Axis of Confusion

So I apparently have geopolitics on the brain this weekend. There are two important geopolitical topics from this fall that I can't wrap my head around. 1. The North Koreans accepting to dismantle their nuclear infrastructure

2. The September Israeli strike on Syria

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1. I am in "I'll believe it when I see it" mode about North Korea.

Their leadership, rightly, believes that their nuclear arsenal is what protects the regime and has sacrificed immensely to get there, including enduring years of sanctions and putting something like 10% of their minimal GDP into their nuclear program. I simply can't believe they have now decided to give it up.

Prediction: This deal falls apart, perhaps with the next administration, just like the Clinton deal did

2. Even more bizarre is the Israeli airstrike on Syria. The normal interpretation given Israel's history of airstrikes would suggest that this would not occur unless they were hitting a non-conventional/nuclear target.

So here is what I don't understand:

a) If Syria had started a nuclear program and the Israelis bombed it, shouldn't that be getting a ton more publicity? You would expect the US to be promoting Syria to Senior Member of the Axis of Evil at this point. Instead both the US and Israel have been dead quiet.

b) On the other hand, it is pretty clear that Israel did not bomb a childrens' toy factory.

While Syria said it was "absolutely, totally, fundamentally ridiculous and untrue. There are no nuclear North Korean-Syrian facilities whatsoever in Syria," it only made a perfunctory protest, has not show much evidence and, according to the NYTimes, "neither Iran nor any Arab government except for Syria has criticized the Israeli raid." The lack of Arab protests is both remarkable and an indication that this was probably nuclear.

c) Making this even more confusing, supposedly it was North Korea that was helping with the nuclear facility (and North Korea was the only country to protest the Israeli attack). So the North Koreas have simultaneously decided to shut down their nuclear operations and help Syria set up operations of its own. Hard to believe.

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Net result, we are not getting the whole story here and clearly the mainstream press has been put on a muzzle and/or not being fed any information, otherwise the topic of "North Korea is helping Syria to building nuclear weapons" would have been covered in the media 10x a day.

Even usually reliable GlobalSecurity.org is confused.

They give a timeline of explanations but the best they came up with is that the US and Israel were caught by surprise and therefore did not have anything to say to the press. So, in other words, globalsecurity.org also has no clue what is going on.

UPDATE:

US assesses that Iran stopped nuclear weapons work in 2003. Would not have weapon ready until 2013 at earliest. Obviously, this is a significant de-escalation from more recent rhetoric on Iran. I am working with the obvious assumption that publicly declared intelligence assessments have PR purposes.

Something is definitely afoot, perhaps as simple as wanting to reduce the pressure on the US take more aggressive measures on Iran, Syria, North Korea.

Other resources:

* An academic review from the Monterey Institute on the topic

* NY Times article

* and just for fun, an oldie from SatireWire. "Passed over, Syria, China, Libya form the Axis of Just-as-Evil"

NSPD 51

Off topic for a moment. Do you know what NSPD 51? It appears to establish a framework for a temporary, extra-constitutional government in the event of a national catastrophe.

It was released on the White House website without comment in May. As usual, the mainstream press ignored it.

Some version of this plan has previously existed -This is the first one made public.

It seems curiously sloppily drafted for such a critical documet that gives a pathway for the presidency to assert control of the country. It appears that this plan can be triggered at the sole discretion of the President and there is no timeframe for return to standard constitutional order.

Of course a document and plan should exist for continuity planning, but shouldn't this be something vetted by congress and the judiciary as opposed to a presidential directive? Instead, the executive branch is denying access to the classified annexes of this document, even to congressmen on the homeland security committee with classified authorization.

Original Press Release at White House.

Wikipedia has some more background:

(b) "Catastrophic Emergency" means any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy, or government functions;

(e) "Enduring Constitutional Government," or "ECG," means a cooperative effort among the executive, legislative, and judicial branches of the Federal Government, coordinated by the President, as a matter of comity with respect to the legislative and judicial branches and with proper respect for the constitutional separation of powers among the branches, to preserve the constitutional framework under which the Nation is governed and the capability of all three branches of government to execute constitutional responsibilities and provide for orderly succession, appropriate transition of leadership, and interoperability and support of the National Essential Functions during a catastrophic emergency;

Enduring Constitutional Government sounds positively Orweillian. .

(6) The President shall lead the activities of the Federal Government for ensuring constitutional government. In order to advise and assist the President in that function, the Assistant to the President for Homeland Security and Counterterrorism (APHS/CT) is hereby designated as the National Continuity Coordinator. The National Continuity Coordinator, in coordination with the Assistant to the President for National Security Affairs (APNSA), without exercising directive authority, shall coordinate the development and implementation of continuity policy for executive departments and agencies. The Continuity Policy Coordination Committee (CPCC), chaired by a Senior Director from the Homeland Security Council staff, designated by the National Continuity Coordinator, shall be the main day-to-day forum for such policy coordination.

Mortgage Continued: Alwaweed on Prince

I know we are running a little late on current events, but life has been a bit busy. Anyway, it is always interesting when Alwaleed gets annoyed. He waits, waits, waits and then look out. From Fortune.

Prince Alwaleed: Let me tell you the facts. Basically when Citigroup pre-announced the $6.4 billion writeoff, Chuck Prince called me within five minutes of the announcement and informed me of that loss and I told him bluntly and openly, "Is this the end of the story? Did you think of everything?"

His answer was "yes" and he expected normalization in the fourth quarter. I listened to the analyst discussion he had with everybody else and he said there would be normalization in the fourth quarter. So obviously, this gave me comfort that this was a onetime event and only an aberration and I backed off.

Although the writeoff said $6.4 billion, post-tax $3.4 billion, if you compare this to the equity of Citibank and the profits of Citibank in the third quarter, there was a $2.4 billion profit. So it was a hiccup assuming that this was a onetime event. But what happened two or three weeks later, another $8 to $11 billion additional write-off, the situation changed completely.

You cannot come to the public and say that this normalization is expected in the fourth quarter and then three weeks later, not three months later, you come and say there is an $11 billion writeoff. This is unacceptable. That's when the events changed completely. My backing was withdrawn dramatically. You should never commit to something that you can't deliver. Never.

More

Q: Are you disappointed in Chuck Prince?

A: I am extremely disappointed with Chuck Prince and I believe that Chuck Prince let down the shareholders completely. Citibank did not conduct itself in the right way. The risk-management situation was very wrong at Citibank.

more

Q: Was Chuck Prince not going resign without [pressure]?

A: The impression I had is that he was not going to resign at all.

Q: Did Chuck Prince ever offer his resignation to you?

A: No, he did not.

Q: Did you like Chuck Prince?

A: Yes, Chuck Prince was a good man. Honest man. Decent man.

Great Moments in Negotiation: The Liquidity Put

From Fortune. Bolding is mine. Leaving aside the point that taking these CDOs off balance sheet was probably a sham transaction by accounting standards, why would you ever agree to this term? Heads you win; tails I lose.

At bottom, the countdown to both Prince's exit and Citi's November shocks began in that summer crisis period for the credit markets. Citi started then to have ominous dealings with CDOs that carried a "liquidity put." Never heard of a liquidity put? Google will give you a few uninformative references. But it is testimony to the obscurity of this term that Rubin says he had never heard of liquidity puts until they started harassing Citi last summer.

What Citi did a couple of years ago was insert a put type of option into otherwise conventional CDOs that were backed by subprime mortgages and sold to such entities as funds set up by Wall Street firms. The put allowed any buyer of these CDOs who ran into financing problems to sell them back - at original value - to Citi. The likelihood of the put being exercised, however, was regarded as extremely remote because the CDOs were structured to be high-grade entities called "super-senior."

Meanwhile, you might think the existence of the put would make it impossible for Citi to get those CDOs entirely off its balance sheet. But in fact Citi found a complex accounting rationale for doing exactly that, and the CDOs jumped entirely to somebody else's balance sheet. All that remained in Citi's realm was this sticky little matter of the puts - which, as we shall immediately see, ultimately worked to get these CDOs right back to their creator, Citi.