Archive for February, 2009

Not getting it dept. : Sri Lanka and the Tigers

February 4, 2009

I believe that probably the most under-reported story of 2008 was states finally beginning to beat insurgencies. Yes, there was the Iraq surge in 2007. And lots of states are still losing. But the two oldest, toughest, generally-best-regarded insurgencies took major, major hits, to the extent of being close to defeat.  I mean the Tamils and the FARC.

Remember that the Tamils were the first suicide bombers. People forget this everyday. For decades, the usual characters have said “you’ll never beat them miltarily”. Well, they’ve just about been beaten. Maybe there’s still a surprise. I hope not. I really do. But all current evidence says Sri Lanka has this thing won.

And then the West starts bleating about civilians. Not getting it. It is truly awful that anyone used a cluster bomb on a hospital. Truly. No “shit happens in war” can excuse it. But what exactly do Clinton and Milliband think they’re accomplishing with this?

If I were an insurgent leader, the next time I was about to lose, I’d just blow up some civilians and wait for the West to call for a ceasefire.

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25 sets of eyes on the DPRK

February 4, 2009

I had always heard the US ‘intelligence community’ was a mess. But I had no real idea, until I read this. 16 agencies plus the DNI. And they all look at such overlapping things. With the proliferation of desks, agencies, missions, etc., I count 25 separate entities likely to be watching the DPRK. There’s a ‘mission manager’ who’s supposed to integrate, etc. – and if he has real power then maybe it works. But the inefficiency … and I somewhat doubt he has sufficient power.

Also, always gotta love the USG’s fabulous talent for abbreviation and acronym. HUMINT. SIGINT.  CNPAKSDKHFASJDHKASJ. (I made the last one up. Hopefully.).

Is GM American or Chinese?

February 4, 2009

There are all sorts of extenuating circumstances, from different seasons to CNY to yes, the extraordinary fireball that is the US auto-market right now, but still, this has some significance, from the NYT:

“For the first time, more vehicles were sold in China last month than in the United States, according to figures from General Motors.”

Later today what I want to check is whether GM produces more cars in the US or China. Now if those two numbers crossed it’d mean the US were bailing out a Chinese company …

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UPDATE : whoops, GM was comparing total vehicle sales in China to passenger sales in the US. Guess they were just trying to make a splashy point. Still doesn’t say much for their market analysis team though.

The US and North Korea’s shifting challenge

February 2, 2009

NKeconwatch has a great summary of how observers – in particular the markets – are shrugging off the latest sabre rattling, which, together with recent reports of military malnutrition (anecdotally confirmed by myself as an eyewitness in NK) means a diminishing conflict threat.  At the same time, I side with those who see the recent erratic posturing of NK as evidence of severe tension in Pyongyang (coupled with Kim’s known illness).

The CFR has now also rung the alarm bell, though one hopes that the US is far, far more prepared than this report would imply, i.e., its recommendations really should be moot. I mean, if the US has not talked to China about what to do in the event of failed succession, then God help us all.

It should go much further though; the report says that if the NK govt fails, “rapid absorption by South Korea is widely viewed as the inevitable next step”. Anyone who believes the Chinese would let this happen is living in a fantasy world. A US ally, with US troops on its soil, with a border that close to Beijing? Seriously now.

My American friends often tell me that there are institutional contexts which mean we shouldn’t read too much into something like this CFR report. I don’t know, but I sure hope they’re right.

Still no NK envoy from Obama. At least he gave Hu Jintao a courtesy call though. That was nice.

China’s debt holdings sized up

February 1, 2009

A new working paper by the CFR cobbles together a bunch of sources to estimate China’s true holdings of US debt. Two things stand out for me: one, China was doing most of the buying of US debt last year, and that’s out of newly accumulated reserves. Reports of US dependence on China are somewhat overblown, as Brad Setser shows elsewhere, but still, as the head of the CIC said, “be nice[r] to the people who lend you money”.

Next, given the massive drops in yield lately, and that I don’t know how active China is going to be in the secondary market, but SAFE may be sitting on some enormous paper profits from its bond holdings over the last couple of years (then again, there are currency movements). I wonder if anyone has crunched the numbers? Would be interesting to see how it compares to the CIC’s well-publicised losses (given the disparities in the size of the equity and debt holdings, my money’s on it well over-compensating)

A last side-point: China has been shifting out of agency debt aggressively. If that continues, it could mean a disconnect in T-bills and agency notes, which would imply mortgage rates in the US remained high, and might motivate more direct Treasury action in housing