Basra Update

BASRA UPDATE....So how did the Iraqi security forces do in their battle against the Mahdi Army in Basra? Al-Zaman reported earlier this week that "thousands" of police officers and "at least two army regiments" had either defected or refused to fight, but I've seen no other confirmation of that until today. Here's the Washington Post:

A senior official in Iraq's Defense Ministry, who spoke on condition of anonymity because he was not allowed to discuss military operations publicly, said Iraqi troops were overwhelmed by the second day of fighting.

....The official said he estimated that 30 percent of the Iraqi troops abandoned the fight before a cease-fire was reached. He also said that soldiers had been hindered by ammunition and food shortages and that some Iraqi police troops, who were supposed to be backing the Iraqi army, had actually supported the militias.

...."If the British and American forces were not there, the Mahdi Army would have gained a victory," he said.

That would put the number of nonperforming troops at about 4,000. Now here's the New York Times:

A senior American military official said that he understood that 1,000 to 1,500 Iraqi forces had deserted or underperformed....Three officials said that among those who had been relieved of duty for refusing to fight were Col. Rahim Jabbar and Lt. Col. Shakir Khalaf, the commander and deputy commander of an entire brigade affiliated with the Interior Ministry.

And this from CNN: "A closely held U.S. military intelligence analysis of the fighting showed that Iraqi security forces controlled less than a quarter of the city [of Basra], according to U.S. officials in the United States and Iraq. They said Basra's police units were deeply infiltrated by members of al-Sadr's Mehdi Army."

So anywhere from 1,000 to 4,000 troops refused to fight — and if I had to guess, I'd say that the real number is closer to the high end than the low — and by the time fighting was over the army controlled only a quarter of Basra. Not a good sign.

In related news, Muqtada al-Sadr is calling for a million-man march in Najaf to protest the American occupation; Maliki is apparently set to break the truce negotiated last weekend already; and the Sunni tribes are pissed off that Maliki is hiring 10,000 new security forces from local tribes even though he's been telling them for months that no more slots are available.

And the good news? Well, things are relatively calm for the moment and the Iraqi army, though bloodied, is still intact. Take that for what it's worth if you're the optimistic type.

Leverage and Exuberance

LEVERAGE AND EXUBERANCE....A couple of days ago I read someone, somewhere, suggesting that the problem with Wall Street these days is that it's just too damn easy to make money. Practically anything you put your hands to generates wild truckloads of cash, and this promotes reckless behavior.

Thanks to my rapidly declining brainpower, I don't remember where I saw this. Which is too bad, because I wanted to write a post saying that I think it's wrong. In fact, I suspect it's 180 degrees wrong. It strikes me that the real problem is that in recent years markets have become so hyper-efficient that it's really hard to make lots of money from purely financial transactions. The competition is too good, spreads are too thin, computers are too powerful, and trading windows are too short. So what to do?

Two things. The first is to rely on absolute mountains of leverage. If a particular kind of hedge offers a potential spread of, say, 0.1%, then you need to invest a billion dollars to even begin to make any serious money. Obviously this makes the downside risk enormous if your bet turns out to be wrong.

The second is.....what to call it? Not fraud, certainly. Not that. Perhaps hocus pocus? Agressive salesmanship? Exuberance? Whatever.

Over at Calculated Risk, Tanta picks up on this theme, arguing that our current credit crisis isn't really due to the rocket-science complexity of CDOs and SIVs, but rather due to excessive leverage and excessive, um, exuberance. The problem is that Mortgage Backed Securities are, fundamentally, sort of boring and low yielding, so something had to be done about that:

The lurking concept here is "leverage." You want to make the big bucks investing in MBS? You leverage them. That's where those CDOs came from. A whole lot of this complexity is driven by the "need" to goose the yield, not by some essential opacity of the underlying credits....The complexity came in because you can't get a tranche paying 12% out of a bunch of loans that pay 8% unless you create complex cash-flow structures hedged by complex rate swaps leading to re-securitization of tranches in new vehicles (parts of the MBS become CDOs, for instance).

Of course, a mania for leverage is nothing new: the stock market crash of 1929, for example, was partly fueled by low margin requirements that caused investors to take huge losses when the market started to tank. (Margin requirements were eventually raised after the creation of the SEC in 1934.) More recently, the collapse of the hyper-leveraged hedge fund Long Term Capital Management in 1998 prompted the following warning from Alan Greenspan and Robert Rubin:

The events in global financial markets in the summer and fall of 1998 demonstrated that excessive leverage can greatly magnify the negative effects of any event or series of events on the financial system as a whole....Although LTCM is a hedge fund, this issue is not limited to hedge funds. Other financial institutions, including some banks and securities firms, are larger, and generally more highly leveraged, than hedge funds....The near collapse of LTCM illustrates the need for all participants in our financial system, not only hedge funds, to face constraints on the amount of leverage they assume.

Well, perhaps Wall Street did need to "face constraints" on their use of leverage, but it turns out that a stern talking-to wasn't enough to get their attention. And so we end up where we are today. We still need to restrain the use of leverage among our exuberant friends on Wall Street, and considering the price we're paying for all this leverage and exuberance, this time the restraint needs to be a little more concrete. This is why, at a minimum, we need new regulations requiring consistent capital requirements among all financial institutions.

And the "exuberance" part of all this? Well, that's where the rating agencies come in. For more on that, check out this post from Bruce Carruthers at Crooked Timber.

Leadership

LEADERSHIP....Barack Obama says, "We can't just tell people what they want to hear, we need to tell them what they need to hear." But does Obama actually do that? Alexander Russo isn't so sure after taking a look at a late-90s controversy in Chicago over who should have the authority to fire school principals: local councils or reformist superintendent Paul Vallas?

Obama was uniquely well-placed to take the lead in mediating this battle. He had a relatively strong background in community and education issues. He was friends and pickup-basketball buddies with Arne Duncan, who was then in charge of magnet schools (and has since taken over Vallas' job). Obama also knew Vallas, who liked him. Then, as now, he was considered a politician who could unify people and resolve challenging conflicts.

....For several months, Obama didn't indicate clearly where his sympathies lay. He didn't join with protesters and other legislators who swarmed public events denouncing the Vallas proposal. He didn't talk to the press about the importance of community engagement for schools or the unfairness of diminishing the influence of the 5,500 elected LSC members. Obama kept tabs on the negotiations through his staff, met occasionally with local-control advocates, and, according to those who were involved, sometimes provided ideas and advice in private. But that was about it. Some local advocates weren't even sure whether he would ultimately be on their side or not. And many worried that without someone like Obama to stop it, the Vallas juggernaut would overrun any opposition.

....Only after [support for Vallas had collapsed] did Obama come out publicly in support of local school councils, making a brief speech (PDF) on the Senate floor to codify the final agreement preserving local councils' authority....In being so late to the debate, however, Obama didn't really have to stand up to anyone — not the groups he was affiliated with, not Vallas, not Chicago Mayor Richard M. Daley.

This is only a tidbit, not an indictment. Maybe it just wasn't an issue Obama considered important enough to spend political capital on. Maybe he knew Vallas's effort to wrest control from the local councils was doomed from the start and saw no point in getting involved. Who knows? But it's still an interesting tidbit.

YouTube - Nas: Hip Hop is Dead: Album Release Party Speech (Episode 3)

Hip Hop Is Dead - Wikipedia, the free encyclopediaHip Hop Is Dead is a 2006 album by American hip-hop artist Nas that was released on December 19 , 2006 . The LP is Nas’ eighth album of all-original material, and his first album .

Hip Hop Is Dead - Wikipedia, the free encyclopediaHip Hop Is Dead is a 2006 album by American hip-hop artist Nas that was released on December 19 , 2006 . The LP is Nas’ eighth album of all-original material, and his first album .

Nas Declares ‘Hip Hop Is Dead’The album is titled “Hip-Hop Is Dead, according to a Def Jam representative, who also confirmed the September release to Billboard.com. Nas capped off his roughly 15-minute set .

[link][more] Internet Game That Allows You To Be Crazy Like Heather Mills

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Asustek Computers has gone ahead and broke the rules with the Eee PC, a small laptop with a five-inch screen and free open-source software. (Jan. 10) Tech Test: Eee Laptop PC Shreds the Rules

German astronaut Hans Schlegel floated out of the international space station for his first spacewalk on Wednesday, two days after an illness forced the shuttle Atlantis crew member to skip an outing to install a new European lab. (Feb. 13) Raw Video: Sick Astronaut Spacewalks

Rene Ayangma, a 20-year-old star athlete and full-time university student who was studying to become a doctor, died suddenly while training for a boxing match at a Prince Edward Island gym Tuesday. He was the second young athlete to die in Canada this week. On Monday, Windsor OHL hockey player Mickey Renaud, 19, collapsed and died at his home. Ayangma “had just started (mixed martial arts’) ultimate fighting and he was being trained to go in matches across Canada,” said friend Kayla Arsenault, describing Ayangma as a dedicated athlete who loved all sports and always won his matches. She said he had never taken drugs or steroids and rarely ever drank because “he didn’t have time with all his studying” to become a doctor. The province’s chief coroner is investigating and an autopsy was scheduled for yesterday. Mixed martial arts: 20-year-old P.E.I. athlete dies while training

It’s hardly surprising Timothy Strickland’s tenure with the Alouettes is over after six seasons. Nonetheless, the veteran strong-side linebacker is upset the organization kept him waiting this long before deciding his future.

Strickland cut, rips into Popp

Lobbying Against Cliche of Casino-Rich Tribes

Though many lobby shops have found a successful niche as a subsidiary or a practice within a law firm, it’s not uncommon for lobbyists to chafe under law firm culture.
A New Lobbying Beachhead

Faced with the misconception that every tribe is casino-rich, 300 Native Americans went to Capitol Hill yesterday and today to lobby lawmakers to help turn around deplorable housing conditions in Indian Country. Lobbying Against Cliche of Casino-Rich Tribes

1994 BMW 5 Series 525I from South Africa - Comments (Carsurvey.org)“BMW at it’s best!” What things have gone wrong with the car? All of the following items of maintenance have been done during my ownership over about 22000KMs.