A scary week ahead

“The U.S. economy is really perched on the edge of a cliff right now,” says Bank of Tokyo-Mitsubishi UFJ economist Ellen Zentner, as Marketwatch reports “the markets get ready for a busy week of data, including numbers about the already damaged U.S. housing market, orders for durable goods and personal income and spending.”

There have been anecdotal reports of a better-than-last-year Black Friday (so named for when retailers traditionally see profits move out of the red and into the black on the day after Thanksgiving). But home sales, construction, and October consumer spending numbers are expected to drop. “Federal Reserve officials believe a substantial decline in home prices is a big risk to the economy, according to forecasts released for the first time by the Fed on Tuesday. The Fed’s forecasts, combined with the summary of its October meeting, appeared to show more concern about slower growth than higher inflation.” There are also fears that the labor market is weakening. “‘Recent data on initial jobless claims suggest layoff activity is gradually accelerating as the full effects of the fallout from tighter credit conditions and the housing recession are realized,’ notes [Ryan] Sweet [of Moody’s Economy.com].”

The question to answer, said [Jim] O’Sullivan [of UBS], is what kind of slowdown the economy’s heading for. “Is it a ‘suddenly falling off a cliff’ slowdown…or more of a gradual slowing?” he asked.

Another Bush ally defeated

Australian Prime Minister John Howard’s [neo-]Liberal party was resoundingly defeated at the polls yesterday. Incoming Prime Minister Kevin Rudd has promised to ratify the Kyoto accords and negotiate a withdrawal from Iraq.

Australian opinion polls have shown that although Australians remain strong supporters of the so-called Anzus alliance — the security pact among Australia, New Zealand and the United States — they do not approve of Mr. Bush or the Iraq war.

The attempts by Mr. Howard’s coalition to stress its economic record apparently failed to impress voters. The Australian economy has had 17 years of continuous growth, lately driven by Chinese demand for Australian iron ore and coal. Mr. Howard had warned voters that a Labor victory would endanger the country’s prosperity.

Improved security in Baghdad?

Supporters of Bush administration policy in Iraq have claimed that “the surge” in U.S. forces is working, that violence has decreased. Opponents have argued that what is really going on is ethnic cleansing. The following comes to me from the International War and Peace Report:


Sectarian tensions are running so high that Baghdadis risk their lives getting their cars fixed.

By an IWPR reporter in Baghdad

When Ali Sadiq’s car engine started acting up, he knew he was in trouble. Engine problems are bad enough under normal circumstances, but in Baghdad Ali faced an additional hurdle: he couldn’t fix his Mercedes because he is a Shia.

Mechanics who repair German and American vehicles are located in a predominantly Sunni area of the capital called Sheikh Omar. Third Street in Sheikh Omar is where most of them are based – but the area is such a Sunni militant hotbed that Shia dare not go anywhere near it.

Sadiq planned to have a Sunni friend drive it there to have it seen to.

“No other mechanics can fix the problem,” said 37-year-old Sadiq, closing the hood of his car. “But the specialists are in the Sheikh Omar area, and I’m too afraid to go there.”

Sunni insurgents have expelled non-Sunni from Sheikh Omar – once a mixed Sunni, Shia, Faili Kurd and Armenian area in the heart of Baghdad.

“Insurgents even seek out Sunni mechanics that repair cars for Iraqi officials,” said Mohammed Abdulqadir, a 43-year-old Sunni mechanic who specialises in Mercedes.

While insurgents wage a sectarian terror campaign in the neighbourhood, criminal gangs also intimidate and steal from mechanics and car owners.

Abdulqadir complains that his business had suffered because militants in the area were scaring off his customers. He says they target Mercedes owners, believing they are government officials because of their expensive cars.

Sectarianism has also seeped into al-Baya’, an industrial area dominated by Shia. The suburb is home to mechanics who specialise in Korean cars such as Opels, one of the most affordable and popular cars in Iraq.

Al-Baya’ was controlled by Sunni insurgents for a while but now Shia militias are in control. Sunnis who own Korean cars won?t risk entering the area.

Hatred of Sunni runs deep here, even among those who worked with them daily.

Mohammad Khalid, a 35 year-old Shia, lost three of his brothers to Sunni assassins at a time when they ruled the neighbourhood. But after the bombing of the Shia Samarra shrine in February 2006, the Shia of al-Baya’ rose up and turfed out the Sunni insurgents.

“The Samara bombing was a saviour for us, the Shia,” said Khalid in his repair shop. “The insurgents back then were powerful, and no one was
confronting them. They were controlling this area, and the [local] Sunni were supporting them. Now they have to pay the price.”

The raging sectarianism is ruining mechanics and many other small businesses by scaring off a substantial proportion of their custom[ers].

Some have given up and joined the exodus of millions of Iraqis to Jordan and Syria. Ziad Sa’d, a 40-year-old Sunni, said that his mechanic who had an auto repair shop in Sheikh Omar had relocated to Damascus.

“I know many Iraqi [mechanics] who have moved to Syria,” he said, “They fled the hell of Iraq.”

Abdullah al-Lami, spokesman for the ministry of labour, described the situation as a “disaster”.

“The security situation has severely affected skilled workers in Baghdad. Many of them have been forced to close down their businesses and leave the area,” he said.

Al-Lami said that his ministry doesn’t have figures of how many businesses have closed down and how many mechanics have been killed or forced to leave their business.

Car owners, meanwhile, regret not being able to have their motors serviced by their old mechanics. Aqeel Muhssin, 29, a Shia, said his Sunni mechanic, who was not [in any] event religious, was killed by Shia militias. “He didn’t even know how to pray,” he said.

Army desertions not yet as bad as Vietnam

According to the Associated Press, desertion rates are now 80% higher than when the U.S. invaded Iraq in 2003, and at the highest rate since 1980. Desertions have increased 42% from last fiscal year (beginning on October 1). “The increase comes as the Army continues to bear the brunt of the war demands with many soldiers serving repeated, lengthy tours in Iraq and Afghanistan. . . . Despite the continued increase in desertions, however, an Associated Press examination of Pentagon figures earlier this year showed that the military does little to find those who bolt, and rarely prosecutes the ones they get. Some are allowed to simply return to their units, while most are given less-than-honorable discharges.” Desertion totals are not yet as high as during the Vietnam War, however the article does not compare force size and avoids comparing rates.

Pakistan suspended from Commonwealth

[Updated] According to the BBC, Pakistan has been suspended from the Commonwealth. Canadian Prime Minister Stephen Harper supported the move, which comes in the wake of General Pervez Musharraf’s declaration of a state of emergency. Musharraf sacked many Supreme Court justices who may have been about to declare his re-election as Pakistan’s president invalid owing to his failure to resign from the Army. The deposed Chief Justice was prevented from leaving his official residence yesterday despite government claims he was now free to do so. The reconstituted court has now dismissed all challenges to his re-election, “pav[ing] the way for him to quit as army chief.”

Musharraf has defended his move, claiming it was necessary to establish order for upcoming elections and to fight terrorist groups, presumably including the Taliban group that now rules the Swat Valley–once “the Switzerland of Pakistan–with Musharraf’s acquiescence, even though “Mullah [Maulana] Fazlullah’s jihad is directed at Musharraf’s regime.”

American and European diplomats see the valley’s takeover as further evidence that their ally Musharraf is not entirely committed to fighting the extremists and that his army might not even be capable of doing so, despite the billions in aid it receives from Washington. “The government simply let the situation keep going,” says a high-ranking Western officer, “and now people are pretending this is a recent problem.” The USA and other countries have tried repeatedly to draw attention to the Swat Valley, but were reassured everything was under control. “Now it’s too late.”

Perhaps, but U.S. Deputy Secretary of State John Negroponte phrased it differently:

“Under [Musharraf’s] leadership,” Mr Negroponte said, great progress has been made “towards a moderate, prosperous and democratic Pakistan.”

“President Musharraf,” he added, “has been and continues to be a strong voice against extremism.”

And “officials in the district” have “imposed a food blockade in parts of Swat amid reports that a full-fledged ground assault is being planned by security forces.” They are also jamming Fazlullah’s FM broadcasts with a broadcast of “Quranic verses to counter Fazlullah’s pre-recorded broadcasts.”

Taliban “spokesman Sirajuddin threatened to unleash suicide bombers if the authorities did not lift [the blockade].”

President Bush also added his support, “saying the general ‘hasn’t crossed the line’ and ‘truly is somebody who believes in democracy.'” This, of course, is of little surprise, given Bush’s domestic record on constitutional principles.

“What exactly would it take for the president to conclude Musharraf has crossed the line? Suspend the constitution? Impose emergency law? Beat and jail his political opponents and human rights activists?” asked Joseph R. Biden Jr. (D-Del.), chairman of the Senate Foreign Relations Committee and a presidential candidate. “He’s already done all that. If the president sees Musharraf as a democrat, he must be wearing the same glasses he had on when he looked in Vladimir Putin’s soul.” . . .

Musharraf has provided extensive assistance to the United States in its efforts to seize high-profile al-Qaeda suspects, but his devotion to the fight has been increasingly questioned by some U.S. officials and outside experts. Musharraf “is not only not indispensable; he is a serious liability” to U.S. policy, a new report by the International Crisis Group said.

A Taliban Thanksgiving

While western economies are shaken by credit crises and western militaries are overstretched in Iraq and Afghanistan, I now see the clearest indication of progress by the Taliban in Afghanistan. The Guardian reports that according an “independent thinktank with long experience in the area,” the Taliban have “a permanent presence in 54% of Afghanistan and the country is in serious danger of falling into Taliban hands.” In addition, “the frontline is getting closer to Kabul – a warning echoed by the UN which says more and more of the country is becoming a “no go” area for western aid and development workers.”

The Guardian does not name the thinktank but also cites an Oxfam report to the British Parliament “that the security situation in Afghanistan is deteriorating significantly with the country’s problems exacerbated by corruption in central and local government.”

The other side of the gun debate

As an anarchist, I value a right to bear arms because I think I just might need them, yes, against a class of violent criminals, a class dominated by the United States government.

Michael Bellesiles argues, however, that a reading of an individual rights is probably inaccurate, failing to reflect historic restrictions on gun ownership in “the 70 years after ratification [of the second amendment], laws were passed regulating the quality of firearms and munitions; their storage, sale, transport and maintenance; and where and when they can be fired. There were laws giving the state the right to appropriate firearms during internal crises and to disarm politically dangerous groups, to conduct gun censuses and to forbid the concealment of firearms. Most importantly, there were laws denying the right to own guns to those seen to pose a threat to the community: blacks, slave and free, and even women on a few occasions.” He also points to low gun ownership rates at the time of the revolution.

For supporters of the individual right to bear arms, the Second Amendment was written as a check upon the central government, a granting of the means by which the people could overthrow tyranny. This latter point seemed to fly in the face of everything that is known about the framers of the Constitution and of the Bill of Rights. For a new government to grant the people the right and support for future rebellion seems exceedingly odd. This insurrectionist view would transform the Constitution, as Justice Robert H. Jackson put it, into a “suicide pact.”

I can’t refute Bellesiles’ argument. I am not an historian. But anarchists, not recognizing government as legitimate authority, will in any case be unimpressed; we argue that rights which must be granted are not rights anyway. Given the Bush administration’s assault on constitutional liberties, and a Supreme Court that has now been stacked with conservatives in a court system that is inherently conservative through its focus on “law and order,” which actually means preserving the privileges of the wealthy, it would be nice to obtain recognition of this one right to self-defense.

Dollar panic spreads to mainstream media

It’s one thing when I see far left–that is, still to the right of me–sources predicting currency collapse. According to the Independent, “just as it appeared that the dollar might have finally reached its floor, there was another warning that the sub-prime crisis is going to get worse. The US Treasury Secretary Henry Paulson, warned an international business summit in South Africa: ‘The sub-prime market, parts of it will get worse before it gets better.'” Paulson was referring to the subprime mortgage crisis, the depths of which may remain unplumbed, but the Independent goes on to quote an economist saying the dollar must decline simply because other economies have become more competitive. Officials in China–a major U.S. creditor–have indicated an interest in diversifying their holdings, which could cause the value of dollar-denominated debt to plunge and make it far more expensive for the U.S.–at all levels–to continue deficit spending.

Meanwhile, according to the Business, a British publication, “The dollar could collapse if Opec officially admits considering changing the pricing of oil into alternative currencies such as the euro, the Saudi Arabian foreign minister [Prince Saud Al-Faisal] has warned.” This was in response to “Iran’s call for oil cartel OPEC to recognise the currency’s relentless falls.” Forbes also quotes Saudi oil minister Ali al-Nuaimi saying, “We have concern for the continued depreciation for the US dollar and we want to instruct our finance ministers to safeguard our continued purchasing power and revenue.” And Bloomberg reports, “The falling dollar will trigger a ‘review’ of the [United Arab Emirates’] dollar peg, [central bank Governor Sultan Bin Nasser] al-Suwaidi said in an interview in Gwacheon, South Korea, today, signaling the emirates may drop the dirham’s link to the U.S. currency. Policy makers are considering whether to shadow a basket of currencies consisting mainly of dollars, he said.”

Kuwait has already dropped its dollar peg, and, having been antagonized by the U.S., Iran and Venezuela are already pressing for payments in alternative currencies. The Independent quoted “Chinese central bank vice-director, Xu Jian, who said the dollar was ‘losing its status as the world currency’.” If in order to purchase oil, U.S. importers must sell dollars to purchase an alternative currency first, this will tend to raise the value of the alternative currency and lower the value of the dollar.

It has been argued that due to globalization, the U.S. is so heavily dependent on imports that the weaker dollar’s boost to domestic manufacturers will be substantially outweighed by increased costs for foreign goods. While that boost may have narrowed the trade deficit, it was still at $56.5 billion for the month of September.

It becomes harder to see how the doomsters on the left (but still to the right of me) who have predicted a dollar collapse, accompanied by high inflation, are wrong. And, as usual, this development will disproportionately impact those who have the least ability to revalue their assets in alternative currencies. The rich, who have profited from bubbles past and present, can take those profits overseas. The poor, who are stuck dealing with dollars, are helpless.

Supreme Court may consider ban on handguns

The Cato Institute included a note in their daily newsletter about the possibility that the Supreme Court might hear a case in which a lower court struck down a Washington, DC, ban on handguns as violating the second amendment right to keep and bear arms. Quoting an article in their own publication, they write:

Hopefully, the U.S. Supreme Court, at long last, will answer this vital question: Does the right to keep and bear arms belong to us as individuals, or does the Constitution merely recognize the collective right of states to arm the members of their militias?

This is a curious phrase. The Cato Institute, a capitalist Libertarian think tank, supports an individual right to keep and bear arms. Their hope, then, can only be for one of these possible answers. And if it is not the one they hope for, I guess that isn’t an answer.

Wal-Mart more socially responsible than Burt’s Bees?

In overwhelming proportions, U.S. consumers view themselves as conscious consumers, socially responsible, environmentally friendly, and “green,” preferring energy efficiency, health and safety benefits, fair labor and trade practices, and environmentally-friendly practices in shopping decisions. But this same research found that these consumers also ranked the following companies as most socially responsible:

Company % selecting
Whole Foods 22
Newman’s Own 19
Wal-Mart 18
Burt’s Bees 17
General Electric 16
Johnson & Johnson 16
Ben & Jerry’s 16

A lot of these were probably within a margin of error (usually at least 3-5%), which was not stated in this report, which inadequately cited the original research. Even so, while they crow about how consumers shop their consciences, the general level of awareness seems dismal.