WTF: Greek debt vs. CDS

Thankfully, you don’t have to know what a CDS is (which I actually had to look up because I know nothing; turns out its a credit default swap) to understand the gist of it. The gist? Greece is so fucked right now. On a related note, why oh why did the EU think a shared currency was a good idea anyway? Like really somebody explain this please. I’m sure they had a decent reason to think so. Right? I mean of course they did. Riight?


Just to be clear, if I’m a hedge fund who owns Greek bonds right now, and say I’ve hedged my exposure using CDSs, then why the fuck would I go along with a voluntary write-down of Greek debt??

From my perspective, if I do go along with it, I lose a asston of money on my bonds and my CDSs don’t get triggered because the write-down is considered “voluntary”. If I don’t go along with it, and enough other hedge funds also don’t go along with it, I either get paid in full or the CDSs I already own get triggered and I get paid in full (unless the counterparty who wrote the CDS goes under, but there’s always that risk).

Bottomline: I don’t go along with it.

None of this political finagling will change my mind. No argument for the stability of the European Union will change…

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Gambling with Israel

Israeli Prime Minister Netanyahu adopted a refined view on an Iran nuclear arms deal. His previous claim of requiring Iran to have exactly “ZERO” of anything concerning nuclear materials was dropped. Still, he says Obama’s plan doesn’t go far enough. Previously, anonymous Israeli officials leaked some of the plans to put pressure on Obama. (NYT)

With Netanyahu’s speech to the conservative-majority US legislature, relations between the leaders of the US and Israeli are in an icy freeze. Not only is that stupid for pure military reasons, it’s also short sighted and potential damaging to Israel’s vibrant democracy as US conservatives and Israeli conservatives start to team up.

On top of that, a former Mossad chief said Netanyahu’s time table of Iranian nuclear progression is way off base and that Iran’s ballistic missiles could not hit “every part of the United States.” For one thing, that would be very, very impressive if it could. Netanyahu either respects Iran a whole lot or he’s playing a tightrope political game to win the upcoming elections. It’s seems insane to gamble with the future of a country for a single election. (AP)

The State of Failed States: Recent Events in Syria and Iraq

In Syria, Aleppo is a human rights catastrophe. There is little hope the fighting will end soon. Previously, the fighting had mostly been between “moderate rebels” and government forces. However, extremist groups recently moved in. Al-Nusra unleashed a potent attack on Assad’s intelligence services in Aleppo. Most recently, the Syrian regime conducted an operation that ended with the death of the leader of al-Nusra. The battle is still raging, extremists battling moderates battling Assad’s regime.

Meanwhile, fighting in the south is going poor for Assad. Hezbollah, the elite proxy force based in Lebanon and receiving training and funding from Iran, is making rapid advances in Syria. They’ve recently pushed into the area near the Golan Heights, a disputed zone on the southern border of Syria, shared with Israel. This marks the first time any Iranian forces have gotten near the geographical borders of Israel.

Over in Iraq, the fight for Tikrit has been slow-going and rough. The plan, devised by Iranian generals and enacted mostly by Shiite militias, calls for the encirclement of the city. However, as predicted, roadside bombs are slowing the advance. The primarily Sunni citizens are fleeing, fearing both the fighting and potential atrocities by the sectarian forces under Iranian command.

The US hasn’t participated in the Tikrit campaign, leaving the Iranian and Iraqis to control the skies. Cooperation between Iran and the US doesn’t exist in Iraq. It’s mostly strategic dancing around each other, the Iranians on the ground and the US in the air. What do we gain from avoiding direct cooperation? Is this a matter of political optics?

Because it’s pretty clear we’d have more progress if the US worked with the Iranians. Even if the US don’t help them, the influence of Iran is already deeply ingrained in the Iraqi regime and even more so in its army. If the US does help, they’re essentially giving Iran the Sunni areas of Iraq on a platter. On the other hand, if the US doesn’t get involved, then how many will die because of partisan foreign policy?

Turkey: Diehard Republicans, Friends of Islam

Turkey is pushing hard for regional power. President Erdogan is trying to be seen as an unwavering champion of Muslims everywhere. During his 12 years in power, Erdogan took up the cause of the conservatives who had often been overlooked by previous administrations. The US has been increasingly frustrated as Erdogan jockeys for power in the midst of the Syria crisis, preventing the US from using bases that would be valuable and doing little to prevent extremists from crossing the border into Syria. All while ISIS/ISIL massacre and pillage, Erdogan turns a blind eye while he keeps his focus pinned to Assad.

Turkey has been in talks to join the EU for quite some now. Now Erdogan is turning away from that, disillusioned by European anti-Islam rhetoric and seeing the opportunity after the Arab Spring. Since the fall of Mubarak, the Turkish government has begun to back groups like the Muslim Brotherhood, which has been seriously irritating Saudi Arabia and Egypt. Indeed, Erdogan supported the brief presidency of Mohamed Morsi before the Egyptian military overthrew him.

It must be noted that while Saudi Arabia and Egypt have a history of being strong allies of the US, neither country is run by a popularly elected government. Erdogan was elected multiple times. For all of that, though, the press in Turkey has been facing nearly the same levels of censorship.

Qatar is a very small country ruled by a monarchy, absurdly, and they’re the backers of al-Jazeera, which is basically run on oil wealth. When the Egyptian military smashed Morsi out of power, al-Jazeera was very critical. That has died down somewhat in the face of pressure from Saudi Arabia. On the other hand, Erdogan hasn’t wavered on the issue. When Qatar expelled leaders from Hamas, again due to pressure from Saudi Arabia, Erdogan was quick to extend his hand and offer safe haven in Turkey.

From the CS Monitor:

Mr. Davutoglu, now prime minister, “believes that Turkey can maximize its influence in the region if it supports democracies,” says Ms. Kenar, the Türkiye columnist. “He believes that if democracy prevails, Turkey will naturally be the leading country…

It’s an odd moment when Turkey, a country that supports right-wing Islamist movements both political and otherwise, is actually the beacon of democracy in the region. Wildly, Palestine, Lebanon, Kuwait*, and Turkey are the only countries in that area with representative governments. Turkey’s ruling party is basically the Muslim Brotherhood, while Hamas is actually a branch of the Muslim Brotherhood. That leaves two countries, Lebanon and Kuwait*. Lebanon, a primarily Shia country, as one of the two countries in the region that isn’t controlled by either a dictatorship or a Sunni political party.

Now, hopping back a little to the list of democratic countries, it must be said that one could call Iran a democracy, as they do hold elections. Unfortunately, that’s misleading. There is little ambiguity in the fact that power is firmly held by the Ayatollah, which pretty much nixes the whole representative government thing. To add insult to injury, the Supreme Ayatollah is also the religious leader for all Shia, which includes Lebanon. The most prestigious group in Lebanon, Hezbollah, is a group of foreign-trained, foreign-equipped, and foreign-funded Shiite soldiers that specialize in asymmetrical warfare. They are, essentially, an outgrowth of Iran’s Revolutionary Guard.

So that’s the landscape of the Muslim world (excluding poor Kuwait*). That’s what Turkey leans into, and to be terribly honest, it doesn’t take much squinting to see Turkey as a haven for republican ideals. While the Muslim Brotherhood and others seek to reimpose Sharia elsewhere in the region, that’s a nonstarter in Turkey. In other words, the only things to truly fear from an Islamic government is untenable (for now) in Turkey. Perhaps, then a realignment could be a good thing. Perhaps when Erdogan finally is pushed out of power, Turkey will come with new ideas and solid credentials and help the downtrodden countries of the region back on the path to true and lasting democracy.

(Note: the first four paragraphs are largely a summary of this article)

*Whoops I completely forgot about Kuwait in the original version of this post. I had to do some research. I’ve learned that Kuwait is fascinating. More on that later.

In Israel, the President appoints the Prime Minister

I was reading a profile about Israel’s President and I came across something that surprised me. From an excellent CS Monitor article about the President of Israel, Reuven Rivlin:

“…Rivlin also will have an important political role to play following Israel’s March 17 elections, in which Mr. Netanyahu’s Likud and the opposition Labor are running neck and neck. As president, Rivlin picks the party leader he deems most likely to succeed in forming the next government, not necessarily the leader of the largest party, and he has said he will pick the person who can form the largest coalition.”

How about that? So a briefer on Israeli elections. First off, votes are cast for a party and not for individuals. I’ll let these guys pick up from here:

“Prior to the elections, each party presents its platform, and the list of candidates for the Knesset, in order of precedence. The parties select their candidates for the Knesset in primaries or by other procedures. Knesset seats are assigned in proportion to each party’s percentage of the total national vote.”

Then the President comes along and picks somebody.

“When a new government is to be constituted, the President of the State, after consulting with representatives of the parties elected to the Knesset, assigns the task of forming the government to a Knesset member. This Knesset member is usually the leader of the party with the largest Knesset representation or the head of the party that leads a coalition with more than 60 members.”

Note that the President isn’t obligated to pick the biggest party/coalition, it’s just usually that. Israel used to have direct election for Prime Minister, but that was abolished in 1996. One last tidbit from Wikipedia: “Presidents are elected by the Knesset for a seven-year term and are limited to a single term.”

Graft, Sectarianism, and War in the Middle East

Bahrain, which is a close ally of Saudi Arabia, is dealing with serious terrorism issues. Why, you ask? Well, Bahrain is a majority Shia country under the yoke of Sunni royalty. Sound familiar? Sound like, say, Iraq or Syria or Yemen? Predictably, a tiny minority of the Shia majority are rising up, and given the new standard model of an insurgency, they rely on terrorist bombing.

So why are these authoritarian governments continually holding on to power? Let’s get some perspective from Yemen. The former president of Yemen is a billionaire. He’s the one who recently was forced from power by the Houthi and is now in his stronghold of Aden. Now it’s come to light that he skimmed anywhere from 30 to 62 BILLION dollars in his 33 years in “office.” Yemen is the poorest country in the Middle East.

And that’s true in Egypt too. The military dictatorship there, led by Sisi, is one of the main benefactors. They make tons of money off of commercial enterprises and their source of income would be threatened by a non-military government. Like many other illegitimate governments, Egypt is dealing with it’s own insurgency in Sinai. The conflict, of course, isn’t staying put.

An Egyptian court listed the militant wing of Hamas, the Palestinian organization, as a terrorist group. Hamas, by the way, is an offshoot of the Muslim Brotherhood. The Egyptian court accused Hamas of supporting the insurgency in the Sinai peninsula, saying “it has been proven without any doubt” that Hamas committed violence against Egyptian security forces in Sinai. However, It should be noted that Egypt has always been a key player in keeping the blockade on Gaza, and while that doesn’t excuse terrorism, it explains why Hamas might be supporting insurgent in Sinai.

So here we have greedy politicians/generals fighting insurgencies against large swaths of the population that they regular fuck over. Iraq, Syria, Yemen, Libya, Egypt, Pakistan, and probably more. All the while, Qatar quietly funds the most influential media organization and pushes their own agenda without a care for their journalists. Iran funds any Shia group it can and Saudi Arabia funds arch-conservative Sunni ideologues that try to bring back the stone ages. Money and the military are bringing down the whole area. The conflicts won’t end until the jaw-dropping graft and sectarian struggles are finally abolished. I don’t have much confidence that’ll happen any time soon.