It was Friday March 10, 1933, the end of FDR's first week in office, and not only had he ordered a national bank holiday, rewritten the banking law in one day, and issued new Federal 

Reserve notes, but also he took on the rambunctious veteran's army that had challenged and humiliated Herbert Hoover as well as cutting the pay of all federal employees by 15%.  And on the seventh day he didn't rest.  Congress was amazed and stumped.  How to get in the way of this character from New York?  This is Frank Roosevelt, Uncle Ted's nephew?  The banks were ordered to reopen on Monday morning the 13th to exchange everyone's paper money and to accept more of the gold certificates and bullion that people had pulled out the previous months.  The veterans were quiet though not happy.  And the Congress was polite in the face of FDR's message: "The nation is deeply gratified by the immediate response given yesterday (March 9) by the Congress to restore and improve our banking system..."  Senator Joseph Robinson of Arkansas, the Majority Leader, remarked, "It was a strong, impressive and convincing statement..."  Senator Charles McNary of Oregon, Minority Leader, conceded, "The President's proposal for economy is the most drastic ever sent to Congress.  The claim for additional power has received a ready response from the Democratic members of Congress and probably will not be opposed by the Republicans...."  In fact the only two to be found in opposition to FDR with any weight were Huey Long of Louisiana, who was aiming to run against FDR on a third party ticket, and Bill Borah of Idaho, who aimed to run against FDR on the Republican ticket.

Nancy Pelosi and David Obey sent the Republican minority a pork farm of a stimulus package that was almost too easy for the GOP to reject with 0 votes.  And the Senate version written by the 

"The New Deal is socialism in poor disguise," said the envious, contentious Al Smith.  "I won't stand for them to want to march under the banner of (Andrew) Jackson or (Grover) Cleveland."  This was 

the counterattack that FDR risked when he used Harold Ickes and others to attack the rich, elite men whom he dubbed "economic royalists" (right) as he prepared to fight class warfare in the election in 1936.   FDR knew what he was doing, borrowing from the class baiting remarks of the charming, strange demagogue Huey Long (who remained a threat until his assassination in Baton Rouge).   The frail Republicans pushed back with energetic men such as the wildcatter Alf Landon of Kansas, who sounded like FDR in his state inaugural speech:  "I think... government power must increase."  Landon overtook Herbert Hoover and Bill Borah at Cleveland to become the GOP nominee.  FDR used the economic royalist attack at the 1936 Philadelphia convention:  "These privileged princes have created a  new despotism and fastened it on the American people...the New Deal is the analogue to the Declaration of Independence... better the occasional faults that lives in the spirit of charity...this generation of Americans has a rendezvous with destiny..."  FDR won a landslide built upon cunning, passionate, articulate class warfare rhetoric:  "Nine crazy years at the ticker, and three long years at the bread lines..."  "They (the economic royalists) are unanimous in their hatred of me, and I welcome their hatred..."

The president's remarks against the $18 billion of bonuses paid to the Wall Street bankers in 2008 are smart, accurate politics.  Joe Biden recognizes the genius and joins in.  So does Andrew Cuomo, the attorney general in New York, who will seek to get back the $4 billion 

that the suddenly suspect and surrounded John Thain paid his Merrill Lynch employees in reward for losing $27 billion year long.   And now Rudy Giuliani recognizes the potency and makes a contrarian argument that if the bonuses are banned it will hurt New York's economy.  Rudy is running for New York governor, against the troubled tenure of David Paterson; so perhaps his pro bonus argument can prosper at the GOP convention.  Elsewhere, the president and vice-president have it right. Class warfare works, and works doubly and triply well during a financial crisis.  It is the spirit of Huey Long, the ghost of FDR, the long lost legacy of frontier heroes like Daniel Boone and Andrew Jackson and Davy Crockett.  Plutocracy always loses at the polls.  And Mike Bloomberg is running for re-election, so he best get right his remarks about "economic royalists."  This may be difficult, because he is a plutocrat and because he is now entertaining the idea of raise sales taxes. 

The Iran arms ship bound for Hamas in the Gaza Strip, according to Chairman of the JCS Admiral Mullen, did not go onto a Syrian port, as was declared earlier, but is now reported docked at Nicosia, Cypress (right).  This is not the diplomatic script as agreed upon by the 

adversaries over the last week.   The story started on January 21-22 when the US Navy intercepted the Nochegorsk in the Red Sea as it was bound for the Suez Canal and then onto Gaza in some fashion.  Inspected, contained, restricted to remain tied up at the edge of the Red Sea and the Suez Canal, the captain challenged the Egyptians to free him to pass through the Suez.  His papers showed that he was bound for Syria.  The Egyptians and Americans both feared that the Israeli Navy would intercept, board and capture the ship, as it did in 2003 with the Karine A.   The fear was not idle, since Israel and Syria remain at war; and intercepting the arms and rockets made sense.   George Mitchell, the new Mideast envoy, rushed to Cairo to conferred with Hosni Mubarak about Gaza, and especially to keep the confusion of the Nochegorsk from erupting into an incident.  Mubarak lied to Mitchell that the ship was Syria bound, and Mitchell pretended to believe the lie.  All went well along, and then Admiral Mullen declared that the ship was laden with arms for Hamas but that the US Navy could not stop it from proceeding to Syria.  The US watched the ship pass through the canal into the Med.   At one point in the Med, the Nochegorsk was escorted by an EU warship, an American warship, and a Russian warship, all with different agendas.  It was supposed to be Syria-bound, where it would tie up with the Russian.  And watching all four players was Israel.

Not Syria.  

But now Nochegorsk is tied up at Nicosia, awaiting what we are told is an imminent inspection.  The latest report is that the US and Israel requested that the Cypriot authorities detain the ship for inspection, since it is Cyrpiot-flagged.  The inspection is due on Friday 30 January.  This is not the end of the story.

News that the Obama team is sending polite letters and signals in all directions to our well known adversaries now includes the logical development that the president is preparing a letter to the Holocaust-denying and hallucinatory Ahmadinejad of Iran.  (Setting aside the 

fact that the Obama camp has been whispering to Tehran for many, many months through cut-outs like Robert Malley.)  It is familiar and hollow diplomacy and will come to grief.  During the so-called Disarmament Conference (right) that started in 1932 and extended into 1933, FDR sent a message that was simple, blunt and absurd:

Hitler assumed power from the decrepit Hindenberg at the end of January 1933 and by spring found a way to praise the FDR message.  The scene I like is the president pushing his ear close to a short-wave radio in the White House to listen to a speech by the new chancellor.  FDR translated Hitler's words with his credible German to his staff, including his close pal Missy LeHand.  Delusional, sadistic Hitler said that he welcomed the new president's gestures to peace, and that everyone knew what was wrong with Europe was the cause of the corrupt and stupid Versailles Peace Treaty of 1919.  The Disarmament Conference adjourned from June till October, when Germany found an excuse to drop out.   FDR shrugged: too busy with his Nanny State of his pseudo-scientific NRA and the rules he liked for every business from sweater factories to railroads.  Within thirty months, Hitler seized the Rhineland without need of many offensive weapons other than bluff.  Catastrophe and Holocaust followed.

What was not clear these last years of looking for the analogy between the 1930s and now is that we did not see that we would re-experience the panic of the great depression that set up 

the weakness in liberty and confidence which the Devils Lenin, Trotsky, Mussolini, Stalin and Hitler exploited.  Now we see it.  The Obama administration aims to make a de facto truce with Tehran and its allies Hezballah, Hamas, and its hirelings and neighbors Al Qaeda and the Taliban.  The explanation is that the president must focus on the broken US economy, no time for bullying foreigners to discover the joys of the Magna Carta.  Same explanation FDR gave himself.  Winston Churchill saw the Devils rising.  FDR ignored them.  They come for us all.  The Devils are loose again, and this time they have the nukes we created to stop their last wave of terror.  Mr. Obama writes a letter to Ahmadinejad seeking to disarm Tehran with dialogue.  The price tag for this sort of conversation is very high.

My best House source tells me that the president spoke for thirty minutes to the House Republican conference and then took questions for as much as an hour, though short and 

predictable questions.  It was not a complicated exchange.  The president wants the GOP House to support a stimulus bill that is one large earmark -- a hog farm for the ages.  The GOP, having wrecked itself over fourteen years of spending like Democrats, having tolerated ruffians like Duke Cunningham and rascals like Tom Delay, even having recently gone along in a fractured way with the TARP folly last fall, now discovers principle and rises to protest:  Mr. President, how can spending $1 trillion on the federal government's fantasies of pork mean anything substantial to the trouble in the banks, the markets and private enterprise?  What does $200 million for the lawn in the Washington Mall, or $150 million for face-lifting the Smithsonian, provide for the auto industry, or the pharmaceutical industry, or the newspaper business, or the tens of thousand of jobs under pressure in Silicon Valley?  The answer is, Nothing.  The president had no answers for the GOP House.   The president either realizes that Mrs. Pelosi and Senator Reid have handed him an old trout to sell to the American people as a flying horse, or the president does not realize it is a old trout and is a victim of a gargantuan (and not unwitty) prank by his Democratic majority in Congress. 

What Happens Now?  

Mrs. Pelosi means to force the House vote on the stimulus bill within the next news cycle.  My information as of the evening before the vote is that there are not ten votes for the bill in the House GOP.  Amendments will be offered, and at least one GOP leader has been told 

that his amendment will be ruled out of order.  Chair of the House Republican Conference Mike Pence of Indiana (right, with House Minority Leader John Boehner), who is likely running for the Senate seat from Indian in 2010, spoke bluntly late in the day that the bill "won't stimulate anything but more government and more debt."  No one in the House GOP disagrees.  The scale of the pork is staggering.   Mrs. Pelosi can pass the bill with her clear majority, but she will not get all of her caucus, and she will be lucky to get as many GOP votes as she loses Democratic votes.  This is a partisan dog fight, and Mrs. Pelosi aims to win ugly.  The Senate takes up the bill for markup next week, however early indications are that there is no solid support for the bill with the GOP.  Senator John McCain says he will not vote for the bill as is.  Senator Chuck Grassley issued a statement today that he disregards the Democratic tactics of elbowing out GOP comments and contributions -- and that there is a rumor that no GOP amendment will be accepted, that Democratic members are told now to vote against them.

What may be happening is that the notorious partisan attack terrier Rahm Emanuel, newly aggrandized as chief of staff at the popular White House, has convinced his boss the 

president that he, RE, can deliver the House for the stimulus bill.  RE may have left out the detail that he can only deliver what Mrs. Pelosi delivers.  Mr. Emanuel is vaguely ironic.  Perhaps he told the president that he could deliver "the vote."  Who knows?  The results will not support the fairy tale of post-partisan politics, or bi-partisan politics, or beyond partisan politics.  The stimulus bill vote in the House begins the end of the honeymoon.  But ever so politely.  The GOP will be excessively cheerful and generous and companionable, overflowing with praise for the president, as they file forward to register their "no" vote.  The guess at this time is that Mrs. Pelosi or Jack Murtha or one of the exuberant whips on the winning side will comment to the media something rudely colorful about the GOP vote, such as "GOP, drop dead."

The Iranian arms ship parked at the edge of the Red Sea and the Suez Canal is loaded with rockets, artillery shells and other weaponry bound for Hamas in the Gaza Strip.  The IDF 

knows exactly what it is, and where it is bound.   The US Navy has boarded it more than once in the past days and yet has not seized the cargo nor questioned the crew in depth.  The Iranian captain traveled to Egyptian authorities to complain, and the dispute quickly went to Cairo.  The pretense is that the Iranian arms are bound for Syria.  Israel is at war with Syria and can interdict.  The US is not at war with Syria and will not interdict.  Right now there is no resolution; however the ship will be permitted to continue through the Suez Canal into the Med.  It will not likely become a new Karine A (above), the Iran arms ship that was intercepted in the Red Sea in January 2003 that was bound for Gaza and Arafat.

However the test here is not about the IDF and Hamas and Syria -- the test is about George Mitchell's embassy (right, with the President and the Secretary of State upon his appointment as Middle East Envoy) to the Middle East as HRC's new envoy to the Palestinian problem.  

Mitchell goes first to Cairo, where he will do whatever it takes to keep the arms ship from becoming an incident.  Hosni Mubarak will lie to George Mitchell, and George Mitchell will pretend to believe him, that the ship is Syria bound and not for Hamas.  Why will Mitchell play along, the supple dhimmi?  Because Mitchell is protecting the Obama administration's stubborn aim to open direct talks with Tehran regardless of the facts and the threat.  Dennis Ross is tasked to be the new American voice to Tehran, and nothing is to keep Dennis Ross from pretending that Iran wants peace.  The Obama administration insist upon making all the mistakes of the last thirty years, since Jimmy Carter and the Camp David treaty of 1979, and making them all quickly.  The Iranian arms ship is plenty of evidence that Tehran is a deceitful, hostile, war-making power that cannot be stopped with jaw jaw, cannot even be slowed.  When it starts, the Obama administration talks to Tehran as a dhimmi.  Is the Obama administration aware what dhimmitude fully means?  It is not about respect or candor or peace.

Spoke Sunday 25 with Michael Korda, author "With Wings Like Eagles: A History of the Battle of Britain," re the spectacularly fragile moment in the summer of 1940 when the British 

Fight Command, led by air Marshal Sir Hugh "Stuffy" Dowding, was the only obstacle to a German invasion of England and the fall of all Europe to the Nazi war machine.  Michael Korda tells the story, at the height of the battle in mid August, a blue sky and sunny day in England, hundreds of British and German fighter planes and German bombers weaved and dived overhead while the public went about their lives without much comment.  There was little noise, and the little you could see from the ground were contrails ad the occasional parachutist.  My favorite moment in this fierce story of mass murder by the bombers and heroism by the fighter pilots was when a British pilot floated to ground on a small golf course.  The man was wounded slightly, had blood of his torn shirt, and was picked up and driven to the club bar and offered a drink while they called for an ambulance.  Two other gentlemen at the bar were not aware of the drama.  One leaned over and said to his mate, "I say, bit scruffy, isn't he.  Do you think he's a member?"  Michael Korda told me this is the best representation he can find of what it was to be English, a version of parochial wit and stoical confidence in the face of a fight to the death.

The Shape of Things to Come.  

The strangest revelation in the book is that Michael Korda's famous show biz family, his 

uncle Alexander Korda and his father Michael Korda, were friends with the wonderful H.G. Wells.  The Kordas long wanted to do a Wells book into a movie, and in 1936 they produced "The Shape of Things to Come," a tale that opens with a wave of bombers destroying London in a single night's raid.  A forty year war of desperate ruin follows, marked by famine and a pestilence known as "the Wandering Sickness."  What is striking is that this movie influenced the war planning of the men who led two countries into the World War -- Stanley Baldwin, Neville Chamberlain and Winston Churchill for the British; and Adolf Hitler and Herman Goering for the Germans.  They all had an exaggerated opinion of the bimber, or, as Stanley Baldiwn put it: "The bomber always gets through."  It was not true.  And it was Dowding's peculiar genius to imagine the way to stop the bomber was the Hurricane, the Spitfire, radar, telephone based controllers, and a grid system of fighter squadrons that pecked at the German attackers instead of confronting them in a massive assault.  Fighter Command wore down the Germans until a frustrated Hitler called off Sea Lion in September 1940.   England was saved by the lateness of the calendar year and the bad weather.  The Germans then turned to night bombing of London and other cities, the Blitz, but that was not invasion.  The fighter plane had defeated the bomber, a fact never imagined in the Korda's film -- and apparently never imagined by anyone by Hugh Dowding, the man who, along with the pilots, saved England to fight on.  And gave the turn of phrase to Churchill that we remember today: "Never have so many owed so much to so few."

  

Caroline Kennedy dropped out of the contest for the appointed NY US Senate seat at the very last moment and guaranteed that the wags and snitches would explode with the details of her warm friendship with NYT publisher Pinch Sulzberger.   When FDR was looking for a 

Secretary of Labor in 1933, he considered William Jennings Bryan's daughter, Ruth Bryan Owen, and then settled on his New York aide Frances Perkins, who knew all about FDR's warm friendship with his secretary and pal Missy LeHand.  This is as close an FDR analogy as I can find to this leering folly.  President Obama clearly wanted Caroline Kennedy in HRC's NY Senate seat, since her endorsement of Mr. Obama in January 2008 launched him from the surprise Iowa caucus victory past the defeat to HRC in New Hampshire and onto the string of victories in January and February, and was the transformative moment for his campaign.  But now Caroline is gone from the Senate -- and all because of gossip that Caroline Kennedy and Pinch Sulzberger have purposefully and cunningly invited for weeks with their needy conduct (right).  Leaving hanging the puzzled NY Governor David Paterson, who was clearly of the mind that appointing Caroline to HRC's seat would bring Kennedy glamour and money to his election campaign in 2010 and likely the president's attention as well.  None of this has anything to do with the fact that the NYT is out of cash and hope and had recently sold its soul to a Mexican billionaire Carlos Slim, who practices capitalism with the same focus as once did the bully Andrew Carnegie.  Odd and loopy.  Add this to the cluttered Federal investigation around Rod Blagojevich auctioning off President Obama's seat to the cockiest bluffer, and then handing it to a man who out bluffed the whole Democratic Senate and White House -- and what is left is a kind of slow motion, plotless, Kennedy-flavored farce.  Now we can look to the carnival coming to town of Norm Coleman vs. Al Franken and the forever Senate race in Minnesota.  It's all fun in a grinding, predictable fashion.  If it wasn't for the pomposity of the Senate, there would be no laughter at all in the bleakness of a Washington out of ideas, time and Republicans.  We need Academy nominations for all this melodrama.  Caroline scratched.  Pinch punked.   Blago blotto.  Franken undead.  And $1 trillion of pork running like a herd down Pennsylvania Avenue.  The Age of Obama, week 1.  No harm, no foul, but icky.

This source does not exaggerate -- as a trader, the advantage is to the man with ice for blood and  dilithium crystals for brains -- so when he wrote "death spiral," I looked around the 

chat room at the usual Dr. Doom sources to see if there is harmonic resonance.  It was President Obama's first day in office, and I was surprised to find so much gloom even while Mr. and Mrs. Obama were dancing in celebration -- and to find it so especially ghastly.   Calculated Risk was not cheerful, as usual, but included a note from NYU economist Nouriel Roubini's blog that seemed especially.  Roubini estimates that the debts load on US banks and brokerage holdings will peak at $3.6 trillion.  Roubini declares that the total capital for US banks and brokerages is $1.4 trillion.  He writes, "This is a systemic banking crisis."  CR puts the issue more bluntly, estimated that the total debt will peak at $2.6, accepting the total cap assets, CR says the US banks are already "insolvent."  This is a polite way of saying that the banks and brokerages have failed.  And that the sell off in bank stocks now is because they are going to be nationalized sooner rather than later, those that survive.  Look at the numbers today: 

Morgan Stanley (MS) off 16%  

London Is Worse.  

A lead item in the Wall Street Journal declares that the EU finance ministers have reached the limits of their ability to spend money to stimulate the economies.  The debt load is 

already so high, that more borrowing will just strain and breakdown the system.  Now to the catastrophe at Old Blighty.  The Bank of England (right) will start buying assets, such as corporate bonds.  Meanwhile the second version of the bailout announced Monday by Gordon Brown and Alistair Darling has now panicked the markets and degraded the pound by an astonishing 5%.  A new crisis is possible, even inevitable, since the buzz is now that the UK will nationalize the banks.   This is another way of saying that the banks have failed.

My other doom and gloom favorite, The Baseline Scenario, provides a summary of what is now unavoidable in 2009.  I am specially mindful of the continuing decline of commodity prices.  This is the sort of deflation that marked the collapse after 1929.  In January 1933, Congress and the outgoing Hoover administration were flummoxed at the sinking farm prices.  Hoover mentioned that he would sign Smoot Hawley -- the infamous protectionist bill -- just because it would help the farmer.  It did not.  So when I see sinking commodities, and see the projection for lower prices, I puzzle if we are condemned to groundhogdaying 1933:  And what happened in February and March, 1933.  The banks failed.  And FDR imposed a bank holiday to stop the panic.

I mean it to be far-fetched.  But what happens if and when the major banks fail, the government nationalizes them, and there is a bank run on small and regional banks when 

people transfer their deposits and assets to the protected creatures?  Do we want to keep our money in a brokerage house that may fail, or a bank that may fail, when we can instead put it into the nationalized Bank of America?  Off-putting speculation?  Dizzy making?  No good model for this, so I am guessing from the historical example -- the runs started in Detroit -- which was not anticipated when it happened.  If there is to be a bank run anywhere, it will be silent.  Jim McTague taught me back in October that people can run on the bank without lining up.  Just clicks of the keyboard.  The silent run.  Watching those regional banks.  Watching Detroit.

The centerpiece of debate the last weeks of the Gaza fighting was that the IDF aimed to cut the tunnels and smuggling supply conduits between Sinai and Gaza in order to rid Gaza of the weapons and rockets that give Hamas power.  The MOU signed by Jerusalem and 

Washington on Friday 16 is said to prove for US back security of the Gaza border, with the aid of Quartet and Egyptian authorities.  Prime Minister Olmert's claim that the IDF had achieved its goals was based upon the MOU promises.  That was then.  Egyptian President Hosni Mubarak now declares that there is no arms smuggling across the Sina and into Gaza.  Mubarak tells the EU that the arms come form Lebanon.  That there is no need to patrol or secure the border.  Best signals source says that, at this remark, the EU ministers sat quiet and unfazed at the magnitude of the falsehood.  The only way to change the smuggling of arms and rockets into Gaza is to change the padlocks on the Egyptian military warehouses at Al Arish (right), the Hamas stronghold on the Sinai side of the border.  The Mubarak regime receives a cut of the smuggling fees each time a convoy comes in from the Sinai and goes out to Gaza.  The arms come from Iran via the Port of Sudan and then up the Red Sea on coastal freighters to Sinai ports, where the cargo is off-loaded and transported across Sinai by the tribals to Al-Arish.  It is a business.  The big stuff that cannot go through the tunnels is on-loaded to fishing boats at Al Alrish that set sail for the port of Gaza along the shallow coastal shelf.  The IDF cannot interdict the boats without coming in very close with zodiacs, and cannot hope to search the fishing fleet.  It is an unbreakable chai of supplies unless Egypt were to change the padlocks.

Hosni Mubarak wants his son Jamaal Mubarak to succeed him, and he has made the deal with the jihadists -- chiefly the Moslem Brothers and their kin Hama (Ikhwan) that Jamaal will 

let them operate to liberate Palestine, and they will let Jamaal pretend to rule.  Jamaal was sent personally to negotiate with Hamas at Al Arish during the Gaza fighting.  Why does Mubarak make this deal.  The story is told that once upon a time, Mubarak was at his palace, enjoying the desert breezes, when he spied a million lights coming along in the distance.  He called to the intelligence chief and secret policeman Omar Suleiman (right with Ehud Barak) and asked, "Omar, whar are those lights?"  Omar Suleiman replied, "Mr. President, those are your people coming to liberate Palestine from the Crusaders and Jews."  Mubarak said, in surprise, what shall we do?"  Omar Suleiman answered, "You have a choice.  They can liberate Palestine by marching around your palace while saluting you, or -- they can liberate Palestine by marching over your palace.  What is your command, Mr. President?"

 

Spoke to major signals source to touch upon the strategic picture of the planet (Northern Hemisphere) at the Obama inaguration weekend.  Quickly the Obama administration (chiefly David Axelrod) thinks tactically, not strategically -- and they are thinking of the mid-term 

election 2010.  HRC, Jim Jones, Dennis Ross, Richard Holbrooke, WJC, all handed the foreign policy portofilio and told to handle it and you will be rewarded.  PErhaps a reward as high as Mrs. Clinton replacing Joe Biden.  They will handle it ably, to the limits of rational planning.  We are leaving Iraq and Afghanistan and the Gulf.  The Russians are a source of stability in the Caspian Sea and the Black Sea and the Eastern Med..  Tehran is the centerpiece of all diplomacy and confrontation.  Cairo and Beirut and Damascus and Amman and Riyadh are all unstable.  The whole of the Ummah is a timebomb.  The EU will rally itself to provide security in the northern Med.  Tehran is powerful, cocky, theologically secure and predictable, to a point.

The strategic surprise is that the PRC military is convinced from senior to junior cadre that the US will attack.  The fact that is stated repeatedly by the PRC military leadership (and 

taught at the academies) is that more US soldiers have died in East Asia than in any other theater.  The PRC military believe the US will bomb the southeast of China, around Shanghai and along the coast.  Nuke Shanghai.  Therefore the PRC will shift 300 million Han Chinese to the east, to the Tibet highland and to East Turkistan.  To construct a new industrial base that can lead the counter strike.    To that end, the PRC will support any strategic partner (Russia, Iran, the Ummah, the EU) that opposes US strategic aggression and interests for the rest of this century.  If you blink, consider this a strategic vision similar to 1914.  Woodrow Wilson's administration wont he money from Congress to build a modern American fleet of super dreadnughts.  FDR as Assistant Secretary of the Navy, thinking ahead to his political fortunes, put the construction of a battleship into the Brooklyn Navy Yard.   The battleship was the U.S.S. Arizona, the mightiest that sailed when it went for a shakedown cruise in the winter of 1917-1918.  The Japanese sank that ship at Pearl Harbor twenty-fours years later, when FDR was president, and he declared war on Japan.   Strategic thinking is many decades ahead, and involves all the present players topsy-turvy.  The U.S.S. George H.W. Bush was just launched by the Bush family.  A super carrier and national asset.  What does the PRC see?

News from London is that the Gordon Brown government's Treasury run by Alistair Darling, which has a cozy relationship with  the Bank of England (right) has just told the U.K. banks 

that it will create a Bad Bank to store all the toxic waste still inside their portfolios.  The British "Bad Bank" is the forerunner of the "Bad Bank" that Tim Geithner at the U.S. Treasury will create once he finishes explaining how he  was personally unusually creative on his own taxes from 2001-2005 and gains a confirmation from the timid and confused Senate.  The Geithner Bad Bank, let us name it the Tim Geithner/Barack Obama BaBa, will dwarf the Alistair Darling/Gordon Brown BaBa now constructed in London.  The estimate of the bill in Old Blighty is now 33k pounds per citizen, which is less than $50k.   Guess what the BaBa will cost our team?   My guess is $300k per ctizen, enough to beggar the country until 2030, barring worse blows.  And barring worse blows is fantasy.  The least we can expect is a few wars.  An asteroid strike begins to look to be an attractive distraction and much cheaper.

Abraham Lincoln's whistle-stop train trip, which Mr. Obama seeks to recreate, left Springfield, Illinois on February 11, 1861 enroute to his first inauguration on March 4.  At the same time, another critical trip started when 

Jefferson Davis, newly elected president of the Confederate States of America, departed his slave-owning plantation Brierfield in Mississippi on the same day, February 11, enshipped on the river to Vicksburg, and began his whistle-stop tour of his new country, the Confederacy.  The New York Times published two columns side by side:  "The New Administration," and "The New Confederacy."  For the next twelve days, the public watched the progress of the two new potentates, and on Sunday 18 I will speak to two authors who write about this trip, Harold Holzer, author "Lincoln President-Elect: Abraham Lincoln and the Great Secession Winter 1860-1861," and Ronald C. White, Jr, author "A. Lincoln: A Biography."  (Below, see Lincoln at Philadelphia's Independence Hall, February 22, 1861; and then Lincoln at his first Washington inaugural, March 4, 1861.)   Lincoln went to Washington.  Davis went to Mobile, Alabama, and eventually to Richmond, Virginia.  The trains of the two presidents, both born in cabins in Kentucky, collided in April 1861 when the Confederates opened fire on Fort Sumter.

Mr. Obama's train is on the track to his first inauguration.  And the other train, the Jihad train, is on the track for a train wreck in Gaza.   My best signals source says that Mr. Obama inserted his talent for avoiding conflict this week in the Gaza War.  Mr. Obama wants the fighting to stop before his inauguration.  The IDF is now waiting for an Israeli Cabinet vote on Saturday night to decide on the so-called unilateral ceasefire.  This figment is a direct order of the Obama administration.  Hamas will not negotiate in good faith; Hamas will not accept any terms; Hamas will fire as 

many rockets as it can as soon as it gets resupplied.   The Israelis are going along with this Obama fantasy that Hamas can be contained without being killed.  The US is promising to monitor the Gaza border and the coastline.  The MOU (right) issued today between T. Livni and C. Rice is supposed to establish procedures for a coalition that will monitor the border by unknown means that will achieve what the IDF was not able to achieve in 40 years, which is the closing of the smuggling routes from Sinai to Gaza.  This deal is a trajn wreck coming down the track, and the Obama team is going to collide with the Jihad train just as certainly as Mr. Lincoln collided with Jefferson Davis in 1861.  Obama has stopped the IDF from the coup de grace of killing Ismail Haniyeh and his gang who are hiding in the Shifa Hospital.  What happens after Tuesday is directly in Mr. Obama's  hands, and already it is a certain confusion.  How may rockets in a ceasefire before it is no longer a ceasefire?  And how does the IDF withdraw from Gaza?  And what happens to the gangsters in Shifa Hospital?   And what does Tehran want from Mr. Obama, and what will he pay for quiet in Gaza?  Not for genuine quiet.  For fewer rockets.  Mr. Obama wants jaw-jaw peace.  He will get jaw-jaw war.  The gangsters are trapped and defeated.  The US is ordering the IDF to give them a get out of jail free card.  (And if Mr. Lincoln had ordered Jefferson Davis's destruction or detention as a seditious rat in March, 1861, how much grief would have been avoided?)

All of them are hiding in a storage room underneath the Emergency Room at Al-Shifa Hospital in the heart of Gaza City.  No secrets here: Wide Angle reported this two days ago, and I can 

confirm it is good intelligence.  The KIA today on Said Siam (or Sayyam), the Hamas Executive Force boss (torturer, thief, aspostate, mass-murderer) was because the genius left Al-Shifa Hospital long enough for the IDF to hit him; and tonight he is standing in line in Hades chanting Jihad tunes with his cronies.  The rest of the heroes are in their safe house beneath the ER (right, from 2007).  Sometimes they wander the halls of the hospital dressed as doctords or UNWRA types.  Everyone knows.  Rather than human shields, Hamas has a hospital shield.  The IDF will not hit them where they are.  The IDF is in a race to get to Shifa before the ceasefire is imposed from Cairo.  Haniyeh knows the game, and he is playing this close.  The IDF is within walking distance of al-Shifa now, in the Zeytan neighborhood. 

In Cairo, the contest is between Egypt, that wants a ceasefire, and Hamas, that wants to act tough.  Hamas refuses so far to give guarantees it will not fire rockets in a ceasefire.  The 

debate: How man rockets does a ceasefire mean?   Also, Hamas demands the IDF withdraw immediately upon ceasefire and open the borders.  The IDF says no withdrawal and the borders stay closed unto there is a sentry in place, either EU and other.  Sad-sack UN chief Ban Ki-Moo (way, way out of his face element)  just wants to look relevant and get a ceasefire in place so that the Quartet can claim to have authority.  But there is more: Hamas needs to rebuild and rearm.  Tehran wants Hamas to accept the ceasefire and maintain resistance afterward.  How?  Fire rockets despot the ceasefire, just like before.  You can see why Haniyeh is frustrated, confused and undecided.  How does he stop the IDF approach to his hidey hole and still show victory?  How safe is he even after a ceasefire?  Everyone on all sides finds him inconvenient.  (Right, Said Aim's house after an airstrike; he was KIA.)

Tehran wants a deal with Obama over the whole region, the Hindu Kush to the Med.  It wants the best deal it can get to let the US bug out of Iraq (reposition forces in Afghanistan will be the euphemism) in exchange for acknowledgement as the regional hegemon and a member of the nuke club.  The way forward for Tehran is for Hamas to keep the pressure on Israel with rockets.  To provoke the IDF.  Hamas must now be resupplied.  Tehran wants the borders opened again for smuggling to restock rockets and guns in Gaza.  The timeline is now spring, when the full use of Syria and the IRGC backed Hizballah is available.  For now, all Hizballah and Syria can do, at Tehran's 

order, is nuisance fire by cut-outs and chest-pounding on TV.  The ceasefire is coming soon.  Perhaps two days, perhaps four.  The IDF hurries, and the Israeli cabinet broods.  Tehran will confront a new team in the Obama administration, but it is a familiar new team, Dennis Ross, Richard Holbrooke, Bill Clinton, Joe Biden, and Mrs. Clinton as the upfront face of American power.   Tehran believes the O team will make a deal as fast as possible so it can worry about the collapsed economy.  Tehran is acting nervous tonight.  In Tehran, Ahmadinejad popped off (right) yesterday about how Israel is "not feasible."  

The race tonight is to get to the room below the ER.  My best signals source says that the IDF wants Haniyeh dead.  Abbas does not want Haniyeh qll the way dead, as the Hamas gangsters in Gaza make him look attractive in Ramallah.  Cairo wants Haniyeh a little bit dead.  Washington doesn't have an opinion right now.  Israeli FM T. Livni is in Washington on Friday to patch up the dialogue between President Bush and StateSec C. Rice, broken over the recent UN resolution confusion.  Bush is trying to stay in the process, but the clock runs out on his team as well.  I figured they could get a ceasefire by Sunday.  But it is Friday morning Gaza time now, and the IDF is in action in Zeytan.  Haniyeh is awake, and can hear the gunfire and the airstrikes.  The whole neighborhood around him is wired, and there are many booby traps.  Hamas is not fighting well.  One IDF non-com called the Hamas shooters, "villagers with guns," who do not aim before they shoot. 

 

The contest now is in Cairo (not in Gaza) where the Quartet (US, UN, EU, Russia) led by Quartet Envoy Tony Blair are trying to get a ceasefire in place before the U.S. inauguration 

festivites begin over the weekend.  Jerusalem wants guarantees that the Sinai to Gaza ratline of weapons and cash will be cut and kept cut.  Hamas will offer any deal but live up to none.  Hosni Mubarak of Cairo (right with UN General-Secretary Ban Ki-Moon in Cairo) sent his son and heir Jamaal to negotiate with Hamas PM Ismail Haniyeh in Sinai/Gaza.   Cairo wants what Hamas wants as long as it gets to a deal for a ceasefire.  And why the rush?  Because Hamas and Cairo believe that if they can get a ceasefire, they can then extend into the Obama administration tenure safely.  They believe that Obama will offer a deal to Hamas and Cairo and to the Hamas puppeteer Tehran that will satisfy all parties except Jerusalem.

Barack Obama wants out of Iraq and out of the Gulf, asap, but he cannot get out unless he finds an accommodation with Tehran.  The accommodation must be to accept that Tehran is a nuclear weapon power with ballistic missiles to project that power.  Joe Biden has already delivered the message to Jerusalem that it must accept Tehran as a nuke power.  What Obama gets for the ceasefire in Gaza is a boost as a peacemaker.  What Tehran gets is Obama acting agreeably and controlling Jerusalem.  Cairo is happy, Hamas is happy, Syria is happy, Lebanon is happy.  Jerusalem is not happy but gets lots of TLC from Obama and Biden.  And this will all last until Hamas rearms and rockets again.  Now the new twist. The Osama Bin Laden message released today, cut in the last nineteen days, is a two-pronged taunt.  It taunts Bush as a failure for never having found Bin Laden nor shut down Al Qaeda; and it taunts and threatens President-Elect Obama that either he is a good Muslim and will acknowledge and accept the Jihad for the next generations, or he is a bad Muslim, and apostate, and he will suffer as did the Bush administration.

The ceasefire is the expectation.  French Foreign Minister Bernard Kouchner (right) in Paris this last cycle predicted that it was possible in the next days.  Quartet envoy Tony Blair this last cycle told CNN that a ceasefire was possible.  Mubarak wants it to happen now.  Hamas's Haniyeh will go along.

The rockets from South Lebanon today were a warning from Tehran of an escalation if it does nto get the ceasefire it wants in Gaza.  The Beirut legend was that the rockets were fired by a mysterious Palestinian group that doesn't much exist except as a surrogate for Hizballah.  The rockets were fired at the israeli settlement of Kiryat Shimona.   Several fell short.  Much attention by Unifil and the photographers to the spent rockets (below).  Why?  This was a marker.  The IDF counter battery fired eight shells into Lebanon (where?) and there were flyovers and a patrol.  All pro forma.  Jerusalem ignored the provocation -- as it did not in the summer '06.  Also, the IDF knows that Hizballah (following Tehran's order) hopes to oblige the IDF to redeploy to the north.  The Golani Brigade is committed to Gaza.  There are no plans at this time to shift forces.  Again, the escalation is in slow motion just because Tehran wants the ceasefire quickly.  Hamas will claim victory.  Hamas will thank Tehran.

The story came to me fifty hours ago from a well-placed source.  I did not put it on air; and it took two days to confirm and even then it was not comfortably certain until the press pool on 

body watch of the PE leaked it to Politico for a partial report at 730 pm tonight, Tuesday 13.  I had been in correspondence with colleagues and sources all day, since I had given it to several trusted pundits as soon as I got it -- for them to check out, too.  We were all working the same story, and it was great fun.  It is a puzzle how to get inside a transition team.  It is not the same as the White House, where one log is kept of the POTUS and his face time.  Also, we were dealing with a dinner party put together quickly by George Will over the telephone.  Last moment, Tuesday night, no media invited other than the fact that the punditocracy elite was the dinner table.  We were moving along with lots of "no comments," then a partial list, then questions to names who may very well have been invited, then silence.  I was writing when my Beast editor emailed that Politico had used the pool report.  It was a partial list, with only three names, but it was enough to go with out full list that also included, Paul Gigot, Larry Kudlow, Rich Lowry, Michel Barone, George Will, along with the Politico's Bill Kristol, Charles Krauthamer and David Brooks.   The details of the menu, the speeches, the colloquy the questions, all will come when the others publish what they can publish.  No report yet if it was "off the record," -- that old game.  My fun now is to imagine those on the right who were left out and their discontent.  Also to see that there is not a female name.  It was to be a party of ten.  I count eight plus the PE.  Perhaps the other name is female.  Unknown.  Also fun to consider how annoyed without actually throwing a vase the Left will be when it reads the list and realizes there has not been a similar event for Paul Krugman and Katrina vanden Heuvel and Michael Tomasky, all three of whom lifted heavily to make Mr. Obama PE.   The final twist of the event is that the conversation at the table had to start and stop with taxes.  Cutting taxes is what will work, what always works.  It is what Mr. Obama wants to do, sort-of; and it is what the Democrats do not want to do, not at all.  In truth, Mrs. Pelosi (and won't she tap her fingers at this dinner stunt) aims to raise taxes by letting the cap gains tax of 15% expire and revert to marginal rates in 2010 (28-35%).  This is delicious to anticipate, a food fight to be, even better than the dessert of (crow?) pie.  

The United Nations Security Council voted 14-0 for an immediate ceasefire.  Signficant is that the US did not vote, did not veto.  Also that the ceasefire does not call for IDF withdrawal.  And the Hamas ops are not cooperating with comments or are repeating the usual palaver about no surrender.  Of more moment is that my best signals source tells me that the Larijani mission to Damascus was to ascertain from Meshal what Hamas and Hizballah have in their aresnals.  The rockets today from Lebanon from Ein-Hilweh Palestinans were a signal that Tehran will get involved if Meshal and his opposite number Hizballah gangster Nasrallah are ready to fight.  Critical detail is that Tehran was surprised by the IDF fury these last 13 days. It was not ready to get involved until now.  Cairo and Riyadh must worry that once the US withdraws, they will have to face Tehran.  There will be what my best signals source calls "another Faustian deal."  But not yet.