Thursday, June 05, 2008


As we have come to expect, a single bomb blowing up next to a Danish Embassy has gotten a lot of ink. Such an attack is worthy of making the news but an even more important event has gotten little coverage. Iran and Turkey are sharing intelligence and jointly going after Kurdish rebels in the high country of Iraq. This is happening with the tacit approval of Iraq and the USA.

An al-Qaeda spokesman from Afghanistan took credit for the bombing in Islamabad. His days are numbered. While the mountains of Afghanistan and Pakistan are great places to hide, the public support for terrorist tactics has fallen sharply. The good guys are increasingly being tipped off when the bad guys come to town.

The terrorist situation is a little bit like prohibition. It was basically impossible to enforce prohibition in the USA because the people were not in agreement with the law. Lots of people continued to drink and a whole network of criminal activity sprung up to supply the drinks. Once the law was changed, the criminal activity was reduced. The recent offers of the Pakistani government to give amnesty to Taliban soldiers sounded goofy at first blush but we do not want or need to kill every "soldier" in the war. It is acceptable for the remaining "soldiers" to go home and to live in peace.

The talk of Euro central bankers about raising interest rates to fight inflation will hurt the dollar in the short term only. The cumulative effect of tight money by central bankers is going to bring commodity prices down. CAL just opened up 3%.