Unlike lots of bloggers, I don’t get many hits from strange Google searches. The most regular topics are “definition socialism” and “Bilal Skaf” (I appear to be one of the few to mention the latter by name). But I got a rather disturbing one today “Jew Jack Straw real name”. The name “Jack Straw” has always seemed too good to be true for a member of the Blair government, having been borne by a leader of the peasant revolt of 1381. But as far as I can tell from this Guardian Quiz it’s real – he has done no more than change from a change from a prosaic “John” to a more proletarian and historically resonant “Jack”. I have of course not bothered to enquire about his religion/ethnicity.
As an aside, the French culture minister of the 1990s bore the unlikely name “Jack Lang”.

As the Washington Post notes, Loan Refinancings are Putting the Squeeze On Fannie Mae. But, as I point out here, the real trouble will come when interest rates start to rise again.
UpdateAaron Task of TheStreet.com manages the “Sum of All Fears” scenario, pointing out that Fannie Mae’s problems are intertwined with JP Morgan’s derivative business. Both look susceptible to a ‘100 year flood’ event that hasn’t been factored into calculations.

The re-election of the German Social-Democrat Green coalition last night, following that of the Swedish Social Democrats last month, marks the end of the European swing to the right that begin with the Austrian elections of 1999 when the far-right (see below) Freedom Party led by Joerg Haider gained 27 per cent of the vote and entered a coalition government with the conservative People’s Party, displacing their previous coalition partner, the Social Democrats. Over the next three years, similar coalitions of the right and far-right, or right-wing governments dependent on far-right support took office in Italy, Denmark, Norway and the Netherlands. In addition, the French socialist government lost office after elections in which the most notable feature was a strong showing by the far-right National Front of Jean-Marie Le Pen.
Most of the right-far-right coalitions are now in serious trouble. The Austrian government has collapsed following an attempt by Haider (a provincial governor) to reassert control over the Freedom Party against its national leadership. Elections are scheduled for November 24, and defeat for the coalition is predicted. Italian PM Berlusconi is frantically trying to change the law to protect himself from trial on corruption charges. In the Netherlands, support for the Pim Fortuyn list has fallen sharply following, among other things, the exposure of its deputy leader as a participant in a violent military coup in her native Surinam. English-language coverage of events in Denmakr and Norway is spotty, to put in mildly, but there’s every reason to hope that the right-wing governments there won’t manage a second term.
The situation is even better in the Eastern Europe, where the far-right has had a series of defeats in the Hungary, the Czech Republic and Slovakia. It now seems almost certain that the expansion of the EU to encompass as many as ten additional Eastern European countries will proceed as planned. The expansion will dismay not only the European far-right, but many on the American right, who are counting on Eastern European countries to provide military bases for a successor to NATOand general support for free-market policies against European social democracy.
Note: The term ‘far-right’ is a convenient catch-all label covering the European parties listed above, as well as like-minded politicians and parties in English-speaking countries, notably Pat Buchanan, Pauline Hanson and Winston Peters. Although there are plenty of differences, there is a clear family resemblance. For example, all are hostile to immigration, although some object to Asians, others to Muslims and still others to Eastern Europeans. I’ll try and come back to this question, and the relationship of the Howard government to the Australian and European far-right, in a later post.

Thanks to Heath Gibson at Catallaxy for pointing out this piece of silliness from James Morrow who says, quoting the SMH:

“Remember that “hole in the ozone layer” that’s supposed to cook the Earth, drown tiny Pacific atolls, maintain full employment for an entire industry of academic, activist, and regulatory no-hopers? Put away the sun block; it’s closing up.

The level of chlorine from chlorofluorocarbons in the atmosphere is falling, and the hole in the ozone layer over Antarctica should close by 2050, Australian scientists have revealed.

A jubilant Paul Fraser, chief research scientist with the CSIRO’s atmospheric research division, which made the discovery, said it was now clear that the pain Western nations, including Australia, had accepted after CFCs were banned in the mid-1990s had been worthwhile.

Of course, this will surely do nothing to mollify the sky-is-falling doomsayers who are pushing for Australia and the U.S. to hand over a hunk of their GNP (or, more accurately, stop producing it) via the Kyoto Accords. ‘

Morrow appears to be unaware that the Kyoto Protocol is modelled on the Montreal Protocol which phased out the use of CFCs and is responsible for saving the ozone layer. Similarly, Bjorn Lomborg triumphantly points to the reductions in various kinds of pollution while ignoring the environmental policies that delivered them. No doubt when Kyoto (and its successors) have been in force 50 years, some future James or Bjorn will be crowing that the environmentalists got it wrong on global warming.

Send No More Roses by Eric Ambler. In my opinion, the only thriller writer worth reading. A postmodernist avant le nom, his untrustworthy narrators manage to convey absolute conviction that the events are real, even while the reader knows that they are probably lying about all the details. He doesn’t load up with technical detail in the manner of Tom Clancy et al, but does a much better job of convincing you that he has it all at his fingertips.

We’re starting to see some analysis of the Bush doctrine of pre-emption and what it all means. As an economist, I’m at least as interested in what it will cost and who will pay.

On the first question, I’d estimate that the annual cost of any serious attempt to implement the Bush doctrine would be at least $100 billion per year and probably closer to $200 billion per year. To get a ‘back-of-the-envelope’ approach to these numbers, I assumed that the a conservative implementation of the doctrine would entail deploying a front-line force of 100 000, and backup and logistic forces of 500 000 with an average annual cost of $150 000 per person. I’m assuming that this will be additional to existing forces. There’s some scope for redeploying forces from NATO but this can be overstated. Much of the US force structure in Europe has already been reoriented from defence against the Red Army to a forward deployment against enemies in the Middle East and elsewhere. To come at the estimate another way, the cost of the Gulf War is estimated at $80 billion, and it only lasted a few months. The Bush doctrine implies a semi-permanent occupation of Iraq and probably the recipients of future pre-emptive defence.

Who will pay. As we’ve repeatedly been reminded, the US is the wealthiest country in the world. However, wealth belongs, by definition, to the wealthy, and nowhere is this more true than the US. The owners of wealth in the US have demonstrated, in a number of ways, that they have no intention of paying anything. Among the signs
(i) Conspicuous consumption on a scale unparalleled in history
(ii) Flagrant tax evasion/avoidance accompanied by moralistic attacks on ‘welfare queens’ and workers cheating the earned income tax credit (both get far more investigation than the rich or big companies
(iii) the massive tax cuts introduced at their behest by George W. Bush
As a result of the tax cut and other policy initiatives, the US government was in chronic deficit before the announcement of the Bush doctrine.
The natural inference is that other US taxpayers will either have to pay more or accept less in non-defence services. But there’s very little capacity to do this. No-one is going to propose an increase in taxes for the middle classes without first repealing the tax cut for the rich, and the latter is not going to happen. On the services side, there are already big unmet demands, such as the prescription drug program promised by both sides.

Another alternative that has been proposed is that the Iraqis and others could hand over oil as reparations. There are, of course, a number of names for pre-emptive demands for reparations of which extortion is one of the less unpleasant. It seems doubtful that even the Bush Administration could seriously entertain this idea.

The truth is that, as in the Gulf War, the Europeans and Japanese will pay, only this time they will be lenders rather than donors. The obvious question is when the pile of US dollar denominated debt will get so high that lenders start to worry about adding to it. At that point, but probably not before, the Bush doctrine will run out of puff.

This story, comparing J.P. Morgan to (spectacularly failed hedge fund) Long-Term Credit Management shows that the great derivatives crisis has just moved one step closer.

Tim Dunlop argues that those on the Left who dismiss Bush as a fool are in fact fooling themselves. He says:

“I, for one, can’t come at this sort of assessment. Nor can I accept the milder account that he is a bumbling amateur who just happens to get lucky. Such an argument is expressed here, on Electrolite‘s comments box by Iain Coleman :

I think the fundamental problem is the amateurishness, rather than the dishonesty. Tony Blair’s government has become notorious for spin, media manipulation, and stretching the truth until it snaps. Nonetheless, I trust Blair in matters of war much more than I trust Bush. This is because, whatever his other faults, Blair is a highly able politician who will put a lot of hard graft and determination into achieving his goals. Bush, by contrast, is a lazy amateur with the attention span of a small houseplant. With Blair, there’s always the chance that the foreign policy will be wrong: with Bush, there’s the certainty that it will be half-assed.”

This isn’t quite right, but there’s more to it than Tim is willing to concede. Bush has shown that capacity to push very hard and successfully for particular goals – the tax cut, the overthrow of the Taliban and the invasion of Iraq, but then the attention span problem kicks in. Given the disappearance of the surplus, the tax cut is sustainable only with rigorous restraint in expenditure, but Bush has shown no inclination to fight hard for this. In fact, it’s been pretty much ‘spend and let spend’ with the Democrats getting money for their priorities in return for supporting Bush’s military initiatives. Similarly, the risk that Afghanistan will collapse back into the kind of warlordism that set the stage for the Taliban is growing every day, and the US seems to be willing to accept this rather than anything that might even slightly compromise the operational freedom of its armed forces. Finally, in relation to Iraq I’d suggest reading James Fallows article (previous post) and asking whether anyone thinks the current Administration has the attention span required to follow through on a successful invasion.

Finally, a serious analysis of the options facing the US after a military victory in Iraq from James Fallows. It would be really encouraging to see some indication that the Bush Administration has thought at all beyond the day the Stars and Stripes are raised over Baghdad.

The headline from a thoughtful piece by Hilary McPhee