Turtle Market

It really looks like a turtle market developing on the DJIA. The downward resistance treadline has been broken again, but the 11,300 barrier has now been tested 3 times in 2 months without any follow through.

The bottom has been tested at 10,650 twice. Technicians would say that a return to the 10,650 level is very likely. The one thing that could change that is the slew of data being released this week culminating with non-farm payrolls and unemployment on Friday.

This, the last day of trading in July, was a very quiet one. A perfect environment for conservative traders averse to risk. That will not be the case later in the week.

If non-farm payrolls disappoint on Friday, the big run on the dollar will kick in, but Wall Street will get a boost.

It is all about interest rates right now. There are so many questions and so few clear signals.

This week be a signal week for the overall direction of markets this month.

Conspiracy Theories

I'm not a big fan of them. However, I love to watch conspiracy videos for some reason. Here is one without the usual fear tactics and time wasting. If anyone can send me anything intelligent to the contrary (besides the pancake theory which is addressed), please, feel free.


Controlled Demolition

Qana Bombed, Rice Cancels Trip to Lebabnon

Early this morning, the Southern Lebanese town of Qana was bombed and at least 60 civilians have been killed as a four story apartment building was hit.

Secretary of State Rice has immediatley changed her tune, now saying it is "time to reach a ceasefire." There has been no report that the U.S. intends to slow the flow of arms to Israel that have recently been expiditied.

Prime Mininster Fuad Siniora is calling the bombing a war crime. Considering that the missle used to destroy the building was likely supplied by the U.S. (maybe even one from the rush shipment), it seems clear that the Lebanese government views the U.S. as at least an accessory to the crime, and is no longer interested in hosting Ms. Rice.

This incident has sparked a near riot in Beirut where Hezbollah supporters stormed the U.N. building there.

Here is the question that I need answered. Is it possible to launch a rocket from a four story apartment building? Israel defends the attack as a defensive one in that hundreds of rockets have been launched from the area. The question remains, was this building used to launch rockets? With the surveillance technology now available, wouldn't it be fairly easy to determine if this building had or had not been used as a rocket launching pad?

In this day and age of precision guided munitions and space age surviellance, it seems to me that with U.S. help, Israel could prove the defensive nature of this attack. That is assuming, of course, that this was in fact defensive.

Qana

Minimum Wage, Estate Tax Link

The discussion has been pretty good so far so I am going to stick with the issue.

I could not find a marked-up version of H.R. 5787 to get the details of the proposed estate tax reduction. Leave it to the financial news networks to actually report information.

This Bloomberg piece is worth reading if you like details. Here are a couple of gems...

The estate tax legislation approved today was modified from last month's version. It would now gradually increase the threshold for triggering the tax to $5 million from $3.5 million between 2011 and 2015 and impose a top rate of 30 percent. It also would allow those who pay the tax to first deduct any estate-tax payments to state governments, a savings that was disallowed by the June measure.

I think that increasing the trigger to $5 million is not so bad. Then, anyone who considers themselves even remotely middle class is not affected by the estate tax. A large issue to be tackled is the 30% top rate. That is nearly a 50% cut in the top rate (down from 55%).

President George W. Bush's 2001 tax cut began phasing out the estate tax through 2010, when it will be repealed for one year. It currently assesses rates of up to 46 percent on estates valued at more than $2 million. Unless Congress acts, the tax is scheduled to return in 2011, with rates as high as 55 percent on estates valued at more than $1 million.

First of all, GWB has annointed 2010 with the title of the best year to die.....ever! But more importantly, look at how this phase-out was structrued. No one would pass a law that permanently removed the estate tax. This alternative is extremely clever because the return of the tax in 2011 will represent a huge tax increase that will effect many people whose estate is largely composed of their family house. Anything less than a total repeal of the estate tax at that time will then be spun as a tax increase.

This line of reasoning has already been used in relation to the temporary cut on capital gains taxes. Even though they were to be temporary, anyone voting against the continuation of this tax relief will be branded as a favoring higher taxes.

Tying this type of legislation to a minimum wage increase shows how twisted and perverted out legislative system really is. A small biscut goes to the poor. A huge givaway to the rich. And what do all of us in the middle get? Inflation and debt.

Thanks.

The House of Representatives passed the minimum wage increase.

But, very big but, this bill would be a serious reduction in the estate tax. I haven't read the bill yet, so I'm not sure how much, but the Democrats would surely not be getting so upset about it if it wasn't significant.

In any case, I doubt this bill will get through the Senate.

The most interesting thing I heard about this issue was from a comment that Stephanie left on the last post which is....

Something people on the top just don't understand is that the difference between $6/hr and $9/hr is a big deal to those who've earned the raises to be getting $9/hr.

For some reason, this reminded me of the illegal aliens who were prejudiced against the new illegals. Not to compare legal wage earners in the states to illegal aliens, but to compare two distictly different groups of working people who don't want advantages given to those that are ever so marginally under them.

Stephanie is right: the people at the top have no idea what a difference that is. Hey, just tell them in percentage terms at they will get it.

The proposed increase will mean a 40% increase in wages for the lowest paid americans.

As much as they deserve it, this will have a very large impact on the economy. The prep cook $7.25 now, will need to quickly get raises since the diswasher now makes the same money. There is a knock-on effect with minimum wage increases. The end result is inflation. The Fed will continue to raise rates trying to stop it, but with oil and wages up, there will be no stopping it.

But what else can you do? $5.15 is riduculous.

Minimum Wage Increase Considered

The House of Representatives is proposing a minimum wage hike.

It seems the Democrats are getting some support from Republicans this time around. Must be an election year or something.

If they get it, expect a sharp drop in the equities markets.




Minimum Wage

Market Brief

Very simply, Q2 preliminary GDP came in at 2.5%, .5% lower than expectations. This means that it is unlikely that the DJIA will break through the 11,200 level and will probably start a pretty decent slide.

A couple of weeks ago, bad data was good for the market because bad data indicated that the Fed might pause. Now that the market is pricing in a 50% chance of a pause anyway, bad data is just bad data.

This poor GDP number indicates that the economy is slowing and I predict that will have the bears out in fairly decent numbers.

Expect the DJIA to drop about 100 points today. I will update later to see if I was right. (I can't always be right you know!)

UPDATE: Stocks are higher, sharply. I suppose they believe that the Fed will pause on its interest rate cycle, but I believe they are living in a fantasy world. Inflation data is going to burst the bubble later this month. Having said that, breaking this 11,200 level is a very good thing for the market.

Not Your Typical Czech

One of the things that I love and hate about the Czech republic is how together certain people are. There is a certain type of Czech person that is so practical, it is infuriating. I admire them, but it is almost painful to be around them. They are not arrogant: they are so used to being the right, that it rolls right off them.

I am usually met by these people with stares of incomprehension and somtimes pure disbelief. My whimsical ways baffle them. My total disregard for innane minutia frustrates them. But I can always deflect any situation by claiming ignorance or just pure immaturity.

When in these situations I usually let a little boyish smile creep out and that gets me "the look".

"The look" is a held-back smile with a slight head tilt, followed by a very tight little "no" shake of the head, kind of like the one your mom might give you when you are looking at the candy bins at the supermarket, only nicer. Sometimes a finger shaking is added for good measure. When it is a young lady doing it, it seems like borderline flirting. But guys do it to, so the perception of flirting is probably just my cultural bias being applied to a foreign situation.

I get the look from my accountant all the time, but it doesn't feel like flirting. She is much older than I and we are from different planets.

The reason I need to describe her is to get ahold of the essence of a type of person that I encounter here daily, but are still almost like aliens to me. She is not typical by a long shot, but she embodies the practicality that is an unalienable part of almost all Czech people that I know. She takes this practicality to its logical end.

I will call her Ann. Ann is 46 years old. She dresses smart, does her hair and is always on time. She is pleasant but very concentrated on her work. Her desk is immaculate. She drinks only water and natural teas depending on the season or if there is a call for something special. Ann uses teas as remedies as do many Czechs. She knows about herbs, plants, flowers and trees. She knows about gardening. She knows about accounting. Other than that, I really haven't found anything else that she knows about extensively. I had to provide her with a list of EU countires, for exapmle.

Ann brings her lunch from home everyday. Often, the food is from her garden. She eats fresh fruit and home cooked food exclusively. She lives a few miles away and usually walks home from work unless her husband picks her up. She has been married 20 years and happily so. She has a grown daughter and a young teenage son.

One could say that Ann is an environmentalist. She takes recycling to a whole new level. She has no less that 7 different recycling piles at home, and she takes things from the office back with her. Not the paper and magazines (two different items, of course), but little things like the creamers, those tiny little plastic containers full of cream that you need at least 5 of for a large to-go coffee. She removes the foil from the top, cleans both the foil and the plastic cup and recycles them seperately. She takes my water bottles, that I would recycle whole, at cuts the little plastic ring off and recyles the ring and the cap seperate from the bottle. Then she removes the cellophane label and throws that away because you can't recycle cellophane. I believe her when she says that. As she explains to me the various divisions of papers and plastics and metals I notice that aluminium is not included. Ann would never buy anything in an aluminum can. That would be wasteful.

As I gawk in amazment, she tells me, "Michael, it will do the earth good!"

One day when we were celebrating a birthday at the shop, the conversation started going around about what we had done when we were in our late-teens that our parents didn't know. A few had older kids who had come home from the club at 2am. (Yes, the clubs here are full of teenage kids. 18 drinking age, but it is pretty lax.) Ann said that she had an incident when her daughter came home after midnight, and that her son would not be interested in such things. She believed it.

I asked her what she would do if her son came home drunk at four in the morning? She said, he wouldn't. I pretended to believe her, but pressed, just for conversational value. The other employees were rivited with what she would say. A blank look washed across her face. She considered her options and said sheepishly, "ground him untill he is 18? Really I have no idea."

I felt a little bad, but since this was a rare opportunity I told her about sneaking out of my parents house and joy-riding the family car down to the beach with my friends when I was about her son's age. She looked at me in complete shock.

I let a little boyish smile creep out and she gave me "the look".

She thought I had made it up.

Markets and Numbers

One of the reasons I was AWOL for a few days is that I have had my head in the numbers.

Today was particulary interesting for Wall Street as it closed just down about a point on the day to 11,102 and was confined to a tight 100 point range. 30 day chart you can see that 11,200 provided strong resistance, and now looks to be the cap. This last day looks like a bull run comming to a complete stop. All this upward momentum hitting this important resistance level so it is literally compacted.

If it can break, great for the bulls. However, a more likely scenario is that 11,200 is the top. To make it very simple, if you look at the chart from the link above, you can actually draw a strait line connecting 11,700 (the peak in mid-May) to 11,300 (a smaller peak in early July), to yesterday's 11,200. This represents strong resistance, and today's failure to break that resistance coupled with the extreme volatilty and accelerated bull run over the last two weeks tells me that the bears will be out soon. I said a couple of weeks ago that we would see 10,700 in about a month. Even though we were there in 4 days, that was event related. Now this thing should settle down to 10,700 or 10,600 over the next couple of weeks. With this extreme volatility there is a danger of dropping right through that 10,650 bottom. Time will tell.

The dollar exceeded everyone's expectations this week. Many were shorting the dollar expecting poor housing and consumer confidence numbers, but we were wrong. I got out early relatively unscathed. If anyone remembers, I had talked about a 1.2650 to 1.2900 range for the EUR/USD. I put in the caveat that it could correct down to 1.2500 or lower. Well it did that once, and then headed back up and the thinking was that you could knock the dollar and run this back up from 1.2650 all the way to say 1.28. They ran it up to 1.2690 just before the data was released and then the dollar took back 1% in 2 hours down to 1.25, again. So now the traders were looking for that to continue, and looking for a trade, I went with the current trend and shorted the Euro.

Then suddenly, when I was down on the trade, I came to my senses and realized that this was the bottom. Then I read a long term analysis that agreed with exactly that and asked, is it finally time for the Euro bull run? Well, to me, it most certainly was. I had gotten so buried in the small numbers I forgot about the big ones for a moment.

If $1.25 was the bottom and we had already hit it, there was little to gain by going short now. All the day traders were still going short, it looks like the big boys came in and ate them for lunch. I almost got eaten up with them.

Instead I flipped the trade. I took about $100 loss and decided to go long (buy) on the Euro. While the boys down at the daily desk in New York were buried in their charts, I took a step back and believed in my larger view. It took me a damn long time to construct it, so I better use it.

I bought at $1.25,85 and sold at $1.27,05. I bought more than one Euro, but less than a million. I had the extra thrill of knowing that the boys had lost. God that feels good.

After a five year obsession and nearly two years of preparation, I went to live trading last week. This was my first really, really good trade.

To soon to tell if this will actually work out for me, but if so..... freedom.

Funny how little things have changed.

I stumbled accross this today. I had heard about it, but had never seen it.

A must see.






Update: I had to split this into two parts for some reason.

Yea, that seems reasonable.

Lebanon is a country of about 3,000,000 people. It is religiously diverse. About 60% are Muslim (Shi'a, Sunni, Druze, Isma'ilite, Alawite or Nusayri) and most of the other 40% follow a form of Christianity. 17 religious sects are recognized.

As one would expect, there has been quite a lot of problems over the years. Lebanon's civil war from about 1975 to 1989 was one of the most confusing civil wars of all time. A web of alliances and betrayals eventually left 100,000 dead.

A large part of the problem are the Palestinian refugees (and their decendents) who fled northern Israel in 1982. Palestinian agression on Israel throughout that period is well documented. Lebanon was used as a base for attacks on Israel.

However, let us not forget that the Syrians originally dispached the Palestinians from Beirut in 1976, saving the Catholics in the process. Only one problem, the Syrians never left.

In fact, Lebanon had other company during the civil war. Israel occupied the south of the country from 1979 until 2000 when they finally complied with the UN resolution demanding their withdrawl from southern Lebanon. Since that time, Palestinian forces in the area have been in violation of UN Resolutions, it should be noted.

In the case of Lebanon, it is a country that has been torn apart not only by civil war, but occupation by two other countries. Despite this disadvantage, they have a unity government that shares power between Shi'a Sunni and Christian. It has problems, and was five years in the making, but anti-Syrian sentiment has solidified a strong coalition, and progress was starting to be made. It was about a year old, this government.

There was a long way to go, but it was a start. Christians and Muslims were living in peace. A democratic government was in place and free enterprise was flourishing. A post-war construction boom had just kept on going like a Marshall plan prodigy.

There was still the problem of Hezbollah in direct violation of UN resolutions calling for their disarming.
(Weren't there a bunch of scare rumors going on that the UN wanted to come and disarm Americans?)

Everyone has been dragging their feet on this one. The world community has ordered Lebanon to disarm palestinian forces in the south. This would be hard for anyone, but especially for a weak, nascent government such as the one in Lebanon.

Perhaps the Syrians could help?

No, it seems that Syria is helping this faction in the south (largely the Hezbollah militia). Of course the alliance has changed to one against Israel as result of the Israeli occupation. Some believe that although Syria helps the Hezbollah militia and others, their presence kept Hezbollah under control. (A dog on a leash?)

So the Syrians are helping Palestinian forces including Hezbollah. The Lebanese rejected the Syrian government (marginally) and after the Hariri assasination Syria left.

A little clunkly, but hey, progress.

Relative calm had pervailed, all things considered. The new anti-Syrian government, elected one year, is now in violation of a UN Resolution. Let us remember that Israel occupied the south of the country in violation of a UN Resolution for 11 years. I'm not saying it is okay, but not everyone just lock-snaps into compliance after all. The task of disarming Hezbollah is like the chore that no one wants to do.

So essentially, what Israel must have planned was to destroy the entire country at the next provacation by Hezbollah. They planned to punish the entire population of Lebanon for failing to disarm Hezbollah within one year.

Well, I think this is slightly unfair. I don't condone what Hezbollah did. (They probably wanted this to happen.) But I can assure you that a majority of the 3,000,000 people in that country do not condone these actions.

The Hezbollah problem is not only complex in that they are a fairly powerful faction in politics, but that many Lebanese believe that without the Hezbollah militia, Israel would still occupy southern Lebanon. For a party who plays on fear of Israel, the current action is only helping them.

I have no problem with Israel defending herself. But this action went well beyond defense from the beginning. The first attack was on a civilian facility. It could have been on Hezbollah headquarters but it was on Beirut International. It was a signal. Indeed, it was clear from the beginning that Hezbollah was a secondary target. It was the bridges, airports, seaports, roads, and general infrastructure that would be targeted. These are civilian targets irrespective if any civilians are killed in the process of them being bombed.

So forget about body counts for a second, and let us focus on one thing:

3,000,000 people, who democratically elected an anti-Syrian government, are now being punished for not disarming a powerful militia that was supported by Syria and possibly Iran. Both are countries which are much more powerful than Lebanon. They had roughly a year to complete this task from time that anything looking like an effective government could be formed.

Think about 3,000,000 people who have had roughly the same experience as the lady in the link below. Dead or alive, every single person who calls Lebanon their home has had their life as they know it destroyed.

Yea, that seems like a good way to combat the forces of extremism.

602 knowledge

If you are a big fan of firsthand accounts from war zones written by people who are not reporters,


Elizabeth has this report from a young woman living in Beirut.

Worth the time, I would say.

Moral Relativism

Those of us who believe that what both Israel and Hezbollah are doing is wrong are often accused of displaying "moral Relativism."

Relativsim...

A theory, especially in ethics or aesthetics, that conceptions of truth and moral values are not absolute but are relative to the persons or groups holding them.

To a certain extent I think this is true. There are certain moral absolutes, but there are a lot of grey areas for most people. What most people try to do is get some basic rules going that are fairly easy to agree on. One thing (nearly) everyone agrees on is that taking civilian lives is bad.

Those of us who are generally anti-war have a hard time supporting any action that results in loss of life of innocents. We do not want to live in a world where people are declared evil and are simply "wiped off the map." Violence, in our view, usualy begets more violence until it reaches such catastrophic proportions that people turn away from it, sometimes for more than a generation but rarely. As the horrors of war fade, throughout history people have turned to it again and again to solve their problems. The effective warriors were so because of their uncomprimising stances.

As the Army's ability to wage war effectively (because of the constraints put on them by sensible people) wanes, the results are less and less dramatic. Lasting solutions are hard to comeby these days: witness Iraq.

War, when waged properly, works pretty well.

Take Ghengis Khan for example. What many people don't know is that he provided his subjects with immense wealth. During his reign, Outer Mongolia was filled with a collection of treasure perhaps never seen before or since. Why was he so effective? He had a simple philosophy, if the people wanted to be his subjects and not question him ever, they would enjoy the priveledges of being his subjects: trade (wealth) and security. If anyone put up a fight (insurgency) he killed everyone. Problem solved.

Due, however, to the "relativism" from us softy liberals (even though I'm not, but whatever I can't stand labels so they mean very little to me), war can no longer be waged effectively. Thank god for that at least. I'd hate to have Ghengis Khan come through my town. I don't care how much my 401k goes up, I'll pass.

The thing is, it is impossible to judge what is right and wrong every time. This is why us "relativists" depend on simple principles like killing is wrong.

I read the Krauthammer piece (that my fine reader suggested I do) and he makes a valid point in refuting all of those who say the whole problem in and around Israel is due to the 67 war and the occupation. That is a big problem but it is not everything. No, as Krauthammer rightly points out, this goes back further. However, he puts the date at 48. Well, I think you have to go further back to find the roots of this conflict. This goes back so far I think it is impossible to say who actually "started it."

It takes two to tango, and these two have been at it a while. I don't agree with either of their tactics and I will not condone Israels actions which continue to take civilian life at a rate of about 40 per day. I do not believe that this action will end the conflict. It will just be a setback of about 20 years for Lebabnon and the violence will continue. I also strongly disagree with the tactic of intentionally targeting civilians on the part of Hezbollah. I think that restrait should be shown on both sides.

Violence begets more violence. Where does it all end?

Some people say Ghengis Khan was a hero and we glorify all the great conquerers through the ages, while snickering about how ruthless they were. Khan was largely vilified by the Russians. The original Mongolian History looks quite favorably upon him, as you might well imagine. A perfect example of how hisory is written by the winners.

So yes, morality is different for different people, and indeed is different at different times. Things that were acceptable 1000 years ago are no longer so. But certain things are indeed universal.

Some of us think killing is usually wrong, and definatley wrong when we talk about killing innocents.

Some of you find it a good way to take care of problems. Some of you seem to enjoy it. The visceral thrill of it all whirling up out of your stomach, giving your head a quick spin as your heart swells with pride over the superiority of your country. It sure does feel good to have a kick-ass army out there kicking people's asses.

Well, I guess for some people it feels good. Not to us "relativists".

Bernanke

Bernanke sparked the stock market with his dovish comments on inflation concerns. The market believes that the Fed will pause at their next meeting, and if not, at the one after.

This was a much needed bounce for Wall Street. However, the picture is less than rosey. Bernanke cited slower growth as a check on inflation. This is the hint that they will not raise rates to combat inflation.

He was harassed
by a Senator...

”At the current rate, the Fed will overshoot and not even know it,”warned Kentucky Senator and former major league baseball pitcher Jim Bunning. ”The Fed is moving into dangerous territory.”

He also said that the Fed had been "fighting an inflation monster that doesn't exist." Mr. Bunning, may I refer you to the higher than expected core CPI data released just two hours before you made those comments?Good old boy Bunning out there putting a word in for the team. Have a look at the data before you say something really stupid. Oh well, it's too late.

If the Fed pauses at the next meeting, I'm goint to be surprised. Especiallly if we keep getting the kind of data we are getting. Benanke is in a bit of a hard spot though. Raising interest rates in slowing economy will not make him popular.

However, core producer and consumer inflation numbers will likely dictate policy and will force the Fed's hand. Therefore, I expect them to hike rates again in August. Bernanke's comments reversed the strong dollar trend that we have been seeing over the last week since the war in Lebanon started. Suddenly, with a few choice words, it is all turning around now. I had said that the EUR/USD may correct to $1.25, and it bottomed out at $1.2454 (I didn't know there was a war about to break out!). I imagine the dollar bears will be out in full effect tomorrow, trying to push back the recent dollar gains. Believing, foolishly, that the Fed will pause.

On tap for tomorrow is initial jobless claims. It has been running pretty high at around 330k. A very high number will be Wall Street positive because it will tell the market that the Fed will have to pause to try to stimulate the economy. Much lower housing starts than expected today also. This is the canary in the coal mine if you ask me.

Seriously, Benanke is caught in a really bad place right now. We are facing the prospects of slowing growth and inflation at the same time. This nasty combination is almost sure to lead to a recession. Right now, we are still quite far from it.

Economics

Before the s*** hit the fan, I had predicted that we would see 10.700 on the DJIA in "about a month." Well, in 4 days here we are. Having said that, I think this level is the bottom for the stock market for now. I don't expect it to go much lower. Despite the war, the U.S. is not particularly involved and doesn't need to be. I picked the 10,700 level specifically because it seems to provide some resistance. Why? If you know anyting about technical analysis, there it is. One thing I love about numbers is that they don't lie. In fact, they can't lie. God I love numbers. If only people.... well, that's another discussion.

The DJIA has stabilized, posting it's first gain in 4 days. There seems to be fairly stiff resistance around 10,650. Three days in a row the DJIA has bounced right off that level.

What is absolutely confounding me is that this war in Lebanon is a dollar positive. There was a theory floating around that people were looking for a "safe haven" to put their money, but this theory has been dispelled. In fact, the most productive cross since the inception of the war has been NZD v. JPY. The New Zealand dollar is anything but a "safe haven." So what we are really seeing is the effects of repatriation. Americans are easily spooked and at the first sign of trouble, they bring their money home. This creates dollar strength. Good? Well it would be if the U.S. wasn't so desperate to increase exports and pay off a 8.4 trillion dollar debt. Right now, dollar strength weighs on everything. Economics are like karma, if you believe in such misguided hippy fantasies.

So Americans are bringing their money home. Great! Too bad that when they do, they will find a glut of cash from the Bush tax cut, and little opportunity to invest. I suppose bond yeilds will provide some relief for the conservative minded, but just wait until corporate earnings start to shrink and then watch the deficit blossom.

Oh, you supply-siders. You rule the world when times are good. But in harsh times, you sell the future out from under us. I'm sure you are very proud. Well, actually the people who actually have money will be just fine. It is all you wanna-be rich people who will pay the price when the whole thing collapses under it's own weight.

You know who you are.

Enjoy. Enjoy the Bush economy!!!!!!

Ramdom Thougts

So after letting the war in Lebanon and Israel sit, I've come to the conclusion that this may not be WWIII. Well, not yet anyway. The United States has no need to enter the conflict (except maybe to restrain Israel which is not going to happen). Even if Syria enters the fray, Israel can more that take care of herself. The only danger is really if Iran enters the fray openly, which they have threatened to do if Syria is attacked.

Then, of course, it is WWIII.

*****

Does anyone else find it ironic that it is the president's
choice of diction that is being most harshly criticised at the moment? This is a typical example of the media looking tough without actually doing anything. Having said that, it is tha media that brings us such priceless moments.

Has anyone else noticed, that after over 3 years in what was promised to be a short war that would bring peace and stability to the region, there is now more conflict in that region at one time, than at any other time in my (short) memory?

Also, has anyone thought about how this is actually helping Bush by taking some attention off of Iraq? Let's face it, as bad as the situation in Lebanon is, there are still more weekly deaths in Iraq. Nevermind Afghanistan, where things are heating up.

Honestly, I am young, but for me, today, I have to say I don't remember a time when there was more war and security situations running simultaneously.

It makes one wonder if Newt Gingrich is right and WWIII has begun. One question for Newt though. He said,

There are at least 400 Iranian guards in south Lebanon.

First of all, how does he know this? Second of all, if he does know this for certain, wouldn't this be classified information? If not, isn't he stating exaggerated rumors as if they were facts? Either way, I think he should explain himself.

But he has a point. If Iran becomes openly involved in this conflict, it will be the beginning of a global war. Isn't that exactly what we asked for by declaring a "global war on terror?"

Sorry about all the questions. I'm still reeling a bit from seeing Beirut International Airport's runway blow up. I had been foolishly hanging on to hope for the future of Lebanon. They have gone back in time 25 years literally overnight.

And the future looks dim for them. Meanwhile, nothing seems to be changing in Iraq, only Afghanistan seems to be having "good" news coming out. 30 to one kill ratio. I'm going to still hold out hope that something good can come out of that endeavor.

Why? Because I'm an optimist.

Rocky Knows Best

Bullwinkle: "Hey Rocky! Watch me pull a final solution out of a hat!"



Rocky: "Again?? "That trick NEVER works!"



Bullwinkle: "Guess I don't know my own strength!"

Thanks to Toon Tracker for the image. Please don't sue me!

Also, great thanks and respect to the one and only Jay Ward.

May Peace Be Upon Him

UN Emergency Session

A quick post, and then I'm out for most of the weekend, if not all.

I'm just watching the UN Emergency Session. The UN introduction called for the release of the prisoners and for restraint from Isreal for humanitarian reasons. They stressed that actions aimed at infrastruction and that kill civilians violate humanitarian law.

The Lebenese ambasador layed out the boming campaign. He stated that most of the major bridges have been destroyed. All three runways at Beirut international are not operational. Fuel instalaions have been bombed and a full air and naval blockade is in place.

The Isreali ambasador went all the way back to idealic Beirut 32 years ago. Essentially his argument is that Lebanon has had since 2000 to real in Hizbolla and has not done so due to "inaction and ineptitude". He accused Iran of "denying the Houlocost while gleefully preparing for the next one." I think that was a pretty decent quote actually. He spoke of a club of evil nations and groups including Syria, Iran, Hizbolla and Hamas. It is the Lebenese people's fault for their complicity vis a vis Hizbolla. He cited rocket launching pads that are made from a single room in a family home and are sponsored by families. He wants the soldiers returned or all bets are off.

The Russian ambasador towed the UN line, and then several countries followed including Ghana.

Bolton has just come on, and has a scathing denounciation of Hizbolla and the "kidnapping" of the two soldiers. Can I get some help from a linguist on this one? If a groop of soldiers goes on an ambush, kill 7 soldiers, and bring 2 of them back alive, isn't that "capturing" a soldier. I mean, if it is an "act of war", don't war terms apply? I never heard of a soldier being "kidnapped".

Bolton is denouncing Iran and Syria for supporting Hizbolla. He actually said that a reckoning of Hizbolla would reckoning of Syria and Iran. Damn.

*****

The stock market is down over 90 points before lunch. Add that to the 288 from the last two days. Ouch. I suspect that the Emergency session will not provide a resolution before close, so expect it to end down. If they can get a cease-fire over the weekend, they will get a great bounce on Monday.

Oil is setting new highs for three days running. Funny thing, even with the markets down, Exon and Chevron and the other big boys are up, some 1.5%. So maybe they didn't plan it. Maybe it is just dumb luck that all this instability makes all the oil boys rich as hell. Hey, at least somebody is enjoying all this.

Have a good weekend.

Hope for peace.

Timeline

I have to admit, I wasn't paying as much attention to Israel as I should be lately. The Gaza incursion was pretty big, but it still seemed business as usual. Isreal killing Palestinians, Palestinians killing Israelis. Rockets, civilians killed, demands that prisoners be let go, you know, normal everyday stuff.

But when I read that Olmert was sending troops north and making incursions into Lebanon engaging Hezbollah openly, I got worried.

When I saw the pictures of Beirut international airport getting bombed, I realized this was quite serious.

In case you are missing some of the key details, here is a good timeline

(Courtesy of Times on Line)

Getting Ugly

Yesterday I did an economic report because I thought we were at a significant point.

You be the judge.....


Stocks tumbled near midday Thursday, extending the previous session's slump, amid record oil prices, geopolitical unrest and concerns about corporate profits.


SINGAPORE (Reuters) -- Oil surged past record highs and into $76 territory Thursday as worries over lower U.S. crude stocks were underlined by increased tension in the oil-rich Middle East and suspected explosions at a pipeline in OPEC exporter Nigeria.

All you investors out there, time to cover up a little.

UPDATE: The dow closed down 175 points making the two day drop 288 points. Evidently, someone on Wall Street noticed that a war just broke out in Lebanon. Currency markets are remarkably unremarkable. I think everyone is waiting for the BOJ decision on Friday and the G8 over the weekend. Has anyone else noticed how bad the G8 has been for the dollar lately?

Did I say 10,700 in a month? Wow, two days later and we are half way there. Better hope for some bounce next week. See if the market can at least stabilize tomorrow. It is in virtual freefall right now.

Act of War

As promised, the Isreali response to the kidnapping of two soldiers has been heavy handed.

BEIRUT, Lebanon -
Israel intensified its attacks against Lebanon on Thursday, blasting Beirut's international airport and the southern part of the country in its heaviest air campaign against its neighbor in 24 years. More than two dozen civilians were killed, officials said.

That seems about right. Capture two soldiers, and the response is to bomb a civilian airport and kill 24 civilians. How anyone can not see this as an act of terrorism is completely beyond me.

24 civilians dead, at least.

Now what happens? What will the response be? Probably more civilian deaths in an equally barbaric retaliation.

Economic Report

Breaking with tradition, I am reporting on the market tonight, but I have a good reason.

The stock market took a shart drop down in late trading today. Whereas the DJIA was -34 points at midday, by close it had lost over 121 points and closed almost at it's lowest point which is rare. I can't find a day in the last six months when the market closed so close to it's low point for the day. These losses were largely due to poor earnings forcasts for Q3 and Q4 and some disappointing earnings reports released today.

If you look at the three-month chart you can see a very strong down trend developing since the high at 11,700 two months ago. You see four relatively uniform, realitively lengthy, doward trends. These are punctuated with increasingly sharp corrections to the upside. The last two were mostly confined to a single, huge day. The last week is showing a very consistent funnel down.

Technicians tell us that the trend is usually slowly moving, while a correction when the trend overshoots itself is usually sharp.

If this applies to the current situation, you should expect a long, slow decline for U.S. equities. 11,300 looks to be the cap in the medium term. If this level cannot be broken, we should see 10,700 in about a month.

Also, the United States May 2006 trade deficit came in 1.2 billion under market expectations at $63.8 billion. One of my trusted sources had called for $64 billion, so they did well. The dollar got a little boost from that news, breaking some important resistance levels, but was unable to stage a substatial rally.

I think the poor earnings outlook will continue to weight on the market. There is a chance for the Euro to go down to $1.25 again, but I suspect it will remain range bound between $1.2650 and $1.2910 and that the Euro bulls will make a run in the morning. Currently it has consolidated right at $1.27. Most likely, we will see slow upward action for the Euro tomorrow.

Gorbachev's Thoughts

I stumbled upon this interview and it is worth reading. It is short, and you can see the film, but there isn't really anything in the film that isn't in the article. It is cool to see the guy though.

Really, read the article. It will only take a second.




Gorbachev

Isreal at War

Anyone who knows how tense and fragile the security situation in sothern Lebanon and northern Isreal knows that this is not a good development.

---Times on Line reports:

Hezbollah captured two Israeli soldiers and killed seven others on the border with southern Lebanon today, opening a new front in the two-week crisis over the kidnapping of an Israeli soldier in Gaza

Isreal has made an incursion into Lebanon. An Isreali tank was reportedly destroyed. Hezbollah shelled northern Isreal. Olmet promised a heavy handed respose. 6,000 troops are being sent there. Hezbolla promises a severe retaliation. They want up to 1,000 prisoners realeased for the 2 Isreali soldiers. Kofi Anan has called for the immediate releaase of the soldiers.

Isreal is now at war on two fronts.

Again, I don't know how anyone can consider this a good development.

Geneva Convention

I have written a couple of times on my opposition to Guantanamo Bay's existance. In Feburary, I called for it's closing but I left myself a caveat. Since this is a war (a word the president chose to use), prisoners from said war should be afforded some Geneva Convention rights. I reitterated my calls in May when it looked like the president was softening (here and here).

So I'm feeling pretty good about today's bombshell announcemnt by the Bush Administration.

---Washington Post reporting

The Bush administration, in an apparent policy reversal sparked by a recent Supreme Court ruling, said today it will extend the guarantees of humane treatment specified by the Geneva Conventions to detainees in the war-on-terror.

In a memo released by the Pentagon this morning, Deputy Defense Secretary Gordon England, citing the Supreme Court's decision, ordered all Pentagon personnel to "adhere to these standards" and to "promptly review" all policies and practices "to ensure that they comply with the standards" of the Geneva Convention's Common Article 3.

If the policy is changed,Bush will have complied with the Hamdan decision, and this is a good move on his part. He will have avoided a constitutional crisis. It will now be up to Congress to authorize a tribunal. It doesn't have to be a U.S. civilian court: not hardly. But the kangaroo court that the administration had in mind where the review board is three guys picked by Donald Rumsfeld, well that just isn't going to fly.

What will change at Guantanamo Bay? I'm guessing that guys who have been getting a full work week of stress positions and psychological torture for the last 5 years are going to get a bit of a break. It will be easy to make the changes on an institutional level because many of the orders that soldiers have for applying these tactics have footnotes that read, "may not comply with Geneva Conventions." Just get rid of those and you are good to go!

All anyone wants is that people are not tortured in our name. We want the United States to have a higher standard than average because we find the average unacceptable. We want to believe everything they told us in High School is true.

It will be interesting to see what the plan will actually have in it. Will the Red Cross be let in? If not, then this is just a sham. So many thoughts on this right now. What is Rove thinking? It seems like the President is rolling over. What is the bigger plan? Is this just posturing? Will they continue to say they are "working on it?" They can't do that for ever.

If they thought the pressure was on before, now the heat will really get turned up. I imagine the Red Cross will redouble their efforts to gain access to the prisoners.

Treason or Smoke Blowing

I've been wanting to post on the issue of the NYT "leaked story" about the government using the SWIFT system to track banking transactions of terrorists. I think one of the biggest problems for the average guy in understanding this issue is that they may not realize how prevalant the SWIFT system is. Almost all of the banking that I do for the business here is done by bank transfer. Every bank has a SWIFT code which has become essential for transfers.

What is the point? If you know that someone is tracking bank transfers, you know that they are using the SWIFT system because there is really no other option.

I really didn't think that what the NYT reported was anything secret, but out of lazyness, I'm going to let you read someone else's take on this who is much more qualified than myself to explain the issue.

Please read this column by Larry C. Johnson.

If you still exercise fatasies that vital information was disclosed by the NYT (and WSJ) articles on the SWIFT system, well, there is little hope.

Jefferson Raid Upheld

The Washington Post reports...

Chief U.S. District Judge Thomas F. Hogan said members of Congress are not above the law. He rejected requests from lawmakers and Democratic Rep. William Jefferson to return material seized by the FBI in a May 20-21 search of Jefferson's office.

What interests me about this case is that Bush is trying to shield Jefferson, who is a Democrat. Is he afraid that the Jefferson case is going to reveal things about his friends, or are his attempts to create immunity for Congress members motivated by the Abramoff case and the others that are sure to follow?

I am also a big fan of the rule of law being applied evenly to everyone. This quote made me smile...

Hogan acknowledged the "unprecedented" nature of the case but said "a Member of Congress is generally bound to the operation of the criminal laws as are ordinary persons."

Music to my ears.

Italy Wins World Cup

In a brilliant match, Italy beat France on penalty shots Italy made all 5 shots in the shootout after 120 minutes of footbal yeilded a 1-1 tie. The big story of the match was Zinadine Zidane being sent off after headbutting Italy's Materazzi after he allegedly called Zindane a "dirty terrorist."

Zidane, of Algerian decent, was playing in his last football game after one of, if not the, most distinguished careers of any French player in history. Zidane had scored the first goal of the match on a penalty shot. Ironically, he was not eligible for the penalty shoot-out which France lost.

I had the pleasure of seeing the match at the Reigrovy Sady beer garden in Prague (Vinohrady) with at least 1,000 other people. It was standing room only by kickoff, and by half time there were probably 200 people standing. I was lucky enough to get a table with a partially obstructed view about an hour before kickoff. There were large contigents of French and Italian nationals in attendance.

Groups of italians paraded around after the game, singing and jumping. Some of them probably continued that until morning.

The good news for the U.S. is that the U.S. team scored their only point in the group stage by squeezing out a draw with Italy. Italy beat every other team they faced in the tournament.

Congratulations Italy, I completely underestimated you this year. At least I wasn't alone.

With Friends like these...

The Iraqi police force is rife with abuse. This according to Iraqi Interior Ministry documents, the L.A. Times reports.

This is confirmation of what many have suspected for quite some time. Tales of rape, torture and killing read like an indictment of Saddam Hussein...

-- Police tortured detainees with electricity and in at least one case, anal rape, in Baghdad's Shiite neighborhood of Rusafa. But prisoners whose relatives could bribe the guards were released.

But what is equally troubling is the evidence that the police are actively fuelling the insurgency....

-- A ring of Baghdad police officers, including a colonel, two lieutenants and a captain, stole communications equipment for insurgents, who used it for remote bomb triggers.

-- A medic with one of the MOI's elite commando units was fired after he was accused of planting roadside bombs and assassinating people.

The U.S. is not going to address this problem directly...

US officials have known of the police abuses for years but want the Iraqis to solve the problem, officials told the Times.

Yea, that seems logical. It isn't like the U.S. invaded, dissolved the police force, trained the new policemen and put them on the street promising an end to the chaos soon.

Or did they?

Standing Corrected

There are times when you slip up in life, and there are times when you fall flat on your face. Usually, when I do the latter, I usually tend to do it in all areas of my life at the same time. This is no exception.

I "reported" on Mexico's recent election. I've seen some bad posts, but this one takes the cake....

Somehow, in my haste and utter ignorance, I had confused the ruling PAN party with the ousted PRI who had almost surely committed voter fraud in the past. Furthermore, I was referencing the PRD when I spoke of the PRI. Anyone familiar with Mexican politics knows what a slap in the face that is to anyone associated with the PRD. My apologies.

So for the record....

PAN has never stolen any election that I know of. My charge that PAN stole this election is completely baseless and rooted in a false premise.

I deeply regret the disrespect I have show to good people like krizantah who have undoubtedly worked very hard to protect that "child in a crowded market," which I spoke of. Imagine how stupid I felt when I read this...

I was a president for a voting booth last Sunday, July 2nd. There was also a secretary and a counter (escrutador). We had at our table one person representing PAN, one from the PRI and 2 for PRD. They watched the whole process. Every citizen over 18 has an id, specifically for voting. The id has a picture, fingerprint, signature. birthdate and address. We had a list with a copy of the id´s of the people voting at our booth. Every time someone arrive to vote, we check his id, put a stamp over the copy we had, pounched his id at the date 2006. We vote the traditional way, paper and crayons, and we kept every paper. After voting averyone had his right thumb mark with a special ink. I knew a lot of the people who came to my booth, they are my neighbours. At 6 pm we closed the booth and the counting started. At our booth PAN won everything, by much. At 10:00 pm we packed all the documentation, sealed and signed everything and every party representative received a copy of the oficial papers with the final numbers. If they had any comments they could have writen them down and we should had to add them to the rest of the documents without any questioning. This didn´t ocurred. They all had cell phones and called their party headquarters to send the final numbers. At 10:30 I was at another address which was a center where the insitute gathered the documantation. We were like an army of presidents of voting booths all carrying the same white, heavy box with all the papers. We were all wet because on top of everything, it was raining. It was so much work, at 11 pm I had breakfast. I checked the numbers that we got in the internet, the IFE and the IEDF have them on their web pages and anyone can see the numbers gotten from each voting booth in the country. The numbers of my booth were correct. Ther is no place for fraud. This elections was carried out by the citizens.

I also want to thank Kvatch who writes blognonymous (which is a "must read" blog) for being the first to alert me to my grievous error.

What makes this especially painful for me is that in college, I wrote a paper on the corruption in the elections which at that point (1991) was endemic. I studied the Zapatista rebels and PRI's efforts to suppress their insurrections. I researched instances where the PRI had received 90% of the vote (in sealed boxes, 10 days late) from areas that were dominated by Zapatistas and historically had voted heavily for the PRD. These fraudulent practices were fairly obvious to any objective observer. As a result of this obvious fraud, a concerted effort in the 1990's led to Vicente Fox's historic 2000 election, and the downfall of the PRI.

Now to the explaination....

My course of study led me to break with politics and news from 1995 on, due to a severe case of disillusionment. I had literally avoided news for 6 years and even after 9/11 I tried to keep a distance from the reality of what was going on. At university I had looked the beast strait in the face and buckled under the pressure. I fled to Europe and pretended that everything was going to be just fine, even though I knew it wouldn't. Well, what could I do about it anyway? I'm nobody.

Eventually, the wall I put up came crashing down. It happened sometime between 9/11 and the invation of Iraq. (For someone who was obsessed with politics from age 10, it had to be a pretty thick wall to last 6 years). I wasn't actually "on my game" until sometime after I started this blog.

As an aside, the other day I met a Canadian girl who is studying law so that she can change the world (my original plan in life). She is committed (probably more than I ever was, hell, she's a vegan). She is dedicated to forest preservation (I had led a forest preservation program at Davis that focused on preserving the the Clayoquot Sound in Brittish Columbia. It was such a no brainer: they were literally using ancient trees from the last large stand of temperate rain-forests for pulp to make paper for phone books because most of the old trees had too much rot to be used for good lumber. The Canadian government who approved the land-use owned stock in the company that got the contract to cut the trees which would be illegal under U.S. law).

Talking with her about how the Clayoquot Sound had been saved renewed my faith in grassroots action and reminded me of Margaret Mead's classic quote....

"Never doubt that a small group of thoughtful, concerned citizens can change the world. Indeed it’s the only thing that ever has.”

The moral to the story is that one should never give up. It may be you who is the important piece of the puzzle that leads to the next great hurdle. Anyone who worked on Mexican voter reform which broke PRI's stranglehold on Mexican politics falls into this category.

Or an alternative moral: you might make a total ass out of yourself on your own blog because you were not paying attention when important things were going on..... and that is not cool. Nope, not cool at all.

Blog on everyone. It is a learning process for all of us.

Economic Report

I'm not calling it a weekly report since it has been weeks since I reported.

Suffice to say, my predictions have been pretty good so far, especially vis a vis EUR/USD which nearly no one cares about.... but they should.

I had said that the EUR/USD would stay between 1.26 and 1.30 for quite some time. It stayed there for a few weeks. Then I said we could see a correction to 1.25. Well, the correction came and went, and now I see the all clear for a run past 1.30, maybe even a new record in a few months time. Of course, the ECB will do everything in it's power not to let that happen becasue it is bad for exports. Evidence? They kept rates on hold at 2.75% as expected and yet the Euro still strengthened mildly on that news. They hinted that they could raise the rate at any time, not just at the meetings. Do they think they can slip a rate hike in and no one will notice?

I had also said that I expected to see a bounce in U.S. equities by the end of the week (on June 10th). We did see that. It has been topsy-turvey since then with no real direction until last Thursday. I had mentioned on June 10th that Bernanke had all but promised a hike to 5.25% with his comments. I had never doubted that the rate would go to 5.25% but the market had. However, by last Thursday, Wall Street had priced in the hike (the currency traders priced in the hike shortly after the June Fed meeting which is why we saw the correction in the EUR/USD down to 1.25).

As a result, there was little reaction to the rate hike, but Bernanke's statements sparked a fresh round of enthusiasm on Wall Street, and a fresh round of dollar selling. His comments were interpreted as less hawkish which has the markets speculating that there will be a pause in the rate hike cycle. I still think it is 50/50 at least (favoring another hike if I had to pick now).

This focus on rate decisions leaves us in a funny spot where bad data from the US is good for Wall Street. For example, later today the jobs report comes out. This used to be THE major piece of data, but in recent years it has lost much of it's significance. Nevertheless, a bad number will tell the market that the Fed will indeed pause. There are other signals (like slumping ISM data and a negative number for construction spending this week) that indicate the U.S. economy is slowing. However, if Wall Street interprets this as a sign that the Fed will pause, we could see a rally on Wall Street, and more dollar weakness.

Initial Jobless Claims came in yesterday near expected (313K). I will update this post after the Non-Farm Payrolls and inflation number come out in a couple of hours. I'm not expecting any huge surprises (but there are some rumors that we could see an abysmal number just like in 2004). The forcast is for less than average. If it is much lower than expected, look for exuberance from Wall Street and a sharp drop on the dollar index as traders rejoice in the belief that the Fed will pause to stimulate growth.

Oh, did I mention that Oil has set a new record twice this week? It now hovers around $75 a barrel. How the U.S. economy continues to shrug this off is beyond me. It just goes to prove how resiliant the U.S. economy really is.

UPDATE: Non-Farm Payrolls came in at 121K about 40K less than expected. The dollar took about a 1% hit as I expected. Let's see what Wall Street does in reaction to the news. (Side note, average hourly earnings were up .5% which will have the market worried about inflation. One think I hate about Wall Street is that a rise in hourly earnings is bad news for Wall Street. Remeber that the next time someone tells you that the economy is doing really good. Yea, it is doing great except for that damn raise in hourly earnings.) Read about the news here.

UPDATE 2: No, Walll Street did not like that news at all. DJIA is down nearl 135 points or 1.2% for the day. At one point it looked to be one of the worst days in the last 3 years. We will see lots of those with increased volatiltiy: best and worst day in years. The point is that bad corporate news (especially from 3M), inflation worries (3.9% year on year increase in wages), and slow growth indicators (lagging ISM data, robust initial jobless claims and two months of disappointing job creation) are indicating a period of stagflation dead ahead. A recession at least. Nevermind the inverted yield curve (yea, arch look that up).

For all the clamoring about how great the "Bush Economy" is, let us look at where we are. 5% growth with very little appreciation in working class incomes. The moment that wages start to increase (i.e. when the working man starts to get his very small piece of the pie) the whole thing threatens to come crashing down. What a great system!

Democracy's Dirty Secret

The Washington Post reports Calderón Wins Mexico Presidential Election.

With all votes now counted, Calderón has topped Andres Manuel López Obrador, a former Mexico City mayor, by half a percentage point, or about 200,000 votes. The final count shows Calderón with 35.88 percent and López Obrador with 35.31.

In Mexico, votes are counted locally and then sealed in boxes which are sent to central counting centers, only boxes with evendence of tampering are opened and counted individually...

This has enraged López Obrador and his supporters. They want a vote-by-vote count of every packet. But Luis Carlos Ugalde, head of Mexico's Federal Electoral Institute, said Wednesday that López Obrador's request is illegal and that opening all the packets would amount to a violation of Mexican law that would annul the results of not only the presidential race, but also thousands of other races, including contests for Mexico's legislature and a host of governships.


PAN, Calderon's party, has been stealing elections through this process for decades. There have been instances where boxes from areas dominated by the PRI have been counted as 90% for PAN. It isn't ironic that PAN doesn't want the packets opened: the law favors the ruling party that has control over the vote-counting process.

I don't think there is a better system for choosing our leaders than by open elections. However, democracy is such a fragile thing, so easily corrupted, it must be gaurded like a small child in a busy marketplace.

It is a hard thing to accept that elections are stolen all of the time. In the United States, especially in the early days, voter fraud has been a way of life. Clearly it is improving, but in tight elections, the better cheater just might win.

In this case, PAN once again proved themselves to be the better cheaters.

Independence Day

230 years ago, one of the greatest documents affirming the supremacy of men over their ruler was submitted. Written by Thomas Jefferson, the Declaration of Independence is still the best living revolutionary document in existence.

Please, if you want to celebrate the Fourth of July without giving GWB a pat on the back, read it slowly. Savor the words and the sheer brilliance of the logic, and the enormous fortitude of the argument within.

Never has this document been more pertinent.

Read it if you know what is good for you.

Happy Fourth of July!

O.K. well it is still Fourth of July where I grew up.

Hamdan v. Rumsfeld

I received this link to Mark Steyn's latest rampage. Arch Stanton sent it to me via email and called me a champion of the Guatanamo Prisoners. Arch, I am a champion of the rule of law. Pay close attention.

When I first read the article, I was quite dismayed. According to the column, it seemed that not only had Stevens argued the case based soley on the Geneva Convention, but that al-Qaeda had been granted statehood by the ruling. "This couldn't be," I thought.

So I read Steven's opinion in it's entirety. What a relief! The case had not been ruled using the Geneva Convention, but Steven's did address the Geneva convention in the last 10% of his ruling. I'll get back to that, but most importantly, the case was decided on it's merits with reasoning that is quite easy to follow and backed by a plethora of precedent.

Getting to this nonsense about turning the Geneva convention on it's head, Hamdan was afforded rights that parties to a conflict "not international in nature" as afforded by Common Article 3 of all 4 Geneva Conventions. As Justice Steven's explains...

The Court of Appeals thought, and the Government asserts, that Common Article 3 does not apply to Hamdan because the conflict with al Qaeda, being “ ‘international in scope,’ ” does not qualify as a “ ‘conflict not of an international character.’ ” 415 F. 3d, at 41. That reasoning is erroneous. The term “conflict not of an international character” is used here in contradistinction to a conflict between nations.

[SNIP]

Common Article 3, by contrast, affords some minimal protection, falling short of full protection under the Conventions, to individuals associated with neither a signatory nor even a nonsignatory “Power” who are involved in a conflict “in the territory of” a signatory. The latter kind of conflict is distinguishable from the conflict described in Common Article 2 chiefly because it does not involve a clash between nations (whether signatories or not). In context, then, the phrase “not of an international character” bears its literal meaning. See, e.g., J. Bentham, Introduction to the Principles of Morals and Legislation 6, 296 (J. Burns & H. Hart eds. 1970) (using the term “international law” as a “new though not inexpressive appellation” meaning “betwixt nation and nation”; defining “international” to include “mutual transactions between sovereigns as such”); Commentary on the Additional Protocols to the Geneva Conventions of 12 August 1949, p. 1351 (1987)

Steven's has not turned the Genevea convention on it's head, he has upheld it by affording limited protection under Common Article 3 which affords legal protection for parties in a conflict that is not between two nations. Since Hamdan is being tried for his involvement with al-Qaeda and not with the Taliban, Hamdan meets the standards for this type of limited legal protection.

In fact, limiting language that would have rendered Common Article 3 applicable “especially [to] cases of civil war, colonial conflicts, or wars of religion,” was omitted from the final version of the Article, which coupled broader scope of application with a narrower range of rights than did earlier proposed iterations.

So the spirit of Common Article 3 is limited protection for a broadly defined set of combatants that are not members of a military of a nation. Had any kind of autonomy been confered upon al-Qaeda by this ruling, Hamdan would NOT qualify for protection under Common Article 3.

Now, getting to the meat of the ruling, this case fell short at nearly every corner. I've read plenty of opinions, and the reasoning in some can be pretty thin and hard to understand. Reading the Steven's opinion left no doubt in my mind as to the correctness of the ruling.

The validity of granting the writ of certiorari in the first place notwithstanding, the case is pretty open and shut. (In Justice Scalia's dissent he says, "..the jurisdiction supposedly retained should, in an exercise of sound equitable discretion, not be exercised."

I for one, am glad that they did not choose to pass on this case.

The first test of this case is based on Reid v. Covert, and specifically the treatise wrtiten by Colonel William Winthrop therein...

The classic treatise penned by Colonel William Winthrop, whom we have called “the ‘Blackstone of Military Law,’ ” Reid v. Covert, 354 U. S. 1 , n. 38 (1957) (plurality opinion), describes at least four preconditions for exercise of jurisdiction by a tribunal of the type convened to try Hamdan. First, “[a] military commission, (except where otherwise authorized by statute), can legally assume jurisdiction only of offenses committed within the field of the command of the convening commander.” Winthrop 836. The “field of command” in these circumstances means the “theatre of war.” Ibid. Second, the offense charged “must have been committed within the period of the war.”28 Id., at 837. No jurisdiction exists to try offenses “committed either before or after the war.” Ibid. Third, a military commission not established pursuant to martial law or an occupation may try only “[i]ndividuals of the enemy’s army who have been guilty of illegitimate warfare or other offences in violation of the laws of war” and members of one’s own army “who, in time of war, become chargeable with crimes or offences not cognizable, or triable, by the criminal courts or under the Articles of war.” Id., at 838. Finally, a law-of-war commission has jurisdiction to try only two kinds of offense: “Violations of the laws and usages of war cognizable by military tribunals only,” and “[b]reaches of military orders or regulations for which offenders are not legally triable by court-martial under the Articles of war.” Id., at 839.29

All partites agreed to this standard and so the object of this trial is actually quite simple...

The question is whether the preconditions designed to ensure that a military necessity exists to justify the use of this extraordinary tribunal have been satisfied here.

And the winner is.....

The charge’s shortcomings are not merely formal, but are indicative of a broader inability on the Executive’s part here to satisfy the most basic precondition—at least in the absence of specific congressional authorization—for establishment of military commissions: military necessity. Hamdan’s tribunal was appointed not by a military commander in the field of battle, but by a retired major general stationed away from any active hostilities. Cf. Rasul v. Bush, 542 U. S., at 487 (Kennedy, J., concurring in judgment) (observing that “Guantanamo Bay is … far removed from any hostilities”). Hamdan is charged not with an overt act for which he was caught redhanded in a theater of war and which military efficiency demands be tried expeditiously, but with an agreement the inception of which long predated the attacks of September 11, 2001 and the AUMF. That may well be a crime,41 but it is not an offense that “by the law of war may be tried by military commissio[n].” 10 U. S. C. §821. None of the overt acts alleged to have been committed in furtherance of the agreement is itself a war crime, or even necessarily occurred during time of, or in a theater of, war. Any urgent need for imposition or execution of judgment is utterly belied by the record; Hamdan was arrested in November 2001 and he was not charged until mid-2004. These simply are not the circumstances in which, by any stretch of the historical evidence or this Court’s precedents, a military commission established by Executive Order under the authority of Article 21 of the UCMJ may lawfully try a person and subject him to punishment.

Particularly interesting is the caveat, "at least in the absence of specific congressional authorization." The court is essentially saying that if Congress wants to establish a military tribunal, they may have a constitutional right to do so. Throughout the case, the dual nature of war powers (i.e. the Executive working in concert with the Congress) was stressed.

So, had Hamdan lost this part of the test, the military tribunal itself was rightly struck down for it's procedural shortcomings. So even had the Government been able to convene a miltary tribunal, the type the President proposed was ruled to be illegal...

Whether or not the Government has charged Hamdan with an offense against the law of war cognizable by military commission, the commission lacks power to proceed. The UCMJ conditions the President’s use of military commissions on compliance not only with the American common law of war, but also with the rest of the UCMJ itself, insofar as applicable, and with the “rules and precepts of the law of nations,” Quirin, 317 U. S., at 28—including, inter alia, the four Geneva Conventions signed in 1949. See Yamashita, 327 U. S., at 20–21, 23–24. The procedures that the Government has decreed will govern Hamdan’s trial by commission violate these laws.

One of the major problems with the tribunal as conceived by the Government is outlined here..

Another striking feature of the rules governing Hamdan’s commission is that they permit the admission of any evidence that, in the opinion of the presiding officer, “would have probative value to a reasonable person.” §6(D)(1). Under this test, not only is testimonial hearsay and evidence obtained through coercion fully admissible, but neither live testimony nor witnesses’ written statements need be sworn. See §§6(D)(2)(b), (3). Moreover, the accused and his civilian counsel may be denied access to evidence in the form of “protected information” (which includes classified information as well as “information protected by law or rule from unauthorized disclosure” and “information concerning other national security interests,”

So on procedural grounds, the tribunals were challenged....

First, because Hamdan apparently is not subject to the death penalty (at least as matters now stand) and may receive a sentence shorter than 10 years’ imprisonment, he has no automatic right to review of the commission’s “final decision”44 before a federal court under the DTA. See §1005(e)(3), 119 Stat. 2743. Second, contrary to the Government’s assertion, there is a “basis to presume” that the procedures employed during Hamdan’s trial will violate the law: The procedures are described with particularity in Commission Order No. 1, and implementation of some of them has already occurred. One of Hamdan’s complaints is that he will be, and indeed already has been, excluded from his own trial. See Reply Brief for Petitioner 12; App. to Pet. for Cert. 45a. Under these circumstances, review of the procedures in advance of a “final decision”—the timing of which is left entirely to the discretion of the President under the DTA—is appropriate. We turn, then, to consider the merits of Hamdan’s procedural challenge.

The Government, then, must show the necessity of deviating from the normal rules. More specifically, the Government must show that following the traditional rules of tribunals is "impractical."

Nothing in the record before us demonstrates that it would be impracticable to apply court-martial rules in this case. There is no suggestion, for example, of any logistical difficulty in securing properly sworn and authenticated evidence or in applying the usual principles of relevance and admissibility. Assuming arguendo that the reasons articulated in the President’s Article 36(a) determination ought to be considered in evaluating the impracticability of applying court-martial rules, the only reason offered in support of that determination is the danger posed by international terrorism.52 Without for one moment underestimating that danger, it is not evident to us why it should require, in the case of Hamdan’s trial, any variance from the rules that govern courts-martial.



And this part is the point where everyone should pay attention.......

The absence of any showing of impracticability is particularly disturbing when considered in light of the clear and admitted failure to apply one of the most fundamental protections afforded not just by the Manual for Courts-Martial but also by the UCMJ itself: the right to be present. See 10 U. S. C. A. §839(c) (Supp. 2006). Whether or not that departure technically is “contrary to or inconsistent with” the terms of the UCMJ, 10 U. S. C. §836(a), the jettisoning of so basic a right cannot lightly be excused as “practicable.”

Under the circumstances, then, the rules applicable in courts-martial must apply. Since it is undisputed that Commission Order No. 1 deviates in many significant respects from those rules, it necessarily violates Article 36(b).

The Government’s objection that requiring compliance with the court-martial rules imposes an undue burden both ignores the plain meaning of Article 36(b) and misunderstands the purpose and the history of military commissions. The military commission was not born of a desire to dispense a more summary form of justice than is afforded by courts-martial; it developed, rather, as a tribunal of necessity to be employed when courts-martial lacked jurisdiction over either the accused or the subject matter. See Winthrop 831. Exigency lent the commission its legitimacy, but did not further justify the wholesale jettisoning of procedural protections. That history explains why the military commission’s procedures typically have been the ones used by courts-martial. That the jurisdiction of the two tribunals today may sometimes overlap, see Madsen, 343 U. S., at 354, does not detract from the force of this history;53 Article 21 did not transform the military commission from a tribunal of true exigency into a more convenient adjudicatory tool. Article 36, confirming as much, strikes a careful balance between uniform procedure and the need to accommodate exigencies that may sometimes arise in a theater of war. That Article not having been complied with here, the rules specified for Hamdan’s trial are illegal.54


So now that Stevens has dismissed Hamdan's presumed status as a viable subject of a military tribunal, the tribunal itself is struck down as an illegal one.

Then, and only then, is the Geneva Convention brought in to further establish the right to a fair, or at least somewhat traditional trial for Hamdan.

Common Article 3 obviously tolerates a great degree of flexibility in trying individuals captured during armed conflict; its requirements are general ones, crafted to accommodate a wide variety of legal systems. But requirements they are nonetheless. The commission that the President has convened to try Hamdan does not meet those requirements.

The message of the court is clear: no puppet courts for conspiritors. They must be tried in something that looks like a court. In the case of people that actually commit specific war crimes, different rules may apply, but military tribunals will not be used to try periferal characters. This is a victory for the rule of law.

I agree with Stevens in his conclusion..

We have assumed, as we must, that the allegations made in the Government’s charge against Hamdan are true. We have assumed, moreover, the truth of the message implicit in that charge—viz., that Hamdan is a dangerous individual whose beliefs, if acted upon, would cause great harm and even death to innocent civilians, and who would act upon those beliefs if given the opportunity. It bears emphasizing that Hamdan does not challenge, and we do not today address, the Government’s power to detain him for the duration of active hostilities in order to prevent such harm. But in undertaking to try Hamdan and subject him to criminal punishment, the Executive is bound to comply with the Rule of Law that prevails in this jurisdiction.

"Bound to comply with the Rule of Law." I like the sound of that.

Real simple guys: this guy is bad, and if he did what you said he did, put it to trial. But get on with it already! And by the way, the rule of law is what seperates us from scum like Hamdan.