Chiseled in The Halls of Congress!

Director of Israeli military intelligence states, Iran is moving swiftly towards nuclear capability. GW will leave office having tossed that "bomb" to his successor as well as an economy in dire straits. His place in history dims with the passing of each day. Sad indeed.

Israel will have no choice but to confront Iran militarily as the rest of the world looks on as usual. Only a matter of time as I have been writing.

Even others, far more savvy, are beginning to sound the same message.(See 1 and 1a below.)

Now that he will soon be out of office, Baradei begins to come cleaner and, out of frustration, more of an alarmist? (See 2 below.)

Diana West concerned about fate of Europe. What's new? Europe is losing Europe, Diana. (See 3 below.)

I wrote several weeks ago, before it became widely known, Russia and Putin are going Cuba but this time in Venezuela. (See 4 below.)

The financial choices we face, as I previously wrote, range between bad and awful. Certainly, bailing out financial markets is something that demands reflection and not rushing into without consensus but the patient is dying so doctors playing politics also are playing with TNT. If it gets down to pinning the tail on the donkey so Democrats can implement their "fairness doctrine" then we are in for serious problems beyond what we have witnessed to date. If it means conservatives are allowed to score philosophical points the situation will be equally traumatic.

Capitalism, as we have known it will never be the same, no matter what happens, because more heavy handed government intrusion, flawed fiscal, monetary and, accounting policies and blinded oversight are inevitable. Congress is the basic cause of the problem in the first place in addition to egregious behaviour on the part of some Wall Streeters.

Free(er) markets have been a thing of the past since Roosevelt and it could be only a matter of time before they are completely laid to rest on the pyre of socialism. It was nice while it lasted. Unbridled capitalism, with all its downside and egregious faults, helped make us a giant among industrial powers. Our tombstone is not yet in place but it is being chiseled in the Halls of Congress. (see 5 below.)

Dick


1) Israeli intelligence revises estimate: Iran is progressing fast towards a nuclear bomb

The director of research at Israeli military intelligence (AMAN), Brig. Yossi Baidatz, surprised the Israeli cabinet Sunday Sept. 21, with a new appreciation of Iran’s nuclear timetable. Tehran, he disclosed, has already stocked one-third or even half the quantity of enriched uranium needed for a nuclear bomb. He warned the ministers that Iran is dashing at top speed towards a nuclear weapons capability and nothing stands in the way of its headlong advance, including international sanctions.

Separately, former Israeli army chief Lt. Gen (Res.) Moshe Yaalon said in a radio interview that an Israel-Iranian war is unavoidable.

Intelligence sources say Israeli intelligence has drastically revised its former evaluation of the Iran’s nuclear progress and intentions. Although Iran has only 4,000 centrifuges producing 4-5-grade uranium, it is fasting building up a stock of enough low-grade uranium – 1.5 tons - to convert quickly and simply into weapons grades material - within a year or eighteen months.

The conventional intelligence view until now was that Tehran, in the final reckoning, would take its program up to the brink of a weapons capability and stop there before its consummation. It was based on Iran’s decision not to follow through on the detailed plans for building a device for an underground nuclear test it obtained from Pakistan in 2002.

Baidatz’s update Sunday has reversed this evaluation.


1a)Everyone Needs to Worry
About Iran
By RICHARD HOLBROOKE, R. JAMES WOOLSEY, DENNIS B. ROSS and MARK D. WALLACE

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Iran's President Mahmoud Ahmadinejad visits the United Nations in New York this week. Don't expect an honest update from him on his country's nuclear program. Iran is now edging closer to being armed with nuclear weapons, and it continues to develop a ballistic-missile capability.
[Everyone Needs to Worry About Iran] AP

Iranian President Mahmoud Ahmadinejad.

Such developments may be overshadowed by our presidential election, but the challenge Iran poses is very real and not a partisan matter. We may have different political allegiances and worldviews, yet we share a common concern -- Iran's drive to be a nuclear state. We believe that Iran's desire for nuclear weapons is one of the most urgent issues facing America today, because even the most conservative estimates tell us that they could have nuclear weapons soon.

A nuclear-armed Iran would likely destabilize an already dangerous region that includes Israel, Turkey, Iraq, Afghanistan, India and Pakistan, and pose a direct threat to America's national security. For this reason, Iran's nuclear ambitions demand a response that will compel Iran's leaders to change their behavior and come to understand that they have more to lose than to gain by going nuclear.

Tehran claims that it is enriching uranium only for peaceful energy uses. These claims exceed the boundaries of credibility and science. Iran's enrichment program is far larger than reasonably necessary for an energy program. In past inspections of Iranian nuclear sites, U.N. inspectors found rare elements that only have utility in nuclear weapons and not in a peaceful nuclear energy program. Iran's persistent rejection of offers from outside energy suppliers or private bidders to supply it with nuclear fuel suggests it has a motive other than energy in developing its nuclear program. Tehran's continual refusal to answer questions from the International Atomic Energy Agency (IAEA) about this troublesome part of its nuclear program suggests that it has something to hide.

The world rightfully doubts Tehran's assertion that it needs nuclear energy and is enriching nuclear materials for strictly peaceful purposes. Iran has vast supplies of inexpensive oil and natural gas, and its construction of nuclear reactors and attempts to perfect the nuclear fuel cycle are exceedingly costly. There is no legitimate economic reason for Iran to pursue nuclear energy.

Iran is a deadly and irresponsible world actor, employing terrorist organizations including Hezbollah and Hamas to undermine existing regimes and to foment conflict. Emboldened by the bomb, Iran will become more inclined to sponsor terror, threaten our allies, and support the most deadly elements of the Iraqi insurgency.

Tehran's development of a nuclear bomb could serve as the "starter's gun" in a new and potentially deadly arms race in the most volatile region of the world. Many believe that Iran's neighbors would feel forced to pursue the bomb if it goes nuclear.

By continuing to act in open defiance of its treaty obligations under the Nuclear Non Proliferation Treaty, Iran rejects the inspections mandated by the IAEA and flouts multiple U.N. Security Council resolutions and sanctions.

At the same time, Iranian leaders declare that Israel is illegitimate and should not exist. President Ahmadinejad specifically calls for Israel to be "wiped off from the map," while seeking the weapons to do so. Such behavior casts Iran as an international outlier. No one can reasonably suggest that a nuclear-armed Iran will suddenly honor international treaty obligations, acknowledge Israel's right to exist, or cease efforts to undermine the Arab-Israeli peace process.

Mr. Ahmadinejad is also the chief spokesman for a regime that represses religious and ethnic minorities, women, students, labor groups and homosexuals. A government willing to persecute its own people can only be viewed as even more dangerous if armed with nuclear weapons.

Finally, our economy has suffered under the burden of rising oil prices. Iran is strategically located on a key choke point in the world's energy supply chain -- the Strait of Hormuz. No one can suggest that a nuclear Iran would hesitate to use its enhanced leverage to affect oil prices, or would work to ease the burden on the battered economies of the world's oil importers.

Facing such a threat, Americans must put aside their political differences and send a clear and united message that a nuclear armed Iran is unacceptable.

That is why the four of us, along with other policy advocates from across the political spectrum, have formed the nonpartisan group United Against Nuclear Iran. Everyone must understand the danger of a nuclear-armed Iran and mobilize the power of a united American public in opposition. As part of the United Against Nuclear Iran effort, we will announce various programs in the months ahead that we hope will be rallying points for the American and international public to voice unified opposition to a nuclear Iran.

We do not aim to beat the drums of war. On the contrary, we hope to lay the groundwork for effective U.S. policies in coordination with our allies, the U.N. and others by a strong showing of unified support from the American people to alter the Iranian regime's current course. The American people must have a voice in this great foreign-policy challenge, and we can make a real difference through national and international, social, economic, political and diplomatic measures.

Mr. Holbrooke is a former U.S. ambassador to the United Nations. Mr. Woolsey is a former director of the Central Intelligence Agency. Mr. Ross was a special Middle East coordinator for President Clinton. Mr. Wallace was a representative of the U.S. to the U.N. for management and reform.



2) IAEA chief: Iran could be hiding nukes




The head of the International Atomic Energy Agency warned Monday that he cannot guarantee that Iran is not running a secret nuclear program, comments that appeared to reflect a high level of frustration with stonewalling of his investigators.
IAEA's Director General...



A senior Iranian envoy accused the United States of trying to use the IAEA as a tool in Washington's confrontation with Teheran. Iran, he said, has demonstrated full cooperation with the agency. Allegations of nuclear weapons work by Teheran is based on forged documents and the issue is closed, the envoy said.

The two men spoke at the start of a 35-nation board IAEA meeting. With time running out before Teheran develops potential nuclear weapons capacity, some worry that Israel or the US might resort to military strikes if they believe all diplomatic options have been exhausted.

And with Teheran showing no signs of giving up uranium enrichment or heeding other international demands, the diplomatic window appears to be closing.

ElBaradei said Iran's stonewalling of his agency was a "serious concern."

"Iran needs to give the agency substantive information" to clear up suspicions, he told the closed board meeting, in comments made available to reporters. He rejected the Iranian suggestion that the IAEA probe could expose non-nuclear military secrets, saying the IAEA "does not in any way seek to 'pry' into Iran's conventional or missile-related military activities."

"We need, however, to make use of all relevant information to be able to confirm that no nuclear material is being used for nuclear weapons purposes," he said, urging Iran to "implement all measures required to build confidence in the exclusively peaceful nature of its nuclear program at the earliest possible date."

If Teheran fails to do so, the IAEA "will not be able to provide credible assurances about the absence of undeclared nuclear material and activities in Iran," he said.

Diplomats at the gathering described ElBaradei's comments as unusually blunt

Outside the meeting, an indignant Ali Ashgar Soltanieh, the chief Iranian delegate to the IAEA, rejected suggestions his country was hiding something, and accused Washington of hijacking the agency for an anti-Iran campaign.

"The international community and all member states of the IAEA are frustrated with this kind of United States actions in the IAEA," he told reporters. "The Americans are every day isolating themselves.

"Iran is of course very advanced in missile activities and technology," he said. "But there is no activity at all related to nuclear weapons."

Ahead of the meeting, hard-line Iranian President Mahmoud Ahmadinejad declared that Iran's military will "break the hand" of anyone targeting the country's nuclear facilities.

Iran insists its nuclear activities are geared only toward generating power. But Israel says the Islamic Republic could have enough nuclear material to make its first bomb within a year. The US estimates Teheran is at least two years away from that stage.

Physicist and former UN nuclear inspector David Albright says says Teheran could reach weapons capacity in as little as 6 months through uranium enrichment.

An IAEA report drawn up for the IAEA board meeting says that Teheran has increased the number of centrifuges used to process uranium to nearly 4,000 from 3,000 just a few months ago.

But Albright, whose Washington-based Institute for Science and International Security closely tracks suspect secret proliferators, says he has also been able to extrapolate other information from the report that is less obvious but of at least equal concern.

Iran, he says, has managed to iron out most of the bugs in the intensely complicated process of enrichment that often saw the centrifuges breaking down. The machines, he says "now appear to be running at approximately 85 percent of their stated target capacity, a significant increase over previous rates."

That, he says means, they can produce more enriched uranium faster. And while the IAEA says that the machines have spewed out only low-enriched material suitable solely for nuclear fuel, producing enough of that can make it easy to "break out" quickly by reprocessing it to weapons- grade uranium suitable for the fissile core of warhead.

To date, Iran has produced nearly 500 kilograms of low enriched uranium, said the report - close to what Albright says is the 700 kilogram - minimum needed to produce the 20-25 kilograms needed for a simple nuclear bomb under optimal conditions.

And with Iran's centrifuges running ever more smoothly, it "is progressing toward this capability and can be expected to reach it in six months to two years," says Albright.

Additional work - making a crude bomb to contain the uranium - would take no more than a "several months," he said.

But that work could be done secretly and consecutively with the last stages of weapons-grade enrichment. With Iran limiting access of IAEA inspectors to facilities it has declared to the agency, the UN nuclear monitor is blind-sided in efforts to establish whether such covert atomic work is going on.

3) We are losing Europe to Islam
By Diana West


With Wall Street convulsing, and the White House race intensifying, the question "Who lost Europe" is on no one's lips, let alone minds. Indeed, the question begs another: "Is Europe lost?"


The answer to the second question is, "No, not yet." And losing Europe, I would add, is by no means inevitable. But that doesn't mean the continent isn't currently hell-bent to accommodate the dictates of Islamic law, bit by increasingly larger bit. Such a course of accommodation, barring reversal, will only hasten Bernard Lewis' famous prediction that Europe will be Islamic by century's end.


And what do I mean by "accommodation"? Well, to take one tiny example, one snowflake in a blizzard of such examples, there are schools in Belgium that not only serve halal food to Muslim and non-Muslim alike (old news), but, according to a recent French magazine report, no longer teach authors deemed offensive to Muslims, including Voltaire and Diderot; the same is increasingly true of Darwin. (Don't even ask about the Holocaust.)


For a more substantial, indeed, keystone example of accommodation, we can look to England, where, it pains me to write, Sharia courts are now officially part of the British legal system. According to press reports this week, the British government has quietly, cravenly elevated five Sharia courts to the level of tribunal hearings, thus making their rulings legally binding.


It may be difficult to quantify the impact of a Voltaire vacuum on the continent, but we can instantly see the inequities of British Sharia (I can't believe I'm writing that phrase). Among the first official verdicts were those upholding the Islamic belief in male supremacy. These included an inheritance decision in which male heirs received twice as much as female; and several cases of domestic violence in which husbands were acquitted and wives' charges were dropped.


In a decidedly minuscule minority, I say we ignore the spread of Islamic law across Europe, from the schoolroom to the courtroom, at our peril, particularly given that in so doing, we also ignore the vital political parties that have arisen in reaction to this threat to Western civilization. Why at our peril? Because the same type of liberty-shrinking, Sharia-driven accommodation is happening here.


Of the parties dedicated to resisting Islamization that I examined in Europe last summer, the most promising range from the sizeable Vlaams Belang in Belgium to the tiny Sweden Democrats, and include the Lega Nord in Italy, the Party for Freedom of Geert Wilders in Holland, the Danish People's Party, the Swiss People's Party and the Austrian Freedom Party. Such parties are unknown here, or ignored. Worse, they are shunned. Why? I believe it's because their respective political opponents — the leftist media and governing establishments that are increasingly dependent on Islamic support, by the way — have successfully slandered these parties as "extremists," "racists," "fascists" and "Nazis."


Is advocating freedom of speech "extreme" or "fascist"? Is opposing Islam's law, which knows no race, "racist"? Is supporting Israel (which these parties do far more than other European parties) "Nazi"? The outrageously empty epithets of the Islamo-socialist left seem calculated to stop thought cold and trigger a massive rejection reflex. In this way, resistance becomes anathema, and Islamic law, unchecked, spreads across Europe.


Does that sound "Islamophobic"? You bet. How can anyone who values freedom of conscience, equality before the law and other such Western jewels not have a healthy fear of Islamic law, which values none of these things? Incredibly, this is an emotion that is supposed to be suppressed — and, in Europe, on pain of prosecution. Indeed, because Filip Dewinter admitted to such "Islamophobia" in an interview, his party, the Vlaams Belang, has been taken to court in Belgium on charges of racism, and, if convicted, will be effectively shut down through defunding by the government.


That hasn't stopped Dewinter, who, in accepting an award at a memorial event dedicated to Oriana Fallaci in Florence, last week, said: "Islamophobia is not merely a phenomenon of unparalleled fear, but it is the duty of every one who wants to safeguard Europe's future. Europe means Rome, Greece, Enlightenment and Judeo-Christian roots. Europe is a continent of castles and cathedrals, not of mosques and minarets."


Of course, even as Dewinter admits to fearing the Islamization of Europe, he and his colleagues act with exceptional political — and physical — bravery in rallying voters against it. This coming weekend, he joins several other politicians on the Sharia-fighting right in Europe — among them two other men I interviewed, Mario Borghezio of Lega Nord, which is part of Italy's ruling coalition, and Heinz-Christian Strache of Austria's Freedom Party, which is expected to become part of Austria's ruling coalition after elections this month — in Cologne, Germany. In that ancient cathedral city, where the city council recently approved the construction of a long-controversial mega-mosque, these men will address a rally against European Islamization. (Contrary to initial reports, Jean-Marie Le Pen will not be at the demonstration.) The Sharia-fighters expect 1,500 demonstrators. Police expect 40,000 counter-demonstrators.


These are frightening odds — a metaphor, perhaps, for Europe's chances of staving off Islamic law. Who lost Europe? If it does happen, we certainly won't be able to say we weren't warned.

4) By VLADIMIR ISACHENKOV

MOSCOW - A Russian navy squadron set off for Venezuela Monday, an official said, in a deployment of Russian military power to the Western Hemisphere unprecedented since the Cold War.

The Kremlin recently has moved to intensify contacts with Venezuela, Cuba and other Latin American nations amid increasingly strained relations with Washington after last month's war between Russia and Georgia. During the Cold War, Latin America became an ideological battleground between the Soviet Union and the United States.

Russian navy spokesman Igor Dygalo said the nuclear-powered Peter the Great cruiser accompanied by three other ships sailed from the Northern Fleet's base of Severomorsk on Monday. The ships will cover about 15,000 nautical miles to conduct joint maneuvers with the Venezuelan navy, he told The Associated Press.

The deployment follows a weeklong visit to Venezuela by a pair of Russian strategic bombers and comes as Venezuelan President Hugo Chavez — an unbridled critic of U.S. foreign policy who has close ties with Moscow — plans to visit Moscow this week. It will be Chavez's second trip to Russia in about two months.

The intensifying contacts with Venezuela appear to be a response to the U.S. dispatch of warships to deliver aid to Georgia which angered the Kremlin.

Chavez said in an interview with Russian television broadcast Sunday that Latin America needs a strong friendship with Russia to help reduce U.S. influence and keep peace in the region. In separate comments on his Sunday TV and radio program, he joked that he will be making his international tour to Russia and other countries this week aboard the "super-bombers that Medvedev loaned me," a reference to Russian President Dmitry Medvedev. "Gentlemen of the CIA, to be clear, I'm joking," Chavez said with a laugh.

Chavez has repeatedly warned that the U.S. Navy poses a threat to Venezuela.

Russia has signed weapons contracts worth more than $4 billion with Venezuela since 2005 to supply fighter jets, helicopters, and 100,000 Kalashnikov assault rifles. Chavez's government is in talks to buy Russian submarines, air defense systems and armored vehicles and more Sukhoi fighter jets.

Russian and Venezuelan leaders also have talked about boosting cooperation in the energy sphere to create what Chavez has called "a new strategic energy alliance."

Russian Deputy Prime Minister Igor Sechin, who visited Venezuela last week, announced that five of Russia's biggest oil companies are looking to form a consortium to increase Latin American operations and to build a $6.5 billion refinery to process Venezuela's tar-like heavy crude. Such an investment could help Venezuela, the world's ninth-biggest oil producer, wean itself from the U.S. refineries on which it depends to process much of its crude.

Sechin warned the United States that it should not view Latin America as its own backyard. "It would be wrong to talk about one nation having exclusive rights to this zone," he said in an interview broadcast Sunday.

5) The shadow banking system is unravelling
By Nouriel Roubini


Last week saw the demise of the shadow banking system that has been created over the past 20 years. Because of a greater regulation of banks, most financial intermediation in the past two decades has grown within this shadow system whose members are broker-dealers, hedge funds, private equity groups, structured investment vehicles and conduits, money market funds and non-bank mortgage lenders.

Like banks, most members of this system borrow very short-term and in liquid ways, are more highly leveraged than banks (the exception being money market funds) and lend and invest into more illiquid and long-term instruments. Like banks, they carry the risk that an otherwise solvent but liquid institution may be subject to a self­fulfilling and destructive run on its ­liquid liabilities.

But unlike banks, which are sheltered from the risk of a run – via deposit insurance and central banks’ lender-of-last-resort liquidity – most members of the shadow system did not have access to these firewalls that ­prevent runs.

A generalised run on these shadow banks started when the deleveraging after the asset bubble bust led to uncertainty about which institutions were solvent. The first stage was the collapse of the entire SIVs/conduits system once investors realised the toxicity of its investments and its very short-term funding seized up.

The next step was the run on the big US broker-dealers: first Bear Stearns lost its liquidity in days. The Federal Reserve then extended its lender-of-last-resort support to systemically important broker-dealers. But even this did not prevent a run on the other broker-dealers given concerns about solvency: it was the turn of Lehman Brothers to collapse. Merrill Lynch would have faced the same fate had it not been sold. The pressure moved to Morgan Stanley and Goldman Sachs: both would be well advised to merge – like Merrill – with a large bank that has a stable base of insured deposits.

The third stage was the collapse of other leveraged institutions that were both illiquid and most likely insolvent given their reckless lending: Fannie Mae and Freddie Mac, AIG and more than 300 mortgage lenders.

The fourth stage was panic in the money markets. Funds were competing aggressively for assets and, in order to provide higher returns to attract investors, some of them invested in illiquid instruments. Once these investments went bust, panic ensued among investors, leading to a massive run on such funds. This would have been disastrous; so, in another radical departure, the US extended deposit insurance to the funds.

The next stage will be a run on thousands of highly leveraged hedge funds. After a brief lock-up period, investors in such funds can redeem their investments on a quarterly basis; thus a bank-like run on hedge funds is highly possible. Hundreds of smaller, younger funds that have taken excessive risks with high leverage and are poorly managed may collapse. A massive shake-out of the bloated hedge fund industry is likely in the next two years.

Even private equity firms and their reckless, highly leveraged buy-outs will not be spared. The private equity bubble led to more than $1,000bn of LBOs that should never have occurred. The run on these LBOs is slowed by the existence of “convenant-lite” clauses, which do not include traditional default triggers, and “payment-in-kind toggles”, which allow borrowers to defer cash interest payments and accrue more debt, but these only delay the eventual refinancing crisis and will make uglier the bankruptcy that will follow. Even the largest LBOs, such as GMAC and Chrysler, are now at risk.

We are observing an accelerated run on the shadow banking system that is leading to its unravelling. If lender-of-last-resort support and deposit insurance are extended to more of its members, these institutions will have to be regulated like banks, to avoid moral hazard. Of course this severe financial crisis is also taking its toll on traditional banks: hundreds are insolvent and will have to close.

The real economic side of this financial crisis will be a severe US recession. Financial contagion, the strong euro, falling US imports, the bursting of European housing bubbles, high oil prices and a hawkish European Central Bank will lead to a recession in the eurozone, the UK and most advanced economies.

European financial institutions are at risk of sharp losses because of the toxic US securitised products sold to them; the massive increase in leverage following aggressive risk-taking and domestic securitisation; a severe liquidity crunch exacerbated by a dollar shortage and a credit crunch; the bursting of domestic housing bubbles; household and corporate defaults in the recession; losses hidden by regulatory forbearance; the exposure of Swedish, Austrian and Italian banks to the Baltic states, Iceland and southern Europe where housing and credit bubbles financed in foreign currency are leading to hard landings.

Thus the financial crisis of the century will also envelop European financial institutions.

____