Watchman Newsletter

Pentagon Report Exposes China Menace

Human Events (Link) - Robert Maginnis (August 31, 2011)

A new Pentagon report indicates China’s sustained military investments are destabilizing and exposes the Marxist giant’s global ambitions. The free world had better wake up to the security threat posed by this hegemonic menace.

Last week the Pentagon issued its annual report to Congress, which warns, “China’s rise as a major international actor is likely to stand out as a defining feature of the strategic landscape of the early 21st century.”

But the report “mischaracterizes and minimizes that threat,” according to Steve Mosher, a social scientist who worked in China and is author of numerous books on the country. The report “does a disservice to the truth,” Mosher said.

The truth about China’s emerging global threat becomes obvious when Beijing’s intentions, behavior and military modernization are properly exposed.

Pentagon prepares for economic warfare

The Australian (Link) - Helen Rumbelow (August 20, 2011)

The guests were assembled in the Warfare Analysis Laboratory, surrounded by uniformed officers from the highest levels of the Pentagon and a dizzying array of screens normally used to simulate nuclear world war.

The gentlemen were called to order and the games began.

“If you imagine the war room in Dr. Strangelove, you’re not far off,” says participant James Rickards.

Yet this was no traditional battle game, but rather the Pentagon’s first economic war game, and the authorities are loath to talk about it.

Economic war? It sounds preposterous. Except it gets less so with every dollar of debt run up by the US.

Behind the scenes, the military are worried about the market. For who owns much of this debt? China, the US’s most powerful rival and threat. And that makes America vulnerable to a new kind of bloodless but ruthless war.

Global Economic Downturn: A Crisis of Political Economy

Stratfor Global Intelligence (Link) - George Friedman (August 9, 2011)

Classical political economists like Adam Smith or David Ricardo never used the term “economy” by itself. They always used the term “political economy.” For classical economists, it was impossible to understand politics without economics or economics without politics. The two fields are certainly different but they are also intimately linked. The use of the term “economy” by itself did not begin until the late 19th century. Smith understood that while an efficient market would emerge from individual choices, those choices were framed by the political system in which they were made, just as the political system was shaped by economic realities. For classical economists, the political and economic systems were intertwined, each dependent on the other for its existence.

The current economic crisis is best understood as a crisis of political economy. Moreover, it has to be understood as a global crisis enveloping the United States, Europe and China that has different details but one overriding theme: the relationship between the political order and economic life. On a global scale, or at least for most of the world’s major economies, there is a crisis of political economy. Let’s consider how it evolved.

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.

Steel On Steel Persecution Update

Steel on Steel - Donald McElvaney (July 11, 2011)

1. Muslim Mobs in Egypt Attack Christian Homes, Threaten Priest

2. Chinese Authorities Expel Shouwang Church Member from Beijing

3. Beleaguered Chinese Church to Provide Legal Aid to Members

4. Messianic Christian Couple in Israel Accused of Converting Minor

5. Pastor’s Father Beaten Unconscious in Attack in Rajasthan, India

6. Pakistan’s Christian Sanitation Workers Swept into Societal Gutter

7. Cuban Pastor, Family Arrive in U.S. after Suffering under Regime

8. Imprisoned Lao Pastor ‘Extremely Weak,’ Family Says

Steel On Steel Persecution Update

Steel on Steel - Donald McElvaney (July 1, 2011)

• China

• Egypt

• Iran

• Nepal

• Nigeria

• Pakistan

• Sudan

• India

China, Russia sign revised currency agreement

China Daily (Link) (June 23, 2011)

The People’s Bank of China, the country’s central bank, said on Thursday that it has signed a revised bilateral currency settlement agreement with the Central Bank of the Russian Federation.

According to the revised agreement, individuals and corporations from both countries will be able to conduct settlements and payments using the yuan, the ruble and freely convertible currencies, the central bank said in a statement on its website.

In addition to border trade, ordinary trade may also be settled in both countries’ official currencies, following the revision of the agreement.

The move will help promote bilateral financial cooperation, trade and investment, the statement said.

Analysts said the move will be of great significance in reducing reliance on the U.S. dollar in bilateral trade, lowering exchange rate risks and promoting the internationalization of the yuan. †

China’s military build-up ‘game’

One News Now (Link) - Chad Groening (June 14, 2011)

A national defense analyst and Pentagon advisor says the Chinese are “playing a game” in their continued efforts to fool the United States about the extent of their military build-up.

A delegation of Chinese military leaders was recently given a tour of several sensitive U.S. military installations. It was the first high-level military exchange since the communist regime cut off military ties last year out of anger that the U.S. sold arms to the island democracy of Taiwan.

Lt. Col. Bob Maginnis (USA-Ret.), senior fellow for national security at the Family Research Council (FRC), shares the concerns of some congressional members about the legality of the visits.

“It seems to me that they violated the DeLay Amendment, which basically says that there are certain people and countries you can’t expose to our high technology,” he notes. “These are the top generals of the Chinese military. They haven’t made any secret about being adversaries of the U.S.”

The coming global financial crisis

MSN Money (Link) - Jim Jubak (June 13, 2011)

Politics virtually guarantee that the global economy won’t go into crisis in 2011. Politics make it extremely unlikely that the global economy will slow down as much as the market seems to fear. Politics, in fact, put a safety net under the global economy this year.

And politics also virtually guarantee another, deeper crisis in 2012 or 2013. I’d bet 2013.

How come? You see, just about every politician in the world is trying to kick an economic problem down the road into 2012 or 2013. I think they’ll succeed in postponing the day of reckoning in 2011 using a combination of funny accounting, additional spending and subsidies. But the price for that postponement will be that problems will be bigger and harder to truly solve in 2012 or 2013 than they are now. And that will raise the odds that the global economy will face another serious crisis -- just five years or so after the last one.

This kick-it-down-the-road effort is most obvious in the eurozone, where the effort to put together a new rescue package for Greece really comes down to putting off a Greek default from 2012 to 2013 or 2014.

But the effect is also visible in the United States, where I think the most likely result of negotiations in the U.S. to raise the debt ceiling will be to kick the problem into the 2012 election campaign, with a “solution” postponed to 2013. You can also see it in China, where the leadership that takes over in 2012 and 2013 from President Hu Jintao will be extremely reluctant to rock the boat until it’s firmly in power.

Roubini: ‘Perfect Storm’ May Rock World Economy by 2013

Money News (Link) (June 12, 2011)

A “perfect storm” of fiscal woe in the U.S., a slowdown in China, European debt restructuring and stagnation in Japan may converge on the global economy, New York University professor Nouriel Roubini said.

There’s a one-in-three chance the factors will combine to stunt growth from 2013, Roubini, who predicted the global financial crisis, said in a June 11 interview in Singapore. Other possible outcomes are “anemic but OK” global growth or an “optimistic” scenario in which the expansion improves.

“There are already elements of fragility,” he said. “Everybody’s kicking the can down the road of too much public and private debt. The can is becoming heavier and heavier, and bigger on debt, and all these problems may come to a head by 2013 at the latest.”

Elevated U.S. unemployment, a surge in oil and food prices, rising interest rates in Asia and trade disruption from Japan’s record earthquake threaten to sap the world economy. Stocks worldwide have lost more than $3.3 trillion since the beginning of May, and Roubini said financial markets by the middle of next year could start worrying about a convergence of risks in 2013.

Tony Blair’s nightmare vision of a European superstate would be disastrous for Britain and the Special Relationship

The Telegraph UK (Link) - Nile Gardiner (June 9, 2011)

Tony Blair’s interview in this morning’s Times deserves to be widely read on both sides of the Atlantic. Why? Because it shows that the Eurofederalists’ delusions of grandeur are firmly alive and remain a huge threat not only to British national sovereignty but the future of the transatlantic alliance, especially the Special Relationship. It is also a further demonstration of just how far removed Tony Blair is from political reality and public opinion in the UK, but that’s never stopped him before.

Blair has always been a European idealist at heart, even though he found out the hard way during the Iraq War that you can’t be both America’s best friend and ally and cosy up to Brussels at the same time. Over Iraq Blair found himself isolated among the ruling elites of Old Europe, especially with Germany and France, and at odds with the leadership of the European Union. He took the right decision to go to war to remove Saddam Hussein but was scorned by the EU establishment. Despite all this, he still remains wedded to the idea that Britain must be at the heart of a federal Europe, and believes that London should be at the forefront of driving the process of further European integration.

China warns U.S. debt-default idea is “playing with fire”

Yahoo! Finance (Link) - Emily Kaiser (June 8, 2011)

Republican lawmakers are “playing with fire” by contemplating even a brief debt default as a means to force deeper government spending cuts, an adviser to China’s central bank said on Wednesday.

The idea of a technical default -- essentially delaying interest payments for a few days -- has gained backing from a growing number of mainstream Republicans who see it as a price worth paying if it forces the White House to slash spending, Reuters reported on Tuesday.

But any form of default could destabilize the global economy and sour already tense relations with big U.S. creditors such as China, government officials and investors warn.

Li Daokui, an adviser to the People’s Bank of China, said a default could undermine the U.S. dollar, and Beijing needed to dissuade Washington from pursuing this course of action.

“I think there is a risk that the U.S. debt default may happen,” Li told reporters on the sidelines of a forum in Beijing. “The result will be very serious and I really hope that they would stop playing with fire.”

China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills

CNS News (Link) - Terence P. Jeffrey (June 3, 2011)

China has dropped 97 percent of its holdings in U.S. Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.

Treasury bills are securities that mature in one year or less that are sold by the U.S. Treasury Department to fund the nation’s debt.

Mainland Chinese holdings of U.S. Treasury bills are reported in column 9 of the Treasury report linked here.

Until October, the Chinese were generally making up for their decreasing holdings in Treasury bills by increasing their holdings of longer-term U.S. Treasury securities. Thus, until October, China’s overall holdings of U.S. debt continued to increase.

China Claims Air Supremacy With Its New J-20 Stealth Fighter

Business Insider (Link) - Robert Johnson (May 10, 2011)

A close look at China’s J-20 stealth fighter, by Washington think tank The Jamestown Foundation, calls the plane a “game changer,” that will render all air defense in the region obsolete.

With no refueling of the J-20, Japan, South Korea, and former Air Force bases in the Philippines will all be open to attack; with refueling, United States operations in Guam become easily acquired targets.

This capability allows China to take full control of both “island chains” that form the country’s self-defined, maritime defense perimeter.

The study suggests that J-20s will be the tactical equal of U.S. F-22A Raptors as well as F-35 Joint Strike Fighters, and be capable of delivering large “glide bombs” that will “remain unseen through the whole delivery maneuver, effecting complete surprise.”

IMF bombshell: Age of America nears end

Market Watch (Link) - Brett Arends (April 25, 2011)

The International Monetary Fund has just dropped a bombshell, and nobody noticed.

For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China. And it’s a lot closer than you may think.

According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now. Put that in your calendar.

It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.

Unreported Soros Event Aims to Remake Entire Global Economy

Media Research Center (Link) - Dan Gainor (March 23, 2011)

Two years ago, George Soros said he wanted to reorganize the entire global economic system. In two short weeks, he is going to start - and no one seems to have noticed.

On April 8, a group he’s funded with $50 million is holding a major economic conference and Soros’s goal for such an event is to “establish new international rules” and “reform the currency system.” It’s all according to a plan laid out in a Nov. 4, 2009, Soros op-ed calling for “a grand bargain that rearranges the entire financial order.”

The event is bringing together “more than 200 academic, business and government policy thought leaders” to repeat the famed 1944 Bretton Woods gathering that helped create the World Bank and International Monetary Fund. Soros wants a new “multilateral system,” or an economic system where America isn’t so dominant.

More than two-thirds of the slated speakers have direct ties to Soros. The billionaire who thinks “the main enemy of the open society, I believe, is no longer the communist but the capitalist threat” is taking no chances.

Thus far, this global gathering has generated less publicity than a spelling bee. And that’s with at least four journalists on the speakers list, including a managing editor for the Financial Times and editors for both Reuters and The Times. Given Soros’s warnings of what might happen without an agreement, this should be a big deal. But it’s not.

What is a big deal is that Soros is doing exactly what he wanted to do. His 2009 commentary pushed for “a new Bretton Woods conference, like the one that established the post-WWII international financial architecture.” And he had already set the wheels in motion.

East-West military gap rapidly shrinking-report

Reuters (Link) - Peter Apps (March 8, 2011)

Western cuts and swiftly rising defence spending in emerging economies are redrawing the global strategic map, a leading think-tank said on Tuesday, with the danger of conflicts between states also rising.

In its annual Global Military Balance report, the London-based International Institute for Strategic Studies (IISS) said the shift in economic power was already beginning to have a real military effect and closing any strategic gap.

“Western states’ defence budgets are under pressure and their military procurement is constrained,” said IISS director general John Chipman. “But in other regions -- notably Asia and the Middle East -- military spending and arms acquisitions are booming. There is persuasive evidence that a global redistribution of military power is under way.”

International Monetary Fund director Dominique Strauss-Kahn calls for new world currency

The Telegraph UK (Link) - Andrew Trotman (February 10, 2011)

Dominique Strauss-Kahn, managing director of the International Monetary Fund, has called for a new world currency that would challenge the dominance of the dollar and protect against future financial instability.

“Global imbalances are back, with issues that worried us before the crisis - large and volatile capital flows, exchange rate pressures, rapidly growing excess reserves - on the front burner once again,” Strauss-Kahn said. “Left unresolved, these problems could even sow the seeds of the next crisis.”

“When we worry about the deficiencies of the international monetary system, we are mostly worrying about volatility,” he added. There is “a sense that money sometimes flows around the globe in too-volatile a fashion and that countries need a more stable, more predictable external environment in order to prosper,” he said.

He suggested adding emerging market countries’ currencies, such as the yuan, to a basket of currencies that the IMF administers could add stability to the global system.

Which Of The Currencies Of The World Is Going To Crash First?

Economic Collapse Blog (Link) (January 21, 2011)

Last year was an absolutely fascinating time for world currency markets.  The yen, the dollar and the euro all took their turns in the spotlight.  Each experienced wild swings at various times, but the overall theme that we saw was that faith in paper currencies is dying.  The biggest reason for this is the horrific sovereign debt crisis that has swept the globe.  The United States, Japan and a whole host of European nations are all drowning in debt.  The U.S. and Japan are both steamrolling toward insolvency, and several European nations would have already defaulted on their debts if they had not been bailed out.  So which of the major currencies of the world is going to crash first?  Will one (or more) of the big currencies fall before the end of 2011?  Once one major currency collapses will the rest start to fall like dominoes?  The truth is that the world has never seen a sovereign debt crisis of this magnitude in all of human history.  Almost the entire globe is drowning in a sea of red ink and it has brought us right to the brink of financial disaster.

So which of the currencies of the world is going to be the first to come crashing down?  Well, let’s take a quick look at the yen, the euro and the dollar....

China’s Military Comes Into Its Own

Stratfor Global Intelligence (Link) - Rodger Baker (January 18, 2011)

Chinese President Hu Jintao is visiting the United States, perhaps his last state visit as president before China begins its generational leadership transition in 2012. Hu’s visit is being shaped by the ongoing China-U.S. economic dialogue, by concerns surrounding stability on the Korean Peninsula and by rising attention to Chinese defense activity in recent months. For example, China carried out the first reported test flight of its fifth-generation combat fighter prototype, dubbed the J-20, during U.S. Defense Secretary Robert Gates’ visit to China the previous week.

The development and test flight of China’s J-20 is not insignificant, but it is also by no means a game changer in the U.S.-China defense balance. More intriguingly, the test highlights how China’s military increasingly is making its interests heard.

China’s Hu Jintao: Currency system is ‘product of past’

BBC News (Link) (January 17, 2011)

Chinese President Hu Jintao has said the international currency system dominated by the US dollar is a “product of the past.”

Mr Hu also said China was taking steps to replace it with the yuan, its own currency, but acknowledged that would be a “fairly long process.”

The remarks to two US newspapers come ahead of a state visit by the Chinese leader to Washington this week.

They reflect continuing tensions over currency issues between the two powers.

The remarks to the Washington Post and Wall Street Journal came in the form of written responses to questions. Mr Hu also reiterated criticism of a decision by the US Federal Reserve to inject $600bn into the economy, which some argue will weaken the dollar at the expense of other countries’ exports.

“The monetary policy of the United States has a major impact on global liquidity and capital flows and therefore, the liquidity of the US dollar should be kept at a reasonable and stable level,” President Hu said.

EU to ‘Wake Up’ to ‘Threat From the East’

The Parliament (Link) - Martin Banks (January 14, 2011)

Joschka Fischer, the former German foreign minister, has warned the EU to beware of a looming crisis which he says could “dwarf” the current economic downturn.

Speaking in parliament, the leading Green politician said the EU stands the risk of being left behind as the global “balance of power” shifts eastwards.

Fischer used his address to a packed conference to call for greater European unity and for Europe to “combine our interests” to weather the economic storm.

He warned that amidst debate about how to tackle the fiscal crisis another potentially much more serious threat had, so far, remained “undiscussed.”

“I am talking about the shifting balance of power in the word, from the west to the east,” he declared.

Gates: North Korea becoming ‘direct threat’ to U.S., ICBMs within 5 years

Stars and Stripes (Link) - Kevin Baron (January 11, 2011)

North Korea likely will possess intercontinental ballistic missiles within five years and is “becoming a direct threat to the United States,” Defense Secretary Robert Gates said Tuesday, offering a blunt new assessment of the threat posed by the reclusive Stalinist regime.

Shortly after meeting with Chinese President Hu Jintao in Beijing, Gates said he had told senior leaders here that he had identified two developments that “changed the status quo” on the Korean peninsula: Pyongyang’s continued development of nuclear weapons and ICBMs, and South Korea’s growing anger with the North’s attacks, notably the sinking of the Cheonan and the shelling of Yeonpyeong island.

“Clearly if there is another provocation, there will be pressure on the South Korean government to react,” he said. “We consider this a situation of real concern.”

Gates predicted that North Korea will have a limited ability to strike the U.S. with a nuclear weapon within five years.

“I don’t think it’s an immediate threat, but on the other hand I don’t think it’s a five-year threat,” Gates said.

China’s Ballistic-Missile, Stealth-Fighter Advances Draw Attention of U.S.

Bloomberg (Link) - Tony Capaccio (January 6, 2011)

Advances in Chinese military technology, including a new anti-ship ballistic missile and possibly a radar-evading fighter plane, are drawing scrutiny from Pentagon officials days before Defense Secretary Robert Gates is due to meet with his counterpart in Beijing.

Vice Admiral Jack Dorsett, the head of Navy intelligence, said yesterday that the Pentagon had underestimated the speed at which China has developed and fielded a ballistic missile that may be capable of hitting a maneuvering U.S. aircraft carrier. Dorsett said it was too early to tell whether the U.S. also has misjudged China’s capability to build a stealth fighter jet.

“We’ve been on the mark on an awful lot of our assessments but there has been a handful of things we have underestimated,” Dorsett told defense reporters. The DF-21D missile now has so-called initial combat capability, he said, according to his analysts and U.S. Pacific Command head Admiral Robert Willard.

China’s advances in military technology are drawing close scrutiny and concern from the Pentagon and new Republican-controlled House, particularly when they may jeopardize the dominance of U.S. naval forces in the Pacific region. News of the Chinese advances comes as Congress prepares to consider cuts in the Defense Department budget.

Fresh humiliation for eurozone as China says it will bail out debt-ridden nations

Daily Mail UK (Link) (December 23, 2010)

China has said it is willing to bail out debt-ridden countries in the euro zone using its $2.7trillion overseas investment fund.

In a fresh humiliation for Europe, Foreign Ministry spokesman Jiang Yu said it was one of the most important areas for China’s foreign exchange investments.

The country has already approached struggling European countries with financial aid, including offering to buy Greece’s debt in October and promising to buy $4billion of Portuguese government debt.

Today Portugal had its credit rating downgraded by the Fitch Ratings agency amid mounting concerns over the country’s ability to raise money in the markets to finance its hefty borrowings.

Fitch said it was reducing its rating on the country’s debt by one notch to A+ from AA- and warned that further downgrades may be in the offing by maintaining its negative outlook.

‘To have any discernible effect China will have to buy a lot more than 5 billion euros if they expect to have any impact on the negative sentiment surrounding Europe,’ said Michael Hewson, currency analyst at CMC Markets.

China’s astonishing economic growth has put it on track to overtake America as the world’s economic powerhouse within two years, a recent report claimed.

China Declares Christian ‘House Churches’ a ‘Cult,’ Advocacy Group Reports

CNS News (Link) - Patrick Goodenough (December 8, 2010)

China reportedly has launched a new crackdown on “house churches,” Protestant congregations that do not belong to the country’s state-sanctioned, “patriotic” church organization.

In an ominous development reported by the China Aid Association (CAA), a U.S.-based group that advocates for Chinese Christians, authorities allegedly have labeled the house church movement a “cult.”

Beijing used the same term when it outlawed the Falun Gong meditation movement in 1999, a move that ushered in a major, ongoing crackdown against the Falun Gong that has brought China worldwide censure.

Citing secret information “from more than one reliable source” inside China, CAA said Tuesday the campaign against house churches ordered by the Communist Party Politburo was launched on December 1.

Chinese security officials “have been notified to collect information about house churches throughout the country and turn these reports in to their superiors,” it said. “A long ‘blacklist’ of church leaders and influential believers reportedly has been drawn up.”

U.S. fiscal health worse than Europe’s: China adviser

Reuters (Link) - Zhou Xin, Simon Rabinovitch and Kevin Yao (December 8, 2010)

The U.S. dollar will be a safe investment for the next six to 12 months because global markets are focused on the euro zone’s troubles but America’s fiscal health is worse than Europe’s, an adviser to the Chinese central bank said on Wednesday.

Li Daokui, an academic member of the central bank’s monetary policy committee, said that U.S. bond prices and the dollar would fall when the European economic situation stabilized.

“For now, market attention is still on Europe and for the coming 6-12 months, it will not shift to the United States,” Li said, when asked about U.S. President Barack Obama’s plan to extend tax cuts for all Americans.

“But we should be clear in our minds that the fiscal situation in the United States is much worse than in Europe. In one or two years, when the European debt situation stabilizes, attention of financial markets will definitely shift to the United States. At that time, U.S. Treasury bonds and the dollar will experience considerable declines.”

China’s credit bubble on borrowed time as inflation bites

The Telegraph (Link) - Ambrose Evans-Pritchard (December 5, 2010)

The Royal Bank of Scotland has advised clients to take out protection against the risk of a sovereign default by China as one of its top trade trades for 2011. This is a new twist.

It warns that the Communist Party will have to puncture the credit bubble before inflation reaches levels that threaten social stability. This in turn may open a can of worms.

“Many see China’s monetary tightening as a pre-emptive tap on the brakes, a warning shot across the proverbial economic bows. We see it as a potentially more malevolent reactive day of reckoning,” said Tim Ash, the bank’s emerging markets chief.

Officially, inflation was 4.4pc in October, and may reach 5pc in November, but it is to hard find anybody in China who believes it is that low. Vegetables have risen 20pc in a month.

The Communist Party learned from Tiananmen in 1989 how surging prices can seed dissent. “Inflation is a redistributive mechanism in favour of the few that can protect living standards, against the large majority who cannot. The political leadership cannot, will not, take risks in that regard,” said Mr Ash.

RBS recommends credit default swaps on China’s five-year debt. This is not a forecast that China will default. It is insurance against the “fat tail risk” of a hard landing, with ramifications across Asia.

A world with no one in charge

The Washington Post (Link) - Robert D. Kaplan (December 5, 2010)

Currency wars. Terrorist attacks. Military conflicts. Rogue regimes pursuing nuclear weapons. Collapsing states. And now, massive leaks of secret documents. What is the cause of such turbulence? The absence of empire. During the Cold War, the world was divided between the Soviet and U.S. imperial systems. The Soviet imperium - heir to Kievan Rus, medieval Muscovy and the Romanov dynasty - covered Eastern Europe, the Caucasus and Central Asia and propped up regimes in Africa, the Middle East and Latin America. The American imperium - heir to maritime Venice and Great Britain - also propped up allies, particularly in Western Europe and East Asia. True to the garrison tradition of imperial Rome, Washington kept bases in West Germany, Turkey, South Korea and Japan, virtually surrounding the Soviet Union.

The breakup of the Soviet empire, though it caused euphoria in the West and led to freedom in Central Europe, also sparked ethnic conflicts in the Balkans and the Caucasus that cost hundreds of thousands of lives and created millions of refugees. (In Tajikistan alone, more than 50,000 people were killed in a civil war that barely registered in the U.S. media in the 1990s.)

The Soviet collapse also unleashed economic and social chaos in Russia itself, as well as the further unmooring of the Middle East. It was no accident that Iraqi President Saddam Hussein invaded Kuwait less than a year after the Berlin Wall fell, just as it is inconceivable that the United States would have invaded Iraq if the Soviet Union, a staunch patron of Baghdad, still existed in 2003. And had the Soviet empire not fallen apart or ignominiously withdrawn from Afghanistan, Osama bin Laden never would have taken refuge there and the attacks of Sept. 11, 2001, might not have happened. Such are the wages of imperial collapse.

Fed data reveal wide scope of loan action during financial crisis

The Washington Post (Link) - Neil Irwin and Jia Lynn Yang (December 1, 2010)

The Federal Reserve pumped trillions of dollars into all manner of banks, investment firms and major companies during the financial crisis, according to documents released Wednesday that reveal for the first time the full scope of the Fed’s emergency lending.

The Fed was compelled by recent Wall Street reform legislation to release details of the special lending programs it undertook in 2008 and 2009, when it deployed a wide range of untested tools to try to fight the financial crisis. The programs included more than 21,000 individual transactions with a total loan value that Bloomberg News tabulates at $3.3 trillion. The programs involved have since been shut down, and most loans have been repaid.

The Fed said it does not anticipate incurring any losses; indeed, many of the programs have turned a profit for shareholders.