Month: May 2011

There was a weird roll call on the bill to raise the debt limit with no strings attached. The bill failed 97-318, with seven voting ‘present’ in protest. Most progressives, but by no means all, voted in the affirmative. Some centrists and Blue Dogs joined them. Pelosi voted against. I’m not sure what message, if any, the Democrats were trying to send. The vote that stood out for me was Rep. Martin Heinrich’s (D-NM), who voted ‘aye’ despite the fact that he’s running for Senate next fall. There could be considerations about his primary since he has some serious competition for the nomination, but he doesn’t appear to be worried that voting to extend the debt limit with no strings attached will come back to bite him.

Anyway, so that’s done. What does it mean? You tell me.

The financial services industry (please, do not call what they produce financial products, please), and particularly those who deal in the commodities markets (you know, stuff like pork belly futures and concentrated orange juice futures — and oh, oh, what’s another good example? — oil and gas futures) are always quick to lay the blame for high prices on things like supply and demand. You recall Mr. Supply and Mr. Demand don’t you? Nasty little buggers one day, your best best friend the next — but I digress.

What is clear, however, these honest, hard working regular guys (like this poor fellow) would never ever manipulate the markets for their own benefit. High gas prices must be the result of that invisible hand, one which we must believe controls all our economic destinies.

Well, that’s their story every time they get caught with their hands in the cookie jar (i.e., cheating their asses off) in order to make big money for themselves, and damn the rest of us suckers who aren’t as bright or bold or sociopathic as they are. Like these guys:

WASHINGTON — A group of financial speculators made $50 million by manipulating the price of oil in 2008, the Commodity Futures Trading Commission charged Tuesday.

The civil charges are for alleged manipulation during the first four months of 2008, when crude oil was on its way up to the all-time high of $147 a barrel. […]

The CFTC complaint alleges that the three companies and two executives conspired — during a period of relatively tight oil supplies — to amass big quantities of oil for next-month physical delivery. They were dominating and controlling supply, even though they were not commercial users of oil.

Read more: http://www.mcclatchydc.com/2011/05/24/114711/speculators-charged-with-manipulating.html#ixzz1NvhYQpaA

You remember 2008, right? The economy was crumbling thanks to the housing market crash brought on by the reckless and unregulated speculation in the derivatives markets for CDOs (i.e., collateralized debt obligations). The world was on the brink of a financial crisis that would have rivaled if not vastly exceeded the Great Depression in scope had not the actions the Federal Reserve in late 2008, and to a larger extent those of President Obama in 2009, averted a complete meltdown of the financial markets. But as they say in the business, Money Never Sleeps.

It seems that in January of 2008, three companies that Parnon Energy Inc., Arcadia Petroleum Ltd. and Arcadia Energy (Suisse) S.A., “allegedly” acquired ownership of large quantities of (i.e., millions of barrels) of crude oil even though they were not end users; by which I mean they didn’t acquire oil to refine it into petroleum products for sale on the retail markets. No, they saw an opportunity to grab ownership of vast amounts of crude oil and hold it in order to force the price up. They weren’t in the business of buying and selling crude oil for delivery to refineries or refining oil themselves. They were solely in the business of speculating on the price of oil. And as we all know, its best to bet on a sure thing than to gamble on a whom and a prayer.

They grabbed these millions of barrels of oil at a time when oil supplies were — as they say in the bizness — tight. they “allegedly” held this oil off the market until the final day when they were required to deliver the oil under the futures contracts they had purchased. What would be unusual move for a company that actually traded in oil futures as a hedge against future price increases and which needed the oil for their business operations was not so unusual for a group of corporations and their executives who wanted to jack the price up. In short, they “allegedly” intentionally held oil off the market to create the impression among other traders that supplies would remain “tight” and this benefit from the increase on crude oil prices when they did finally release the oil and deliver it for sale.

Now these “persons” are actually small potatoes in the grand stew of corruption that occurs every day in the commodities markets. They only managed to make a “killing” (i.e., profit) of $50 Million Dollars. Pikers in comparison to the thieves at Enron and its “partners in crime” who in 2000-2002 made Billions of Dollars off the manipulation of the western electricity markets, especially in California.

Still, I suppose its nice to see the federal government doing anything at all to investigate price manipulation on the oil and gas markets, especially after the sorry record of the Bush administration when the oil prices rose from $25 dollars a barrel to a high of $147 a barrel thanks in large part to deregulation of the markets and other actions to increase market speculation as it related to price of oil:

In April 2009, Dr. Ahmad R. Jalali-Naini, working under the supervision of Mohammad Alipour-Jeddi, Head of the Petroleum Studies Department for the Organization of the Petroleum Exporting Countries, prepared a seminal report entitled The Impact of Financial Markets on the Price of Oil and Volatility: Developments since 2007. Based on his findings therein he concluded, inter alia, that speculation in oil futures markets contributes significantly to price volatility and observed that:

[T]hrough new asset management strategies, financial product innovation, and development of new institutional forms of investing (e.g. index and hedge funds), this paved the way for greater financialization of the oil industry. . . . [This has] resulted in greater . . . depth in the paper-oil market. These developments . . . have given rise to new investment assets that get their reward from price performance of oil futures and derivatives rather than the old-fashioned form of market reward through capital investment into oil exploration and extraction, and the resulting higher production.1

Thus, financial investments in the crude oil market have substantially moved from capital raising equity and debt investments for production to betting on price direction. […]

In this regard, it is interesting to note that those who have been most concerned about regulatory controls on excessive financialization of these markets are the major oil producing and exporting countries, especially at a time when they seemed to be the principal beneficiaries of record high oil prices. […]

Ali bin Ibrahim Al-Naimi, Minister of Petroleum and Mineral Resources for the Kingdom of Saudi Arabia … concluded:

I would also note that while there is little or no correlation over the past two years between global crude oil inventories and crude oil prices, there has been a strong correlation between the increasing volumes of crude oil futures trade on the NYMEX and rising prices. According to many observers and analysts, inadequate oversight, regulation and reporting of speculative investments in commodities have further exacerbated this situation.

The conclusions of Dr. Ahmad R. Jalali-Naini‘s in his April 2009 seminal report are supported by the findings within several other expert reports below. Dr. Jalali-Naini concluded, inter alia, that ―oil price movements were at times magnified by speculative pressures and incorrect expectations disseminated by certain investment banks,‖ marketing passive price directional paper investments.

I think the Saudis, if anyone, would know what is most affecting the increase in crude oil prices during a time of when the world economy is making a very slow recovery from the greatest recession in our lifetimes.

So while the indictment of a few small players in the oil futures market back in 2008 any seem like a big step, I see it as nothing more than a symbolic action. The big boys — i.e., Exxon, BP, Shell, etc. — and their accomplices on Wall Street (Goldman Sachs, anyone) …

With the public reluctant to put money in anything that felt like a paper investment, the Street quietly moved the casino to the physical-commodities market — stuff you could touch: corn, coffee, cocoa, wheat and, above all, energy commodities, especially oil. In conjunction with a decline in the dollar, the credit crunch and the housing crash caused a “flight to commodities.” Oil futures in particular skyrocketed, as the price of a single barrel went from around $60 in the middle of 2007 to a high of $147 in the summer of 2008.

… are probably safe from any extensive investigation into whatever price manipulation they are likely engaging. Federal civil indictments of Parnon Energy Inc., Arcadia Petroleum Ltd. and Arcadia Energy (Suisse) S.A. are easier to obtain (though they only come three years after the fact) because those companies do not have the resources — financial and political — to fight off a DOJ investigation and prosecution. These civil actions are merely the result of the DOJ casting a small net to catch a few minnows while the big sharks continue to roam the ocean of oil in commodity exchanges in their efforts to obtain massive speculative profits and further to gouge the American consumer.

Eric Holder has expressed his “concern” about the rise in gasoline prices despite weak demand and has made vague noises about looking into the matter. To his credit, the Democratic Senator Richard Blumenthal from Connecticut in particular has been pushing the Obama DOJ hard to undertake a more serious and extensive investigation into commodity market speculation and its effect on rising oil and gas prices.

“These recent steps by DOJ to prioritize its efforts in this area as it relates to surging gas prices are important, but I believe we must go further,” the senator said in a letter Wednesday to Attorney General Eric Holder and the heads of agencies that regulate energy markets.

Blumenthal also used a Senate Judiciary Committee hearing with Holder Wednesday to express concern that the Oil and Gas Price Fraud Working Group that Holder announced in April would not be aggressive enough. […]

“With speculation in the energy markets at its highest levels on record, it is vital that prosecutors in DOJ’s Fraud Section and at the U.S. Attorneys’ offices nationwide begin immediately investigating potential ongoing commodities fraud,” adds the letter that was also sent to the heads of the Federal Trade Commission, the Commodity Futures Trading Commission, and the Federal Energy Regulatory Commission.

However, if anyone believes we are likely to see a serious investigation into the what is likely a massive price manipulation of current crude oil and gasoline prices by Big Oil and Wall Street, I suspect they will have a very long wait. As Senator Durbin reluctantly noted regarding Wall Street’s power over the actions of our Government, and in particular the Senate, “[T]hey frankly own this place.”

.

F-secure Q&A analysis of stuxnet computer worm effects Siemens Process Controllers

Apparently the stuxnet worm did most harm in the ultra-centrifuges plant at Natanz in Iran.

(New York Times) – In early 2008 the German company Siemens cooperated with one of the United States’ premier national laboratories, in Idaho, to identify the vulnerabilities of computer controllers that the company sells to operate industrial machinery around the world — and that American intelligence agencies have identified as key equipment in Iran’s enrichment facilities.

Siemens says that program was part of routine efforts to secure its products against cyberattacks. Nonetheless, it gave the Idaho National Laboratory — which is part of the Energy Department, responsible for America’s nuclear arms — the chance to identify well-hidden holes in the Siemens systems that were exploited the next year by Stuxnet.

The worm itself now appears to have included two major components. One was designed to send Iran’s nuclear centrifuges spinning wildly out of control. Another seems right out of the movies: The computer program also secretly recorded what normal operations at the nuclear plant looked like, then played those readings back to plant operators, like a pre-recorded security tape in a bank heist, so that it would appear that everything was operating normally while the centrifuges were actually tearing themselves apart.

Siemens PLC systems were present on the Deepwater Horizon. Not likely stuxnet worm involved in sinking of the oil rig.  

• SIEMENS Automation Conference 2008
  Control System Security Assessments (pdf)

STUXNET constructed and delivered by Israel’s Signals Intelligence (SIGINT) elements, possibly Unit 8200.

Buried in the code, experts found a concealed reference to the word “MYRTUS”, believed to refer to the Myrtle tree, or Hadassah in Hebrew. This was apparently the birth name of the former Jewish queen of Persia, Queen Esther whom the Bible describes as having persuaded her husband to launch a pre-emptive strike on Persian forces, before his own forces were attacked. The virus is most likely to have been introduced into the Iranian systems by a Russian technician, unknowingly, by means of a USB memory stick.

Israel’s SIGINT Unit 8200  

• Israel’s omniscient ears

"But I will not let myself be reduced to silence."

Sometime today, the House Republicans will hold a vote on whether or not to raise the debt limit with no strings attached, as the Obama administration has requested. The idea is to prove to the administration that the health of the global economy is now a hostage to the GOP’s extreme demands for massive, unprecedented cuts in domestic spending and entitlements. Essentially, the Republicans are saying, “Destroy your own base of political support, punish the elderly, the needy, and our veterans, or the global economy gets it.” It’s not a serious vote. It’s a joke vote.

And for all the talk of economic crisis should Congress fail to raise the debt ceiling by August, the financial markets are likely to yawn at this vote — if only because Republican leaders have privately assured Wall Street executives that this is a show intended to make the point to Mr. Obama that an increase cannot pass absent his agreement to rein in domestic programs.

“Wall Street is in on the joke,” said R. Bruce Josten, executive vice president of the U.S. Chamber of Commerce.

The stock market may yawn at today’s vote, but they’ll completely freak out if the the deadline for raising the limit gets close without some action.

This is an opportunity for you to make a lot of money. Just think back to the debate over TARP.

Mr. Josten of the Chamber of Commerce, who has met privately with Republican newcomers on fiscal matters since January, asked, “Am I the only one who remembers the split screen on TARP?”

He is not. Increasingly, worriers from Washington to Wall Street recall how House Republicans by a 2-to-1 margin first rejected the Troubled Asset Relief Program, better known as the bank bailout, on Sept. 29, 2008, though the financial system was near collapse and a Republican president, George W. Bush, was pleading for their support.

That afternoon, cable networks split screens to capture the stock markets going down simultaneously with the House vote; the Dow Jones industrial average fell more than 777 points, its largest single-day point drop. Four days later, following the Senate’s lead, the House approved a revised bailout and Mr. Bush signed it into law.

A time will come sometime in July when the Republicans fail to raise the debt ceiling and Wall Street starts a massive sell-off. This is when you buy shares. You might want to wait until the market has lost more a third of its value, though, because it could be a very long time before the global economy recovers and stock prices reach their pre-crisis levels.

Take the time to read this account of what may happen if the government defaults (or even comes close to defaulting) on its debts.

You need to pay close attention to where you have your money parked, and seek out advice about where you can find safety.

Everyone may think the Republicans are bluffing and that this is all a joke, but there is nothing funny about what’s going on, and there doesn’t seem to be any realistic prospect of the GOP backing down prior to a major adverse event on Wall Street.

Last week, Sarah Palin announced a bus tour of America and managed to get her name splashed all across the nation’s headlines…again. But, if the Republicans are despondent about their presidential candidates, Palin’s entrance into the race would do nothing to alleviate that feeling of gloom. Maybe someone ought to ask why the Republicans have no decent candidates. The problem is deeper than the lists of who has and has not decided to run for president. Consider the three names most often mentioned as white-horse rescuers.

First, there’s Jeb Bush, the son who ought to have been heir to his father’s failed presidency. Instead, we got the boy-king and his Rasputin/Palpatine sidekick Dick Cheney. Jeb might have been less of a catastrophe for the country than his older brother turned out to be, but the Bush brand lays in tatters.

Then there is Rep. Paul Ryan. Gifted with Eddie Muntser’s good-looks (along with accompanying widow’s peak), Ryan is the symbol of all that is rotten and unpopular with the modern Republican Party. His budget proposal is so disliked by the public that the GOP just lost a special election in New York’s most conservative district because their candidate had endorsed Ryan’s plan. It’s highly doubtful that Ryan can win reelection to his own district, let alone win statewide in Wisconsin. Nationwide? Not a chance.

And, finally, there is New Jersey Governor Chris Christie who, while doing an admirable job of representing the Garden State’s trademark attitude, is not doing a good job of representing his constituents. After pissing away federal money for education and transportation, New Jersey’s voters give Christie a thirty-eight percent approval rating, are split on whether he’d be a better president than Dubya, and by a 2:1 margin say Christie would be a worse president than Obama.

In other words, the three so-called ‘knights on white horses’ are some of the most unpopular people in politics.

This isn’t new. Republican leaders tend to wear out their welcome quite thoroughly. Remember Gingrich at the end? Remember how Tom DeLay went out? Did people feel sad to see Dennis Hastert or Bill Frist or Trent Lott go? And who can forget the spectacle of half of Washington DC serenading Bush the Younger’s presidential exit with their version of “Na Na Hey Hey Kiss Him Goodbye”?

Even the most popular of all recent Republican politicians, Rudy Guiliani, destroyed the good will he earned by humping 9/11 until it hurt.

The problem isn’t personalities. It’s results. When given a chance, the Republicans cannot govern effectively. To listen to their rhetoric, they don’t believe effective governance is possible, and it’s certainly not preferred. The Republican candidates are not unpopular and uninspiring because of their policy differences. They basically have no policy differences of any consequence. They represent the hive-mind. And their busy bees don’t serve the country or the truth, but their little band of religious fundamentalists and tax-averse businessmen.

They’re not popular because their beliefs are not popular. And their message of doom is uninspiring.

Finn says many thanks to everyone for the mosquito-avoiding advice – the bites are healing, and he doesn’t have any new ones!

What are you-all up to? I have another batch of German potato salad in the works – yesterday’s got devoured already.

Isn’t this Angry, Angy Bird’s time about up? Weinergate? Really?

I hope Shirley Sherrod’s or Rep. Weiner’s and others’ lawyers takes him to the cleaners.

It’s clear that no one in our so-called liberal media will do the “hard (not all that hard) work” bloggers have done time after time to expose this fraudulent smear merchant.

Breitbart is the perfect example of how a serial failure in real life can suddenly achieve the great American Dream simply by hitching his wagon to the right wing disinformation circus to become “the pus that infects the mucus that cruds up the fungus that feeds on the [conservative media] pond scum.” Too bad no one in our elite beltway punditocracy is willing to state the truth that he’s a con man, pure and simple.

If I was a Republican and had any principles or conscience at all I’d be embarrassed that this blowhard has been let loose by the people who control the agenda of that party to help them destroy our Republic. But I suppose that’s asking a bit much from people who not so long ago worshiped at the feet of Glenn Beck.

One of the burdens of being a very serious Beltway journalist is that you want to maintain access (relationships, really) to people on both sides of the aisle. That makes it hard to simply report, for example, that you talked to Eric Cantor and he’s lying through his goddamned teeth. If you do honest reporting like that, Eric Cantor won’t answer your calls the next time you want to interview him or get a catchy response quote for your article. In broader terms, this phenomenon allows the Republicans to do or say almost anything and still avoid getting treated like fringe-lunatics or shameless shilling liars. That is what is happening right now with the Medicare debate.

The media does report the facts about Paul Ryan’s plan, but they balance that out by accusing the Democrats of “trying to scare seniors” when they talk about the same facts. The Republicans proposed ending Medicare as we know it and replacing it with inadequate subsidy that would leave soon-to-be seniors broke and lacking access to health care. Then the Republicans offered to take the savings to the government and not apply it to the deficit but to cutting corporate tax-rates and personal income tax-rates on the extremely affluent.

Why wouldn’t seniors and soon-to-be seniors be afraid of that? What’s wrong with pointing out the truth?

There is an ancient Greek proverb, often attributed to Euripides, which states that “whomsoever the Gods seek to destroy, they first make mad.” Whether the Eurozone crisis of 2011 was some kind of karmic revenge for those who sought to destroy Greece, we shall never know: what is clear, however, is that the actions of the ECB throughout that crisis more closely resembled those of a madman whom the Gods had chosen to destroy.

Heaping ever greater austerity measures on an economy already in free-fall, insisting on interest rates which the Greek economy had demonstrably no capacity to pay, and finally, withholding further loans required simply to roll over previous loans could only have had one outcome: And the great surprise is that that outcome came as a surprise to the ECB at all.

Perhaps it was all part of a devilish clever scheme to force a default when a default could never be officially countenanced: To force a resolution that all had to officially condemn as unthinkable. But reality has an awkward way of rethinking the unthinkable to the point where it becomes the most obvious outcome of all: a solution blindingly obvious in hindsight, yet utterly unpredictable to those who should have had the expertise to predict and counteract just such a thing.

Whatever the dynamic in the weeks and months leading up the D(efault) day, the events of the day itself were alarmingly simple and straightforward.  The Greek Government announced three things:

1. It was unable to meet the ECB/IMF terms for the issuance of further Euro loans.
2. As a consequence it was unable to meet debts now falling due in Euros, and

3. As a consequence, it was repaying those debts in full in new Drachmas, officially valued as 1 new Drachma = 1 Euro, and would issue sufficient new Drachmas to meet all its future obligations in like manner as well as provide for the orderly running of the Greek economy and Government.

It was then “a matter for the international currency markets”, the official statement noted, “as to whether the official 1:1 exchange rate would hold, and the new currency would be convertible at whatever exchange rates those markets would determine”.  The Greek Government was “Officially agnostic” the statement went on, “as to what the new floating exchange rate would eventually turn out to be”.

In the event, no one was surprised that the markets went into a wild selling frenzy, to the point where the New Drachma was worth less than €0.20, and only recovered many months later to reach today’s rate of €0.40 Euro to the New Drachma – a rate which most economists regard as sustainable given the underlying strengths and competitiveness of the Greek economy.

The actions of the Greek Government had several huge and utterly predictable consequences:

1. Greece’s National debt was discounted by as much as 80% and most of its creditors – chiefly German banks – lost their shirts as a result. The Greek Government’s finances were almost immediately placed on a much more even keel by the huge reduction in their interest burden and the gross debt repayable.
2. Greece’s economy recovered its competitiveness to the point that it quickly returned to growth and job creation mode. Imports became hugely expensive and diminished rapidly, whereas exports grew rapidly to achieve a positive trade balance.  Provided Greeks managed to avoid those expensive imports, their standard of living wasn’t effected over-much and at least they now had some prospect of the job.
3. The hugely increased cost of imported cars and petrol also gave a huge fillip to the nascent Greek solar energy industry, to the point that the Greek sustainable energy industry (largely solar and wind) now provides 80% of Greek energy needs and also provides c. 100,000 relatively well paid jobs.
4. Further afield the Eurozone banking industry was once again in crisis, with Merkel having to do precisely what she said she wouldn’t do – bail-out German banks with taxpayers money.  Initially, of course, Merkel flailed about threatening to expel Greece from the EU, until her officials pointed out that there was, in fact, no legal mechanism for doing any such thing. Her defeat by the Greens and the SDP at the next election was a foregone conclusion the moment that realisation struck home.
5. The newly elected Portuguese government also seized the moment to distance itself from its “socialist” predecessor and announced its intention to let the “markets decide” the value of the Portuguese national debt – widely interpreted as a thinly veiled threat to also secede from the Eurozone. The ECB almost fell over itself in its haste to offer almost unlimited loans at a nominal rate to avert that possibility.  
6. Spain, too, nervously looking over its shoulder at its Portuguese liabilities (and potential loss of relative competitiveness) made similar noises, and thereafter seemed to have no difficulty obtaining ECB funds to ensure its banks remained liquid despite a 50% peak to trough fall in Spanish property prices.
7. Ireland had pre-empted the issue of penal ECB interest rates by “privately” negotiating a deal with the Obama administration to obtain a borrowing facility with the Fed which obviated the need to draw down any ECB funds. The statement by the “hapless” Irish Premier, Enda Kenny, that Ireland would not be drawing down any loans “at unsustainable interest rates” was widely misinterpreted as a threat to go down the Greek road.  In fact the Irish government used the Fed funds to buy back Irish Government debt on secondary debt markets at an average discount of 50% because of the panic in Sovereign debt markets as the Greek crisis unfolded.  Apparently Goldman Sacks, a key Obama donor, made a killing in fees acting behind the scenes buying back Irish debt at huge discounts on behalf of the Irish Government. Observers at the time often wondered why the Irish Government seemed to develop a knack of making statements which unsettled the markets whenever a sense of calm was being restored.  It turned out the Irish Government managed to reduce the Irish national debt by c. €70 Billion by recyling it almost entirely through secondary markets.  In addition, that debt is now largely denominated in US$ which looks a good move now that the Euro has achieved a 30% trough to (current) peak revaluation against the dollar since the Greek exit from the Eurozone.

The irony of the crisis is that the Eurozone economy as a whole has done exceptionally well throughout this crisis – first because the crisis kept the Euro artificially undervalued, and then because the crisis forced the systematic reform of the key EU institutions.  The European commission was forced to develop, belatedly, a properly funded industrial and energy policy which resulted in a huge increase in infrastructural spending throughout the Eurozone.  

The ECB, for its part, was almost dismantled and rebuilt on an entirely new foundation.  Many had likened the Irish Government’s decision to appoint Stiglitz and Krugman as economic advisers as just a fit of peek at the refusal of the ECB to grant it a sustainable interest rate on its loans – one in the eye for the “Austrian School” economists who seemed to dominate ECB thinking.  But in the end, their role was more akin to that of Keynes at the Bretton Woods conference – completely recasting the way in which Eurozone monetary policy is run.

Gone are the days when the ECB can freely comment on EU Members fiscal policy (where it has little competence) and neglect its primary responsibilities of regulator of European banking activities, market maker, and lender of last resort.  Gone are the days when the Eurozone has a monetary authority but no fiscal authority.  It is perhaps a particularly sweet irony that the EFTA (European Fiscal transfer Authority) is funded almost entirely from the Tobin taxes brought in on the banking transactions which had, in the past, done so much to destabilise the European banking system in the first place.

And so here we are in 2015 in a situation where the EU economic situation has gone from strength to strength. Irish debt peaked at 109% of GDP in 2013 thanks to a combination of secondary market repurchases and the dollar devaluation, and is expected to decline to as little as 75% of GDP within 2 years.  The Greek economy has thrived to the point where it might be welcomed back into the Eurozone – except that the Greeks have absolutely no intention of rejoining.  

The substantial increases in EFTA funded infrastructural spending – agreed as a condition of the Irish Government agreeing to a referendum on ECB and financial regulatory reform – have benefited not only the heavily oil dependent PIIGS countries, but the Eurozone as a whole. The underlying strengths of the Spanish and Portuguese economies, allied to a thriving sustainable energy sector, huge EFTA funded infrastructural projects, and almost unlimited access to Euro liquidity from the new ECB have managed to contain the crisis in property prices and even managed to reduce youth unemployment substantially – the other spark which threatened to undermine the whole Euro concept.  

The neo-liberal argument, that economic progress required reduced “Government interference” and greater “free-market reforms” has been comprehensively and devastatingly defeated. The monetarist argument that “printing money” must always lead to inflation has been thoroughly debunked. Even Germany has (slightly) overcome its fear of the inflation monster. Now even the US Government is championing the state led “Migeruan” economics which have made this turnabout possible.  Hats off to the pioneers of the European Tribune TARA (There Are Real Alternatives – to TINA) project which helped to make these changes possible. The Alternative economics have become a Reality.  Such a pity that the European Tribune has just been sold to a Murdoch led consortium for €700 Million…

Considering the fact that Mitt Romney recently made his first visit to Iowa of this election cycle, it appears that he doesn’t intend to seriously contend in the state. And considering that there are a plethora of socially conservative candidates running for the Huckabee vote, and that that vote is therefore likely to be divided up among more than a have dozen candidates, it seems to me like it should be possible for a more mainstream candidate to win the caucuses with a very low overall percentage of the vote.

I have read in several places that former Utah Governor Jon Huntsman doesn’t plan on competing in Iowa either, and probably for the same reasons as Romney. Iowa’s Republican base is evangelical and not too open-minded about supporting Mormons, regardless of what policies they advocate. That’s the theory, anyway. But Huntman’s road to the nomination has to start somewhere. He can’t skip Iowa and think he will win New Hampshire. And if he doesn’t win in either of the first two states, he certainly won’t win in South Carolina or have any momentum in Nevada. If I were advising Huntsman, I would advise him to compete heavily in Iowa with the goal of finishing in the top three. Assuming that Palin does not run, I don’t think a second place finish in Iowa would be out of the question and a third place finish should be eminently doable.

Why do I feel this way? Well, part of it has to do with the Iowa caucus system. Here’s an amusing anecdote.

Most grating to Iowa Republicans have been the snide comments from their fellow early state, New Hampshire, which has a more conventional primary election.

In a recent column for the New Hampshire Union Leader that was reprinted in the Des Moines Register, former New Hampshire GOP chairman Fergus Cullen wrote that important issues don’t get debated in Iowa, because “three quarters of the audience wears tinfoil hats.”

“Iowa Republicans didn’t set out to marginalize themselves, but it’s happened — to New Hampshire’s benefit,” Cullen added. “With several major candidates likely to bypass Iowa, and the odds rising that Iowa’s skewed caucus electorate could support candidates with limited general election appeal, the likelihood of New Hampshire being called upon to make a correction” increases.

Barack Obama won the Iowa caucuses because he performed a minor miracle in getting as many people under the age of 30 to show up as people over the age of sixty-four. But, this time around, Romney isn’t even going to try to overcome the tinfoil-hat nature of the Republican base in Iowa. By conceding, he leaves a quarter of the electorate without a candidate. Rep. Steve King, who exemplifies the Crazy, is set to endorse Michele Bachmann. Pawlenty is positioned to straddle the sweet spot between the lunatics and the Establishment. But he’s going to get pulled far to the right. This is where Huntsman can come in and make an electability argument. He can say that unlike Romney, he’s not a career flip-flopper.

The goal is not necessarily to win Iowa, which is probably unrealistic, but to be positioned to pick up the pieces for the Establishment when Romney crashes and burns in New Hampshire. And, make no mistake, every GOP outlet that communicates with voters is going to be gunning for Romney because of the health care issue. He is going to take so much friendly-fire that you could use him as a sieve. He has no chance of retaining his lead in the New Hampshire polls, especially after the winner of Iowa steals all the media attention for a week or two.

Let me put this another way. If Huntsman has not positioned himself to pick up the pieces, the GOP is going to nominate Pawlenty or, shockingly, someone else from their field of loons.