Back in September I reported what was then the most serious piracy incident—the hijacking of MV Faina, a Ukrainian-owned freighter that happened to be carrying 33 Russian T-72 tanks. The US Navy promptly dispatched the USS Howard and Russia followed by sending the missile frigate Neustrashimy (Fearless).
A few days later, on 2 October, I provided an update. (1) I simply had to repeat what the New York Times reported:
In a 45-minute interview, the pirate spokesman explained what the pirates wanted (“just money”) to why they were doing this (“to stop illegal fishing and dumping in our waters”) to what they had to eat on board (rice, meat, bread, spaghetti, “you know, normal human-being food”).
He said that so far, in the eyes of the world, the pirates had been misunderstood. “We don’t consider ourselves sea bandits,” he said. “We consider sea bandits those who illegally fish in our seas and dump waste in our seas and carry weapons in our seas. We are simply patrolling our seas. Think of us like a coast guard.”
IMPOTENCE
Well to my disbelief I have to report that the MV Faina is still in the hands of the pirates. It has been surrounded by four US warships and the Russian warship for the last six weeks. I am at a loss for a rational explanation for the impotent behavior of these major powers.
There are currently 14 warships in the Gulf of Aden. Eight of them come from the combined task force of the coalition that is fighting the war in Afghanistan. NATO has four. Russia has one. And India has one. (2)
NAVIES HAVE THEIR HANDS TIED
ABC News recently reported that most of the navies have declared that shipping companies must protect themselves:
There is no consensus among the world's powers, however, to go after the pirates despite the fact that the ships that have been captured are anchored in clear view off the coast of Somalia.
The U.S. Navy said Wednesday that it’s not about to use its military might to free a giant oil tanker or any other ship captured by Somali pirates because if naval forces recover one ship, they would have to recover them all. Besides, a Pentagon official asked, what would they do with all the captured pirates?
The U.S. Fifth Fleet has dozens of ships patrolling the pirate-infested waters off the Somali coast in the Gulf of Aden and in the Indian Ocean. They have been joined by warships from several other nations trying to create a safe corridor through the busy shipping lanes. (3)
But so what? I wonder why President Bush hasn’t made a decision. This is so unlike him. The presidential elections are over. His administration will be in power for just two more months. (The presidential inauguration of Senator Obama is scheduled for 20 January 2009.) Does he intend to hand over this problem to his successor?
BAD EXAMPLE
This impotence can only make the pirates bolder. Thugs like them only understand one language and that is the language of power. Apparently while they don’t understand the lack of action, they’re not wasting time pondering this. Since the MV Faina incident, about 15 more vessels have been hijacked.
According to the same ABC News article, 95 ships have been attacked so far this year and 39 have been captured.
A TIMELY EXCEPTION
Last week, on 19 November, Wednesday, the only Indian warship took offensive action at the first opportunity. (4) The INS Tabar first saved two merchant vessels on 11 November and followed it up on the 19th by destroying one of the mother ships of these Somali pirates.
INS Tabar encountered the pirates’ mother ship with two speed boats in tow and there were about 20 pirates on board the ship, it is learned.
“This pirate vessel was similar in description to the ‘Mother Vessel’ mentioned in various piracy bulletins. INS Tabar closed in on the vessel and asked her to stop for investigation,” a Navy spokesperson said.
But the pirates threatened to blow up the warship if it sailed closer to their mother ship, despite repeated calls from INS Tabar to stop and let the Navy personnel to inspect the ship, he said.
The Navy noticed that pirates were roaming on the upper deck of the vessel with guns and rocket propelled grenade launchers in hand, and they continued the threats and subsequently fired upon INS Tabar.
In their retaliatory action in “self-defence,” INS Tabar opened fire on the mother vessel of the pirates. “As a result of INS Tabar's guns booming, fire broke out on the pirate vessel and explosions were heard, possibly due to exploding ammunition that was stored on the vessel,” he said.
Congratulations to the Indian government and its navy for setting a good example.
THE LARGEST INCIDENT YET
Today, the Swiss news website, swissinfo.ch, reported that:
Somali pirates holding a Saudi supertanker after the largest hijacking in maritime history have reduced their ransom demand to $15 million (10 million pounds), an Islamist leader and regional maritime group both said on Monday.
The November 15 capture of the Sirius Star—with $100 million of oil and 25 crew members from Britain, Poland, Croatia, Saudi Arabia and the Philippines—has focused world attention on rampant piracy off the failed Horn of Africa state. (5)
Hopefully this will prod the powers to finally take action. The cry has been building:
Tom Barnett of ScrippsNews—a major US media conglomerate—wrote an op-ed (opinion-editorial) that plainly said “when piracy threatens global commerce, great powers need to fight back—collectively.” (6) I might add that the US navy should be able to do it by itself if the President ordered it. After all, if the US can invade two countries, surely it can exterminate several thousand pirates.
Admiral Vladimir Vysotsky of the Russian Navy was quoted by the Russian News & Information Agency (Novosti) as saying that warships from all of the Russian Navy fleets will be involved in measures to fight piracy in the Horn of Africa region. (7)
And back to the good-example-maker, India. Outlook India claims that India has been given the UN’s blessing to take on the pirates:
With international maritime nations identifying Somalian waters as the source of increasing piracy threats, India today said the UN Security Council has granted it permission to “suppress” the sea brigands there.
“So far India’s encounter with the pirates has been in the international waters. Our desire to fight piracy through the UN route has been conveyed and confirmed through the UN Security Council via the UN Permanent Representative of Somalia in UN,” Ministry of External Affairs Secretary (East) N Ravi told reporters here.
Navy officials, on their part, said the UN has given permission to navies operating in that area to take action against pirates, as enshrined in the UN Security Council (UNSC) Resolutions 1814, 1816 and 1838.
They said the go-ahead came after the Transitional Government of Somalia approached the UN welcoming action against pirates in their territorial waters. (8)
As my daughters would say, "whatever!" Let’s see what happens next.
REFERENCES
(1) “PIRACY UPDATE - 2 October 2008.” Retrieved from http://philosophytoastronomy.blogspot.com/2008/10/piracy-update-october-2-2008-when.html on 22 November 2008. (2) “FACTBOX: Foreign ships off Somalia.” Retrieved from http://www.reuters.com/article/topNews/idUKTRE4AK4M020081121 on 22 November 2008. (3) “Shipping Companies Must Protect Themselves.” Retrieved from http://abcnews.go.com/print?id=6292014 on 23 November 2008. (4) “Indian Navy Sinks Pirate Ship in Gulf of Aden.” Retrieved from http://www.outlookindia.com/pti_news.asp?id=635226 on 23 November 2008. (5) “Somali pirates want $15 million for Saudi ship.” Retrieved from http://www.swissinfo.ch/eng/swissinfo.html?siteSect=105&sid=10005525&ty=ti on 24 November 2008. (6) “Barnett: Fight the pirates.” Retrieved from http://www.scrippsnews.com/node/38139 on 23 November 2008. (7) “Warships from all Russian Navy fleets to fight piracy off Somalia.” Retrieved from http://en.rian.ru/russia/20081123/118473138.html on 23 November 2008. (8) “India gets UN nod to take on piracy in Somalian waters.” Retrieved from http://www.outlookindia.com/pti_news.asp?id=636464 on 23 November 2008.
The first part shows the interim CEO of Fannie Mae speaking in front of the Congressional Black Caucus (CBC). The speech was delivered in 2005, the year that the housing bubble peaked. It's interesting to hear the CEO admit the existence of serious problems already brewing inside Fannie Mae.
It's followed by a Fox News commentary and analysis that explains the relationship of the CBC to Fannie Mae. It also reveals Senator Obama's role in the Congressional Black Caucus.
At the end of this post, is a copy of the article that appeared in the website of Washington State's Herald newspaper. (I do this to minimize the frustration of clicking on a dead link.)
The article explains the significance of this two quasi-government institutions and why they had to be bailed out.
FANNIE MAC, FREDDIE MAC BAILOUT HAD TO HAPPEN Published Sunday, September 14, 2008 by James McCusker
The story was that Fannie Mae and Freddie Mac had no choice. They would either agree to a federal government takeover or, alternatively, the federal government would take over anyway.
The back story, though, is that the Treasury Department didn't have a choice, either.
Two factors forced the decision to take over the mortgage giants. The first was that a review of Freddie Mac's books revealed that its accounting methods had overstated its capital position. When this information was made public the financial markets would again be in turmoil, something the Treasury Department neither needed nor wanted.
The significance of the accounting issue should not be understated.
Both Freddie Mac and Fannie Mae had made a point of their capital adequacy as each presented its best face to the markets and the public. And, in fact, both of the mortgage giants appeared to have capital levels that not only met but also exceeded regulatory requirements.
If the capital accounts were built on sand, though, lenders and investors would feel that they had been deceived. A reputation for deception is not a good thing to have in financial markets. And an accounting mess is certainly not a good thing to reveal while the Treasury Department was inside these organizations and backing them up. Its reputation would be smeared, too.
We should not underestimate the importance of human nature, either. Almost certainly Freddie Mac's accounting made the feds wonder, "What are we going to find next?"
Financial markets do not like the unexpected and have been on edge ever since this mortgage finance mess began to give off its distinctive odor. Clearly, the Treasury Department could not afford to play a losing game of "Whack-A-Mole" with either Freddie Mac's or Fannie Mae's accounting surprises.
The second factor was not raucous Wall Street, but the quiet, paneled rooms of central banks in Europe and Asia, which together hold nearly $1 trillion in mortgage-backed debt guaranteed by Fannie Mae and Freddie Mac. China alone holds an estimated $300 billion of this debt and has reportedly made it very clear that it has no taste for either accounting surprises or the legal subtleties of government-sponsored-entities. As far as China was concerned, it held the U.S. government's IOUs and expected to be paid in full. Europe has been quieter but, we would guess, no less insistent.
The net effect was that the Treasury Department had no choice. In order to take responsibility it had to take over.
The takeover means that stockholders in Fannie Mae and Freddie Mac are moved to last place in terms of their claims on the companies' assets—effectively rendering the stock worthless. There will be few tears shed for those who hold common stock. After all, the bad news and the precipitous decline in the mortgage companies' share prices over the past few months, it would be a singularly uninformed investor who did not consider the stock to be speculative.
The preferred stock, however, is another matter, and some steps may need to be taken to deal with the takeover's collateral damage. Preferred stocks do not carry voting privileges, so the owners bear no direct responsibility for Freddie and Fannie's bone-headed management.
Many banks that hold that preferred stock will be looking at big holes in their balance sheets. The losses are so significant that analysts estimate as many as 40 smaller banks around the country will be forced to find replacement capital to stay afloat.
Even banking giant Wells Fargo, widely praised for its skillful avoidance of the sub-prime credit mess, finds itself staring at a $480 million loss from its Fannie and Freddie preferred stock holdings. It is not a big enough loss to impair its capital position, but it's no fun, either.
Treasury's takeover of Fannie Mae and Freddy Mac was organized as a conservatorship, a flexible structure which allows for a considerable exercise of judgment. Perhaps the government will review the unintended consequences of its takeover and make some adjustments to accommodate the holders of preferred shares. Certainly, the Treasury Department does not wish its takeover action to bring further woe to the banking system.
The final cost to the taxpayers of this takeover may not be as much as now projected. If the takeover calms the financial market waters and gives hope to the housing market, the write-downs may not be as severe as predicted. And as the critics of the takeover come out of Wall Street's woodwork, we need to keep our perspective: Treasury, in fact, had no choice.
Arriving at a decision, as far as the concept of advocacy is concerned, is a contest. An advocate enters into a discussion solely for the purpose of convincing the decision makers. An advocate is a spokesman for his position. He will lobby for while defending it at the same time. Dissenters are discouraged or dismissed. Advocates fight to win since the alternative is to lose.
Inquiry, on the other hand, treats decision-making as a problem that needs to be solved. An "inquirer" enters into a discussion for the purpose of evaluating hypotheses. They think critically and present and listen to balanced arguments. Their attitude keeps them open to alternatives even when these viewpoints are submitted by the minority. In the end, this approach leads to a sense of collective ownership of the final decision by the entire group.
Politics, unfortunately, is one of those topics that can inflame the heart. It is hard to maintain an inquiring nature in this subject. Passion has a way of turning people into fierce advocates for their positions.
As my uncle often said, there are two topics of discussion that never end: politics and religion. And he wisely refrains from participating in both.
The presidential election is less than 90 days away and the incumbent president has certainly had a tumultuous administration. It is no wonder that passions run high especially among the Democrats.
I heard Senator Obama, the Democratic candidate, give a rousing speech at his party's national convention. As a former member of Toastmasters, I applauded his masterful delivery of his message. However, sometimes the delivery is so good that it is hard to review the meaning of the message.
I want to do that with both candidates.
I was surprised, therefore, when I read the analysis of Obama's speech in this political opinion article by Mr. Robert Tracinski. Entitled "Obama Offers a Beautifully Packaged Lie," I read it with a critical eye. I was looking for flawed partisan logic but saw none.
Here then, I present for your own review, are excerpts of Tracinski's article:
Barack Obama can fake sincerity, and that, more than the words of a speech or the pageantry that precedes it, is the key to his power as a speaker.
His speech last night was brilliant and perfect. It is too bad that the whole thing was a lie, which depended on the smoothness and apparent sincerity of Senator Obama's delivery to lull the listener into a state of credulity and prevent him from asking too many questions.
Here's an example that is small but revealing. Obama led with the best sales pitch he has to offer: that he is not George Bush. But of course, Obama is running against John McCain, not Bush. So he attempted to justify the substitution by claiming that "John McCain has voted with George Bush ninety percent of the time." This statistic has been used throughout the Democratic convention, but it makes no sense. Bush is not a member of Congress and casts no votes there--so how can you compare his voting record to that of McCain?
But don't examine this folly; ask only what it accomplishes. It allows Obama to run against an unpopular president who will not defend himself because he is not actually in the race.
IMPOTENT NAVIES ENCOURAGE MORE PIRACY
