Terrorism, the AEL and porn

The Dutch secret service AIVD presented its annual report for 2002, spending considerable time on the threat of Islamic terrorism and the recruiting of terrorists in the Netherlands:

Despite recent successes in the battle against terrorism, Islamic terror networks are still capable of carrying out attacks all over the world, according to the 2002 annual report of the Dutch secret service AIVD.

Caretaker Interior Minister Johan Remkes presented the report to Parliament on Tuesday. The AIVD said radical Islamic networks are also active in the Netherlands and the groups generally play a supporting, rather than a front-line terrorist, role by giving financial, material and logistical assistance to terror cells.

The Dutch groups also recruit young men for the holy war, or jihad, against the "enemies of Islam," the AIVD alleged. This is a repeat of its claim, made in December 2002, that dozens of young Muslim men were in training.

But Dutch security authorities have not brought any alleged terrorists to justice since the September 11 attacks in the US.

This is nothing particularly new, but it underscores the activities of Islamofascist organization in the Netherlands. The Saudis have been financing a lot of this, even to the point where Dutch politicians are now calling for the government to take action against Saudi Arabia. But at the same time, the AIVD's report also shows that while awareness of surveillance of various extremist Islamist groups has increased, there has been little tangible progress. The arrests that were made last year evaporated in the increasingly risible Dutch justice system.

One of the groups mentioned in the report is the Arab-European League, founded in Belgium and now establishing itself firmly in the Netherlands:

The AIVD emphasised that groups — such as the Arab European League (AEL) in the Netherlands and Belgium — which play on creating a Muslim identity and religious or ethnic sentiment, are a security risk.

The leader of the Dutch AEL has not formally been instated yet, but it's likely to be Mohammed Cheppih, who is known to be funded by the Saudis in role as chairman of the Muslim World League in the southern Dutch town of Tilburg:

Islamic centres in Amsterdam and Eindhoven have been singled out as particular hotbeds of Muslim extremists and a report in newspaper Het Parool said two hijackers involved in the September 11 terrorist attacks in the US, including Mohammed Atta, possibly received ideological training at the El Tawheed mosque in Amsterdam.

Wilders and VVD colleague Ayaan Hirsi Ali have demanded the mosque's closure.

The Islamic conference was organised by a foundation which the intended chairman of the Arab European League in the Netherlands, Mohammed Cheppih, is involved with and Atta and another hijacker possibly attended at Eindhoven or Amsterdam.

The AEL is a profoundly dangerous organization because its founder Abu Jahjah knows how to play the democratic game. He's not just another ranting zealot, but he's proving adept at using the rhetoric and paraphernalia of a bona fide democratic movement as a cover for his radical Islamism. But he does conform to one of the more culturally invariant features of shady populist leaders in that he does not really practice what he preaches. Abu Jahjah was under investigation in Belgium last year for his role in rioting in Antwerp, and as part of that investigation several of his computers were seized. The latest information to trickle out of that investigation is that Belgian police are taking a closer look at the porn on Jahjah's computer to determine whether any of it is illegal. He claims he's being set up of course, because even the possession of legal porn would rather undermine his Islamically Pure image amongst the Arab immigrant masses. In a few weeks' time the Belgians go to the polls, where the AEL is participating in an alliance with an extreme left-wing party. The revelations certainly come at an awkward time for Jahjah.

Then again, it would not surprise me in the least to see Jahjah partaking of the carnal pleasures of the decadent West. Not that this would even be too out of step with my own insight into the Saudi mind. I am getting quite a few hits via search engines to my blog from Saudi Arabia, looking for various things like "Saudi girl sex," as well as search strings in Arabic. I touched upon this earlier, but that particular blog entry keeps getting the search engine hits. The string "Ù?Ù?اÙ?ع سÙ?س" alone netted me 182 hits this month (it's part of a comment in Arabic). I wish I could read Arabic though, but it does seem that my blog has become a Saudi porn magnet. I've had 842 hits from the .sa domain this month.

I'm not sure whether to be encouraged by this or not. On the one hand, it does show the universal appeal of sex and porn. The "Democracy! Whiskey! Sexy!" meme coming from Iraq would support this. On the other hand, the strict puritanism of the Islam, and especially Wahhabi Islam is in stark contrast to this desire for sex and porn. In that sense, it's another manifestation of the fantasy world, the dream palace of the Arabs. They've been very good at lying to themselves, about their own importance and the sorry state of Arab society. The liberation of Iraq has made these lies, both official and self-inflicted, painfully obvious. Reality does come crashing through in the end. As they say, reality is that which is you stop believing in it, does not go away. And it's not going to go away for the backward Arab societies either.

Nor is the reality going away that Europe too is threatened by the Saudi-funded Islamofascism. That's the reality politicians here will have to confront.

Turning up the pressure

One down, two to go in the Axis of Evil. Although it's a Reuters report (and thereby a bit suspect), it still makes an interesting read: the US is accusing Iran of developing nuclear weapons. The tone of the article is probably meant to be critical of the US, in the true Reuters style. (Either that or I am becoming paranoid about Reuters coverage). It's full of references of how the US used allegations of WMD programs in Iraq for the war there to depose Saddam. In Reuters-speak, this is no doubt a Horrible Thing, but in this instance they're doing us a favor. Turning up the pressure on mullahs is just what the doctor ordered, and the Reuters dispatch is doing just that.

The ultimate goal is the removal of despotic leadership in Iran, and this may not require a war as it did in Iraq. The mullahs do not have as firm a grip on the country as Saddam had, and the rumblings of discontent have been going for many years. It looks as though the Iranian people will be able to overthrow the mullahs on their own without direct intervention from the US. It's a process that's almost impossible to manage or direct from abroad, but it would be wrong to interfere too much at this stage.

An Iraq-style invasion is a costly thing to do. In Iraq's case, it was a relatively simple matter; taking on Iran in direct military confrontation would likely be less simple. Not that the final outcome would be in doubt there either, as the Iranian people are fed up with the mullahs and the Iranian armed forces are about as effective as the Iraqis. The sheer size of the country would make things more complicated though. It can be done, and will be done if necessary, but the hope is that it will not become necessary.

If a hammer is your only tool, you tend to see all problems as though they were nails. In Iraq, the hammer worked fine, but other parts of the toolkit will be brought to bear in Iran. (One of the criticisms of Bush is that he's a war monger, invading Iraq, but that he's inconsistent in not invading North Korea and Iran; i.e. being too bellicose and not bellicose enough at the same time. But Bush knows he has more tools than just a hammer at his disposal.) Turning up the pressure externally on the theocratic thugocracy in Iran is one these tools.

No option is without its drawbacks though. Doing nothing means capitulating to the Islamofascists and inviting them to have another shot at us. That's clearly not an acceptable solution, and would leave the Iranian people in the lurch. Invading Iran to remove the leadership would work, but it would take time and a considerable amount of military power, and cause civilian casualties. But the current course of turning up the pressure on the mullahs is not without cost either. Part of the calculation is that the pressure will cause the mullahs to feel more nervous and encourage opposition within Iran. The downside there is that there will be more repression in the short term, a price that will have to be paid by the people of Iran. The increased repression will lead to increased resistance and opposition to the regime, improving the chances of an overthrow of the mullahs. This calculation works in Iran because the mullahs had not gone as far as Saddam (or Kim Jong Il) in terrorizing their own people. It's a cold-hearted calculation to make, but there is no alternative in the short-term. This is one of those situations in which there is no neat, tidy answer, just a messy one. All we can do is to try to make as it mess-free as possible, and hope for a quick end to the theocracy in Iran. But at least in that we're on the same wavelength as the people of Iran.

The Saudi connection

It will come as no surprise to hear that various Muslim extremist groups in the Netherlands are being financed by Saudi Arabia:

A director of the Islamic foundation Al Waqf al Islami in Eindhoven, Ahmad Al Hussaini, is included in a list of 20 Saudi Arabian business leaders alleged to have provided financial support to the Al Qaeda terror network.

[...]

But the [Dutch secret service] AIVD included the Al Waqf al Islami foundation in a report last year that identified the foundation as one of several extremist groups with close ties with Islamic primary schools in the Netherlands. The foundation was also described as a radical Islamic group.

These recent revelations are just further confirmation of the role that Saudi money is playing in supporting Islamofascist terrorism. Politicians are stirring again, and the parliamentary representatives of the CDA, VVD and LPF are demanding (link likely to go stale, sorry) that the foreign minister summon the Saudi ambassador for an explanation. They also demand that the Dutch government force that Saudis to stop such support. It's a thought I fully support, but somehow I don't think it's going to make much of a difference, but at least the realization of the Saudis' role in the subversion is getting more play here. The Saudis are not going to be impressed by the protestations of a tiny, insignificant country like the Netherlands. We need President Bush to put its weight behind this. As Glenn Reynolds has been saying on Instapundit, this has been one of the big blind spots in this current administration's War on Terror. Until now, pragmatic expediency of getting rid of Saddam meant that the Saudis would have to be dealt with later. Now that Saddam is gone, the time has come to start ratcheting up the pressure on the Saudis. If even the Dutch are willing to do it, then why not the Americans?

A forced tour of Iraq

While flipping through TV channels tonight, I briefly came upon a program on a Dutch channel, where they were interviewing protesters at an Amsterdam "anti-war" march. Asked why he was there, one protester said he was against war. Then the interviewer asked him which other protests he'd been involved in, and the protester fondly recalled his memories of Vietnam, Panama, the first Gulf War. Then a question reporters never think of asking: "So it's all war where America was involved. Did you protest against any wars where other countries were involved like Russia or China?" The protester was clearly taken aback and could not answer. After some prodding he said "Tibet, I'm against Tibet."

At least all those years of protesting haven't dulled the intellectual vigor of the left. They're as sharp as ever. (Others who were interviewed were similarly flummoxed, but I didn't have much time to watch. I should have taped it.) It wasn't a big surprise to see that the protesters' main driving motive was anti-Americanism. They've long been Moscow's useful idiots, and since our victory in the Cold War they've been looking for new tyrants to appease. Now that Saddam is gone, I'm sure they'll find the next one soon.

What to do with such people? It's obvious that they're not amenable to reason, as they're living in a fantasy world of their own making. One interesting suggestion would be to give them a tour of Iraq:

It is those outside Iraq, those who enabled Saddam's killing machine, those who extended his rule through the perversion of diplomacy, those who protested and signed petitions against the "immoral war" to remove him from power but who never once mentioned Saddam's victims, whom Gen. Franks should force to see the meat hooks hanging from ceilings, the electrodes, the human meat grinders and the acid baths.

It is they who should be forced to see the flimsy coffins stacked one upon another, the thousands of corpses - men, women and children - with mutilated bodies and a single gunshot wound to the head. It is they who should be forced to see the pictures and read the record books of Saddam's victims - like the Nazis, Saddam's executioners kept detailed records in order to demonstrate their ideological commitment to the cause.

That's the only way I'd welcome Jacques Chirac and Dominque de Villepin, Gerhard Schröder and Joschka Fischer to Iraq: on a guided tour by Tommy Franks.

Inverted justice

The blogosphere has been pretty good covering the sentencing of Fortuyn's killer, who was condemned to a ridiculous 12-year sentence. Now the appeals are beginning to roll in both from the prosecutors as well as from the defense. There was a big outcry in the Netherlands over the light sentence handed out to Volkert van der Graaf, which even led to one of the judges receiving a bullet in the mail. The Dutch judiciary has never been known for handing out particularly tough sentences, as evidenced in recent cases. Moreover, the authorities are all but capitulating to criminals.

The appeal by the defense in this case is a real tear-jerker. The defense attorneys argue that the judges did not take into account the "harsh conditions" under which murderer van der Graaf had been kept initially. Moreover, they say, they disregarded the statements made by several politicians about murderer van der Graaf. Poor baby.

Meanwhile in the inverted world of Dutch justice, a jeweler is faced with a demand for a two-year prison sentence because he shot and killed one burglar, and wounded another. The public prosecutor claims it's a case of manslaughter, as the jeweler refused to help the scum who were trying to rob him after shooting them. And he also kicked one of them (hard, they add) in the head. And to make matters completely unbearable, the gun he committed his crime with was of course illegal.

It's outrageous that law-abiding citizens face jail time for protecting their property. If more burglars were faced with the threat of having their brains blown out, they might decide to take up a less risky profession. The only silver lining is that even if the jeweler is convicted to the full two years, he won't have to spend very long in prison. But every day that he does is an outrage in itself. Meanwhile real criminals, like Pim Fortuyn's murderer, are treated with preposterous lenience.

Mickey Kaus (no permalinks?) pointed out the following:

Among the lessons the twentieth century teaches us, one is surely that assassinations work -- maybe not in the long-term (centuries), but in the medium term (decades). You're not supposed to say this. It's a bit like admitting that most great popular music is made on drugs. But Oswald, Sirhan, Ray, Amir, van der Graaf -- name five other men who have done more to alter the course of history (for better or, in this case, worse) in their lifetimes. You'd think the Dutch judges would recognize this and adjust the punitive calculus accordingly. Instead, they've made an offer many ineffectual-yet-earnest activists may find hard to refuse.

This is exactly the point. If you do want to commit murder, do it in the Netherlands. If the reason is important enough for you, then spending 12 years in prison may not be such a bad deal. And if you can convince psychiatrists that you're actually nuts, you can get off even more easily. It's a ridiculous and dangerous position for a country to be in, but somehow I suspect it's not going to improve any time soon.

Listen to their friends

Perspective is a funny thing. Changing your perspective can lead to interesting insights. One way of changing the perspective is to go over and read how propaganda agencies like the Iranian IRNA are reporting matters compared to how western media are reporting things. IRNA's reporting is obviously very far from unbiased, truthful, fair and objective, and every report they produce is in the blatant self-interest of the despotic theocrats in charge of that country. It is exactly this propagandistic slant that gives an insight into what's going on there and what they think is important. So it's particularly interesting to read a story from IRNA headlined "France, Iran stress UN role in post-Saddam Iraq:"

Iran and France on Thursday underscored the role of the United Nations in post-Saddam Iraq, with President Mohammad Khatami warning of many problems if Iraq's fate is not immediately left to its people to decide.

"I believe what happened in Iraq is not over yet and if the fate of this country immediately is not left to the Iraqi people (to decide), America, the region and the world will face many problems," he told French Foreign Minister Dominique de Villepin here.

"The United Nations must have a fundamental role in disarming Iraq and establishing a legitimate government there as well as reconstructing Iraq," de Villepin, who arrived here on a one-day visit early Thursday, said.

[...]

The president hailed France for leading the world's anti-war front and hoped that "France, given its position in the world, will make more efforts to promote peace, global coexistence and justice in the international scene".

He also praised Paris' stance on guaranteeing just peace and security in the occupied Palestinian lands. "An enduring peace in the Middle East will not be achieved without restoring the legitimate rights of all Palestinians," Khatami said.

It does not even surprise me to see de Villepin visiting the next doomed fascist dictator that he wants to be chummy with. And the theocratic thugs running Iran at the moment obviously are delighted to have French support for their regime. I'm sure de Villepin enjoyed being in the reality-distortion field of like-minded people. When Khatami praises the French efforts to "promote peace, global coexistence and justice," what he really means is that he's grateful that there's still someone stupid enough to stand up for dictators like him.

Note to the French: if you're in a hole, stop digging. Throwing themselves wholeheartedly into the war on Saddam's side, they are now apparently trying to repeat the same mistake again with Iran. Perhaps they're just trying to get into the Guinness Book of World Records as the country supporting the greatest number of fascist states? The country choosing the losing side most often? I'm willing to donate any surplus shovels to the French government, though.

While this visit to Iran may not have made the front page in the western press, I have a suspicion that it did not go unnoticed in the White House.

A year without government

The Netherlands has now been without effective government for over a year. It's been almost a year since Pim Fortuyn was murdered in the election campaign that followed the fall of the Kok government over the Srebrenica affair. While elections are pending the old government stays in office as a caretaker, but is allowed by custom to take any significant policy decisions. The same applies to the period after an election while a new coalition government is formed. Last May's election resulted in the historic win of Pim Fortuyn's LPF party, but that victory was squandered by the incessant bickering within the LPF. So while there was a "real" government in power fairly shortly after the elections of last year, it never got around to doing very much. It all ended in the fall of the government which in turn led to elections in January. All in all, the country has now been rudderless without an effective government for over a year.

A new government is still not in sight, as negatiations between the Christian Democrats and Labor have collapsed, and this after three months. They had to make the effort to try to form a coalition, since these two parties were the big winners of the last election, and they came pretty close to agreement. However, neither seemed very enthusiastic about actually forming such a government and it was the Christian Democrats who finally pulled the plug on the negotiations. One consequence is that the leader of the Christian Democrats, the current caretaker prime minister Balkenende, has suffered from a fall in his credibility. He apparently needed to consult with his followers every other minute during the negotiations, giving an impression of someone who's not really in charge of his own party.

The most likely outcome now is a second try at a coalition of the Christian Democrats, the right-wing Liberals (VVD) and the LPF. There are personal issues galore with this combination, since it was VVD leader Zalm who torpedoed the last coalition over the LPF's infighting. He thought he could harvest the LPF voters easily, but that never happened. So the LPF does not look favorably on him. At least in terms of party programs these three parties seem to be close to one another, making it easier for them to agree on policy than the Christian Democrats' abortive tie-up with Labor.

It's going to be a while yet before we get a new government. Is not having a government really such a bad thing? I definitely think we have far too much of it in the Netherlands, but the day-to-day machinery of the State continued to grind and grind finely in the absence of a policy-setting government. Meanwhile the economy is in a hole, crime is rising, education and health care have their own problems and the issue of the assimilation of immigrants has not been addressed. I hold little hope that any new government would actually tackle these problems effectively, but the status quo is not a tenable situation either.

More drift ahead, and plenty of rocks to hit.

Montana sells French stocks

The publicly run pension fund in Montana recently decided to sell its French equities. It was billed as an investment decision:

"We couldn't figure out why France would be so adamant in keeping a murderous dictator in office," Klawon said. "The only thing we could surmise is perhaps French companies have been doing business with Iraq against U.N. sanctions."

If there were illegal dealings by the French, Klawon said that would add to local investment risk.

"If we were helping French companies that were indirectly contributing to terrorism, what would the people of Montana think?" he said.

With a total of around $15 million in stock, the amount is puny and is not going to make the slightest difference in French stock prices. Although the rationale given is investment-based, it's obvious that the underlying motive is political. While I've been avoiding French products myself, it's a rather more dangerous thing to do for the trustees of a pension fund. They have a fiduciary duty towards their shareholders to protect their investments and to take decisions that are in their interests. Failing to do so runs the risk of serious jail time. While I sympathize with the sentiment, the Montana trustees are opening themselves up for a potential legal liability here.

However, the investment-based case is not entirely without merit, as French companies have been dealing with Saddam. It's not clear though how much of an impact these deals have made on aggregate profitability of corporate France. The most flagrant of these is probably the deal that TotalFinaElf made with Saddam to develop the Majnoon and Bin Umar oil fields (these are known as "supergiant fields," with estimated reserves of 10 billion barrels of oil, and production capacity of 1 million barrels per day). That deal was thought to be worth in the order of $50 to $75 billion dollars. I don't know how these estimates were made, but it when people are talking about the worth it's like to be in terms of revenues rather than profits. TotalFinaElf currently has about $100 billion in revenues a year, and that $50 to $75 billion is probably a lifetime number, not an annual one. Still, it would have added perhaps $5 billion a year in revenues, and that would translate into $500 million to $1 billion in extra profit, depending on how much of a sweetheart deal TotalFinaElf got from their friend Saddam. But even that does not necessarily move stock prices.

It all depends on what kinds of expectations have been priced in. It's all a relative game and any newsflow affects stock prices to the extent that the newsflow differs from the expected, priced-in newsflow. That's how companies can report a huge profit but still see their stock price decline, if that profit did not match expectations. It does not look as though TotalFinaElf's megadeal with Saddam was priced in to begin with, so there are unlikely to be any losses stemming from the unwinding of the deal. On the other hand, there is a huge loss compared to what might have been.

The way French stock prices might be affected is by the marginalization of French companies by American consumers, be they private, corporate or government consumers. If the anti-French feeling persists for long enough, then French companies will be feeling the pinch eventually. But it's unlikely to be a short-term effect. Although there is plenty of anectodal evidence for Americans boycotting French products, the effects have thus far not been quantifiable. It'll be interesting to see how that shakes out. The much bigger worry for French companies is the poor state of the French economy, which really could put a big dent in their earnings.

Massive public searches now common

Under a law enacted last year, the Dutch police has the power to conduct massive searches. The way it works is that an area of town is cordoned off, and everybody within that area is subjected to a search in order to confiscate weapons and drugs. And they're not just on the streets, as police officers also go into bars and cafes and search the people there. After a slow start these searches are becoming common. Last Friday there was a big search around the Rembrandtplein, a popular nightlife hotspot in Amsterdam. About 1,000 people were subjected to a search. As a result 25 knives were confiscated, an imitation gun, some pepperspray and cocaine. This kind of police activity now happens almost every weekend. It does not make the newspapers anymore (the link above goes to a local TV station's news).

The goal of these raids is to reduce crime by making the possession of weapons riskier. You're not allowed to carry any kind of weapon here, be it a knife, gun or pepperspray, and the statistics from Friday night's raid indicate that about 3% of those searched had proscribed weaponry on them. In removing these from circulation, you could call the raid a success. It would be interesting to see more details on the kinds of people who were caught; were these hardened criminals, or just ordinary people who happened to have a swiss army knife on them? I suspect hardened criminals will find a way to escape the raid. Ultimately, it's the actual recorded crime numbers that will show whether these raids are having any effect on reducing crime.

Irrespective of that, the infringement of civil liberties that these searches represent is very serious indeed. Going out for dinner and a drink in Amsterdam (or anywhere in the Netherlands) now puts you at risk of being searched by the police. Not because they have probable cause or a reasonable suspicion, but simply by the fact that you're there. It puts an excessive amount of power in the hands of the authorities, and history shows that such power is likely to be abused. The state has no business prying into an individual's affairs as long as there is no reasonable suspicion of criminal behavior.

Crossing that line and casting the net as wide as the Dutch authorities have done will also have more pernicious effects in the longer term. It will inure the population to intrusive government control, which makes the next step on the way to eviscerating civil liberties that much easier. The most distressing thing is that these raids enjoy massive public support.

if the current level of oversight and intrusion fails to curb crime, the temptation will be great to ratchet it up a notch. It will be possible to reduce crime by ever greater amounts of oversight and intrusion, but with every step you take down that road you end up closer to an authoritarian police state. It's better not to get on that road on the first place.

Kim Jong Il supposedly visits Beijing

The Swiss newspaper Neue Zürcher Zeitung reports that Kim Jong Il supposedly paid China a secret visit. This information in turn is based on a report in the American magazine "Strategic Forecasts," which may be referring to Stratfor, but I'm not sure of that. The information is based on sources in Russian intelligence. There's not much information in the newspaper article, except that Kim is alleged to have made this secret trip a few days after the war in Iraq started. He met with new dictator Hu Jintao in Beijing, who is said to have assured Kim that China would not remain passive should relations with the US deteriorate further.

There's not too much concrete information here to go on, and the commitment of the Chinese to defend Kim Jong Il stands in contrast with reports that the Chinese cut off the oil pipeline to North Korea late last month. This would have been shortly after Kim supposedly visited Beijing. Coincidence? I hope not. It might be a sign that the Chinese leadership is coming to realize that having a lunatic egomaniac dictator with nuclear weapons and long-range missiles as a neighbor is not exactly a good idea.

My speculation is that Kim did go to Beijing and scared the hell out of Hu Jintao, who realized what a nutcase Kim is. The shutdown of the oil pipeline was Hu's reaction. Let's hope this marks a new beginning of Chinese realism in dealing with Kim Jong Il.

Chile's Unidad de Fomento

Traveling to different countries can be eye-opening. One of the things that struck me in all three Latin American countries I visited was the deeply ingrained fear of a return to hyperinflation. The ravages of annual inflation rates of 1000% or more were keenly felt by the population, and the poor were hard hit. While this has not turned them into raving monetarists or Chicago-style free marketeers, they are willing to through some short-term hardship as long as it prevents a return to hyperinflation.

In Santiago I was talking to some people about Chilean government bonds and how they're inflation-protected. That is, the yield you get on a Chilean bond is a real yield, corrected for inflation, rather than a nominal yield like most bonds. Chile isn't the only country in the world issuing inflation-protected bonds, but it was one of the first ones to do so. By now, many governments issue inflation-protected bonds. There are the index-linked gilts in the UK, TIPS in the US, OATi's in France and various other flavors in Sweden and (I think) Australia. Issuance is fairly limited as demand has been surprisingly low for them. You'd think that a risk-free return over inflation would snapped up by institutional and retail investors alike, but in practice the uptake has been limited. Apparently the Treasury in the US is looking at increasing issuance of TIPS. (TIPS stands for Treasury Inflation Protected Securities; the story on the grapevine was that Robert Rubin, then Treasury Secretary, had a fit when he heard people were calling them that. "The US Treasury does not give TIPS!" he is said to have exclaimed.)

Chilean inflation-protected bonds however are not denominated in peso, but in a unit of account called the Unidad de Fomento, or UF. The UF's exchange rate to the peso is calculated on a daily basis relative to the peso, which is the currency in Chile. This exchange rate is based on inflation in the last two months, so that the real purchasing power of one UF remains the same, but it fluctuates in value relative to the peso.

What's remarkable is how widespread the use of the UF is. The UF is used not just for government bonds, but also for rents, house prices, long-term contracts, wages, services and big-ticket items. Its use is deeply engrained in the Chilean economy. Its value is calculated on a daily basis and is widely disseminated. All banks and newspapers carry the conversion rate of the UF to the peso. The value of the UF expressed in pesos depends on the inflation rate of the preceding two inflation data points, so you can project forward the value of the UF until the next inflation data point becomes available. That's why the conversion rate can be calculated for some days into the future.

A large part of Chilean contracts and some goods are denominated in UF rather than pesos. This has the effect of indexing that part of the economy to inflation, moving it out of nominal (inflationary) peso space into real (inflation-protected) UF space. But for all this, the UF is just a conversion factor to pesos. All payments are still made in pesos as there are no UF notes or coins. Whenever a payment is due that was agreed upon in UF, the current conversion rate is applied and the payment is transacted in peso. This means that the functions of money are split into a currency (peso) and a unit of account (UF).

The Chilean Central Bank has published a series of papers on indexation and its effects. The two key documents to read are the introduction and Robert Shiller's look at the UF. They key argument against the widespread use of indexation is that it creates persistence of inflation because it is of necessity tied to lagged inflation information rather real-time inflation data. While an indexed unit of account will create inflation protection in high-inflation environments and can be useful in the transition to a low-inflation regime, it is actually harmful in trying to get inflation into the low single digits. Many of the papers refer to exactly this problem and try to quantify the impact. On the other hand, Robert Shiller is a long-time fan of indexation and argues that the problems of inflation inertia can be overcome.

Shiller argues that all countries should create a unit similar to the UF, and accompany that with another unit indexed to wages. I refer you to his paper linked above for the details. In fact, Shiller goes so far as to argue that a complete monetization of the indexed units of account would be feasible, de facto creating inflation-protected currencies. But what good would it do if all prices were denominated in an inflation-protected unit? Would it not simply reintroduce inflation by another means? Shiller argues that since the monetized units of account would at their base still be convertible to the nominal currency, any inflationary effects would correct themselves in an inflation-protected currency. The least sticky prices would rise in UF and therefore in peso too, be picked up by the inflation rate, which leads to an adjustment of the UF/peso rate which then in turn leads to a downward readjustment of the UF price, pushing the inflation back into the peso and peso only. I'm not sure this would actually work, because if all the UF to peso conversions happen transparently, people will stop thinking in terms of nominal pesos. This in turn will allow inflationary expectations to creep into UF prices.

As a behavioral finance guru, Shiller writes a lot about the illusion of money (again I refer to his article for more detail). The illusion of money is that people feel better off if they have more in nominal terms even if there is no improvement in real terms. The canonical example is that people feel better off if their wages increase only at the rate of inflation. The real purchasing power remains the same, but the nominal amount is higher. This also introduces an aymmetry into the flexibility of any real wage adjustments, as people are extremely unwilling to see their nominal wages reduced. There's a floor at zero, while the upside is unbounded.

We're all accustomed to living in a nominal world although we really should be thinking in real terms. This applies even to people who you might expect to know better such as CEOs and CFOs, who you might assume ought to have some training in these matters. But company balance sheets live in nominal space, their P&L's are nominal, their share prices are nominal and their dividends are nominal. We've seen part of the repercussion of this nominal thinking in recent times as nominal GDP growth in the US had fallen to its lowest level since 1962. As a rough approximation, you might expect a company's top line to grow roughly in line with GDP; as the economy expands, so does the potential for revenue. But companies had gotten used to high nominal growth rates in the economy, and the recession of 2001 coupled low GDP growth with low inflation, resulting in low nominal GDP growth of just 1% or so. This crimped the expectations that companies had for their top line as they saw nominal sales growth decline to unprecedented levels (not many of them were CEOs and CFOs in 1962). An even worse situation exists in Japan, were nominal GDP growth has been negative for the better part of five years now.

Changing the mindset from nominal to real is hard to do and seems to come unnaturally. But in Chile at least part of the economy has been indexed, and people can and do deal effectively with an inflation-protected unit of account, even if it is not fully monetized. Ironically, the Chilean authorities are trying to reduce the reliance on indexation because it hampers efforts to reduce inflation even further. A partial nominalization is underway, as the Chilean Central bank explains on page 29. The UF is not being abolished, but the setting of monetary policy is now based on nominal peso interest rates rather than real UF interest rates. The central bank has also started to issue short-dated debt in peso rather than UF. As long as there is an agreed-upon calculation of the UF the people can continue to use it. So at the moment there is no real danger that the UF will be abolished altogether.

The US Treasury already calculates a daily CPI series based on interpolated data, much like the Chilean UF. In principle it could be used to create an American version of the UF to base transactions on. A more interesting variant would be for a private provider to issue an inflation-protected currency that would maintain its purchasing power relative to the CPI basket of goods. Modern methods of payment (credit and debit cards) make the use of such alternatives technically feasible. But this still would not solve a more fundamental problem with the current monetary system: if the central bank gets policy wrong, the economy will suffer. The central bank has the potential to screw things up in a massive way, and an indexed unit of account like the UF won't help either. There is no price discovery mechanism for money and we have to hope central bankers get it right.

But even if we were to move to a world of real prices by monetizing an inflation-indexed unit of account like the UF in Chile, then that still would not mean an end to price fluctuations. The laws of supply and demand still apply, and if there's a dramatic increase in the demand for milk, then milk prices will rise, UF or no. Only those who buy the exact basket of goods used in the CPI calculation will be fully protected against inflation. And even that protection is imperfect as the inflation data is lagged.

An inflation-indexed unit of account like the UF can be useful as the Chilean experience shows. The current efforts to nominalize the economy are limited in scope and the UF will continue to be used for the foreseeable future. There's also the fundamental question whether it matters if the central bank can get inflation down to 3% from 5% if a large part of the economy is inflation-indexed anyway. The Chilean Central Bank does seem to think it matters.

Chile has become an interesting economic laboratory over the last 20 years, with fully funded pensions and innovations like the UF. Its economy has done reasonably well with far better macroeconomic stability than the rest of Latin America. Thus far the experiments seem to be working. But more importantly, they provide crucial empirical data for economists to ponder.

Now if only I could get a Pisco Sour here...

They're not just baffled

Russians generals, the Moscow Times reports are baffled by the quick Allied advance into Baghdad. I first saw this at Shoutin' Across the Pacific, and later it also appeared at The Command Post, again focusing on the bafflement of Russian generals. But that's not the most important information in that story. Here's a much more significant excerpt:

Last week it was disclosed that two retired three-star generals -- Vladislav Achalov (a former paratrooper and specialist in urban warfare) and Igor Maltsev (a specialist in air defense) -- visited Baghdad recently and were awarded medals by Hussein. The awards were handed out by Iraqi Defense Minister Sultan Khashim Akhmed.

It was reported that the retired generals helped Hussein prepare a war plan to defeat the Americans. Achalov confirmed he was in Baghdad just before the war and received medals from Hussein for services rendered. He also told journalists that the defense of Baghdad was well organized, U.S. tanks would be burned if they enter the city and U.S. infantry would be slaughtered. According to Achalov, the only way the allies could ever take Baghdad and other Iraqi cities was to raze them to the ground by carpet bombing.

In other words, retired Russian generals have been actively helping our enemy. From the Russian government's perspective, this offers "plausible deniability" while still remaining chummy with Saddam. In a system that's as autocratic as today's Russia, it'd be surprising if the Putin government wasn't involved in this visit. If Putin had played his cards better, he could have come out the winner in the long-term (and I thought he would). Siding with Saddam should have consequences, and there's a big juicy target waiting: Lukoil, the Russian oil company. It had signed a multi-billion dollar contract with Saddam for the development of the West Qurna oilfield. It's already trying to stake its claim to that field even after the regime change, threatening to sue in international courts. I have no idea how strong their position is from a legal point of view, but pragmatically speaking they don't stand a chance. Play with dictators and suffer the consequences.

How to hate the French

One of the tools of my trade is a Bloomberg terminal. Those who work outside of finance may know Bloomberg TV or radio, or the web site. A Bloomberg terminal provides a staggering amount of real-time data and information, and it's easy to just wonder around the system looking at yet more stuff. It's a bit like the Web, only much more expensive. Some of the material also appears on the web site, so I can link today to a column I came across. How to Hate the French: A User's Guide by Michael Lewis (of Liar's Poker fame) examines how best to stick it to the French.

Berkeley, California, April 9 (Bloomberg) -- It's astonishing how much easier it has become in America in just the last few weeks to hate the French, even for those who shouldn't.

A random sampling of three friends who disapprove of the war in Iraq and enjoy a good Burgundy reveals that all of them are inclined more than ever to detest our former ally. Trouble is, they don't know how to do it.

(RTWT: Read The Whole Thing.) His main argument is that what the French are really after is not respect or admiration, but importance. They don't care what we think of them, as long as we think of them at all. Well, they certainly got our attention, which was the whole purpose of the pro-Saddam stance that France had taken. I don't think it's that simple as Lewis describes, but the yearning to be seen to be relevant is an important aspect of the French national psychopathology. Commercial interests and shady dealings with Saddam also played a role.

The French have never come to terms with their declining influence and relevance. It should have been obvious after the second world war, which ended all pretense of France being a world power. The Vichy government also removed any claim to the moral high ground, although we did allow the myth of the Resistance to swamp the reality of the Collaboration after the war. Perhaps it was necessary, as a deluded non-communist France was preferable to a France under serious threat of a communist election victory.

The French response to declining geopolitical relevance and the abdication of the moral high ground was brazen denial. By repeating to themselves that they were indeed important and morally superior they almost convinced themselves of it. The hypersensitivity where these issues are concerned shows that they never quite succeeded in vanquishing the cognitive dissonance this produced. It seems like Chirac and de Villepin did come to believe their own propaganda though, which led to their overplaying their hand dramatically. It would not have mattered too much, but it did give the downward spiral that France finds itself in another push.

Although I don't entirely agree with him, I'll end by quoting Lewis again:

Americans have long suspected that they don't actually like the French but it isn't until this war that those suspicions have been confirmed. Now they must learn how to express that dislike.

I have spent only a bit of time among the French and cannot offer the most expert advice. But I would say this: To wound an important French male with words, you must chose them carefully. Taking the French out of fries will do nothing but reaffirm his view that he is your natural superior.

Jed Babbin, a former U.S. deputy undersecretary of defense, spoke well when he said that ``going to war without France is like going deer hunting without an accordion.'' In a sentence he isolated and insulted the vanity of the powerful French male while at the same time conveying an admirable air of indifference toward him.

Those of us who cannot summon such wit would do better to remain silent, and pretend that the important French male does not exist. Otherwise we risk giving him exactly what he wants.

The next round of criticism

It's not the end yet, but it's certainly the beginning of the end of the Three Week Quagmire. Since I got home from work I've been going through the TV channels here, watching BBC domestic news and German news and Dutch news. Today's events are unspinnable; not even these notoriously anti-American outlets have been able to undo the potency of the images coming out of Baghdad. They tried, with a reporter for the German ZDF station remarking that the cheer that went up when the Marines helped take down the Saddam statue was muted. Well, he tried. He failed. Dutch TV reported that Iraqis living in exile here are ecstatic. One of the German channels showed baffled and depserate reactions on the streets of Cairo.

It's glorious to see Iraqis finally liberated and celebrating. It wasn't the main reason for this war, but it's a fantastic sight nonetheless. With relatively quick collapse of Saddam's regime under Allied assault is a blessing, and a testament to the professionalism of the British and American forces. Once again the doubters have been proved wrong. The ghost of Vietnam had been laid to rest some time ago for most Americans. The ghosts that remain from that era are the Hippies Who Never Grew Up, who dress in rhetorical Halloween ghost costumes. But they're the only ones who believe that their ghost costumes are the same as real ghosts, cause they sure ain't fooling anyone else.

Now that we do appear to have a quick victory in sight (there's still a lot of ground to cover, especially Tikrit), we'll soon get the next round of criticism. Having failed with the Quagmire Opening and the Arab Street Maneuver, the next round of critcism from America-haters will be to belittle the achievement. "With the enormous superiority of American technology and Corporate Dollar$, no wonder that the poor, brave Iraqi defenders were routed. They never had any chance. It's just further proof of the Great Danger that America poses, and just how evil America really is. It's not much of an achievement by the world's hyperpower to defeat a third-world country." I also predict that this criticism will be voiced by those who just two weeks ago were proclaiming Quagmire. Once you make intellectual dishonesty a habit, the need for consistency dimishes dramatically. From predicting horrible defeat for the US to claiming that a US victory was a foregone conclusion: it's going to happen.

But that is an issue for later. Tonight, let us rejoice with the Iraqi people.

The bear market takes its toll

The Netherlands is one of the few countries in Europe that has a substantial amount of pension assets in the various funded schemes. Still there is a substantial dependence on a relatively generous pay-as-you-go state pension system which will become a problem at some point. But at least the situation isn't as bad as it is in France or Germany. But while capital-funded pension systems at least try to address the issue, they are not without risk. Investment risks tend to average out over the long term, but in the short term pension funds are exposed to the vagaries of the markets.

We're now witnessing the biggest bear market since the 1930's. The current downturn in equities has been longer and deeper than the big bear of 1973-74, and pension funds around the world have been suffering as a result. The biggest Dutch pension fund ABP has just announced that its funding ratio fell below 100% last year. With around $140 billion in assets, the ABP is one of the largest pension funds in the world. (CalPERS used to be the biggest, but has fallen back to just $131 billion in assets.) Getting back to a fully funded status is going to require large premium increases for the participants. Premiums may have to rise by 25% in the coming year in order to regain a 100% funding level. The funding level is the ratio of present values of assets to liabilities of the pension fund. So an underfunded status of 99% is nothing to panic about as it is not causing a cash flow problem. Rather it means that if the fund were closed today (no more contributions, no more building of pension rights but still paying out the built-up rights) the assets would not cover all the liabilities. You do need to fix the underfunding, but that is something that can be done over the course of a few years. The short-term increase in premiums that the active members of the fund will have to pay remain painful nonetheless.

There is no magic bullet in creating old-age provisions. A capital funded pension system is still the best alternative there is because you actually do build up capital as you go along. The downside risk is that things will fall apart and that we'll get a worldwide economic collapse. But if that happens, a state-run pay-as-you-go system isn't going to be better off either.

Pension reform in France

Last week massive strikes paralyzed France. The labor unions still have a powerful hold on the country, and whenever they don't like what the government is doing, they shut down the country. Amazingly, strikers in France have enjoyed widespread support in the past despite the disruption that they've caused. And even today the strikers still seem to be able to count on sympathy from the suffering public. Some people are getting fed up, as mentioned in this story, but the disenchantment with the unions has not reached the level yet where the government would feel comfortable in taking them on. The same story also quotes a student saying that "people must strike to defend their interests, it's part of our culture." It's a culture of infantile entitlement, the countrywide equivalent of a brat stamping his foot and demaning that he get his ice cream now. This culture has slowly beend draining the productive resources of the French economy to the point where it is now in a ramshackle condition. It's not as bad as Germany's predicament, but the long-term secular growth rate has been declining, and even that trend rate of growth has not been attained in the current cyclical downturn. In other words, the French economy is not doing very well, but it's not in a state of imminent collapse.

The biggest beneficiaries of the tax-happy French governments of the past can be found in the traditionally least productive sector, the civil servants. This is also where the labor unions are strongest. French civil servants lead an easy life, with excellent job protection and lavish retirement benefits. But as the economy struggles and public finances are in trouble, the government is trying to look for ways of cutting back on spending. Add to that the demographic problems of an aging population and action is becoming urgently required. France is highly vulnerable to aging as it has adverse demographics, a very generous public pension system an no capital-funded pension provision at all. (France actually has more favorable demographics than many other European countries, but its lack of an affordable and funded pension structure account for its aging vulnerabilty). Now the government is trying to reform the system in order to stave off a financial catastrophe in the coming decade.

Demographics are relentless. Forecasting 50 years ahead is a tricky exercise, but you do know with a fair amount of certainty what's going to happen in the next 20 years. Even if there's a sudden upturn in birth rates in the next five years, the benefits are not going to flow into the labor force until much later. And looking ahead by 20 years, France has a serious problem. Its entire pension system is a pay-as-you-go system. That means that current retirement benefits are paid out of current taxation, so even though contributions are labeled as "social security," they're not actually your contributions, but they're used to pay someone else. This is no different from Social Security in the United States, but at least the US has a wide range of funded supplementary pension provisions. Pay-as-you-go systems are state-run Ponzi schemes, and with a declining birth rate and an increasing dependency ratio, the end for the system is in sight. Either taxes will have to go up dramatically, or pension benefits will have to be cut.

The big strikes that paralyzed France revolve only around a tiny portion of the wider pensions problem. Specifically, the government wants to bring civil servants into line with private employees in requiring them to pay contributions for 40 years in order to reap the largest benefit from the national Ponzi scheme. Currently they only have to contribute for 37.5 years, so we're talking about an extension of 2.5 years here. This will make a difference, but it hardly addresses the root of the problem, which is a lack of funded pensions. Transitioning from a pay-as-you-go to a capital funded system is not cheap either, because you have continue to pay pensions for a while under the old system while also contributing to the new funded system. But there are ways around that, so the obstacle is not insurmountable.

The big problem for France is that if even such a small change in the pension system is causing so much protest, then a real reform that would institute funded pensions is very far off indeed. But time is running out, as the dependency ratio in France will start to increase substantially over the next five years and keep rising as far as projections go. It's already too late for a relatively painless reform, and the longer they wait, the bigger the problem is going to be.

What's making matters worse is the poor state of the economy, brought on by decades of dirigisme, the stultifying French brand of state-directed pseudo-capitalism. The dependency ratio is already higher than it would have been had the economy been performing well, because those in work have to support not only the elderly but also the unemployed. "Young, French and Jobless," as the Australian Financial Review put it:

For Alexandra Duprey, a member of France's "Generation Aix," unemployment is a growing crisis.

"We're afraid for the future," says the 23-year-old student at the University of Aix-Marseille. She and hundreds like her were at a government-sponsored seminar last week in this coastal city aimed at encouraging young people to become entrepreneurs.

Ironically, these should be giddy days for Duprey and her peers. The number of French workers retiring each year should rise by about 250,000 by 2006 to 750,000. But far from being plied with offers of work, they can only watch helplessly as the sky-high rate of youth unemployment climbs ever higher. Youth unemployment, 20.9 per cent at the end of 2001, rose to 21.7 per cent last year, among the highest in the euro zone and well above the common-currency region's 16.3 per cent average for that age.

Meanwhile, older French workers fare much better. For those between 25 and 49, unemployment was 8.4 per cent at the end of 2002, up 0.2 percentage point from 2001. For those over 50 it was 6.2 per cent. Still, French President Jacques Chirac last week called for a "national mobilisation" for employment, and asked for "specific measures to favour employment for those over 50".

Not only are young people out of work, the labor unions and the older generation are making sure that they stay that way. Chirac's response as quoted above is also symptomatic of the confused policy response to the problems, and betrays a fundamental lack of understanding of how the economy works, and more specifically, how real jobs are created, the kinds of jobs that actually help the economy grow and generate a profit. You can't pull an economy out of a slump by government decree, national mobilization or specific measures to favor employment. It is much more likely to create further distortions in the economy.

The French government sees the liquidity problem of the current system coming, and the current reform is aimed at mitigating the cash crunch. But it still does not address the fundamental pensions problem in France, which is the pay-as-you-go Ponzi scheme that masquerades as a pension system.

Clean Mistress

Working my way through the huge pile of physical mail that accumulated during my trip, I found the usual door-to-door ads. There's the one psychic who promises immediate results, while the other psychic guarantees results. Always a difficult choice. Sometimes they're just plain funny, like this one advertizing a Clean Mistress. I just hate dirty mistresses.

Of course, poor English is not limited to door-to-door mailings. There's this sign at Schiphol airport here in Amsterdam. The Dutch never understand why this is hilariously funny (or threatening, depending on how sadistic you think the airport authorities are.)

The farce at the ECB continues

Central banks wield enormous influence over the world economy, and we're in a year in which we are seeing big personnel turnover at two of the biggest. The new governor of the Bank of Japan has just been appointed, while Wim Duisenberg (Gretta's husband)is due to retire later this year. Well, he was due to retire in July, but that now appears to have been postponed. This is no way to run a central bank. The ECB has enough problems as it's trying to deal with diverging economies under its care without having to worry about the farcical nature of the succession.

When the ECB was founded, the French wanted the top job as a consolation prize for allowing the ECB to be based in Frankfurt. Of course, the French only act in the best interests of the European Union as a whole, that great organization that is making the nation state and national allegiances obsolete. In the French view of the world, the best interests of the EU coincide with surprising frequency with the narrow national interests of France. Funny, that.

In any case, the French wanted their man at the top of the ECB, but in the horse-trading that followed a compromise was struck. The smaller countries got their man in (in this case, Wim Duisenberg, who became quickly known as Dim Wim), but he agreed informally to step down halfway through his tenure. So he duly announced last year that he would be stepping down in July of 2003. There is a hitch though: the successor-designate, the Frenchman Jean-Claude Trichet, is in a bit of a pickle. In fact, he's being investigated and tried on charges of corruption stemming from his tenure as finance minister in the early 1990's. A corrupt French government minister? I'm shocked, shocked!

While the trial continues he can't really be appointed as the head of the ECB, so now Dim Wim has been asked to stay on a bit longer, so the French can clear their man of the charges and put in charge of the ECB later this year. As I said before, this is no way to run a central bank. In an era of fiat money, a central bank's credibility is its greatest asset. The ECB has struggled since its inception to gain credibility as an inflation-fighting central bank in the mould of the old Bundesbank, but by doing so it actually undermined that same credibility. It's been fighting the last war, while the Federal Reserve was trying to stave off deflation in the wake of the internet equity bubble. The Bank of Japan has dug in in the poppy fields of financial Flanders, sending wave after wave of monetary cannon fodder into the mud.

But the ECB's job is not easy to say the least. The structural economic problems that afflict Europe are severe, and much of the blame for Europe's poor economic performance can thus justly be laid at the feet of Europe's politicians. However the entire project of monetary union was always politically driven, without paying too much regard to economic fundamentals. The 12 economies of the European Monetary Union are diverging, and in need of different monetary policies. That's not a problem the ECB can solve, no matter who's in charge.

"Vive Chirac. Stop The Jews!"

The peace movement has never been known for its moral fortitude, although they have always regarded themselves as morally superior, as if the single-minded pursuit of peace at all cost is the sign of a more advanced intellect. It is in fact the opposite, as it provides a seemingly easy way out of real life dilemmas, and ignores the real life costs of pursuing peace at all cost. The lesson of the 1930's has been completely lost on them. Appeasement does not work. Sometimes the peace won in the short term begets much more serious problems in the long term, but I guess if you're a sophisticated thinker such reasoning can be shot down easily.

But that's just the charitable interpretation, as the so-called "peace" movement has a long history of serving as the useful idiots for foreign regimes guilty of horrific human rights violations. In the 1980's it was the Soviet Union, now it is the likes of Saddam who find support on the left. But these peace-movements, together with the rise in Islamic influence in Europe (see also recent experiences in Denmark) a new element has been added to the "peace" movement's canon: anti-semitism. This has been mirrored by the rise of anti-semitism in the incubators of far-left radicalism on American campuses.

In France the toxic mix of Islamofascism from the Arab immigrants and the anti-Americanism of the French governments is leading to a dangerous environment if you happen to be Jew in France, as the Washington Times reports on the latest attacks of Muslim youths on Jews there. Of course, the fact that these Jews were protesting the war too made no difference to the Arabs. As the Washington Times writes:

The French government was forced to appeal for calm after protesters, some of them carrying pictures of Saddam Hussein, burned the Israeli flag and turned on Jewish students, attacking one of them with an iron bar, during a series of antiwar rallies.
Officials fear that antiwar sentiment, supported by President Jacques Chirac, may be running out of control and could ignite widespread violence. Banners at recent demonstrations have shown the Star of David intertwined with a Nazi swastika, while protesters shouted: "Vive Chirac. Stop the Jews."

That last slogan really sums it up. "Vive Chirac. Stop the Jews." And what does the celebrated Chirac do? According to the Washington Times, he's keeping quiet.

To be fair, the police are setting up a new unit to investigate racist and anti-semitic crimes. It's a bit late to focus on that only now, as anti-semitic violence has been increasing in France was several years now. The article also points out the potential for civil unrest in France, where millions of unassimilated Arabs live in the vast and depressing suburbs of French cities. The embers Chirac has been fanning may yet rise up into a firestorm.

Slow return to normalcy

It has been an interesting trip to the southern hemisphere. Especially the Chilean pension system proved of interest to me (obsessed as I am with the topic), so I'll write about that a bit more in the near future. Other countries such as Peru and Thailand are looking to the Chilean experiment in privatizing pensions as they try to set up their own funded pension programs. I assume that'll be of more interest than my experiences with drinking Brazilian caipirinhas.

Although I got back in the middle of last week, events have prevented me from blogging until now; I spent most of the weekend trying to work off the huge sleep deficit that has built up over the last two weeks or so. But a more normal pattern of blogging will resume now. I don't think I'll be writing too much about the war, since I missed most of it, being able to gathered only a few minutes of CNN a day while I was away. Besides, other bloggers are covering the war extremely well, and I don't think I can add much at this late stage and knowing so little. I was watching domestic BBC news last night, and it was not so much the bias but the vapdity of the reporting that struck me. John Simpson was being interviewed live by video phone at night, so all you saw was a blog of green on a black background, and he was saying how the US airforce had bombed Iraqi positions with huge bombs. Question from the anchor: "So what effect is that having on the Iraqi troops?"

They were slightly miffed, as it rattled some of their fine china during afternoon tea, and the cucumber sandwiches were somewhat stale too.

What do you think the effects were? Sheesh. It went on like this for a while, so I switched off the news and got caught up on the three episodes of 24 that I taped over the last three weeks.

It's good to be back though.