Fire Hydrant of Freedom

At first glance, Citigroup's endorsement last week of a Senate plan to allow bankruptcy judges to break mortgage contracts looks like a scene from "Goodfellas."

 
APSince October, the government has invested $52 billion in Citi, while agreeing to eat up to $249 billion in losses on the bank's toxic real estate portfolio. And so it's really hard to say no when those Washington "investors" call for a favor. In the 1990 Martin Scorsese movie, a restaurant owner realizes too late that a partner big enough to protect him is big enough to take everything he has. As Ray Liotta narrates, "Now he's got Paulie as a partner. Any problems, he goes to Paulie. Trouble with a bill, to Paulie . . . But now he has to pay Paulie."

The problem with Citi's capitulation is that it means that not just Citi will have to pay the Beltway outfit if the bill passes. Other banks, borrowers and taxpayers will also suffer. In fact, this deal is looking more and more like a case of Citi colluding with its new political owners in order to force competing banks to break contracts and take more losses. This kind of politicized banking is precisely why the Bank of the United States was shut down in the 19th century.

After years of resisting, Citi has suddenly signed off on Senator Dick Durbin's plan to allow judges to rewrite mortgage contracts for borrowers in Chapter 13 bankruptcy. Under the Illinois Democrat's plan, which is earmarked for inclusion in the pending stimulus bill, judges could reduce the amount of principal, lower the interest rate, and change the length of the mortgage term.

Until Washington embraced the politics of housing panic, even sensible Democrats recognized that allowing such mortgage "cramdowns" was a terrible idea, sure to punish future borrowers with higher rates as lenders calculate the increased risk. The Congressional Budget Office warned in January 2008 that such a change could result in higher interest rates for homeowners and bigger caseloads in bankruptcy courts. In 2007, 16 House Democrats signed a letter opposing similar legislation.

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They realized that the consequences would fall hardest on those hoping to buy a home, if markets logically respond by setting mortgage interest rates closer to those on, for example, auto loans or credit cards. A bankruptcy judge is now free to reduce amounts owed on many types of consumer debt. For mortgages, the iron-clad requirement to pay off the loan or lose the house is precisely to encourage lower rates on a less risky investment.

Supreme Court Justice John Paul Stevens described the importance of this principle in 1993 in Nobelman v. American Savings Bank: "At first blush it seems somewhat strange that the Bankruptcy Code should provide less protection to an individual's interest in retaining possession of his or her home than of other assets. The anomaly is, however, explained by the legislative history indicating that favorable treatment of residential mortgages was intended to encourage the flow of capital into the home lending market."

Mr. Durbin argues that borrowers won't be able to enjoy the benefits of a cramdown until they first make an effort to negotiate new terms with their lenders before declaring bankruptcy. Also, to counter the perception that they are harming the mortgage market, Mr. Durbin and Senate colleagues Chris Dodd and Chuck Schumer are proposing that cramdowns only be available for mortgage contracts signed before their bill becomes law. But of course lenders will have every reason to assume that, whenever the going gets tough, Washington will let future borrowers break contracts too.

Mr. Durbin and his allies have tried and failed several times to break the cramdown opposition, and they believe Citi finally gives them the club to prevail. As Mr. Schumer noted in a press release, "Citigroup's support means that the dam has broken across the banking industry. We now have a real chance to pass this legislation quickly." Talking point number one for Democrats is that if giant Citigroup is for this plan, why would anyone oppose it?

In Today's Opinion Journal
 

REVIEW & OUTLOOK

Tehran's Strip Club

TODAY'S COLUMNISTS

The Americas: Dictatorship for Dummies
– Mary Anastasia O'GradyInformation Age: How the Music Industry Can Get Digital Satisfaction
– L. Gordon Crovitz

COMMENTARY

Charter Schools Can Close the Education Gap
– Joel I. Klein and Al SharptonTake It From McCain's Advisers: The GOP Would Raise Taxes
– Matt MillerWhy Russia Stokes Mideast Mayhem
– Garry KasparovThe U.S. Votes 'Present' at the U.N.
– John R. BoltonIn fact, Citigroup may support this plan precisely because it isn't a big player in the mortgage market. Sure, it has some dodgy mortgage-backed securities on its books, but they've been written down and the feds cover 90% of losses beyond $29 billion in any case. When it comes to making loans, however, Citi originates less than 10% of American mortgages.

Citi is falling further behind J.P. Morgan Chase, which acquired Washington Mutual; Wells Fargo, which acquired Wachovia; and Bank of America, which bought Countrywide. J.P. Morgan's mortgage business is now twice the size of Citi's, while Wells and BofA each originate almost three times as much dollar volume as Citi. So in agreeing to Mr. Durbin's offer, Citi is also volunteering its competitors to write down more mortgages, giving Citi a comparative advantage.

But the unintended consequences could make even Citi rue the day it got in bed with the goodfellas on Capitol Hill. If the possibility of this refinancing-via-bankruptcy encourages more people to declare bankruptcy, that would mean additional losses on Citi's credit cards and auto loans.

Having spent the past year committing taxpayer trillions to support American banks, Washington now seems not to mind at all if its latest bailout drives up bank losses on mortgages, credit cards and other loans. The Senate could soon make Paulie look like a reasonable business partner.

The announcement late Friday that Lloyds bank has admitted to illegally transferring Iranian money into the U.S. deserves more public attention. The deferred prosecution agreement is a victory for the Manhattan District Attorney's office despite backroom foot-dragging from the U.S. Treasury. And it's further evidence of how deadly serious Iran is in seeking to buy parts for its missile and nuclear programs.

 
APUnder Lloyds TSB Group's deferred prosecution agreement with District Attorney Robert Morgenthau and the Justice Department, the British bank will pay a $350 million fine and, most important, share all its records on the Iranian transfers. If Lloyds continues to cooperate, neither the bank nor its executives will be criminally prosecuted for violating the 1977 International Emergency Economic Powers Act, under which the U.S. has imposed sanctions on Iran.

State-owned Iranian banks Saderat and Melli have been barred from the U.S. financial system for their ties to terrorism and nuclear proliferation, respectively, and were specifically cited in the U.N. Security Council's most recent sanctions order against Iran. But for years, Lloyds and other financial firms helped Iran's rogue banks infiltrate the U.S. Why did Iran's banks need American dollars? In some cases they appear to have purchased items within U.S. borders. In others, law enforcement sources believe the banks were channeling billions in cash through U.S. banks to third countries to parties demanding payment in dollars.

Our sources say the money trail often began at the Iranian Central Bank, which sent funds to banks Melli and Saderat, as well as to Bank Sepah, which a U.S. Treasury official has called "the financial linchpin of Iran's missile procurement network." The U.K. branches or subsidiaries of the Iranian banks would send electronic messages via the Swift banking payments system to Lloyds and possibly other financial houses. Employees at Lloyds would then re-key the data into a new Swift message, carefully removing any reference to Iran or its banks. Employees at the British bank called this "stripping." The sophisticated screening software at American banks would have raised red flags if the true source of the funds had been revealed, but coming from a respected British financial institution, they weren't questioned.

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Lloyds admits to stripping for Iran from 2001-2004, though it may have begun in the 1990s and wasn't detected by law enforcement until early 2007. But one reason for deferring prosecution is that Lloyds's employees began to raise questions and convinced the bank's leadership to end the illegal Iranian transfers via London by April of 2004. Lloyds's offices in Dubai and Tokyo continued to facilitate Iranian money transfers into the U.S. until October of that year. Illegal transfers from Sudan, similarly disguised to evade sanctions but at much lower dollar amounts, occurred through 2007.

We're told that records of transfers back to London suggest that the Iranians sometimes used overnight deposits in the U.S. to take advantage of favorable interest rates. But American officials are also now in a race to track down all of the ultimate destinations. Mr. Morgenthau's office, which has led this effort, suspects that some funds may have been used to purchase raw materials for long-range missiles.

In Today's Opinion Journal
 

REVIEW & OUTLOOK

Bank of the United States

TODAY'S COLUMNISTS

The Americas: Dictatorship for Dummies
– Mary Anastasia O'GradyInformation Age: How the Music Industry Can Get Digital Satisfaction
– L. Gordon Crovitz

COMMENTARY

Charter Schools Can Close the Education Gap
– Joel I. Klein and Al SharptonTake It From McCain's Advisers: The GOP Would Raise Taxes
– Matt MillerWhy Russia Stokes Mideast Mayhem
– Garry KasparovThe U.S. Votes 'Present' at the U.N.
– John R. BoltonWe're also told that nine other banks are being investigated, including another British bank, a Swiss bank and a German bank. But since any illegal activity does not appear to have involved the U.S. subsidiaries of foreign firms, there is a question of how cooperative the foreign banks will be. The biggest potential payoff from Lloyds's cooperation should be when the bank identifies for U.S. law enforcers all of the wire transfers that originated in Iran, thus helping the CIA and FBI track them to their final destinations.

The size of this financial cover-up shows the lengths Iran has been going to evade sanctions and expand its military arsenal. Mr. Morgenthau has done a service in releasing the details, all the more so given the strange reticence of the U.S. Treasury. Treasury has long pushed for tough financial sanctions on Iran. Yet in this case it fought against criminal sanction, preferring only a civil judgment, and it argued for a lower fine. One possible explanation is that Treasury Secretary Hank Paulson didn't want to offend British regulators by coming down too hard on one of their banks. However, it strikes us that helping Iran cover up its weapons-buying is serious enough to deserve the criminal sanction. Treasury officials declined our repeated invitations to comment.

Iran continues to make progress on its nuclear program, and yesterday the New York Times reported that President Bush refused a recent Israeli request for weapons that could help in any military strike against Tehran's nuclear sites. Whether or not that proves to be an historic mistake, it increases the importance of financial pressure on Iran. President-elect Obama has said he wants to toughen sanctions against Iran, and his new Treasury team can help by cooperating more with Mr. Morgenthau's investigation.

 

 

Know that PJ O'Rourke is more libertarian than conservative and is side-splitting funny.   I think you will find him an enjoyable read.

Second post of the morning:

By DAVID B. RIVKIN JR. and BRUCE D. BROWN
The farce of foreigners suing Americans for defamation in overseas forums, where the law does not sufficiently protect free speech, is so well-known that it has a fitting nickname: libel tourism. And London is its hot destination. Particularly since 9/11, foreign nationals have cynically exploited British courts in an attempt to stifle any discussion by American journalists about the dangers of jihadist ideology and terrorist supporters.

At long last, U.S. politicians are waking up to the dangers posed by libel tourism, which threatens both the First Amendment and American national security. The trouble is that their efforts, though well-intentioned, are relatively toothless and constitutionally problematic.

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Early last year, New York State passed the nation's first anti-libel tourism law. The law allows state courts to assert authority over foreign citizens based solely on a libel judgment they have obtained abroad against a New Yorker.

The statute's passage was prompted by libel tourism's most frequent flier, Saudi bigwig Khalid bin Mahfouz. He brought a claim in England against author Rachel Ehrenfeld, who alleged in a 2003 book that the international moneyman also financed terrorism. Although "Funding Evil" was published in the U.S., Mr. Mahfouz relied upon (and the British court accepted) the fact that the book was purchased by a small number of British readers on the Internet as sufficient grounds to sue Ms. Ehrenfeld in England.

Under the New York law, the target of a foreign libel suit does not even have to defend himself overseas. If a judgment is entered against him, he can seek a declaration that the foreign tribunal did not live up to First Amendment standards and therefore its ruling cannot be enforced against his U.S. assets. While emotionally satisfying, it does not protect a libel tourism victim's assets outside the U.S.

Moreover, the New York law takes a constitutionally dubious approach to the acquisition of personal jurisdiction over libel tourists. U.S courts have never before claimed jurisdiction over individuals who have no ties whatsoever to the U.S., other than suing an American in a foreign court.

Rep. Peter King (D., N.Y.) and Sens. Arlen Specter (R., Pa.) and Joe Lieberman (I., Conn.) have been advancing federal libel tourism bills. Unfortunately these bills, which are modeled on New York's, carry the same constitutional risks.

It is a mistake to respond to libel tourism by seeking to catch foreign plaintiffs with no U.S. contacts in our jurisdictional net. This smacks of the same legal one-upmanship that makes libel tourism itself so odious.

It is high time for a strategy that would stop libel tourists dead in their tracks, without sacrificing constitutional values. The answer lies not in stretching claims of personal jurisdiction, but in federal legislation that would enable American publishers to sue for damages, including punitive damages, for the harms they have suffered. A proper federal libel tourism bill would punish conduct that takes place overseas -- in this case, the commencement of sham libel actions in foreign courts -- by utilizing the well-recognized congressional authority to apply U.S. laws extraterritorially when compelling interests demand it. The Alien Tort Statute, for example, gives U.S. courts subject matter jurisdiction over brutal acts that violate the "law of nations" wherever they may occur. More recently, Congress has created civil remedies to enable victims of international terrorism and human trafficking to sue in our courts for money damages.

But in devising a robust, substantive cause of action for damages -- a bludgeon that Messrs. King, Specter and Lieberman appropriately include in their bills -- Congress should not change normal personal jurisdiction rules. In order to sue foreigners under the federal libel tourism bill and remain consistent with due process, these individuals would have to visit or transact business in the U.S. in order for the U.S. courts to acquire jurisdiction over them. (Radovan Karadzic, the Bosnian Serb leader charged with genocide, was famously served with an Alien Tort complaint while leaving a Manhattan hotel restaurant.)

Under such a law, U.S. courts would be asked to evaluate, at the beginning stages of a foreign lawsuit, whether the plaintiffs are seeking to punish speech protected under the First Amendment. This type of early intervention by judges has worked very well in the 26 states that have passed laws to discourage frivolous libel suits here in the U.S.

To give this approach sufficiently sharp teeth, the damages awarded in libel tourism cases would have to be very substantial. While it is somewhat unusual in tort law to set statutory damages, it presents no constitutional problems. Accordingly, an effective federal bill should give courts the authority to impose damages that amount to double any foreign judgment, plus court costs and attorneys' fees (in both proceedings) for good measure. Habitual libel tourists who obviously seek to impair Americans' First Amendment freedoms should face even stiffer fines. Such a robust response would make foreign libel adventures fiscally disadvantageous, and should deter most overseas suits from ever being filed.

For libel tourists our courts can't fairly touch, it is better to leave them alone than to overreach and tread into unconstitutional territory. But they may yet pay a price. Availing themselves the pleasures of American life could one day be costly. As Karadzic learned, if you violate U.S. law, don't dine out in Manhattan.

Messrs. Rivkin and Brown are partners in the Washington, D.C., office of Baker Hostetler LLP.

http://www.michaelyon-online.com/red-flag.htm

That is both funny and scary. 

http://www.workingpitbull.com/

Profiles of valor: U.S. Marine Corps Capt. Brent Morel
United States Marine Corps Capt. Brent Morel of Martin, Tennessee, was a platoon commander with 1st Reconnaissance Battalion, 1st Marine Division during the first offensive in Fallujah as part of Operation Iraqi Freedom. On 7 April 2004, Morel's platoon encountered enemy fire from more than 50 insurgents. A rocket-propelled grenade crippled the lead vehicle in the convoy, and the platoon was besieged with mortar and machine gun fire. After ordering the last two vehicles to establish flanking positions for the convoy, Morel left his vehicle to lead an assault across an open field to maneuver into firing positions. His assault eliminated several enemy fighters. But seeing his fellow Marines pinned by enemy fire, he again left the safety of his position in order to counterattack. It was then that he issued his final order: "Cover me. We're assaulting through." Though he took out more enemy fighters, he fell mortally wounded. The Marines rallied and defeated the ambush, killing more than 30 terrorists.

When informed of his son's death, Mike Morel could only ask, "Was he in the front?" Yes, he was. He replied, "I always knew that's where he would be." For his bravery, Capt. Morel was posthumously awarded the Navy Cross. A second Navy Cross went to Sgt. Willie L. Copeland III, who fought alongside Morel that day.

Geopolitical Diary: From a Chill to a Freeze in Europe
January 8, 2009
Related Links
Russia, Ukraine: Update on the Natural Gas Cutoff

Russia raised the stakes in the natural gas crisis with Ukraine even higher on Wednesday by shutting off the last of the supplies piping into the country. The standoff has now lasted seven days, with a dozen states in Central, Southern and Eastern Europe seeing their imports shut down 100 percent, and a handful of other countries — like Germany and Italy — seeing the bulk of their supplies disappear.

Russia has changed the game from a simple threat to a possible real crisis. During Russia’s 2006 cutoff of natural gas to Ukraine (and subsequently to Europe), Moscow never cut supplies fully, and it only reduced the flow for two days, so the move had no real impact. It was meant to get Europe’s attention, not to concretely harm the Continent. Russia was letting the West know that it was time for Moscow to get Ukraine back under its umbrella, something that has been shaking out over the past few years.

The current crisis looked as if it were following the same path — until Wednesday, when Russia did not just prolong the cutoff, but expanded it into a full shutdown of supplies through Ukraine. Some European states — Serbia, Bulgaria, Macedonia and Bosnia — are shutting down industrial complexes and decreasing access to centralized heating, all while an arctic front moves across the Continent.

So far, the cutoff’s real effects are being felt only in the less-influential European states. Russia’s next step would be to prolong the cutoff, causing industries to close and heating supplies to dwindle in the more influential countries, like Germany. Russia might be just testing out its energy lever on the smaller states to see how long it takes to break them, before threatening (or actually inflicting) the same treatment on the more critical states.

The Russians have the Europeans at break point. Europe can’t bear a Russian natural gas cutoff for much longer. Even with all its energy diversification plans on the table, the fact is that Europe is still heavily dependent on Russian supplies for the next few years. The Europeans have issued ultimatums, held meetings and sent warnings to the Russians, but there is nothing concrete that they can do right now.

Europe’s next practical step would be accommodation. And the main target the Russians want the West to back off on is still Ukraine. A deal on scaling down Western influence in Ukraine won’t be struck within a day, but a more solid and prolonged reversal within Ukraine will be seen — most likely with the end result of a pro-Russian government being installed.

It seems that discussions on this topic already are under way; Stratfor has heard rumors that German Chancellor Angela Merkel, Ukrainian Prime Minister Yulia Timoshenko and Russian Prime Minister Vladimir Putin held a phone conference during the night. Merkel is struggling to make sure that the trap Russia has laid by freezing the Europeans isn’t sprung on Germany, and, at the moment, the price for such assurance is Ukraine.

But this does not mean Russia won’t ask for more than just Ukraine in the near future. Russia has a long laundry list of things it wants to accomplish before it is countered by a freed-up United States, including locking Germany into a neutral stance, restoring its hegemony in the Caucasus, starting up a crisis in the Baltic states and intimidating Poland. But for now (and only now), Russia will settle for Ukraine.

My understanding is that the true point is not deficit or not, but governmental burden on the economy.  Taxes might be paying for all spending, but if the overall % of GDP is too high, that is the problem.

WSJ
Like a Virgin: The Press Take On Teenage Sex Yes, attitudes do make a difference in behavior.
By WILLIAM MCGURN


The chain reaction was something out of central casting. A medical journal starts it off by announcing a study comparing teens who take a pledge of virginity until marriage with those who don't. Lo and behold, when they crunch the numbers, they find not much difference between pledgers and nonpledgers: most do not make it to the marriage bed as virgins.

Like a pack of randy 15-year-old boys, the press dives right in.

"Virginity Pledges Don't Stop Teen Sex," screams CBS News. "Virginity pledges don't mean much," adds CNN. "Study questions virginity pledges," says the Chicago Tribune. "Premarital Abstinence Pledges Ineffective, Study Finds," heralds the Washington Post. "Virginity Pledges Fail to Trump Teen Lust in Look at Older Data," reports Bloomberg. And on it goes.

In other words, teens will be teens, and moms or dads who believe that concepts such as restraint or morality have any application today are living in a dream world. Typical was the lead for the CBS News story: "Teenagers who take virginity pledges are no less sexually active than other teens, according to a new study."

Here's the rub: It just isn't true.

In fact, the only way the study's author, Janet Elise Rosenbaum of Johns Hopkins University, could reach such results was by comparing teens who take a virginity pledge with a very small subset of other teens: those who are just as religious and conservative as the pledge-takers. The study is called "Patient Teenagers? A Comparison of the Sexual Behavior of Virginity Pledgers and Matched Nonpledgers," and it was published in the Jan. 1 edition of Pediatrics.

The first to notice something lost in the translation was Dr. Bernadine Healy, the former head of both the Red Cross and the National Institutes of Health. Today she serves as health editor for U.S. News & World Report. And in her dispatch on this study, Dr. Healy pointed out that "virginity pledging teens were considerably more conservative in their overall sexual behaviors than teens in general -- a fact that many media reports have missed cold."

What Dr. Healy was getting at is that the pledge itself is not what distinguishes these kids from most other teenagers. The real difference is their more conservative and religious home and social environment. As she notes, when you compare both groups in this study with teens at large, the behavioral differences are striking. Here are just a few:

- These teens generally have less risky sex, i.e., fewer sexual partners.

- These teens are less likely to have a teenage pregnancy, or to have friends who use drugs.

- These teens have less premarital vaginal sex.

- When these teens lose their virginity they tend to do so at age 21 -- compared to 17 for the typical American teen.

- And very much overlooked, one out of four of these teens do in fact keep the pledge to remain chaste -- amid much cheap ridicule and just about zero support outside their homes or churches.

Let's put this another way. The real headline from this study is this: "Religious Teens Differ Little in Sexual Behavior Whether or Not They Take a Pledge."


Now, whatever the shock that might occasion at CBS or the Washington Post, it comes as no surprise to parents. Most parents appreciate that a pledge of virginity -- a one-time event that might be made at an emotional moment in a teen's life -- is not some talisman that will magically shield their sons and daughters from the strong and normal desires that grow as they discover their sexuality. What these parents hope to do is direct these desires in a way that recognizes sex as a great gift, which in the right circumstances fosters genuine intimacy between a man and a woman and at its freest offers the possibility of new life.

This is not the prevailing view, of course. And these parents know it. Far from conformists living in a comfortable world where their beliefs are never challenged, these families live in an environment where most everything that is popular -- television, the movies, the Internet -- encourages children to grow up as quickly as possible while adults remain locked in perpetual adolescence.

Nor do these families believe their children are better than other kids. Unlike the majority of health experts and their supporters in the press, however, they don't believe that the proper use of the condom is the be all and end all. For these parents, the good news here is that the striking behavioral differences between the average American teen and the two teen groups in this study show that homes and families still exert a powerful influence.

That, alas, is not something you're likely to read in the headlines. For when it comes to challenging the conventional wisdom on issues of sexuality, the American media suddenly become as coy as a cloistered virgin.

Write to MainStreet@wsj.com

 
"To cherish and stimulate the activity of the human mind, by multiplying the objects of enterprise, is not among the least considerable of the expedients, by which the wealth of a nation may be promoted."

--Alexander Hamilton, Report on Manufactures, December 1791
 

Virtually no one likes President Bush very much these days.  This thread is for saying why, defending him, informative articles on his record, and the like:

WSJ

By KARL ROVE

Mythmaking is in full swing as the Bush administration prepares to leave town. Among the more prominent is the assertion that the housing meltdown resulted from unbridled capitalism under a president opposed to all regulation.

 
APLike most myths, this is entertaining but fictional. In reality, Fannie Mae and Freddie Mac were among the principal culprits of the housing crisis, and Mr. Bush wanted to rein them in before things got out of hand.

Rather than a failure of capitalism, the housing meltdown shows what's likely to happen when government grants special privileges to favored private entities that facilitate bad actors and lousy practices.

Fannie and Freddie are "government-sponsored enterprises" (GSEs), chartered by Congress. As such, they had an implicit promise of taxpayer backing and could borrow money at rates well below competitors.

Because of this, the Bush administration warned in the budget it issued in April 2001 that Fannie and Freddie were too large and overleveraged. Their failure "could cause strong repercussions in financial markets, affecting federally insured entities and economic activity" well beyond housing.

Mr. Bush wanted to limit systemic risk by raising the GSEs' capital requirements, compelling preapproval of new activities, and limiting the size of their portfolios. Why should government regulate banks, credit unions and savings and loans, but not GSEs? Mr. Bush wanted the GSEs to be treated just like their private-sector competitors.

But the GSEs fought back. They didn't want to see the Bush reforms enacted, because that would level the playing field for their competitors. Congress finally did pass the Bush reforms, but in 2008, after Fannie and Freddie collapsed.

The largely unreported story is that to fend off regulation, the GSEs engaged in a lobbying frenzy. They hired high-profile Democrats and Republicans and spent $170 million on lobbying over the past decade. They also constructed an elaborate network of state and local lobbyists to pressure members of Congress.


When Republican Richard Shelby of Alabama, then chairman of the Senate Banking Committee, pushed for comprehensive GSE reform in 2005, Democrat Sen. Chris Dodd of Connecticut successfully threatened a filibuster. Later, after Fannie and Freddie collapsed, Mr. Dodd asked, "Why weren't we doing more?" He then voted for the Bush reforms that he once called "ill-advised."

But Mr. Dodd wasn't the only Democrat to heap abuse on the Bush reforms. Rep. Barney Frank of Massachusetts defended Fannie and Freddie as "fundamentally sound" and labeled the president's proposals as "inane." He later voted for the reforms. Sen. Charles Schumer of New York dismissed Mr. Bush's "safety and soundness concerns" as "a straw man." "If it ain't broke, don't fix it," was the helpful advice of both Sen. Thomas Carper of Delaware and Rep. Maxine Waters of California. Rep. Kendrick Meeks of Florida berated a Bush official at a hearing, saying, "I am just pissed off" at the administration for raising the issue.

Democrats had ready allies among lenders accustomed to GSEs buying their risky mortgages. For example, Angelo Mozilo, CEO of Countrywide Financial, complained that "an overly cumbersome regulatory process" would "reduce, or even eliminate, the incentives for the GSEs and their primary market partners."

It took Fannie and Freddie over three decades to acquire $2 trillion in mortgages and mortgage-backed securities. Together, they held $2.1 trillion in 2000. By 2005, the two GSEs held $4 trillion, up 92% in just five years. By 2008, they'd grown another 24%, to nearly $5 trillion. They held almost half of all American mortgages.

The more the president pushed for reform, the more they bought. Peter Wallison of the American Enterprise Institute and Charles Calomiris of the Columbia Business School suggest $1 trillion of this debt was subprime and "liar loans," almost all bought between 2005 and 2007. This bulk-up in risky paper made it possible for banks to lend imprudently on a massive scale.

Some critics blame Mr. Bush because he supported broadening homeownership. But Mr. Bush's goal was for people to own homes they could afford, not ones made accessible by reckless lenders who off-loaded their risk to GSEs.

The housing meltdown is largely a story of greed and irresponsibility made possible by government privilege. If Democrats had granted the Bush administration the regulatory powers it sought, the housing crisis wouldn't be nearly as severe and the economy as a whole would be better off.

That's why some mythmakers are so intent on denying that Mr. Bush worked to rein in the GSEs. But facts are stubborn things, as Ronald Reagan used to say, and in this instance, the facts support Mr. Bush and offer a harsh judgment on key Democrats. Perhaps that explains why so many in the media haven't told the real story.

Mr. Rove is the former senior adviser and deputy chief of staff to President George W. Bush.

 

Marginal tax rates IMHO are a matter of the deepest import.

Militant Islam Threatens Us All
Hamas rockets have the same terror goal as Hitler's blitz.Article
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By BENJAMIN NETANYAHU
Imagine a siren that gives you 30 seconds to find shelter before a Kassam rocket falls from the sky and explodes, spraying its lethal shrapnel in all directions. Now imagine this happens day after day, month after month, year after year.

If you can imagine that, you can begin to understand the terror to which hundreds of thousands of Israelis have been subjected. Three years ago Israel withdrew from every square inch of Gaza. And since that withdrawal, our civilians have been targeted by more than 6,000 rockets and mortars fired from Gaza. In the face of this relentless bombardment, Israel has acted with a restraint that other countries, faced with a similar threat, would find hard to fathom. Israel's government has finally decided to respond.

For this action to succeed, we must first have moral clarity. There is no moral equivalence between Israel, a democracy which seeks peace and targets the terrorists, and Hamas, an Iranian-backed terror organization that seeks Israel's destruction and targets the innocent.

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In launching precision strikes against Hamas rocket launchers, headquarters, weapons depots, smuggling tunnels and training camps, Israel is trying to minimize civilian casualties. But Hamas deliberately attacks Israeli civilians and deliberately hides behind Palestinian civilians -- a double war crime. Responsible governments do their utmost to minimize civilian casualties, but they do not grant immunity to terrorists who use civilians as human shields.

The international community may occasionally condemn Hamas for putting Palestinian civilians in harm's way, but if it ultimately holds Israel responsible for the casualties that ensue, then Hamas and other terror organizations will employ this abominable tactic again and again.

The charge that Israel is using disproportionate force is equally baseless. Does proportionality demand that Israel fire 6,000 rockets indiscriminately back at Gaza? Does it demand an equal number of casualties on both sides? Using that logic, one would conclude that the United States employed disproportionate force against the Germans because 20 times as many Germans as Americans died in World War II.

In Today's Opinion Journal
 

REVIEW & OUTLOOK

The Winter Gas WarWaiting for DoddA Charter Setback in Florida

TODAY'S COLUMNISTS

Business World: Mad Men
– Holman W. Jenkins Jr.The Tilting Yard: An Unrepentant New Dealer Runs for Congress
– Thomas Frank

COMMENTARY

Iran's Hamas Strategy
– Reuel Marc GerechtBoost Private Investment to Boost the Economy
– Hal VarianThe GOP Should Fight Health-Care Rationing
– Tom PriceIn that same war, Britain responded to the firing of thousands of rockets on its population with the wholesale bombing of German cities. Israel's measured response to rocket fire on its cities has come in the form of surgical strikes. To further root out Hamas terrorists in a way that minimizes Palestinian civilian casualties, Israel's army is now engaged in a ground operation that places its soldiers in great peril. Carpet-bombing of Palestinian cities is not an option that any Israeli leader will entertain.

The goal of this mission should be clear: To end the current round of missile attacks and to remove the threat of such attacks in the future. The only cease-fire or diplomatic initiative that should be accepted is one that achieves this dual objective.

If our enemies assumed that the Israeli public would be divided on the eve of an election, they were wrong. When it comes to exercising our most basic right of self-defense, there is no opposition and no coalition. We stand united against Hamas because we know that only by defeating Hamas can we provide security for our people and hope for a future peace.

We fight to defend ourselves, but in so doing we are also fighting a fanatical ideology that seeks to reverse the course of history and throw the civilized world back into a new dark age. The struggle between militant Islam and modernity -- whether fought in Afghanistan, Iraq, India or Gaza -- will decide our common future. It is a battle we cannot afford to lose.

Mr. Netanyahu, Israel's ninth prime minister, is the chairman of the Likud Party and its candidate for prime minister.

Whoops! 

Not sure what happened there-- what I meant to post was this:

Israel, Lebanon: Tehran Reins in Hezbollah
Stratfor Today » January 6, 2009 | 2143 GMT

ANWAR AMRO/AFP/Getty Images
Lebanese students in Beirut affiliated with Hezbollah protest Israeli operations in the Gaza Strip on Jan. 6Summary
While Israel has warned its people that a northern front with Lebanon could open up at the same time as the Israeli military is involved in the Gaza Strip, it appears Iran may be working to keep Hezbollah from opening a northern front.

Analysis
Related Special Topic Page
Israel, Syria and Lebanon: A Tangled Web
Hezbollah
As the Israel Defense Forces continued pounding Hamas targets in the Gaza Strip, six Israeli warplanes flew over Lebanon from the night of Jan. 5 through the morning of Jan. 6, reaching as far north as Sidon, according to the Lebanese army. The Israeli overflights occurred amid several warnings by the Israeli political and military leadership that another front could open up on Israel’s northern frontier with Hezbollah in Lebanon.

As Stratfor previously wrote, neither Hezbollah nor Israel is looking for a fight right now. Israel, focused on paralyzing Hamas, does not want to spread its forces thin by confronting Hezbollah. Meanwhile, Hezbollah is content with limiting its support to Hamas to helping maintain the Palestinian group’s supply lines and commanding several Hamas units in Gaza City. A debate has been taking place inside Hezbollah, however, regarding how much more Hezbollah should be doing in this Gaza crisis. More radical elements are arguing that another confrontation with Israel is inevitable, and that the group would be better off battling Israel in a two-front war.

It now appears that Hezbollah’s patrons in Iran are making sure such a scenario does not occur. To this end, Said Jalili, secretary of Iran’s Supreme National Security Council, visited Damascus and Beirut on Jan. 2-3. During his visit, he met with Hamas’ exiled leadership in Damascus, Hezbollah chief Sheikh Hassan Nasrallah and Ahmad Jibril, chief of the Popular Front for the Liberation of Palestine-General Command (PFLP-GC). According to a Stratfor source whose information has not been verified, Jalili made it abundantly clear in his meetings that Iran would not authorize Hezbollah to get any more involved in Israel’s war with Hamas.

Iran’s apparent need to restrain Hezbollah from provoking Israel represents a very different picture from 2006, when Iranian Islamic Revolutionary Guard Corps officers in Lebanon were believed to have played a direct role in escalating the conflict between Israel and Hezbollah into an all-out war. At that time, Iran was looking to flex its muscles and demonstrate to the United States, Israel and its Sunni Arab rivals that it had Shiite militant proxies under its control that could unleash chaos at Tehran’s will unless certain Iranian demands were met on key issues, like Iraq.

Tehran has proved its point, and in the current scenario Iran does not have much to gain from an Israeli-Hezbollah war. Not only would Hezbollah run the risk of becoming crippled this time around by a better prepared Israel Defense Forces, but Iran is also at a delicate negotiating stage with the incoming U.S. administration. Iran’s main focus is on consolidating the gains it has made thus far in expanding Shiite power in Iraq; having its primary militant proxy in the Levant come under fire would thus do little to further Iranian interests at this time.

But Iran is not only worried about Hezbollah popping a shot across the border. Jalili, according to the source, also sought to ensure that Hezbollah and the PFLP-GC prevent radical Sunni militants milling about in Lebanon from launching a rocket attack on northern Israel. The Iranians apparently are concerned that these Sunni militants, the bulk of whom are either on the payroll of Syrian or Saudi intelligence, could attempt to drag Hezbollah into an all-out war with Israel. There are reportedly hundreds of Sunni sleeper cells in southern Lebanon, most of which are in the Palestinian refugee camps of Rashidiyye and Burj al-Shimali, with others sprinkled throughout several Sunni villages in the deep south.

While the probability of hostilities breaking out on Israel’s northern frontier remains low, there is still a chance for militants outside Iran’s and Hezbollah’s command to open up a new front. Iran does not appear to be taking any chances, but neither is Israel. If an attack is launched from the north, the Israelis will not hesitate to respond

Wednesday Chronicle
Vol. 09 No. 01
7 January 2009

THE FOUNDATION
"All men having power ought to be distrusted to a certain degree." --James Madison

THE DEMO-GOGUES
Hope 'n' change: "The number one goal of my plan ... is to create three million new jobs, more than 80 percent of them in the private sector." --Barack Obama on creating 600,000 new government jobs

"Potentially we've got trillion-dollar deficits for years to come, even with the economic recovery that we are working on at this point. We're going to have to stop talking about budget reform. We're going to have to totally embrace it. It's an absolute necessity." --Barack Obama on "budget reform," by which he means slashing national defense spending

The Democrats finally have the country where they want it: "The economy is in much worse shape than we thought it was in. There is no short run other than keeping the economy from absolutely tanking. That's the only short run." --Joe Biden

Life's rough: "I can't go to my own barbershop now. I've got to have my barber come to some undisclosed location to cut my hair." --Barack Obama

Everybody's innocent: "I'm here to tell you right off the bat that I am not guilty of any criminal wrongdoing, that I intend to stay on the job, and I will fight this thing every step of the way. ... As governor I am required to make this appointment." --Illinois Gov. Rod Blagojevich on appointing professional narcissist Roland Burris to fill Barack Obama's Senate seat

Power play: "[T]here's clearly legal authority for us to do whatever we want to. This goes back for generations. ...[There is] a cloud over anyone that comes from the state of Illinois being appointed by [Gov.] Blagojevich." --Senate Majority Leader Harry Reid

Hurt feelings: "[Rick] Warren compared same-sex couples to incest. I found that deeply offensive and unfair. If [Barack Obama] was inviting the Rev. Warren to participate in a forum and to make a speech, that would be a good thing, but being singled out to give the prayer at the inauguration is a high honor. It has traditionally given as a mark of great respect. And, yes, I think it was wrong to single him out for this mark of respect." --Rep. Barney Frank (D-MA)

UPRIGHT
"According to a just published report (from the Pew Research Center), more Americans today call themselves conservative than liberal, and the relative percentages in each category has hardly changed since George W. Bush was elected to his first term in 2000. Thirty-eight percent of Americans self-identify as conservative, 21 percent as liberal, and 36 percent as moderate." --columnist Star Parker

"From the dawn of the Progressive Era, politicians have sought to minimize the Constitution whenever it got in the way. When the Supreme Court rejected President Franklin D. Roosevelt's New Deal programs, he threatened to expand and pack the court with more progressive minds. Suddenly, what was previously unconstitutional became constitutional. After seventy years of emasculating the Constitution, it is time for politicians to respect it rather than roll it out as a media prop." --columnist Matt Mayer

"Republicans can be successful by having better ideas than Pelosi, Reid and the Democrats in the House and Senate, not by just being opposed to what the majority is proposing." --Rich Galen

"Bernard Madoff, who stands accused of bilking sophisticated investors out of $50 billion, is reported to have told two of his executives that his business was 'a giant Ponzi scheme.' Politicians go on and on about Wall Street 'greed' and 'irresponsibility.' But Madoff's scam was small compared to Ponzi schemes the government itself runs: Social Security and Medicare. In reality, our money, rather than being invested and kept in an actual 'trust fund,' is immediately given to current retirees in Social Security benefits or to their healthcare providers in Medicare benefits. The government's promise to pay for your retirement pension and medical care is just a promise. And a lie." --John Stossel

"It's often pointed out that Hamas does not recognize Israel's right to exist. It's more than that. Hamas, with Iran's backing, is committed to Israel's violent destruction." --columnist Mona Charen

INSIGHT
"A lie would have no sense unless the truth were felt dangerous." --Austrian psychologist Alfred Adler (1870-1937)

"Most of the change we think we see in life is due to truths being in and out of favor." --American Poet Robert Frost (1874-1963)

"Life is not holding a good hand; Life is playing a poor hand well." --Danish proverb

EDITORIAL EXEGESIS
"Many of those who voted for [Barack Obama] either dismiss the terrorist threat, or believe none exists. Still worse, some think we should placate our enemies, not vanquish them. That's why a new report from Homeland Security chief Michael Chertoff is more than a little disquieting. It suggests that the U.S. faces a real prospect of a serious terror attack sometime in the next five years, particularly from a biological weapon of some sort. 'The threat of terrorism and the threat of extremism has not abated,' Chertoff recently said. And that's not just rhetoric. The Homeland Security Threat Assessment for 2008-2013, leaked to the Associated Press late last week, predicts that terrorists will try some sort of biological weapon on the U.S. in the next five years -- an attack that could overwhelm our health care system, leading to devastating consequences for our economy. The report goes on to warn of outside terror groups such as al-Qaida using our porous borders and poor controls to place terrorist cells inside the United States. Sound unlikely? Recall that just two days before Christmas, five Muslim immigrants were convicted for plotting to kill U.S. soldiers at Fort Dix, N.J. It's already here. ... The worst thing that could happen, we fear, is that Obama comes in with a mandate to spend upward of $1 trillion on a stimulus package and then decides to at least partly finance it by cutting defense and anti-terror measures to the bone. There are already warning signs in Obama considering abandoning missile defense and other advanced defense systems, while our potential foes plunge full speed ahead. And his aides suggested the Pentagon's request for 30,000 more troops might be rejected. With Russia boosting its defense outlays by 40% while it builds its nuclear arsenal, China intent on having a blue-water navy to challenge the U.S., and the terrorist threat unabated, it wouldn't be wise to cut back on defense or anti-terrorist efforts right now." --Investor's Business Daily


 

DEZINFORMATSIA
Gag reflex kicking in: "The sun glinted off chiseled pectorals sculpted during four weightlifting sessions each week, and a body toned by regular treadmill runs and basketball games." --Washington Post reporter Eli Zaslow on Barack Obama's workout habits

Like, dude, he's so awesome: "We're actually talking about how a lot of people think that President-elect Barack Obama is the epitome of cool. Look at that guy. Everything, I mean, even in a baseball cap. Don't you think?" --CBS's "Early Show" co-host Tracy Smith

You asked for it, you got it: "Obama has spent most of his vacation secluded in his oceanfront rental home, some days emerging only to get in that daily workout, where he always draws crowds. In an interview with 60 Minutes just after his election, Obama was already lamenting the loss of the simple things." --NBC correspondent Savannah Guthrie

Wouldn't want to "distract": "Obama's coming into office with a very ambitious agenda, and if you add together what's going on with [Bill] Richardson right now with the [Rod] Blagojevich scandal, is that going to be a distraction in the key early days?" --ABC anchor Dan Harris

Sad commentary: "Quietly, as the United States presidential election and its aftermath have dominated the news, America's three broadcast network news divisions have stopped sending full-time correspondents to Iraq." --The New York Times

Newspulper Headlines:

Our New Year's Resolution: Watch More Television: "Reading Raises Property Taxes 5 Percent" --Reading (PA) Eagle

We Blame Global Warming: "Twin Cities Streets an Icy Mess; Who's to Blame?" --Star Tribune (Minneapolis)

Not to Mention Guns and Religion: "In Tough Times, Americans Cling to Christmas Trees" --Reuters

Wow, That Is Turbulent!: "Oil Rises on Quiet Trading to Cap Turbulent Year" --Associated Press, Dec. 31 ++ "Oil Falls on Quiet Trading to Cap Turbulent Year" --Associated Press, Dec. 31

News You Can Use: "Forget the Economy: Killer Asteroids Could Pose Real Danger" --McClatchy Newspapers

Bottom Stories of the Day: "Obama-Inspired Hope Goes Only So Far in Kenya" --Los Angeles Times

(Thanks to The Wall Street Journal's James Taranto)

VILLAGE IDIOTS
Days of Our Lives -- Minnesota: "After 62 days of careful and painstaking hand-inspection of nearly 3 million ballots, after hours and hours of hard work by election officials and volunteers around the state, I am proud to stand before you as the next senator from Minnesota." --wannabe comedian Al Franken

As the World Turns -- Illinois: "I am a United States senator. They can't stop me from doing my senatorial duties." --Illinois Senator-appointee Roland Burris with reference to the Senate Democrat leadership unwilling to allow him to be seated ++ "We are hoping and praying that they will not be able to deny what the Lord has ordained. I am not hesitating. I am now the junior Senator from the state of Illinois. Some people may want to question that and that is their prerogative." --Roland Burris

Young and the Restless -- New York: "I'm really coming into this as somebody who isn't, you know, part of the system, who obviously, you know, stands for the values of, you know, the Democratic Party. ... I know how important it is to, you know, to be my own person. ... It's really, you know, it's not about just the Kennedy name. It's about my own work and what I've done with those values." --Caroline Kennedy, who is almost as eloquent as Barack Obama, on seeking Hillary Clinton's Senate seat **Kennedy used the words "you know" an astounding 168 times in this interview.

Strange comparisons: "I don't think it's appropriate. It's like putting, you know, [Dick] Cheney in charge of gun control. It's wrong ... it's just wrong." --co-host of "The View" Joy Behar on Barack Obama's choice of pastor Rick Warren for the invocation at his inauguration

"The destruction of the Jews in Israel has been assured with this inhuman attack on civilians in Gaza. Exactly as its Nazi mentors did to the Jews of Warsaw, Israel now bombs innocent civilians who have been imprisoned in concentration camps in Gaza! ... The Zionists look German! The Palestinians look like the Jews of Poland!" --"comedienne" Roseanne Barr

SHORT CUTS
"Observes a perceptive author of a letter to the editor of the New York Times: 'It's amusing that Andrew M. Cuomo, who owes his whole career to his dad, may not get the Senate seat of Hillary Rodham Clinton (who owes her whole career to her husband) because David A. Paterson (who owes his whole career to his dad) may give it to Caroline Kennedy (who owes her whole career to her dad). You would think a state as large as New York could find someone who deserves something on his or her own." --Washington Times editor Wesley Pruden

"n the past few years, we have seen any number of rather obnoxious individuals called to our nation's capitol so that members of the House and Senate could grill them in front of the TV cameras. And while I would normally enjoy watching tobacco, oil and car company CEOs, along with steroid-using baseball cheats, publicly embarrassed, that's not how it's worked out. Instead, because the politicians are so disgustingly arrogant and self-righteous, it's hard not to view their victims in a sympathetic light. All I know is if I were ever guilty or even suspected of a crime, I would certainly want to be attacked by the likes of Christopher Dodd, Charles Schumer and Barney Frank." --columnist Burt Prelutsky

"A question for you in the Drive-By Media. Why do you think Israel would attack Gaza? Is it for their national treasure? Is it because they want all of the scientific discoveries that are being made by Hamas intellectuals?" --radio talk show host Rush Limbaugh

"Barack Obama's Hawaii vacation compound was ringed Monday by Palestinians who are angry about his support for Israel. You can imagine their disappointment. Not only is he the first black president, he's the first guy named Hussein to back Israel." --comedian Argus Hamilton

Jay Leno:

For the next two weeks, President-elect Barack Obama will be living full-time at a hotel right across the street from the White House. This is historic because this is the first time a Democrat has checked into a Washington hotel room under his own name.

Bernie Madoff has been charged with swindling people out of $50 billion. I don't want to say he's unpopular, but [over Christmas] as he was walking in New York, he passed a manger scene and Joseph threw a sandal at him.

Congress says they're looking into the Bernie Madoff scandal. So the guy who made $50 billion disappear, is being investigated by the people who made $750 billion disappear.

In an interview with The Washington Times, Vice President Dick Cheney said he is not a big fan of rap music. I was stunned by that. He gets driven around in a limo; he's surrounded by bodyguards; he shot a guy in the face -- he is a rap star!


*****

http://online.wsj.com/article/SB123128812156759281.html?mod=rss_opinion_main

JANUARY 7, 2009
Iran's Hamas Strategy
Radical Shiites back radical Sunnis with the aim of destabilizing the Middle East.

By REUEL MARC GERECHT

Anyone who knows anything about the Middle East knows that Sunni and Shiite radicals don't work together -- er, except when they do. Proof that the conventional wisdom is badly wrong is on offer in Gaza, where the manifest destiny of the Islamic Republic of Iran is now unfolding. Tehran has been aiding Hamas for years with the aim of radicalizing politics across the entire Arab Middle East. Now Israel's response to thousands of Hamas rocket provocations appears to be doing just that.

AP
Iranian President Mahmoud Ahmadinejad attends an anti-Israeli demonstration in Tehran, Dec. 12, 2008. A poster at rear shows the late spiritual leader and founder of the Hamas movement, Sheik Ahmed Yassin.

Born in the 1980s from the ruins of the Palestine Liberation Organization's corrupt and decaying secular nationalism, Hamas is a grass-roots, Sunni Islamist movement that has made Shiite Iran a front-line player in the Israeli-Palestinian conflict. Before Hamas, the mullahs had financed the Palestine Islamic Jihad, whose holy warriors became renowned suicide bombers. But Islamic Jihad has always been a fringe group within Palestinian society. As national elections revealed in 2006, Hamas is mainstream.

Although often little appreciated in the West, revolutionary Iran's ecumenical quest has remained a constant in its approach to Sunni Muslims. The anti-Shiite rhetoric of many Sunni fundamentalist groups has rarely been reciprocated by Iran's ruling elite. Since the death in 1989 of Ayatollah Ruhollah Khomeini, the charismatic, quintessentially Shiite leader of the Islamic revolution, Iran's ruling mullahs have tried assiduously to downplay the sectarian content in their militant message.

Khomeini's successor, Ali Khamenei, has consistently married his virulent anti-American rhetoric (Khomeini's "Great Satan" has become Khamenei's "Satan Incarnate") with a global appeal to faithful Muslims to join the battle against the U.S. and its allies. Ali Akbar Hashemi Rafsanjani, the most politically adept of the revolution's founding clerics, loved to sponsor militant Sunni-Shiite gatherings when he was speaker of parliament and later as president (1989-1997). He and Mr. Khamenei, who have worked hand-in-hand on national-security issues and have unquestionably authorized every major terrorist operation since the death of Khomeini in 1989, have always been the ultimate pragmatists, even reaching out to Arab Sunni radicals with a strong anti-Shiite bent.

The most radical branch of the Egyptian Islamic Jihad Organization and its most famous member, Ayman al-Zawahiri, became favored Arab poster boys for the clerical regime in the 1980s and 1990s even though Islamic Jihad, like other extremist takfiri Sunni groups, damns Shiites with almost the same gusto as it damns Western infidels. The laissez-passers that Iran gave members of al Qaeda before Sept. 11, 2001 (see the 9/11 Commission Report), the training offered to al Qaeda in the 1990s by the Lebanese Shiite Hezbollah (again, see the report), and the "detention" of senior members of al Qaeda fleeing Afghanistan after the American invasion are best seen against the backdrop of clerical Iran's three-decade long outreach to radical Sunnis who loathe Americans more than they hate Shiites.

In 2003, Iran launched two Arabic satellite TV channels both under the guidance of the former Revolutionary Guards commander Ali Larijani, a well-dressed, well-trimmed puritan with a Ph.D. in philosophy who crushed a brief period of intellectual openness in Iran's media in the early 1990s. A favorite of Mr. Khamenei, Mr. Larijani pushed TV content extolling Hamas, anti-Israeli suicide bombers, anti-Semitism and an all-Muslim insurgency in Iraq. Iran's remarkably subdued rhetoric against Arabs who gave loud support to insurgents and holy warriors slaughtering Iraqi Shiites between 2004 and 2007 is inextricably tied to Tehran's determination to keep Muslim eyes focused on the most important issue -- the battle against America and Israel. Iran's full-bore backing of Hezbollah in the July 2006 war with the Jewish State, a conflict that Tehran and its Syrian ally precipitated by their aggressive military support of Hezbollah, drew Sunni eyes further away from Iraq's internecine strife.

The 2006 Lebanon war, which lasted 34 days and saw Hezbollah's Iranian-trained forces embarrass the Israeli army, made Tehran's favorite Arab son, Hezbollah leader Hassan Nasrallah, one of the most admired men in the Sunni Arab world. This was a remarkable achievement given that Hezbollah had helped Iran train some of the Iraqi Shiite militants who were wreaking a horrific vengeance against Baghdad's Sunni Arabs in 2006 -- a bloodbath that was constantly on Arab satellite television.

Prominent Sunni rulers -- Egypt's Hosni Mubarak and Jordan's King Abdullah -- have railed against a "Shiite arc" of power forming in the Near East, only to see few echoes develop outside of the region's officially controlled media. Although the Sunni Arab rulers have sometimes shown considerable anxiety about the prospect of an Iranian nuclear weapon, Sunni fundamentalist organizations affiliated with Egypt's Muslim Brotherhood, the mother ship for Sunni Islamists, have been much more restrained in expressing their trepidation.

With strong ties to its fundamentalist brethren along the Nile, Hamas has given Iran (really for the first time, and so far at little cost) an important ally within the fundamentalist circles of the Muslim Brotherhood. One of the Islamic revolution's great disappointments was that it failed to produce more allies within the Egyptian Muslim Brotherhood and its many offshoots.

The revolution certainly inspired many within the movement in Egypt and in Syria. But Iran's ties to the ruling Syrian Allawite elite -- a heretical Shiite sect that Sunni fundamentalists detest -- complicated its outreach to Sunni militants. When Syria's dictator Hafez Assad slaughtered thousands of Sunni fundamentalists in the town of Hama in 1982, and revolutionary Iran remained largely silent, Tehran's standing within the Muslim Brotherhood collapsed.

With Hamas, Iran has the opportunity to make amends. The mullahs have a chance of supplanting Saudi Arabia, the font of the most vicious anti-Shiite Sunni creed, as the most reliable backer of Palestinian fundamentalists. Even more than the Lebanese Hezbollah, which remains tied to and constrained by the complex matrix of Lebanese politics, Hamas seems willing to absorb enormous losses to continue its jihad against Israel. Where Saudi Arabia has been uneasy about the internecine strife among Palestinians -- it has bankrolled both Hamas and the Palestinian Authority of Mahmoud Abbas -- Iran has put its money on the former.

Although Fatah, the ruling party within the Palestinian Authority, may get a second wind thanks to the excesses of Hamas and the Israelis' killing much of Hamas's brain power and muscle, it is difficult to envision Fatah reviving itself into an appealing political alternative for faithful Palestinians. Fatah is hopelessly corrupt, often brutal, and without an inspiring raison d'être: a Palestine of the West Bank and Gaza is, as Hamas correctly points out, boring, historically unappealing, and a noncontiguous geographic mess. Fatah only sounds impassioned when it gives vent to its anti-Israeli, anti-Semitic, profoundly Muslim roots. It's no accident that the religious allusions and suicide bombers of Fatah and Hamas after 2000 were hard to tell apart. If Hamas can withstand the current Israeli attack on its leadership and infrastructure, then the movement's aura will likely be impossible to match. Iran's influence among religious Palestinians could skyrocket.

Through Hamas, Tehran can possibly reach the ultimate prize, the Egyptian faithful. For reasons both ancient and modern, Egypt has perhaps the most Shiite-sympathetic religious identity in the Sunni Arab world. As long as Hamas remains the center of the Palestinian imagination -- and unless Hamas loses its military grip on Gaza, it will continue to command the attention of both the Arab and Western media -- Egypt's politics remain fluid and potentially volatile. Tehran is certainly under no illusions about the strength of Egypt's military dictatorship, but the uncertainties in Egypt are greater now than they have been since the assassination of Anwar Sadat in 1981.

President Hosni Mubarak, Sadat's successor, is old and in questionable health. His jet-setting son or a general may succeed him. Neither choice will resuscitate the regime's legitimacy, which has plummeted even among the highly Westernized elite. The popularity and mosque-power of the Muslim Brotherhood, which would likely win a free election, continues to rise. A turbulent Gaza where devout Muslims are in a protracted, televised fight with the cursed Jews could add sufficient heat to make Egyptian politics really interesting. The odds of Egypt cracking could be very small -- the police powers of the Egyptian state are, when provoked, ferocious -- but they are now certainly enough to keep the Iranians playing.

Where once Ayatollah Khomeini believed in the revolutionary potential of soft power (Iran's example was supposed to topple the pro-American autocrats throughout the Middle East), Khomeini's children are firm believers in hard power, covert action, duplicity and persistence. With Gaza and Egypt conceivably within Tehran's grasp, the clerical regime will be patient and try to keep Gaza boiling.

It is entirely possible that Tehran could overplay its hand among the Palestinians as it overplayed its hand among Iraqi Shiites, turning sympathetic Muslims into deeply suspicious, nationalistic patriots. The Israeli army could deconstruct Hamas's leadership sufficiently that Gaza will remain a fundamentalist mess that inspires more pity than the white-hot heat that comes when jihadists beat infidels in battle. But with a nuclear-armed Iran just around the corner, the mullahs will do their best to inspire.

Ultimately, it's doubtful that Tehran will find President-elect Barack Obama's offer of more diplomacy, or the threat of more European sanctions, to be compelling. The price of oil may be low, but the mullahs have seen worse economic times. In 30 years, they have not seen a better constellation of forces. And as the Shiite prayer goes, perhaps this time round the Sunnis, too, inshallah (God willing), will see the light.

Mr. Gerecht, a former Central Intelligence Agency officer, is a senior fellow at the Foundation for Defense of Democracies.

Iraq: Stability and Boosting Oil Production
Stratfor Today » January 7, 2009 | 0017 GMT

ALI AL-SAADI/AFP/Getty Images
Iraqi Oil Minister Hussein al-ShahristaniSummary
Iraq’s oil minister has announced a new tender for the development of 11 major energy fields. The tender is part of a plan to restore — and expand upon — Iraq’s status as a major energy exporter. Whether the plan succeeds, however, depends upon Baghdad’s ability to maintain domestic stability.
 
Iraqi Oil Minister Hussein al-Shahristani on Dec. 31 announced a new international tender for the development of 11 major energy (mostly oil) fields as part of an effort to increase oil production. This second bid round comes six months after the first round of bidding was opened; six oil and two natural gas fields were offered for development in the first round. Al-Shahristani said developing the two sets of fields should allow Baghdad to increase production from its current 2.5 million barrels per day (bpd) to some 6 million bpd in the next four to five years. The Iraqi government plans to sign the contracts of the first round in mid-2009, while the second round is to be concluded by the end of the same year.

(click image to enlarge)

The 11 fields are Majnoon, West Qurna Phase 2, Halfaya, Gharraf, Badrah, East Baghdad, Kifl/West Kifl/Merjan, Qamarim/Gullabat/Naudman, Najmah/Al-Qayara, Khashm al-Ahmar, and Siba (the last two are natural gas fields). Each field is in a politically sensitive area. Majnoon, West Qurna Phase 2, Halfaya, Gharraf, Kifl/West Kifl/Merjan, Khashm al-Ahmar, and Siba are located in southern provinces where rival Shiite factions are pitted against one another. The East Baghdad field in the capital is in a stronghold of the al-Sadrite movement. The Najmah/Al-Qayara field is in Ninawa province contested between the Kurds and the Sunnis. Khashm al-Ahmar and the Qamarim/Gullabat/Naudman field is in the communally mixed Diyala province.

In addition to the domestic issues, three of the fields are jointly owned with neighboring Iran and Kuwait. Majnoon and Badrah are located on the Iran-Iraq border, while Siba is on the Iraq-Kuwait border. Developing them will require agreements between Iraq and its two neighbors, something that will be complicated by a row over oil fields that led to the 1990 Iraqi invasion of Kuwait and by Iranian interests in Iraq.

Political and security conditions allowing, the development of these fields could allow Iraq to re-emerge as a major oil-exporting state. Despite the global economic downturn, Iraq is the one place that could attract investment from global energy majors given the low cost of development and the potential for success.

As much as 80 percent of Iraq’s energy resources have long remained untapped. Whatever development took place occurred before the former Iraqi dictator Saddam Hussein became president in 1979. From there onward, Iraq’s links to the wider world became constrained. The process began with the 1980-88 war with Iran and exacerbated in the wake of the Iraqi invasion of Kuwait in 1990. Perhaps the worst period began with the 1991 Persian Gulf War and continued through twelve years of sanctions. The country then experienced nearly five years of insurgency in post-Baathist Iraq.

Together, this sequence of events took the country out of the select club of major oil exporters. This meant there is huge potential for increasing oil production, especially in the light of the technological developments that have taken place in the last three decades and the fact that Iraq has not barely been exposed to them.

The introduction of technology into the country will work well with the nature of Iraq’s oil fields - highly shallow and horizontal pool - and thus immensely facilitate development work. Unlike other oil fields around the world, which are deep below the surface and are in the vertical shafts, Iraq’s oil fields are in many ways large lakes that don’t require a whole lot of drilling. This aspect is extremely important from the point of view of the cost of enhancing production, which is why Iraq is the one place where the world’s energy majors are drawn to.

Having oil fields that require little work to begin production constitutes half the undertaking; being able to ship it is an equally important part of developing the energy sector. The world has many places — like Russia — where there is plenty of oil but where the fields are nowhere near any means of transport, which renders the project cost prohibitive. In Iraq, however, most of the fields are located near existing export points and other transit infrastructure. This means it does not require much effort to transport Iraqi crude.

Najmah/Al-Qayara and East Baghdad are not far from a pipeline running from Baghdad through Baiji to the tri-border area with Syria and Turkey. The Khashim al-Ahmar and Qamarim/Gullabat/Naudman are a little west of the same line. Meanwhile, the pipeline from Basra to Hadith runs through the Kifl/West Kifl/Merjan field near Najaf and runs close to Gharraf. And the Halfaya, Majnoon, West Qurna Phase 2, and Siba are located very close to the pipeline network hubbed at Basra. This leaves Badrah as the only field that is far from any existing pipeline. But since it is close to East Baghdad, it can be linked to the pipeline running north from the capital.

Despite these logistical positives, two key factors have prevented energy majors from leaping at the opportunity since the U.S. move to effect regime-change. The first has been the lack of an internationally recognized government, and the second has been a multifaceted security problem.

The Petraeus strategy allowed the United States to collapse the Sunni insurgency from within in 2007, while U.S.-Iranian dealings took care of the Shiite militia problem. The prospect of violence remains, however, given ongoing Sunni-Shiite and Arab-Kurdish tensions. On the political front, the Shiite-dominated central government has considerably extended its writ in the country. Even so, numerous faultlines at both the intra- and inter-communal levels continue to threaten the gains made over the last two years.

The issue of autonomy, which pits the central government against the Kurdistan Regional Government — especially over energy — continues to prevent the enactment of a national hydrocarbon law. Furthermore, 2009 is an election year, with provincial elections scheduled for Jan. 31 and parliamentary polls slated for later in the year. These votes are the next step in the process toward stabilizing the Iraqi state. If Iraq’s various stakeholders can move past these tensions, they will enhance the chances for success of the Oil Ministry’s plans to expand production.

Given the number of moving parts in the new Iraqi republic, any number of things could go wrong. But so long as Baghdad can maintain status quo in terms of Iraq’s relative security and stability, it stands a good chance to greatly exceed its past status as a major oil-exporting nation.

The depth and diversity of your knowledge continue to impress    Very interesting.

I am quite sympathetic to the point about the unmeasured costs of industro-agriculture AND completely unpersuaded that putting the government in charge is a good idea.  Have you ever read PJ O'Rourke's "Parliament of Whores"?  The chapter on the Dept of Ag in particular is quite devastating.

PJO'R wrote in the early Clinton years IIRC, and then the Gingrich Revolution nearly finished off the Dept of Ag, which would have been a tremendous blow for freedom, but in one of his worst of many bad moves, President Bush resurrected the Dept of Ag in order to buy mid-west farm votes.  It wasn't necessary politically, it was simply Republican corporate welfare.

Anyway, it is against this sense of things that I measure the idea of a 50 year plan.  Even Lenin and Stalin were humble enough to limit themselves to 5 years      Right now it appears that we are about to see the human global warming hysteria of the eco-liberal fascist-MSM-academic matrix blown up.  The people who said in 1973 that we would be out of oil by 1993, and said the world was cooling, then that the world was warming and that we had to DO SOMETHING!  PUT GOVERNMENT IN CHARGE OF MANAGING THE CLIMATE OF THE PLANET!!! are now about to be wrong once again.

But BO is about to pass out trillions of dollars and I am shocked! absolutely shocked! that articles like this written by two guys who hope to get their fingers in the pie just like Halliburton did  would appear in the NYT.

Somehow the idea of a 50 year government plan for the management of dirt does not appeal , , ,

So what IS to be done?   One thing is to get out the word about the superior nutritional value of organic food.  Bring out the points about minerals and trace minerals missing from humans whose diet is industro-ag.  Look at how the organic food products are developing and deepening into the food chain.  People increasingly want this! 

Look for market driven analysis and solutions.

Although it gets several of the big points right, on several levels what a nasty little piece that is.

Border webcams

http://www.blueservo.net/

With the choice of Clinton retread Panetta for CIA, one wonders what other retreads are in the pipeline. 

Anyone know what Monica Lewinsky is up to these days?