by Alex Evans | Sep 22, 2008 | Africa, Conflict and security, Influence and networks
Yet another ship was hijacked by pirates off the coast of Somalia on Sunday, bringing the total of ships seized there to over 30 this year alone. The current tally is that up to 200 seafarers are being held hostage for ransom.
The US Navy has said bluntly that it can’t guarantee security and that “shipping companies must take measures to defend their vessels and their crews”; shipowners, for their part, are urging EU governments to “recognise the seriousness of the situation and to urgently deploy more warships to the Gulf of Aden and to the seas off the coast of Somalia with the required rules of engagement to enable direct action to be taken against the pirates”. But as US vice-admiral Bill Gortney notes, “this is a problem that starts ashore and requires an international solution. We made this clear at the outset — our efforts cannot guarantee safety in the region”.
In other words, failed states – right? Well, perhaps not entirely. After all, “failed” implies that some kind of effort was underway in the first place, whereas the reality is that for some at least, the absence of formal state control was always the design. Peter Lamborn Wilson notes that:
The sea-rovers and Corsairs of the 18th century created an “information network” that spanned the globe: primitive and devoted primarily to grim business, the net nevertheless functioned admirably. Scattered throughout the net were islands, remote hideouts where ships could be watered and provisioned, booty traded for luxuries and necessities. Some of these islands supported “intentional communities,” whole mini-societies living consciously outside the law and determined to keep it up, even if only for a short but merry life.
Lamborn Wilson is the creator of the idea of Temporary Autonomous Zones, which are more or less what they say on the tin: places where, at least for a while, a zone outside of state control is created. Now while one permutation of TAZs sees them as bases for crime, terrorism and so forth, Lamborn – an anarchistically minded fellow – is as a rule positively enthusiastic about TAZs, as indeed are his libertarian followers (hence the popularity of the concept in rave culture, where free parties can be seen as TAZs).
But where the idea of TAZs really starts to get interesting is when you watch the counter-insurgency / 4GW crowd start to play with it.
(more…)
by Charlie Edwards | Sep 22, 2008 | UK
Picture the scene: It’s Labour Party Conference 2008, Geoff Hoon is busy in interviews saying the Cabinet is totally united. While James Purnell argues that the party needs a vision on BBC 2, Hazel Blears talks to the BBC about her belief that the Conservatives will stand on the sidelines during economic difficulties. And then Paul Waugh, Political Editor of the Evening Standard, is handed a note by one Blairite conspirator with a list of names that would make up David Miliband’s first Cabinet.*
Prime Minister – David Miliband
Foreign Secretary – James Purnell
Chancellor – John Hutton
Home Secretary – Alan Johnson
Health Sec – Andy Burnham
Education Sec – Jacqui Smith
Business Secretary – Ed Balls
Defence – Jack Straw
Justice – Liam Byrne
DIUS – Jim Murphy
Work and Pensions – Mike O’Brien
Chief Sec to Treasury – Kitty Ussher
Transport Sec – Yvette Cooper
Environment – Caroline Flint
Cabinet Office – Hazel Blears
DCLG – Ed Miliband
Commons – Harriet Harman
Int Devpmt – Pat McFadden
Culture – Ben Bradshaw
Chief Whip -Tony McNulty
Let the stirring commence.
*Quite a good list – no?
by Alex Evans | Sep 22, 2008 | Global system, North America, UK
I’m not even going to try to form any kind of overview while things are moving so fast, but here are a few observations in no particular order:
First, just look at what happens to US indebtedness if the Paulson proposal proceeds. Alan Beattie moots the prospect of “the first trillion dollar deficit in history”. Today, the US federal government has $5,400 in debt, and according to the Congressional Budget Office planned to run a deficit next year of $438bn (3% of GDP). Now the Paulson plan is for $700bn over 2 years, meaning that next year’s federal deficit could easily top the $1,000bn mark. Former IMF chief economist Ken Rogoff concludes: “I can’t imagine this crisis is going to end up costing the government less than six to seven per cent of GDP.” Liam Halligan observes that “default by the US government is no longer unthinkable”. [Incidentally, UK government borrowing also looks set to double next year, to £90bn rather than £43bn as planned.]
Push-back against the Paulson plan is starting in earnest. Paul Krugman: “I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.” He continues:
Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.
The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.
And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.
Sebastian Mallaby agrees: “The plan is being marketed under false pretenses. Supporters have invoked the shining success of the Resolution Trust Corporation as justification and precedent. But the RTC, which was created in 1989 to clean up the wreckage of the savings-and-loan crisis, bears little resemblance to what is being contemplated now. The RTC collected and eventually sold off loans made by thrifts that had gone bust. The administration proposes to buy up bad loans before the lenders go bust.”
But as Gillian Tett notes this morning, the flipside problem is that if the Paulson plan doesn’t go ahead, it’s not clear what the alternatives are: “the unpalatable truth is that if this latest salvo does not calm the panic, then Mr Paulson simply does not have many more bazookas left in his arsenal … recent events have left market participants so exhausted that nerves are stretched to breaking point. That creates the risk that euphoria could flip to terror again. And while the equity markets might have ended last week in a jubilant mood, in the arena where it matters most – the murky bowels of the credit and debt world – terror remains widespread”.
Nouriel Roubini, meanwhile, reckons that in the wake of the first four elements of the crisis (collapse of the Structured Investment Vehicle system; a run on big US broker-dealers like Bear Stearns, Lehman and Merrill Lynch; the collapse of other leveraged institutions like Fannie Mae, Freddie Mac and AIG; and panic in the money markets), “the next stage will be a run on thousands of highly leveraged hedge funds“.
One last thought: the intellectual bankruptcy of the left in all this. A confident, forward-looking centre left would right now be moving forward into the breathtaking amounts of political space suddenly opening up as the ‘liberal capital markets’ storyline collapses. (Let’s remind ourselves of Milton Friedman’s sage advice once again:
Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable…)
But instead, the left is (as usual) unable to move beyond the politics of whingeing, offering its usual lame messages about “fat cats” and so on – which is why, as Gordon Brown seeks to play to the gallery at Labour Conference this week, his key lines lead on “irresponsible” City bonuses. Sure, let’s stuff the City and Wall Street; but could we focus on sorting out the mess first?
PS: great aside from Niall Ferguson in the FT –
The bad news is that emerging markets tend to experience more violent financial reactions to reductions in growth … Russia, having shot itself in the foot with its 1930s-style escapade in Georgia, is bottom of the heap – with its stock markets forced to close temporarily last week in order to avoid a complete collapse. (So much for “the return of history”. Memo to Vladimir Putin, Russian prime minister: when Hitler invaded neighbouring countries, he had capital controls in place.)
