REYKJAVIK, Iceland -- This volcanic island near the Arctic Circle is on the brink of becoming the first "national bankruptcy" of the global financial meltdown.

Home to just 320,000 people on a territory the size of Kentucky, Iceland has formidable international reach because of an outsized banking sector that set out with Viking confidence to conquer swaths of the British economy _ from fashion retailers to top soccer teams.

The strategy gave Icelanders one of the world's highest per capita incomes. But now they are watching helplessly as their economy implodes _ their currency losing almost half its value, and their heavily exposed banks collapsing under the weight of debts incurred by lending in the boom times.

"Everything is closed. We couldn't sell our stock or take money from the bank," said Johann Sigurdsson as he left a branch of Landsbanki in downtown Reykjavik.

The government had earlier announced it had nationalized the bank under emergency laws enacted to deal with the crisis.

"We have been forced to take decisive action to save the country," Prime Minister Geir H. Haarde said of those sweeping new powers that allow the government to take over companies, limit the authority of boards, and call shareholder meetings.

A full-blown collapse of Iceland's financial system would send shock waves across Europe, given the heavy investment by Icelandic banks and companies across the continent.

One of Iceland's biggest companies, retailing investment group Baugur, owns or has stakes in dozens of major European retailers _ including enough to make it the largest private company in Britain, where it owns a handful of stores such as the famous toy store Hamley's.

Kaupthing, Iceland's largest bank and one of those whose share trading was suspended last week to stop a huge sell-off, has also invested in European retail groups.

Iceland teeters on the brink of bankruptcy

Watching Dean Baker on CSPAN at the moment, visited his think tank's site, lots of interesting talking point memos.

With much of this equity now eliminated by the collapse of the bubble, many families can no longer sustain their levels of consumption. The main reason that banks won't lend to these families is that they no longer have home equity to serve as collateral. It wouldn't matter how much money the banks had, they are not going to make mortgage loans to people who have no equity.

And house prices are not going to come back. This is like Pets.com. We are not going to get the price of $200,000 homes in central California back up to $500,000.

...

How do we go about getting the banks in order? Almost every economist I know rejects the Paulson approach and argues instead for directly injecting capital into the banks. The taxpayers give them the money and then we own some, or all, of the bank. (That's what Warren Buffet did with Goldman Sachs.)

This isn't about begging for a sliver of equity as a concession for a $700 billion bailout, this is about constructing a bank rescue the way that business people would do it. We have an interest in a well-operating financial system. There is zero public interest in giving away taxpayer dollars to the Wall Street banks and their executives.

The Bailout Round II: Adult Version?

Decius wrote:

The 3rd Infantry Division’s 1st Brigade Combat Team has spent 35 of the last 60 months in Iraq patrolling in full battle rattle, helping restore essential services and escorting supply convoys.

Now they’re training for the same mission — with a twist — at home.

Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North...

...this new mission marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.

This has the conspiracy theorists a twitter. On the eve of a major presidential election and in the midst of a financial crisis, a U.S. Army Infantry Division has, for the first time in U.S. history, been assigned to a permanent domestic deployment without a mission to respond to a specific disaster or crisis. They're here, you know, just in case.

This is interesting:

...

They may be called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack.

Training for homeland scenarios has already begun at Fort Stewart and includes specialty tasks such as knowing how to use the “jaws of life” to extract a person from a mangled vehicle; extra medical training for a CBRNE incident; and working with U.S. Forestry Service experts on how to go in with chainsaws and cut and clear trees to clear a road or area.

The 1st BCT’s soldiers also will learn how to use “the first ever nonlethal package that the Army has fielded,” 1st BCT commander Col. Roger Cloutier said, referring to crowd and traffic control equipment and nonlethal weapons designed to subdue unruly or dangerous individuals without killing them.

“It’s a new modular package of nonlethal capabilities that they’re fielding. They’ve been using pieces of it in Iraq, but this is the first time that these modules were consolidated and this package fielded, and because of this mission we’re undertaking we were the first to get it.”

The package includes equipment to stand up a hasty road block; spike strips for slowing, stopping or controlling traffic; shields and batons; and, beanbag bullets.

...

The military has performed house to house clearing exercises in urban areas for years with civilian actors. Sounds like they're ready to start putting it to action with formal domestic operations, you know, just in case.

I thought this is what the National Guard was for, but what do I know?

Maybe this is a new model in the perpetual global war on terror: Bring the troops home for a little bit of a recharge but keep them hot with respect to urban skills so they don't lose their edge.

RE: Brigade homeland tours start Oct. 1 - Army News, opinions, editorials, news from Iraq, photos, reports - Army Times

Dear Fannie and Freddie Shareholders,

You are screwed big time. I don't know what possessed you to continue to hold Fannie or Freddie common stock in recent weeks, when it was clear that Treasury Secretary Paulson was not going to protect the common stock in a bailout. You obviously weren't reading EPJ. I warned in July, that common stockholders in the two firms would be diluted down to near zero in the bailout. Maybe you were reading and following Dean Baker's useless advice.

Whatever the case, the worst still might be ahead of you. The Treasury has rights to a 79.9% stake in your companies for capital infusions of $1 billion each, but it is very likely that further capital infusions may be required which would dilute your pitiful stake even further.

More in the article. Comparison to the Chrysler bailout.

Your Only Hope: An Open Letter To Fannie and Freddie Shareholders

Decius wrote:

The war in Georgia, therefore, is Russia’s public return to great power status... Russia has been an empire for centuries. The last 15 years or so were not the new reality, but simply an aberration that would be rectified. And now it is being rectified.

Why did the U.S. bless this conflict? Did they intend to provide Russia this opportunity to make a demonstration in exchange for some covert concession?

It occurs to me that perhaps they figured Russia planned invade outright and they wanted to push their hand early.

Was hoping Stratfor would have something public soon, good read. One angle that occurred to me was if we get something started, chances are the next US President, whoever it may be, will pretty much have to pick up the mantle. A little insurance by Bush/Cheney? Could they be that cynical?

As for the question of why did Georgia attack when they did, there's an old saying: When the cat is away the mice will play. The Olympics, Putin away, all that.

Here's something I just started, haven't finished but so far so good:

http://www.nationalinterest.org/Article.aspx?id=19538

Talks about the NATO angle and how alliances can also be breeding grounds for wars.

Here's something from Nov 2007 about Georgia's build up.

http://www.tiraspoltimes.com/news/arms_build_up_as_georgia_prepares_war_on_abkhazia_south_ossetia.html

Look like the US started the arms build up in earnest in 2002. Long time coming.

RE: The Russo-Georgian War and the Balance of Power | Stratfor

The U.S. Army Corps of Engineers proposed on Thursday reducing the flow of water from Georgia rivers into Alabama and Florida in a bid to resolve a tussle among the three states over water use during a drought.

The states will also work on a fresh plan for the corps on how to respond to the drought, U.S. Interior Secretary Dirk Kempthorne told a news conference that followed a meeting of the governors of the three southeastern states.

"This is the best opportunity for us to find a solution with regard to water and its allocation," Kempthorne said.

"It's no longer theory. There is a drought in the South. It is also important to recognize that the solution can and will come from the governors," he told a Washington news conference relayed via telephone.

Army drafts drought plans

unmanaged wrote:
I am not sure what is more ridiculous, the fact that they were suspended for chanting the letter E or that they are abusing the vowels. I had no clue you could abuse a letter... Is that a felony?

The new alphabet song:

A B C D [redacted] F G ...

RE: Students Suspended For Gang-Related Chanting....

"It's a defense against something which does not exist," the Russian president said. "It would be funny if it was not so sad."

...

Not too worked up about this actually. Cold War Redux was pretty much a foregone conclusion once the US decided to set up permanent occupation in the Middle East. Russia and China are the new dynamic duo versus the USA. The wildcard becomes Japan's tradition of nuclear ambivalence changing overnight if the rhetoric gets too out of hand.

What I speculate about is the Pakistan factor. They are a tenuous ally at best. What happens if the next attempt on Musharraf's life is successful? You then have a very real nuclear power with the means to hit Europe and probably the motivation to threaten it.

I see the strategy in placing the anti-missile defense systems in Europe. Retargeting missiles is pretty much just reprogramming a computer. Takes relative moments. I don't believe the USA particularly cares about stopping Russia's missiles aimed at Europe because that won't happen, Russia is never going to fire them. This shield would be relatively successful against what the new players to intermediate and intercontinental range missiles could lob towards Europe though. Anyone with MERVs though are pretty much going to walk through an anti missile defense system.

This new showdown gives Russia face in the world, another step towards relevance after the thrashing the USSR received post breakdown. Bush and Putin get to play out their final years in power as sabre rattling opponents of the new Cold War. It's good for the defense business, this pony show. Russia gets to use it as an excuse to at first bootstrap their domestic arms industry as a state run enterprise. Once it is up and running, expect the foreign capital to flood in. Someone has to arm China, right? Easier to build and ship heavy armament from Russia (with love!), less resource intensive and quicker time to market.

Expect to see Bush and Putin on the golf course together in 2009 ala Clinton and Bush Sr.

Bush Opens Europe Trip on Jarring Note

Ron Paul's statements during the debate are being twisted by the major media in an attempt to put words in his mouth. Most of the spin is that Rep. Paul suggests that America invited the 9/11 attacks.

I've excerpted the Q&A below. Most of the articles I've seen do not quote the entirety of Rep. Paul's statements nor the context.

I did not interpret this as him saying America invited 9/11, so much as that our foreign policy inevitably leads to blowback.

...

MR. WALLACE: Congressman Paul, you're one of six House Republicans who back in 2002 voted against authorizing President Bush to use force in Iraq.

REP. PAUL: Right.

MR. WALLACE: Now you say we should pull our troops out. A recent poll found that 77 percent of Republicans disapprove of the idea of setting a timetable for withdrawal. Are you running for the nomination of the wrong party? (Scattered laughter.)

REP. PAUL: But you have to realize that the base of the Republican Party shrunk last year because of the war issue. So that percentage represents less people. If you look at 65 to 70 percent of the American people, they want us out of there. They want the war over.

In 19- -- 2002, I offerer an amendment to International Relations to declare war, up or down, and it was -- nobody voted for the war. And my argument there was, if we want to go to war, and if we should go to war, the Congress should declare it. We don't go to war like we did in Vietnam and Korea, because the wars never end. And I argued the case and made the point that it would be a quagmire if we go in.

Ronald Reagan in 1983 sent Marines into Lebanon, and he said he would never turn tail and run. A few months later, the Marines were killed, 241 were killed, and the Marines were taken out. And Reagan addressed this subject in his memoirs. And he says, "I said I would never turn tail and run." He says, "But I never realized the irrationality of Middle Eastern politics," and he changed his policy there.

We need the courage of a Ronald Reagan.

...

MR. GOLER: Congressman Paul, I believe you are the only man on the stage who opposes the war in Iraq, who would bring the troops home as quickly as -- almost immediately, sir. Are you out of step with your party? Is your party out of step with the rest of the world? If either of those is the case, why are you seeking its nomination?

REP. PAUL: Well, I think the party has lost its way, because the conservative wing of the Republican Party always advocated a noninterventionist foreign policy.

Senator Robert Taft didn't even want to be in NATO. George Bush won the election in the year 2000 campaigning on a humble foreign policy -- no nation-building, no policing of the world. Republicans were elected to end the Korean War. The Republicans were elected to end the Vietnam War. There's a strong tradition of being anti-war in the Republican party. It is the consti... [ Read More (0.4k in body) ]

Select transcript of Ron Paul's remarks on the Iraq war at the 5/15/07 Republican debate

A Hamas-run television station defied Israel and the Palestinian government on Friday by continuing to air a controversial children's puppet show with a Mickey Mouse lookalike preaching resistance.

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Weird.

Defiant Hamas TV airs resistance Mickey again