I drove you into this ditch, I can drive you out.
The Post:

The dollar dropped to record lows against the euro on Friday, succumbing to negative sentiment and erasing all of the U.S. currency's earlier gains following a robust U.S. October employment report.

The dollar index, a measure of the U.S. dollar's performance against a basket of currencies, fell to a nine-year low. The U.S. currency also fell to six-month lows against the yen and 6-1/2 month lows against the Australian dollar.

Traders were struck by the dollar's inability to sustain a robust rally fueled by the strong U.S. economic data. An undertow of negative dollar sentiment driven by the U.S. current account and budget deficits made currency investors keen to buy euros, analysts said.

"The price action today is nothing short of stunning," said Richard Franulovich, senior currency strategist with Westpac Banking Corp in New York.

"Net-net, given the sharp U.S. upward revisions to payrolls, for the euro to punch higher to fresh highs is nothing short of spectacular. I think this is a pretty good guide at just how entrenched negative sentiment is toward the dollar," he said.

[See Nov. 3 post:
"We can sell but will they buy?"

[Also, expect interets rates to go way up. Foreign investers will expect a return on their worthless dollars.]

Rummy must have missed this one.
Didn't Rummy say something about if it had happened after the invasion they would have seen it? Well, apparently they did, I guess he must have been asleep at the wheel again.

LOS ANGELES - Explosives were looted from the Al-Qaqaa ammunitions site in Iraq while outnumbered U.S. soldiers assigned to guard the materials watched helplessly, soldiers told the Los Angeles Times.

About a dozen U.S. troops were guarding the sprawling facility in the weeks after the April 2003 fall of Baghdad when Iraqi looters raided the site, the newspaper quoted a group of unidentified soldiers as saying.

U.S. Army reservists and National Guardsmen witnessed the looting and some soldiers sent messages to commanders in Baghdad requesting help, but received no reply, they said.

"It was complete chaos. It was looting like L.A. during the Rodney King riots," one officer said.

The eyewitness accounts reported by the Times are the first provided by U.S. soldiers and bolster claims that the U.S. military had failed to safeguard the powerful explosives, the newspaper said.

Soldiers who belong to two different units described how Iraqis snatched explosives from unsecured bunkers and drove off with them in pickup trucks.

The soldiers who spoke to the Times asked to remain unidentified, saying they feared retaliation from the Pentagon.

One senior noncommissioned officer said troops "were running from one side of the compound to the other side, trying to kick people out" and that at least 100 vehicles were at the site waiting for the military to leave so that they could loot the munitions.

Famous last words?
According to Jack Straw, the man who has called Moammar Gaddafi a "statesman:"

LONDON (AFP) - Foreign Secretary Jack Straw said it was "inconceivable" that the United States would attack Iran over its nuclear programme.

"I don't see any circumstances in which military action would be justified against Iran full stop," Straw told BBC radio amid speculation that re-elected US President George W. Bush may be more hawkish over the Islamic republic.

Asked if the world would support a US bombing campaign against Iran, Straw said: "Not only is that inconceivable, but I think the prospect of it (US military action) happening is inconceivable."

[He didn't say he wouldn't support it, though.]

Our overstreched army.

This is from the yet another mess this idiot has gotten us into dept. I'm sure Condi will get it all worked out, though.

The Asia Times reports:

According to information provided by the Project on Defense Alternatives (PDA) in Cambridge, Massachusetts, soldiers can occasionally deploy for 120 days overseas without missing out on important yearly routines at their home bases, such as training and leave.

But deployments of much more than that result in deficits adversely impacting other aspects of a soldier's career and personal life.

PDA estimates that the 120-plus-day overseas deployment rate (averaged for 2003 and 2004) has been 46% during the Iraq war years, with most of it being 365-day deployments.

This rate is likely to decline only marginally in 2004. And, many of the soldiers deployed in 2005 will be on their second 365-day deployment in three years. PDA anticipates that accumulated stresses by late 2005 will exceed any since the Vietnam War period.

It is not hard to find examples of the army being stretched thin. The 1st Brigade of the 82nd Airborne Division was sent to Iraq in January this year, even though it had returned from Afghanistan only five months before.

Meanwhile, the 3rd Infantry Division, which liberated Baghdad in early April 2003, has had its tour in Iraq extended at least five times.

In mid-July 2003, Lieutenant-General John Abizaid, the head of US Central Command, announced that all army units would have to spend a full year in Iraq, double the normal tour for peacekeeping duties.

Meanwhile, several National Guard and Reserve units have been mobilized without reasonable notice, kept on active duty for longer than anticipated and sent overseas to Iraq and Afghanistan without effective training.

Members of the Michigan National Guard, for example, were sent to Iraq with only 48 hours notice. The Maryland National Guard's 115th Military Police Battalion, meanwhile, has been mobilized three times in the past two years, and by the end of its last tour will have remained on active duty for 18 months.

This is all despite the fact that a reserve soldier should be given at least 30 days of notice before being mobilized and should not be kept on duty for more than nine to 12 months in a five-to-six-year time frame.

As a result, the typical active-duty US soldier in a deployable unit could literally spend the majority of the next three to four years abroad.

In 2004 alone, 26 of the army's 33 main combat brigades in the active force will deploy abroad at some point; over the course of 2003 and 2004 together, virtually all of the 33 brigades will be deployed.

The typical reservist might be deployed for another 12 months over the next three to four years. As one example, all 15 of the Army National Guard's enhanced separate brigades are to be deployed at some point by 2006

It's worth noting that it is not just outside critics who are concerned about an overburdened military. In September the Defense Science Board, a panel of outside advisers to Defense Secretary Donald Rumsfeld, released a report stating that the US military lacks sufficient personnel to meet the nation's current war and peacekeeping demands throughout the world in coming years, despite steps being taken by the army to stretch its ranks and increase the number of soldiers available for combat.

Comings and goings.
(NY Times)

The Times seems to think if Powell goes:

Secretary of State Colin L. Powell has long been described by many people working with him as likely to leave office after tiring of the battles he has waged with administration hardliners.

(The)most likely successors are Condoleezza Rice, the national security adviser, and former Senator John F. Danforth, who is now United Nations ambassador.

[Yeah, Condi would be a great choice. She's been so effective as a National Security Advisor. Kaboom!]

Associates of Ms. Rice say, on the other hand, that she would be more interested in the job of Defense Secretary than Secretary of State. [Even better!]

People who work with Ms. Rice say, for example, that attending diplomatic functions and ceremonies and meeting with visiting diplomats are one of the least favorite aspects of her job. [She's way to intellectual for that.]

Rummy on the other hand:

At the Pentagon, meanwhile, some working with Defense Secretary Donald H. Rumsfeld say he is interested in staying in the job in order to complete some of his changes, including the redeployment of troops around the world, transforming the military to make it more flexible, and training an Iraqi security force. [Yeah, why not let him finish what he started? So far it has only been a second class disaster.]

If Condi leaves we have the choice of Stephen J. Hadley, her deputy, and Paul D. Wolfowitz, the deputy defense secretary, who was an early advocate of invading Iraq. [He's really done a great job with the whole finding the WMD thing. Why not make him the top security advisor to the president?]

Some were said to be angling for more powerful jobs in a second term. John R. Bolton, under secretary of state for arms control and international security, and an architect of the administration's tough policies on the nuclear programs of Iran and North Korea, [What tough policies? Ignore them and threaten them occasionally? Seems to me they both are on their way to having a ton of nukes.]is being pushed by supporters for a more senior position in a second Bush term.

My money is still on Newt becoming Secretary of State. All these predictions are based on what a sane administration would do. Remember, these guys are bonkers.

So, Genl. William Boykin for Defence and Newt for State. And can't someone find a position for Richard Perle? How about Ollie North?

Liberals to become extinct.
(NY Times)

Exulting in their electoral victories, President Bush's conservative supporters immediately turned to staking out mandates for an ambitious agenda of long-cherished goals, including privatizing Social Security, banning same-sex marriage, remaking the Supreme Court and overturning the court's decisions in support of abortion rights.

Dr. (James) Dobson [Nut-job.] and several other Christian conservatives said they believed the expanded Republican majority in the Senate and the defeat of the Senate Democratic leader, Tom Daschle, put them in striking distance of both amending the constitution to ban same-sex marriage and approving the appointment of enough conservative Supreme Court justices to overturn Roe v. Wade and other abortion rights cases.

Austin Ruse, president of the conservative Catholic Culture of Life Foundation, suggested that if Chief Justice William H. Rehnquist steps down, Mr. Bush could begin to repay his social conservative backers by naming Justice Antonin Scalia to replace him. "We'd love to see Scalia in that spot, and I think we have earned it," Mr. Ruse said.

Grover Norquist: The moderate.

Social conservatives are a very important part of the base, but they are not enough alone," said Grover Norquist, the president of Americans for Tax Reform and a conservative strategist close to the Bush administration, noting that in Illinois, Alan Keyes had taken a drubbing in the race for the Senate after running a vigorously conservative campaign on social issues.

Mr. Norquist eagerly predicted the accomplishment of a long agenda of government reduction: repealing the estate tax, privatizing Social Security, restricting medical and other liability lawsuits, closing military bases, opening more government jobs to competitive bidding to lower costs and weaken unions, imposing new disclosure requirements on organized labor, and expanding health care and investment savings accounts.

Guam build up. Watch your ass China.

If it comes down to our fuel needs or China's economic development...

Reuters:

MILITARY BOOM

Giant B-52s have been rotated regularly through Guam's Andersen Air Force Base since February, the first time the bombers have visited in more than a decade.

Work on a $32 million bomber hanger began in the same month, and an August announcement that Andersen's runway would be upgraded at a cost of $24 million was seen as signaling a bigger air force redeployment to Guam in the future.

Andersen stores more than 60 million gallons of fuel, and saw its role sharply underlined when it supplied about 21 million gallons for U.S. forces preparing for war in Afghanistan and Iraq.
The base covers 22,000 acres, only a third of which is in use.

Among other projects, the military plans to build a $26 million high school and spend $20 million to improve the Navy's chlorination system and $12.5 million to expand Navy ammunition storage.

Guam's harbor is being dredged to make way for bigger ships. A third nuclear submarine is due to be based on the island from December and there are rumors that an aircraft carrier will be stationed in Hawaii with its air wing deployed at Andersen.

More housing, fitness centers and bigger supermarkets are also in the works, catering for the 6,000 military personnel and their families.

Bush to dance with the one who brung him.

NEW YORK (Reuters) - Oil prices surged more than $1 on Wednesday as the re-election of President Bush countered the impact of a big increase in spare oil supplies ahead of winter.

Crude dealers said Bush's victory over Democrat Senator John Kerry could bolster U.S. fuel demand and underscore anxiety over the security of Middle East oil shipments.

If another Bush government moves on to Iran, then oil prices would go very high and really threaten China's economic development," said Andy Xie, Morgan Stanley's chief Asia economist.

"I believe the fluctuation in oil over the past few days has been tied to the election," said Wachovia market analyst Jason Schenker.

"Last night there was a spike after it appeared a Bush win would be imminent," he said.

"The Bush administration is much more focused on fossil fuels, a Kerry administration would be more focused on renewables."

Hmmm...wonder why?

Oil company share prices on the New York Stock Exchange were also stronger Wednesday, with ChevronTexaco up $1.17 to $53.27, ConocoPhillips p $1.97 to $85.40, ExxonMobil up 84 cents to $49.27.

[And of course the Saudis are rolling in it too.]

Sign of things to come:

In his "victory" speech Bush said " We'll reform our outdated tax code." {Translation: consumption tax]

"We'll strengthen the Social Security for the next generation." [Translation: Privatization]

All our worst nightmares are about to become true. Better start hiding your money under the mattress.

Would you lend money to this man?

WASHINGTON (AFP) - President George W. Bush won the vote. Now he has to beat the math.

Analysts say the logic is inescapable: you can't cut taxes deeper and still halve the deficit.

These are the 10-year outlook numbers, as calculated by the Concord Coalition, a grassroots advocate of fiscal responsibility:

-- Bush wants to extend all his 2001 and 2003 tax cuts at a combined cost, along with other fiscal measures, of 1.244 trillion dollars.

-- He has spending plans, including a health tax credit, adding a net 82 billion dollars to expenditure.

The result: a gap of 1.32 trillion dollars.

"Throughout his presidency, George W. Bush has refused to calibrate his drive for lower taxes with his support for expensive initiatives such as the global war on terrorism and a major expansion of Medicare," the coalition said in a recent report.

"There is no reason to expect anything different in a second term."

Stay the course. We're in deep doo doo.
Well, yippy. W and the republican congress are back in the saddle for another 4 years. Now, they can start dealing with the mess they've made.

Remember the deficit?

WASHINGTON - The Bush administration announced Wednesday that it will run out of maneuvering room to manage the government's massive borrowing needs in two weeks, putting more pressure on Congress to raise the debt ceiling when it convenes for a special post-election session.

Treasury Department officials announced that they will be able to conduct a scheduled series of debt auctions next week to raise $51 billion. However, an auction of four-week Treasury bills due to be completed on Nov. 18 will have to be postponed unless Congress acts before then to raise the debt ceiling.

"Due to debt limit constraints, we currently do not have the capacity to settle our four-week bill auction scheduled to settle on Nov. 18," Timothy Bitsberger, acting assistant Treasury secretary for financial markets, said in a statement.

The need to raise the debt ceiling reflects the record budget deficits of the past two years. The deficit for the 2004 budget year, which ended Sept. 30, was an all-time high of $413 billion, surpassing the old mark, in dollar terms, of $377 billion in 2003.

The administration says the president has a plan to cut the deficit in half by 2009 (Yeah, right), but critics contend that the real problems will come in later years as retiring baby boomers put unprecedented strains on Social Security and Medicare.

In its announcement Wednesday, Treasury said it will sell $51 billion in new securities next week including $22 billion in three-year notes on Monday, $15 billion in five-year notes on Tuesday and $14 billion in 10-year bonds on Wednesday.

We can sell but will they buy?

According to the Post:

...a rash of new data, including Treasury Department figures released yesterday showing a net sell-off by foreigners of U.S. bonds in August, has stoked debate over whether overseas investors -- private individuals, institutions and government central banks -- are growing dangerously bearish on the U.S. economy.

Foreign governments and individuals hold about half of the $3.7 trillion in outstanding U.S. Treasury bonds, for example, and the government has been heavily dependent on continued overseas bond purchases to finance the roughly $1 billion a day it has to borrow to pay its bills. Foreign lending and investment are also needed to finance the country's roughly $50 billion monthly trade deficit, while foreign capital has been a key prop to U.S. stock prices.

A turn in overseas attitudes toward the United States could ripple deeply through the economy, depressing the market, raising interest rates and pushing down the value of the dollar.

In August, foreign private investors actually sold $4.4 billion more in Treasury bonds and notes than they bought that month, the Treasury Department said yesterday -- the first time in a year that net foreign purchases were negative. That followed a 20 percent decline in July that shrunk net foreign purchases to $18.3 billion.

Bond purchases by foreign central banks also dropped sharply in July, falling 76 percent, to $4.1 billion. A rebound in August brought them back to $19.1 billion. The recovery was timely: Without it, the dollar may have taken a serious hit, said Ashraf Laidi, chief currency analyst at MG Financial Group in New York, who headlined yesterday's client newsletter, "Foreign Central Banks Save Dollar From Disaster."

Foreign purchases of stocks are off as well, going from net purchases of $9.7 billion in July to a net sell-off of $2.1 billion in August. Over the past 12 months, private foreign investors have purchased a net of $17 billion in U.S. stocks, compared with $30 billion in the 12 months before that.

The fear among economists is that those foreign lenders may grow concerned that their portfolios are too swollen with dollar-denominated assets.

Global balance of financial terror.
(Don't piss the Chinese off!)

The U.S. dependence on foreign capital concerns economists on both ends of the political spectrum. In a speech this March, Lawrence H. Summers, a Treasury secretary in the Clinton administration and now the president of Harvard University, warned of "a kind of global balance of financial terror," in which the economic well-being of the United States depends on the actions of foreign governments.

"There is surely something off about the world's greatest power being the world's greatest debtor," he said. "In order to finance prevailing levels of consumption and investment, must the United States be as dependent as it is on the discretionary acts of what are inevitably political entities in other countries?"