Not quite our most immediate of bags, but if we stretch the envelope of what domestic insurgency can be about - and its triggers...
A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. Sound familiar?
It does to Sweden. The country was so far in the hole in 1992 -- after years of imprudent regulation, short-sighted economic policy and the end of its property boom -- that its banking system was, for all practical purposes, insolvent.
But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.
Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing cheques. Banks had to write down losses and issue warrants to the government. That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well. "If I go into a bank," said Bo Lundgren, who was Sweden's finance minister at the time, "I'd rather get equity so that there is some upside for the taxpayer." Sweden spent four per cent of its gross domestic product, or 65 billion kronor (RM33.7 billion) , the equivalent of US$11.7 billion at the time, or US$18.3 billion in today's dollars, to rescue ailing banks. That is slightly less, proportionate to the national economy, than the US$700 billion, or roughly five per cent of gross domestic product, that the Bush administration estimates its own move will cost in the United States.
But the final cost to Sweden ended up being less than two per cent of its GDP. Some officials say they believe it was closer to zero, depending on how certain rates of return are calculated.
The tumultuous events of the last few weeks have produced a lot of tight-lipped nods in Stockholm. Lundgren even made the rounds in New York in early September, explaining what the country did in the early 1990s.
A few American commentators have proposed that the US government extract equity from banks as a price for their rescue. But it does not seem to be under serious consideration yet in the Bush administration or Congress.
The reason is not quite clear. The government has already swapped its sovereign guarantee for equity in Fannie Mae and Freddie Mac, the mortgage finance institutions, and the American International Group, the global insurance giant.
Putting taxpayers on the hook without anything in return could be a mistake, said Urban Backstrom, a senior Swedish finance ministry official at the time. "The public will not support a plan if you leave the former shareholders with anything,"
The Swedish crisis had strikingly similar origins to the American one, and its neighbors, Norway and Finland, were hobbled to the point of needing a government bailout to escape the morass as well.
Financial deregulation in the 1980s fed a frenzy of real estate lending by Sweden's banks, which did not worry enough about whether the value of their collateral might evaporate in tougher times.
Property prices imploded. The bubble deflated fast in 1991 and 1992. A vain effort to defend Sweden's currency, the krona, caused overnight interest rates to spike at one point to 500 per cent. The Swedish economy contracted for two consecutive years after a long expansion, and unemployment, at three per cent in 1990, quadrupled in three years.
After a series of bank failures and ad hoc solutions, the moment of truth arrived in September 1992, when the government of Prime Minister Carl Bildt decided it was time to clear the decks.
Standing shoulder-to-shoulder with the opposition centre-left, Bildt's conservative government announced that the Swedish state would guarantee all bank deposits and creditors of the nation's 114 banks. Sweden formed a new agency to supervise institutions that needed recapitalisation, and another that sold off the assets, mainly real estate, that the banks held as collateral.
Sweden told its banks to write down their losses promptly before coming to the state for recapitalization. Facing its own problem later in the decade, Japan made the mistake of dragging this process out, delaying a solution for years.
Then came the imperative to bleed shareholders first. Lundgren recalls a conversation with Peter Wallenberg, at the time chairman of SEB, Sweden's largest bank. Wallenberg, the scion of the country's most famous family and steward of large chunks of its economy, heard that there would be no sacred cows.
The Wallenbergs turned around and arranged a recapitalization on their own, obviating the need for a bailout. SEB turned a profit the following year, 1993.
"For every krona we put into the bank, we wanted the same influence," Lundgren said. "That ensured that we did not have to go into certain banks at all."
By the end of the crisis, the Swedish government had seized a vast portion of the banking sector, and the agency had mostly fulfilled its hard-nosed mandate to drain share capital before injecting cash. When markets stabilized, the Swedish state then reaped the benefits by taking the banks public again.
More money may yet come into official coffers. The government still owns 19.9 per cent of Nordea, a Stockholm bank that was fully nationalized and is now a highly regarded giant in Scandinavia and the Baltic Sea region.
The politics of Sweden's crisis management were similarly tough-minded, though much quieter.
Soon after the plan was announced, the Swedish government found that international confidence returned more quickly than expected, easing pressure on its currency and bringing money back into the country. The centre-left opposition, while wary that the government might yet let the banks off the hook, made its points about penalising shareholders privately.
"The only thing that held back an avalanche was the hope that the system was holding," said Leif Pagrotzky, a senior member of the opposition at the time. "In public we stuck together 100 per cent, but we fought behind the scenes."
A recent IMF study [80-page pdf] of 42 systemic banking crises across the world provides evidence on how different crises were resolved.
Sep 30, 2008
Sep 27, 2008
Indeed, posting has been tardy despite dubious ambitions of saturation flaunting. No apologies, to be sure - we've been aggressing on other time-devouring and invoice-able fronts, as well as hermetically delving into arising revolutions within significant ongoing revolutions; much creeping decisiveness is in motion and much of this tip-toeing choreography has been afforded our selfish attention afore hacked 'n jacked scribblings in this our admitted forum of narcissistic relief.
Pegging of the dollar - to what now?
Iran so more now than ever.
A perfect and kinetically laced IO aimed at Western Europe. Thanks Georgia's Poor Villy: God save a NATO embedded amidst an aspiringly recalcitrant EU.
IO Meister Petraeus to CENTCOM.
Pakistan - graft up for grabs. (Are we the best of bidders?)
Things are coalescing out there in the night - radiation from countless stars with the radar emissions of FAA regulated flight control towers. All the while everything important relentlessly expands.
Sep 25, 2008
By tracking the amount of light emitted by Baghdad neighborhoods at night, a team of UCLA geographers has uncovered fresh evidence that last year's U.S. troop surge in Iraq may not have been as effective at improving security as some U.S. officials have maintained.
Night light in neighborhoods populated primarily by embattled Sunni residents declined dramatically just before the February 2007 surge and never returned, suggesting that ethnic cleansing by rival Shiites may have been largely responsible for the decrease in violence for which the U.S. military has claimed credit, the team reports in a new study based on publicly available satellite imagery.
"Essentially, our interpretation is that violence has declined in Baghdad because of intercommunal violence that reached a climax as the surge was beginning," said lead author John Agnew, a UCLA professor of geography and authority on ethnic conflict. "By the launch of the surge, many of the targets of conflict had either been killed or fled the country, and they turned off the lights when they left."
The team reports its findings in the October issue of Environment and Planning A, a leading peer-reviewed academic journal that specializes in urban and environmental planning issues.
The night-light signature in four other large Iraqi cities — Kirkuk, Mosul, Tikrit and Karbala — held steady or increased between the spring of 2006 and the winter of 2007, the UCLA team found. None of these cities were targets of the surge.
Baghdad's decreases were centered in the southwestern Sunni strongholds of East and West Rashid, where the light signature dropped 57 percent and 80 percent, respectively, during the same period.
By contrast, the night-light signature in the notoriously impoverished, Shiite-dominated Sadr City remained constant, as it did in the American-dominated Green Zone. Light actually increased in Shiite-dominated New Baghdad, the researchers found.
Until just before the surge, the night-light signature of Baghdad had been steadily increasing overall, they report in "Baghdad Nights: Evaluating the U.S. Military 'Surge' Using Night Light Signatures." [11-page pdf]
"If the surge had truly 'worked,' we would expect to see a steady increase in night-light output over time, as electrical infrastructure continued to be repaired and restored, with little discrimination across neighborhoods," said co-author Thomas Gillespie, an associate professor of geography at UCLA. "Instead, we found that the night-light signature diminished in only in certain neighborhoods, and the pattern appears to be associated with ethno-sectarian violence and neighborhood ethnic cleansing."
The effectiveness of the February 2007 deployment of 30,000 additional U.S. troops has been a subject of debate. In a report to Congress in September of that year, Gen. David Petraeus claimed "the military objectives of the surge are, in large measure, being met." However, a report the same month by an independent military commission headed by retired U.S. Gen. James Jones attributed the decrease in violence to areas being overrun by either Shiites or Sunnis.
Reasoning that an increase in power usage would represent an objective measure of stability in the city, Agnew and Gillespie led a team of UCLA undergraduate and graduate students in political science and geography that pored over publicly available night imagery captured by a weather satellite flown by the U.S. Air Force for the Department of Defense.
Orbiting 516 miles above the Earth, Satellite F16 of the Defense Meteorological Satellite Program, Operational Linescan System (DMSP/OLS) contains infrared sensors that calculate, among other things, the amount of light given off in 1.75-square-mile areas. Using geo-referenced coordinates, the team overlaid the infrared reading on a preexisting satellite map of daytime Iraq created by NASA's Landsat mapping program. The researchers then looked at the sectarian makeup in the 10 security districts for which the DMSP satellite took readings on four exceptionally clear nights between March 20, 2006, when the surge had not yet begun, and Dec. 16, 2007, when the surge had ended.
Lights dimmed in those neighborhoods that Gen. Jones pointed to as having experienced ethno-sectarian violence and neighborhood ethnic cleansing in his "Report of the Independent Commission on the Security Forces of Iraq." [153-page pdf]
Long-term obstacles to meeting Baghdad's power needs may have contributed to the decrease in night lights in the city's southwestern parts, the researchers acknowledge. But Baghdad's shaky power supply does not fully account for the effect, they contend, citing independent research showing that decaying and poorly maintained power plants and infrastructure were meeting less than 10 hours of Baghdad's power needs prior to the fall of Saddam Hussein.
"This was the part of the city that had the best sources of connection and the most affluent population, so they could actually generate power themselves, and they were in the habit of doing so well before the U.S. invasion," said Agnew, the president of the American Association of Geographers, the field's leading professional organization. "But we saw no evidence of a widespread continuation of this practice."
In addition to casting doubt on the efficacy of the surge in general, the study calls into question the success of a specific strategy of the surge, namely separating neighborhoods of rival sectarian groups by erecting concrete blast walls between them. The differences in light signatures had already started to appear by the time American troops began erecting the walls under Gen. Petraeus's direction, the researchers found.
"The U.S. military was sealing off neighborhoods that were no longer really active ribbons of violence, largely because the Shiites were victorious in killing large numbers of Sunnis or driving them out of the city all together," Agnew said. "The large portion of the refugees from Iraq who went during this period to Jordan and Syria are from these neighborhoods."
Previous research has used satellite imagery of night-light saturation to measure changes in the distribution of populations in a given area, but the UCLA project is believed to be the first to study population losses and migration due to sectarian violence. The outgrowth of an undergraduate course in the use of remote sensing technologies in the environment, the UCLA project was inspired by a desire to bring empirical evidence to a long-running debate.
Jacked & Hacked article from PhysOrg.com
Sep 5, 2008
Agent Says Israelis Let a Nazi Escape
JERUSALEM (AP) — Israeli agents who kidnapped the Nazi mastermind Adolf Eichmann from Argentina in 1960 found the notorious death camp doctor Josef Mengele but let him get away, one of the operatives said Tuesday.
I remember being told years ago that the head of Mossad, Isser Harel, was running the Eichmann operation from the safe house in Buenos Aires. So the decision not to grab Mengele was clearly made from on high.
I kinda doubt that the head of OGA would be part of a U.S. action team.