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Generational Dynamics Web Log for 16-Sep-2011
16-Sep-11 World View -- Fed bails out Europeans with dollars

Web Log - September, 2011

16-Sep-11 World View -- Fed bails out Europeans with dollars

Cameron and Sarkozy, in Libya, promise to keep on fighting

This morning's key headlines from

* World View -- Fed bails out Europeans with dollars
* Cameron and Sarkozy, in Libya, promise to keep on fighting
* Fed bails out Europeans with dollars
* Israel prepares for West Bank violence on bid for Palestinian state
* Turkey's rise threatens Iran's dreams of regional hegemony
* Jordanians hold smaller than expected anti-Israeli protest
* American officials blame Pakistan for terrorist attack on Kabul

Cameron and Sarkozy, in Libya, promise to keep on fighting

Cameron and Sarkozy meet cheering crowds in Benghazi on Thursday (Reuters)
Cameron and Sarkozy meet cheering crowds in Benghazi on Thursday (Reuters)

Rebel forces are continuing to battle pockets of pro-Gaddafi forces in Libya, with Sirte, the birthplace of Muammar Gaddafi, being one of the last holdout cities. U.K. Prime Minister David Cameron and French President Nicolas Sarkozy became the first foreign leaders to visit Tripoli since Nato's humanitarian kinetic military activity in Libya began. According to Cameron,

"This is not finished, this is not done, this is not over; there are still parts of Libya under Gaddafi’s control. We will help you to find Gaddafi and bring him to justice."

Sarkozy added that airstrikes against pro-Gaddafi forces "will continue as long as Libyan leaders think Libyan people are in danger." Whether this means that the Nato action will morph into a kind of "nation-building" exercise, like the ones in Iraq and Afghanistan, remains to be seen. Bloomberg

Fed bails out Europeans with dollars

The European Central Bank (ECB) can "print" as many euros as it wants, and it has been doing so to purchase near-toxic bonds from Italy and Spain. However, the ECB cannot print dollars, and for the last couple of weeks there's been a growing crisis that European banks don't want to lend dollars to one another, let alone to other entities. U.S. money market funds and other traditional dollar lenders have become increasingly nervous about the threat of a Greek debt default. The ECB itself has been lending dollars to European banks, but the ECB is running out of dollars. Bloomberg

In order to "kick the can down the road" yet one more time, and to provide three more months for the Europeans to find a way to keep Greece from defaulting, the Fed is setting up a "liquidity swap program" with four foreign central banks -- the ECB, the Bank of England, the Bank of Japan, and the Swiss National Bank. The Fed sets up "swap lines" with the foreign banks, exchanging their currency for dollars, with an agreement that the foreign banks have to exchange back at a fixed date, after three months in this case. Thus, the Europeans now have enough dollars to last them until the end of the year. Reuters and Federal Reserve

Israel prepares for West Bank violence on bid for Palestinian state

Large demonstrations and possible violence in the West Bank are expected in conjunction with the Palestinians' request for United Nations recognition of an independent Palestinian state. In preparation, Israel has given approval for the Palestinian Authority (PA) to equip its security forces with riot-control gear, such as tear gas grenades and rubber bullets. In addition, the Israel Defense Forces (IDF) is reinforcing its West Bank forces, calling up a few reserve battalions. The battalions have trained to deal with possible scenarios, including violent marches toward settlements, IDF checkpoints and major roads serving the Israeli population. Haaretz

Turkey's rise threatens Iran's dreams of regional hegemony

When the "Arab Awakening" began, Iran claimed credit for it as having been inspired by Iran's Islamic Revolution of 1979, and hoped that it would lead to Iranian leadership among the Arab states. This was always a REALLY silly claim, but now Iran is facing a different reality. The Arab pro-democracy demonstrations are galvanizing Arabs around Turkey, leaving Iran out in the cold. This development is consistent with my oft-stated expectation that when forced to choose sides in the coming Clash of Civilizations world war, Iran will side with the West, including Israel. Financial Times (Access)

Jordanians hold smaller than expected anti-Israeli protest

Protesters shout anti-US and Israeli slogans outside the US embassy in Amman (Reuters)
Protesters shout anti-US and Israeli slogans outside the US embassy in Amman (Reuters)

Activists had called for a "million-man march" against Israel, but only 300 or so demonstrators gathered at the Israeli embassy in Amman, Jordan, on Thursday. They demanded to end the 1994 Wadi Araba peace treaty with Israel, the second Arab peace deal signed with Israel, after the 1979 deal with Egypt. The demonstrators, a mix of leftist, liberal and Islamist opposition activists, instead gathered near a mosque close to the complex, shouting, "No Zionist embassy on Arab land." Al-Jazeera

American officials blame Pakistan for terrorist attack on Kabul

U.S. Ambassador Ryan Crocker and U.S. Defense Secretary Leon Panetta are blaming Pakistan for not preventing the Haqqani group from perpetrating several terrorist attacks in Kabul, Afghanistan. On September 13, militants dressed in burqas worn by many Afghan women ferried a carload of weapons and ammunition past checkpoints and set off suicide bombs, killing six Nato personnel. This came three weeks after the Taliban killed eight people in an assault on the British Council cultural center. Pakistan's Inter-Services Intelligence (ISI) service is known to have ties to the Haqqani network. Bloomberg

(Comments: For reader comments, questions and discussion, see the 16-Sep-11 World View -- Fed bails out Europeans with dollars thread of the Generational Dynamics forum. Comments may be posted anonymously.) (16-Sep-2011) Permanent Link
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