Iran Protests

I was impressed by the scale of protests inside Iran this past week.  One particular image caught my eye; that of a protester helping a riot policeman out of the crowd.  It’s only a brief image, and hard to draw conclusions from, but does give evidence that these are ordinary men and women out there in the streets; not some fringe radicals.

The Twitter threads are updating far faster than I can read.  Video was captured of a young woman shot in the heart; her name was Neda and it now becomes a rallying cry.  Some sort of chemical (lye?) is reported being dumped from helicopters, and APCs are in the city streets.  (STRATFOR reported a few days ago that the IRGC had taken over internal security for Tehran.)  Some tweets warn of Basij marking or breaking into houses, others give first aid information and warn about wearing contact lenses.

Today likely marks a key turning point; if the protests survive and grow larger, I expect the security forces will be overwhelmed or co-opted.  Finally, two researchers at Columbia University have some interesting comments about the official election “results”.

Nationalization

In an interview with ABC News’ Terry Moran, President Obama made a few comments about nationalization.

 MORAN: There are a lot of economists who look at these banks and they say all that garbage that’s in them renders them essentially insolvent. Why not just nationalize the banks?

OBAMA: Well, you know, it’s interesting. There are two countries who have gone through some big financial crises over the last decade or two. One was Japan, which never really acknowledged the scale and magnitude of the problems in their banking system and that resulted in what’s called “The Lost Decade.” They kept on trying to paper over the problems. The markets sort of stayed up because the Japanese government kept on pumping money in. But, eventually, nothing happened and they didn’t see any growth whatsoever.

Sweden, on the other hand, had a problem like this. They took over the banks, nationalized them, got rid of the bad assets, resold the banks and, a couple years later, they were going again. So you’d think looking at it, Sweden looks like a good model. Here’s the problem; Sweden had like five banks. [LAUGHS] We’ve got thousands of banks. You know, the scale of the U.S. economy and the capital markets are so vast and the problems in terms of managing and overseeing anything of that scale, I think, would — our assessment was that it wouldn’t make sense. And we also have different traditions in this country.

Obama: No ‘Easy Out’ for Wall Street, 2009-02-10

On the face of it, we have two paths, one right and one wrong.  Tradition apparently dictates the wrong one.  I say tradition, because while this country has thousands of banks, many are healthy.  As Kedrosky notes, that objection ignores the relative GDPs of the two countries as well as the fact that the six largest banks represent the lion’s share of the problem.

It is possible Obama does not feel there is sufficient political support for nationalization, and so will run with the current plan until attitudes are more favorable.  I acknowledge that this is only conjecture, but feel it appropriate to ascribe some measure of strategic planning to this administration.

Interesting Times For China

China’s statistical bureau reported that industrial production for November grew 5.4% year-over-year according to Bloomberg.  The more interesting quote from the article is this:

Electricity output fell by 9.6 percent from a year earlier. Pig-iron production fell 16.2 percent. Raw steel declined 12.4 percent. Steel products tumbled 11 percent.

To echo the concerns of another CR reader, what is the break-even number for China due to the increase in urban population?  More critically, the drop in electrical output does not jive with the production numbers.  I would be very concerned.

The China number means nobody is buying here. Who finances our government? I just had this mental picture of the US economy flying through the air. It’s a 4 engine jet and we lost number 1 and 2 engines awhile back. Now number 3 just flamed out.

– nova, 2008-12-14

On a side note, it appears that North Korea has closed down both the northern and southern borders.  150,000 Chinese troops are now massed along the northern border, most likely as a prophylaxis against the collapse of the Kim regime.  Given North Korea’s precarious position and nuclear status, it is safe to assume that most players in the region are very interested in stabilizing the country and securing any loose buckets of instant sunshine.

Origins of the Georgian Conflict

Courtesy of Stratfor, here is some excellent background reading.

Georgia and Kosovo: A Single Intertwined Crisis

By George Friedman

The Russo-Georgian war was rooted in broad geopolitical processes. In large part it was simply the result of the cyclical reassertion of Russian power. The Russian empire — czarist and Soviet — expanded to its borders in the 17th and 19th centuries. It collapsed in 1992. The Western powers wanted to make the disintegration permanent. It was inevitable that Russia would, in due course, want to reassert its claims. That it happened in Georgia was simply the result of circumstance.

There is, however, another context within which to view this, the context of Russian perceptions of U.S. and European intentions and of U.S. and European perceptions of Russian capabilities. This context shaped the policies that led to the Russo-Georgian war. And those attitudes can only be understood if we trace the question of Kosovo, because the Russo-Georgian war was forged over the last decade over the Kosovo question.

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