‘These councils include tens of thousands of tribal Sunni fighters who the U.S. has created, armed and financed…More than 100,000 tribesmen have joined the Sunni militia ranks and are reported to have helped in reinstating security in formerly restive areas….But according to Thamer al-Tamimi, one of these councils’ top leaders, the Sunni militia groups are under threat due to an upsurge in violence directed at their leaders and offices.’

http://www.azzaman.com/english…..fname=news2008-02-28kurd.htm

and help to counter China’s growing influence in Iraq.

China to develop Iraqi oil field following assurances of security
‘China National Petroleum Corporation (CNPC) has agreed to start developing the Ahdab oil field (Kut area) with proven reserves estimated at 1.4 billion barrels, Governor of Wasit Province said.’

http://www.azzaman.com/english…..fname=news2008-03-06kurd.htm

The VP’s mission, he being a rather [ahem] different personality than our faux louche President, summoned up something like Fitzcarraldo Cheney: The Consummate Idiocy of Obsessive Secrecy When the Entire World Already Knows Enough to Sink Your Ass.

Someboy should write it one day. The first canto could establish the setting, in which the government of a mythical kingdom has just been persuaded to shelve a plan to stop the heralds from declaiming the latest sour mash price in every public square by the appearance outside the royal offices of 2 million subjects all banging their empty tin flasks [if only!].

The futility of Vice-King Fitzcarraldo Cheney’s mission to his kingodm’s rich, happy, but putatively slow-witted financial backers would be illustrated by, e.g., these statements from one of the kingdom’s more optimistic seers:

“The question is whether [2008] will be disappointing or horrible; our forecast is disappointing.”

and

“In the past 10 years, the U.S. economy has had two locomotives,” Leamer said. One was the high-tech stock bubble of the late 1990s, the next was the run-up in housing.

“Looking to the future, there isn’t another locomotive. There is still not a reason for great optimism,” he said.

The kingdom’s sour mash gap has become so obvious that it figures in the set of examples on division by zero that were responsible for the blacklisting of all of the second-grade teachers in one of the kingdom’s few remaining public school systems. (Somewhere, a first grader who was assigned a counting task with the number of available soldiers in the kingdom’s army to be used as reference still stands in a darkened classroom, mute, because his mother told him never to tell a fib. The phrase “I would prefer not to” had not occured to him.)

Nevertheless, Fitzcarraldo Cheney is a doughty man (especially when other people are doing the pulling), and will not be dissuaded from his mission by something so trivial as impossiblity. …

The other factor is the Fed Rate…
How low can that sucker fall…
I’m thinking by late summer to zero, then what will the B man
do… call Greenspan?

Actually I think Ben&Co have had that looming zero rate in mind for sometime. The first big hint (there’ve been previous vague suggestions) was the speech last week that I went around praising, where he urged bankers to accept the fact that they have created losses, and so they should start to write down those losses (and reduce the principal on the loans that produced them accordingly) so we all, including the central bank, can proceed with the rest of our lives.

While that message sinks in among the banking community, this new facility announced Tue, along with the TAF, are designed to enable some kind of monetary policy, or at least Federal Reserve credit policy, to continue even if rates scrape the zero barrier. Krugman, whose ear to the ground is awfully reliable, pointed this out Tue also. He refs a gbs of a paper by Ben and two other Fed economists that is worth a bookmark and a look: it has a one-page nontechnical summary at the beginning.

The abstract:

The success over the years in reducing inflation and, consequently, the average level of nominal interest rates has increased the likelihood that the nominal policy interest rate may become constrained by the zero lower bound. When that happens, a central bank can no longer stimulate aggregate demand by further interest-rate reductions and must rely on “non-standard” policy alternatives. To assess the potential effectiveness of such policies, we analyze the behavior of selected asset prices over short periods surrounding central bank statements or other types of financial or economic news and estimate “no-arbitrage” models of the term structure for the United States and Japan. There is some evidence that central bank communications can help to shape public expectations of future policy actions and that asset purchases in large volume by a central bank would be able to affect the price or yield of the targeted asset.

Furthermore, despite what looks like a big move by the Fed today (and Adm. Fallon8( ), they’ve probably looked at the horizon on U.S. banking assets for the next couple of years, and decided that it was not good. We will get to the $200 barrel, but not soon enough for the Bush/Cheney mob I’ll bet.

(I’ve actually sat in classes in dynamic programming-like math with members of some of those families. The upper crust as a whole might deserve its reputation for indolence, but there are some smart guys over there.)

If so they may not be able to increase production without damaging long term productivity.

My best guess is that they are at peak oil, and likely the world is as well. Sure am glad, I’m not making payments on any gas guzzlers.

Will Congress even think to ask what Cheney offered or will we never know? I bet we never know.

Dick: We must hit Iran.
Abdullah: You are crazy.
D: Do not worry. We continue to honor our guarantee. Our Armed Forces will handle any threat to KSA. You can plainly see our naval fleet on-station.
A: Your guarantee has become weak in the face of modern weapons. We observed your Naval war-games. Your navy concluded that the old guarantee is no longer operable.
D: I tell you it is!
A: You risk shutdown of 30% of world crude[oil] supply.
D: We and our allies have over 30 days SPR [Strategic Petroleum Reserve]
A: Any blockage of [Gulf of Hormez] shipping will likely be way over 30 days. And any resumption of shipping will not return to former volumes or tanker terms.
D: Bullshit. I guarantee it or else!
A: What if the Royal Family is forced to abdicate? Then what?
D: Our Marines will hold KSA and and the oil fields until a new government is stabilized.
A: Is that the real reason your Navy is on alert? It is not about Iran?
D: Of course not. You can trust me. It is just in case.
A: Your “just in case” is after the fact of Korea, VietNam, Afghanistan, Iraq, America is now a desperate importer of oil and, worst of all, the world is now in a bidding-war for crude. Your guarantee and my presence on the Royal Throne are equally in doubt. America has made too many enemies. The KSA must not make too many enemies.
D: You question our guarantee?
A: We agree that world crude production is not sustainable, is falling and will fall faster each year from now on. You know supergiant Ghawar [5.5 million bbl/day] is tired. As an old friend of America, I repeat what I have said for years. The bidding war will not stop until America cuts per capita consumption and raises gasoline prices to match Europe. Only then can nations cooperate to develop sustainable energy sources. KSA will act responsibly and in concert with others to force consumption to match dwindling production. Thank you for your visit. Farewell old friend.