Afghan Withdrawal? The TSIBR View (Part I):

It's 2009, the fourth quarter, and the question of the day remains: should the US withdraw from Afghanistan? Here is the TSIBR view, Part I:

Clearly when it comes to the Taliban, al Qaeda, Afghanistan, and Pakistan all is shifting sand. Nevertheless, at certain times certain factions hold more sway generally, which is why the Taliban and al Qaeda have at times been able to implement grand strategies. How much sway al Qaeda presently has in the swirling tribal alliances throughout the Af/Pak mountains is very difficult to say, especially from a strategic perspective, since it makes sense for al Qaeda to take a backseat to Taliban leadership as long as the main front remains Af/Pak (where the Taliban are viewed as homegrown, al Qaeda are foreign interlopers). Al Qaeda (or what passes for it these days) almost certainly has laid strong bets with the TTP (Tehreek-e-Taliban in Pakistan, Mehsud’s tribe) for an alliance aimed at controlling future Pakistan, although the info coming from Waziristan tends to be rather untrustworthy.

If the Taliban are able to consolidate power in Afghanistan, there is little doubt that ties between the Islamic Emirate of Afghanistan and the Pakistani TTP would multiply and strengthen, becoming more effective and well capitalized. Anything that smacks of a Taliban victory in Afghanistan would likely ignite a recruitment and charitable donation bonanza to the Taliban and al Qaeda of inestimable impact. Al Qaeda would then quickly be able to re-ramp up operational capability, using key alliance networks in Afghanistan as support to make the TTP ever strengthened. As they strengthened, more and more tribal leaders would be force to appease the widening TTP/Qaeda alliance.

I believe something like this or similar would occur upon a US withdrawal because in conditions of great resource scarcity, violence, and swirling power alliances, leadership gravitates to capital, and much more capital will flow into the Af/Pak region seeking to connect the TTP with the Afghani Taliban if the US withdraws. Indeed, certain factions of the Pakistani ISI may even view such an outcome as a victory.

Does anyone really think the situation for northwestern Pakistan would not deteriorate considerably if the US leaves Afghanistan? Let’s not forget that the Taliban and al Qaeda exist largely because the US abandoned Afghanistan to begin with. Abandoning Afghanistan today is tantamount to abandoning the civilian government of Pakistan. What kind of civilian government in Pakistan could maintain control with a TTP on steroids existing in the Northwest?

Now, before readers flame me for being some sort of neo-con imperialist warmonger, notice that I have never said that the US must, or even should, stay in Afghanistan. Believe me when I say, TSIBR is quite uncomfortable laying down evidence that can be interpreted as pro-war. However, if the US withdraws, I believe what I have written may approximate the consequences; then again they may not.

My main point remains this: little will stop terror attempts coming from this region for the foreseeable future, and something significant will probably eventually get through. Given that Americans will likely react to that with war, American citizens generally should be prepared to be involved in Afghanistan for a very long time to come, and count on it sucking every step of the way. Obama calling our generation the ‘Greatest Generation’ in recent speeches, and all the sacrifice that the phrase connotes, suggests to me that Obama may have come around to such a view already.

Ever see an obstacle in your life that there is no way around, you’re gonna have to go through this, and its gonna take a long time, and its gonna hurt, its gonna suck? What do you do? Do you give up? Do you curse the gods? Or do you accept your fate, prioritize your situation, and try to get through it as quickly and cleanly as possible. Welcome to Afghanistan during your late hegemony, America; you’re not the first, but you may be the last.

Dollar Collapsistan:

For those of us keyed into the long cycles of hegemony and history, two stories have lit up the world stage in October: 1) The tottering dollar and 2) The Pakistani offensive against the Taliban in South Waziristan. TSIBR will now lend its inimitable view on both.

On October 6^th, the following article roiled energy and currency markets by claiming to uncover covert meetings aimed at implementing a plan to price oil in something other than dollars ‘within the next decade’:

http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html

Of course, widespread denials and recriminations ensued; which reminded TSIBR of that old political saw – truth in politics is best measured by strength of denial. Perhaps then we should put faith in the words of lone-wolf Putin, who is apparently ready to conduct Russian-Chinese oil trades in Ruble-Yuan immediately:

http://en.rian.ru/russia/20091014/156468599.html

Meanwhile, US economic authorities remain powerless to defend the dollar – after all, there really is only one palatable path towards restoring economic balance – dollar debasement. Remove that printing in any significant measure, and collapse will almost assuredly begin anew:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aPoUCijvAfCk

The flip side of that equation, however, is that dollar printing for the moment is causing a global reflation. How will we know when that reflation is becoming a damaging inflation (an effect of general monetary imbalance)? Probably when stocks decline while oil and other commodities continue to rise. Indeed, here are two excellent articles summing up all of the many negative consequences a falling dollar will have on American markets in the long-run:

http://online.wsj.com/article_email/SB10001424052748703298004574458923186941870-lMyQjAxMDA5MDAwODEwNDgyWj.html

http://www.telegraph.co.uk/finance/china-business/6266790/China-calls-time-on-dollar-hegemony.html#

Ah, what’s an American to do? Own gold of course:

http://www.reuters.com/article/newsOne/idUSTRE5963BX20091007

http://www.bloomberg.com/apps/news?pid=20601039&sid=ajPCIYcGX8t4

Now onto Pakistan. Whenever considering Pakistan, comprehending the basic grand strategy of the al Qaeda / Taliban Alliance is of paramount importance. Al Qaeda and the Taliban are seeking to establish an Islamic Caliphate (Kingdom) stretching from Afghanistan through Saudi Arabia. For obvious reasons, said would require the absolute collapse of the United States (owing to its many diverse interests throughout the wide region). The best means to that end, al Qaeda and the Taliban believe, is to sow seeds of chaos throughout the region, thereby bleeding the US in regards to troops, will, and most importantly, economic clout. The more US global financial / military hegemony totters, the greater the likelihood that the al Qaeda / Taliban Alliance will eventually succeed, or so they believe.

Now, let’s analyze the following article, which suggests that the Afghani Taliban have no qualms with the US as long as the US withdraws from Afghanistan, in light of the above elucidated grand strategy:

http://www.foxnews.com/story/0,2933,562160,00.html

Clearly this is an ill-disguised attempt by Qaeda/Taliban to use America’s lack of will for war to convince the US to give up the fight in Afghanistan. Not only would this lead to unspeakable terror for Afghani women, it would further score a win for the Qaeda/Taliban Alliance of immeasurable impact. The Taliban re-ascending to power in Afghanistan would accomplish the first major goal in the Qaeda/Taliban grand strategy. The next major goal would be to use Afghanistan as a launching pad to foment government collapse in nuclear-armed Pakistan.

As TSIBR has been indicating for several months, the Taliban are a far better face for the Qaeda/Taliban Alliance in the Af/Pak area than al Qaeda is – the Taliban are viewed as homegrown, while al Qaeda are viewed as foreign interlopers. Thus as long as Af/Pak remains the key front in the war against Islamic Militancy, expect al Qaeda to happily take a back seat to the Taliban. If one reads between the lines, that is the most useful conclusion that can be drawn from the following article:

http://www.huffingtonpost.com/2009/10/07/al-qaida-showing-smaller_n_311985.html

However, this does not seem to be the conclusion that the Obama administration or the mainstream press are drawing from the Afghan Taliban’s false and strategically projected split from al Qaeda. High up administration officials may be leaning towards some sort of appeasement with these despicable humans:

http://www.foxnews.com/politics/2009/10/08/obama-war-council-focuses-al-qaeda/

Meanwhile, the Taliban are daily growing in power, especially in Pakistan:

http://news.yahoo.com/s/ap/us_afghanistan_taliban_finances;_ylt=AqYnSQRmDJN_Ry17CaIg_zas0NUE;_ylu=X3oDMTNkaXRxbDJwBGFzc2V0A2FwLzIwMDkxMDEyL3VzX2FmZ2hhbmlzdGFuX3RhbGliYW5fZmluYW5jZXMEY3BvcwMyBHBvcwM2BHB0A2hvbWVfY29rZQRzZWMDeW5fdG9wX3N0b3J5BHNsawNvZmZpY2lhbHRhbGk-

http://www.google.com/hostednews/afp/article/ALeqM5jgvQygeGMBysviMWUUcBwtL_8BLA

Moreover, all the many anti-India Pakistani terrorist groups are now gravitating to the Pakistani Taliban. TSIBR has little doubt that al Qaeda is providing the glue, with maybe a little extra fuck you in their for Shiite Iran:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEW2xCPp8TLc

http://www.bloomberg.com/apps/news?pid=20601087&sid=agD_q6.0spFw

In the meantime, one would have to say the South Waziristan offensive against the Mehsuds is having mainly negative consequences, rather than positive, for the Pakistani Army (see the Twitter feed for the latest):

http://www.nytimes.com/2009/10/11/world/asia/11pstan.html?_r=2&em

And, finally, in case you are still a bit perplexed as to why Pakistan is central to US hegemonic decline and the TSIBR focus, here is an excellent back-page article revealing the little acknowledged simmering tension between the two ascending hegemonic contenders – China & India. If the hegemonic cycle continues as it has in the past, then China and India will both continue to develop and militarize, trade tensions would mount, eventually breaking out into total war, with China and Pakistan on one side, and the US and India on the other. India would likely win that war with American help, if the entire human race weren’t destroyed first. And although that is not the path that TSIBR views as the most likely outcome to these tremendously momentous times, the following article is of some concern, once one has learned to read for the hegemony between the lines:

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSDEL8101920091014

Joshua Kane

Li'l Fall Break Due To Family Illness:

Hello TSIBR readers! As I'm sure you realize, things are heating up all over the stage of world affairs; exciting times are upon us. Nevertheless, I'll be visiting my ailing Grammy over the next week or so. Hence, expect spotty twitter coverage of key events until late next week, at which point you can assuredly expect a TSIBR mega-update.

Thanks for your continued interest!

Sincerely,

Joshua Kane

Mehsud is More Region Than Man:

MEHSUD SUCCESSFULLY PENETRATES PAKISTANI CENTRAL HEADQUARTERS:

The above Hakimullah Mehsud orchestrated attack is the sort of attack that takes little in the way of initial capital, the weapons used are easily obtainable anywhere in the developed world, planning would be very difficult to detect, and in this case, Pakistan's equivalent of the Pentagon was penetrated. Hakimullah has threatened to bring such attacks to America.

Full Post Coming Soon...

Reader Questions Re Depression & War:

Q: To your knowledge, has there ever been an adequate refutation of Marx's concept of the crisis of overproduction? From what I understand, there hasn't been, but I haven't studied economics for all that long.

A: Not to my knowledge, no. In fact, Marx's theories of overaccumulation (too much capital in too few hands) causing overproduction (too much productive capacity with not enough demand to create profitability) seems to describe the current global economic downturn fairly well. Today economists are resurrecting Marx's ideas on overproduction when they speak of 'articulation errors' – the partial or total lack of fit between what is wanted and what is available. And of course the study of articulation errors has become complex, however, nothing I have seen in that literature has entirely contradicted Marx's original understandings of major capitalist crises periodically arising as an effect of overaccumulation/overproduction.

And actually, this connects up well with the Dent/Depression thread floating around (see here). In that, Marx, along with a whole host of other scholars (myself included - and you can find previous threads about coming war and depression on the SF forum throughout last year), would agree with what Dent has predicted regarding coming Depression and War, even though they approach the topic from slightly different angles. For example, Marx argues that capitalism necessarily overcomes overproduction cries via a rapid reduction in the productive capacities of humanity along with a slowing in population growth. In other words, wide-scale war and crisis.

Q: The way you (paraphrasing Marx) worded that gives agency to capitalism itself. So what you're talking about here is people and institutions. If there is a direct link between the crisis of overproduction and war, doesn't that connection involve human consciousness of the crisis, and a pretty cynical and utilitarian (but practically omniscient) decision capacity on the part of those capable of controlling such things? And on a sidenote, would this theory suggest that (for example) ending the Depression was not merely a pleasant side effect of U.S. involvement in WW2?

A: I'm not sure I understand what you are getting at here. All economics today, whether discussing micro or macro, assumes actions at the individual level are governed by bounded rationality. Such bounded rationality leads to the profit maximizing actions of financial and corporate agents and officers. At the macro level, over time, such individual actions aggregate into an overaccumulation crisis as described.

Any similar theories would most likely see WW2 ending the Depression as causal - WW2 widely destroyed productive capacities while allowing for a reintegration of the global economic system based on better technology, better economic understanding, and redistributed wealth.

Thinkin about this some more, I see what you are saying - that my writing above seems to reify capitalism as an individual with agency. But trust that the macro-effects that I am discussing above can each be traced back to actions taken by individuals participating in the economy based upon bounded rationality.

Q: I get the relationship between economics as a system and individuals as rational actors (WIKIing "bounded rationality" but the meaning seems apparent). Maybe I was too opaque. I'm saying, the move from OH FUCK CRISIS OF OVERPRODUCTION/OVERACCUMULATION to LET'S START A FUCKING WAR seems to me to require something more than the bounded rationality of individual political-economic actors. Going to war has no macro feature--it is the decision of an individual, or an oligarchy at best. And the link that would make this decision a rational response would be an understanding of war as a solution to the crisis of overaccumulation. See what I mean? I'm asking you, in your opinion, are the wars that deal with this crisis (WW2 as an example, specifically the destruction of productive capabilities) resulting from decisions made by, or advised by, people conscious of this relationship? Is someone up there saying: we need to bomb the fuck out of everything to lower supply (production capability) in keeping with realistic demand? Or is the war some kind of geo-political epiphenomenon of some other feature of the crisis? I guess I'm asking you to draw the map that gets us from the economic crisis to the war. Not how the war "solves" the crisis, but why the war inevitably happens?

A: Of course, each particular path to war differs, but there is clearly a correlation between capitalist crises born of overproduction, and war. Although the path to each capitalist crisis is made up of countless individual decisions, and each of those individual decisions sorta differ from any other decisions made in history, those differing decisions share one important feature: they are based on bounded rationality maximizing behavior, and thus, each capitalist crises has some overwhelmingly similar features (e.g. overaccumulation).

So too then does each lurch from crisis to war. On that path, no individual needs to understand the ultimate aggregation of everyone's individual decisions in order to have a similar historical outcome obtain. What history has shown is that political leaders, in trying to protect their country from further crisis, and also trying to protect their own leadership, make bounded rational decisions that in the end aggregate to ever further disintegration of the current global system. As the global system disintegrates, individual leaders attempt to formulate a new global financial order, but they find that the old order is dying precisely because it no longer fits the current balance of power on the globe. Which of course pushes leadership to question, well, what precisely is the current balance of power on earth? And what financial system would serve that best?

Now if global balance of power were a clear cut issue, there would be no need for war. But it isn't. So the question then becomes, which nation's interests will the new global financial system serve best? And it is around this question that war typically breaks out. War not only settles that question, but eliminates global productive capacity while ushering in new technology, thereby creating solid growth fundamentals once the new global financial system, that was forged in the crucible of war, is put securely in place.

So that's pretty much how it has happened in the past. I blog regularly about how it might be happening now, and here are some excerpts from Aug-Sept '08:

As far as choices go, I think people and populaces have little choice in political-economic events. There are systemic ebbs and flows and individuals and groups can change the flow slightly, and certainly can alter its timing, but at the grand level of history (Braudel called it the long duration), the system moves people more than people move the system (although one definition of history would be that it is the never-ending interplay between individuals and systemic institutions over time, but I digress). So my point with these Obama the Neo-Con posts is not to critique Obama or support McCain, but to document in real-time how the current state of the global political-economic order (with the US led system slowly collapsing) is shaping Obama far more than Obama will change the long building trends that have been buffeting the world political-economy in recent decades.

A different way of making a similar point:

America's debt burden is far past the point of no return, and with the baby boomers retiring, America already cannot make good on its debts (without stimulating massive hyperinflation that is). Given that America is likely to fight more in the near future, that debt burden is only going to get worse. At some point the only choice for America will be to scrap the current world financial order, and find a new one that is more amenable to American standard of living. The strength of the American military leaves the door open for America to fight if the world balks at allowing the US to have a primary say in determining the next financial order. In other words, America's main strength is state on state conflict. Rather than watch the globe reshape the world financial order into something that does not benefit America, America is far more likely to switch the game to bring into play our main and only remaining strength. If this seems somewhat confused, then forgive me, predicting catastrophe is difficult, if not impossible. All I can say with any certainty for myself is that I do not see how the present global political-economic order can go on given the imbalances that have developed. Given that America will not sit by and let a new world order develop without it having a major say, and given that America's only remaining strength is its ability to wage state on state war, the future does not at all augur well for peace. That's TSIBR’s confused and confusing take, and we’re sticking to it until events suggest otherwise...

And if you want even more about this sorta thing, see my original essay on how war might lead to an overall forgiving of American debt:

http://thesystemisblinkingred.blogspot.com/2008/10/forgiving-american-debt.html

Q: If A) the stock market, commodities trade, federal deficit, U.S. indebtedness to "X" (China, et al.), valuations of intangible assets/banks/businesses, etc. all reflect real-world goods and services (i.e. material and labor) somewhere down the line, and B) these economic abstractions are all indicating a declining American hegemony, and C) U.S. goes to war to change that (aside: I agree and have held for some time that the U.S.'s sole remaining global strength is its state-to-state military capability, and this terrifies me), then what does a military outcome in favor of the U.S. really mean?

A: Excellent question. Sometimes new things do happen under the sun, and this is the first time in capitalist history that the globe seems to be going through a hegemonic transition (America declining) without any other nation being powerful enough to reprise America's role. What we are witnessing is growing multipolarity, a direct result of rapid globalization. In my opinion, there is no 'winning' for America in this, there will not be a renewed American hegemony. The best that America can hope for is using its military might as a platform to create a world-system where America won't continue to decline economically and politically vis a vis developing nations.

Q: What is the relationship between the "global financial order" and the "balance of power"? It almost sounds, from the way you're using these terms, that in a WW3, if the U.S. wins the global financial order has been realigned to reflect the global balance of power, and if (say) China wins, the balance of power has been reshaped to fit the global financial order. Can you clarify that?

A: The global financial order is a direct consequence of the global balance of power. National power is based on many different variables (all the ones you would imagine). All those variables aggregate into: this nation can kick this nation's ass. Which over time gels into a global financial system that mainly benefits the nations who can kick other nations' asses. Thus if the US were to win in a hegemonic war against China, it would demonstrate that the balance of power lies in America's favor, and the US consequentially would take the lead role in developing the financial system, which would be certain to benefit the US more than China. The converse would obtain if China won a hegemonic war against the US.

But that's not the precise path I believe most likely going forward. Growing multipolarity is signaling the end of Hegemony as a solution to anarchy at the global level. The question now becomes whether humanity is ready for something new, something more multipolar. Is the world ready for global governance? The ultimate answer to that question will determine whether the human race continues on as a going concern, in my opinion.

Q: is sustained conventional warfare among any of these states even plausible? do you think war is a necessary in-between step? Or at least, inevitable given U.S. tendencies? Or is it possible to slide peacefully into multipolarity?

A: No, sustained conventional war between nuclear states is highly implausible. And if there is one main aspect of the current hegemonic cycle that makes this one 'new under the sun', it is the existence of nukes. Thus any 'world' conflicts in the offing will not appear that similar to previous world wars. More likely fighting will occur between proxies. In my view, before such fighting morphs into outright hegemonic style state on state war, random mass destruction events will occur. These events will force global leadership to bargain out a new world order prior to hegemonic conflict (i.e. conditions of total war) obtaining.

That being said, I do not believe a peaceful slide into a multipolar global governance structure is possible. The way in which the Iranian and Af/Pak conflicts are now coming to a head indicates that I am correct. As did America's invasion of Iraq.

The ability to wage war is pretty much all America has left now that our economy has been hollowed out by 30 years of deregulation and currency 'flexibility.' And wage it we will. But to what end? If its an attempt at renewed hegemony, America will fail. If its an attempt for an equal and fair spot at the table, in the scenario of an open global economy amongst mainly pro capitalist-democratic states that have willingly submitted to representative global governance, well, the US may win those sorts of battles. But first Americans have to decide that this is what we'll be fighting for. Alternatively, America is facing a bleak future of decline, violence, and societal breakdown. It may face that future regardless.

Obama The Outsourcer; Will Almost-Spilled Be Good Enough?

With the stock market continuing to roar back to life, TSIBR pauses to reflect – how can it be that the TSIBR portfolio (now 60% in stocks and commodities ETFs, 40% in cash) is having its best year ever? Shouldn’t we be fast approaching the double dip in our W shaped recession/depression? That original double dip forecast, with the second dip expected in the Fall of this year, assumed that the Obama administration would prevent Wall Street from going back to business as usual once the government had saved Wall Street’s asses by protecting the major firms from any and all losses. As TSIBR has been covering all year, that is not what has taken place, Obama has outsourced the writing of financial reconstruction regulations to the same elite cabal that profited from the mess in the first place. These elites have of course dragged their feet, and with the US government protecting them from any and all losses, they have gone back to speculation as usual:

http://www.marketwatch.com/story/stocks-more-attractive-than-bonds-strategists-say-2009-09-21?siteid=nwhpm

Obama’s hands-off approach to financial reconstruction has been a terrible blunder for a number of reasons. One I would like to highlight now is that Obama has set up his four-year term to witness a stock market bubble in the first part, to be likely followed by a secondary crash in the second half of his first term. For obvious reasons, a first term President wants the opposite; Obama has really dropped the ball on financial reform.

As a result, there really is no telling how long the current stock market rally could last. It could be two more years; it could be two more days. The reason the market crashed in the first place was that speculation had become detached from economic reality. This remains the case. It used to be that the stock market predicted directions in the larger real economy, however, owing to the Fed’s loose money policies since 1995, speculation has run rampant to the point where the stock market no longer predicts the real economy; the stock market has now become the entire economy, or at least the main driver of it. Thus, as long as the perpetual money machine known as the Fed continues to provide limitless liquidity to rampant speculators, the stock market will rise, and the economy will be dragged higher behind it.

Sounds good right? Not so fast. What happened right before the Crash of ‘08? Commodities were rising to levels and at a pace theretofore unseen. This forced the Fed to begin to take the punch bowl away from housing speculators, thereby causing the entire economy to collapse. This then is the path that TSIBR sees as most likely going forward: choppy volatility in a generally rising market as commodity prices accelerate eventually turning into rapid inflation. Then the Fed starts to remove stimulus. Then the stock market drops precipitously. Then the economy follows.

Of course, complicating that view is the still lurking potential for a major deflationary wave to kick in. For example, debt issuance is still declining at a record pace in the US:

http://www.telegraph.co.uk/finance/financetopics/recession/6190818/US-credit-shrinks-at-Great-Depression-rate-prompting-fears-of-double-dip-recession.html

While cascading bank failures are still a real possibility in the near future:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aYdgQkXu9eBg#

Hence TSIBR will be actively playing the speculative bubble that is developing in commodities, but we will also be staying highly nimble, watching out for deflation. More generally, TSIBR expects that in a few years we will have experienced a ‘ski-jump’ shaped crash, where there was a sharp drop, a rapid recovery, followed by an even shaper drop. Somewhat similar to this knowledgeable chap’s outlook:

http://prudentbear.com/index.php/thebearslairview?art_id=10274

Regarding the dollar, the only hope for the greenback these days appears to be economic collapse, because crisis seems to be the only thing that makes people want to hold dollars. As TSIBR has been tweeting about daily, the dollar broke support a couple of weeks ago and has continued to decline. Assuming no crises are in the offing (which they probably are), the path of least resistance for the dollar is certainly down. Especially with increasing talk of a global currency rebalancing to help eliminate China’s trade surpluses and America’s many deficits (which would involve mainly an immediate and specific devaluation for the dollar).

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6211858/HSBC-bids-farewell-to-dollar-supremacy.html

http://www.reuters.com/article/usDollarRpt/idUSLL68602920090922

If such a rebalancing does occur, we could wake up one morning to find gold up $200-$300 dollars and dollar purchasing power significantly reduced. The shock to consumers would be rough for a few months, but a coordinated devaluation of the dollar would at least begin to set the global economy on a path toward real recovery. Although, the consequential inflation in the West would likely blow the lid off of a whole range of other economic and political imbalances lurking right beneath the surface of our everyday perceptions.

To begin with, China’s reserves would be worth far less and they would have far less interest in increasing them. Meaning that China will have to hasten its push away from dollars both prior to and in the aftermath of a devaluation. In other words, a coordinated devaluation could unleash market forces that create an entirely uncontrolled and rapid dollar collapse. China won’t be waiting to find out, as it is already hastening its push away from dollars and into commodities, notably gold.

http://www.telegraph.co.uk/finance/economics/6146957/China-alarmed-by-US-money-printing.html

Indeed, learned gold market investors have started bandying around the idea that there is now a Chinese ‘put’ in the gold market, i.e. a price that China will desire to add gold positions at, thus putting a stable floor under gold prices, thereby limiting risk:

http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=88887&sn=Detail

If you ask TSIBR, relations between the US and China seem to be deteriorating. Here we have the Chinese government thumbing its nose at Western financial conglomerates, telling them it will protect Chinese firms from recent derivatives losses by simply allowing them not to pay (this is another potential deflation driver in the future):

http://www.reuters.com/article/rbssBanks/idUSSP47327420090831

And of course, last week the brewing trade war between the US and China was headline news:

http://www.bloomberg.com/apps/news?pid=20601087&sid=a7nGNZzouDOM

Let’s not forget that China is militarizing at an incredibly rapid rate right now. If China expects world peace, why bother?

http://www.breitbart.com/article.php?id=CNG.a2e736d334e760c3afc9d72bbc9a211c.bb1&show_article=1

Ah, world peace, that’s a funny one with the Iranian nuclear standoff slowly but surely coming to a head. There is little doubt that Iran could now assemble a bomb rather quickly if it felt the need to do so:

http://www.nytimes.com/2009/09/10/world/middleeast/10intel.html?_r=1&hp

To make matters worse, the Iranian stance at the initiation of negotiations was a non-starter. There was never anything for the US to talk about with Iran:

http://online.wsj.com/article/SB125249646237795391.html#mod

Really, the only talking that should be going on right now should regard the precise mechanisms of the strike – who leads in the first push and strategies for the aftermath. Clearly, the US needs to lead in the first wave of strikes on Iran:

http://online.wsj.com/article/SB10001424052970203917304574410672271269390.html

Can you imagine how it will look to the Muslim world if Israel unilaterally launches a strike on Iran? That would be a disastrous outcome of Obama’s outsourcing leadership style. He mistakenly outsourced the writing of financial reforms to Wall Street lackeys and he mistakenly outsourced the writing of healthcare reforms to bought and paid for members of congress. If he now mistakenly outsources the bombing of Iran to Israel, the attack on Iran would likely fail (politically if not strategically), and American stature in the world may never recover. Obama needs to internalize this bipartisan report on Iran, which concludes the US must be prepared to strike, and soon:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGXuRWqsEFos

Obama also needs to internalize the Netanyahu idea that the Iranian regime is not only dangerously tyrannical, but it is also weak. Now is the time to castrate them, before it is too late, both for their people and the world:

http://www.breitbart.com/article.php?id=CNG.a107751183efc761a95b7687cb8acd74.931&show_article=1

Man, even bin Laden knows that one way or another a war between the West and Iran is in the offing. Clearly he hopes Israel takes the lead, as he basically rewrote the history of al Qaeda to be only about its anti-Israel stance in his 9/11 anniversary address:

http://www.foxnews.com/story/0,2933,549780,00.html

All in all, given Netanyahu’s strange surprise visit to Russia (which many knowledgeable analysts, including this one, felt was a prelude to a strike on Iran):

http://virl.com/d5224/

Along with America’s surprise fig leaf to Russia in the form of abandoning the Polish and Czech missile defense sites:

http://roomfordebate.blogs.nytimes.com/2009/09/17/the-fallout-of-a-reversal-on-missile-defense/?hp

All followed by strange anti-dollar and anti-attacking-Iran statements by Medvedev:

http://ca.news.yahoo.com/s/capress/090918/business/eu_russia_economy_5

http://www.alertnet.org/thenews/newsdesk/LL693597.htm

One has to wonder what Netanyahu was in Russia to discuss, and what the US got in return from Russia for abandoning Poland and the Czechs? According to the press, the US seems to have gotten nothing. It seems more likely to TSIBR that the US and Israel got a greenlight from Russia on their plans to attack Iran, and Russia agreed that it should be circumspect about supporting the US and Israel in this, until negotiations have run their course. When then does TSIBR expect the attack to begin? Still March 2010.

So that’s pretty much the story West of Pakistan, now let’s shift east over to the Af-Pak region. Interestingly, the following article makes the case that al Qaeda locates in Pakistan precisely because from there it can easily foment trouble both to the East and West of Pakistan. Indeed, the article goes on to make the further point, one that TSIBR has been harping on for sometime, that al Qaeda and the Taliban cannot be defeated as long as the Pakistan and Afghanistan wars are conducted separately, by the US on one side and by the duplicitous Pakistani Army on the other:

http://www.atimes.com/atimes/South_Asia/KI24Df03.html

The duplicitous Pakistani Army is the real problem if you ask TSIBR:

http://news.bbc.co.uk/2/hi/south_asia/8260292.stm

The Pakistani Army loves US money, but it does not have US interests at heart, in fact quite the opposite. Pakistan is looking at a future with two main possibilities: continued US global hegemony that propels India (Pakistan’s arch-enemy) to developed world status in a matter of years; Or, a bleeding US that loses power to China (Pakistan’s ally) in the world-system, thereby increasing the chances of Pakistani development vis-à-vis its enemy India. Clearly the Pakistani Army wants the US to bleed while the US continues to send aid, and this is indeed what is occurring on a daily basis in the Af-Pak area. In short, don’t trust anything the Pakistani Army reports.

Especially regarding the Pakistani Taliban. Now that the dust has settled in the aftermath of Baitullah’s death, Hakimullah seems to be clearly in control. As expected, terror in Pakistan has been on the rise. Moreover, in his first two contacts with Western reporters since his ascension, Hakimullah has twice threatened America with attacks:

http://news.sky.com/skynews/Home/World-News/Taliban-New-Leader-In-Pakistan-Is-Alive-And-Vows-To-Continue-The-Unfinished-War-On-The-West/Article/200909315383871?lpos=World_News_Carousel_Region_4&lid=ARTICLE_15383871_Taliban%3A_New_Leader_In_Pakistan_Is_Alive_And_Vows_To_Continue_The_Unfinished_War_On_The_West_

Recall that al Qaeda’s one long term problem with Baitullah was that he was overly focused on Pakistan. Al Qaeda wants the Pakistani Taliban to have more of an international focus. Well, it sure seems like with Hakimullah they have gotten their man into power.

Also recall that such occurrences echoed the months prior to 9/11/01, thus giving TSIBR Dark Forebodings of Fall. Well, as if from the TSIBR keyboard to God’s ears, the FBI managed to foil the biggest al Qaeda connected plot targeting the US since 9/11. TSIBR has little doubt this was to be the next big one. It has all the hallmarks, and as suggested above (and for months), al Qaeda wants the next American terror event to be traceable back to Pakistan, thereby forcing the US into a bloody and costly war inside sovereign Pakistan, which could in turn collapse the Pakistani state and/or cause Pakistan to seriously ratchet up tensions with India. Unsurprisingly, the Denver/NYC based cell leader immediately copped to being trained in Pakistan:

http://www.reuters.com/article/domesticNews/idUSTRE58M4OA20090923

If anyone actually thinks the US will somehow be safer by abandoning the Af-Pak region, they’re sorely mistaken. Al Qaeda was days away from launching another 9/11 this Fall. The Af-Pak region is not Vietnam and this is not 1967. The Viet-Cong never threatened to attack America, let alone succeeded on a massive scale. I agree with Condoleeza Rice on this one: if you want multiple future 9/11s, abandon Afghanistan and Pakistan:

http://www.huffingtonpost.com/2009/09/22/condoleezza-rice-if-you-w_n_294755.html

American power is receding rapidly in the wake of the financial crisis, causing the world to ponder the ‘next world order.’ Al Qaeda seems to have a vision, but America does not. Al Qaeda understands that their vision indispensably includes the destruction of America. Al Qaeda will continue to make gains until America comes to understand that its vision of the next world order not only indispensably involves the destruction of al Qaeda and the Taliban, but it also necessarily involves the removal of the tyrannical and widely unpopular Iranian regime. But these are complicated and bloody needs. And Americans tend not to like bloody solutions unless their blood has been freshly spilled. Not almost spilled, but freshly spilled.

Joshua Kane

Dark Forebodings of Fall / The Timing of Silence:

The chaos following Baitullah Mehsud’s demise continues (the Taliban is sticking to their story that he is ‘severely ill’). Although, reports are now circulating that the new top commander of the Pakistani Taliban will be, either, Hakimullah Mehsud (a close younger cousin of Baitullah) or Waliur Rehman (an older more experienced Taliban commander, and also cousin to Baitullah, who may have been the main architect of Baitullah’s shift towards al Qaeda over the past couple of years):

http://www.google.com/hostednews/ap/article/ALeqM5hkiMxbHNH0BqgpWA2ZG6VD6wVTmAD9A8NTR80

Both potential leaders are pro al Qaeda, and the shift towards these two men suggests that al Qaeda may not find itself weakened in South Waziristan as a consequence of Mehsud’s ‘illness.’ Indeed, if Rehman rises to power, then al Qaeda in Pakistan may find itself strengthened. Although, Pakistani officials are asserting that the Taliban are fracturing along tribal lines once again:

http://www.nationalpost.com/news/story.html?id=1925351

Why the Pakistani Army has not pushed into Waziristan while the Taliban is in disarray is anybody’s guess; perhaps the Pakistani Taliban are not in as much disarray as the Pakistani Army would have the world believe? Its hard to say. Nevertheless TSIBR readers, come along with me for just a moment, as I describe why dark forebodings of Fall are plaguing us here at TSIBR. To begin with, hazy reports regarding changes in the al Qaeda / Taliban alliance leadership (especially regarding how they were streamlining hierarchies and pressing the fight against the Afghani Northern Alliance) emerged throughout the Summer of ’01. Recall that at that time, the Nasdaq crash was on hold. Having sold off hard from the Spring of 2000, the Nasdaq crash paused in March 2001, and began to recover the 3500 level (after having reached 5000 at the top). The index rose placidly into September as analysts became certain the worst was behind us…

Then came 9/11, sending the Nasdaq eventually to 1800. It should be apparent, even to the casual TSIBR peruser, that we find ourselves in a similar spot today. The indexes have stopped crashing and have begun to recover. Analysts are becoming more confident that the worst is behind us. Al Qaeda has a safe haven, still wants to destroy the US financially, and reports indicate leadership machinations behind the scenes.

Stop for a minute and consider this question: What sort of debacle serves America’s conservative elites best? Of course, having no debacle serves elite interests best, but many times societal debacles are unavoidable. So which sort of debacle would be preferable to leading American conservative elites: A debacle solely blamed on conservative elites from which springs popular legislation designed to curb their power? OR, a debacle that comes from outside the nation that then allows conservative elites to move on pressing international issues (e.g. Iran) that have been on their agenda for sometime. Clearly the conservative elites would prefer the latter.

Now, kind readers, I am going to lay out a few articles that describe, indeed almost guarantee, a secondary financial debacle coming down the pike as the stimulus effects and inventory restocking cycles wane, and we enter the oft mentioned and maligned ‘double dip’ of our likely W shaped recession/depression:

Master Roubini’s Call (also peep the Roubini article posted on the Twitter feed to the right):

http://www.telegraph.co.uk/finance/financetopics/recession/6080523/Nouriel-Roubini-warns-threat-of-double-dip-recession-is-rising.html

Commercial Real Estate Bubble Has Yet To Pop:

http://www.upi.com/Business_News/2009/08/18/Commercial-real-estate-bubble-looms/UPI-89211250607446/

Cody Blog – this guy gets it:

http://blogs.marketwatch.com/cody/2009/08/17/abby-joseph-cohen-is-a-genius/?siteid=nwhnwhnr

Toxic loans remain on bank balance sheets:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aTTT9jivRIWE

http://www.latimes.com/news/nationworld/nation/la-na-toxic-assets14-2009aug14,0,3865656.story?track=rss

China speeds diversification away from dollar:

http://english.people.com.cn/90001/90780/91421/6734461_txt.html

http://www.bloomberg.com/apps/news?pid=20601109&sid=aTZisOrCq1BY

http://business.timesonline.co.uk/tol/business/economics/article6736681.ece

Dollar crisis looms:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aeD0JMxdEA_c

Allow TSIBR to now put in concrete terms what has been suggested above. Crashes never occur in a straight line. But crashes always do scare the shit out of conservative elites who see their world of privilege and comfort called into question. Conservative elites also have privileged access to information, and wield their privileged access to information for power. During those moments where crashes pause, conservative elites will hide and cloud information regarding the potential for further crashing. Thus during those moments, conservative elites are more aware of the potential for further crashing than is the general public. They are also aware that the first wave of crashing has called into question their elite rule; they of course fear losing further power enormously. Thus, it serves elite interests if something outside the nation, something rather removed from global economics, ‘causes’ the secondary financial debacle that is certain to accompany a W shaped recession/depression.

In short then, it seems that there might be alignment between the interests of conservative American elites and al Qaeda terrorists in promoting some kind of large political ‘accident’ over the coming months. A similar alignment of interests existed in the months preceding 9/11. Now, TSIBR is not saying that some cabal of American conservative elites is actively planning a second 9/11; there is no evidence of that. TSIBR is also not saying that it has a clear understanding of the mechanisms that might lead to terror events when conservative elite interests suddenly align with those of international terrorists. What TSIBR is saying is that when those interests do align, for whatever reason, terrorism does tend to occur. So this Fall marks yet another dangerous moment for the homeland. And if you don’t believe that you should heed a TSIBR warning (which often accompanies the Fall months), perhaps then you’ll believe you should heed the words of the current undisputed champion mouthpiece of the American conservative elite, Dick(less) Cheney, who had been quite vocal about coming terror, but now is rather silent on the issue:

http://www.politico.com/news/stories/0209/18390.html

The timing of silence often speaks louder than words.

Joshua Kane