Watchman Newsletter

A National Debt Of $14 Trillion? Try $211 Trillion

NPR (Link) (August 6, 2011)

When Standard & Poor’s reduced the nation’s credit rating from AAA to AA-plus, the United States suffered the first downgrade to its credit rating ever. S&P took this action despite the plan Congress passed this past week to raise the debt limit.

The downgrade, S&P said, “reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.”

It’s those medium- and long-term debt problems that also worry economics professor Laurence J. Kotlikoff, who served as a senior economist on President Reagan’s Council of Economic Advisers. He says the national debt, which the U.S. Treasury has accounted at about $14 trillion, is just the tip of the iceberg.

“We have all these unofficial debts that are massive compared to the official debt,” Kotlikoff tells David Greene, guest host of weekends on All Things Considered. “We’re focused just on the official debt, so we’re trying to balance the wrong books.”

Steel On Steel Persecution Update

Steel on Steel - Donald McElvaney (August 6, 2011)

1. Pastor in Iran Awaits Decision on Execution

2. Muslims Seize Christian Burial Sites in Tanzania’s Archipelago

3. House Church Alliance Leader in China Sentenced to Labor Camp

4. Muslim Extremists Torch Churches in Zanzibar, Tanzania

5. Two Bombs Explode Near Churches in Jos, Nigeria

6. Kidnapped Christian Girl in Sudan Escapes, Traumatized

7. Blast Near Church in Kirkuk, Iraq Injures 13

8. Muslim Extremists in India Attack, Threaten Christian Women

Islam and Democracy: Uneasy companions

The Economist (Link) (August 6, 2011)

“OF COURSE they say nice things these days,” says a Lebanese woman, a sophisticated Sunni Muslim in her 50s, gliding between English, French and Arabic. “They know who they’re talking to. But you cannot trust them—absolutely not.” Again and again, in secular and liberal circles in Beirut, Cairo, Rabat, Tunis and even Ramallah, the seat of the Palestinian Authority, you hear almost identical dark warnings against the Islamist movements that are gaining ground across the Arab world as dictators are toppled, tackled or forced into concessions.

Islamist spokesmen and leaders of the revived Islamist mainstream, in particular the Muslim Brotherhood and groups akin to it, are bending over backwards to give reassurances that they will promote a peaceful, pluralistic and tolerant version of Islam. The rights of women and religious and ethnic minorities will be respected, they say, and the people’s democratic verdict will be accepted if they lose elections.

Whatever their doubts, most democrats in the Arab world reckon that Islamists who say they will abide peacefully by the rules of the game must be allowed—indeed encouraged—to participate in mainstream politics: far better than forcing them into a violent, conspiratorial underground. All the same, the well of mistrust on both sides runs deep.

China says debt financing unlikely ‘to save’ US, EU

France 24 (Link) - AFP (August 5, 2011)

China said Friday that debt deals in the United States and in Europe would not be enough to save their economies and “concrete steps” must be taken to rebalance the global economy.

“The only way the Americans have come up with to improve economic growth has been to take on new loans to repay the old ones,” a blistering commentary published on the official Xinhua news agency said.

“To eat May’s grain in April, however, will never be a permanent solution to a problem,” the report said.

China warned on Wednesday that Washington’s efforts to raise the US limit on borrowing had failed to defuse America’s “debt bomb” and signalled that Beijing would further diversify its holdings away from the dollar.

Egypt’s Transition Six Months On: From Diversity to Divisiveness

The Brookings Institution (Link) - Khaled Elgindy (August 4, 2011)

Last month, I traveled to Cairo to gain a better understanding of the political transition now underway following the Egyptian people’s historic uprising that ousted Hosni Mubarak from power six months ago. While the situation remains rather fluid today, several important observations can be made about the state of Egypt’s turbulent transition.

One of the more striking features of the current transition is the extraordinary diversity and dynamism of Egypt’s burgeoning political landscape. Since the removal of Mubarak, whose historic trial began in Cairo, Egypt has seen an explosion in civic and political activity across the country and in all areas of life, including the proliferation of dozens of new political parties, movements, and groupings of all stripes. Previously apolitical actors like the youth movements that led the January uprising and the ultra-orthodox Salafists have now entered the political fray for the first time. Even established powers like the Muslim Brotherhood are undergoing major transformations with defections and splits along generational and philosophical lines. Competition, debate, and shifting alliances among the various youth, liberal, leftist, and Islamist forces unleashed by the revolution (including those who had opposed it) have brought Egypt’s once comatose political culture back to life - but not without a price.

Turkey absent again from naval drills with Israel, US

The Jerusalem Post (Link) - Yaakov Katz (August 4, 2011)

Israel and the United States started their annual joint naval exercises in the Mediterranean Sea this week again without the participation of the Turkish navy, in another sign of Jerusalem’s deteriorating ties with Ankara.

Called Reliant Mermaid, the annual exercise was started over a decade ago and included the Israeli, Turkish and American navies. The objective of the exercise is to practice search-and-rescue operations and to familiarize each navy with international partners who also operate in the Mediterranean Sea.

The exercise was last held with all three partners in the summer of 2009 but following the Israeli navy raid on the Mavi Marmara last May, Turkey pulled out of the 2010 drill.

The IDF had expected Turkey would not participate this year as well.

Elite General to Become Iran Oil Minister

Financial Times (Link) - Najmeh Bozorgmehr (August 3, 2011)

Iran’s parliament has voted for a senior Revolutionary Guards commander to become the oil minister despite him being listed on the European Union sanctions list for alleged connections to the country’s controversial nuclear programme.

Of the 246 parliamentarians at Wednesday’s session, about 90 per cent voted for Brigadier General Rostam Qasemi to run the ministry, which generates most of Iran’s foreign exchange.

Ali Larijani, the speaker of the parliament that is dominated by fundamentalists, called for a “symbolic vote” in response to the sanctions that bar the new minister from travelling abroad and consequently attending meetings of the Opec oil producers’ cartel at its headquarters in Vienna. Iran currently heads the group.

He also assured parliamentarians that “the perception that the guards intend to take over political power is irrelevant.”

After the Iran-Iraq war ended in 1988, the Revolutionary Guards gradually expanded their economic power by taking over development plans such as construction of roads, dams and later oil and gas projects. The National Iranian Oil Company says the guards’ oil projects alone are worth $25bn.

The West’s horrible fiscal choice

The Telegraph (Link) - Ambrose Evans-Pritchard (August 3, 2011)

The theoretical model behind the austerity push – known as an “expansionary fiscal contraction” – is based on the work of German theorists, and more recently on studies by Harvard professor Alberto Alesina and a group of brave scholars willing to defy the canonical doctrine of post-war Keynesian economics.

The Alesina view has been embraced by the European Central Bank and the budget cutters of the Eurogroup, but has enraged America’s professoriat and set off a heated argument across the world.

Former US Treasury Secretary Larry Summers said there is now a one-third chance of a full-blown recession next year in the US. Nobel leaureate Paul Krugman said obscurantists had run amok. “What we’re witnessing here is a catastrophe on multiple levels. We are doing a terrible thing. We are repeating all the mistakes of the 1930s, doing our best shot at recreating the Great Depression,” he said.

Fear that a synchronized squeeze in half the global economy may go horribly wrong has seeped into market psychology, explaining why the $2.4 trillion (£1.5 trillion) debt deal agreed in Washington has failed to spark a relief rally. Wall Street is a step ahead, bracing for cuts in an economy that has already slipped to stall speed.

Senate Panel Keeps ‘Secret Patriot Act’ Under Wraps

Wired (Link) - Noah Shachtman (August 2, 2011)

The secret Patriot Act is staying secret.

Two Senators have been warning for months that the government has a secret legal interpretation of the Patriot Act so broad that it amounts to an entirely different law — one that gives the feds massive domestic surveillance powers, and keeps the rest of us in the dark about the snooping.

“There is a significant discrepancy between what most Americans – including many members of Congress – think the Patriot Act allows the government to do and how government officials interpret that same law,” wrote the Senators, Ron Wyden and Mark Udall. “We believe that most members of the American public would be very surprised to learn how federal surveillance law is being interpreted in secret.”

The Senators tried to get the government to reveal some of the law’s contents, by forcing the Director of National Intelligence and the Attorney General to produce a report outlining when this secret surveillance has gone overboard. Yesterday, the effort failed. The Senate Select Committee on Intelligence said no to the report by rejecting Wyden and Udall’s amendment to the FY2012 Intelligence Authorization Act.

In other words: we are all still in the dark about how the government is spying on us.

Debt Deal Is A Blank Check

Forbes (Link) - Peter Schiff (August 2, 2011)

By supposedly compromising to raise the debt ceiling, Congress and the president have now paved the way for ever higher levels of federal spending. Although the nation was spared the trauma of borrowing restrictions, the actual risk of default existed solely in the minds of Washington politicians.

Both parties are now pretending that the promised cuts in spending outweigh the increase in the debt limit. But the $900 billion in identified cuts are spread over a decade and are skewed toward the end of that period. There are an additional $1.4 trillion in cuts that the plan assumes will be identified by a bi-partisan budget committee. But similarly empowered panels in the past have almost never delivered on their mandates.

More importantly, none of these “cuts” are actually binding. There is plenty of time for future Congresses to reverse what was so laboriously agreed to over the past few weeks. My guess is renewed economic weakness will be used to justify ultimate suspension of the cuts. In addition, most of the spending reductions were already scheduled to take effect before this agreement. So what did we really get?

The Congressional Budget Office currently projects that $9.5 trillion in new debt will have to be issued over the next 10 years. Even if all of the reductions proposed in the deal were to come to pass, which is highly unlikely, that would still leave $7.1 trillion in new debt accumulation by 2021. Our problems have not been solved by a long shot.

EU demands that Britain admit immigrants intending to go straight on to benefits

The Telegraph (Link) - Daniel Hannan (August 2, 2011)

The European Commission may finally have hit on an issue that jerks Britain from its euro-torpor – an issue that simultaneously presses the buttons of border control, welfare abuse and Brussels intrusiveness. Whether from hubris, power-hunger or from sheer stupidity, Eurocrats are demanding that Britain stop asking immigrants to show that they won’t immediately start accessing the social security system.

As the law stands, people wishing to settle in Britain must demonstrate that they have the means to support themselves, either through work or through an alternative source of income such as a pension. The European Commission claims that this amounts to discrimination against EU citizens, who are supposed to enjoy the same rights as British nationals.

In fact, as so often happens, Eurocrats are disregarding the plain text of their own rules. Article 7(1) of the Free Movement Directive gives EU citizens the right to reside in another member state only if they have “sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State”.

The Battle for Syria

The Trumpet (Link) - Robert Morley (August 2, 2011)

When the United States government and al Qaeda agree on something, you know that can’t be a good thing.

In this case, they both want Syrian President Bashir Assad to step down. Bizarrely, that’s not all they agree on. On July 11, U.S. Secretary of State Hillary Clinton said, “President Assad is not indispensable. … Our goal is to see that the will of the Syrian people for a democratic transformation occurs” (emphasis added throughout).

Responding to America’s overtures to the anti-government protesters, al Qaeda leader Ayman al-Zawahiri warned the pro-democracy activists not to deal with America. America would only corrupt them, he said. He called Assad, however, a “leader of criminal gangs,” an “aggressor,” an “oppressor,” and a “traitor” to his people. He applauded the pro-democracy activists’ efforts to teach Assad a “lesson.” And he hailed Syrian protesters as “mujahideen,” or holy warriors.

Both America and al Qaeda are pushing for democracy in Syria. Yet for all the talk, that is mostly all it is. Neither group has much influence in Syria.

Israel ‘ready to negotiate borders with Palestinians’

The Telegraph UK (Link) - Adrian Blomfield (August 1, 2011)

The offer, which emerged tonight appeared to represent a major climb-down by Mr Netanyahu, who has consistently refused to discuss specific borders of a future state.

A government official in Jerusalem told The Daily Telegraph the offer was dependent on the Palestinians dropping their campaign for statehood at the United Nations next month and accepting Israel as a Jewish state.

The offer appears to cross Palestinian red lines, and it seemed likely to be rejected — although the onus is now likely to be placed on the Palestinians to present a counter offer.

Mr Netanyahu reacted angrily when the 1967 proposal was made by Barack Obama in May but was now said to be offering to trade Israeli territory on its side of the line for West Bank land where its main settlements were located.

UNIFIL: IDF troops didn’t cross border

YNet News (Link) - Hanan Greenberg (August 1, 2011)

UNIFIL said Monday that Lebanese fire on IDF troops earlier in the day was uncalled for, and that the latter had not crossed into Lebanese territory, as the country’s army had claimed. The facts did not stop the Lebanese president from rebuking Israel for “provocation,” however.

On Monday morning Lebanese soldiers opened fire on Israeli soldiers patrolling the border, who returned fire. Lebanese news agencies reported at first that a Lebanese soldier was hurt during the exchanges of fire, but UNIFIL Spokesman Neeraj Singh later refuted the claims.

Lebanese President Michel Suleiman praised the army for its conduct. Suleiman blamed Israel for repeated aggression and provocation against his country. “The Israeli enemy tried again to revert back to attacks and provocations in the Wazani region, but you stood guard,” he told the troops.

A preliminary investigation by UNIFIL, which was forwarded to the IDF, shows that Lebanese forces opened fire because they thought the IDF soldiers had crossed the border.

But IDF sources are insisting that the Israeli troops remained on their side. They say a Paratroopers force was on vehicular patrol when suddenly they were fired upon, and returned fire with their rifles.

Iran new Hamas commando brigade in Gaza

DEBKAfile (Link) (July 31, 2011)

A team of Iranian Revolutionary Guards (IRGC) officers has just finished setting up Hamas’ first commando unit especially trained to combat any Israel military force entering the Gaza Strip, DEBKAfile’s military sources report. The new “Al Qods Brigades” unit of 400 men is to be the first of three. A week ago, July 23, the first unit held a passing-out parade and leave-taking ceremony from its two Iranian instructors.

DEBKAfile’s intelligence sources report that the pair arrived in the Gaza Strip in the latter half of May on Iranian passports which gave their cover names as Morteza Rahban and Hojjat Safar-Zadeh.

Their journey took them from Sudan through Egypt and Sinai where they were led by Bedouin smugglers to the contraband tunnels accessing the Gaza Strip. They went back to Tehran by the same route.

The two officers were members of the IRGC’s notorious Al Qods Brigades which undertakes overseas terrorist and covert activities on behalf of the Iranian regime. For the Al Qods commander Gen. Qassem Suleimaini, setting up a Hamas commando force in Gaza was a high and immediate priority.