Wall Street Bailout And The Essence Of Capitalism.
Readers of my mission statement and my other postings might know I have a bit of an obsession for externalities. This is because I think many of the big global problems can be seen as externalities, i.e. in essence examples of market failure. Global climate change is clearly such an example, as is the global financial crisis.
Chomsky correctly observes that
…Markets have inherent and well-known inefficiencies. One factor is failure to calculate the costs to those who do not participate in transactions. These "externalities" can be huge. That is particularly true for financial institutions.
Their task is to take risks, calculating potential costs for themselves. But they do not take into account the consequences of their losses for the economy as a whole.
Hence the financial market "underprices risk" and is "systematically inefficient," as John Eatwell and Lance Taylor wrote a decade ago, warning of the extreme dangers of financial liberalization and reviewing the substantial costs already incurred - and also proposing solutions, which have been ignored.
The threat became more severe when the Clinton administration repealed the Glass-Steagall act of 1933, thus freeing financial institutions "to innovate in the new economy," in Clinton's words -- and also "to self-destruct, taking down with them the general economy and international confidence in the US banking system," financial analyst Nomi Prins adds.…
The great furor over the publicly funded state bailout of the financial industry, which has just been rejected by the House, brings to further relief the inherent nature of the modern capitalist system and of neo-liberalism in particular.
Many allow themselves to be deluded about the true workings of both. The purpose of the state is to socialize risk and cost for the corporate sector, a task needed because of the existence of both positive and negative externalities (Chomsky’s comment above is suggestive of only negative externalities). Externalities are the main reason why the US “defense” budget is so high. Given positive externalities a high-tech economy, and its epistemic foundations in theoretical and applied science, requires a state sector, which in the US can be found in the Pentagon system.
I have stated in a previous article at On Line Opinion that the underlying axiom of economics (which comes from Galbraith in his Economics and the Public Purpose) is: we must make the rich happy for if they are happy nice things will happen.
Whatever effects the crisis, which is developing into a severe liquidity crisis, will have on the broader economy one thing is clear; this is a crisis first and foremost because it affects the interests and privileges of the rich. If public support is necessary because of external effects then the public has the right to set the terms of the bailout and to subject Wall Street firms benefiting from public funds to rigorous public oversight and control. It is quite clear that Wall Street would like an Indian style “clean exemption” i.e. a bailout without conditionality.
Morally speaking, the overwhelming priority for rescue should go to mortgage holders.
Notice that nobody is talking about plans to help out the most disadvantaged members of the US urban poor, who have been the most severely affected by the sub-prime meltdown. The New York Times has reported that the Republicans successfully ensured that proposed measures designed to soothe “liberal housing groups” (translation; sub-prime borrowers) were banished from the final deal reached between the executive and congressional leadership.
Following the House voting down the ~$700 billion bailout package the Times also reported that
…The collapse of the proposed rescue plan for the teetering financial system was the product of a larger failure — of political leadership in Washington — at a moment when the world was looking to the United States to contain the cascading economic crisis.…
The bailout package has attracted overwhelming popular opposition; with a strong whiff of old style class war directed by the broader population toward the Wall Street rich. This manifestation of what Australia’s Deputy Prime Minister likes to call “yesterday’s battles” (which never prevented her from coming up my way for her safe seat entry to Parliament, given to her by courtesy of extensive branch stacking) no doubt is a real source for concern.
Old battles die hard hey Julia? Why don’t you stand for Higgins when Costello retires then?
The Times also demonstrates for us the nature of democracy. They state
…While there were lawmakers who opposed the package on the merits, with Election Day just five weeks away, substantial numbers decided that to favor the bill would be to imperil their own political futures. And once the vote was under way and so few Republicans were voting aye, Democrats were disinclined to force more of their members to help pass the unpopular plan.…
You see political leadership in a democracy, in the House of Representatives no less, is not about actually reflecting popular will. Leadership is to bailout the rich despite overwhelming popular opposition.
One of the most prominent supporters of the bailout is Barack Obama, which neatly demonstrates that “change you can believe in” is put an empty slogan crafted by the multi-billion dollar PR industry (another anti-market industry).
In the same article the “Newspaper of record” also states that (expressing outrage that it was the House GOP that really sunk the package)
… So the House Republicans made the difference. Their mutiny captured just how much the Republican Party has changed from its 19th-century roots as the party of business and economic stewardship.…
That’s an amazingly partisan comment for them to make, and demonstrates who they truly serve. The Republican Party in the 19th century actually opposed the corporatisation of America, even going so far as declare opposition to the labour market in its platform, viewing the wage system as a form of slavery. The present structure of power was developed in many respects by Liberals, such as Wilson and FDR. Reagan, the neo-cons and so on are an extreme end of the same Liberal establishment.
There are not that many real Conservatives in America, or anywhere else for that matter.
Many have allowed themselves to be deluded about the true nature of neo-liberalism. This tract is pretty much the standard position amongst much of the political Left
…Neoliberalism is a philosophy in which the existence and operation of a market are valued in themselves, separately from any previous relationship with the production of goods and services, and without any attempt to justify them in terms of their effect on the production of goods and services; and where the operation of a market or market-like structure is seen as an ethic in itself, capable of acting as a guide for all human action, and substituting for all previously existing ethical beliefs.…
That is obviously false. Neo-liberalism refers to a doctrine whereby corporations and the rich are protected by the state whilst the broader population is to be subject to market discipline. The dichotomy between a bailout for Wall Street and a non-bailout for sub-prime borrowers demonstrates this quite succinctly, should further demonstration have been necessary.
Australia And Extended Deterrence
The report into the Air Force management of nuclear weapons following the B-52 and Taiwan incidents is available. The report repeats a standard argument made in favour of extended deterrence
…If our deterrent is perceived as less than credible, the more technologically advanced nations among our allies could well begin to develop their own nuclear capabilities.…
What is more important for slowing nuclear proliferation; extended deterrence or the NPT?
The report also has some implications for the question of Australia and extended deterrence
…Despite these trends, many allied and friendly countries—roughly 30, including NATO and our Pacific allies—continue to depend on the security provided by the nuclear umbrella of the United States.…
NATO has 26 member states. Adding South Korea and Japan makes 28 i.e. roughly 30. Adding Australia and New Zealand makes exactly 30, but ANZUS is a two-way street now since the 1980s. The US does not extend nuclear deterrence to New Zealand.
So, roughly 30 means roughly 30, not exactly 30. Big surprise. 29 is roughly 30 too, but that statement is hardly a ringing endorsement of the notion that the US extends deterrence to Australia.
If they had stated “28” or “29” we would know for sure, what is more important everybody else would know. That’s the essence of deterrence. The statement above is highly ambiguous.
Actually, the whole thing is worse than that.
Notice that the "roughly 30" is not meant to come across as Nato+Pacific but is a more global statement. We might add in Israel as a result. In fact we should add in Israel. Then we get 29 for sure. Adding in Australia becomes exactly 30, but exactly is not roughly. Excluding Australia we have NATO+Japan+South Korea+Israel=29=~30=roughly 30.
I'm sure at Defence HQ in Canberra there are some not too happy campers.
Iran Weaponisation Plus Air Strike Issues
In my haste on the latest IAEA Safeguards Report I missed this little scoop
…With reference to the document describing experimentation in connection with symmetrical initiation of a hemispherical high explosive charge suitable for an implosion type nuclear device, Iran has stated that there have been no such activities in Iran. Since the Director General’s previous report, the Agency has obtained information indicating that the experimentation described in this document may have involved the assistance of foreign expertise. Iran has been informed of the details of this information and has been asked to
clarify this matter.…
That is extremely interesting. Consider The New York Times report on the IAEA Report
…The official linked to the agency said a foreign government was not involved. He also ruled out the involvement of Libya and the remnants of the network run by Abdul Qadeer Khan, the Pakistani metallurgist who built the world’s largest black-market sales operation for nuclear technology. A senior Western official said that North Korea, which has been accused of aiding Syria in building a nuclear reactor, was not involved. The officials spoke on condition of anonymity under normal diplomatic rules.…
In other words someone out there may have sold to the Iranians knowledge about the symmetrical initiation of hemispherical high explosive charges, precisely of the sort required for imploding a fissile primary for a nuclear weapon.
Fuck Iran; think about that for a second. The 1977 Office of Technology Assessment of the US Congress in its wide-ranging report Nuclear Proliferation and Safeguards wrote on nuclear weapons manufacture that (this included some people who know their shit like Carson Mark, Ted Taylor and George Kistiakowsky) [pp29-30]
…Contrary to common belief, the construction of a gun-assembly weapon presents difficulties roughly equivalent to those of an implosion weapon. The success or failure of producing a militarily effective nuclear explosive, via the effort described above, is far more dependent on the competence of the people involved than on the technological problems themselves.…
This is taken to be one of the barriers for non-state actors to use Plutonium in an improvised nuclear device. That is, the difficulty of imploding a fissile core by symmetrical shock waves in comparison to gun-assembly, is presented by many as one bit of evidence in favour of HEU being a bigger problem than Plutonium.
But if this story is legit then someone, perhaps even a group, i.e. a non-state actor, has sold along key knowledge for implosion. If the 1977 report holds then the conclusion to be drawn is obvious.
Very, very important news.
However, let us not fuck Iran and return to the issue at hand. ISIS makes a point about break-out timelines, important in the context of bombing, in their analysis of the IAEA Report
…Iran could use between 700 and 800 kilograms of LEU to produce in its P-1 centrifuges 20-25 kilograms of weapon-grade uranium, enough for a crude fission weapon. Other estimates are more pessimistic about Iran's ability to enrich the LEU up to weapon-grade, estimating that 1,000-1,700 kilograms of LEU would be necessary to produce 25-30 kilograms of weapon-grade uranium, generally considered more than enough for one nuclear weapon. Whatever the actual amount of LEU, Iran is progressing toward this capability and can be expected to reach it in six months to two years.…
Iran currently has produced 480kg of LEU. Remember that most of the work in going to weapons-grade is done in going to reactor-grade. Of course, Iran with enough P1 centrifuges, about 5000, could go straight to weapons-grade from the get-go.
For those who will mount a case for bombing these two figures, which ever comes first, will be used to try and legitimise military action.
ISIS, in fact, has mounted a strong case against bombing.
They point out
…Recent discussions of attacking Iran's nuclear facilities militarily often liken the destruction of Iran's uranium enrichment program to Israel's surgical strikes on Syria's clandestine nuclear reactor in September 2007, or Iraq's Osirak reactor in June 1981. In each case a single attack with fewer than ten aircraft destroyed a key facility that could have produced plutonium for nuclear weapons, setting back that country's ability to produce a plutonium-bomb by several years. In the case of Iran, the analogy goes, an attack on just two facilities, the Natanz enrichment plants and the Esfahan uranium conversion facility would likewise significantly delay Iran's ability to produce weapon-grade uranium for nuclear weapons.
This analogy is grossly misleading. It neglects the important differences between a gas centrifuge uranium enrichment program and a reactor-based program, and fails to account for the dispersed, relatively advanced, and hardened nature of Iran's gas centrifuge facilities. It also ignores the years Iran has had to acquire centrifuge items abroad, often illicitly, allowing it to create reserve stocks of critical equipment and raw materials, such as high strength aluminum, unmagnetized ring magnets, and special steels.…
That is not unrelated to the OTA point above. The key here is knowledge.
What is interesting, however, is the recently announced deal (requires support from Congress) to sell the GBU-39 Small Diameter Bomb, a bunker-buster, to Israel. The deal is to sell 1000 GBU-39 bombs.
The GBU-39 has some features worth pointing out
…At just 5.9 feet long and 285 pounds, the bomb’s small size increases the number of weapons an aircraft can carry, therefore raising the amount of targets it can kill in one sortie…
…A small diameter bomb can be used in adverse weather and has a standoff range of more than 60 nautical miles. Once released, the weapon uses its inertial navigation and an anti-jam Global Positioning System to fly to the target. Its guidance is further augmented by a differential GPS system, which provides corrections to enhance accuracy…
…The Small Smart Bomb is a 250 pound weapon that has the same penetration capabilities as a 2000lb BLU-109, but with only 50 pounds of explosive. The 250 pound-class warhead that has demonstrated penetration of more than 6 feet of reinforced concrete. With the INS/GPS guidance in conjunction with differential GPS (using all 12 channel receivers, instead of only 5) corrections provided by GPS SPO Accuracy Improvement Initiative (AII) and improved Target Location Error (TLE), it can achieve a 5-8m CEP. The munition, with a smart fuze, has been extensively tested against multi-layered targets by Wright Laboratory under the Hard Target Ordnance Program and Miniature Munitions Technology Program. The length to diameter ratio and nose shape are designed to optimize penetration for a 50lb charge. This weapon is also a potential payload for standoff carrier vehicles such as Tomahawk, JSOW, JASSM, Conventional ICBM, etc…
Natanz likely will be defended, should Russia not sell the S-300 SAM system to Iran, by the Tor-M1 SAM.
…Tor detects targets at a distance of 25 kilometers and kills them at a distance of 12 kilometers…Effective range limits are from 1500 to 12000 m with target altitude limits being between 10 and 6000 m. The maximum maneuvering load factor limit on the weapon is 30 g.…
The GBU-39 will have the required standoff capability to hit with high accuracy and with high number of munitions deployed per sortie without meeting too much problems from the Tor-M1. Of course, whether 6 feet of penetration is enough to deal with the issue of ground penetration is another matter entirely. I am not in a position to judge.
ISIS in its bombing report makes a good point
…Iran formally halted its voluntary adherence to the Additional Protocol in early February 2006. This advanced inspection agreement required Iran to provide the IAEA broader declarations of its nuclear activities and to allow inspectors greater access to its centrifuge facilities. Iran ended its suspension of its enrichment program in January 2006, which included IAEA access to a wider range of centrifuge manufacturing facilities than allowed under the Additional Protocol, which provides information and access to a limited, albeit important, portion of a country's centrifuge manufacturing complex. Iran also announced that it would no longer provide the IAEA design information prior to the construction of nuclear facilities such as enrichment plants. It reverted back to an out-dated safeguards condition that requires notification about a new nuclear facility 180 days before nuclear material is introduced. This condition allows Iran to construct and start undeclared centrifuge cascades as long as it intends to give sufficient notice of when it introduces any nuclear material into the facility. But following a military strike, such a facility could replace the Natanz fuel enrichment plant.
Without these various inspection arrangements, the IAEA has limited means to inspect Iran's centrifuge manufacturing operations and already assembled centrifuges, or to determine if Iran is indeed building undeclared centrifuge plants. Based on interviews with knowledgeable government officials, intelligence agencies simply lack reliable information on the full-scope of Iran's centrifuge facilities and activities.…
Regular readers of the IAEA Safeguards Reports on Iran will know that no additional protocol and Iran’s interpretation of inspector rights hampers the ability of the IAEA to get a handle on enrichment related activities in Iran. For Iran the reasons for this are obvious; to allow the IAEA this sort of access could lead to vital intelligence for air strike planners, either in the IAF or the USAF.
It is the constant talk of a military option, with even Obama leaving it on the table, which discourages Iran from playing ball with the IAEA on full-scope safeguards.
This further demonstrates a long held theory of mine. Whatever is the motive for Iran policy, one thing is clear; nuclear non-proliferation is a very low priority.
The GBU-39 deal won’t help; perhaps the real number in all of this is 100…the price of oil is dipping below $100 a barrel. The price of oil thus far as been one deterrent to military action.
Latest (Sept 2008) IAEA Safeguards Report On Iran
The IAEA has released the latest Safeguards Report on Iran. On weaponisation it informs us of a series of meetings the Agency had with Iranian officials on the “alleged studies” offering Tehran a strategy to deal with the matter. In its essentials
… In connection with the alleged studies in general, the Agency requested that Iran identify and clarify those elements of the documentation which it considered to be factually correct, and to specify those aspects considered by Iran to have been fabricated.…
So, bottom line is
… The Agency, regrettably, has not been able to make any substantive progress on the alleged studies and other associated key remaining issues which remain of serious concern. For the Agency to make progress, an important first step, in connection with the alleged studies, is for Iran to clarify the extent to which information contained in the relevant documentation is factually correct and where, in its view, such information may have been modified or relates to alternative, non-nuclear purposes. Iran needs to provide the Agency with substantive information to support its statements and provide access to relevant documentation and individuals in this regard. Unless Iran provides such transparency, and implements the Additional Protocol, the Agency will not be able to provide credible assurance about the absence of undeclared nuclear material and activities in Iran.…
In so far as bombing is concerned, I think there might be two numbers that might count. 5000 and 100. I think that the Israeli’s will call 5000 centrifuges as meeting its technical basis for an air campaign. For a P1 type centrifuge with separative power of ~1kg SWU per year about 5000 would be needed for 90% U-235 for one bomb a year. I think the Israelis might use that as a technical measure to justify bombing. They have stated that after Iran reaches a no turning back point, i.e. a technical break-out capability, then military action might be very likely.
The report states that Iran continues to operate the original 3000 centrifuge (IR-1) unit (Unit A24) and is working on installing 12 additional cascades at Unit A26 with 5 cascades from this unit currently been fed with UF6. Finishing Unit A26 would put the Israeli technical measure into the picture (a further cascade at Unit A26 is in vacuum, but not being fed with UF6).
How far are they off from completing Unit A26?
100 is the price of oil. If that dips nicely, in a sustained way, below $100 a barrel then hardliners might win the argument in Washington.
However, there are other issues. Such as the election, Iraq and even the coming surge in Afghanistan and now even into Pakistan. Central Command is busy, and I think any action by Israel might not be too welcome at the Pentagon.
But, if McCain wins…
Plan B For RRW: Reliable Refurbished Warhead
Recognising that things are not looking too flashy for the Reliable Replacement Warhead Strategic Command is giving us Plan B, the Reliable Refurbished Warhead
…Convinced the time has come for an alternative to building a controversial new nuclear warhead, a key U.S. military command is laying the groundwork for Plan B: Dramatically extending the existing stockpile’s service life…
…Under Strategic Command’s new approach, some of the advanced technologies previously imagined for the Reliable Replacement Warhead might now be retrofitted into existing weapons as they undergo maintenance. The intent would be to meet as many RRW objectives as possible, principally increased safety and security, without a wholesale replacement of the warhead…
That means, at its most basic, that they may call for refurbishing a warhead around existing Pu pits. The original RRW concept would have manufactured entirely new pits. We trade replacement for refurbished.
The article points out that after the refurbishment of the B61 and W76 the most likely next candidate would be the W87 for the MMIII ICBM (and its replacement), however
…The W87 design is unique for strategic ballistic missile systems in its use of an insensitive high explosive and a fire-resistant pit design; both features help to minimize the possibility of plutonium dispersal in the event of an accident. The enhanced safety design features of the W87 were incorporated early in the development program when the Air Force was considering basing schemes with moveable missiles.…
Remember that the W87 was for the MX ICBM originally and at the time of development there was all sorts of nonsense about shell games and so on in the context of the “window of vulnerability”.
The W87 gets my fishy radar off; why refurbish the W87 if it already has the enhanced safety features that are sought by RRW advocates?
Another question, on the original RRW design the WR1. I wonder whether the WR1 is a variable yield warhead like the B61. Given the emphasis on tailored deterrence in the second nuclear age, I would have thought that a good feature for RRW warheads for ballistic missiles to posses would be a good spread of yield options like you get with the B61.
Just a thought.
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Marko is also interested in philosophy, especially the theory of knowledge, and science, especially physics, and considers himself to work within the naturalist and enlightenment tradition. He is writing a book on nuclear terrorism.