China Latest to Join Somali Pirate Hunt

| Tue Dec. 23, 2008 10:06 AM EST

A few days ago, Iran sent a warship to the Gulf Aden to keep marauding Somali pirates from attacking its merchant ships, joining a growing fleet of international ships patrolling the Somali coastline. I've speculated here before that this might inadvertently open the door to US engagement with Tehran. The news this morning is that China has dispatched three ships to the region. It's an increasingly interesting cast of characters—American and Western European ships cruising in close proximity to those from Russia, China, and Iran, among others. The enemy of your enemy is your friend, right?

Meanwhile, the International Crisis Group points out that piracy is a symptom of the larger problem. In a report it released today (.pdf), the group warns that Somalia is much worse for wear thanks to the US-backed Ethiopian occupation, but says that things could improve after the Ethiopians withdraw (planned by the end of this year). "There is reason to believe that despite radical posturing, a significant majority in the Islamist insurgency would engage in a political process that does not seek to criminalise it and offers them a role in future governance," the report asserts. "There is no other practical course than to reach out to it in an effort to stabilise the security situation with a ceasefire and then move on with a process that addresses the root causes of the conflict. In the course of that effort, the insurgents will need to provide assurances about the kind of Islamic state they envisage as well as clarify their rejection of foreign groups like al-Qaeda."

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Guantanamo Update

| Tue Dec. 23, 2008 2:08 AM EST

GUANTANAMO UPDATE....In the Washington Post today, Peter Finn reports that European countries, which have had an obviously fraught relationship with the Bush administration over Guantanamo and the legal treatment of terrorist suspects in general, is looking forward to working more closely with Barack Obama on these issues. In particular, they may be willing to accept the resettlement of Guantanamo detainees into their countries:

The Europeans want a clear commitment to close Guantanamo Bay and an acceptance of common legal principles in the fight against terrorism, including those regarding the treatment of suspects, European officials said. A series of meetings between the United States and the European Union on a legal framework for combating terrorism has considerably narrowed differences on the application of human rights law, refugee law and humanitarian law, said Amado and John B. Bellinger III, a legal adviser at the State Department.

The Europeans also want Obama to agree to transfer a small number of detainees to the United States before they attempt to sell a resettlement program to their own citizens.

....Guantanamo Bay currently has about 250 prisoners, according to the Pentagon. And some European officials said a number of governments are considering the logistics of resettling a majority of the 60 prisoners already cleared for release by U.S. authorities.

The Pentagon has not identified the 60, but a study released by the Brookings Institution last week found that as well as the Chinese Uighurs, the group includes detainees from Yemen, Tunisia, Algeria, Uzbekistan, Iraq, Saudi Arabia, Egypt, Libya and the Palestinian territories. The Brookings study found that these prisoners "concentrate at the less dangerous end of the spectrum."

The whole story is a little hard to follow, which is probably because nothing even close to definitive has been settled yet. Mostly it's just a feeling that EU countries are looking forward to a more constructive relationship with Obama than with Bush, and may be willing to make some compromises on their end to start things off on the right foot.

It's all very mushy at this point, but obviously good news regardless. The question of what to do with Guantanamo detainees that nobody wants is a genuinely difficult one. If the EU helps out here, it makes it a lot more likely that Guantanamo will be shut down sooner rather than later.

Department of Labor

| Mon Dec. 22, 2008 8:58 PM EST

DEPARTMENT OF LABOR....Victor Davis Hanson is unhappy with Barack Obama's choice to head the Department of Labor:

I'm sure that the labor secretary nominee Hilda Solis is a bright and savvy politican. But a labor secretary is supposed to reflect some balance between labor and management, one that seeks to hammer out compromises in the best interests of the nation. Her record, however, is exclusively pro-union without exception or doubt.

Maybe my memory is just getting fuzzy as I get old, but I sure don't remember very much conservative concern with "balance between labor and management" when George Bush chose Mitch McConnell's wife to be Secretary of Labor eight years ago. Do you?

Let's see. Before her appointment, Elaine Chao spent four years as a fellow at the Heritage Foundation. She campaigned tirelessly with McConnell against the Employee Free Choice Act. Her choice to head up OSHA was a partner at one of the best known union-busting lawfirms in the country. Under her watch the NLRB reclassified 8 million workers as "supervisors," primarily in an attempt to throw a wrench in unionizing efforts. New overtime rules wiped out time-and-a-half for 6 million workers. The probability of union organizers being fired went up by more than half.

Now, that's about what I'd expect from an administration that's exclusively pro-business without exception or doubt. But after eight years of that, it's a little rich to complain when a liberal president nominates a Secretary of Labor who's actually pro-labor. Less whining, please.

The Best Chocolate You've Never Heard Of

| Mon Dec. 22, 2008 8:00 PM EST

Kallari, released at Whole Foods in October, is the world's first widely-available chocolate bar made and marketed by actual cacao farmers. It also might be the best chocolate I've tasted, and I'm a big chocolate fan. It's produced with a rare, highly-celebrated bean grown in the Ecuadorian Amazon by 850 enterprising Quichua families who receive 100 percent of the profits. It probably doesn't hurt that they got a little bit of help from Robert Steinberg, the founder of Berkeley's renowned Scharffen Berger chocolate. If you're looking for a holiday gift, Kallari's 75% cacao bar might be a good bet. In these depressing times, you'll get to talk about how it was made by farmers who until recently couldn't even afford to ship their beans from the jungle to Quito but who now run the show--true role models for us children of the recession. And then you can suggest opening it right away so you can snap off a big chocolatey chunk for yourself.

Our Writers Are Even More Amazing Than We Thought: Nomi Prins' Challenge to Readers

| Mon Dec. 22, 2008 4:40 PM EST

nomi_pic.jpgWhen we asked readers to help save our D.C. investigative crew after some major funders pulled out, one of our freelancers, Nomi Prins--a former Goldman Sachs managing director turned ace finance reporter--offered to put up the $1,000 fee for her most recent story as a challenge grant. Yes, just like on public radio: We won't hold the blog hostage for 20 minutes every hour to bludgeon you into giving, but we sure don't want to leave this money on the table. Can you help? It's incredibly easy, just follow this link. If you give $45 or more, we throw in a subscription to the magazine. Please help Nomi help us out. And then go read her story on the financial crisis. It will make you weep.

UPDATE: Now you can give via PayPal! Thanks to those of you who have already given, it means a ton. We'll let you know whether we make the match.

Bruce Springsteen, Neil Young Set for Glastonbury; Coachella Rumors Heat Up

| Mon Dec. 22, 2008 4:26 PM EST

Neil Young Bruce SpringsteenWhat better pastime on this dreary winter day than happily imagining ourselves sprawled on the lawn at a summer music festival, trying to catch a glimpse of the performers between the dancing hippies? Festival promoters are even helping with our creative visualizations by making some lineup announcements. The UK Sun reports that Glastonbury has "gone back to basics" this year with two legendary performers set as headliners: Bruce Springsteen and Neil Young. God bless those guys, but they're probably the only respectable musicians around who could make co-headliners Blur seem young. Ouch, I know, but for reals. Of course, this is the festival that caused an outburst of creepily-verging-on-racist complaints when headliner Jay-Z was announced for the 2008 edition, although the fact that the rapper ended up cheekily covering Oasis' "Wonderwall" at the show seemed to make it all worthwhile. But you can't help wondering if festival boss Michael Eavis is so desperate to avoid a similar controversy, he's going with the oldest, whitest, most respectable rockers around? (And Blur?) (Why am I being so mean to them?)

After the jump: can we legally start Coachella rumors before January 1?

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Domestic Spying

| Mon Dec. 22, 2008 2:44 PM EST

DOMESTIC SPYING....Over the weekend Dick Cheney made a point of saying that congressional Democrats were fully on board with the NSA's domestic spying program during the 2001-04 period. This may or may not be completely true, but there's plenty of evidence that it's mostly true: the NSA program really was approved on a bipartisan level. Spencer Ackerman comments:

Cheney might not be acting in good faith, but he's nevertheless pointing to something barometrically significant. In Washington, the phrase "bipartisan" is supposed to cash out to something like "legal" or "wise" or "no longer controversial" or "kosher." The Germans probably have a word that's a more acceptable translation. In any event, that's self-evidently foolish: lots of people can make mistakes and lots of people can make venal decisions, and it's not a function of belonging to one political party or the other. Cheney doesn't get off the hook if Nancy Pelosi is on it with him. Naturally, what I imagine Cheney's doing is warning the Democrats off creating an independent commission into the abuses of the administration, lest it go after them too, but that's all the more reason one should be created.

Agreed. Unfortunately, there appears to be literally no one who has any incentive to do this. Not Republicans, not Democrats, not Bush loyalists, and not Barack Obama, who voted for the wiretapping bill earlier this year and really has no reason to want this to continue to be an issue. Unfortunately, this whole issue is probably destined to fall quickly down the memory hole.

*Stimulus and Energy Efficiency - Together at Last

| Mon Dec. 22, 2008 2:11 PM EST

STIMULUS AND ENERGY EFFICIENCY — TOGETHER AT LAST....Glenn Hubbard thinks the housing market is close to its natural bottom, and in order to keep it from overshooting it's time for the government to step in and start offering below-market mortgage rates. Brad DeLong agrees:

All in all, I approve of the plan: having Fannie and Freddie buy up mortgages at market prices and refinance them at 4.5% could do a lot of good for the country and make a fortune for the government.

I'm agnostic on how close we are to a housing bottom. My guess is that we still have a ways to go, but since it takes a while for a program like this to take effect, maybe now is the time to get started.

But if we're going to do some social engineering with mortgage loans, why not go whole hog? An outfit called Architecture 2030, founded by Edward Mazria, suggests that we offer homeowners not just low-interest loans, but a sliding scale of low-interest loans that's conditioned on renovating their homes to increase energy efficiency. Their proposed scale is on the right. The nickel explanation is below:

Mazria walked me through a hypothetical example that highlighted the huge incentives the plan could unleash. Say you're a homeowner with a $272,000 mortgage at 5.55%, paying about $1550 a month. You decide you want your mortgage rate to drop to 3%. In order to qualify for the reduction, you have to improve the energy efficiency of your home 75% below code, and it's going to cost you a pretty penny: about $40,000.

Existing tax credits would take care of about $10,000 of that cost. The rest would get tacked on to your existing mortgage, bringing it up to $302,000. But, at 3%, you'd be paying only about $1280 — saving almost $300 a month on the mortgage alone, plus another $150 in reduced energy costs. The value of your home rises, you have more disposable income, you've given work to someone to do the upgrades for you — and s/he's now paying federal taxes, and you've reduced your carbon footprint.

The Architecture 2030 folks claim that their program (which has a component for commercial buildings as well) would cost a mere $170 billion over two years, and in return would create over 8 million new jobs, jump start a new $1.6 trillion renovation market, save consumers a boatload of money, and reduce CO2 emission by about half a billion tons. What's not to like?

To be honest, I'm not sure. There's something a little too free-lunchish about this plan, and I figure there has to be a catch somewhere. I invite everyone reading this to try and figure out what it is. But if the sums really add up the way they say they do, it seems worth considering, no?

Markets in Everything, War Edition

| Mon Dec. 22, 2008 1:38 PM EST

MARKETS IN EVERYTHING, WAR EDITION....Dan Drezner bemoans the fact that international relations scholars aren't allowed to invade other countries to test out their pet theories1, but says we're about to conduct a natural experiment anyway that might tell us why large scale warfare has become much less common than it used to be:

Liberals will point to the rise of the Kantian triad — democracies, international organizations and economic interdependence. All three of these trends have made war much more costly to leaders than it used to be....Realists offer a different explanation — the rise in nuclear weapons. The logic of nuclear deterrence is inescapable — the prospect of a devastating counterattack is sufficient punishment to prevent a conflict from breaking out in the first place.

....[But] the Kantian triad is about to take a serious beating. The global economic crisis is encouraging beggar-thy-neighbor policies in the form of new tariffs and currency manipulations. The crisis has exposed the powerlessness of international institutions (within a month of the G-20 pledge not to raise new barriers to trade, Russia, India, Brazil and Argentina went back on their word). The longer the recession lasts, the more each major power will turn inward to boost its economic prospects.

Will this lead to more war or not?

Hmmm. I have my doubts that this will really answer the question. What if we continue to have zero wars between nuclear powers (highly likely, I'd say) but an uptick in wars between smaller powers? I think we need a better natural experiment. But sometime long after I'm dead, please.

1But he's just joking, OK?

Spooked and Insolvent

| Mon Dec. 22, 2008 1:03 PM EST


Even now my interpretation is that the Wise Men Of Washington who are "dealing" with this financial crisis believe they are dealing with a liquidity crisis rather than an insolvency one. They think that big shitpile is actually worth something, but that "financial actors" are "spooked." They think that if banks aren't lending it's because they have temporary capital issues because of this, instead of the fact that maybe banks aren't lending because recession is here and it's not the most awesome time to lend money for projects.

But why can't it be both? In the previous post I said it was a bad idea for Henry Paulson to bail out all the big banks instead of reserving funds only for those banks that were genuinely close to insolvency, and this is one of the reasons. Not only did a lot of money get wasted on banks that didn't want it, but it prevented us from finding out which banks were in trouble and which ones weren't. If, say, a quarter of the banking industry is insolvent, but nobody knows which quarter, than we have both an insolvency problem and a "spooked financial actors" problem. Sweden solved both these problems in the early 90s by taking over the banking industry completely, but in their case it was really true that virtually every bank was underwater. In our case, it's not1, and we ought to be spending more time figuring out which banks are viable entities and which ones aren't. The ones that aren't can be bailed out or nationalized if there's some prospect of future recovery, and the rest can be left alone. Result: we still have a big recession, but at least the solvent banks aren't under the same cloud of suspicion as everyone else and can go about their business semi-normally.

1Well, I don't think so, anyway. I could be wrong, though!