The Fed cut its prime lending rate today to 4.5%. Right on cue, the stock market surged (after an initial drop of 100 points on the Dow) and the dollar dropped to close to $1.45 to the Euro. But don't worry about the dollar dropping further, it is blessing in disguise says the former editor of The Economist.
Sunday marked the 89th anniversary of Czech independence after the break up the Austro-Hungarian empire. Tomáš Masaryk was elected in 1920 and held the office for 15 years until poor health forced his resignation.
WWII ended what we call here "the First Republic" barely 20 years after it began.
This is just a quick note to let you all know I'm buried in school right now. In fact, I've just spent the last couple of days out of Prague on an educational trip, and I haven't even had time to check my email. It is one AM and I have classes tomorrow at 8:30.
I wanted to thank everyone for commenting on the post below, and I promise I will get back to those thoughtful contributions, but I really just don't know when yet... probably Sunday.
The chart to the left is the source of General Petraeus' claim that "civilian deaths in Iraq are down 45% since December." (Click it to enlarge)
That may be true, although this article does much to cast doubt on that claim (as well as Hilary Clinton's claim that the opposite is true). Indeed, politicians on both sides of the spectrum have excelled at misjudging, misinterpreting, and generally misunderstanding the data, the backdrop, and the overall character of this conflict.
With the Petraeus report, we are hearing people say things like, "I hope the Iraqis use this opportunity to get their feet under themselves." Yeah, I hope so too, but reducing violence down to a level roughly equivalent to where it was just over a year ago is not what I would call much of an opportunity. Hardly anyone would argue that the violence is more intense than in December (except maybe Hilary Clinton), but it is exceptionally ignorant to suggest that the current lull in violence presents an opportunity for reconciliation that Iraq has not had in the past. Add this hubris to the list of junk analysis that I have contradicted from the beginning.
The list:
1. The insurgency is largely made up of ideologically motivated foreign fighters and financially motivated Iraqis.
2. Insurgents and terrorists are synonymous.
3. Rooting out al-Qaeda will largely end the conflict.
4. If America was being occupied, we as Americans would not attack our occupiers. (This one is particularly absurd, but yet even the most militant "conservatives" can't seem to understand how ridiculous this idea is.)
I think the film Meeting Resistance goes a long way to dispel these dangerous myths. See the excerpt below.....
I am not the only one who thinks this is a valuable film. The U.S. military is showing the film to soldiers in Iraq. Below is the reaction of two soldiers after seeing the film...
What blows me away about watching the clip above is that nearly five years in, we are just now starting to ask the important questions like, "what makes up these people's character?" and, "how do people react to occupation?"
The first question would be a bit difficult for me to answer. I would need to do a lot of research and preferably I'd need to live in Iraq for some time.
But the answer to second question is so obvious, it is infuriating that we even need to ask it, and much more infuriating that intelligent people need to be spoon-fed the answer because they can't answer it for themselves.
And you wonder why the world sees us as ignorant?
Postscript: An early morning U.S. led raid on Sadr City reportedly killed six militant and at least as many civilians including... ...two toddlers, one with a gouged face...
Honestly, is the anger that hard to understand? What if those were your kids? What would YOU do?
It looks like the Czech Republic is finally getting serious about cracking down on child porn. Czech President Vaclav Klaus signed a bill stipulating punishment for the possession of child pornography into law Thursday, Klaus's spokesman Petr Hajek told CTK Thursday.
Up until now, it has not be illegal to posses child porn here in the Czech Republic. Manufacturing and distributing was punishable by up to two years in prison (under the new law it will be a maximum of eight) but it was difficult to root out the networks when the police could not investigate people for mere possession.
Despite the objections of certain MPs that people could be framed by having child porn sent to their email inbox, this common sense measure has finally passed.
One of the more important bits of economic data that gets little media attention is the Treasury International Capital System or TICS data. There is a lot of data in the official report, but the most important bit is the "net foreign purchases of long term securities".
But what does that mean? Very simply, that is the amount of U.S. bonds and equities purchased world-wide minus what was bought by Americans. This is important because of the current-account deficit (or trade deficit) which is running at close to $60 billion per month. To fund that deficit, the U.S. must get the same amount per month back in by selling bonds and equities to foreigners. If not, the currency (the dollar) will have to adjust to make up the difference. This is why currency traders watch this monthly release very closely.
So last month, I was slightly concerned that the TICS data came in at under $20 billion. One month's data isn't anything to worry about, but since last year the amount per month has been only marginally meeting the target. So I thought, "well, wait until next month and see if it corrects itself."
I thought it was a misprint when I saw that August's data (released yesterday) was negative $69.3 billion! In my limited experience, I've never seen a negative number here. So what are the implications? Well, this will put more downward pressure on the dollar, which in turn makes dollar denominated assets look less attractive, which in turn means less foreign inflows of cash. Think of it this way, would you purchase bonds in a currency that you expected to lose ground against your own currency?
We've been hearing for years that a weakening dollar may eventually result in foreigners buying less U.S. assets, which will further weaken the dollar and could start a chain reaction amounting to a run on the dollar. A decade ago, a run on the dollar was a fantasy that no one took seriously. Not only is it no longer a fantasy, but we may be seeing the beginning of it.
It seemed like old times when I saw Rice and Lavrov (her Russian counterpart) in this photo. The Bush administration has been legendarily unsuccessful in its diplomatic efforts throughout the last 7 years. The rift with Russia over the planned European missile defense system is a microcosm of the problems of the Bush administration thanks to its propensity for unilateral action and its inability to build coalitions.
Now we see an administration that cannot make any progress on the diplomatic front. Putin is clowning Rice with his comments and the world is taking note. And despite Putin's objection to the missile defense system, and despite the fact a majority of Czechs don't want the Radar based here, the administration is bulling ahead with its plans as it always does.
So we can expect to see more of the same for the foreseeable future: A crippled state department unable to make any progress anywhere.
Honestly, it is getting embarrassing. But there is a simple solution, one that the Bush administration should understand.
Democracy. Let the people decide. If democracy is good enough for the Iraqis, surely it must be good enough for the Czechs and the Poles.
As I've mentioned before, I find that tracking the increase in the public debt to be a far more accurate measure of deficit spending. Things like the Iraq war are not counted in the deficit because these are emergency measures. So what I like to do is track what the government actually owes.
Since president Bush has taken office, the public debt has been increasing at a rate of about $.5 trillion annually. This fiscal year (which ended at the end of September) it was almost exactly that. Here are the numbers going back to 97 for a little perspective. Each figure is the amount of public debt on the last day of the fiscal year.
(1997) Total Debt: $5,413B (1998) Total Debt: $5,526B (UP $113B) (1999) Total Debt: $5,656B (UP $130B) (2000) Total Debt: $5,674B (UP $18B) Clinton's final fiscal year (2001) Total Debt: $5,807B (UP $133B) Half Clinton, half Bush (2002) Total Debt: $6,228B (UP $421B) Bush's first fiscal year (2003) Total Debt: $6,783B (UP $555B) (2004) Total Debt: $7,379B (UP $597B) (2005) Total Debt: $7,932B (UP $553B) (2006) Total Debt: $8,506B (UP $574B) (2007) Total Debt: $9,007B (UP $501B)
So for all the talk about cutting the deficit in half, you don't really see much of a result. And, I don't know if it is intentional, but they have done something funny with the accounting so that the debt is artificially lower on the last fiscal day of the year. Last year it meant that the debt went up by about $50 Billion within a couple of days. This year, the debt has shot up by $150 Billion in the two days since the end of the fiscal year. When you take that into consideration (i.e. if we look at the total public debt on the second day of the fiscal year of 2006 and 2007 and compare those numbers) we see the debt increasing by over $600 Billion in one year.
The total public debt on October 2nd, 2007 was $9,151,786,966,610.65
Some little bits that you might find interesting....
The radar issue finally made the front page of the Herald-Tribune and can be seen here on the NY Times site (but for how long, no one knows).
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Klaus met Cheney regarding the radar issue. Klaus is paraphrased in the article... Klaus said it is necessary to address the Czech public that has taken a rather negative stand on the radar project. The result cannot be anticipated. The democratic process of decision-making must be respected, he told Cheney.
No one knows if Cheney understood or gives a flying hoot about that last part.
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An old Communist MP who served as a prison guard during communist rule says he was just doing his job. He has been stripped of his immunity and now faces trial.
And finally, today is Mahatma Gandhi's birthday. The international day of non-violence is being observed in Prague. How about in your neck of the woods?
