A DEER HERD, MELAMINE, AND THE WALL STREET CRISIS

"Ain't it funny the way a mind works?" he would say, as he looked up from the newspaper, his thick eyeglasses having slipped way down on a bulbous nose. That oft-repeated comment of my Uncle Frank's, who though unlettered, was wise and well-versed in the university of hard knocks, was quickly followed by some great insight into the world's problems.

That saying of his, came to me this morning as I read two stories in the newspaper, one lamented the lack of regulations which led to our recent financial crisis, and the other reported on the scarcity of oversight which appears to have caused and abbetted the Chinese melamine scandal. Somehow their juxtapositon made me think of the problem of overpopualtion in the deer herd on Shelter Island's Mashomack Preserve. "Aint it funny the way a mind works?" What is that relationship? In all three cases, the problem revolved around the lack of needed regulation.

Shelter is located on the eastern end of Long Island, nestled in between the two forks. The eastern one-forth of the five-mile-wide island is occupied by the Nature Conservancy's wild and forested Mashomack Preserve. I spent a number of happy summers there studying and helping to document the archaeology of that place, and in the process got to know the wildlife and the forest quite well. At that time, in 1980s, the deer population on the preserve, was growing like a Wall Street "dot.com" bubble. The out-of-control herd ate just about everything in their path, consuming the forest upon and within which they lived. Naturally, in a forest preserve no hunting was allowed, and with no natural predators, there were no controls on their population. By eating the tender young tree-shoots, which were needed to replace the dying older trees, they were effectively eating themselves out of existence and devastating an ancient and pristine forest. Mike Laspia, the wise preserve manager resolutely faced up to his superiors to convince them that a control system (hunting) was needed to bring the herd back into balance with its food supply. Hunting in a nature preserve? Yes! Hunting is as abhorrent to the conservancy staff as financial regulators are to a Wall Street tycoons. But regulation of the herd by hunting was a necessary evil. It solved the deer problem, and today Mashomack has both a healthy deer herd as well as a healthy forest.

On the last day of 2008, the NY Times ran a story on the front page: "Former Head of Chinese Diary Pleads Guilty of Scandal" (David Barboza, NYT December 31, 2008 http://www.nytimes.com/2009/01/01/world/asia/01milk.html?_r=1&hp)
Tian Wenhua,is the former director of Sanlu Corporation of Shijiazhuang City in the northern province of Hebei. Ms Wenhua is one of the highest corporate executives ever to go on trial in China. Wenhua, 66 years old, is accused of knowingly selling contaminated baby formula from May 2008 to September of that year when the company she managed finally stopped production at the urging of its subsidiary in New Zealand. In the end it was necessary to issue a recall of some 900 tons of contaminated baby formula it had produced. The adulterated formula was found to have a concentration of the poisonous adulterant known as melamine at more than 100 times the concentration allowed.

In response to the scandal, and prior to the Sanlu trail, (which focused only on local officials), several high-ranking Shijiazhuang government officials were fired and the head of the Chinese product-safety watchdog group, the General Administration of Quality Supervision and Quarantine had been forced to resign. In addition, fifteen other dairy middlemen in Hebei province were charged in the scandal. In 2007, after an earlier product scandal, China's State Food and Drug Administration head-regulator faced execution after he was found guilty of corruption and dereliction of duty. A similar fate may be in store for Madam Tian.

The damage to the Chinese food industry has been enormous and one wonders will the struggling dairy industry be able to recover? In fact, reports from Beijing, indicate that Chinese food exports in October, (after the scandal) were down by 13% over the September level. (See http://news.jongo.com/articles/08/1219/167638/MTY3NjM4e0KqXWDB.html)
One does not know how or when recovery will occur, however, we can pinpoint the cause: lack of proper oversight and regulation.

Reading between the lines, one can imagine how problems of weak regulation might occur in a rapidly growing and expanding new economy. Perhaps all the necessary pieces of the oversight and regulatory system could not have been foreseen and others were not in place when an industry grows to a point at which control is necessary or critical. Furthermore, when a local industry generates enormous profits and full employment, senior officials are loath to interfere. Hard-nosed types that might be tempted to blow the whistle on a potential scandal might be dissuaded by threats, bribes or other forms of coercion.

On the other hand, in the case of Wall Street collapse, and the sub-prime loan mess of late 2008, exacerbated by the Mardoff scandal, we can clearly lay the blame as well to a lack of oversight and regulation. In the US case, the failure of regulation was due to the faulty ideology and political philosophy of Republican government leaders. The Bush Administration lauded and advanced deregulation wherever it could, and viciously cut the knees out from under any honest and effective overseers. Existing legislation, some which had been drafted as long ago as the 1930s, was purposely emasculated to enable a "freeing up" the market. In the amount of damage done and the financial evil unleashed, the Wall Street collapse was far worse than what has been revealed in the China dairy and food scandals. But the underlying causes were the same...unrestrained greed and excess and limited or ineffective regulation and control. And in both cases, the industries affected were irreparably harmed. Apparently from what we have learned so far, the Chinese perpetrators were (or will be) treated harshly when caught, execution, life in prison. Our Wall Street perps were handed money, permitted to keep their golden parachutes, and let off the hook.

So as in controlling the deer herd on Shelter Island, modulating greed and profiteering in China's dairy industry, and reining in similar motives in our financial system, effective and fair regulation is necessary to keep the natural systems healthy, to generate a robust financial system and a profitable Chinese dairy industry. In the past, the old Republican mantra, "deregulate, deregulate" repeated over and over by right-wing politicians from Goldwater in the 60's to Reagan, and finally to George Bush in this century. Thankfully (though at great cost) the Republican financial philosophy has now been thoroughly tested and fully repudiated. One only has to look at the examples above: the Melamine scandal and the American credit collapse to fully understand the real need for appropriate controls and regulation. Like a healthy deer herd needs effective controls so does our economy and industries. Without them, as with the Mashomack deer herd, we may run the risk of destroying the very system on which we live and survive.

Let's get that straight for the new year.

FOLLOW UP ON MELAMINE SCANDAL

Lisa McCormick of Consumer Affairs.com reports that the USDA will now test meat and poultry products, baby food, and chicken nuggets for melamine. Why? We thought melamine contamination was limited to pet foods and infant formula. Well think again. It seems to be all around us. (Seehttp://www.consumeraffairs.com/news04/2008/12/chinese_formula17.html)

The melamine story first broke way back in early 2007 when pet dogs got sick and some died after being fed pet food laced with melamine. Melamine is white, looks like milk powder and is very cheap. It is an industrial chemical used as a strengthener in concrete, but it has the unique property of mimicking protein in chemical tests for that substance. To boost the pet food product's "protein level" on the cheap, unscrupulous producers added melamine. Little did we know how widespread the practice was at that time. But soon, all manner of foods where milk or milk protein might have been used as a component were revealed to have traces of melamine. By April of 2007 it was reported in fish feed. A US company in Colorado was sanctioned for using it as a binder in fish food used at a commercial fish farm. It was soon discovered that this seemingly innocuous, indigestible solid substance could seriously affect renal functioning and initiate physiological reactions which cause it to precipitate as "stones" in animal and human kidneys. Furthermore no one had any inkling of how widespread the practice of adulterating food in China was or of the potential for impact to world health. But by September 2008 news broke that melamine had been found to be the cause of a widespread outbreak of kidney disease in Chinese infants. Melamine was found in the infant formula fed to these children. Thousands of infants were sickened and several died. The discovery caused widespread concern.

Since then, besides the pet food, fish food and infant formula, melamine has shown up in many other food products. In the US, and elsewhere, the growing list includes: Topaz Wafer Rolls, Cocoa from Canada (recently the Canadians have turned on us and barred certain milk products from the US), Vietnamese biscuits, Hong Kong Brown Eggs, Walgreens chocolate bars, many brands of US infant-formula, Chinese White Rabbit candy, Chinese-made Cadbury chocolate bars, Mr Brown coffee, Chinese-made yogurt, Dutch Lady (brand) banana and honeydew flavored milk, Silang (a brand name) potato crackers, certain kinds of puffed rice balls, as well as Indonesian-made Oreo cookies, Snickers bars and M&M candies. The scandal has even affected zoo animals. In China two young gorillas in a zoo were fed melamine-tainted milk. Both were sickened and suffered kidney related problems and are being closely monitored for kidney stones.

By late December 2008 some in the US were asking how the US Department of Agriculture and the Food and Drug Administration let this happen?(See "Tainted Government by James McWilliams. Slate Dec 29, 2008) McWilliams states that China is now investigating melamine and seventeen (17) other illegal food additives..including boric acid, lye, formaldehyde and an industrial red-dye called Sudan Red used to dye plastics. (See China Digital Times (http://chinadigitaltimes.net/2008/12/lye-boric-acid-banned-as-food-additives-in-china/) The Chinese authorities have banned these adulterants to food. No Chinese producer can from now on use of boric acid in food preparations. That's nice. I've only known it as an eyewash, and an insecticide. It is decidedly not a food additive to my mind. But then in China, it was commonly added to Chinese noodles to increase the elasticity of the noodles. Lye and formaldehyde were also banned. Swell! One is a caustic base that will burn a hole in your jeans in a few minutes and is used in the preparation of soaps and the other is a noxious, pungent preservative. But both were in use in China as additives to certain dried seafood to make these products appear fresher and bigger. So you can see the problem. No oversight and no regulation often leads to very dangerous and costly actions.

We should not be too critical...our own President Bush had a penchant for removing regulations and limiting oversight. These behaviors of his led to the credit crisis of 2008. As a result of his actions and the collapse of the world markets many of those Chinese factories which were adulterating foods may now be out of business.

Regarding lack of oversight, let's us turn a spotlight on our own government where confidence in our FDA has suffered in recent months. How? Thanks to a penetrating report by the Associated Press we have learned how the FDA organization (under the Bush banner) plays ball with big business. As McWilliams reports in his Slate piece, once the FDA finally discovered the level of melamine in the baby formula sold in the US.."its first order of business was to set up a conference call to warn the companies that produce 90% of the worlds milk powder--Abott Labs, Mead Johnson, and Nestle." But when it came to alerting the public, about the health threat, the FDA remained silent until the AP filed a Freedom of Information Act request for the test results and published them in late November. Such behavior from organizations that should be the "watchdogs" of industry and protectors of the citizen's safety does not engender our respect or confidence.

What can a concerned citizen do? Send letters to you congressman and senator about this problem. On a more practical and immediate level, avoid prepared food products that might have milk or milk-product as a component..and keep in mind that includes certain poultry and animal meats we do not often associate with milk...such as prepared sausages and of course...hot dogs. That's why the FDA has begun its belated testing of meats and poultry products. Let's hope they do a better job!

SHOE THROWING AND OTHER SIGNS OF DISRESPECT

In "Looking Back, Bush and Cheney Reveal Different Views" Sheryl Stolberg, NY Times, December 24, 2008, writes that President Bush and Vice President Cheney have been "unusually talkative" lately. Stolberg suggests that they have different goals as they attempt to justify their administration's actions over the last, nearly eight years. Sitting among the wreckage of our nation suffering through the worst financial crisis since 1929, with two on-going disastrous wars, our financial system broken, a strained military, our economy in tatters, one wonders how they have the nerve to try to "justify" what they have done. Stolbert reports that in their uncommonly numerous (as compared to previous administrations) recent interviews the two have given, Bush and Cheney have in some respects parted ways. Bush has finally expressed some misgivings (recall that in 2004 he couldn't think of one mistake). Now he admits he was "unprepared for war" and "regrets" what he calls "the intelligence failure in Iraq." Mr Bush never minded the actual facts. He is not bothered that he was planning a war in Iraq long before 9-11 and that he ignored real intelligence prior to the 9-11 attack, or that tossing aside valid intelligence he cherry picked through Dick Cheney's intelligence efforts to drag a reluctant nation into an unnecessary,costly and disastrous war.

On the other hand, Mr Dick Cheney remains staunchly unrepentant and "defiant to the end". Cheney continues to defend his actions, including torture, and actually stated he"feels good about what he did."

Fortunately for us, these two men are about to leave the protective cocoon of the White House. They will soon learn what the real world thinks and feels about their tenure. What they are about to discover is that outside of their enclosed world where they face only puff ball questions, butt kissing, and polite, tentative prodding, offered up at the hands of the timid media and White House Press corps, what most people here in the US and around the world think of their actions is closer to that expressed by the courageous young Iraqi journalist, Muntadar al Zaidi.

It was al Zaidi who threw his shoes at President Bush in disgust while attending a joint Bush-al Maliki news conference in Baghdad. At the point that President Bush intoned that "While the war in Iraq was not over yet, it is deciseively on its way to being won." Muntadar al Zaidi, a young journalist working for the Cairo based Baghdadia TV hurled his shoe at Bush, as he shouted: "This is a goodbye kiss from the Iraqi people, you dog!" The shoe, tumbling heel over toe, sped across the room and would have struck Bush squarely in the head had not the President ducked so quickly behind the high podium. It was a well aimed shot. Al Zaidi, was not finished. As Bush peeked up to see if the coast was clear, Muntadar reached down and pulled off his second shoe, and as he threw it over the heads of the rushed of other journalists and Maliki's security guards, he yelled," "This is for the widows and orphans and all those you killed in Iraq." At Bush's side Mr Al Maliki put up his hand as if to ward off the blow. Bush ducked again below the podium as the struggling and defiant young journalist was dragged from the room. Afterward Bush made light of the disturbance in his folksy way, but the event rightly marred his last visit to Iraq...a country which his actions left as a devastated wreck of a nation.

Perhaps, if American journalists had responded to Bush in some similar manner to express their disgust when he first proposed going into Iraq, or as he spoke up about deregulating the financial markets, or as he encouraged every Tom, Dick and Harry and Jane to get a house mortgage, regardless of their finances, we would not be faced with our present national crisis.

Yes Bush and Cheney are talking it up more, they have a lot of papering over to do with the press. But perhaps instead of sitting and glumly listening, as these men attempt to rewrite the past, our journalists should make some appropriate sign of disagreement when these two again get up to speak(in our culture, shoe throwing is a no no) . But mooning them seems to come to my mind as an appropriate response.

I FALL ON MY WALLET AND THE DOW FALLS 100 POINTS

Today, December 23, 2008, was sunny, but cold and blustery. Crusty snow covered the landscape except for the roads and parking lots, where, though mostly cleared, treacherous icy patches lay in wait for a carelss pedestrian. Out shopping, for Christmas dinner, I stepped on a slick spot in a parking lot and took a heavy fall. I landed on my wallet which I carried it in my back pocket. It seemed fortunate at first, since the thick leather absorbed a good deal of the jarring shock. The hard, jagged ice would have hurt more. But the event seemed somehow prophetic when I looked at DOW averages at the end of the day.

On the last full trading day before Christmas, the DOW Jones Industrial Average fell a full 100 points. It handed investors a fifth straight day of loss, or about 1%, of its total, to end at 8419. The DOW has lost about 6% in the last five days of the 2008 Christmas Season and is down nearly 40% so far this year. If losses continue at this pace to the end of the year, the Average will have suffered its worst annual loss since 1931...and that was during the Great Depression.

BUSH:THE LAWRENCE WELK OF WASHINGTON

Bubbles bubbles everywhere. It's "Wuunerful...wunnerful" intoned the stiffly smiling Lawrence Welk (television bandleader of the 1950s to 1980s era) mechanically keeping time with his baton, like a happy victim of Parkinson's disease, as his "champagne music" and trade-mark bubbles wafted up across the screen. Perhaps not all of you will remember (some were not even born yet) Mr Welk. Known as the "bubble man" by many of his fans, he reminds me of the stiff faced and smiling Mr. Bush who according to a recent NY Times article is the modern version of the old TV "bubble man". The NY Times accuses Bush of being one of the primary causes of the housing bubble. That dumb smile common to both men and their bubble associations seems to fit. See "White House philosophy stoked mortgage bonfire, December 20, 2008,(http://www.nytimes.com/2008/12/21/business/21admin.html?em)

The Times article quotes President Bush:“We can put light where there’s darkness, and hope where there’s despondency in this country. And part of it is working together as a nation to encourage folks to own their own home.” — Oct. 15, 2002.

"Eight years after arriving in Washington vowing to spread the dream of home ownership, Mr. Bush is leaving office, as he himself said recently, “faced with the prospect of a global meltdown” with roots in the housing sector he so ardently championed." The Times puts the blame squarely on Mr. Bush:"But the story of how we got here is partly one of Mr. Bush’s own making,....From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone." So Mr. Bush is the Lawrence Welk of the housing bubble. The bubble generator!

Which leads me to a piece by the always interesting Mr. Krugman of the NYT: entitled "Life without bubbles" http://www.nytimes.com/2008/12/22/opinion/22krugman.html

In reference to the end of the housing bubble and the economic stimulus, Krugman asks, "What comes after that?" What comes after the end of the housing bubble and the economic stimulus plan takes effect? Can we go back to business as usual? More bubbles? Krugman warns that we can not.

The false prosperity of the past depended on the huge bubble in housing, which replaced the stock bubble, the earlier dot.com bubble and an even earlier land bubble. But according to Krugman, the housing bubble isn't coming back soon and the wild spending and excesses of those years will not return either. That sounded good to me. Krugman warns that people will not be able to use the equity in their homes as ATM machines anymore. Some of us with an eye to the environment and the alteration and decay of our towns and sell-off of our valuable and irreplaceable farm land may see that as a good thing.

Perhaps with the end of the house-building boom we will see a slowing of the pick-up-truck traffic going east to undeveloped land in eastern Brookhaven and the Hamptons on weekday mornings (and have fewer nails in our tires from careless construction workers). But what will these unemployed builders, real-estate agents, plumbers, roofers, and self styled "developers" do with themselves? Who will support our economy? Will some new "bubble" come along?

I personally have hope for a "green bubble"which will attract investors to our shores, an put our underemployed to work developing and building efficient and salable wind mills, solar power devices, and practical geothermal and tidal technologies of the future. These industries would serve our domestic need for energy in a time of global scarcity, grow our economic base, and reinvigorate and expand our weakened manufacturing sector. Export of this green technology could alter our trade deficit to the positive side..that is, selling abroad more than we import. (Sorry China! You will have to retool your economy from the role of our economic Sancho Panza, as the contributor and enabler of our bubble excesses to a some new role.) I envision a US with a secure energy base, fueled by natural gas, nuclear, and replenishable, non-polluting green technologies, and a healthy manufacturing sector with a sound trade balance with the rest of the world. In such a world we could pay for universal health care and we will not need such a large outlay for military spending.

These visions of a green economy "bubble-free economy" will require vision and continued fiscal support from Washington. But Mr.Krugman warns us that it may be a long time before the US economy can live without bubbles. Let's hope that our leaders in Washington have this vision too.

PRESIDENT OBAMA'S FIRST ASSIGNMENTS

I. Get the US economy back into working order. The assignments below are related to this primary one.

2. Get us out of Guantanamo. Close it down and sprinkle to ground with salt.

3. Deconstruct the phony war on terror, and to start, perhaps, strike the use the term "terrorist" itself from the lexicon. It serves no useful purpose. Let us define any real enemies more accurately.

4. Get us out of Iraq. Out means out. The word needs no further defnition. It means no US fighters in Iraq, (play no games as some expect by renaming troops as advisers) a stop to the building of those massive air strips, and abandoning the $0.6 billion dollar Bagdhad embassy. Those facilities and structures are of the past. Out of Iraq means out.

5. End the useless, damaging and bloody US drone air-strikes in Pakistan and Afghanistan. They are counter-productive.

6. Get out of Afghanistan. It it not a winnable war.

7. Cut the so called "Defense" Department Budget...Make it a real "defense" department and not a "Global Imperialism" department. In bringing it down to size..we can redirect those wasted funds toward an improved domestic economy. Additionally bring the military back under civilian control. Too often we hear generals in the field making strategic pronouncements..those decisions belong in the White House with our elected officials.

7. Face up to the real problem between the Israelis and Palestinians. We can no longer support Israeli aggression and expansion. For the fact is that our uncritical support is counter to our own, as well as Israeli's best interests, and we simply can not afford the monetary or political costs any longer.

To be continued....

THE GREAT DEBT CRISIS AND LOSS OF EQUITY

The "Great US debt engine slips into reverse"or so says John Kemp, Reuters columnist in "Great US debt engine slips into reverse" Reuters, Dec 12, 2008. After six decades of excessive consumption and prosperity the credit system has come to a halt and the locomotive of the US economy is stalled and beginning to slip back downhill in the third quarter of 2008. Kemp unearths some interesting facts: For six decades now--since the 1950s, financial activity has grown much faster than GDP (gross domestic production). From 1952 to 2007 our GDP has grown by about 40 times, while credit market debt has increased by more than 100 times. Credit debt has outpaced production by better than two to one. For the entire report see: http://www.forexfactory.com/showthread.php?p=2416385

Kemp points out that in 1953 for each dollar of GDP the economy was burdened with about $1.28 in debt. By 1980, each dollar of GDP was paired with credit instruments of $1.61, and in 1990 that had grown to $2.28. But debt continued to grow and by the end of 2007, there was nearly three and one-half dollars of debt for each dollar of GDP. While during these years of incraseing debt burden the US plowed ahead..not on what it was producing but on credit advanced by China and oil producin nations of the Middle East. Their largess permitted the huge expansion of US debt, enormous growth of consumption, massive home building, enormous business investment, and of course, the unwise tax cuts and ill advised prosecution of wars of choice --all at the same time, and all on the "cuff".

Then, in the twinkle of an eye...between July and September 2008 the entire credit-debt structure came tumbling down.

But right now like a man with a hangover in a liquor store..America has sworn off debt..but perhaps just for now. For the first time since 1952 total debt owed by US households fell. For corporations debt growth slowed from 14% to 4% in the last year. Only the US government remains an active borrower, its rate increasing by 40% in the three months up to this last September.

The Bush Administration, Greenspan and and other Bush-defenders have all "Poo Pooed" the great mountain of debt...claiming that both household and corporate assets have grown even faster than the debt.

But that was then. Now household net worth has shrunk in each of the last four quarters. Household net worth, valued at $64 trillion at the end of 2007 has dropped by $7 trillion to just $57 trillion, losing about 11% of its value. That seven trillion dollars of vanished wealth is one half of the nation's annual GDP, and greater than the GDP of any other single country on the planet! This, in addition to the nearly one billion loss in mutual funds valuations and nearly two billion dollars in pension fund reserves and three trillion dollars in falling equity prices may be the greatest loss of equity ever! Finally, the net worth of corporations (excluding financial corporations) fell by 52 billion out of $16 trillion net worth or about 3% of their value.

Next: The impact of Wall Street Scandals such as the Bayou Hedge Funds case.

OBAMA'S CHOICES IN AFGHANISTAN

Stay the course or a new direction?


There are presently (as of November 2008) approximately 70,000 allied troops in Afghanistan and we are "losing the war" according to our military advisors(rf: Antony Cordesman CSIS). On all sides one hears..."we need more troops". In a Washington Post article dated November 22, 2008, Defense Secretary Gates stated that he supported a buildup of an additional 20,000 US troops for Afghanistan in the next 12-18 months. That would mean we would have nearly 90,000 troops in that war torn nation. That was close to the level of Soviet troops during the initial phase of their occupation. Will it change anything? Herodotus of Halicarnassus (born in 484BC in what is Bodrum, Turkey today ) would have been familiar with this land of Afghanistan and would have certainly thought that history would give us an answer. The father of history is famous for his statement that though history does not repeat itself, human beings in similar circumstances are wont to do similar things...and that we would be wise to learn about those circumstances..so we do not repeat these old mistakes over and over again. Unfortunately, Americans in general, are not not history devotees--to our perpetual loss and discomfort. But it was Niccolo Machiavelli who (after reading Herodotus) may have said it best: "Whomever wishes to foresee the future must consult the past; for human events ever resemble those of preceding times. This arises from the fact that they are produced by men who ever have been, and ever shall be, animated by the same passions, and thus they necessarily have the same results." And I add here Mr. Lincoln's warning to us all: "Fellow citizens, we cannot escape the past!" So in the case of Afghanistan we have a ready "case history", an open book of a most recent conflict there before us. But have we used it?

Afghanistan located in the middle east about 7000 miles from Washington DC. wedged between Iran and Pakistan. It is a nation of about the size of Texas (and close to that latitude as well) but with much greater relief, having half of its land area above 6500 feet, or well more than a mile high. The rugged Pamir Range and the Hidu Kush, parts of the Himalaya Range, make up these highlands.

The Soviet War in Afghanistan spanned the period form August 7, 1979 to May 15, 1988. Nine years of war in which more than 100,000 Soviet (now Russian) troops were deployed in a futile attempt to control an unruly people in a daunting climate and imposing terrane. As we read this essay keep in mind that the Soviets were fighting closer to home, on their near borders. Afghanistan is about 1000 miles from their southern, nearest border, while we, on the other hand have immensely long lines of supply (through Pakistan) of more than seven times that distance.

At this time, the causes for that Afghan-Soviet war are immaterial, but the circumstances and the analogies to our situation and the consequences are important aspects we should study carefully.

Invasion and Early Phase
After taking control of major urban centers, military bases and strategic installations by December 1979 the Soviet forces appeared to have the upper hand. But the large presence of USSR troops appears to have only exacerbated nationalist feelings and did not have the effect of pacifying the nation that the invaders expected. Furthermore, the Afghan army was not trustworthy and as a consequence the Soviets were increasingly drawn into fighting urban uprisings, tribal armies, and even rebellious Afghan army units. These engagements served only to further antagonize the Afghans. Soviet air power was used effectively against these uprisings when they fought as massed units. The control of air power caused the insurgency to subside temporarily.

The Guerrilla War
Between 1980 and 1985 the war evolved into a new pattern in which the Soviets occupied the cities and main axes of communication, while the mujahideen, in small groups, waged an effective guerrilla war. As a consequence, most (some estimate as much as 80%) of the country was never under USSR control. Periodically, the USSR launched major offences into guerrilla occupied areas but the overall situation was unchanged.


The Surge of Soviet Troops Phase
In March of 1985, under the direction of a new Soviet General Secretary, Mikhail Gorbachev, who was unhappy with the way the war was being fought, nearly ten thousand additional Soviet troops were sent to Afghanistan. The build-up brought the troop level at this stage to 108,000 Russian troops (not counting civilian and KGB operatives) and initiated 1985 as the bloodiest year of the war. Though the mujahideen suffered heavy losses, they remained in the field and continued to resist the Soviets effectively.


Middle Phase..thinking of withdrawal
From April 1985 to January 1987 began the implementation of a new phase..an exit strategy in which Soviet troops were limited to a supporting role for the Afghan army, such as air and artillery support, and technical assistance...though some large scale offensive actions were engaged in when it appeared they might be advantageous. By this time the Afghan Army had an official strength of 302,000 (1986) (and with Soviet forces at 108,000 there were more than 410,000 men in Afghanistan under arms by 1987.

Last Phase
Between 1987 and February 1989, the last phase of the war, the Soviet army remained in defensive positions as they prepared for withdrawal. From May to August 1988 half of the troops were withdrawn and from November to February 1989 the remainder of Soviet troops left the country.

Soviet Costs
More that 600,000 troops served in Afghanistan (but not more that 108,000 at one time), 14,500 were killed, 54,000 wounded, 400,000 fell sick from various diseases (hepatitis, typhoid fever were common due to difficult terrain and lack of sanitary facilities) Almost 11,000 Soviet army men were discharged as permanently disabled. There were heavy losses of weaponry and aircraft:more than 100 planes, 300 helicopters, and nearly 150 tanks were lost, and over 11,000 trucks and tankers were destroyed or stolen.


Cost to Afghans
Over one million Afghans were killed, five million became refugees to Pakistan and Iran, another 2 million were displaced within Afghanistan. More than a million Afghan fighters were disabled, and three million non-combatants maimed or wounded.
Farming the country's mainstay was devastated by destruction of irrigation systems (essential in Afghanistan's dry upland climate), killing of livestock, and bombing of farm fields. A post-war Swedish study revealed that 1/4 of all Afghan farmers had their irrigation systems destroyed and livestock shot.


Cities were depopulated. Kandahar a major center of population in the south was reduced from a population of 200,000 to 25,000, by Soviet carpet bombing and bulldozing.

Landmines killed 25,000 Afghans during the war.Another 10-15 million landmines unmarked and forgotten remain scattered over the countryside. Child mortality had climbed to 31% just prior to the Soviet withdrawal, and of those children who did survive, 67% were deemed severely malnourished by a UN study team.


To exploit the ethnic diversity of Afghanistan the Soviets Used standard "divide and conquer military practices". They purposely weakened the culture of Afghans by weakening traditional Islamic practices, generated refugee groups which departed from traditional home areas as they were forced to flee fighting. Thus intensifying ethnic differences and increasing inter-ethnic and sectarian animosities between formerly amicable groups. By the end of the conflict, a shared Afghan cultural unity had disappeared and the nation had been split into diverse ethnic enclaves with little or no culture, language and religion in common.

Finally the Soviet withdrawl led to the Civil War 1989-1992) See: http://en.wikipedia.org/wiki/Soviet_war_in_Afghanistan

Addendum
An interesting piece summarized from the LA Times of Nov 23,08 by Megan Stack, "Retired general looks back Russo-Afghan war."

General Ruslan Aushev should know. He served five years in Afghanistan, was wounded, and named a "Hero of the Soviets" and now heads the Afghan Veterans society. What lessons did he learn from his experiences in the 1980s?


According to Stack's piece, Gen Aushev claims the US is making the same mistakes as the former Soviets. They set up a weak leader in Babrak Karmal, who had little "prestige" with the people. "We tried to mold the people into a Soviet way of life where religion is separated from the state..and imposed youth organizations, but in a nation that was still in the Dark Ages", said Aushev.

In regard to troop numbers Aushev said, "with more troops what will change? Even with 200,000 troops, at night the Taliban come and then they are in charge. You must talk with the Taliban to come to terms..they must be engaged in negotiations."

He added: "The Taliban are an idea (not an organization) you must sit down and think what to do with it (the idea)."

"One year after we were welcomed in 1979, we had 40% of the people hating us, five years later 60%, and when we pulled out, 90% hated us..so we understood finally we were fighting (not the Taliban) but the people."

"More than a million Afghans died and 14,000 Russians ...I am sorry we did that," said Ausheve.

THE WHY OF THE IRAQ WAR

A central question of the Bush years will always be the Iraq War. Why did Bush invade Iraq? It certainly was not the WMDs. Even I, only an moderately well-informed private citizen, knew there was no evidences to suggest Hussein had such weapons. No it was not the WMDs.

One obvious reason was to remove Hussein's Iraq as a threat to Israel's hegemony in the greater Middle East region. That was attractive to an element in the government, but that could not be the entire reason.

Another, may have been George Bush's own personal predilections: When his father, George H. W. Bush wisely refrained from entering Baghdad at the end of the Gulf War in 1991, he was pilloried for "not completing the mission". Some say young George saw this as a way to differentiate himself from his father with his political base by accommodating the "hawks" and "completing the mission" to "out" Hussein. There are abundant evidences to support that contention in reports from Bush's first cabinet meetings in the early days of his administration in which it was reported that Bush stated clearly his intention was to invade Iraq. Paul O'Neil, former Treasury Secretary mentions that in his book, as does Richard Clark White House Security Chief in his memoir.

Also the stage may have been set for the invasion as far back as March 1992, when a document entitled the "Defense Planning Guideline" written by Paul Wolfowitz was leaked to the NY Times. [Wolfowitz was the former Undersecretary of State who famously stated: "Iraq floats of a sea of oil."] The frank nature of the leaked document sparked such controversy that it was quickly withdrawn and rewritten, and a toned down. A more diplomatic version was issued in April of that same year. However, the original (leaked) document is the one that the neocons of the Bush regime seemed to have kept in their vest pockets. When Bush was elected eight years later they attempted to put many of these into play as the "Bush Doctrine". Thus the Bush team had a grand strategy ready for implementation given the opportunity.

What were the tenets of the right's grand strategy as outlined in the "Defense Strategy Guidelines"? The main premise was that after the Cold War, and the collapse of the Soviet Union, the US was the sole superpower. Under those conditions the objective of the US should be to maintain that prime status. "Our first objective is to prevent the re-emergence of a new rival,...and that we (should) endeavor to prevent any "hostile" (my quotes) power from dominating a region whose resources would, under consolidated control, be sufficient to general (sic) global power." Furthermore, Wolfowitz and the neocons eschewed international coalitions, preferring the security and secrecy of US unilateralism. It stated the USA's right to intervene when and where it believed necessary, preemptively if it saw fit. It viewed Russia as a continued potential threat. In the Middle East, it stated the need to remain the predominant outside power in that region and to preserve US access to the region's oil. Eight years later, upon the election of George Bush these precepts were put into action with what turned out to be disastrous results.

As Fareed Zakaria notes in his Nov 29, 2008 essay,"Wanted a New Grand Strategy". Mr. Zakaria states that with a grand strategy in place (even a flawed one such as the Defense Strategy Guidelines) the Bush administration only had to take advantage of the "opportunities" (such as the tragedy of 9-11) to implement these ideas. Or according to Zakaria, "to use the urgent to pursue the important or, put another way, never let a crisis go to waste."

Thus the Bush Administration saw an opportunity to implement a major part of its grand strategy as the 9-11 tragedy unfolded. The implicit reasoning was put forth by Mr Robert Kagan (1) (in the Washington Post, June 19, 2005). "The most sensible argument for the invasion was not that Hussein was about to strike the United States or anyone else with a nuclear bomb. It was that containment could not be preserved indefinitely, that Hussein was repeatedly defying the international community and that his defiance appeared to both the Clinton and Bush administrations to be gradually succeeding. The main concern of senior officials in both administrations was that, in the words of then-national security adviser Samuel "Sandy" Berger, containment was not "sustainable over the long run." ....if and when containment collapsed. As Berger put it, "Saddam's history of aggression, and his recent record of deception and defiance, leave no doubt that he would resume his drive for regional domination if he had the chance."

It was Kagan's opinion that if the Bush administration had not gone to war in 2003, the United States might have faced a more dangerous and daring Saddam Hussein later on, consequently it felt compelled to act. So, in addition to whatever price might have been paid, certainly by the Iraqi people and possibly by Iraq's neighbors, for leaving Saddam in power, we might have wound up going to war anyway. There is the further question of what the entire Middle East would have looked like with a defiant, increasingly liberated Hussein still in power. To quote Berger again, so long as Hussein remained "in power and in confrontation with the world," Iraq would remain "a source of potential conflict in the region," and, perhaps more important, "a source of inspiration for those who equate violence with power and compromise with surrender." Whether historians judge the war favorably will depend heavily on whether post-Hussein Iraq does indeed provide a different sort of inspiration, but, again, the effort to change the direction of the region was surely worth paying some price."

This last statement is the crux of Kagan and Berger's arguments. Would Hussein have been containable? And was he to become a "source of inspiration for those who ....equate violence with power and compromise with surrender." And we can add here..an inspiration for those who might have the temerity to stand up to American domination in the region. Thus the entire question comes to this. Was the effort to change the direction of the region "worth paying some price?" The answer is yes..some price. But at what price? Today we must look at the balance sheet prepared for us by the Sandy Bergers, Kagans, Wolfowitzs and Bushs. Was the devastation of Iraq, the loss of life, the unimaginable costs in money and horrible costs in blood and suffering be worth the change they sought? Did they accomplish their goals? Can we say we have moved the region in a new direction (a pro-American direction)? I think not. We have changed the Middle East but not they way Kagan, Berger, Bush et. al wanted. It is a less pro-American Middle East and a more dangerous world for us all. Can we honestly say that a further diplomatic effort was not the wiser choice? I think not. It is obvious that those that prepared our balance sheet prior to the war saw only what they wanted. They are a generation too far removed from the horrors of the great wars in Europe. Perhaps we must learn over and over again what horror and devastation war really is.

Were there other reasons? Many have suggested that Bush feared he might end up as his father did, challenged by a strong Democrat and ousted after only four years. However, a well-timed middle east war would have the advantage of avoiding that eventuality and as well, advancing the Wolfowitz-Bush global strategy, eliminate the potential for a rival such as Russia to control a rich oil reserve, and make it possible for the US to position itself in the center of the Middle East where it could more effectively project its military power; and most importantly for Bush, make it difficult for the unsteady, "wet behind the ears" junior Bush to be challenged from the left in the 2004 election. Furthermore, if he attained a second term he could cement Republican gains in Congress, and the Supreme court and thus help to permanently ensconce Republican far-right wing philosophy and its "grand strategy" in a power position for the next several election cycles. And certainly, he was not immune from the personal financial advantages a war could have to advance the Bush-family economic interests. The war was a win-win situation for Mr. Bush. There was little to say about it that was not positive, except perhaps there was no "good reason" to go to war. But then Mr. Bush was adept at "cherry picking" among CIA data and wholly unperturbed and unembarrassed (perhaps unaware) of the lack of logic in his verbal gyrations prior to and during the war.

Gwynne Dwyer (Japan Times, March 22, 2008) writes in "Iraq after five years of war" that the "facts" Bush's defenders love to restate over and over are how Hussein's security forces killed thousands of Iraqis every year! The Bush war removed this tyrant from power. But as Dwyer states, the figures of Hussein's atrocities (as horrible as they were) pale in comparison to even the monthly figures of deaths resulting from the insurgency and the sectarian violence unleashed by the US war. Yes Iraq's evil Hussein killed his own people during uprisings. There is no valid comparison here, but in an accounting only of the number of dead the deaths of Iraqis at the hands of Hussein and his henchmen pale in comparison to the numbers that the US has been responsible for as the result of the invasion and its aftermath.

Keeping in mind that Iraq posed no threat to its neighbors (or to Israel or to the distant USA) when we invaded, and there was no moral imperative to invade. Recall that their army had been annihilated in the Gulf War of 1991 by "pere" Bush and could not be rebuilt because of the strict and harsh post-war sanctions imposed on Iraq. [The economic and health effects of that ten year period of sanctions are another chapter of American abuse of Iraqi population which no one wishes to include in the estimates of civilian deaths. That is another story.] The oft repeated claim of connections to al Qaida were patently false. For basic religious reasons...Hussein was a Bathist Sunni while al Qaida were predomnately Shia. The antipathy between those two groups was on the level of the hatred between Catholics and Protestants in Northern Ireland. The idea that they might collude with each other is hard to imagine for anyone understanding these basic Iraqi cultural facts. In fact, a Pentagon study of post-war captured Iraqi documents (more than half a million of them) proved conclusively that Iraq had no ties to al-Qaida. So we can just leave those tried old justifications as one of the many "mis-statements" that Bush and his cronys used so effectively in the lead up and during the war.

The balance sheet must include the US dead (nearly 5000) and maimed and the Iraqi dead and maimed. Had we not invaded, those vast numbers of Americans and Iraqis (solid estimates for Iraqi dead range from 100,000 to 600,000) would still be alive. And let us not forget the horrendous monetary cost...three trillion dollars in lost war expenditure (See Stiglitz and Bilmes' book: "The Three Trillion Dollar War".) dumped down a hole. The money was spent for no good purpose since the outcome of the war has not changed the region the way the war planners had hoped. That lost war money would be a great boon to us today during the economic crisis we face, were it still in our coffers.

Our so-called "troop surge" was a "success" but not because of the additional number of soldiers but because of the cooling of the Iraq civil war (nothing we had to do with) and our policy of walling off and segregating formerly mixed Sunni-Shite neighborhoods, as well as the costly arming and subsidizing of local Sunni tribal groups...many of which now pose a threat to the Iraq central government.

Then there is the case of the Iraqi refugees and displaced persons. About one out of every eight Iraqis have fled their neighborhoods and homes (or about 4-5 million people displaced) out of a pre-war population of about 32 million. Will they return? Probably not. And certainly not to their old homes which have been destroyed or taken over by some other family. The costs to a nation so altered by human tragedy are incalculable.

Again was the war worth it in terms of cost? The direct costs (12 billion x 68 months) right now (December 2008) range from 800 billion on up to a trillion dollars. Were those costs contributory to the economic melt-down in the USA and the world of late 2008? Linda Bilmes a budget and public finance expert at Kennedy School of Government (Harvard) thinks so and states that "both in a long term sense and short term...the US is worse off economically..because of the war." She states that by adding nearly a trillion dollars to the national debt, due to borrowing for the war, debts which clearly limit the fluidity and financial flexibility to respond to the financial crisis. That "war money" is not available to provide things like economic stimuli to improve the economy." Bilmes states further that as a result of having to borrow the money for the war (and ultimately to repay its interest costs) that any idea that the war was good for the economy is a myth.

We must not let the Bush revisionists get away with it. Hearing that the war was worth it go back and dig up the real facts and respond to them with the truth. Our very democracy depends on a valid recounting of the past, so we can avoid making the same mistakes over and over again.

1. A little background on Mr. Kagan: He writes extensively from the far right perspective on US strategy and diplomacy. Kagan and fellow neoconservative William Kristol co-founded the Project for a New American Century (PNAC) in 1997. Also Kagan signed the famous 1998 PNAC letter sent to President Clinton urging regime change in Iraq. A more critical view of Mr. Kagan appeared recently in a piece by Glenn Greenwald (March 11, 2007) entitled, "Why would any rational person listen to Robert Kagan? (Read at: http://www.salon.com/opinion/greenwald/2007/03/11/kagan/)
Greenwald states:"No rational person would believe a word Robert Kagan says about anything. He has been spewing out one falsehood after the next for the last four years in order to blind Americans about the real state of affairs concerning the invasion which he and his comrade and writing partner, Bill Kristol, did as much as anyone else to sell to the American public."]