Saturday, January 19. 2008
A Check for Osama
Posted by Joerg Wolf in International Economics, Quotes on Saturday, January 19. 2008
Presidential candidate Mike Huckabee is right this time (via: Andrew Sullivan):
None of us would write a check to Osama bin Laden, slip it in a Hallmark card and send it off to him. But that's what we're doing every time we pull into a gas station.
The same is true for Europe, which is even more dependent on oil from the Middle East than the United States. Related posts in the Atlantic Review: The US-Saudi Relationship: Oil Supply at the Expense of US Security and Moral Values and Chicago Tribune: "Germany says 9/11 hijackers called Syria, Saudi Arabia"
SuperFrenchie presents the picture that says all about President Bush's latest Middle East tour. I am not aware of any European head of government having kissed Saudi princes. Bush does not just kiss the Saudis in their own country as a gesture to cultural customs, but even kisses the Saudis, when they visit him in the US. He also holds hands with them. And yet, Europeans are supposed to be the softy weasels from Venus that do anything to get cheap oil.
Perhaps a better analogy would have been to say that Saudi Arabia gets a few cents on every dollar of gasoline sold in the US.
Right now, both Canada and Mexico receive most of that dollar. Last time I looked, we didn't have any major issues with them that would lead the US to try to scupper their economies.
It no longer matters where the oil is pumped when it comes to purchasing oil. It's a global commodity. If the US decides to not buy oil from Country X, you can be sure that China or India or Europe or Japan will be pleased to do so. The same amount of money is being transferred to the same oil producers.
You are correct, of course, but it does not [b]feel[/b] good to be giving billions of dollars to a country like Saudi Arabia.
Besides, if we would not get our oil from Saudi Arabia, we (meaning Europe and the US) would not need to try to get some money back by selling modern weapons to this awful country.
Moreover, if we would get rid of our ME oil dependency and cancel all our commercial relations with Saudi Arabia, then China and India would get more oil from this country, as you point out. But: Perhaps Al Qaeda and all the other Anti-Western forces in the Arab world will then get angry at godless China and polytheist India for supporting the Saudi royal family. And we are off the hook, at least A LITTLE bit. No?
"The same is true for Europe, which is even more dependent on oil from the Middle East than the United States"
I agree. Even in the US, so many people, particularly on the brain-dead left (as opposed to the thoughtful left) believe that, because Europe uses less oil than the US, that the foreign policy of European countries are somehow immune to the need for oil. China's foreign policy certainly isn't immune either.
I don't know if something like [url=http://www.terrorfreeoil.org/projects/129Q.php]Terror-Free" Oil[/url] ever caught on in Europe? Other than the one gas station, it hasn't really caught on in the US.
As far as moral values go, we may be more "on the hook" for our trade with China, than for our trade with Middle East.
Much of the Chinese economy is based on slave labor, and anyone who trades with them is typically buying products that were produced, at least in part, by slaves. Morally, these goods are directly tainted.
Granted, oil revenues support the toxic Saudi educational system, as well as an international charity system that too often finances terrorism. Nevertheless, morally, middle eastern oil is less directly tainted, since as purchasers we don't actually benefit from the immoral acts of the supplier.
On the other hand, China is on a path that may one day result in it replacing slavery with full democracy. I see much less basis for this happening in the Middle East.
On the other, other hand, cutting off all trade with the Middle East and China would so increase the sum total of human suffering in the world, it would be morally even worse.
I have some ideas for what to do about these issues, but that would be a much bigger post that I am prepared to do right now...
It's hard to take seriously the ex-governor of a state that built one of the first ethanol plants, vai subsidies, in the US but like many other states refused to back the construction of either a refinery or a pipeline from the Gulf that could have lessened the Midwest's reliance on oil from Mexico or Venezuela. He didn't call for any new refineries, pipelines, utilizing currently available sources of power such as coal, oil shale or nuclear. He also didn't call for eliminating the ethanol subsidy, unlike Sen. McCain, which has proven to be one of the main causes of the high oil prices and the subsequent rise in prices dependent on petroleum products for fertilizers, medicines or even the fuel necessary to plant, grow, harvest and deliver the corn that used to go to the market and the feed lots.
In regards to Germany I'm certain that they are in the weakest position of all considering the continued closing of nuclear power plants and an ever increasing reliance on coal, natural gas and oil for its power needs. Germany will continue to be at the mercy of its commodity sources as it must for the foreseeable future import 90% of it natural gas and 80% of its oil.
Plus, John of Michigan, might want to consider the fate of Citgo which has been the victim of a completely off the radar boycott because of its connection to Venezuela's PDVSA. They have lost sales, market share and value and at least in California many of its franchisees have switched over to Valero. If something serious happened where the government of Saudi Arabia was proven to be complicit, not just assumed, there would be craters where gas stations that got petroleum from Saudi sources would have been.
To emphasize the lack of seriousness in most of Gov. Huckabee's proposals or at least to show how ineffective some of these new ideas are, is the leaking of an EC report on the EU's biomass fuel mandates. Like ethanol it is costly to build, to use and it uses even more power and farmland then assumed. But like the mohair and sugar subsidies in the US once these programs are put in place an act of God would be necessary to get rid of them. But seeing as how Europe likes to contrast its secularism against all those fundamentalist in the US God might not be interested in acting, "Deus et Machina."
Here's the new item concerning the negative biofuel report from the EC.
[url]http://www.rawstory.com/news/afp/Internal_EU_report_casts_doubt_on_01182008.html[/url]
One caveat should be that this seems not to be the final report which definitely could be massaged to produce a different resul and the newswire story doesn't really source the story so that it could be verified.
President Bush went to Riyadh not to promote democracy, but to beg for lower crude prices and sell $$billions of dollars of smart bombs to the authoritarian kingdom. In the process, he also ensured that nothing would stand in the way of Prince Alwaleed bin Talal acquiring a 15% equity stake in Citibank.
The fire sale of our once powerful financial institutions (Merrill, Citi, Morgan Stanley) to non-democratic governments is another sad legacy of this presidency.
Re: Huckabee. He has exposed a fault line in the Republican party. Huck will actually deliver to evangelicals what Bush promised but had no intention of delivering: the injection of the Bible into the Constitution and the transformation of America into a true Christian theocracy. That has been key to Huck's success so far.
The good news is when Hil-gal is elected she has promised the price of oil will immediately drop. What a leader she will be. Life is going to be so good. David will be so happy.,
The notion that petro-dollars are critical to terrorism financing is pure nonsense. It is feel good populism for the uninformed.
Terrorism is by military standards extremely low cost. A complete basketcase, bottom of the economic ladder nation such as North Korea or Somalia can on their own fund a very effective terror organization and campaign.
Modern Islamist terror is carried out by true believers working in small cells who often self-finance through fake charities or organized crime. The dumb cells get caught and the smart cells are poised for action.
How much do you think it cost to finance the 9/11 terror operation? Don't confuse funding an armed insurgency which costs big bucks to funding terror cells.
I disagree with Reid.
The only kind of terrorism I can think of that is cheap, is regional or "domestic" terrorism in regions that are already unstable to begin with, such as Darfur. I suppose operations like the [url=http://en.wikipedia.org/wiki/Beltway_sniper_attacks]Beltway sniper attacks[/url] were cheap, but they are not reliable, since purely self-motivated, self-trained and -financed types like this don't pop up often enough to keep people in terror.
Reliable, motivated suicide bombers that are capable of effective operations on a global scale, don't grow on trees, and they are a single-use weapon. They must be cultivated, nurtured if you will, and that requires two kinds of infrastructure.
The first kind is similar to traditional spy vs. spy: recruiters, training camps, training cadres, safe houses, laundered money, security, fake documents, diplomatic cover, ideological/religious support, etc. The second kind is the ability to wage information warfare. You must create or co-opt media outlets, you must have language skills and cultural (or in cases, even sub-cultural) literacy, and you must be able to assess the impact of your propaganda and tailor it appropriately.
What is the ratio of raw recruits to operational agents? It is higher than infantry, and probably as high or higher than the ratio of raw recruits to elite special forces.
Unlike special forces, in suicide operations, an operation is much more likely (approaching 100% chance!) to result in the destruction of the asset. There is no such thing as a "proven" or veteran suicide bomber!
Next, what is the ratio of successful to unsuccessful operations? 1:10? 1:100?
Because everything is cellular, co-ordination is a major challenge, there is a lot of duplicated effort, and it is hard to share knowledge of what works and what doesn't. There is a high incidence of blue-on-blue conflict ("friendly fire"), since the cells are competing for similar resources/opportunities and typically have no way of identifying each other; when they do identify each other, they may see the other cell as an enemy, or at least, an unworthy rival, due to the intense level of indoctrination required for suicide operations.
All this costs real money.
Granted, individual operations such as 9/11 probably cost less (maybe even much less) than a single, million-dollar cruise missile, for example.
But the ship or plane that launched the missile may be re-used the next day, while the support elements for 9/11 that survived our counter-operations, had to spend months or years deep underground before they can be reused.
Overall, 9/11 style operations are cheaper than traditional military operations, but they still require a great deal of cash.
Even a cursory examination of Al-Waleed bin Talal would have revealed him to be exactly the kind of moderate Saudi the US needs to court. He has donated millions of dollars to charity throughout the world, has taken many positions against the ruling orthodoxy in Saudi Arabia and his source of wealth is not petro dollars but a loan from his father and a second mortgage.
And as many news sources have pointed out that these travels to OPEC countries to jawbone for either lower prices or increased productivity is hardly confined to the current administration. Though eventually it would be hoped that any administration might see such requests as futile. And I really can't get excited about a Saudi or the Singaporeans upping their stake in Citigroup any more than the suicidal rush of American financial institutions in buying up failing Japanese and Indonesian banks. Caveat emptor!
The remaining issue is what else will Gov. Huckabee say to get elected that is not based on short sighted and content free populism. I suspect that even right now he has his speech writers cribbing huge sections out of William Jennings Bryant's famous "Cross of Gold Speech" to save his now failing campaign.
I hope you'll do your part to promote "moderation" in Saudi Arabia by opening a Citibank checking account.
Remember when Mayor Giuliani returned a $10 million check from Prince Al-Waleed which was earmarked for 9/11 victims' relief? The "moderate" prince suggested that the US brought on the attacks itself because of its Middle East policies.
Al-Waleed bin Talal is a Wahhabi, which come in two varieties with identical goals: 1) jihadis and 2) jihadis who have [b]temporarily[/b] given up violence until the time is right. There is nothing moderate about either variety.
If David's comment can be taken as saying that bin Talal is not a moderate, I find myself agreeing with David!
...
Sorry, I was distracted by [url=http://archives.cnn.com/2000/US/10/27/when.pigs.fly.ap/index.html]a flying pig[/url] just then.
"therapeutic companion pet"? Awesome.
Kudos, man, for talking about about rich Wahabis and pigs in one comment. Watch out for any fatwas in the mail.
My link to the flying pig story has gone dead. CNN sucks.
But it is a great story, and I want people to get the joke. So, [url=http://www.seattlepi.com/local/pigs281.shtml]here is the same story about flying pigs[/url] from the late, great, Seattle Post-Intelligencer. If that link doesn't work, [url=http://www.google.com/search?q=flying+pig+therapeutic+companion+pet]you can probably find the story from Google with this link[/url].
"None of us would write a check to Osama bin Laden"
Well, if you said "Sure I would - but only if he manages to hit them hard again!" to people on the street here, you would most likely gain an amused response. But since you guys would lynch me here, I better put it into quotation marks.
Tomorrow I will receive "Uncouth Nation" from Markovits at university - really locking forward to that one :)
In this picture it definitely looks like, sans foreplay, that Nicholas Sarkozy is getting ready to plant a wet one on the cheeck of one of the officials representing the UAE. One can only hope that he remembered Elizabeth's advice to the Baron in Young Frankenstein, "No tongue!"
[url]http://d.yimg.com/us.yimg.com/p/rids/20080115/i/r1387275253.jpg[/url]
Okay. Got me.
Well, he is French...
Yes, Joerg. It is difficult to imagine Angie kissing a sheik - or the sheik wanting one. Then again it's hard to imaing him wanting Bush or Sarkozy to. Sarko's new squeeze or wife or whatever she is might be another story.....
But it's different somehow with guys anyway. I could easily visualise Gerd doing it, can't you? He did it for Putin after all: some fellows have no discrimination... ;)
joe-You are definitely braver than me. With the possibility of a suspended dividend, an 83% drop in net income and the stock down over 50% this year makeing Citigroup, with another $8 to $11 billion in bad loans still on the books, as attractive as sticking something sharp in a vein to try to find out how fast I can bleed to death. Now Warren Buffet's new company which is buying mortgage insurers with the full muscle of Gov. Spitzer's office looks much more palatable. Or simply park the money in an ETF or even a CD.
Pat,
There is nothing really wrong with Citi brand. They got caught up like most of the banks. The real question - is all the bad news out. That is the unknown. One thing if history repeats the write downs are probably greater than what the real losses will be.
As you know the time to buy is when the sky is falling and there is blood in the streets. We are just about in a panic state worldwide with the markets. In this state fear is the driving force not logic or analysis. C is down more than 50% in the last 6 months. The downside from here is not that much more maybe 25%.
As to a bank ETF -KBE is not down as much and includes a bunch of banks that have yet to make large write downs. There is probably more risk there and less upside with little decrease in risk.
Either way you have about 24 months to take your gains or David and his pals will punish you for your investment. He would rather let China buy C than you and I.
Pat and Joe:
I would tend to agree with the premise that now is a good time to put some spare dough into Citi. The Saudis will not let their investment wither for vanity. The Gulf arabs actively boycotted American investment banks after 9-11 in response to the US invading Afghanistan. All that much about sharia-compliant investment vehicles at Radobank, Abn-Amro and RBS apparently didnt mollify the heavies or give them enough legal insulation from political risk to keep them happy.
All good points, that's why I put some in Goldman Sachs. But Citigroup looks extremely precarious and not particularly well run at this moment. The, more accurate, figure of $10.5 billion in nonperforming assets just makes me too nervous to take the plunge on Citi. If Citi can't unload those notes or the mortagage insurers can't pay then the Saudis, the Singaporeans and the Emirates are going to be taking an awful beating. And like the Japanese who bought Rockefeller Plaza may find it a little difficult to pick up their toys and go home. It wouldn't be the first time that some bankers that were regarded as uncouth American hillbillies went home with bags of dollars or euros and a promise made with convincing honesty that they would call in the morning.
Pat,
Had you purchased C at the opening on Tuesday, you would be up about 4 points on Wednesday's close. A nice percentage gain but surely not something that would make you rich. Still this gain would have pissed David off.
Be nice now because all those fascist plutocrats or Nick Leeson wannabes that run either David's retirement fund or 401 may have invested in Citi and in spite of what I thought of the stock may be basking in the quick gain.
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