Sunday, November 30, 2008

Pakistan: glorious distinction

WASHINGTON, Nov 14: CIA director Michael Hayden has warned that every major terrorist threat confronting the world has ties to Pakistan. - The Dawn

An editorial

The Tribune from Chandigarh:
It has been noticed over the years that in the name of federalism and coalition politics, the authority of the Centre has grossly weakened and the states are going their way in many vital areas, unmindful of a national perspective.

Under the pretext that law and order is a state subject in the jurisdictional division of responsibility, the states have been blocking reforms that could make the Centre strong enough to tackle threats to security.

The states have particularly succeeded in blocking the setting up of a central nodal agency to fight any threat to national security. There are several other areas where the states have resisted central advice and intervention, getting away with many a lapse.

Considering the present situation, it has become imperative for the Centre to set up a central nodal authority – whatever its label – to draw a national strategy to fight any threat to national security.

It is possible to set up the new nodal agency without amending the Constitution. But in case the Centre wants to arm itself with power to set up one, the people under the present climate would support an amendment of the Constitution, maybe, in the winter session of Parliament.

The country cannot be allowed to be weakened just because of the flotsam and jetsam who come to power in the states.


It is copyrighted, but somehow I don't think he'll sue me:

Pakistan is a victim of terror - The first person to die in a suicide bombing is a Pakistani.
(c): Enquyoob

One from Mazdak

Far too many people here have taken to shrugging off such excesses committed in the name of Islam, while foaming at the mouth about the inequities of the West.

You can substitute "India" for the "West" in the above and it will still remain true. But you should read the entire essay.

PS: on the previous essay that I had linked to, a headline like "Prominent Pakistani columnist clubs together secular India, Taliban as forces regressing Muslims to the sixth century and asks for end of madness" -- In India, Muslim ulema have won the right to dominate women as a religious right. This exemption was granted to them by a secular Congress Party. In Pakistan and Afghanistan, the Taliban and their supporters want to ban music, movies and even kite-flying. When the Taliban were in power, they had banned education for girls, and had denied women medical care from male doctors. Where will this madness end?

Mumbai: Silence of the Lambs

Swati Parashar

In classical political science we are taught that a ‘state’ as a political entity consists of four essential elements; territory, government, sovereignty and population. These attacks in Mumbai make me rethink our existence as a ‘state’. Our territorial integrity blatantly violated by people (terrorists) who could walk in and out without being as much as even questioned. Sovereignty, such that these foreign terrorists deliver justice to the oppressed citizens of this country. Government? Does there seem like one? So does population alone make our country a ‘state’ then, a population which is anyways being annihilated in such acts of terror? These difficult questions will have to be asked and we will have to introspect, we will have to speak out.

RAND editorial

Peter Chalk, September 1, 2001.

The Why: (notice that Kashmir is a factor in the perennial conflict with India, not the cause of the conflict.)

Islamabad's backing for these groups revolves around the perennial conflict with India - a militarily, economically and demographically superior state viewed as posing a fundamental threat to Pakistan's long-term viability and integrity.

Sponsoring militancy in Kashmir is regarded as a relatively cheap and effective way of offsetting existing power symmetries (essentially through the philosophy of a 'war of a thousand cuts') while simultaneously creating a bulwark of instability along the country's vulnerable southern flank. Both are considered vital to ensuring that Pakistan has sufficient strategic depth to undertake a protracted conventional war on the sub-continent, should this ever become necessary.

Religious imperatives also come into play, particularly on the part of the Inter-Services Intelligence (ISI) Directorate, which enjoys a high degree of autonomy and executive space within Pakistan. The agency has specifically sought to replicate and transplant the success of the anti-Soviet Afghan campaign in Kashmir, exhorting foreign militants to participate in the conflict as part of the wider moral duty owed to the jihad. The medium to long-term aim, according to intelligence sources in New Delhi and Srinagar, is to trigger a generalised Islamic revolution across the northeast and eventually India as a whole.

I count this as an independent voice saying that the terrorism was going to happen regardless of the outcome of J&K.

[URL from Bharat-rakshak forum]

What if...?

CIP asks an important question in the comments:

Would there be Islamic terrorism today if Israel didn't exist and India had held and abided by the promised referendum in Kashmir? Maybe so, but the targets would almost certainly be much different.

CIP was answered amply in the comments. Here is my answer. I cannot speak about Israel, but the answer is yes.

To address one thing first - the accession of J&K to India was precipitated by invasion from Pakistan; the referendum in Jammu & Kashmir was necessitated by Pakistan's invasion; and a precondition of the referendum was that Pakistan would vacate that aggression - which never happened.

Let us also note that the leader of the National Conference, Sheikh Abdullah, the largest popular party in J&K at that time did not like Jinnah, and was more in favor of independence than accession to Pakistan (or India). For a variety of reasons, independence was not a viable option.

But let us say J&K peacefully slipped into the hands of Pakistan in 1948. Would there be terrorism today?

My answer is an unequivocal yes. The reason is that Hinduism remains a fundamental challenge to the Islamic worldview. We are "polytheists" and "idolators" and "rule over" (not "try to live in secular equality with") a huge number of Muslims native to India. Pakistan was a creation explicitly made with the assumption that Muslims cannot live as equals with Hindus, and a common refrain in Pakistan is "if we're to be secular, modern, etc., like India, then why did we create Pakistan?". We pose an unsolved ideological challenge.

The logic of Partition - that Muslim majority areas had the right to secede from the whole that was British India - led to non-Muslim majority areas within Muslim majority provinces also seceding and remaining with India. This was a great disappointment, a "moth-eaten Pakistan". Until the debacle of the 1965 war, a popular slogan in Pakistan was "Hans ke liya Pakistan, ladke layenge Hindustan" (Laughing - as in child's play - we took Pakistan, fighting we will take Hindustan.)

At seven times the size, India would continue to be a "threat" to Pakistan; Pakistan would continue to seek strategic depth. This would mean both trying to make Afghanistan a puppet state, as well as seeking a fifth column in India. Pakistan's inherent contradictions would have continually led it to become more "Islamic". E.g., being "Islamic" meant imposing Urdu on everyone. Nothing to do with India or Kashmir; Jinnah started off on the wrong foot when he inaugurally told Banglas that Bengali would be a second-class language in the new Pakistan, and that was the first step that ultimately led to the split-up of 1971. But this misstep was a product of his Islamic ideology, not something forced by India. Further, the failures of Pakistan are continually diagnosed as having resulted from them not having been Islamic enough. The inability of Pakistan to formulate a Constitution for almost a decade after Independence was due to fights over Islam, nothing to do with India. The anti-Ahmediya riots that ultimately led to their first military dictator were over Islam.

Again, CIP, I challenge you - you can accept that an ideology can be pathological - e.g., Soviet Communism. Then why is it so hard to accept that a particular religion-based ideology can be pathological? Sure, you want ample evidence, we can provide that. Given the need to deconstruct Pakistan, these pages will present you a lot of evidence in the coming days.


You brought up Bill Ayers in the conversation. As per Bill Ayers today, the Weather Underground never meant to and never did kill anyone. Listen to him here:

I don't know if Ayers is truthful, but killing is most definitely the intent of jihadists. Slitting of the throat is their preferred method of execution. Ayers would be most unhappy to be compared to these.


I posted this link once on your blog; it is a lot of heavy reading unfortunately. But it outlines the problems in pre-Partition India that the creation of Pakistan was supposed to solve. The so-called solution has mostly not worked.

Postscript: contingent history is actually very hard. I had to think about - what if there had been no Cold War? What if the geological facts of the Middle East (regarding petroleum) had been different? What if Chiang Kai- had won in China instead of Mao Tse-Tung? Do I have to consider all those also in the contingent history of a Pakistan to which J&K peacefully acceded?

PPS: question to CIP - was the Cold War inevitable?

A Clear Warning

Balu had some thoughts about the Mumbai attacks, but I won't share them here, because there is a simpler message to be extracted from his analysis.

Think for a moment like a terrorist. In your assessment, were the just-terminated Mumbai attacks more successful in creating terror than the various serial bomb blasts that have hit Indian cities in the past few months? Did they require equipment or capabilities beyond that available to the real or imagined would-be terrorist in various Indian cities?

If the answers are yes and no, then please start preparing for more of the same. The Mumbai attacks exposed many weaknesses, at least start addressing those.

If the answers are no and yes, sleep in peace.

Only in Secular India

Irfan Hussain (penname: Mazdak) is a columnist for the Pakistani English daily, The Dawn. His latest column is a protest against the Malaysian fatwa against yoga (yoga being unIslamic and all).

Mazdak variously notes:
Already viewed as a backward community by much of the world, Muslims risk withdrawing from the rest of mankind at a time when globalisation is breaking down barriers at a frenzied pace....

Millions in the Islamic world have convinced themselves that their current weakness has been caused by the West. If they examine the causes for their backwardness more closely, they will discover that they lie much closer to home than they would like to admit....

It will end if and when Muslims decide that enough is enough, and that they do not want to live in the sixth century.
However, these are unremarkable observations, there are plenty of Muslims writers who pen similar lines.

The following is the real stinger, something which is politically incorrect to note in India, the land of the "oppressed Muslims". In listing the ways Muslims regress to the sixth century, Mazdak includes this item:
In India, Muslim ulema have won the right to dominate women as a religious right. This exemption was granted to them by a secular Congress Party.
Keep this in mind as you are treated to the howling of the so-called secular brigade. The above is their creation. They are out in force defending the current Indian government against charges of being inept at handling terrorism by spouting off that this government - consisting of the Congress and Marxists - is a secular government. Protesting the above marks you immediately as a Hindu fundamentalist.

(hat-tip R.P.)

Saturday, November 29, 2008

The Roots of Terrorism

My friend CIP, likes to think that it is lack of jobs and hope and so on that is the root cause of terrorism. It is however only one of the possible causes, and that operates only sometimes.

The Ali al-Tamimi quoted in the post below this one, has the following bio. from Wikipedia - some deprivation he suffered!
Al-Tamimi was born in Washington, DC, and raised in a predominantly Catholic neighborhood. His father, a lawyer, worked at the Iraqi embassy, and his mother was a noted scholar of psychology. When he was 15 his family moved to Saudi Arabia, where he became interested in Islam. On returning to the U.S. two years later, he attended The George Washington University and the University of Maryland, College Park. He received a doctorate in computational biology from George Mason University on the topic of "Chaos and Complexity in Cancer". In the early 1990's, Al-Tamimi led a five person delegation from the Islamic Assembly of North America in the United Nations 4th World Conference on Women, held in Beijing, China. Al-Tamimi contacted Shaikh Abdel Rahaman Abdel Khaliq, who wrote a book about women in Islam, which Al-Tamimi translated into English.

He lectured often at the Center for Islamic Information and Education in Falls Church, Virginia. He was a founding member of the Center, which is also known as Dar al-Arqam.

Prior to al-Tammi's prosecution, 11 members of the Virginia Jihad Network were charged with a number of charges related to their participation in a terrorist enterprise. Although the group trained with paintguns they also were convicted of using and possessing various firearms, rocket propelled grenades and explosives. Nine members of the group were found guilty.

Dr. al-Timimi remained under Grand Jury investigation as an unindicted co-conspirator during the trial of the Network members. After the conclusion of the Virginia Jihad Network trials, prosecutors then successfully proved that al-Timimi was the spiritual leader of the group and had encouraged them to wage Jihad on India and the US.

What CIP does not realize is that, e.g., US Christian fundamentalists do not typically come from deprived backgrounds. Nor do these jihadis. Not al-Tamimi, nor the Virginia 11. Unlike the Christian fundamentalists, these guys' fundamentalism teaches them to be violent.

The whole fear of bringing religion into politics, or slandering a religion of peace, or some obscure liberal inability to comprehend that there can be entire groups of people who are not nice, mysteriously keeps this from the comprehension. It is an illusion that everyone wants peace. These blinders are strange, because it is not at all difficult to acknowledge that there are totally undeprived, unpoor, unoppressed people who become religious fundamentalists. There are plenty in America. It is just an additional step to understand that some fundamentalisms involves a lethal embrace of holy war.

PS: It is even more mysterious, this inability to see, when e.g, CIP himself would acknowledge that an entire American elite, the neo-cons, commandeered the apparatus of the state to wage their war of choice. So at least grant that this can happen with other elites, too.

Comprehensive Guide For the Faithful

Home > Knowledge > Unseen:

Conquest of India Prior to the Day of Judgment
Ali Al-Timimi
At-Tuwaijiri's Ithaf al-Jama'a, Vol. 1, pp. 365-366

The latest conflict in Kashmir between the Mujahideen (those who fight in righteous jihaad) and India brings to mind the ahadeeth regarding the conquest of India prior to the day of Judgment.

Thawban, radhiAllaahu 'anhu (May Allah be pleased with him), that the Messenger of Allah, sallallahu 'alayhi wa sallam (May Allah's peace and blessing be upon him), said, "Two groups of my ummah Allah has protected from the hellfire: a group that will conquer India and a group that will be with 'Isa b. Maryam, alayhis salaam (Jesus, May Peace be upon him)." [Reported by Ahmad, an-Nisa'i, and at-Tabarani]

Na'im b. Hammad in al-Fitan reports that Abu Hurayrah, radhiAllaahu 'anhu, said that the Messenger of Allah, sallallahu 'alayhi wa sallam, mentioned India and said, "A group of you will conquer India, Allah will open for them [India] until they come with its kings chained - Allah having forgiven their sins - when they return back [from India], they will find Ibn Maryam in Syria."

While Abu Hurayrah said, "The Messenger of Allah, sallallahu 'alayhi wa sallam, promised us [the Muslims] the conquest of India. If I was to come across that I will spend my soul and wealth. If I am killed then I am among the best of martyrs. And if I return then I am Abu Hurayrah the freed." [Reported by Ahmad, an-Nisa'i, and al-Hakim]

In another narration reported by Ahmad, Abu Hurayrah says, "I was told by my khalil (trans - beloved), the truthful and believed in, the Messenger of Allah, sallallahu 'alayhi wa sallam, that there will be in this ummah an expedition sent to Sind and Hind (India) ..." The rest of the narration is the same but it has the following addition, "... then I will be released from the Hellfire." At-Tuwaijri remarks this addition explains what is meant by "the freed" above.

Historical background:

Ibn Kathir remarks in al-Bidaya wan-Nihaya, "The Muslims invaded India during the days of Mu'awiya in the year 44 A.H and [great] events transpired then. And [likewise] the mighty and magnificent King Mahmud b. Subuktikin the ruler of Ghazna invaded the lands of India at the turn of the fifth century. He entered India and killed, took captive, [and] enslaved [many]. He took [muc] booty. He entered as-Sumanat (*) and destroyed the great al-Budda which they worship and he stripped it of its jewlery. He then returned [to Ghazna] safe, [Divinely] aided, and victorious."

* as-Sumanat is a costal city where India's scholars, monks, and the idol al-Budda are found.

At-Tuwaijiri remarks that Ibn al-Athir has detailed the campaigns of Mahmud b. Subuktikin in his book al-Kamil fi t-Tarikh.

Home > Knowledge > Unseen
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It takes a Nobel caliber mind

“It is extremely important to understand that the criminal activities of a minuscule group, even if it turns out to have home-grown elements, say nothing about Indian Muslims in general, who are an integral part of the country’s social fabric,” Amartya Sen, the Harvard economist and Indian-born Nobel laureate, wrote in an e-mail message. “Even if it turns out that the Mumbai terrorists had a base in Pakistani territory, India has to take full note of the fact that the bulk of Pakistani civil society is an ally, not an enemy, in the battle against Islamist terrorism, for they too suffer greatly from the violence of a determined minority based in their country.” - Amartya Sen, Nobel Laureate in Economics, quoted in the New York Times

We are told that for a long while, there were tip jars in the restaurants in Pakistan for diners to contribute to the jihad. Perhaps the bulk of Pakistani civil society never ate out, or some other complicated thing that only a Nobel laureate can figure out. I have yet to see on Pakistani TV or in their press any sense that the jihad hitting India is a bad thing. To most of the "civil society" that you see in the media, India mostly deserves it. We even had some email exchanges with a couple of them in the days when it hit only India, didn't they think the jihad would hurt them one day? (I think it was Ejaz Haider and Ayaz Amir. Maybe my memory is faulty.) Nah, to them it was an very effective policy of state.

But Amartya Sen is a laureate, and laureates see things normal mortals don't. Maybe Pakistani civil society is like dark matter, known to be present only by inference. Just like the astronomer will point to galactic rotation curves, gravitational lensing, and arcane cosmological calculations to prove that not only does dark matter exist but it exceeds in quantity all of the visible matter, perhaps likewise there is evident through some social science mantras pronounced in his university office, a quantity of Pakistani civil society that exceeds the visible one, that opposed the jihad against India, or at least thought it was a bad idea.

Pakistanis no doubt want intra-Pakistani violence to stop. But I challenge you to show me any significant person over there who will say in public: "The jihad against India has to stop".


On jihadi websites, India is often referred to as the "House of the Spider" (Koranic reference, Sura 29) indicating weakness. (from a comment on turcopolier)
YUSUFALI: The parable of those who take protectors other than Allah is that of the spider, who builds (to itself) a house; but truly the flimsiest of houses is the spider's house;- if they but knew.
PICKTHAL: The likeness of those who choose other patrons than Allah is as the likeness of the spider when she taketh unto herself a house, and lo! the frailest of all houses is the spider's house, if they but knew.
SHAKIR: The parable of those who take guardians besides Allah is as the parable of the spider that makes for itself a house; and most surely the frailest of the houses is the spider's house did they but know.

Friday, November 28, 2008

To hell with root causes!

Swati Parashar on (a bio. can be found on this page)

We did not wish to be ‘enemies’, but since we have been constructed that way, should not we take our roles as ‘enemies’ a bit more seriously? I cannot speak the language of peace and love anymore. If the war is forced upon us, we will have to accept it. And since our state is too inept to handle it on our behalf, let us debate ways in which we can all participate in this ‘war’, through words, wisdom or actions.

I am afraid it will not soothe my senses anymore by being told again and again that religions stand for peace and ‘some people’ are misusing religion and misquoting scriptures. The problem is that the supply of ‘some people’ seems to be never ending. These ‘some people’ are not just a few people but like amoeba they keep multiplying. I am afraid I will not feel calmed tomorrow when I hear that we should try to understand the ‘root causes’, the injustices and anger that force people on the path of terror. I ask today, as I rage at these terrorists who may not even be citizens of my country, how dare you speak for people of this country? And if it is Babri Masjid and Gujarat that you avenge, how many times should we apologise as a nation and justify your barbarity with heads hung in shame and guilt written on our faces? If we are paying the price for being a tolerant and democratic (although not perfect) nation (there are many dissenting voices tolerated in this country including the voices that speak of hatred against communities of all kinds, voices that talk of revenge and exclusion and voices that are overtly seditious against the state), I reject the guilt, shame and tolerance today for it makes me your ‘enemy’. You punish our innocent people for crimes of a few; and scream hoarse when the ‘innocent’ in your community are held up because of your barbarity. You reject our diversity (of our opinion and politics as well that has defended you and stood for you always), you do not like it when we have spoken with different voices. I, therefore, accept the ‘national identity’ you have bestowed on me as your ‘enemy’, an identity that I had always questioned in order to understand you and your problems. Thank you for reminding us, Indians (those who consider themselves one), once again that we are all equal ‘enemies’ in your war and that we need to think of an equal and befitting response.

I find some inspiration and comfort in the words of the famous poet Faiz Ahmed Faiz:

Rakht-e-dil baaNdh lo dil figaaro chalo
Phir hameeN qatl ho aa.eN yaaro chalo

Pick up the burden of the heart, let us go heartbroken ones;
We are the ones to be murdered my friends!!

Postscript: edited to make my point of posting this clearer. I've added some emphasis on key sentences. Here is the bio. of the author:
Swati Parashar is currently a PhD candidate at Lancaster University, UK. Prior to entering the doctoral program, Ms. Parashar was a Research Analyst with the International Centre for Political Violence and Terrorism Research at the S. Rajaratnam School of International Studies (RSIS), Singapore. Additionally she has worked as an Associate Fellow at the Observer Research Foundation, New Delhi, where she coordinated the International Terrorism Watch Programme. Ms. Parashar was a Fulbright Fellow at the Institute of Global Conflict and Cooperation, University of California, San Diego, US. She and has been published extensively on terrorism and security related issues in both print and online media, and has presented papers at national and international conferences. Her research interests include feminist international relations theory, women combatants in terrorist and political extremist groups, suicide bombers and terrorism, political violence, conflicts, and great powers' politics in South Asia.

Notice that one whose profession is the study of terrorism is so shaken by what happened in Mumbai. She has declared war, and so too, I think, all of India.

....since our state is too inept to handle it on our behalf, let us debate ways in which we can all participate in this ‘war’, through words, wisdom or actions.

Is there a limit to freedom of speech?

But firebrand British-based Muslim preacher Anjem Choudhary backed the terrorists and said any Britons killed or held hostage were legitimate targets because they should not have gone to India.

Choudhary, right-hand man to preacher of hate Omar Bakri, said Britain and America is at war with the Muslim world and their citizens must keep off the battlefield.

'Muslims are being killed in Pakistan, Iraq and Afghanistan every day through acts of atrocity against them. But the media only report events like Mumbai.' --The Sunday Mail

If it is a battlefield, the implication is that Anjem Choudhary is a legitimate target.

Thursday, November 27, 2008

B. Raman: India's Day of Infamy

His warnings fell on deaf ears.
4. It is not just 9/11. It is not just Madrid, March, 2004. It is not just London, 2006.

5. It is --- I am using the present tense because the situation is still not under control at 5-30 AM despite the Army's assistance being sought--- an act of terrorism, the like of which the world has not seen before. Mind boggles as one tries to think and figure out how the terrorists could have planned and carried out terrorist strikes of such magnitude, territorial spread and ferocity without our intelligence and police having been able to get scent of it.

8. The Government of Manmohan Singh reacted to the repeated warning signals of the moving iceberg since November 2007, in the same way as the Bush Administration reacted to reports about the plans of the Al Qaeda for an of aviation terrorism in the US; in the same way Megawati Sukarnoputri reacted to reports of the activities of the Jemmah Islamiyah; and in the same way Khalida Zia reacted to reports of the plans of the Jamiat-ul-Mujahideen .

9. Bovine. It just did no react. It was in a total denial mode.

Wednesday, November 26, 2008

Cancer in decline?

The incidence of new cancer cases has been falling in recent years in the United States, the first time such an extended decline has been documented, researchers reported Tuesday.

Cancer diagnosis rates decreased by an average of 0.8 percent each year from 1999 to 2005, the last year for which data are available, according to an annual report by the National Cancer Institute, the American Cancer Society and other scientific organizations.-- NYT
It is likely a real effect and not e.g., an artifact of less screening. If you consider that the population has been greying over this period, this seems rather significant.

PS: from various sources, the median age of the US population in 2000 was 35.3 and in 2006 was 36.2.

Tuesday, November 25, 2008

CDSes are not regulated

Contrary to the anonymous commenter a couple of posts down who insisted that Credit Default Swaps were regulated because traders responded to Federal Reserve pressure, this Bloomberg story explicitly states that CDSes are not regulated.
Geithner’s skills and limitations as a consensus-builder perhaps show up most clearly, though, in his handling of credit- default swaps, where he played a leading role in trying to make the market safer and more stable.

Trading in credit-default swaps, which were conceived to protect bondholders against default, exploded 100-fold the past decade as investors increasingly used them to speculate on creditworthiness. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should the borrowers fail to adhere to their debt agreements.

Unregulated Market

The big problem Geithner faced in trying to get a handle on the market: It was unregulated, so he lacked authority to make changes on his own and had to depend on his powers of persuasion.

The New York Fed chief began pressing banks in September 2005 to reduce trading backlogs that could prove dangerous should a crisis hit. An average 17 days’ worth of unsigned trades had piled up on dealers’ books, threatening to undermine the market if a wave of defaults hit. A lax system for unwinding and reassigning trades left dealers at times unsure of who was on the other side of their trade.

It took dealers a while to respond. A year later, they had cut the backlog of unsigned trades by 70 percent and doubled the number of deals that were electronically processed.

“It was like herding cats,” said Brad Bailey, director of business development at Jersey City, New Jersey-based brokerage Knight Capital Group and a former derivatives trader, who praised Geithner for making the effort and getting results.

Conduits, SIVs, SPIVs

Conduits, Special Investment Vehicles (SIVs), Special Purpose Investments Vehicles (SPIVs) all are names for a investment mechanism the main property of interest is which that these do not appear on a company's balance sheet.

There certainly are legitimate uses for it. In my browsing, for instance, the example of Williams (an energy company) setting up a SPIV, to enter the telecommunications business is mentioned. This way investors who do not want the risk of a new startup can keep investing in the parent company.

Enron made SIVs notorious using them to hide liabilities.

The matter of interest here is that it seems to me that banks have conduits
a. that are loaded with toxic assets, or at least assets whose value greatly depends on the residential housing market, which has fallen, and
b. that do not appear on their balance sheets, but
c. that the banks are liable for paying off investors if the assets in the conduit fall beyond a certain point.

I think it is these off-the-balance-sheet entities that are the cause of the fear in the market on the principle that you fear what you do not know.

Here's a bunch of links, maybe you'll figure out more than I did:

For all the work, a New Yorker article on the meltdown:

Sunday, November 23, 2008

The Making of a Meritocracy

This is too good to be lost (The Economist, via dailykos)
I remember back in the late '90s when Ira Katznelson, an eminent political scientist at Columbia, came to deliver a guest lecture to an economic philosophy class I was taking. It was a great lecture, made more so by the fact that the class was only about ten or twelve students and we got got ask all kinds of questions and got a lot of great, provocative answers. Anyhow, Prof. Katznelson described a lunch he had with Irving Kristol back either during the first Bush administration. The talk turned to William Kristol, then Dan Quayle's chief of staff, and how he got his start in politics. Irving recalled how he talked to his friend Harvey Mansfield at Harvard, who secured William a place there as both an undergrad and graduate student; how he talked to Pat Moynihan, then Nixon's domestic policy adviser, and got William an internship at The White House; how he talked to friends at the RNC and secured a job for William after he got his Harvard Ph.D.; and how he arranged with still more friends for William to teach at UPenn and the Kennedy School of Government. With that, Prof. Katznelson recalled, he then asked Irving what he thought of affirmative action. "I oppose it", Irving replied. "It subverts meritocracy."

Citi Meltdown

The NYT carries a story about how Citigroup has fallen down and can't get up.

It is worth reading through. It is a story largely about poor management. But there is something more, mentioned but not very clearly spelled out. We've heard a lot about subprime mortgages, CDOes and CDSes and the role these played in bringing down the financial system. In addition there is some way of moving liabilities off the accounting books, and that has to be the cause of the great fear in the market.

As per the article, on October 1, 2007, Citigroup had $43 billion of CDOs on the books. Since Citigroup had a market value of around $250 billion even if you write off 100% of the CDOs, Citigroup should have lost only one-fifth of its value. Instead, as Thomas Friedman puts it,
With $5, you can now buy one share of Citigroup and have enough left over for a bite at McDonalds.
We are told:
But when Citigroup’s trading machine began churning out billions of dollars in mortgage-related securities, it courted disaster. As it built up that business, it used accounting maneuvers to move billions of dollars of the troubled assets off its books, freeing capital so the bank could grow even larger. Because of pending accounting changes, Citigroup and other banks have been bringing those assets back in-house, raising concerns about a new round of potential losses.....

....Also, hundreds of billions of dollars in dubious assets that Citigroup held off its balance sheet is now starting to be moved back onto its books, setting off yet another potential problem.

The bank has already put more than $55 billion in assets back on its balance sheet. It now says an added $122 billion of assets related to credit cards and possibly billions of dollars of other assets will probably come back on the books.
Since investors have no way of knowing what Citigroup really owns, they shun it. For all they know, it is rotten to the core.

Saturday, November 22, 2008

Quantum of Solace

The new James Bond movie is palatable fare for a Friday evening, when one is brain-damaged after the week of work. However the movie has an annoying style of cinematography during periods of fast action - it is as though a whole lot of frames in the sequence are missing, so what happens is too quick to follow. Since the movie is doing well at the box office, no doubt the movie mogul morons will proceed to emulate this in future Bond movies as well as elsewhere.

Sunday, November 16, 2008

On Credit Default Swaps

Borrowers who took out subprime mortgages are **NOT** the cause of the current financial mess. It bears repeating, because so much propaganda to the contrary is out there.

Devilstower, on dailykos endeavors to explain
Subprime mortgages (and all mortgages, really) are a fraction of the current problem. The bailout would have been enough to buy out every subprime mortgage in foreclosure across the country. In fact, it was enough to do that several times over. So why not do that?

The reason is that the purpose of the bailout (at least as Treasury Secretary Paulson sees it) isn't to stop mortgage foreclosures, but to save the banks. And the banks have some self-inflicted problems that make those mortgages an afterthought.

For example, the wonderful credit default swap. In essence, credit default swaps are (or were) nothing but insurance policies for loans. And yet in 2007 the total number of credit default swaps traded far exceeded the value of all loans. In fact, it may have touched $70 trillion dollars, which puts it above the gross domestic product of the entire planet.

How is that possible? Come with me back to the primitive world of 1999, when SUVs ruled the roads and cell phones did not yet shoot video, and let's see how this clumsy bit of fiscal jargon conquered the planet.

and a bit later:

Stage 4 (Fatum casus)
I have a swap. I really, really want someone to take my swap. Only even with every incentive I can offer, not enough people are loaning. Sure, there's a record amount of hypothetical money sloshing around the system thanks to me and my swaps, but it's still not enough. So what can I...

Wait a second. Swaps are unregulated. No one says I have to have enough resources to cover the swap, and even better, no one says I have to offer the swap to the person who actually made the loan! Hey buddy, see that loan over there? You may think it's iffy, but I think it'll hold up. In fact, I'm so sure it will, I'll sell you a credit default swap on it that pays off if it fails. You don't make the loan, you don't have to pay off on the loan, you don't have anything to do with the loan. You just pay me the fee. And if that guy loses his money, you collect. How sweet is that!

This mutation is enormous (see how the genera changed up there?). At this point, credit default swaps have become completely divorced from the original function. A single loan can be covered by multiple swaps. There's a complicated fiscal term for this. It's called gambling, and at this stage, that's all that remains of those little "insurance" policies. They no longer protect anyone from anything, they just offer a chance to place enormous overlapping side bets on everything.

Saturday, November 15, 2008

The Decline of Men

The Decline of Men
How the American male is tuning out, giving up, and flipping off his future
by Guy Garcia

Grabbed this from the new books' shelves at the library. Might have been a mistake.

Men are doomed. 300,000 years ago, the human Y chromosome supposedly had 1400 genes. Today it contains 45. So it will soon be extinct. (What a misunderstanding of evolution!) Men are supposedly so different from women "as to render them almost a separate species". Women's brains are better integrated than men's. Testosterone levels in men are dropping 1.2% per year. Self-control, cooperation and verbal participation are difficult to impossible for many boys, yielding girls a huge advantage in the classroom. The sky is falling!

One of the problems with the book is that far too often it simply documents a relative decline of men with respect to women, which is only to be expected as women become the equals of men in practice, not just in principle.

Over the past twenty-five years the number of women enrolled in undergraduate colleges has grown more than twice as fast as that of their male counterparts. By 2006, women outnumbered men on American college campuses by more than two million, and the gap is growing.
Now let's look at what the National Center for Education Statistics says:
Enrollment in degree-granting institutions increased by 16 percent between 1985 and 1995. Between 1995 and 2005, enrollment increased at a faster rate (23 percent), from 14.3 million to 17.5 million. Much of the growth between 1995 and 2005 was in female enrollment; the number of females enrolled rose 27 percent, while the number of males rose 18 percent. During the same time period, part-time enrollment rose by 9 percent, compared to an increase of 33 percent in full-time enrollment. Enrollment increases can be affected both by population growth and by rising rates of enrollment. Between 1995 and 2005 the number of 18- to 24-year-olds increased from 25.5 million to 29.3 million, and the percentage of 18- to 24-year-olds enrolled in college rose from 34 percent to 39 percent. In addition to the enrollment in accredited 2-year colleges, 4-year colleges, and universities, about 434,000 students attended non-degree-granting, Title IV eligible,1 postsecondary institutions in fall 2005.

So the decline is relative to women, not an absolute decline, nor a decline relative their share in the population. This is not "a national emergency with economic, sociological and cultural ramifications...".

Another problem with the book is that it examines many possible explanations for the apparent decline of men, but leaves them as plausible stories. How we might go about checking whether the stated explanation is correct is not touched upon. Rather, the book goes from opinion to conflicting opinion. If it is not clear what the problem is (see above) and even less clear what the cause of the problem is, then it is impossible to solve.

Ultimately, I couldn't go more than about halfway through the book. Since I've held the book for one week beyond when some poor schmuck placed a hold on it, I have to go to the library to return it. As in now.

The book rates a single star.


India's lunar orbiter and lunar impact lander have been successful so far. Lots of pictures and other details are available on the bharat-rakshak forum. A very detailed presentation of the mission given at the Tata Institute is on the web, here.

One thing to note: ISRO chairman quoted by the press:

""We have also emerged as a low-cost travel agency to space," referring to the mission's 80-million dollar tag."

Asia Times has this:

" Chandrayaan-1 cost US$74 million, ...... Moreover, $20 million of the $74 million Chandrayaan-1 cost went into valuable reusable infrastructure, such as building a trio of Earth-stationed trackers of moon-mission data - the Deep Space Network, the Spacecraft Control Center and the Indian Space Science Data Center, all located at Byalalu, near Bangalore in the south."

Chandrayaan carries two NASA instruments. You can read about one of them here. The claim on the bharat-rakshak pages is that the NASA budget for these is greater than the $80 million price tag of the launch.

It will be interesting to see if the economics of space exploration can truly be changed. Time will tell. In any case it is reassuring that come what may, the human exploration of space will continue.

PS: I'm an advocate of a vigorous program of unmanned, scientific missions in space. Humans in space is a little less interesting to me; it should proceed, but not by sacrificing unmanned exploration.

Friday, November 14, 2008

Toxic Assets

There is a tendency to blame sub-prime borrowers for the current financial mess, even though back-of-the-envelope estimates show that the value of the mortgages that are at risk is small relative to the mortgage market and miniscule compared to the overall financial market.

Via dkos, I came across this Michael Lewis article in Conde Nast; it tries to explain what happened.

Here are the key excerpt:

“Then he said something that blew my mind,” Eisman tells me. “He says, ‘I love guys like you who short my market. Without you, I don’t have anything to buy.’ ”

That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

You really should read the whole thing.

“That Wall Street has gone down because of this is justice,” he says. “They fucked people. They built a castle to rip people off. Not once in all these years have I come across a person inside a big Wall Street firm who was having a crisis of conscience.”

But he couldn’t figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. "I didn’t understand how they were turning all this garbage into gold," he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. "We always asked the same question," says Eisman. "Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk." He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. "They were just assuming home prices would keep going up," Eisman says.

Wednesday, November 12, 2008

On National Security Letters

Read this to get a little grasp on how Bush tried to Sovietize the United States.

National Security Letters are used by government agents with no judicial oversight to get you to do whatever they want, and if you tell anyone you go to jail.

They existed before Bush, but their use was very limited. With the Patriot Act, the use of these exploded.

Saturday, November 08, 2008

Bill Ayers writes.

You read.

Friday, November 07, 2008

Socialism only for us

Via dkos.
A comment on a conservative blog included the following:
The GOP needs to come up with a "no socialism for anybody" message instead of the "no socialism for the people who we don't like and don't vote for us but plenty of socialism for 'our types of people the real Americans'" message and actions that have dominated the GOP since 1980.

By the way: small government Sarah Palin actually increased spending in her state. So why did we presume that she supported small government and less spending? Simple: because she is a Republican from a state that doesn't have a Chicago, Detroit or Harlem in it. That is precisely the problem that I am speaking of.

There's lots more over there.

Wednesday, November 05, 2008

Antidote to cynicism

If you haven't seen it already, here is President-elect Obama's victory speech.

The "Yes, we can!" spirit requires a sloughing off of cynicism. I think cynicism comes in part from a constant disregard for the truth. In that spirit, I must comment on John McCain. McCain supposedly gave a great, gracious concession speech. So say all the TV pundits. It is enough to make one cynical.

Even while McCain was making his remarks, the crowd assembled of his strongest supporters booed when Obama's name was mentioned. It was merely a surface manifestation of hatred that McCain and Palin did their best to stir up. As per Newsweek (h/t RP)
The Obama campaign was provided with reports from the Secret Service showing a sharp and disturbing increase in threats to Obama in September and early October, at the same time that many crowds at Palin rallies became more frenzied.

And there is this, minor in the scale of things - perhaps!
NEWSWEEK has also learned that Palin's shopping spree at high-end department stores was more extensive than previously reported. While publicly supporting Palin, McCain's top advisers privately fumed at what they regarded as her outrageous profligacy......One aide estimated that she spent "tens of thousands" more than the reported $150,000, and that $20,000 to $40,000 went to buy clothes for her husband. Some articles of clothing have apparently been lost. An angry aide characterized the shopping spree as "Wasilla hillbillies looting Neiman Marcus from coast to coast," and said the truth will eventually come out when the Republican Party audits its books.
The Senator put Palin on the path to the Presidency, and this was probably the most irresponsible act of his career.

This is the truth that must be acknowledged to keep cynicism at bay.

PS: McCain's VP candidate (from R.P.) as per Fox News, the Republican Propaganda Channel:
Carl Cameron just reported on O'Reilly that when Palin was selected, aides to McCain found out that she did not even know that Africa was a continent.
She thought it was a country and that South Africa was to the south of that country:

(via A.M.)

Tuesday, November 04, 2008

Calling it early

With Ohio and Pennsylvania called for Obama by the networks, this is not premature (from

Sunday, November 02, 2008

The Real McCain

Saturday, November 01, 2008

How is this different from Bihar?

Perhaps more genteel, but what's the difference with Bihar?
Devilstower on dkos:
Unlike many of the other battleground states, Missouri's Republican-dominated state house has seen to it that the state has no early voting, a constant furor around ID laws, and a lot of righteous fist shaking over new voter registration. If you were panning through local newscasts last night, you could have watched either of two stations devote a solid chunk of their broadcast to the terrible problem of how dead people weren't removed from the polls quickly enough -- though no one showed a single instance of these lingering names translating into an actual vote.

On election night, be prepared for Missouri to be close. Be prepared for lots of podium thumping from the Republicans, no matter the outcome. And be prepared for what's going to happen in St. Louis.

St. Louis has a structure that's nearly unique. More so than any city outside of Washington, D. C., the city's control is not in its own hands. Everything from the city boundary, to the makeup of many boards and departments is at least partially in the hands of the state. ....

The City of St. Louis has a population that's roughly 50% African-American. Like African-American populations elsewhere, they tend to vote heavily Democratic. For what it's worth, the rest of the city also votes heavily Democratic. You can bet your life that come Tuesday, voters are going to line up at every polling place in town. And that's the problem.

Republicans know very well that the turnout in St. Louis (and Kansas City) can swing the outcome of every election in Missouri, so they have a well practiced and time-honored game plan.

First, there won't be enough machines. Neighboring counties will have plenty, St. Louis County will be tight, St. Louis City will be woefully short. It's that way every cycle, it'll be that way this time.

Second, Republican poll workers and monitors will be late to arrive. This tactical heel-dragging will help slow the opening of some polling stations, and ensure that those trying to vote before work face frustrations and delays.

Third, Republicans will challenge voters. Not voters of whom they're suspicious, mind you, lots of voters. Particularly older voters who they think seem confused, or voters who already seem steamed about the delays. The goal here is to slow the process as much as possible, so that when voters are coming in to vote after work, the lines are stupendous. This process will continue right up until 7PM, when the polls close.

At that point, there will be thousands of people still in line in the city and county. The local Democratic Party will rush to a judge before the polls close, and get an injunction keeping some polling stations open longer to accommodate the overflow crowds. They'll get the injunction.

The Republicans will be roughly 3.2 seconds behind them, relaying this injunction to an appellate judge. This judge, whether appointed by the Bush administration or the Blunt administration in Missouri, will happily order the polls closed.

Polling places will then be left to interpret these rulings amid a sea of confusion. Close the doors immediately? Let everyone already in line vote but block any more people getting in line? Keep the polls going until they're forcibly shut down? All three options will be exercised, often within a few blocks of each other.

At the end of the night, there will be thousands of St. Louisans who didn't get to vote, Republicans will scream that Democrats were trying to cheat "again," and Kit Bond will deliver a red-faced speech that's slightly less coherent than Sarah Palin on a bender. All of this is as predictable as sunrise.

So when you see the first results come in from Missouri, and they lean toward McCain, don't give up hope. The Republicans may play the same defense they've played forever in the cities, but this year's offensive line is coming at them with an energy they're never going to expect.

BPA news

More on Bisphenol-A:

1. Wegmans Food Markets responded to a question by me (excerpt of response):
None of Wegmans jugs or plastic cups/lids contains BPA. We use HDPE(#2) for milk jugs and Polypropylene (#5) for cultured products cups and lids. BPA is found in plastic objects made from Polycarbonate — usually grouped under recycling #7 — these plastics are hard, not flexible like our packaging.

2. The NYT has been mentioning BPA:
a. BPA may interfere with chemotherapy.
b. Panel rebukes FDA about BPA.
c. NYT editorial board rebukes FDA about BPA.
Now it is imperative that the F.D.A. complete a more rigorous assessment [of BPA]. It must also consider whether to restrict some uses of BPA without waiting for further research.