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Generational Dynamics Web Log for 13-Jun-2014
13-Jun-14 World View -- President Obama considers military action in Iraq

Web Log - June, 2014

13-Jun-14 World View -- President Obama considers military action in Iraq

Foreign exchange price fixing will exceed libor scandal in criminality

This morning's key headlines from

Sunday's attack on Pakistan airport signals terror tactical shift

Smoke rises on Monday morning after the assault on Karachi's airport (AFP)
Smoke rises on Monday morning after the assault on Karachi's airport (AFP)

The terrorist attack on the Jinnah International Airport in Karachi, Pakistan, on Sunday did not achieve its primary objective of hijacking an aircraft and holding its passengers hostage. Nonetheless, it represents a more sophisticated kind of attack, following the model of previous major attacks that were more like complex military actions. One is Mumbai's '26/11' three-day terrorist attack in 2008, and another is the three-day attack on the Westgate shopping mall in Nairobi Kenya, in September of last year.

Apparently there had been Taliban sleeper cells planted in Karachi weeks or months before. These cells provided shelter, weapons, explosives, transport and intelligence to the terrorists who eventually carried out the attack. As in the other cases, there were a series of well-planned attacks designed to defeat and kill layers of security and take control of the target.

It's no longer a "simple" case of a suicide bomber walking into a shopping center or mosque to kill as many people as possible. Now there are more complex objectives, with huge financial rewards to fund future projects.

Pakistan's government now has to face some hard realities. The "peace talks" with the Pakistani Taliban (Tehrik-e-Taliban - TTP), which has claimed credit for the attack, were never more than a joke anyway, but they did provide a fig leaf to hide government officials' desperation. The TTP is headquartered in Pakistan's tribal area, but analysts point out that the army has only made half-hearted attempts to defeat them there, not being willing to go in and clean out the hideouts and weapons stores that are making the terrorist strikes possible. Dawn (Pakistan) and Indian Express

President Obama considers military action in Iraq

President Obama is facing a dilemma about responding to the collapse of what he considered a major achievement, ending the war in Iraq. Islamic State in Iraq and Syria (ISIS) has executed a "blitzkrieg" in Iraq, giving it control of huge swaths of land, millions of dollars of money stolen from banks, and huge volumes of heavy weapons stolen from weapons stores. When combined with ISIS's control of parts of neighboring Syria, ISIS is on the verge establishing a new "Sunni Islamic Caliphate" nation, bounded on the west by Bashar al-Assad's rump Syria, and bounded in the east by Nouri al-Maliki's rump Iraq. It's not certain that ISIS will be able to indefinitely hold all this territory, but if it does, then the territory will serve as a base for terrorist and military attacks on other nations.

According to President Obama at a press briefing on Thursday:

"Well, this is an area that weíve been watching with a lot of concern not just over the last couple of days but over the last several months, and weíve been in close consultation with the Iraqi government. Over the last year, we have been providing them additional assistance to try to address the problems that they have in Anbar, in the northwestern portions of the country, as well as the Iraqi and Syrian border. That includes, in some cases, military equipment. It includes intelligence assistance. It includes a whole host of issues.

But what weíve seen over the last couple of days indicates the degree to which Iraq is going to need more help. Itís going to need more help from us, and itís going to need more help from the international community.

So my team is working around the clock to identify how we can provide the most effective assistance to them. I donít rule out anything, because we do have a stake in making sure that these jihadists are not getting a permanent foothold in either Iraq or Syria, for that matter.

Part of the challenge ... is that the politics of Shia and Sunni inside of Iraq, as well as the Kurds, is either going to be a help in dealing with this jihadist situation, or itís going to be a hindrance. And frankly, over the last several years, we have not seen the kind of trust and cooperation develop between moderate Sunni and Shia leaders inside of Iraq, and that accounts in part for some of the weakness of the state, and that then carries over into their military capacity.

So I think itís fair to say that in our consultations with the Iraqis there will be some short-term, immediate things that need to be done militarily, and our national security team is looking at all the options. But this should be also a wakeup call for the Iraqi government. There has to be a political component to this so that Sunni and Shia who care about building a functioning state that can bring about security and prosperity to all people inside of Iraq come together and work diligently against these extremists. And that is going to require concessions on the part of both Shia and Sunni that we havenít seen so far.

The last point Iíll make -- whatís happened over the last couple of days I think underscores the importance of the point that I made at my West Point speech: the need for us to have a more robust regional approach to partnering and training partner countries throughout the Middle East and North Africa. Weíre not going to be able to be everywhere all the time, but what we can do is to make sure that we are consistently helping to finance, train, advise military forces with partner countries, including Iraq, that have the capacity to maintain their own security. And that is a long and laborious process, but itís one that we need to get started."

Phrases like "there will be some short-term, immediate things that need to be done militarily," and "There has to be a political component to this so that Sunni and Shia who care about building a functioning state that can bring about security and prosperity to all people inside of Iraq come together and work diligently" indicate to me that President Obama still doesn't have a clue what's going on in the world.

There's a great deal of fury growing against President Obama. Statements like "American blood drove al-Qaeda out of Iraq, and Obama has squandered all of it," or "I fought in Afghanistan, and Obama has given the worst of the worst of the Taliban a free pass" are increasingly common. White House

Foreign exchange price fixing will exceed libor scandal in criminality

Britain's government is proposing legislation to punish foreign exchange rigging with criminal sanctions, including prison.

This is another case where bankers from different banks colluded with one another to defraud their customers making currency conversions from one currency to another. One banker would call his pal at another bank to let him know that some client was about to exchange, say, $10 billion for euros. The two bankers would collude on front-running and setting the exchange rate so that when the transaction went through, a few minutes later, the bankers could pocket hundreds of thousands of dollars.

Readers may recall the Libor scandal that began a couple of years ago, where bankers would collude with one another to fix interest rates. Those actions may have cost clients hundreds of millions of dollars, but the foreign exchange market is much bigger, $5.3 trillion, and clients may have lost hundreds of billions of dollars over the years.

It's now been over ten years that Gen-X "financial engineers" flooded into banks and knowingly created tens of trillions of dollars of fraudulent synthetic securities backed by faulty subprime mortgages, and not a single one has gone to jail. The worst that happens is that the bank gets fined. But the individual crooks who caused the global financial crisis keep the millions of dollars that they gained fraudulently, and are free to go on in their jobs to find other ways to defraud investors. The Libor scandal proves that.

Now we're going through the same process again, with the foreign exchange price-fixing scandal. Supposedly, UBS will pay $8 billion in fines, Deutsche Bank AG will pay $4.4 billion, and Citibank will pay $4.3 billion.

Supposedly, this time is different because legislation is being proposed to make foreign exchange fixing a criminal activity. But defrauding clients is already a criminal activity. All of the fraudulent activities of these bankers is criminal activity. The problem is not the laws, but that the criminals are rewarded by letting them keep their money, and they're not prosecuted and sent to jail. AFP and Reuters

(Comments: For reader comments, questions and discussion, see the 13-Jun-14 World View -- President Obama considers military action in Iraq thread of the Generational Dynamics forum. Comments may be posted anonymously.) (13-Jun-2014) Permanent Link
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