The Credit Crisis and the Fundamentals of the Stock Market

Ambose Evans-Pritchard writes in a blog entry at the Telegraph:

Even so, equities have not begun to reflect the reality that the 2006-2007 credit bubble has popped and cannot be easily reflated at a time of stubborn, lingering inflation. Spare me the mantra that the “fundamentals” are sound. Credit is the ultimate fundamental.

This is a folly. It is natural for the stock prices to edge higher when the alternative investment opportunity that is provided by the credit market is in trouble. Upward drift in the stock market is not always a reflection of belief in higher profits. In this case it is more likely to be a lack of good alternatives.

It is a mistake to report the stock market mood as "jubilant" after the Fed acknowledged the credit market troubles with the rate drop. The mood is quite probably more like: "These stocks are going to stink at these prices, but hey, look at the alternatives." Willingness to buy at a higher price without any underlying positive indicators is a sign of acceptance of lower yields. I would hesitate to call such a mood "jubilant".

The recent returns to lower stock market price levels have most probably been caused by disappointing profit reports, especially from the financial companies.

There is some correlation between the credit market and the stock market, but these markets are also ever competing against each other. A crisis in the credit market is bound to have a short term boost in the stock market. If an investor is faced with modest yields and a high risk in the credit market, he might just as well put his money into the stock market.

On the other hand, trouble in the credit market might actually be a real boost to established companies with sound cash positions. After all, tightening credit conditions cause hard times for their growth-hungry and deeply indebted smaller competitors. To the economy in general, this is not good news.

Human Terrain Teams and Dehumanization of Civilians

Nick Turse wrote in TomDispatch.com about the mind-set of big game hunters being taken as a model for US Marine troop in Iraq and Afghanistan. He quite correctly recognizes this as a part of the dehumanization of the enemy.

Yet, the very first paragraph of his post brings forward the fact that in this war, the dehumanization has gone much further than seeing the enemy combatants as animals to be hunted for pleasure:

Earlier this month, news of the military's use of Human Terrain Teams -- U.S. combat units operating in Afghanistan and Iraq that contain anthropologists and other social scientists who have traded in their academic robes for body armor -- hit the New York Times. While the incorporation of academic experts into combat units has raised ire in some scholarly circles, their use as "cultural advisers" to aid the war effort has been greeted by the military as "a crucial new weapon in counterinsurgency operations" and in the media as an example of increased cultural sensitivity as well as evidence of a new Pentagon willingness to think outside the box.

"Human Terrain Team" is a perfect display of the role that is played by the Iraqi civilian population in this conflict. This term does not refer to a terrain team made up of humans. It mean a team that is focused on issues with the "human terrain".

This term, human terrain, relegates the population to the level of mere landscape features in a battlefield. They are put on the same level with rocks, buildings, trees, rivers and other parts of the overall scenery that is usually thought of as the terrain. How much lower can we go with dehumanization?

This view-point is directly related to the reckless endangerment that the civilian population has been put through in Iraq. The lives of Iraqi civilians are not only much below the safety of American troops, but they are also much below the importance of killing of capturing even low-level insurgents.

There have been numerous cases of deaths from shooting through doors without warning and calling in air-raids to properties with known civilian presence. In the early part of the invasion, we heard reports of numerous bombings of buildings that Saddam Hussein or other high-level Baath party members were rumored to be located at. There were no limits for such strikes. No matter if it was an apartment building with many families, or a restaurant where innocent people were having dinner. The importance of eliminating a single individual was, and still is, seen as a higher priority.

But now that the original "reasons" for the war have been found to be false, the only remaining concern for the American troops in Iraq is supposed to be the safety of the Iraqi people. Yet the same reckless abandon continues in force.

Some people have claimed that the US must stay in Iraq to fix the damage that they have done. But the US military, with associated private contractors, are the proverbial bull in the china shop. The longer the bull stays in the shop, the more destruction there will be. And it is some very expensive destruction at that.

The Iraqi government is finally starting to show some real frustration with this phenomenon. In two years at most there will be angry demands for a US withdrawal from the Iraqis, and no talking about any enduring bases to be left behind. US strategists should start to prepare for that if they want to save themselves from major embarrassment. They would, of course, be also saving thousands of additional Iraqi people from being hunted for sport or being shot as parts of the landscape.

Moving to Blogger from Yahoo 360°

This blog is a continuation of the blog with the same title that I have been very infrequently writing at Yahoo 360°.

I have become increasingly annoyed by the Yahoo system, especially its tendency to lose entire blog entries at submission, so I finally decided to move it here. I think that this move should have been made a long time ago.

This blog is true to its title and not dedicated to any specific subject. The title is also a quote from Donald Rumsfeld, who, according to reports, showed his priorities on 11 September 2001 by saying to his aides: "Judge whether good enough hit [Saddam Hussein] at same time. ... Go massive, Sweep it all up. Things related and not."