Repeat after me: if it is too big to fail then it is too big to exist. That should be the first and foremost lesson of this financial crisis. The latest "too big to fail" is Citigroup:

Citigroup Inc faced a crisis of confidence on Wednesday as investors questioned the survival prospects of the U.S. banking giant, and its shares tumbled 23 percent to a 13-year low.

The second-largest U.S. bank by assets has been reeling on concerns that mounting losses from credit cards, mortgages and toxic debt could overwhelm its efforts to slash costs and add deposits. Last month, Wells Fargo & Co dealt a blow by derailing Citigroup's bid to buy Wachovia Corp.

Citigroup shares closed down $1.96 at $6.40 on the New York Stock Exchange and have fallen 33 percent this week as some investors concluded that Chief Executive Vikram Pandit's plan to shed 52,000 jobs and cut expenses by one-fifth won't restore the bank to health.

"People are looking at their business model and wondering how on earth they're going to be able to survive," said William Larkin, a fixed-income manager at Cabot Money management in Salem, Massachusetts.

It Citigroup fails, which won't surprise me one bit, it will be the prime case as to why Glass-Steagall should never, ever, ever have been repealed. And remember, it was Citigroup who forced Congress to repeal the law. I'd laugh at the folks at Citigroup if its failure weren't so perilous for the economy. Citigroup would make the AIG bailout look like, well, I can't think of a suitable metaphor other than a four letter word that starts with "F" and I've already used it once today.

Yes, yes, I know it's pretty pathetic to complain about something as pedestrian as a stomach bug the day after we learned one of our best friends has died. But you know what? Rick would want me to post this. I'll tell you why. Because he would be the first to laugh at me and poke fun at me, followed in rapid succession by Tina, Escher and then a stern warning of gloom and doom would follow from Don about malaria, or some such and how it's all to do with Peak oil and that we're all fucked! (Perhaps I'm being a little hard on Don, but hey, if I can't pick on y'all then y'all sure as hell can't pick on me!) Of course, Don's right, we are, but that's besides the point. Or maybe it is the point.

I digress.

More after the break, but beware, the details are gory.

By Hannes Artens

Recent developments prompt me to postpone the third part of my series on President Obama's global agenda until next week in order to instead invite you to speculate with me on what a Secretary of State Hillary Clinton would mean to the US and the world.

I'm dying to learn of your thoughts on this development because I completely fail to understand it, both President-elect Obama offering her the job, and Senator Hillary Clinton possibly accepting it (as of now we don't have a confirmation; the same day, Tuesday, The Guardian and CNN declared her having accepted, The New York Times reported on strong reservations on her side). Both doesn't make any sense to me, is outright illogical as it will sooner than later result in a ruinous competition and constant strife between the White House and Foggy Bottom, a lose-lose situation for Obama, Clinton, and ultimately for us all, who have set such high hopes on this fresh start.

Yesterday S&P500 made a new low without a significant amount of buyers. That was not unexpected but bonds signaled too that they do not believe anymore in a recovery of stocks near months.

I think that the problems of General Motors, Ford and General Electric; and adjustment of TARP make the market price stocks lower. But I never know if the real reasons are presented in MSM.

The long term fair value of S&P 500 is about 975 - 990. The same model says that because of too little liquidity the market might trade as low as 70% of fair value, like at 699.99. The index is "buy" now when it trades under 1000 point.

My newest You Turks post is up, you can see it here. And also a few new photos.

As we all deal with the loss of Rick Harrison, I find great solace in reading some of his past diaries. You can find the full list of them here. One of the qualities I loved most about Rick was that he was not dogmatic and had willingness, actually an eagerness to learn new things and have his own ideas challenged. It's my thought, perhaps a little vainly, that this is why he came and stayed here. That perhaps he found a community of like-minded people just trying to figure life (and politics) out.

My personal favorite will always be Friday Cat Slagging. Rick loved dogs, and loved teasing me and Tina about our love of cats and cute pictures of cats. Out of that good natured ribbing came Friday Cat Slagging, a collection of cat pictures designed to show cats in the worst possible light. Rick did it well and with panache. I'm not sure if we'll continue Cat Slagging in his memory or not, but I know this: Friday's around here won't be the same without him.

Rick's taste in music was wonderful. He seemed to love all kinds of music, adhering to the old adage that there are only two types of music: good and bad. His Saturday Night Jukebox posts will be missed as well. So will his recommendations. When I hear the Martin Sexton songs on my iPod now I feel a real tinge of loss and have a better understanding of Rick. If you ask me, he and Don were real soul mates when it came to music.

Rick loved his family and wrote about them often. This post on election night, for his daughter, is especially poignant in light of his early passing. And this post was an Agonista favorite as well. One many of us could relate to, and one, once again, showing how much family meant to Rick.

But my personal favorite is this one. Humor, profanity and family all mixed together for the holidays. Rick, Godspeed my friend, we will miss you.

Add this to another long list of regrets in my life: not meeting my good friend, fellow musician and all around rock-solid human being, Rick Harrison.

I was notified just a few moments ago that Rick died a few days ago of a heart attack, 11/14/2008.

I cannot begin to share my sadness. Although I never met Rick, he was an indelible part of this site. We shared a lot of ups and downs in the last several years, personal, political and otherwise.

He was a good friend to all the editors here and one of the earliest, original members of The Agonist and had the best, most wicked sense of humor I've come across in a long time. He rarely wrote diaries, but when he did, they sang out with life and an affirmation that goodness was real and possible, that family and friends and song made life worth living.

I literally just found out a few moments ago and wanted to pass on the information.

I'll be posting some highlights from his diaries and thoughts from his family very soon. But for now, my heart and prayers are with the Harrison Family and his wife today. Rick was one of our own. One of the best, one of the good guys. And I will miss him, very, very much.

Other editors of the site and readers are welcome to add to this post their thoughts as well.

Update: I hate having to type this, but here is his obituary, please sign the guest book, and as Rick was in life, so he is in death, suggesting donations to charity in lieu of flowers. We really have lost one of our own. As the day wears on I realize just how much I will miss Rick.

Asymmetrical warfare, the Pentagon calls it. The U.S. spends a minimum of $600 billion on its Defense Department budget, but the real security threats come from terrorists or pirates with minuscule budgets and attack forces numbering 20 or less.

The latest outrage is this week's commandeering of a Very Large Crude Carrier, the Star Sirius, off the coast of Somalia. VLCC means that the carrier is holding $100 million of crude oil, destined for the United States. This is a vessel taller than the Chrysler Building, yet it was successfully overtaken by 15 pirates who captured the crew, and had the carrier taken to a Somali port where it is now surrounded by hundreds of other pirates.

Some long time readers and members may remember the trials and tribulations of Agonist member Isabella V. There were many unforgettable and sometimes uncontrollable threads on the old BB about her and including her. The NYT reports that a movie is being made about her and it looks like Natalie Portman will be portraying Isabella. May I suggest Matthew McConaughey as Dave? :D A blurb at IMDB suggests the movie being released in 2010. In 2003 Esquire magazine published The Search For Isabella V. by John H. Richardson about her flight. Here is brief outline she did of her life on the now defunct website "..she's a flight risk".

Ever the fence sitter, I still wonder if it was real.

There is concern that the Obama administration will not carry through on withdrawing from Iraq as expeditiously as promised. Although the Iraqi government has approved an agreement requiring all US troops to depart by the end of 2011, the intervening three years are sufficient for maneuvering. The military, some Iraqi groups, Israel, and Saudi Arabia want the US to stay longer and will maneuver adroitly to shape events over the next three years. However, the US presence has adverse consequences beyond the insurgency and terrorism it has fomented in Iraq. Delaying the US departure will have destabilizing effects in Iraq and the entire region.

Nov 18

A U.S. judge has declared Dr Aafia Siddiqui, a Pakistani woman accused of trying to kill a U.S. soldier and FBI agents, mentally unfit for the trial. Remember our treatment of her? After being shot a judge had to ORDER medical care.

U.S. officials doubt reports that Iran has softened stance on Iraqi security pact

Iran softened its resistance Monday to a pact that calls for withdrawing American forces from Iraq by the end of 2011, a shift that could make it easier for Iraq’s ruling Shiite Muslim government to secure parliamentary approval. U.S. officials, however, said they doubted that Tehran had altered its stance.

Reports from Iran’s state news agency called an Iraqi Cabinet vote that advanced the security compact a "victory for the ruling party and its Kurdish partners," referring to the Shiite lawmakers who supported the agreement.

China rejects sending troops to Afghanistan

China said Tuesday it would not send any troops to Afghanistan _ rejecting recent speculation that Beijing might support the international coalition there.

British Prime Minister Gordon Brown told New York's Council on Foreign Relations on Friday that China could send troops because there was a global consensus that Afghanistan is the "the front line" in the battle against terrorism.

However, in a statement seen Tuesday on the Chinese Foreign Ministry's Web site, spokesman Qin Gang said there had been no change to Beijing's approach to Afghanistan _ or to its policy of sending forces abroad only under United Nations Security Council mandates.

The issue of China sending troops to Afghanistan "simply doesn't exist," Qin said

more stories after the jump

Please post new stories and comments about the coalition's wars in Iraq and Afghanistan on this thread. Prior updates here

Brian Witte | Annapolis | Nov 19

AP - More than 100 retired generals and admirals called Monday for repeal of the military’s “don’t ask, don’t tell” policy on gays so they can serve openly, according to a statement obtained by The Associated Press.

The move by the military veterans confronts the incoming administration of President-elect Barack Obama with a thorny political and cultural issue that dogged former President Bill Clinton early in his administration.

“As is the case with Great Britain, Israel, and other nations that allow gays and lesbians to serve openly, our service members are professionals who are able to work together effectively despite differences in race, gender, religion and sexuality,” the officers wrote.

It's still a man's world out there in sports.

Republican election tactics:

just be criminal.

Huckabee urged the crowd to take friends and relatives to the polls. Turnout will be key in the Dec. 2 race, which occurs just after the Thanksgiving holiday.

“If they’re voting for Saxby, get them to the polls,” Huckabee said. “If they’re not, let the air out of their tires.”

Of course, he was joking.

Right?

Unfinished Business

What's so funny? It must be an inside joke. Image cc

Tasks Ignored During the Bush Reign of Horror

Michael Collins
"Scoop" Independent News

The last eight years can best be described as the illegitimate rule of deviant forces bent on enriching the few at the expense of the many. Poverty is up, real income is flat for the majority of citizens while the elite have "super sized" their holdings with a callous disregard for the nation and economic realities.

The phantom "Yellow Brick Road" has come to an abrupt end through an expression of will by the people. President-elect Obama won by a wide margin in the popular vote and an even wider margin in the Electoral College. He is their choice.

What Obama promised matters. What the people expect matters more. What matters most is the crucial statement of the people. This election was a resounding no vote on executive lying, misdirection, deception, fabrication, and non stop failures. It was also a clear no vote on the unrestrained exercise of power used to attack individual rights promised in the Constitution and the willful neglect of the collective needs of citizens made manifest by their daily struggles.

DR Congo tops the headlines again.

I was skeptical about the choice to send former Nigerian President Olusegun Obasanjo as the UN's Special Envoy to DR Congo (skeptical because of the charges of corruption, ineffectively addressing interreligious violence, and human rights violations that have dogged him and his successors), but so far Obasanjo appears to be making some progress.

He has met with rebel leader Laurent Nkunda, who has expressed willingness to participate in a peace process. Some told the BBC that Nkunda, who has backed ceasefires before, suckered Obasanjo. In any event, most observers agree this is the start of a long and intricate process, rather than a prelude to a swift ending.

The hype wave on this film is growing quickly, with posters being released. For anyone who came of age reading comic books in the 1980's this is the one that has to be done right or not at all. The original screenplay draft that was circulating 15 years ago rewrote the ending, and changed so many elements as to be disowned by fans even before it got going. Alan Moore hates Hollywood for what they've done with his graphic novels. There's a law suit over the rights to the film.

It's certainly not going to have reached the screen without drama.

Video after the jump

I am off to the central highlands for some trekking and will not be around for a few days. Keep the lights on for me. And play nice.

I should return to Saigon in three or four days.

The website Icasualties.org now reports that over 1,000 coalition soldiers have died in Afghanistan. (I am having trouble locating precise figures on NATO casualties in Afghanistan and icasualty's estimate may be high. Wikipedia puts the number at 940.)

That, and Derrick Crowe's recent post at Brave New Films on why "We Cannot Afford to Escalate in Afghanistan," have me thinking about all the reasons why we cannot afford to escalate this war.

One of the most important ideas of 20th century economics was Keynes demonstration that Say's Law does not hold for whole economies. Say's law argued that economies will right themselves - tend to equilibrium - at full production. Keynes showed that will economies tend to equilibrium, they don't tend to equilibrium at what is called a "Pareto Optimal" state. That is the point where there are no "win-win" situations left, in specific terms no one's utility can be increased without an exactly equal decrease in someone else's utility. Sometimes the ship of an economy rights itself, by sinking to the bottom.

This conclusion, that economies can stabilize after a shock at a lower level of production was his reason for calling for "priming the pump" stimulus: spending which would encourage people not to defer purchases, or businesses not to defer investment based on fears about the economy. This later leads to General Equilibrium Theory of Kenneth Arrow. The idea is this: the market depends on people making decisions based on obvious and present information, and transmitting the results of that decision by purchasing or not purchasing. This will be reflected in price, and since price information travels, if not immediately, then faster than anything else, the whole of production and consumption will move to a point where everything that people can produce, will be sold, and everything people want to buy can be obtained. However, if people worry about inflation, they will buy earlier than they want, and if they worry about deflation they will buy later. This means the job of government is to make it so that people balance the risks to growth and inflation, and, on net, buy when they want to buy, and save when they want to save.

A deflationary spiral begins with the expectation of future earnings drops, and people both defer buying and businesses defer investing. In Keynesian terms the economy's liquidity preference rises, and becomes a vicious circle. People want to be liquid, because they see everyone else wanting to be liquid. Money disappears under the mattress of the economy, the velocity of money drops. Keynes observed that "one man's expenditure is another man's income." That means if everyone stops buying, businesses don't expand capacity, but wait for capacity to fall in price so they can buy it cheaply, and that means fewer jobs, which means less income, which means less buying, which means even more incentive for businesses to wait for cheaper labor and production. Prices never fall enough to get buying going again.

Malthus hypothesized that eventually holders of rent would begin spending. Keynesians countered that holders of rent will not buy production, but will instead buy rents, or buy unproductive labor. That is, they will buy things like paintings and art objects and land, because these things are rents, or buy, and put out of production, competitors. Or they will buy servants and other forms of labor which do not increase the wealth of the society. Thus, sayeth the Keynesians, government, as the ultimate rent holder, is a better "buyer of last resort" than the wealthy holders of rents. Not to put too fine a point on it, the Malthusian solution was tried in the 1930's - by Nazi Germany, Fascist Italy, and Militarist Japan. The holders of rent in those societies got together and began spending when labor got cheap enough. On weapons.

So how does this work? How can you "just print money?" Well you can't. But there's a reason why you can run the printing presses and it works here. Let me explain.

If you haven't read Hannes important essay about Dennis Ross and the Obama transition, please do so now.

And then spread the word.

He's right: we cannot afford to have Ross running our Iran policy. He's simply not trustworthy and I seriously doubt he would act in good faith on Obama's behalf. And yes, I realize that is a really serious thing to say. But the bottom line is rapprochment with Iran is utterly essential if we are to disengage rapidly from Iraq. So, if you are like me and want to see us get out as soon as possible then read the essay and heed Hannes' call to action.

I'm inclined to defer to Krugman's advice here:

To pull us out of this downward spiral, the federal government will have to provide economic stimulus in the form of higher spending and greater aid to those in distress — and the stimulus plan won’t come soon enough or be strong enough unless politicians and economic officials are able to transcend several conventional prejudices.

One of these prejudices is the fear of red ink. In normal times, it’s good to worry about the budget deficit — and fiscal responsibility is a virtue we’ll need to relearn as soon as this crisis is past. When depression economics prevails, however, this virtue becomes a vice. F.D.R.’s premature attempt to balance the budget in 1937 almost destroyed the New Deal.

But I have to say it really does fly in the face of my normal penchant for balanced budgets, higher taxes on the wealthy (and I still think any income over a million should be taxed at 60% or higher) and a draw down in Iraq, which will alleviate many of the budgetary constraints Obama will be faced with. You can already here the Rubinites talking about such 'constraints' when it comes to things like national healthcare and a really big, important domestic infrastructure stimulus package.

Why am I inclined to defer? Because Krugman has been right on so many things in the past he's gained my trust. We'll soon see, won't we?

About a half a mile from where I sit, 150,000 chickens that woke up this morning on our farm are being caught and attached by the legs to a moving conveyor with shackles. The chickens pass through a vat of water carrying an electrical charge that stuns them. Their necks are sliced by a saw; they bleed out through this wound until dead. The body then passes though a vat of scalding water and emerges to be plucked and gutted by a machine, then pieced and packaged by experienced brown hands. Within days, what’s left of their bodies will appear in meat counters.

We like our meat as far removed as we can get it from the point of origin, so you very seldom see whole chickens in grocery stores anymore. Instead we buy Styrofoam trays with neat rows of boneless breasts, wings or leg quarters laid out on an absorbent pad and wrapped in clear plastic with letters attesting to the wholesomeness of the product. No feet, feathers or blood; certainly no heads with sightless eyes staring out to remind us these parts were once part of a living animal.

Ever wondered what a sleeper bus looks like? Well, wonder no more. This photo is from the bus I took from Hoi An to Saigon. (I'm just not going to type the whole frigging name anymore.)

I've taken them before, but only in China. One time I took a sleeper bus for 47 hours between Golmud in Qinhai, China to Lhasa, Tibet.

It was sheer hell.

Most of the trip was spent at 4,000 meters or higher in a bus full of spitting, vomiting and farting Chinese. There were plenty of Westerners on the bus that got sick from the altitude as well.

But as buses go, sleeper buses are great. You've got enough personal space to be comfortable, the windows open and they stop frequently for food and other necessities.

All in all, not a bad way to travel. Besides, a flight would have cost $80 to $100. The bus? It cost $6 for a twenty four hour trip.

Besides, I got to see countryside roll past me in the window of the bus that I would never have seen on a plane and that is what really counts.

I am very much inclined to see this as the first act in Pootie-poot's return to the presidency. It was very clear when Medvedev was running and won the presidency that Pootie-poot would be his prime minister. After the story from the other day, here it's pretty clear who is calling the shots. So, I'd expect Pootie-poot to either run when Medvedev's first term is up or for Medvedev to step down at some point after the bill passes to let Pootie-poot to run. I could be wrong, and it wouldn't be the first time, but when it comes to Russia it's pretty clear at this point who is really calling the shots.