Strike on Syria or Iran – Lebanon torn in the Middle

High Level Debate Stalled Syria Air Strike 

The September Israeli airstrike on a suspected nuclear site in Syria had been in the works for months, ABC News has learned, and was delayed only at the strong urging of the United States.

In early July the Israelis presented the United States with satellite imagery that they said showed a nuclear facility in Syria. They had additional evidence that they said showed that some of the technology was supplied by North Korea.

One U.S. official told ABC's Martha Raddatz the material was "jaw dropping" because it raised questions as to why U.S. intelligence had not previously picked up on the facility.

Officials said that the facility had likely been there for months if not years.

"Israel tends to be very thorough about its intelligence coverage, particularly when it takes a major military step, so they would not have acted without data from several sources," said ABC military consultant Tony Cordesman.

U.S. Cautious After Flawed Iraq Intelligence

A senior U.S. official said the Israelis planned to strike during the week of July 14 and in secret high-level meetings American officials argued over how to respond to the intelligence.

Some in the administration supported the Israeli action, but others, notably Sect. of State Condoleeza Rice did not. One senior official said the U.S. convinced the Israelis to "confront Syria before attacking."

Officials said they were concerned about the impact an attack on Syria would have on the region. And given the profound consequences of the flawed intelligence in Iraq, the U.S. wanted to be absolutely certain the intelligence was accurate.

Initially, administration officials convinced the Israelis to call off the July strike. But in September the Israelis feared that news of the site was about to leak and went ahead with the strike despite U.S. concerns.

The airstrike was so highly classified, President Bush refused to acknowledge it publicly even after the bombs fell. ..ABC's Martha Raddatz filed this report for "World News With Charles Gibson."

The Archbishop of Canterbury, Rowan Williams, has issued an angry rebuke to those in the United States who favour military action against Syria or Iran.

"When people talk about further destabilising of the region, when you read about some American political advisers speaking about action against Syria and Iran, I can only say that I regard that as criminal, ignorant and potentially murderous folly," he said.

Dr Williams has just returned from a visit to Syria where he met hundreds of Christian Iraqi refugees.

Christian Split in Lebanon Raises Specter of War, Oct. 5 — With the Islamist group Hezbollah having brought Lebanese politics to a standstill, the country’s once-dominant Christian community feels under siege and has begun re-establishing militias, training in the hills and stockpiling weapons.

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Christian LebanonSlide Show
Many Lebanese say another civil war — like the 15-year one that started in 1975 — is imminent and that the most dangerous flash points are within the divided Christian community.

Christian youth are signing up for militant factions in the greatest numbers since the end of the civil war, spray painting nationalist symbols on walls and tattooing them on their skin, and proclaiming their willingness to fight in a new civil war — in particular, against fellow Christians.

"…When I asked Hersh who wants to bomb Iran, he said, "Ironically there is a lot of pressure coming from Democrats. Hillary Clinton, Obama, and Edwards have all said we cannot have a nuclear-armed Iran. Clearly the pressure from Democrats is a reflection of – we might as well say it – Israeli and Jewish input." He added the obvious: "a lot of money comes to the Democratic campaigns" from Jewish contributors…"
Hersh said. "When it comes to choice between bombing Iran and taking some political heat, the president will do what he wants. Look, no decision has been made, no order has been given, I've never said it's going to happen. But I had breakfast this morning in Washington with somebody who's close to a lot of military people, and there's a sense among them that the president is essentially messianic about this. He sees this as his mission. It could be because God is telling him to do it. It could be because his daddy didn't do it. It could be because it's step 13 in a 12-step program he was in. I just don't know."

Comments (41)


1. abraham said:

Pfffff. ABC is not reporting anything new. They’re just passing along more propaganda from neocon and zionist sources intended to bolster in the minds of Americans the idea that Syria is trying to develop nukes.

So contrived. So hackneyed.

zionists are so dumb.

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October 6th, 2007, 7:02 pm

 

2. abraham said:

And more propaganda–perhaps the most inane so far–from the Spectator (UK):

http://www.spectator.co.uk/the-magazine/features/222736/we-came-so-close-to-world-war-three-that-day.thtml

Among other silly thing the article claims is that “terrorism is a growth industry in Syria”.

HAHAHAHAHAHAHHAHAHAHAHAHAHAHA. That sounds like something stupid that the Akbar Palace dude would say.

One of the co-authors: “Douglas Davis is a former senior editor of the Jerusalem Post”

That’s all one needs to know to assume this entire piece is bad fiction.

zionists are so dumb.

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October 6th, 2007, 7:10 pm

 

3. abraham said:

And yet even more zionist fiction:

Report: Israel ‘blinded’ Syrian radar
http://www.ynetnews.com/Ext/Comp/ArticleLayout/CdaArticlePrintPreview/1,2506,L-3456456,00.html

This is by far the stupidest of the three articles I’ve commented on here. More anonymous sources, innuendo, crude propaganda, and idiotic wishful thinking.

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October 6th, 2007, 7:20 pm

 

4. Akbar Palace said:

Abraham,

I understand that the Zionist controlled media (CNN, The Telegraph, The Gaurdian, and the BBC) is causing you undo stress while it spreads lies and fiction regarding the peaceful intentions of Iran, Syria, and the freedom fighters they support.

However, his excellency, Dr. Bashar has already admitted that the Zionist regime hit “a building under construction related to the military”.

Are you disputing the words of greater Syrian leader? I know Professor Josh finds this almost impossible, but the great Syrian leader would surely not make this story up. Would he?

He ended his silence in a BBC interview, saying Israeli jets hit “a building under construction related to the military but it’s not used, it’s under construction so there’s no people in it, there’s no army, there’s nothing in it”.

http://news.bbc.co.uk/2/hi/middle_east/7026003.stm

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October 6th, 2007, 8:04 pm

 

5. offended said:

Akbar,
We believe our President.
We disbelieve the dumb Zionists.
I hope that helps.

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October 6th, 2007, 8:23 pm

 

6. ausamaa said:

“Christian Split in Lebanon Raises Specter of War”

War between who? Wet cats and Lions?

Are they really WORRIED about a sectarian war in Lebanon or WHISING it?

Aint gonna happen any way. Not enough ammos availlable to the ones who wish it, and no need to have it for the ones who do have the ammos. And the balaced Army will take care of small incidents when it happens.

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October 6th, 2007, 8:43 pm

 

7. ausamaa said:

Akbar Palace, you continue to sound like someone trying to sell defective Ice boxes to Alskans.

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October 6th, 2007, 8:48 pm

 

8. ausamaa said:

Interestingly enough, the Saudi websit ELAPH has no comment or even mention of Hassan Nassrallah speach so far.

Put yourself in the shose of the Saudies and you will appreciate how huge their loss of influence, respect and even effectiveness is. They threw to many eggs in the wrong baskets, now it is a miracle if they can get themselves out of all this mess.

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October 6th, 2007, 9:13 pm

 

9. Friend in America said:

On the Spectator.Co.UK article:
This is the most complete description of what happened. One can say it is nothing new because much had been reported here, yet there are facts not previously known. It does establish the link between the “cement” shipment and the nuclear materials. The theory that the North Koreans sought to park some of its nuclear materials until the international inspections and dismantleing concludes is interesting but Nort Korea has too much material for one shipment, although it would not surprise me the North Koreans would try it. The North Koreans are so “provincial” that they would think parking its weapons material in Syria would go unnoticed.

Syria lacks the financial resources to develop nuclear weapons itself. So, a likely theory is that Syria did not purchase or “own” the materials. Who does? The Spectator article suggests North Korea. But, North Korea is and has been desperately short of international currency and would sell its materail for currency credits – especially oil. Better we keep Iran on the suspected financer list.

What’s in it for Syria? Follow the money for the answer. Those beautiful new houses on the coast of the Mediterrean were not built on army officers salery or wages of government functionaries. Syria has a history of receiving funds that do not go into the economy but are diverted to those who support the administration. First it came from skimming the Lebanese economy. Then from banking Iran’s funding of Hezbollah. The nuclear is Syria’s big money jackpot.
My comments may sound hostile to Syria but they are not. They are a dose of realism of how an authoritarian regime works, especially one that believes living dangerously in international affairs make it a power to be reconed with. I am not ready to agree that Syria has embarked on a nuclear deveopment program, but Iran has and so has North Korea who wants money for its huge investments instead of throwing it all into the trash as the international commission will do. Look for news about Iran’s involvement in this affair. Look for linkage between the treaties of cooperation and mutual military defense agreements between Iran and Syria and this affair.

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October 6th, 2007, 9:48 pm

 

10. seeking the truth said:

Has someone come across a good answer to why the Israelis, although recently admitted to carrying out the air raid, have so far not said what they hit?

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October 6th, 2007, 10:01 pm

 

11. abraham said:

Friend in America:

What’s in it for Syria? Follow the money for the answer. Those beautiful new houses on the coast of the Mediterrean were not built on army officers salery or wages of government functionaries. Syria has a history of receiving funds that do not go into the economy but are diverted to those who support the administration. First it came from skimming the Lebanese economy. Then from banking Iran’s funding of Hezbollah. The nuclear is Syria’s big money jackpot.

Hardly. Those beautiful houses were bought by expatriate Syrians who found success in other countries. Like my father, who considered buying one of those beachfront properties, but instead bought two condos in a new development by Tartous because he thought it was a much better value than the beachfront properties.

In case you haven’t been paying attention, the Syrian real estate market has been booming for a couple years now, and it’s because of all the money being pumped in from abroad. Aside from the condos, my father has also purchased several hectares of property in and around Tartous in at least a couple locations. He worked hard and did well in America, and has no connection whatsoever to the Syrian government. The same can be said for countless other buyers of those properties, I’m sure.

I think you’ve read too much into the article. As I stated, it is simply crude propaganda by zionists. Again, read the byline: one of the co-authors is a former Jerusalem Post editor. That’s all you need to know to determine it’s all a bunch of crap. Also, that Akbar Palace dweeb is trying to defend it, so that’s another give-away right there.

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October 6th, 2007, 10:33 pm

 

12. norman said:

Seeking the truth,

Israel did not brag because the attack failed ,

Ausamaa,
I do not thing we know what Gaga and Junblat have and how much Harreri paid for weapons , we should remember that Lebanon is in 40 bilion dollar debt because of Harreri.

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October 6th, 2007, 10:45 pm

 

13. Akbar Palace said:

seeking the truth said:

Has someone come across a good answer to why the Israelis, although recently admitted to carrying out the air raid, have so far not said what they hit?

Dear seeking the truth,

What constitutes a “good answer”? And if the GOI gave you an answer, would you then believe it?

It’s sort of a “Catch 22”, don’t you think?

For example, when the strike was first reported everyone here claimed Israel failed completely in their mission.

And now, when the his excellency the President of Syria claims that Israel (I mean the Zionist Entity) hit a building “related to the military”, the forum participants continue to say Israel failed.

Denial isn’t just a river in Eygpt.

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October 6th, 2007, 11:27 pm

 

14. Iran » Blog Archives » Middle East News- 10/06/07 said:

[…] Strike on Syria or Iran – Lebanon torn in the Middle Syria or Iran. When people talk about further destabilising of the region, when you read about some American political advisers speaking about action against Syria and Iran, I can only say that I… I asked Hersh who wants to bomb Iran, he said, Ironically there is a lot of pressure coming from Democrats. Hillary Clinton, Obama, and Edwards have all said we cannot have a nuclear-armed Iran… Hersh said. When it comes to choice between bombing Iran and taking some political heat […]

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October 7th, 2007, 12:32 am

 

15. ugarit said:

“U.S. Cautious After Flawed Iraq Intelligence”

That’s funny as if that mattered or even matters. I think what this really means is that they are cautious because they might be caught yet again creating “intelligence” to fit their goals. Anyhow it doesn’t really matter because both the Democrats and the Republicans are war parties.

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October 7th, 2007, 12:52 am

 

16. ugarit said:

Dear Akbar Palace:

So is bombing an empty and under construction military “related” building with no people in it success or failure?

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October 7th, 2007, 12:57 am

 

17. ugarit said:

Where is EHSANI2 and his previous compliments for the US economy?

http://www.thetrumpet.com/index.php?q=4288.2525.0.0

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October 7th, 2007, 1:17 am

 

18. norman said:

Ugarit.
I disagree with you on this ,
I still think that the American economy is strong and other countries and investors will continue to invest in the US, It is a safe country and a country of laws so investors will not fear losing their investments to corruption , apparently the safety of investment is as important as return on these investments.

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October 7th, 2007, 2:19 am

 

19. EHSANI2 said:

Dear Ugarit,

EHSANI2 is still around. His compliments to the U.S. economy are still alive and well you should be glad to hear.

Here is a direct quote from the article that you highlighted:

We “might be in the early stages of … a boycott of U.S.-dollar-based financial assets.”

The reporter conveniently ignores the recent performance of the U.S. equity market. The Dow Jones has just crossed 14,000 (up 13% on the year) while both NASDAQ and the S&P 500 were also on a tear by the end of Friday.

This is not to say that the U.S. economy is not going through a challenging period. The housing market is indeed in a dangerous slump. So is the value of Dollar. Having said this, it is clear that investors are not too worried judging by the behavior of the stock market.

Why?

The size of the U.S. economy is $ 11.2 Trillion (in inflation adjusted terms). Investments in residential Real Estate have been falling at close to $25 billion per quarter. While this has shaved a full 1% off GDP growth, other parts of the economy have made up the slack. Indeed, in spite of all the shocks that have hit the U.S. economy, it is yet to experience recession. The drop in the value of the Dollar for example has already had a positive impact on the country’s external trade. As exports rose and imports dropped, the net contribution from this sector has mitigated the effect of the housing drop. Consumers have also been spending by more than most expected. This is partly attributed to steady labor market evidenced by a low 4.7% unemployment rate. This is not to say that the U.S. economy is immune to recessions. Since WW II, the U.S. economy has entered a recession on more than seven occasions. Time and again, it was able to survive and prosper. As we speak, U.S. households have $44 trillion in financial assets. Fully 50% of the world’s wealth resides in the U.S. The value of the U.S. Dollar is set freely in open markets. Lately, traders and investors have been dumping the U.S. Dollar and buying the Euro and other currencies. I have personally been doing the same. Foreign exchange markets are volatile. They experience wild swings in sentiment. At the present, the fundamentals have been against the U.S. Dollar. But, I can assure you that this trend will soon reverse. It was not long ago that the Euro was experiencing a similar fate. That sure-bet proved short-lived too.

Here is another quote from your article:
« Thanks to greed, the world’s financial doomsday clock is approaching midnight.

Greed and fear are the critical ingredients in every free market economy. Greed is good and so is fear. As economic agents swing too far in the direction of greed, they soon learn to pay the price. Fear sets in and forces an inevitable adjustment in prices and market sentiment. This is the main underpinning of a capitalist and free market system. Investors learn from their mistakes till they feel the urge to walk down that greed isle the next time a profit opportunity presents itself.

A final note,

The U.S. Central bank (The Fed.) is an independent institution that has been entrusted with the dual goal of achieving both maximum economic growth and low inflation. Prior to this housing market meltdown, the Fed was more worried about inflation than growth. In a single week, they had the courage to admit their mistake and quickly reversed course and CUT rates by a full 0.50% on September 18th. This dynamic management of the U.S. economy is what makes investors believe in it. This is why its stock market marches on and makes new highs (corporate profits are still very healthy of course).

Dear Ugarit,

Any country that practices free market economics will inevitably see the standard of living of its citizens rise. The journey is never a straight line. There will be expansions and recessions along the way. Such economies will see their currency rise and fall. Armed with able policy makers such as the Federal Reserve in the U.S., monetary and fiscal policy will adapt and ensure the continued vigor and prosperity of capitalism and free markets.

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October 7th, 2007, 3:11 am

 

20. Joshua said:

Ehsani,
You haven’t lost your touch! You must have made a small fortune these last few months on the foreign currency swings? I hope your “walk down that greed isle” was fun. I can see it has confirmed your faith in free economies. May Syrian greed help it down the isle to a freer economy.

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October 7th, 2007, 3:51 am

 

21. EHSANI2 said:

Dear Josh,

Let us say Amen to that. My wish is for Syria to experience a full dose of free market economics one day. I think that Syrian will excel at that. Having survived in such an economy for this long, one can only imagine how they will thrive and proper if given the chance.

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October 7th, 2007, 4:17 am

 

22. Akbar Palace said:

Ugarit breaks with the terror-supporters here and admits the unimaginable:

So is bombing an empty and under construction military “related” building with no people in it success or failure?

Ugarit,

Now that you are the first on this site to entertain the “remote” possibility that the Zionists (aka Israelis) hit a “military related” building, I will be happy to answer your question.

(Suggestion: please whip out your pencils and paper and take notes)

With respect to your question, how do we know Israel hit a “military building”? How do we know no one was in this building? And how do we know if anything was in the building? How do we know if his excellency is telling the truth or isn’t? How do we know if what has been leaked to the western news seervices is accurate or just “hot air”?

Judging by what Professor Josh and the rest of the participants here have to say, it was quite simple: Israel was detected by the Syrians, and just barely escaped without carrying out any successful mission.

But if his excellency admits that a military facility was hit then there’s a problem. Originally, his excellency’s news seervice said the Israelis were scared off and dropped an external fuel tank to escape. The Zionists only managed to drop a tank on the ground, flee. They hit nothing else.

Because his excellency, Dr. Bashar has changed his story, I deem him and his government as the least reliable. Never mind the fact that the whole Syrian government and press is completely cotrolled by the Baathist watch-dogs.

Enough leaks have seeped out into the world press for anyone (who has yet to be brainwashed) to figure out what transpired.

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October 7th, 2007, 4:59 am

 

23. ausamaa said:

Akpar Palace, Why dont the side you support either PUT UP or SHUT UP. We are getting very boared with this latest version of I Know What You Did Last Summer. If they are up to doing anything about Syria or Iran, why, get on with it. Bigger crimes were committed by your side before, so the restraining factor is “ability” not anything else. Again, ask them kindly to Put Up or Shut UP.

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October 7th, 2007, 6:33 am

 

24. ugarit said:

Dear EHSANI2:

You’re still under the mistaken impression that the US economy is a “free” market economy. It is a highly regulated economy to ensure that the rich remain rich. If the US had a free market economy there would be no patent office. If the US had a free market economy the Feds would not be controlling interest rates. If the US had a free market economy tax payers would not be bailing out bankers and mortgage companies. I could go on and on, but I think you get the message.

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October 7th, 2007, 3:11 pm

 

25. EHSANI2 said:

Free markets do not mean unregulated markets. Central banking with strong supervisory and regulatory oversight over the banking industry is a strong tenet of capitalism. It was precisely the lack of oversight over the mortgage brokerage industry that was one of the culprits behind the latest housing problems. How did tax payers bail out bankers and mortgage companies? Merrill Lynch took a $ 5 billion charge. Citigroup took a $4 billion write off. The investment banks combined had to wipe out a total of $20 billion in earnings this quarter.

My friend Ugarit,

You seem to rely on socialist/left leaning sources for your information. I will be happy to point you to more credible sources which can convince you about the merits of capitalism.

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October 7th, 2007, 6:48 pm

 

26. abraham said:

Oh joy, more braying from our resident jack-ass, Akbar Palace.

If your favorite Arab politician, Dr. Bashar, is so unreliable, what makes you think his latest telling is the truth, now that it comports with your pre-existing conclusions?

Here’s a little lesson for you. I’ll wait until you’ve gotten your pad and paper to take notes………very well. Anyone can play the disinformation game. All one has to do is say something that isn’t true.

Only the gullible–and the braying mules–will take it at face value and use it to confirm their own peurile suspicions.

Now run along and play.

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October 7th, 2007, 7:05 pm

 

27. SimoHurtta said:

How did tax payers bail out bankers and mortgage companies?

EHSANI2 you forget the Northern Rock. British government (= taxpayers) had to guaranty its savings otherwise Northern Rock would have collapsed. This mortgage crisis in financial markets is far from over. One doesn’t have to be a socialist to recognize that. Much depends how the US sub-prime mortgage payers can keep up with payments in coming years (mortgages are long contracts) and how long US (privately owned) central banking system can keep the rates down. Low rates mean increasing pressure on USD’s value. The last rate move was a couple of aspirins. The fever went down for a couple of hours but the disease is not cured. The reluctance of banks lending money to each other is “perfect” sign that the problems are considerable.

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October 7th, 2007, 8:21 pm

 

28. Alex said:

Ehsani You defend capitalism just as passionately as I defend Syria 🙂

I enjoyed your comments.

So tell me what you think of this case:

A BMW X5 costs $65,000 Canadian dollars (which now equals $66,000US) .. in the US it is still selling for $48,000 US Dollars … isn’t that … wrong?

How can the same product be valued 50% higher 100km away from NY state, here in Montreal? … we have free trade and the BMW X5 is made in the US and Canada does not subject it to any duties.

I am allowed to import a car from the United states, but BMW does not allow their American dealers to sell to a Canadian! … how can that be consistent with free markets?

Here is one of the consequences of the drop of value of the US dollar:

Audi Canada said that Sep 2007 sales were 29% lower than Sep 2006 sales. Porsche dropped their prices by 10% .. they said they can not drop them more because that will upset their existing customers who will see the value of their cars depreciated severely.

150,000 Canadians are expected to buy their next car this year from the United States … mostly used where there are no restrictions on Canadians.

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October 7th, 2007, 8:46 pm

 

29. EHSANI2 said:

SimoHurtta,

The sub-prime problem is not over. There are over 2 million American households who face a mortgage reset over the next year. It is not going to be pretty. Banks used to offer credit to anyone with a pulse. Things have clearly changed now. Credit availability has diminished as banks became reluctant to leave assets on their balance sheets (investors are not in the mood to buy these securitized issues). Capitalist systems live through ups and downs. Interest rates and currencies adjust to bring back economies into equilibrium. This is the way markets adjust. The dollar will keep falling till it goes far enough for investors and traders to decide to go the other way. The fall in the dollar has been good for America’s net trade position. Let us hope its fall can stay orderly. My bet is that it will.

My very good friend Alex,

If I can defend capitalism like you can defend Syria, can you imagine if Syria were to turn capitalist one day? You and I can make a great marketing team.

As for your car dilemma, let me offer you this deal:

I will buy your X5 for you for US$ 48,000 and drive it across to you. I was going to offer you the deal at $55,000 but given our Aleppo roots, I decided to give it to you at no markup. If enough people like us do this, this arbitrage will go away and free markets would end up doing their job. The rise in the Cad$ has not been factored by car dealers yet. With time, it will. Audi and BMW America have both warned that prices in the U.S. are set to rise soon. Car dealers are clearly slow to adjust.

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October 7th, 2007, 9:15 pm

 

30. SimoHurtta said:

The fall in the dollar has been good for America’s net trade position. Let us hope its fall can stay orderly. My bet is that it will.

Of course capitalist systems live through ups and downs. No doubt about that. The forest grows again even if the forest is burn. The problem is that falls make people “angry” and recovery takes time.

No doubt that the fall of USD has been good for US importers. The problem is that USA doesn’t any more have so much to export as 10 – 15 years ago. Also the export sector is a rather small part of the US economy, under 8 percent of the GDP. The import to USA is almost double compared to export. Public debt represents about nine years export.

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October 7th, 2007, 10:21 pm

 

31. EHSANI2 said:

That is true. So what? The law of comparative advantage states that if a country can produce a product cheaper than you, you ought to forgo producing at home and import it instead. U.S.Imports have far exceeded its exports. The fall in the dollar will correct that over time. This is the beauty of free markets.

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October 7th, 2007, 10:27 pm

 

32. norman said:

Alex ,
Do you think that the price of a BMW is higher in Canada because you add more taxes on high end cars?.
Ehsani ,
Don’t you think that the farm subsidies that the US government gives farmers to keep producing things that can be cheaper to import is against the real free market principles, I think national security plays a part here , The Us should not import it’s food.

One more question , do you think that the fed should have decreased the rate or leave the reckless borrowers and lenders to fend for themselves , I ask you that because i like to hear your opinion .

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October 7th, 2007, 11:28 pm

 

33. ausamaa said:

“The fall in the dollar has been good for America’s net trade position. Let us hope its fall can stay orderly. My bet is that it will”.

Orderly or not, most INDEPENDENT states have taken the neccessary precautions. Can we expect oil at 15 Euro by end of today? Does any particular sectir in the US economy benifit more than others from the dollar’s fall? Who controlls it?

Or is it just playing chicken with China?

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October 7th, 2007, 11:43 pm

 

34. EHSANI2 said:

Norman,

The Fed’s mandate is to help the economy achieve maximum growth with little inflation. The reason it decided to cut the rate on September 18th is because its own outlook and growth forecasts of the economy had shifted lower. People criticizing the Fed’s action are mistaken. The willingness to lend had been shaken. People with very high credit rating may have been able to tap into fresh borrowing but the same cannot be said for people with lower credit scores. If anything, it was the lower income group that is going to suffer the most. Reckless lenders have already suffered massive write offs. Reckless investors saw the value of their bonds fall. Reckless borrowers will also see significant higher monthly payments at reset times (those who borrowed at teaser adjustable rates). The Fed’s job is to address the macro implications. What it did what as an attempt to put a floor under a rapidly deteriorating market sentiment and the inevitable effects it was going to have on the economic growth prospects.

The Fed ought to be applauded for its decision.

Ausamaa,

No one “controls” the value of the dollar. On a daily basis $3 trillion are traded on open markets. There is simply no way for a single entity to have enough influence on such a large and deep free trading market. There is no doubt that government officials decide to intervene and influence the value of their currencies at times. Ultimately, it is market forces that win. It is conceivable that as we speak, the value of the Dollar may have bottomed against the Euro for example. Indeed, it is now reported that most German car makers cannot make any profits selling their cars in the U.S. market unless they raise their prices and risk losing market share of course.

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October 8th, 2007, 12:25 am

 

35. norman said:

Thank you Ehsani..

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October 8th, 2007, 12:34 am

 

36. norman said:

This is interesting about the value of the Dollar.

What the falling dollar means for you
The mighty U.S. dollar has tumbled over the past five years and is likely to keep falling. Here’s how it could change your life.

By Charley Blaine
Thinking about a trip to Europe? Start saving. Because of the weakening U.S. dollar, travel overseas is becoming more expensive.

Even if you don’t plan a globe-trotting vacation, the falling dollar may cost you. If the slump gets out of control, it could mean inflation and much higher interest rates for Americans.

The dollar has steadily lost value compared with other major currencies since the end of 2002. Result: The euro has risen more than 70% against the dollar. The Canadian dollar, affectionately known as the loonie, is up more than 60% — to parity for the first time in more than 30 years. The yen is up about 16%.

The dollar is falling partly because Americans import way more goods than they sell abroad — especially oil — and must borrow to close the gap. Another factor: Higher interest rates in Europe and elsewhere make those countries’ currencies more valuable.

Consider how this affects your life:

The downsides
Pain at the gas pump will get worse. While growing global oil demand is pushing prices higher, here’s the dollar angle: Crude oil is priced in dollars, and oil producers, especially members of the Organization of Petroleum Exporting Countries, want to be compensated for the dollar’s decline.

In most years, the price of crude oil and gasoline declines in the fall. But this year, AAA’s daily price survey shows regular unleaded gasoline at about $2.79 a gallon nationally, up 21% from a year ago.

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You may need to stay home. Let’s say you went to Paris in early 2002 and paid 100 euros a night for a room in a moderately priced hotel. That was the equivalent of about $86 a night.

Today, that room would cost $142 a night, a 65% increase.

Ditto for neighboring Canada. Keep that in mind if you want to attend the 2010 Winter Olympics in Vancouver.

Your dream BMW costs more. The base price of a BMW 3 Series sport sedan has risen about 20% over the past five years, The Wall Street Journal reported this week. It’s likely to go up more.

Though BMW and other automakers may accept lower profits to stay in the U.S. market, the lower dollar boosts prices for imported food, shoes, chemicals and the like. European governments worry that a dollar in free fall could be a disaster even for Germany, Europe’s strongest economy.

And if price competition eases, U.S. companies could gradually charge more for products they sell at home.

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Interest rates will rise. Somehow, the U.S. has to finance its trade and government deficits, and, at some point, the investors who provide the cash will want to get paid.

The lenders are banks, pension funds and governments in Europe, China, Japan and oil-producing nations. These investors showed their potential muscle over the summer, when many balked at the terms for purchases of mortgage securities and junk bonds that Wall Street banks wanted to sell.

But there are upsides
U.S. exports will get a boost. The weaker dollar is a boon for U.S. manufacturers because it makes their products more competitive abroad.

One company that sells bakeware made at a factory in Minnesota expects its exports will grow 50% this year because of the weaker dollar, according to The Wall Street Journal.Lay out the welcome mat for foreign tourists. Visitors to the U.S. will find their cash goes further than before, potentially helping the travel business.

The Greater Fort Lauderdale Beachmobile — a sandbox on wheels that promotes warm beaches and suntans — usually goes to New York in winter to drum up business for south Florida. This year, it’s going to London.

”It’s almost un-American, but every time the dollar drops a little lower, it looks a little better for tourism in the U.S.,” Nicki Grossman, the president of the Fort Lauderdale tourism bureau, told The Miami Herald.

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Of course, foreign investors want to buy what they see, pushing property prices higher in key markets like New York.

The falling dollar should help U.S. stocks. All of the companies in the Dow Jones Industrial Average ($INDU, news, msgs) are big multinationals. Each time one of them translates a profit from, say, Europe, the weaker dollar adds to the bottom line. For example, IBM Corp. (IBM, news, msgs) reported that quarterly revenue rose 9% from a year earlier. Without currency changes, the gain was about 6%.

The weaker dollar is one reason the Dow gained 684 points, or 5.1%, in the 10 trading sessions from Sept. 18 through Monday, when it smashed through 14,000 for the second time in 2007.

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This rosy scenario is good at least until the dollar drops so low that U.S. interest rates start to rise. When that happens, things could get nasty — which is another story.
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The Fed cut its federal funds rate 50 basis points, and it also cut the discount rate 50 basis points. Which response best describes your reaction?
The Fed did the right thing and it should keep the housing slump from spreading through the economy.It’s a good move, but more rate cuts will be needed to stem the crisis.The Fed should have held rates steady because the economy isn’t that weak.I don’t care. The action is not going to make a difference.
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The Fed cut its federal funds rate 50 basis points, and it also cut the discount rate 50 basis points. Which response best describes your reaction?
The Fed did the right thing and it should keep the housing slump from spreading through the economy.
25%It’s a good move, but more rate cuts will be needed to stem the crisis.
43%The Fed should have held rates steady because the economy isn’t that weak.
22%I don’t care. The action is not going to make a difference.
10%35817 responses, not scientifically valid, results updated every minute.
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October 8th, 2007, 1:05 am

 

37. ugarit said:

EHSANI2: “Citigroup took a $4 billion write off.” and where does the write off come from? Capitalists always know that they will be given welfare when they’re in trouble.

The Feds’ legislated goals are price stability and full employment and not to achieve maximum growth with little inflation. However, the latter is what has been the norm for a while and its legality is questionable.

I am more of a capitalist than a socialist. I merely have a realistic view of what capitalism is about.

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October 8th, 2007, 1:30 am

 

38. EHSANI2 said:

Ugarit,

You are a realistic capitalist. I guess that leaves me on the unrealistic side. So long as capitalism is a winner, all is well

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October 8th, 2007, 3:31 am

 

39. ugarit said:

EHSANI2 said: “So long as capitalism is a winner, all is well”

Capitalism cannot be the winner or the loser. People are winners or losers. Your vocabulary is highly revealing.

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October 8th, 2007, 2:55 pm

 

40. EHSANI2 said:

How about this?

people under capitalism are the winners

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October 8th, 2007, 9:07 pm

 

41. ugarit said:

“people under capitalism may be winners” is more realistic. 🙂

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October 9th, 2007, 12:46 am

 

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