What if Roubini's Right: A Thought Experiment

Nouriel Roubini, known as Dr. Doom, is a renowned economist. He made a name for himself by predicting the mortgage, financial, and oil crisis currently going on.

"In 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he's a sage."[1] In September 2006, he warned to a skeptical IMF that: "The United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining
consumer confidence, and, ultimately, a deep recession."[2]

He also foresaw "homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt". The New York Times labeled him "Dr. Doom", whereas, in hindsight, IMF economist Prakash Loungani has called him "a prophet".[2]

Now, the same Roubini is predicting a dollar carry trade bubble.

So what is behind this massive rally? Certainly it has been helped by a wave of liquidity from near-zero interest rates and quantitative easing. But a more important factor fuelling this asset bubble is the weakness of the US dollar, driven by the mother of all carry trades. The US dollar has become the major funding currency of carry trades as the Fed has kept interest rates on hold and is expected to do so for a long time. Investors who are shorting the US dollar to buy on a highly leveraged basis higher-yielding assets and other global assets are not just borrowing at zero interest rates in dollar terms; they are borrowing at very negative interest rates – as low as negative 10 or 20 per cent annualised – as the fall in the US dollar leads to massive capital gains on short dollar positions.

Let us sum up: traders are borrowing at negative 20 per cent rates to invest on a highly leveraged basis on a mass of risky global assets that are rising in price due to excess liquidity and a massive carry trade. Every investor who plays this risky game looks like a genius – even if they are just riding a huge bubble financed by a large negative cost of borrowing – as the total returns have been in the 50-70 per cent range since March.

Roubini believes that the weak dollar has been fueling a rush to risky assets as investors try and take advantage of a weak dollar. Roubini specifically identifies "risky global assets". Risky global assets are especially plentiful in the third world and the developing world.

In other words, domestic investors are borrowing at cheap domestic rates, moving out of dollars, and going into the third world with the potential of massive returns. One important characteristic of any bubble is the presence of a stimulant outside of fundamentals. In this case, the stimulant is the weak dollar itself. So, investors aren't making massive bets in the third world necessarily because of the fundamentals, but rather, because they're taking advantage of the weak dollar. So, once the dollar strengthens, they'll move out and back into dollar assets.

So, what we'll see is the rapid investment into the developing world and then that investment will move out, and the bubble will burst. Now, the U.S. has had its fair share of bubbles. They're difficult even at their mildest. Looking back, 2001-2003 was a relatively mild recession following the internet bubble. Yet, while it occurred, there was plenty of pain. In the third world, bubbles are much rarer since they don't experience as many booms.

Roubini isn't merely calling for a dollar carry back asset bubble but the MOTHER OF ALL dollar carry back asset bubbles. That means that third world economies will see economic pain on scales we've never seen before. After experiencing growth that will give their populations hope, they'll experience pain on scales they thought they'd never see again.

We often look at economics strictly economically. There is however a cultural, societal, and geopolitical aspect that is often overlooked. A massive bubble that hits the third and developing world all at once would lead to a sort of geopolitical instability that's frightening. In those nations, economic pain leads to coups, governments falling, and dictators rising.

Since this bubble's nexus will be tracked to a weak dollar, tracked to U.S. policy, you can bet that despots and opportunists will use the crisis to blame America. So, what we will have is a dictatorial takeover all over South America, some parts of Asia, and parts of Africa. Anti American depots and opportunists will look to use the crisis to support leftists to fill the vacuum for falling governments all over the world.

There will of course be plenty of civil wars. That's what happens in conjunction with falling government, often, in the third world. We'll see death, looting, and mass chaos all over the place. This will also give opportunities for terrorists and other American enemies like Hugo Chavez, Russia, and Iran to install governments sympathetic to their beliefs.

Chavez will almost certainly be the big winner in South America in such a scenario. He, more than anyone else, would ride the Anti American card as developing countries have their governments fall. Africa would see multiple civil wars all at once. Parts of Asia will have their governments fall. In the geopolitical climate that will likely be in place before all this, this sort of scenario is a recipe for disaster.

Sarkozy On Obama: Naive and Grossly Egotistical

This video is sure to get all sorts attention.




That's Jack Kelly of the Pittsburgh Post Gazette. If Kelly's sources are solid, then President Sarkozy views our president in much the same way as many of his opponents, naive and arrogant. That's of course the worst sort of a combination for any leader. I can't find video of the entire interview and that's too bad. That's because prior to this bombshell Kelly also said that Sarkozy pushed Obama to reveal Iran's secret nuclear site in his speech at the UN. He said that Obama didn't do it because he didn't want anything interfering with the resolution he wanted passed committing the UN to getting rid of nukes.

In other words, according to the sources that Kelly has near Sarkozy, Obama thought it was more important to pass this resolution than to maximize the diplomatic confrontation between the West and Iran. In fact, Kelly said that in his estimation Obama wouldn't have revealed it at all had it not been for the prodding of Sarkozy and Brown.

If Kelly's sources are right, we have a serious problem. That would mean that Sarkozy will be weary of anything that Obama does and says. He won't be apt to join any sort of serious alliance on any important foreign policy matter. Sarkozy would then feel that Obama is incapable of properly handling and would proceed with that in mind. It would undermine most geopolitical moves made by Obama. Obama's already alienated most of our Eastern European allies by dumping the missile shield, and now a major Western European ally thinks he's arrogant and naive. Colombia has been alienated because we won't sign a free trade pact. Mexico was ticked off by protectionist language in the stimulus. That really doesn't leave too many allies.

Now, if Kelly is right about Sarkozy, and Sarkozy is right about Obama, then we have a disaster. If the president is naive and arrogant then not only will he proceed with policies with no hope of working but he'll be too arrogant to see they aren't working. With Afghanistan on the brink, Iran on the brink of a nuke, Russia lying in wait, and Venezuela trying socialize South America, we have a lot of potential problems. If we have a president both clueless and too arrogant to realize he's clueless, we have a lot of potential problems that will explode.

I was always stunned by how anyone could vote for someone that was four years removed from being a state senator. What exactly did his supporters think? Did his supporters really think he was up to being president? Obviously, the jury is still out, and it's unfair to make total judgments yet. That said, I think everyone should begin to admit that we may all be facing our worst nightmares with President Obama. So far at least, it appears all of our worst nightmares are coming true. We have a far left ideologue that's not all that bright and too arrogant to see it.

Navigating Foreign Policy in a World of Bad Actors

When I first heard about the coup in Honduras, I immediately thought of something that Bill O'Reilly once said. He covered the war in El Salvador. He said that when he speak to common folk in El Salvador, they told him both sides, the military lead government and the leftists militias, were rotten to the core. The outbreak in Honduras has immediately turned partisan. Supporters of the president also now support deposed leader Manuel Zelaya. Here's an example of that support from the Huffington Post.

Viewed from a distance, the streets of Honduras look, smell and sound like those of Iran: expressions of popular anger - burning vehicles, large marches and calls for justice in a non-English language - aimed at a constitutional violation of the people's will (the coup took place on the eve of a poll of voters asking if the President's term should be extended); protests repressed by a small, but powerful elite backed by military force; those holding power trying to cut off communications in and out of the country.

These and other similarities between the political situation in Iran and the situation in Honduras, where military and economic and political elites ousted democratically-elected President Manuel Zelaya in a military coup condemned around the world, are obvious.

Meanwhile, conservatives have called the coup totally legal and necessary. They have taken defending most of the actions of the new government. The fact is this. Military stormed the quarters of the leader of the nation and arrested him at gun point in the early morning. To not see that this is wrong is to be willfully blind. Furthermore, these same folks are now cutting off television signals, detaining journalists, and imposing martial law. These are not necessarily nice folks.

Of course, Maneul Zelaya is far from a good guy himself. This all started when attempted to move forward with an election the Supreme Court had ruled illegal. He has alligned himself with Hugo Chavez and he was clearly on the road to a leftist dictatorship.

So, what does President Obama do? He had three options. The first was to declare this an internal issue and distance himself. This was a long term untennable stance. At some point, he would either have to recognize the new government, and inherently support the coup, or to cut diplomatic ties, and inherently make it illegal. The other two options were to support the coup or Zelaya.

Obama, of course, chose the third option. The first problem with Obama's decision is that he made an absolute moral stance. This situation has no absolute morals. In Obama's view, coups are inherently evil and thus, we must oppose this coup. What about the rise of leftist dictators? Aren't those equally as evil?Why wouldn't we oppose the rise of another leftist dictator?

Furthermore, he has condemned the coup without condemning the actions of Zelaya that lead to the coup. If the coup is "illegal", how does President Obama view a leader that ignores the ruling of the highest judiciary?

The second problem is that he has alligned himself with someone that gives America no strategic value. In fact, all this does is strengthen the hand of our enemy, Hugo Chavez. In El Salvador, the U.S. wound up supporting the military government not because they were beacons of goodness, but because they were the enemy of our enemies, the leftists. We have the same situation here. The new government is not a beacon of goodness, but they are opposing a leftist alligned with Hugo Chavez. There are no good options, but ultimately, the enemy of my enemy is my friend. President Obama chose the wrong side.

What Now of Our Policy in South America

President Obama just laid down the marker today regarding Honduras. (h/t Hot Air)

The president called the coup "illegal" and said the U.S. continues to recognize deposed President Manuel Zelaya the leader of Honduras. Now, if we are to follow this to its logical conclusion, then this means that we won't recognize the new government. That means we would have to remove our ambassador from the nation. We'd cut off aid and all diplomatic ties. As such, we would wind up with more diplomatic ties with Venezuela than with Honduras.

More importantly, the United Nations, the Organization of American States, and the United States have all not only condemned the coup but also continue to recognize Zelaya. How long can the new government survive with all of these groups refusing to recognize it? What will happen once the government falls? Most likely, Zelaya will regain power. Then, he will impose another term and eventually lifetime rule.

Then, you create a leftist axis in Venezuela, Cuba, Honduras, Nicaragua, and Bolivia. Our ally in the region, Colombia, has far more leftist dictators to deal with. So, where does that leave our policy in South America? Are we still going to engage with Venezuela? A coup is something you don't necessarily want to make a habit of support, but in this case, a leftist leader trying to be a dictator is even worse. By taking sides with Zelaya, we help to secure yet another dictatorship in an area in which democracies are in an ideological battle with Socialist dictators. Which side are we on exactly?

Obama, Iran, and Honduras

I am trying not apply cynical and disturbing motivations to Obama's disjointed foreign policy but it's really hard when you look at the situations in Iran and Honduras. So, rather than getting inside his head, I will simply lay out the facts.

In Iran, there was a sham election. Despite record turnout, the results were announced about four hours after polls closed. Iran has no machine ballots nor exit polling. As such, these results would have had to have been hand counted. Even though everyone expected a very close election, Mahmoud Ahmadinejad was announced to have won overwhelmingly.

Then, supporters of the opponent, Al Mousavi, took to the streets in mass protests. The protests were eventually put down, often violently. The opposition candidate doesn't appear to be free to move. Many protestors have been beaten, jailed, and even murdered. Meanwhile, the ruling elites have declared the election valid and call this the final word.

Here, President Obama has been very careful with his words. He has insisted that he doesn't want to meddle. His language has been very even handed. He once pronounced that there was little difference between Ahmadinejad and Mousavi. He has repeatedly referred to the election and its aftermath and "internal Iranian matter".

Meanwhile, in Honduras, the President, Manuel Zelaya, was attempting to run for office one more time despite being at the end of his final term. He called for a national referendum to put it to the voters. Yet, according to the Supreme Court of Honduras, this move is unConstitutional. They declared as such. Despite the ruling of the Supreme Court, Zelaya went ahead with the referendum. When the military refused to set up balloting stations, he fired most of the heads of the military.

When Zelaya insisted on moving ahead with the referendum despite the ruling of the Supreme Court, the Supreme Court issued an arrest warrant. The military followed through on their order. Then, the Congress declared that Zelaya was no longer the President and installed a new one, Roberto Micheletti.

Now, some in the conservative media have already taken to siding with the Congress and the Supreme Court. I'm more skeptical. Often in cases like this, there are no good guys. There are only different sorts of bad guys all vying for power.

That said. If President Obama felt that he shouldn't meddle in Iran, he certainly shouldn't be meddling here. The last thing anyone needs is for the world to think that this is being orchestrated by the U.S. Yet, not only was he meddling, but they've been meddling for weeks.

The Obama administration and members of the Organization of American States had worked for weeks to try to avert any moves to overthrow President Zelaya, said senior U.S. officials. Washington's ambassador to Honduras, Hugo Llorens, sought to facilitate a dialogue between the president's office, the Honduran parliament and the military.

The efforts accelerated over the weekend, as Washington grew increasingly alarmed. "The players decided, in the end, not to listen to our message," said one U.S. official involved in the diplomacy. On Sunday, the U.S. embassy here tried repeatedly to contact the Honduran military directly, but was rebuffed. Washington called the removal of President Zelaya a coup and said it wouldn't recognize any other leader.

Furthermore, the statements coming out of the White House regarding Honduras are significantly less equivocating.

We call on all parties in Honduras to respect the constitutional order and the rule of law, to reaffirm their democratic vocation, and to commit themselves to resolve political disputes peacefully and through dialogue.

I am having an awful lot of trouble squaring these two situations without becoming cynical and frankly frightened by our foreign policy. In Iran, there was a popular and peaceful uprising that demanded fair and honest elections and an end to tyranny. In Honduras, the President ignored the Supreme Court and moved forward with a referendum that very Supreme Court deemed un Constitutional. As such, both the Supreme Court and the Congress acted in conjunction with each other. The president saw the situation in Iran as one he needed to maintain a passive and even handed approach to. Meanwhile, in Honduras, he sided with the President, and he meddled both in words and deeds. It's even more disturbing when you add that Zelaya is a leftist alligned with Hugo Chavez. Exactly, which side is our president on?

Coup in Honduras

This morning, in a daring pre dawn raid, the President of Honduras, Manuel Zelaya, was arrested by military force and forced into exile in Costa Rico. The Congress then elected its leader, Roberto Micheletti, to replace Zelaya. The military acted on the order of the Honduran Supreme Court.

The whole dispute started when Zelaya attempted to serve another term in office. He was about to finish his constititutionally mandated final term next year. He wanted to serve another term. As such, he planned on having a referendum allowing him to serve another term. His opponents said that a referendum was not the Constitutionally prescribed way to allow him to serve another term.

As such, the military not only began opposing Zelaya, but the referendum. As such, his Defense Minister, Edmundo Orellana, was removed and so was General Romeo Vasquez, the head of the armed forces. Meanwhile, the heads of the army and marines resigned in protest.

Then, two days ago, the Honduran Supreme Court ruled the referendum unconstitutional. The President, Manuel Zelaya, went ahead with the referendum even though the military, the judiciary and the legislature were now all against him. Then, this morning, the Supreme Court ordered an arrest warrant for the President.

Zelaya is a leftist and an ally of Hugo Chavez. He was, at least in the opinion of his opponents, attempting to turn the country into a dictatorship much like Chavez has in Venezuela.

Meanwhile, the U.S. worked behind the scenes for the last couple days to stop the coup. (H/T to Hotair

The Obama administration worked in recent days to prevent President Zelaya's ouster, a senior U.S. official said. The State Department, in particular, communicated to Honduran officials on the ground that President Obama wouldn't support any non-democratic transfer of power in the Central American country.

"We had some indication" that a move against Mr. Zelaya was a foot, said a U.S. official briefed on the diplomacy. "We made it clear it was something we didn't support."

Secretary of State Hillary Clinton joined Mr. Obama Sunday in criticizing the Honduran coup and calling for the restoration of the democratic process.

The President is calling on all sides to "respect Constitutional order". Television stations aren't working today and power is out in many parts of Honduras. It goes without saying that the situation remains "fluid".

The Hubris of Humility

In last night's talking points memo, O'Reilly did a fine job of describing President Obama's strategy so far in foreign policy.

In Europe, Mr. Obama went out of his way to tell the world how he is going to correct what he believes were the mistakes of the Bush administration

...

The Obama strategy is to clear the decks of any anti-Bush hostility and present a new day dawning. He wants to make the nations of the world our partners in problem solving, and if he has to eat a little crow to do that, he'll butter up the bird.

Of course, while former President Bush is the biggest recipient of his ire, the current president is in fact criticizing our modern day foreign policy in general. After all, as he once said

too often we dictate the terms of the debate

and

we speak when we should listen

He will turn the page not only the wrongs of President Bush, but on all the wrongs of America. He will listen. Listen he did. He listened for nearly an hour while Marxist Daniel Ortegan went into an anti American diatrobe and said nothing. Later on, he only mused that he was glad that Ortega didn't blame him (President Obama) for things that happened when he was very young. That was rather revealing. The president wasn't terribly concerned if Ortega blamed his country, just not him personally.

President Obama will have a new sort of a foreign policy philosophy. This starts with a whirlwind tour in which he apologizes for every previous American wrong, real and imagined, all over the globe. It started in Europe, move to Mexico, and hat its latest stop in Trinidad and Tobago. What is the effect? Well, his advisor, David Axelrod, summed it up.

What’s happened is anti-Americanism isn’t cool anymore,” Mr. Axelrod said, speaking to an audience of a few hundred at a conference in Washington sponsored by the Religious Action Center of Reform Judaism.

“This president has not only engaged the leaders of the world, he’s engaged the people of the world,” Mr. Axelrod said, arguing that Mr. Obama’s approach to foreign policy has restored “a sense of humility” that “was missing” in the past.

He's right. It isn't cool to bash America anymore. After all, why bash America, when its leader beats you to it. It is an old trick. Beat your critics to the punch. Before they have a chance to bash you, you bash yourself. It's the best part of self deprecating humor.

There's a bit of irony in all of this. President Obama is convinced that America has been doing it wrong all this time. America has been far too arrogant. It's time for more humility and he's just the one to do it. In fact, the only real arrogance is his own. He isn't merely bashing President Bush's foreign policy but America's in general in our recent history, all the way back to JFK. This nation, which brought freedom and democracy to millions in multiple continents, is the one that has been getting it wrong all this time. It's his job to fix it all. Job one is telling the rest of the world about each and every mistake. Job two is taking seriously the views of each and every tyrant and despot that has a beef with us.

Of course, so far at least, all of this "humility" has given us absolutely nothing tangible. We got no troops in Afghanistan. We got nothing of substance on North Korea. Iran put an American in prison for years on trumped up charges. His supporters continue to say that these things take time. That's true. His presidency has a lot more days left than days past. Maybe, we, critics, are wrong. Maybe after some more buttering up soon everyone will come to work with him constructively. They just haven't yet. I'd just like to know how much time he needs. At what point will he see that maybe, just maybe, his approach is wrong.

For me, it's rather simple. What sort of arrogance can be behind a belief that hundreds of years of history is wrong while your own view point is right. If America is so wrong, why are we more often than not on the right side of history? if we are on the right side of history more often than not, maybe that's what you tell the rest of the world rather than focusing on each and every mistake. That's what I would have told Ortega, but then again, my view of foreign policy isn't nearly is humble as the president's.

The Handshake II: the Propaganda Boon and Nightmare

Following their embrace last night, Hugo Chavez saw another opportunity for a propaganda boon this morning.






Jake Tapper is reporting that the book that Chavez gave President Obama the book, Open Veins of Latin America: Five Centuries of Pillage by Eduardo Galeano. It's a book that essentially blames U.S. imperialism for every problem in Latin America, and to add insult to injury, the book is in Spanish, a language the president doesn't speak.



The video has become an instant sensation, but the propaganda value is only the latest in a string of propaganda coup for Chavez at this conference. The photo of the leaders taken last night was instantly posted in the web by the Chavez administration. The photo of the two men shaking hands enjoyed the top billing, page 1 above the fold, in the New York Times today. Now, the speculation is that relationships between the two nations are "thawing".



The White House has been busy downplaying the two handshakes, but the propaganda value has been maximized by Chavez. Chavez is already claiming that Obama initiated the handshake. The images have been broadcast the world over, and as such, Chavez gains not only much needed attention but credibility.



Hopefully, this will teach the president a valuable lesson of caution when deciding to meet with thugs and tryants. He has given the enemy much unnecessary leverage. This was a chance meeting at a conference. What kind of propaganda value would Obama give our enemies if the meeting was scheduled?

This Photo Op Will Reverberate Everywhere

I have said over and over that President Bush's biggest foreign policy error was ever trusting Vladimir Putin. He allowed that tyrant his trust. He gave him several powerful photo ops. Putin repaid Bush's trust by turning a budding democracy into a near totalitarian state. When this phot op was created for Bashar Assad.

Within weeks, Assad turned up the heat and he began to crack down on his critics throwing significant numbers of political opponents in jail in a way that he hadn't before this photo was taken. The legitimacy that this photo and the meeting created gave him the leverage he needed to crack down on his opponents in a way he wasn't before the meeting.

Now, we have another photo op that will strengthen our enemies, weaken our friends, and it will likely lead to a crackdown on dissidents of an oppressive regime.

This embrace will give Hugo Chavez a legitimacy that he desperately needs. That legitimacy gives him more leverage in the region. There is a power struggle in South America between the faction lead by Chavez and other socialists in coutries like Bolivia and budding democracies lead by our allies in Colombia.

Such an embrace also sends the signal that you need not reform or end tyranny to be legitimized by America. Totalitarians all over the world are rejoicing because America just said with this handshake that they don't need to change and they will be recognized as equals by America just the same. Stay tuned, we will likely give the same kind of treatment to Mr. Castro. After the bow to the King of Saud, this continues a symbolism of respect to despots and tyrants all over the world. You can bet that this photo will be used by anti America media all over the world to legitimize this tyrant.

In geopolitics, symbolism is awfully important and this sends the worst kind of symbol.

Obama's Foreign Policy Unravels (Updated)

Yesterday, I surmised that John McCain had made an astute political maneuver in challenging Obama to take a trip together to Iraq. I've thought about it some more and in reality, it is not so much that McCain acted as a skillful politician. What's happening is that Barack Obama's multiple foreign policy statements are giving all his opponents plenty of room to define him just how they want.

First, let's all remember agains a bit of political wisdom from Dick Morris. He has stated on more than one occasion that the position that is most concise, simple, and easy to explain is the one that will win politically more times than not. Now, on nearly every issue of foreign policy, Barack Obama's position is muddled, not precise, and very difficult to understand.

It really all started in the Youtube debate.

Would you be willing to meet separately, without precondition, during the first year of your administration, in Washington or anywhere else, with the leaders of Iran, Syria, Venezuela, Cuba and North Korea in order to bridge the gap that divides our countries?

I would

Now, taking aside the validity of the policy, politically what he said passed the Dick Morris test at the You Tube debate. Whether you agree with it or not, back in July of 2007, this policy was clear, precise and easy to explain.

Since then though, this policy has been muddied so much that it is no longer recognizable. The best proof is this youtube search. Just on the first page, there are five different positions taken by Obama or one of his surrogates. At this point, it is not at all clear what Obama plans to do vis a vis Mahmoud Ahmadinejad.

Today, the right blogosphere is buzzing about this New York Times article. Even as he tries to explain his position here it is nothing if not confusing.

I didn’t say that I would meet unconditionally as John McCain maintained, because that would suggest whether it was useful or not, whether it was advancing our interests or not, I would just do it for the sake of doing it,” he said. “That’s not a change in position, that’s simply responding to distortions of my position.”

He added: “I think if we lay out repeatedly and clearly my position, ultimately I think I’ve got the majority of the American people on my side on this issue.”

So, another words, he won't meet unconditionally but will meet with no pre conditions. Huh...At this point, Barack Obama gets an F on the Dick Morris test of political conciseness, clarity, and terseness with regards to Iran.

On Latin America, Barack Obama has similary problems with clarity. Jake Tapper says it best.

one of the obvious high priorities in my talks with President Hugo Chavez would be the fermentation of anti-American sentiment in Latin America, his support of FARC in Colombia and other issues he would want to talk about."

OK, so a strong declaration that Chavez is supporting FARC, which Obama intends to push him on.

But then on Friday he said any government supporting FARC should be isolated.

"We will shine a light on any support for the FARC that comes from neighboring governments," he said in a speech in Miami. "This behavior must be exposed to international condemnation, regional isolation, and - if need be - strong sanctions. It must not stand."

So he will meet with the leader of a country he simultaneously says should be isolated? Huh?

So, Obama is simutaneously planning on isolating Venezuela and attempting to sit down one on one with Chavez. Again, huh. Here is yet another failure of the Dick Morris political test.

Ironically enough, Obama shows the least amount of clarity on his position on Iraq. He has been stating that he plans on setting timetables for withdrawal and plans on moving troops out of the theater immediately, but at yet another debate, he wouldn't commit to pulling all troops out by the end of his first term.



So, think about it. Barack Obama makes a commitment to set timetables and begin immediate withdrawals but can't make a commitment to be done withdrawing four years later. The real problem for Obama on Iraq is explained by Morris himself.

Here the Iraq issue opens a real opportunity for McCain, where otherwise his support for the war would be a real negative. Iraq is a lot like Social Security. Everyone knows there is a problem, but any solution is immediately shot down. The issue earned the label “the third rail” in our politics, a status that was underscored when Bush’s momentum from his 2004 reelection was smashed against the rocks of Democratic and elderly opposition to his Social Security reform plan.

So it is with Iraq: He who proposes an alternative is doomed. McCain’s position, that we have to stay until we win, is far from popular, but it’s a lot better than unilateral and immediate withdrawal.

And Obama’s opposition to the war begs a host of questions: Shall we retain any presence? What about al Qaeda? What happens if the government falls? Can we let Iran take over? Obama will dither and seem far from decisive as he answers each of these questions. They will make him look terrible, just as Kerry — in opposing the war after voting for it — looked like a flip-flopper.

The problem for Obama is that while he is in favor of withdrawal he hasn't really explained how it will work logistically. As Morris points out, there are all sorts of hypotheticals that would arise that Obama will need to address in explaining his withdrawal plan. He has already reserved the right to put troops back into the theater if there is a genocide, and that is an almost certainty if we pull out too early. By the time Obama is done explaining each and every hypothetical, his withdrawal plan will be so full of caveats you won't be able to recognize it. Like Morris pointed out, staying in Iraq and winning may not be popular but it is clear, concise and easy to explain.

The pundits will spend the rest of the campaign analyzing and hyperanalyzing Obama's positions, along with John McCain on all of these issues, and I usually don't want to follow the cattle call of pundits. I will make the exception here. I see Obama's clarity problem rooted in two flaws. The first flaw is that Obama is simply not very experienced on foreign policy. He started with what he thought was an idealistic and fresh approach of meeting unconditionally with our enemies. I suspect he didn't expect to be attacked so viciously. Once he was, he frankly didn't know how to counter, and soon it was an unrecognizable mess. The second problem is that he approaches all foreign policy matters, as well as almost all matters period, from the perspective that Bush is wrong. That may work with idealogues, however you don't form a clear, coherent message starting from that position.

Obama's problems with regards to these issues are numerous. All of the inconsistencies and vague answers re inforce exactly what his opponents are trying to portray him as...inexperienced and naive. Furthermore, it is impossible for Obama to assess the damage of all these statements. Most of these will be the subject of numerous campaign commercials and it remains to be seen just how effective they will be. They certainly have the potential to be effective. The best thing Obama can do is move the debate from foreign policy to domestic issues where his positions are a lot clearer.

Update:

Barack Obama's advisor, , said something simply remarkable this morning.




Here is a transcript of the relevant part.

I think we would want to go over there and talk to them and see what sort of difficulties they're facing and see how it is that we can begin to carefully remove them and carefully bring them back to their families and bring them back to the United States

This is stunning and remarkable. Barack Obama has just uneqivacably stated that we have lost in Iraq, and any trips would be made only to arrange our retreat. Keep in mind that he has NOT visited the country since the surge began. Thus, he has made his analysis entirely through third sources. Not only is this obscenely irresponsible, admitting it is politically brain dead. Painting him as a naive, intransigent, defeatist is now only a matter of putting these statements into several advertisements.

Barack Obama's Curious Latin American Philosophy

Yesterday, I pointed out a minor gaffe by Barack Obama regarding Hugo Chavez. In a speech on Latin America, Obama blamed Bush for the election of Hugo Chavez. Of course, Bush was still Governor of Texas in 1998 when Hugo Chavez was elected.

It turns out that this was not his biggest gaffe. Jake Tapper picks it up...

On Thursday Obama told the Orlando Sentinel that he would meet with Chavez and "one of the obvious high priorities in my talks with President Hugo Chavez would be the fermentation of anti-American sentiment in Latin America, his support of FARC in Colombia and other issues he would want to talk about."

OK, so a strong declaration that Chavez is supporting FARC, which Obama intends to push him on.

But then on Friday he said any government supporting FARC should be isolated.

"We will shine a light on any support for the FARC that comes from neighboring governments," he said in a speech in Miami. "This behavior must be exposed to international condemnation, regional isolation, and - if need be - strong sanctions. It must not stand."

So he will meet with the leader of a country he simultaneously says should
be isolated? Huh?

Here is how the campaign responded to the perceived inconsistency.

The Obama campaign says there's nothing unusual about proposing the isolation of a country at the same time a President talks about meeting with its country's leader. (The Obama campaign cites how the U.S. is talking to North Korea via the Six-Party talks as an example. Though it might be observed, those diplomatic efforts are quite different than a presidential-level meeting.)

Here is an excerpt of what Obama sees wrong with our Latin American policy and what he would do to resolve it.

Since the Bush Administration launched a misguided war in Iraq, its policy in the Americas has been negligent toward our friends, ineffective with our adversaries, disinterested in the challenges that matter in peoples’ lives, and incapable of advancing our interests in the region.

...

That is the record – the Bush record in Latin America – that John McCain has chosen to embrace. Senator McCain doesn’t talk about these trends in our hemisphere because he knows that it’s part of the broader Bush-McCain failure to address priorities beyond Iraq. The situation has changed in the Americas, but we’ve failed to change with it. Instead of engaging the people of the region, we’ve acted as if we can still dictate terms unilaterally. We have not offered a clear and comprehensive vision, backed up with strong diplomacy. We are failing to join the battle for hearts and minds. For far too long, Washington has engaged in outdated debates and stuck to tired blueprints on drugs and trade, on democracy and development -- even though they won’t meet the tests of the future.

...

It’s time for a new alliance of the Americas. After eight years of the failed policies of the past, we need new leadership for the future. After decades pressing for top-down reform, we need an agenda that advances democracy, security, and opportunity from the bottom up. So my policy towards the Americas will be guided by the simple principle that what’s good for the people of the Americas is good for the United States. That means measuring success not just through agreements among governments, but also through the hopes of the child in the favelas of Rio, the security for the policeman in Mexico City, and the answered cries of political prisoners heard from jails in Havana.


The first and most fundamental freedom that we must work for is political freedom. The United States must be a relentless advocate for democracy.

Now, my first question is what about the issue of free trade Senator. The so called "failed policies" that Obama refers to created one of the biggest trading alliances in the world in CAFTA. It is a free trade agreement so lucrative to Latin America that Barack Obama has blamed it for the declining job growth all over the heartland. Certainly, if it is that lucrative to our trading partners, the Bush administration hasn't been as the Senator proclaims

disinterested in the challenges that matter in peoples’ lives, and incapable of advancing our interests in the region.

If anything, he has been to interested in their challenges. So, interested in fact, that the Senator has seen it boomerang on our own economy. Obama's double talk continues...

Instead of engaging the people of the region, we’ve acted as if we can still dictate terms unilaterally.

Of course, CAFTA was agreed upon by more than ten nations, all of which are considered in Latin America (besides the U.S. itself), and yet Obama wants to renegotiate that agreement along with NAFTA. Who exactly is "dictating the terms unilaterally" here?

Furthermore, he refuses to allow the passage of our free trade agreement with Colombia. Colombia has bent over backwards to finalize the terms of this agreement. Furthermore, Colombia is a beacon of democracy and a counterweight to the leftists totalitarians in Venezuela, Bolovia, and Cuba in the region.

Barack Obama makes no mention of the importance of free trade for Latin America. I suppose he thinks that those impoverished nations can rise from third world status without access to the biggest market in the world.

Then, there is the gaffe in which he simultaneously says that Venezuela needs to be engaged and isolated. This is all part of a perverted geopolitical worldview that Obama has that sees engagement with our enemies while we punish our biggest allies where it hurts most...free trade.

Here's the thing that Obama doesn't seem to realize. Any one on one meeting with the likes of Hugo Chavez will have at its center for Chavez more free trade with the U.S. While Chavez may spew anti American vile, he does know where his proverbial bread is buttered, the U.S. market.

Obama's Ridiculous, Uneducated and Totally Hypocritical Statement on Iran

Barack Obama made a statement today regarding Iran, Syria and other bad menaces that should give everyone pause.

Iran, Cuba, Venezuela, these countries are tiny compared to the Soviet Union. They don't pose a serious threat to us the way the Soviet Union posed a threat to us,” Obama said

...

Obama seemed to brush off these concerns about Iran’s threats while campaigning in Oregon. “Iran, they spend 1/100th of what we spend on the military. If Iran ever tried to pose a serious threat to us, they wouldn't stand a chance,” Obama said.

The ironic hypocrisy of this statement is astounding. This is the same candidate that has been against the Iraq War from the beginning calling it a strategic blunder. He claims we cannot defeat a group of terrorists with even less military resources than Iran militarily, and yet he brushes off a war with Iran as though that would be a cakewalk. Of course, everything that applies in Iraq would apply in Iran, and yet he makes that war seem so easy.

Furthermore, the mullahs and Ahmadinejad are different than the Soviets in a very important way. The Soviets believed in the basic human condition of self preservation. One thing they cherished is their own existence. The mullahs and Ahmadinejad aren't like that at all. They would welcome an all out war as long as millions of Americans go with them because they believe that is their ultimate destiny anyway.

Furthermore, Iran doesn't need to attack us directly. They can hand off any weapon to any terrorist group including Hamas and Hezbollah and have them use it on our nation.

Barack Obama is caught with a serious foreign policy gaffe. He is on record as wanting to meet with our worst enemies with no pre conditions, and that is dangerous. Because he is now in a position to defend the indefensible, he continues to dig a hole deeper and deeper and this latest statement is yet another example.

Just recently, three prominent Democrats distanced themselves from the policy of unconditional talks with Iran.

Sen. Joseph R. Biden Jr. of Delaware, former Sen. Gary Hart of Colorado and former Rep. Harold E. Ford Jr. of Tennessee distanced themselves from Mr. Obama's position, each saying that preconditions for any such meeting would be essential.

"I'll concede, you cannot meet with foreign leaders — with terrorists, rather, those that lead rogue nations — without some conditions," Mr. Ford said on NBC's "Meet the Press."

That's a large concession because that is the center piece of the Obama doctrine. The article continues...

"I don't think Barack Obama or any other president is going to meet with a head of state without lower-level discussions preceding that," he said on CNN's "Late Edition." "What you do is send diplomats and negotiators to explore areas of mutual interest. And if it does seem profitable, then you go to the heads of state."

Mr. Biden, who is chairman of the Senate Foreign Relations Committee and sought the Democratic presidential nod this year, said Mr. Obama gave the "wrong answer" in the debate, but added that the senator from Illinois has "learned a hell of a lot."

Of course, this wasn't simply a wrong answer in a debate. On his own web site, Barack Obama touted himself as being the only candidate ready to proceed with unconditional negotiations with our enemies.

The fact is that Barack Obama's foreign policy is the center piece of someone with little foreign policy experience. That's why he thinks that sitting down with Ahmadinejad is a good idea. He simply doesn't know any better. The longer he continues to try and defend the policy the worse it is for him.


Here is how the McCain campaign responded...

Before I begin my prepared remarks, I want to respond briefly to a commentSenator Obama made yesterday about the threat posed to the United States by the Government of Iran. Senator Obama claimed that the threat Iran poses to our security is “tiny” compared to the threat once posed by the former Soviet Union. Obviously, Iran isn’t a superpower and doesn’t possess the military power the Soviet Union had. But that does not mean that the threat posed by Iran is insignificant. On the contrary, right now Iran provides some of the deadliest explosive devices used in Iraq to kill our soldiers. They are the chief sponsor of Shia extremists in Iraq, and terrorist organizations in the Middle East. And their President, who has called Israel a “stinking corpse,” has repeatedly made clear his government’s commitment to Israel’s destruction. Most worrying, Iran is intent on acquiring nuclear weapons. The biggest national security challenge the United States currently faces is keeping nuclear material out of the hands of terrorists. Should Iran acquire nuclear weapons, that danger would become very dire, indeed. They might not be a superpower, but the threat the Government of Iran poses is anything but “tiny.”

“Senator Obama has declared, and repeatedly reaffirmed his intention to meet the President of Iran without any preconditions, likening it to meetings between former American Presidents and the leaders of the Soviet Union. Such a statement betrays
the depth of Senator Obama’s inexperience and reckless judgment. Those are very serious deficiencies for an American president to possess. An ill conceived meeting between the President of the United States and the President of Iran, and the massive world media coverage it would attract, would increase the prestige of an implacable foe of the United States, and reinforce his confidence that Iran’s dedication to acquiring nuclear weapons, supporting terrorists and destroying the State of Israel had succeeded in winning concessions from the most powerful nation on earth. And he is unlikely to abandon the dangerous ambitions that will have given him a prominent role on the world stage.

“This is not to suggest that the United States should not communicate with Iran our concerns about their behavior. Those communications have already occurred at an appropriate level, which the Iranians recently suspended. But a summit meeting with the President of the United States, which is what Senator Obama proposes, is the most prestigious card we have to play in international diplomacy. It is not a card to be played lightly. Summit meetings must be much more than personal get-acquainted sessions. They must be designed to advance American interests.

An unconditional summit meeting with the next American president would confer both international legitimacy on the Iranian president and could strengthen him domestically when he is unpopular among the Iranian people. It is likely such a meeting would not only fail to persuade him to abandon Iran’s nuclear ambitions; its support of terrorists and commitment to Israel’s extinction, it could very well convince him that those policies are succeeding in strengthening his hold on power, and embolden him to continue his very dangerous behavior. The next President ought to understand such basic realities of international relations.”

Last week, I pointed out that Barack Obama made a tactical political error by forcing foreign policy into the spotlight. As he continues to make naive statements that will bear out even more. On the other hand, the future of our foreign policy is a debate worth having, and thus it is a good thing that both Barack Obama's and John McCain's foreign policy vision are now front and center.

Dick Morris in Bolivia: Struggling for Independence

Last night, Dick Morris joined H&C from Bolivia. Morris is down there trying to help eastern provinces, Beni, Pando, Santa Cruz and Tarija gain their independence from the leftist government.

Bolivia's leader, Evo Morales, is a well known ally of Hugo Chavez in the region. (in fact, Venezuela gives Bolivia 100 million dollars yearly in aid) While Bolivia's economy has gone through a period of privatization over the last twenty years, it continues to be largely influenced by socialism. Now, it seems that a confrontation between four Eastern provinces and the Morales government is coming to a head.

differences with the four provinces, where officials approved statutes last week that would give them control over petroleum royalties and other functions, such as creating their own police forces.

After these provinces took steps to create more autonomy in their own regions, the Morales government responded by amending the Constitution...

acknowledged that the dispute had intensified after his supporters approved a controversial draft constitution.

Still, Mr. Morales said he believed that the constitution, which would bolster indigenous rights and dismantle large landholdings in eastern Bolivia, was legitimately approved despite a boycott of the vote by the political opposition and the abrupt transfer of the constitutional assembly to Oruro, a Morales bastion in the western highlands.

While this referendum must still pass through the national referendum, tensions are quite high. The context of this dispute is quite complicated. First, Morales is of Aymara descent,

a native ethnic group in the Andes and Altiplano regions of South America; about 2.3
million live in Bolivia, Peru, Northern Chile, and Northwestern Argentina (in particular in Salta Province). They lived in the region for many centuries before becoming a subject people of the Inca, and later of the Spanish in the 16th century

This makes Morales the first indigenous leader of Bolivia. His sharp anti American rhetoric make him a lightning rod. For instance, here is how he described the American economy...

The worst enemy of humanity is U.S. capitalism. That is what provokes uprisings like our own, a rebellion against a system, against a neoliberal model, which is the representation of a savage capitalism. If the entire world doesn't acknowledge this reality, that the national states are not providing even minimally for health, education and nourishment, then each day the most fundamental human rights are being violated.

As such, he has moved aggressively to nationalize many vital industries most notably natural gas.

As of May 1, 2006, President Morales signed a decree stating that all natural gas reserves were to be nationalized: "the state recovers ownership, possession and total and absolute control" of hydrocarbons (Bolivia has the second largest resources of natural gas in South America — 1.38 trillion cubic meters — after Venezuela). He thus put to some effect his electoral promises made during the various Gas Wars, declaring that "We are not a government of mere promises: We follow through on what we propose and what the people demand."

The area which the four "rogue" provinces are located on is rich in natural gas. Morales' drive to nationalize the industry also creates a situation in which their fruitful natural resource is rendered to a central government that the provinces don't believe is looking out for them. Morris has allied himself with these provinces and no doubt this story is constantly evolving.

There is more at stake than whatever internal domestic issues this addresses in Bolivia. In Venezuela, there was also nearly a grass roots uprising when Chavez closed down a television station. If this particular uprising is successful it may signal that Chavez' brand of leftism is dying in the region and that the folks in the region are rejecting their demagoguery. Here enters Dick Morris who has allied himself with the four provinces seeking their independence. This story is sure to evolve over the next several months and I will track it.