Monday, July 31, 2006

Damascus, Syria

Isaiah Chapter 17

א מַשָּׂא, דַּמָּשֶׂק: הִנֵּה דַמֶּשֶׂק מוּסָר מֵעִיר, וְהָיְתָה מְעִי מַפָּלָה. 1 The burden of Damascus. Behold, Damascus is taken away from being a city, and it shall be a ruinous heap.


The Iranian People: Israel Shouldn’t Exist

A recent poll of the Iranian populace reveals widespread agreement with the radical views of their president, including with his quest for nuclear weapons.

Quite a bit of stock has been placed in the belief that a large percentage of the Iranian people do not agree with their president’s rabidly anti-Jew views. A “chilling new poll,” however, reveals a different story: The Iranians are right behind their president, and not only concerning his views of Israel. In fact, an American president right now would no doubt be overjoyed with comparable approval ratings.

“Contrary to popular opinion, it seems that the Iranian people overwhelmingly agree with their president’s view that Israel has no right to exist,” reported the Spectator on
July 27.

When asked if the State of Israel is illegitimate and should not exist, 67 percent of Iranians surveyed by one of the most prestigious U.S. pollsters agreed and only 9 percent disagreed. Even more astonishingly, this overwhelming hatred of the State of Israel was shared consistently by all sub-sections of the population, regardless of either age or gender.

The Zogby poll, which will be published by Reader’s Digest next month, also found that 55.9 percent of Iranians agree that their country should play the dominant military and diplomatic role in the Middle East, with just 12.3 percent disagreeing.

When asked which issue should be their government’s top priority, 41 percent of respondents said economic reforms, 27 percent said development of nuclear weapons, and just 23 percent said expansion of individual freedoms. The Spectator commented (emphasis ours throughout):

Given the widespread poverty plaguing the country, it is no surprise that most respondents cared primarily about the economy; but the fact that over a quarter of the population believe that the overriding priority should be to build nuclear weapons, a number larger even than that of those who want greater freedoms, is extremely depressing.

To make matters even worse, the survey was conducted before the present crisis erupted two weeks ago; opinion today would probably be even more radicalized. …

If the findings of the poll are accurate—and there is no reason to doubt that they are—they put to rest one of the central myths about Iran: the claim, shared by most Western analysts, that ordinary Iranians are increasingly at odds with their rulers. While many young Iranians may superficially have become more pro-American in recent years, even they support the views of the leadership, at least when it comes to geopolitics.

As the
Trumpet has stated before, all political groups in Iran—both reformists and conservatives—are on the same side as far as their quest for regional supremacy goes. This poll now confirms that the vast majority of the people themselves are also agreed with the major policies of their violence-instigating government.

The Defense & Foreign Affairs Special Analysis of July 20 stated, “[T]he Bush White House has made it clear that it supports the Iranian population resolving the leadership question in Iran, rather than seeing Iran and the U.S. forced into direct military confrontation.”

This means that the very thing that is being touted as the solution—an Iranian population that will at some point bring about a change in leadership favorable to America—does not even exist.

So much for a solid foreign policy. As the title of the Spectator article stated, “Don’t seek reassurance from the Iranians.”

Major Lee Cho O

IsraTV exclusive: Major Lee Cho O in the IDF
Born in Vietnam, she came to Israel with her family as a refugee. As many boatpeople, she came to Israel in 1977 by a decision by former Prime Minister Menahem Begin.
Lee Cho O is now more Israeli than other Israelis. She is a Major in the army.
Language: English
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Coming War with SYRIA

Chemical, Biological and Nuclear Weapons: Current 1999 2001 2002 2003 2004 2005

Syria's Chemical Misslies


July 30, 2006: Syria may not have nuclear weapons, but it has created a force of ballistic missiles equipped with chemical (nerve and mustard gas) warheads. Syria is believed to have about 1200 ballistic missiles. About 85 percent of them are SCUDs, and most of these are improved designs from North Korea and Iran. The main improvement is a larger fuel tank, giving these missiles a range of about 700 kilometers. This allows them to reach anywhere in Israel. About 15 percent of their missiles are more modern (solid fuel) Russian SS-21s. But these only have a range of 70 kilometers. Thus the Syrians have about 600 missiles with a range of 700 kilometers, another 400 with a range of 300-400 kilometers, and about 200 with a range of 70 kilometers. All these missiles carry a half ton warhead. And some of these warheads carry nerve gas or mustard gas.

There are about 70 mobile launchers for the SCUDs, and about as many for the smaller SS-21s. The SCUD launchers, and support vehicles, are hidden in fifteen or more tunnel complexes. A major disadvantage of the SCUDs is that they take over an hour to fuel and get ready for firing. Some of the liquid fuel is poisonous, and the crews have to be careful while handling it. While there are some underground SCUD launching facilities, these are probably known to the Israelis, and likely to be bombed early in any conflict. That's why the 70 mobile launchers are so important. These will be much sought after by Israeli aircraft, UAVs and satellites.

Israel also has an anti-missile system (Arrow) that can knock down a few SCUDs at a time. If the Israelis can destroy most of the mobile launchers, and underground launch sites, that might be enough to avoid getting hit with chemical warheads.

These ballistic missiles are really the only reliable weapon Syria has. Poverty, and the end of Cold War era handouts from Russia, has led the 220,000 man Syrian army to decline in quality. The Syrian air force has sunk even deeper. The Syrian forces were never all that great to begin with. But now, all they can do is threaten Israel with chemical warheads carried on ballistic missiles. The United States has threatened to reply with nukes if anyone uses chemical weapons against U.S. troops or civilians. It's unclear if Israel would respond the same way. The Israeli armed forces could roll over the Syrian army and capture all of Syria in short order. The threat of Israeli war crimes trials against Syrian leaders (who survived the Israeli offensive), might be the ultimate deterrent.

Friday, July 28, 2006

Why the “War on Terror” Is Failing

The United States’ inability to yet bring an end—or even successful progress—to the war on terror demonstrates a clear decline in the mightiest military in history.

The Japanese bombed Pearl Harbor on Dec. 7, 1941, drawing the U.S. belatedly into a full-throttle war. That war ended three years and eight months later when America dropped atomic bombs on two Japanese cities, instantly breaking Japan’s will to fight and forcing its surrender.

By contrast, though 9/11 occurred almost five years ago, the war it provoked is far from being over. Actually, by several measures the problems that gave birth to that event are much worse today. There are several reasons for this.

Consider, to begin, the very definition of the war America is prosecuting. Entrapped in political correctness and thus uncomfortable with any unfavorable portrayals of Islam, America’s leaders have defined it as a “war on terror.” This is confusing. Terror is not an enemy, but a tactic. Failing to clearly identify Islamist extremism and its chief sponsor nations as the enemy is like defining World War ii as a “war on blitzkrieg” so as not to directly implicate Germany.

Characterizations of the “terrorist threat” as vague, shadowy, elusive and ubiquitous are also misleading. The threat emanates predominantly from a few nations, one in particular: Iran. Just as the collapse of the ussr overnight reduced the Soviet communist threat, ending state support of Islamist terrorism would all but end terrorism.

Trouble is, Iran has allies: most notably, Russia and China. Afghanistan was friendless and powerless—so the U.S. selected it (or, more accurately, the Taliban) as the first target in the “war on terror.” In terms of contributing to global terrorism, the Taliban was small potatoes compared to Iran, but this is the trouble one runs into after failing to properly define the enemy.

America’s subsequent attack on Iraq (or, more accurately, Saddam Hussein) was even more problematic, because it eliminated the single greatest check on Iran, virtually guaranteeing the ascendancy of the Islamic Republic.

Perhaps the present U.S. administration viewed Afghanistan and Iraq as tools to frighten Iran into submission, or to provoke a popular uprising against its radical leaders. Obviously, neither of these has happened.

As a result of this confusion in defining the enemy, in five years the U.S. effectively has done nothing to target Iran or degrade its support of terrorism. Though Iran is a far less fearsome enemy than Japan was in World War ii, five years of “war on terror” have actually left it stronger. Its president is pushing to build nuclear weapons and threatening to wipe Israel off the map. Iranian agents fuel an insurgency in Iraq that kills American soldiers. Right now, Iran is directing, funding, arming and personally assisting in the Hamas and Hezbollah attacks that have transformed Israel and Lebanon into what looks to be the first battleground of World War iii.

But the U.S. has done worse than merely not attack Iran: It has actually pursued dialogue with Iran, soliciting its help in bringing the bog in Iraq under control by reigning in the Shiites. In order to tidy up its business in Iraq—its primary theater in the “war on terror”—the “superpower” United States is requesting aid from the world’s top state sponsor of terror!

This is the unbelievable situation, five years into the “war on terror.”

On top of that, democratic elections in the region—encouraged by the U.S.—have strengthened Islamists’ political portfolios in Egypt and installed Islamists into the highest offices in the Palestinian territories. Meanwhile, the troubles in Afghanistan refuse to go away, and Iraq appears destined to end up with a government that will eventually ally with Iran.

In other words, the “war on terror” is not reducing the threat of terror against America.

How could this be? How can the deluge of dollars, steel, sweat, tears and blood America has dedicated to this cause—not to mention the lives of over 2,800 of its soldiers—fall so far short?

Consider. To the ancient nation of Israel, God promised manifold blessings for obedience to His laws. Among these was the promise of security through supernatural protection: “And I will give peace in the land, and ye shall lie down, and none shall make you afraid … neither shall the sword go through your land. And ye shall chase your enemies, and they shall fall before you by the sword. And five of you shall chase an hundred, and an hundred of you shall put ten thousand to flight: and your enemies shall fall before you by the sword” (Leviticus 26:6-8). Clearly the U.S. is not receiving this blessing today. In fact, objectively viewing the advances made by radical Islamists in the past five years, one might be inclined to believe it is they who are receiving it.

The counterpart to the promised blessing of victory over enemies is God’s warning about terrifying curses for disobedience. The idea of being under a curse may seem ancient and superstitious in this modern, scientific age. But if you believe the Bible, you know that curses are real—even today. To rebellious Israel and its descendants (which include the United States), God warns, “And I will break the pride of your power … And your strength shall be spent in vain …” (Leviticus 26:19-20).

Consider the staggering implications of these scriptures.

They imply that these modern nations would have power, and pride in that power—they would have military strength. This fact is corroborated by other prophecies about the modern descendants of Israel (e.g. Genesis 24:60; 49:22-26; Micah 5:7-9). But—because of these nations’ disobedience—God would break that pride, and thus—as a curse—all that power would be wasted, squandered!

Is America now under this curse?

Absolutely. There could be no more perfect description of the U.S. today—still far and away the greatest military power on Earth—than to say that the pride in its power has been broken, and that it spends its strength in vain.

American officials defend hopelessly ineffective policy and call it “moral” use of power, or “just war,” intended to show how ethical, decent and principled war should be. In the end, however, this methodology makes America a triple loser: 1) true victory is impossible to achieve; 2) liberal elements of Western society are never satisfied that the war is altruistic enough; and 3) enemies view all such efforts as weakness—all the more cause to press on toward ultimate victory. The harder the U.S. works to implement a “just war” doctrine, the deeper the hole it digs for itself.

Put in biblical terms, the U.S. is spending its strength in vain.

We must be able to recognize a curse when we see it.

Thursday, July 27, 2006

Economic Meltdown

Bankers Fear World Economic Meltdown

July 26, 2006
By Gabriel Kolko

On June 15 we published Gabriel Kolko’s essay on the enormous instability of the world’d financial system. In the ensuing weeks Professor Kolko has enlarged his analysis, and here we offer our readers his updated version. AC / JSC

There has been a profound and fundamental change in the world economy over the past decade. The very triumph of financial liberalization and deregulation, one of the keystones of the “Washington consensus” that the U.S. government, International Monetary Fund (IMF), and World Bank have persistently and successfully attempted over the past decades to implement, have also produced a deepening crisis that its advocates scarcely expected.

The global financial structure is today far less transparent than ever. There are many fewer reporting demands imposed on those who operate in it. Financial adventurers are constantly creating new “products” that defy both nation-states and international banks. The IMF’s managing director, Rodrigo de Rato, at the end of May 2006 deplored these new risks – risks that the weakness of the U.S. dollar and its mounting trade deficits have magnified greatly.

De Rato’s fears reflect the fact that the IMF has been undergoing both structural and intellectual crises. Structurally, its outstanding credit and loans have declined dramatically since 2003, from over $70 billion to a little over $20 billion today, doubling its available resources and leaving it with far less leverage over the economic policies of developing nations – and even a smaller income than its expensive operations require. It is now in deficit. A large part of its problems is due to the doubling in world prices for all commodities since 2003 – especially petroleum, copper, silver, zinc, nickel, and the like – that the developing nations traditionally export. While there will be fluctuations in this upsurge, there is also reason to think it may endure because rapid economic growth in China, India, and elsewhere has created a burgeoning demand that did not exist before – when the balance-of-trade systematically favored the rich nations. The U.S.A. has seen its net foreign asset position fall as Japan, emerging Asia, and oil-exporting nations have become far more powerful over the past decade, and they have increasingly become creditors to the U.S.A. As the U.S. deficits mount with its imports being far greater than its exports, the value of the dollar has been declining – 28 per cent against the euro from 2001 to 2005 alone. Even more, the IMF and World Bank were severely chastened by the 1997-2000 financial meltdowns in East Asia, Russia, and elsewhere, and many of its key leaders lost faith in the anarchic premises, descended from classical laissez-faire economic thought, which guided its policy advice until then. “…{O]ur knowledge of economic growth is extremely incomplete,” many in the IMF now admit, and “more humility” on its part is now warranted. The IMF claims that much has been done to prevent the reoccurrence of another crisis similar to that of 1997-98, but the international economy has changed dramatically since then and, as Stephen Roach of MorganStanley has warned, the world “has done little to prepare itself for what could well be the next crisis.”

The whole nature of the global financial system has changed radically in ways that have nothing whatsoever to do with “virtuous” national economic policies that follow IMF advice – ways the IMF cannot control. The investment managers of private equity funds and major banks have displaced national banks and international bodies such as the IMF, moving well beyond the existing regulatory structures. In many investment banks, the traders have taken over from traditional bankers because buying and selling shares, bonds, derivatives and the like now generate the greater profits, and taking more and higher risks is now the rule among what was once a fairly conservative branch of finance. They often bet with house money. Low-interest rates have given them and other players throughout the world a mandate to do new things, including a spate of dubious mergers that were once deemed foolhardy. There also fewer legal clauses to protect investors, so that lenders are less likely than ever to compel mismanaged firms to default. Aware that their bets are increasingly risky, hedge funds are making it much more difficult to withdraw money they play with. Traders have “re-intermediated” themselves between the traditional borrowers – both national and individual – and markets, deregulating the world financial structure and making it far more unpredictable and susceptible of crises. They seek to generate high investment returns – which is the key to their compensation – and they take mounting risks to do so.

In March of this year the IMF released Garry J. Schinasi’s book, Safeguarding Financial Stability, giving it unusual prominence then and thereafter. Schinasi’s book is essentially alarmist, and it both reveals and documents in great and disturbing detail the IMF’s deep anxieties. Essentially, “deregulation and liberalization,” which the IMF and proponents of the “Washington consensus” advocated for decades, has become a nightmare. It has created “tremendous private and social benefits” but it also holds “the potential (although not necessarily a high likelihood) for fragility, instability, systemic risk, and adverse economic consequences.” Schinasi’s superbly documented book confirms his conclusion that the irrational development of global finance, combined with deregulation and liberalization, has “created scope for financial innovation and enhanced the mobility of risks.” Schinasi and the IMF advocate a radical new framework to monitor and prevent the problems now able to emerge, but success “may have as much to do with good luck” as policy design and market surveillance. Leaving the future to luck is not what economics originally promised. The IMF is desperate, and it is not alone. As the Argentina financial meltdown proved, countries that do not succumb to IMF and banker pressures can play on divisions within the IMF membership -– particularly the U.S. –- bankers and others to avoid many, although scarcely all, foreign demands. About $140 billion in sovereign bonds to private creditors and the IMF were at stake, terminating at the end of 2001 as the largest national default in history. Banks in the 1990s were eager to loan Argentina money, and they ultimately paid for it. Since then, however, commodity prices have soared, the growth rate of developing nations in 2004 and 2005 was over double that of high income nations –- a pattern projected to continue through 2008 –- and as early as 2003 developing countries were already the source of 37 per cent of the foreign direct investment in other developing nations. China accounts for a great part of this growth, but it also means that the IMF and rich bankers of New York, Tokyo, and London have much less leverage than ever.

At the same time, the far greater demand of hedge funds and other investors for risky loans, combined with low-interest rates that allows hedge funds to use borrowed money to make increasingly precarious bets, has also led to much higher debt levels as borrowers embark on mergers and other adventures that would otherwise be impossible.

Growing complexity is the order of the world economy that has emerged in the past decade, and the endless negotiations of the World Trade Organization have failed to overcome the subsidies and protectionism that have thwarted a global free trade agreement and end of threats of trade wars. Combined, the potential for much greater instability – and greater dangers for the rich – now exists in the entire world economy.

High-speed Global Economics

The global financial problem that is emerging is tied into an American fiscal and trade deficit that is rising quickly. Since Bush entered office in 2001 he has added over $3 trillion to federal borrowing limits, which are now almost $9 trillion. So long as there is a continued devaluation of the U.S. dollar, banks and financiers will seek to protect their money and risky financial adventures will appear increasingly worthwhile. This is the context, but Washington advocated greater financial liberalization long before the dollar weakened. This conjunction of factors has created infinitely greater risks than the proponents of the “Washington consensus” ever believed possible.

There are now many hedge funds, with which we are familiar, but they now deal in credit derivatives – and numerous other financial instruments that have been invented since then, and markets for credit derivative futures are in the offing. The credit derivative market was almost nonexistent in 2001, grew fairly slowly until 2004 and then went into the stratosphere, reaching $17.3 trillion by the end of 2005.

What are credit derivatives? The Financial Times’ chief capital markets writer, Gillian Tett, tried to find out – but failed. About ten years ago some J.P. Morgan bankers were in Boca Raton, Florida, drinking, throwing each other into the swimming pool, and the like, and they came up with a notion of a new financial instrument that was too complex to be easily copied (financial ideas cannot be copyrighted) and which was sure to make them money. But Tett was highly critical of its potential for causing a chain reaction of losses that will engulf the hedge funds that have leaped into this market. Warren Buffett, second richest man in the world, who knows the financial game as well as anyone, has called credit derivatives “financial weapons of mass destruction.” Nominally insurance against defaults, they encourage far greater gambles and credit expansion. Enron used them extensively, and it was one secret of their success – and eventual bankruptcy with $100 billion in losses. They are not monitored in any real sense, and two experts called them “maddeningly opaque.” Many of these innovative financial products, according to one finance director, “exist in cyberspace” only and often are simply tax dodges for the ultra-rich. It is for reasons such as these, and yet others such as split capital trusts, collateralized debt obligations, and market credit default swaps that are even more opaque, that the IMF and financial authorities are so worried.

Banks simply do not understand the chain of exposure and who owns what –- senior financial regulators and bankers now admit this. The Long-Term Capital Management hedge fund meltdown in 1998, which involved only about $5 billion in equity, revealed this. The financial structure is now infinitely more complex and far larger – the top 10 hedge funds alone in March 2006 had $157 billion in assets. Hedge funds claim to be honest but those who guide them are compensated for the profits they make, which means taking risks. But there are thousands of hedge funds and many collect inside information, which is technically illegal but it occurs anyway. The system is fraught with dangers, starting with the compensation structure, but it also assumes a constantly rising stock market and much, much else. Many fund managers are incompetent. But the 26 leading hedge fund managers earned an average of $363 million each in 2005; James Simons of Renaissance Technologies earned $1.5 billion.

There is now a consensus that all this, and much else, has created growing dangers. We can put aside the persistence of imbalanced budgets based on spending increases or tax cuts for the wealthy, much less the world’s volatile stock and commodity markets which caused hedge funds this last May to show far lower returns than they have in at least a year. It is anyone’s guess which way the markets will go, and some will gain while others lose. Hedge funds still make lots of profits, and by the spring of 2006 they were worth about $1.2 trillion worldwide, but they are increasingly dangerous. More than half of them give preferential treatment to certain big investors, and the U.S. Security and Exchange Commission has since mid-June 2006 openly deplored the practice because the panic, if not chaos, potential in such favoritism is now too obvious to ignore. The practice is “a ticking time bomb,” one industry lawyer described it. These credit risks – risks that exist in other forms as well – seemed ready to materialize when the Financial Times’ Tett reported at the end of June that an unnamed investment bank was trying to unload “several billion dollars” in loans it had made to hedge funds. If true, “this marks a startling watershed for the financial system.” Bankers had become “ultracreative… in their efforts to slice, dice and redistribute risk, at this time of easy liquidity.” Low-interest rates, Avinash Persaud, one of the gurus of finance concluded, had led investors to use borrowed money to play the markets, and “a painful deleveraging is as inevitable as night follows day…. The only question is its timing.” There was no way that hedge funds, which had become precociously intricate in seeking safety, could avoid a reckoning and “forced to sell their most liquid investments.” “I will not bet on that happy outcome,” the Financial Times’ chief expert concluded in surveying some belated attempts to redeem the hedge funds from their own follies.

A great deal of money went from investors in rich nations into emerging market stocks, which have been especially hard-hit in the past weeks, and if they (leave then the financial shock will be great -- the dangers of a meltdown exist there too.

Problems are structural, such as the greatly increasing corporate debt loads to core earnings, which have grown substantially from four to six times over the past year because there are fewer legal clauses to protect investors from loss –- and keep companies from going bankrupt when they should. So long as interest rates have been low, leveraged loans have been the solution. With hedge funds and other financial instruments, there is now a market for incompetent, debt-ridden firms. The rules some once erroneously associated with capitalism -- probity and the like -- no longer hold.

Problems are also inherent in speed and complexity, and these are very diverse and almost surrealist. Credit derivatives are precarious enough, but at the end of May the International Swaps and Derivatives Association revealed that one in every five deals, many of them involving billions of dollars, involved major errors – as the volume of trade increased, so did errors. They doubled in the period after 2004. Many deals were recorded on scraps of paper and not properly recorded. “Unconscionable” was Alan Greenspan’s description. He was “frankly shocked.” Other trading, however, is determined by mathematical algorithm (“volume-weighted average price,” it is called) for which PhDs trained in quantitative methods are hired. Efforts to remedy this mess only began in June of this year, and they are very far from resolving a major and accumulated problem that involves stupendous sums.

Stephen Roach, Morgan Stanley’s chief economist, on April 24 of this year wrote that a major financial crisis was in the offing and that the global institutions to forestall it– ranging from the IMF and World Bank to other mechanisms of the international financial architecture – were utterly inadequate. Hong Kong’s chief secretary in early June deplored the hedge funds’ risks and dangers. The IMF’s iconoclastic chief economist, Raghuram Rajan, at the same time warned that the hedge funds’ compensation structure encouraged those in charge of them to increasingly take risks, thereby endangering the whole financial system. By late June, Roach was even more pessimistic: “a certain sense of anarchy” dominated the academic and political communities, and they were “unable to explain the way the new world is working.” In its place, mystery prevailed. Reality was out of control.

The entire global financial structure is becoming uncontrollable in crucial ways its nominal leaders never expected, and instability is increasingly its hallmark. Financial liberalization has produced a monster, and resolving the many problems that have emerged is scarcely possible for those who deplore controls on those who seek to make money – whatever means it takes to do so. The Bank for International Settlements’ annual report, released June 26, discusses all these problems and the triumph of predatory economic behavior and trends “difficult to rationalize.” The sharks have outfoxed the more conservative bankers. “Given the complexity of the situation and the limits of our knowledge, it is extremely difficult to predict how all this might unfold.” The BIS (does not want its fears to cause a panic, and circumstances compel it to remain on the side of those who are not alarmist. But it now concedes that a big “bang” in the markets is a possibility, and it sees “several market-specific reasons for a concern about a degree of disorder.” We are “currently not in a situation” where a meltdown is likely to occur but “expecting the best but planning for the worst” is still prudent. For a decade, it admits, global economic trends and “financial imbalances” have created increasing dangers, and “understanding how we got to where we are is crucial in choosing policies to reduce current risks.” The BIS is very worried.

Given such profound and widespread pessimism, the vultures from the investment houses and banks have begun to position themselves to profit from the imminent business distress – a crisis they see as a matter of timing rather than principle. Investment banks since the beginning of 2006 have vastly expanded their loans to leveraged buy-outs, pushing commercial banks out of a market they once dominated. To win a greater share of the market, they are making riskier deals and increasing the danger of defaults among highly leveraged firms. There is now a growing consensus among financial analysts that defaults will increase substantially in the very near future. But because there is money to be made, experts in distressed debt and restructuring companies in or near bankruptcy are in greater demand. Goldman Sachs has just hired one of Rothschild’s stars in restructuring. All the factors which make for crashes – excessive leveraging, rising interest rates, etc. – exist, and those in the know anticipate that companies in difficulty will be in a much more advanced stage of trouble when investment banks enter the picture. But this time they expect to squeeze hedge funds out of the potential profits because they have more capital to play with.

Contradictions now wrack the world’s financial system, and a growing consensus now exists between those who endorse it and those, like myself, who believe the status quo is both crisis-prone as well as immoral. If we are to believe the institutions and personalities who have been in the forefront of the defense of capitalism, and we should, it may very well be on the verge of serious crises.

Gabriel Kolko is the leading historian of modern warfare. He is the author of the classic Century of War: Politics, Conflicts and Society Since 1914 and Another Century of War?. He has also written the best history of the Vietnam War, Anatomy of a War: Vietnam, the US and the Modern Historical Experience. His latest book, The Age of War, was published in March 2006.

He can be reached at:


Iran's War
By Kenneth R. Timmerman | July 27, 2006
Haifa, Israel – Some have suggested that the latest round of fighting between Israel and the Iranian-backed Hezbollah organization in Lebanon is the beginning of World War III.

Think again.

“This is more like the Spanish Civil War,” says Daniel Seaman, an Israeli government spokesman. “What we are seeing is a series of conflicts that foreshadow a future world conflict, just as the Spanish Civil war prefigured the Second World War.”

Seaman’s analogy is worth exploring.

Just as Hitler used Franco as his proxy in Spain to test new military techniques and equipment on the battlefield, so Iran is using Hezbollah as its proxy to do the same.

Hezbollah is no longer a rag-tag guerilla group, but a veritable terrorist army. “They understand complex military tactics, and are pursuing combined military operations using ground forces, missiles, intelligence, and the media,” Seaman said.

Over the past six years, following Israel’s unilateral withdrawal from south Lebanon, Iran began supplying Hezbollah with massive quantities of long-range artillery rockets of a type never before used against Israel.

These Iranian-made Fajr-3 rockets have a range of around 43 kilometers, and carry a 50 kilogram warhead packed with thousands of deadly ballbearings.

These are terrorist mass-kill weapons, designed to kill as many civilians as possible. No one standing within a 50 meter radius of one of these incoming rocket can survive, Israeli bomb experts say. The Fajr-3 was used with great success in a July 16 attack that killed eight railway workers at a repair depot in downtown Haifa.

“When they showed me the small pellets packed inside, I thought they were showing me a suicide bomber belt,” Haifa mayor Yona Yahav told me. In fact, Iran modeled the design of the Fajr-3 warhead on the suicide bomber belts, with the clear aim of maximum its lethality.

Syria supplied similar rockets to Hezbollah, packed with ball-bearings. Hezbollah purchased smaller rockets from Communist China, after they had been similarly modified.

How many terrorist groups can boast an arsenal of over 10,000 long-range rockets? Only those with the backing of a sovereign state, Iran.

Israeli foreign minister Tzipi Livni explained Hezbollah’s aims with stark clarity here yesterday.

“While Israel is targeting Hezbollah, and during this operation, unfortunately it can lead to loss of civilian life, Hezbollah is targeting our cities in order to hit, in order to target civilians and to target Israeli population centers. This is a crucial difference.”

This is a strategy Iran is testing out for a future war. Iran is testing Israel, probing Israel’s reaction, and testing the response of the international community.

Let’s recall how this all began. On July 12, a Hezbollah commando broke through the security fence at the border and snuck into Israel. In an operation that lasted scarcely five minutes, they ambushed an Israeli army Humvee on patrol, killed three soldiers, kidnapped two others, and escaped back across the border.

Shortly afterwards, Hezbollah launched six long-range rockets into Israel, hitting Haifa, Israel’s third largest city. It was the first time Haifa had been attacked in such a manner.

How would the Israelis respond? Would they launch a massive ground assault into Lebanon? That was what the Iranians were hoping, because they believed it would catalyze the Muslim world against Israel, and position Iran as the new champion of the Muslim “resistance.”

When the Israelis didn’t bite, the Iranians ordered Hezbollah to step up the rocket attacks against Israeli cities, towns and villages. On day two, they launched 133 rockets into northern Israel, 108 on day three, and 126 on day four.

In response, Israel launched air strikes deep into Lebanon, striking the airport, cutting resupply routes into Syria, and attempting to knock out command bunkers where they believed Hezbollah leader Hassan Nasrallah was hiding. But none of this deterred Hezbollah, and for good reason: the Iranians had prepared them to fight a long war, dispersing their weaponry across Lebanon.

On July 15, Iranian advisors in charge of Hezbollah’s more sophisticated weapons stunned the Israelis by launching two sophisticated C-802 anti-shipping missiles against an Israeli SAAR-5 boat cruising some 18 kilometers off the Lebanese coast.

One of the missiles was apparently deflected by Israeli counter-measures, and hit a Cambodian merchant vessel that was 60 km from the coast and 44 km down range from the Israeli ship, according to a technical analysis of the attack published by the Israel Resource News Agency on Tuesday. The second seriously damaged the Israeli corvette, the INS Ahi-Hanit.

What terrorist groups possess third-generation radar-guided anti-shipping missiles? The Chinese-built C-802s were first shipped to Iran in 1995, and at the time generated concern among U.S. naval commanders in the Persian Gulf because at the time the U.S. had no defense against them.

The Israelis had electronic countermeasures on board the Ahi-Hanit that could have deflected the missiles, the experts believe, but had turned them off for fear of friendly-fire incidents against Israeli fighters flying overhead.

More lessons learned for the Iranians.

And how did Israel respond to the rocket attacks?

Anyone who has been watching television over the past two weeks has probably heard the eerie wail of the air raid sirens that go off many times each day in Haifa and in smaller towns and settlements across northern Israel.

As many as 500,000 Israelis have fled the warzone. Most of Israel north of Haifa is deserted, while those remaining are living in underground shelters.

Haifa Mayor Yona Yahav estimated that the economic impact has been devastating – “in the billions of shekels” of lost business for Haifa alone. That’s roughly $500 million.

Israeli officials believe the Iranians gave the go-ahead for the kidnapping and the rocket war. They point to the unannounced arrival in Damascus the night before Hezbollah launched its attacks by the head of Iran’s National Security Council and Iran’s intelligence minister.

For Dr. Michael Oren, author of a forthcoming book on the history of the U.S. relationship to the Middle East, the current conflict is just a stage in the war against Iran. “People need to realize this is not a bilateral conflict. It is part of the broad regional and international conflict between the West and Islamic fundamentalism championed by Iran,” he told me.

Dr. Oren is a senior fellow at the Shalem Center for Strategic Studies in Jerusalem. He is also a major in the Israeli Defense Forces reserves. He was called up for active duty on July 21, but asked for a three day extension so he could finish his new book, Power, Faith and Fantasy: America in the Middle East from 1776 to the Present.

He believes the stakes of Israel’s effort to smash Hezbollah as an effective fighting force in Lebanon go way beyond the immediate impact on Israeli or Lebanese civilians.

“If we don’t win in Lebanon, Iran will be well on the way to creating an arc of influence extending from the Indian border to the Mediterranean,” he said.

Those are the stakes.

Iran launched this war to deflect attention from the G-8 summit in Saint Petersburg from its nuclear weapons program. But at the same time, it launched this war to try out new weapons and new tactics for future conflicts.

The next step, should the West fail to step up to the plate: how about long-range Shahab-3 missiles in Lebanon’s Bekaa Valley, aimed at Europe? And how do you think the Europeans would respond, seeing the devastating impact far smaller rockets fired into Israel have had on Israel’s economy?

Can you imagine Parisians or Romans taking to the bomb-shelters? Sending their children to stay with relatives living overseas? Can you imagine them resisting Iran as Israel is doing?

Unchecked, Iran will continue its march toward nuclear power, and it will use terrorist proxies to conduct war against the West. In the future, those proxies will have nuclear weapons.

This is the “hurricane” Iranian president Mahmoud Ahmadinejad promised the world earlier this week in Tehran, in yet another “mein kampf” statement.

Now is the time to draw the line.

Hell Is Coming

Special Reports : World War IV
Posted by Sean Osborne on 2006/7/22 6:36:14 ( )
Ultimately, and with little forewarning, World War IV in all of its mass destructiveness will arrive on our shores - in the American heartland. Hezbollah, Al Qaeda, HAMAS and other various proxy stooges of all nationalities or citizenships can and will strike our apparent national ambivalence to this direct threat.

See UPDATE below main article.

By Sean Osborne, Associate Director, Senior Analyst, Military Affairs

22 July 2006: The current military situation in the Middle East is EVERYONE'S worst nightmare - whether they individually or collectively realize it at this moment or not. I say this due to the fact that, believe it or not, some here in the United States don’t believe this war will amount to much of anything for American’s to be concerned about. They do not realize or accept that we are engaged in World War IV. (I classify the so-called “Cold War” as World War III.)

They are wrong, and probably dead wrong.

To be sure, this is not just another Arab versus Israel war. This is an existential war. This is a war specifically begun via proxy as designed and prepared for by the regime of the Islamic Republic of Iran, Syria and their military allies. Israel is both the initial target and the ultimate objective.

So is the United States of America.

America is an enemy objective and a part of this war because we have been targeted by the Iranian regime, their proxy terrorist forces and allied nations due to our support of Israel.

As long as America stands behind Israel as the arsenal of democracy and best hope of freedom the enemy axis powers know full well they cannot hope to defeat Israel on the battlefield. The Iranian plan has always been to ignite the two front war in Israel, and then to hit the US with a haymaker from our blindside. Their plan, the Hojjatieh sect of Shi’a Islam plan, has always been to ignite an Armageddon-like scenario, to collapse “Anglo-Saxon civilization” as an intregal part of the overall objective to achieve hegemony over all of the Middle East, Islam and the oil beneath those lands. Thus in executing these objectives nothing less than World War IV will result.

The Order of Battle

The events in Gaza and Northern Israel were the well coordinated triggering events which launched this war. The rapid escalation and weaponry brought to bear are indicative of the battle plan prepared well in advance of hostilities. Recent engagements illustrate this in an unambiguous manner.

A week ago an Israeli Navy Sa’ar-5 class corvette, the “Ahi Hanit”, was struck by an Iranian C-802 shore-to-ship variant of the Communist Chinese designed YJ-8 family of cruise missiles. Iran purchased at least sixty C-802’s from the Chinese PLA. The C-802 missile (NATO Codename: CSS-N-8 SACCADE) was launched under inertial guidance from the Lebanese littoral most likely by Iranian Revolutionary Guard Corps (IRGC) troops. Most open-source military reports state that this cruise missile is radar guided. True, all indications are that the C-802 has a J-band (10 – 20 Gigahertz) terminal active radar guidance seeker in the warhead.

What has not been widely reported, however, is that an Iranian submarine, which I believe to be a Russian-made SSK Kilo-class electric-diesel boat, was nearby at the time. Did this Iranian sub provide some form of terminal guidance to the C-802 missile? It’s possible. That the sub was in the area of combat operations prior to the execution of the battle plan also speaks to the detailed preparations made by Iran. There are no reports that I am aware of which reported this sub transiting north-bound through the Suez Canal. The lack of this information in open-sources means that the Iranian sub had quite a long voyage around the African continent to arrive on station prior to hostilities. My theory is that upon reaching the Strait of Gibraltar the Iranian sub performed a maneuver that is known as “degaussing.” It parked itself directly underneath an eastbound commercial freighter and made the run through the strait completely under electrical power. It then continued along a 100 fathom line along the North African coast to the area of Tunisia and on to the eastern Mediterranean Sea.

Just about 48 hours ago I learned of the first open-source report on the detection of this submarine. The CBN report stated that a U.S. Air Force RC-135V/W "Rivet Joint" reconnaissance aircraft detected the Iranian submarine with its very sensitive Electronic Intelligence (ELINT) sensor array. The CBN report then commented on the full-extent of the electronic surveillance capabilities of the “Rivet Joint” aircraft by noting its sensors had also detected Iranian ballistic missile activities and shipments of these missiles to Lebanon.

In the past couple of days Israeli SOF had located an Iranian Zelzal-2 (Earthquake) short range ballistic missile (SRBM) on its launcher in Lebanon. The missile, with a maximum range of about 250 miles, was prepped and ready to launch. An immediate air strike guided by on-the-ground Israeli Special Forces laser designators was radioed in. The air strike on the missile launcher threw the Zelzal airborne momentarily and ultimately impacting the ground a very short distance away. Scratch one Zelzal. More Iranian Zelzal’s were targeted in the exact same manner as they crossed from Syria into Lebanon. When you read of or see broadcast reports of Israeli air strikes on bridges between Lebanon and Syria along the Beirut-Damascus highway and other avenues into Lebanon they are specifically intended to halt the flow of such war material. However, conservative estimates are that enemy combatants in Lebanon had at least 200 of these Iranian ballistic missiles prior to hostilities erupting.

The Current Situation Report (SITREP)

The war has the Israeli Defense Forces fully engaged, although not to the level of their entire strategic depth, but fairly close to that level. The Israeli’s are prepared for any battlefield eventuality, including the use of WMD. In fact, Israeli ground forces are about to move into southern Lebanon on a large scale combat operation to engage all enemy combatants. This may include Lebanese army forces who reportedly will side themselves with Hezbollah and IRGC forces. The Syrian military has been making moves of its own by targeting its own missile forces on Israeli targets. One can reasonably expect that this is totally unacceptable to the Israeli High Command and a pre-emptive strike against Syrian targets is an imminent probability. The point of all this is to illustrate that this war is just getting to the boiling point and its escalation to full-scale regional warfare can happen within hours or minutes of your reading this article. I suspect that this war will involve the first use of weapons of mass destruction in the near term against Israel with the resultant immediate Israeli retaliatory response directed against the Syrian capital city Damascus.

Can Israeli pre-emptive strikes against rear-echelon targets in Iran be far behind? And for how long will US and Coalition forces in the CENTCOM AO remain unengaged in the war given the Iranian strategic objectives alluded to above?

Ultimately, and with little forewarning, World War IV in all of its mass destructiveness will arrive on our shores - in the American heartland. Hezbollah, Al Qaeda, HAMAS and other various proxy stooges of all nationalities or citizenships can and will strike our apparent national ambivalence to this direct threat. The Northeast Intelligence Network has been consistently warning of this inevitability for a very long time, and I must now repeat the admonition to the whole of America: If you have not been vigilant in your local community before, you absolutely must be so engaged at this time. America is a primary target, a major military objective of Iran, its proxies and allies. Your survival depends upon the level of vigilance and preparations you may or may not have bothered to exert up to this minute. Personal responsibility, prudent planning and preparations are all that stand between you and your family, indeed your own neighborhood and region of the nation, and the war which is now in progress. God help us all.


This special report has resulted in an overwhelming flood of emails requesting me to define for individuals and families what I meant by being "engaged at this time". The following are my observations and recommendations in this regard.

First, foremost and paraphrasing my favorite ex-Green Beret, John Moore (a/k/a The Liberty Man) :

1. The U.S. government cannot and will not protect individuals or families. Our government agencies are doing the best job they can to keep our country safe. However, no government agency (including FEMA) is responsible for a comprehensive defense program.

2. Each individual business and family must make their own preparations to be safe from the consequences of a terrorist attack. Please consider:

a.) We have "just in time" delivery of everything from auto parts to life sustaining pharmaceuticals.

b.) Every part of our infrastructure is a potential target.

c.) A break anywhere in this infrastructure (telecommunications, transportation, utilities) can cause the whole system to fail. Consequently, every citizen is at risk to suffer the consequences of a terrorist attack happening anywhere in the country.


Okay, that stated as suscinctly as possible, what do you do individually to prepare yourself, your family, your group of friends, your neighborhood?

I suggest the following 8-point minimum regimen be executed ASAP in an effort to transition from a possible victim to a potential survivor:

1.) Non-perishable foodstuffs and fruit juices or reconsitutable/concentrated juices or milk for a minimum of 30 - 60 days sustainment per individual.

2.) Lot's of H2O in cases of individual servings or large bottles and 5-gallon containers. As much as you can possibly collect.

3.) A portable generator, batteries for every device in the house which may require them.

4.) Communications. Hand crank radios like the small Grundig ($20.00) sold by Radio Shack, or any battery operated solid state radio.

5.) Ammo for your personal firearm(s). Execute your Second Amendment rights. Hopefully you don't live in New Jersey as I do.

6.) Fuels: Gasoline or Diesel as you require. Get it now gas/diesel are currently at anywhere from $3.05/$2.75 per gallon. I would expect these prices will increasesubstantially in the very near term - a direct reflection of the Iranian desire for $100 per barrel crude. Fill your 5 gallon cans now if at all possible.

7.) An evacuation plan and lay-up points enroute. In case your area is particularly hard hit and an evacuation is ordered by national or state authorities, have a designated place to go and coordinated plans with fellow travellers if at all possible. Strength is found in numbers.

8.) Keep your bank account well as fed as you are able. If terrorists hit the electrical grid or if an EMP device is utilized during hostilities you will still need to pay any bills. Whatever is not in the bank have liquid as cash-on-hand. ATM's and banks will probably get swamped or could be inoperable for a short time by those who did not prudently plan or prepare ahead of time. The "snooze, you lose" mentality applies here.

Plan for the worst, hope for the best, and pray for personal guidance from God.

Move Out and Execute as much as you are able which applies to your own situation as quickly as you can "Git R Done".

Wednesday, July 26, 2006

Israel's Lost Opportunities

A Pakistani Muslim defiles the Israeli flag with his dirty sandaled feet (July 21, 2006)

The latest war that has been imposed upon Israel by the Arab Muslim Nazi terrorists gives the Jewish state so many golden opportunities to do so many vital things. But the traitor Israeli government, army, news media, and establishment are predictably squandering every single one of these opportunities.

Immediately after the 1967 Six Day War, little Israel could have easily expelled all of the Arab Muslim Nazis who lived in the Holy Land.

The world was sympathetic to Israel as never before. The whole world witnessed the Arab Muslim Nazi dictators all publicly promising "to push the Jews into the sea" and "to finish Hitler's job."

When the tiny Jewish state, which then had a population of only 2.5 million Jews, beat back the Arab Muslim attackers, who came from nations that then had a combined population of 160 million, it was the ultimate reenactment of David versus Goliath.

Only 22 years after the Nazi Holocaust, when memories of what happened to over six million innocent Jews were still fresh, the Arab Muslim vow to carry out another Holocaust stunned the world.

The world bore witness to the purest example of a war between good and evil. The children of the Holocaust survivors rose from the ashes of Auschwitz with iron fists and blazing guns to beat back the heirs to the legacy of Nazism, the Muslims, in a miraculous and breathtaking victory.

In the atmosphere of June 1967, Israel could have expelled all of the Arab Muslim Nazis in the Holy Land with only minimal protest from the world.

This was a tragic lost opportunity, which Israel has paid a very heavy price for.

Now, in this latest war, Israel has new historic opportunities which she once again is squandering.

The first opportunity involves the Arab Muslim Nazis who live in Judea, Samaria, and the Gaza District.

If Israel would hermetically cut off all electricity, water, food shipments, foreign aid, and other assistance to the Arabs, it would cause instant starvation and desperation that would force the Arabs to leave these Jewish Biblical areas.

It would certainly be an understandable act of war to cut off supplies to the enemy. Although the European Jew-haters and the news media Jew-haters would criticize Israel, the criticism would not be very harsh as even the critics would know deep down that Israel is simply doing what every normal nation must do in a time of war.

Blood on a floor of a Haifa bookstore, where a Hezballah Muslim terrorist rocket struck down
an Israeli citizen

The deadly power of a Hezballah rocket - A building in Nahariya was sprayed by deadly shrapnel. (The rockets, besides being encased in metal, are packed with ball bearings and other small metal parts, to inflict as much indiscriminate injury as possible.)

Israel would not even have to lift a finger to expel the Arabs. The Arabs would leave en masse on their own. Israel would open the borders to enable the Arabs to leave as a humanitarian gesture, since allowing them to leave the war zone is the most humane solution.

Afterwards, there would be demands that the Arabs be permitted to return. Israel would reject those demands just as she has rejected the demands of Arabs who fled the 1948 War of Independence to return.

If only JTF and its heroic Israeli allies were in power in Israel, this golden opportunity would have been exploited already.

A Jordanian woman celebrates the Jew-killing exploits of Hezballah

A powerful Hezballah rocket
blasted through the reinforced
concrete of a Haifa balcony

A second golden opportunity for Israel in the current war involves Muslim Nazi Iran and its program to develop nuclear bombs.

This is the perfect time for the Israeli air force to destroy all Iranian Muslim Nazi nuclear reactors, factories, and laboratories.

Even the Jew-hating world would have to understand that Israel is retaliating against the Iranian missile attacks on Israeli cities. And that tiny Israel cannot afford to allow the maniacal Iranian terrorist regime to create nuclear bombs, so that the fanatic ayatollahs and mullahs could carry out their promise to "wipe Israel off the face of the earth."

A bombed-out Lebanese street

One Hezballah rocket pierced a three-story home from top to bottom, exploding on its way through - Fortunately, the occupants of the house had earlier evacuated it, in fear of just such a possibility. (The object hanging in front of the hole in the ceiling is a lighting fixture.)

If the world complained about Israel's actions, so what? The world is complaining about Israel's hopelessly wimpy actions now.

These are just two of the numerous golden opportunities that the traitor leaders of Israel refuse to exploit. Not only the leaders, but the people of Israel who support these leaders over and over again, have so much to answer for on Yom HaDin (The Day of Judgment).

According to Kofi Annan, the Hezballah Muslim terrorists are not terrorists - in fact, they are not even militants! - Instead, the corrupt UN leader avowed at a recent assembly on Israel, they are "alleged militants"

When we urge Jews and righteous Gentiles to support JTF, so that JTF can support its heroic allies in Israel, and so that JTF can bring this vital message to the people of Israel, we are not speaking only about politics or mere differences of opinion.

We are speaking about Jewish survival.

A Muslim woman in Bahrain, a supposed partner in America's war on terror, waves a poster of Hezballah Muslim terrorist leader Hassan Nasrallah

Israeli soldiers in their prayer shawls

JTF supports the political activities of the Hilltop Youth, and therefore is not tax-deductible.

The Voice of Jewish Activism (VJA) is strictly non-political. It supports the educational efforts and the humanitarian needs of the Hilltop Youth and right-wing Jewish dissidents and therefore is tax-deductible.

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