the old Yeltsin type scum back in power. But Putin and his former KGB buddies have made that bloody difficult by, literally, "draining the swamp" by ensuring state control of resources.
Stability in Pakistan is crucial here. A fright that gets set of by something going wrong in Pakistan could bring their whole world crashing down.
An Iran war won't, because *everyone* who counts will know why the wars being fought. They'll simply wait to see if the US wins or loses. See that's a deliberate and supposedly "controlled" gamble. But pakistan going upside shows that control is *lost*.
Once control and therefore confidence is *lost*, their whole edifice could crumble - like the Soviet Unions.
There's another issue to if Pak goes hostile to the US. A hostile pakistan acting in concert with Iran could cause serious damage to oil flows out of the Gulf. More importantly, it would make the US utterly dependent on *India* using the IA to keep Pakistan in check, or to physically go in and clear the coastal areas. The US/West simply does not have the manpower to clear the Pak coast, or go in physically to Pak to control things.
Only we do.
The Anglo-American, European and Japanese financial systems are closely interlinked. But actual economic power is shifting to the Eurasian land mass through our and Chinas economies and the Russian and Iranian energy supplies. And at this crucial moment, the Americans who reckon they're the worlds best poker players, currently holding a bad hand, reckon they can still win simply by bluff and staring down anyone else.
We being polite folk are refraining from pointing out the Emperor has no clothes. And it appears we're willing to allow US capital a safe hidey hole in tough times, if they ask politely and not raise their voices ill-mannerdly. The Russians, Iranians and Chinese don't seem to have that hang-up. And the rest of the world seems to be simply waiting to see which way things go before taking a side.
Interesting times.
kg.
Hi Kg,
I think the financial channels for the rescue of the sort you have talking about is in the works. The Chinese just asked their banks to increase their reserves and two Chinese banks have been given direct access to the US market.
One sees a very obvious conflict over this decision. On the one hand the US will need the Chinese to bale them out financially and on the other hand they want to sit around talk trash about the poor quality products etc...
You know I bet you every poll that you could take among Americans would tell you that 77% of the people polled don't want to import stuff from China because they think it is dangerous, but less than 1% of the people would want to take a paycut in order to be competitive with the Chinese.
I imagine the Chinese would want to support this kind of behavior to the extent that they can avoid some kind complete collapse in the US market, but I can't see the Chinese going along with activities that are destructive to their own capital investments. Ultimately Chinese banks will pull the chain and diminish the ability to effectively campaign against Chinese products in the media. It will be interesting to see which media resources the Chinese will invest in first.
Incidently, ICICI has been given access to the US market at the same time.
I was a little surprised to see open discussions on US channels about how much white powder was streaming from Pakistan and the impact that instability would have on that. The amount of air time being given to BB is also interesting. She is being painted as someone who is rescuing Pakistan from utter disaster.
I still can't say whether this is part of an utterly idiotic feel-good exercise about Pakistan or if it is a more cynical setup where Benazir is being deliberately led up the same path of martyrdom that her father was taken along.
Maybe I am have been watching television for too long, but really this rubbish about "Bhutto the Saviour" is unwatchable. After it is shown in NDTV or IBN every fellow on the street asks about Bhutto and CJP as if these people matter somehow. I can't bring myself to pretend I care.
Hi Kg & M,
There is a saying in India that the sins of the father & forefathers have to be paid by the son. Either be sin or be it debt, G.W.Bush descendants will have to pay for what he and he precedecesors have done.
Hi All,
Sri. Raman has an article about the police-army interaction.
http://www.saag.org/papers25/paper2459.html
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