RUTHFULLY YOURS

“Given the risks to the outlook, I consider it appropriate for the [Federal Open Market] Committee to proceed cautiously in adjusting policy,” Fed Chair Janet Yellen told the Economic Club of New York Tuesday, citing slower growth in the US and China and weak commodity prices. Her opposite number at the European Central Bank, Mario Draghi, knows better: on March 10 he announced that the ECB would buy corporate bonds to continue quantitative easing, the first time a major central bank has put large amounts credit risk on its balance sheet in living memory.

Draghi feared a collapse of confidence in Italian banks, who in turn own 405 billion euros of Italian government debt, or more than a fifth of the total. The trouble is that the Italian banks probably are insolvent by a wide margin. Non-performing loans stood at about 18% of Italian banks’ total loans at the end of 2014 and the total probably has increased since then.

The Fed’s threat to raise US interest rates sent world stock markets into a tailspin during the first six weeks of the year. Markets snapped back after the US, European and Japanese central banks responded with monetary ease and the promise of more. The central banks are right to worry. The European banking crisis of 2012 was never resolved, just swept under the carpet. It threatened to erupt again in February.

Nonperforming assets are larger than shareholders’ equity in all the top four Italian banks. The basket case is Monte dei Paschi, the third-largest private commercial bank, with non-performing assets at more than 500% of equity. Depending on recovery value, Unicredito and Intesa San Paolo, the two largest banks, might be solvent, presuming that they aren’t lying about their non-performing assets. By contrast, Bank of America and Citigroup have non-performing assets valued at 3% to 4% of their equity.

Chinese banks–the subject of endless scrutiny by foreign analysts–reported nonperforming loans of just 1.6%, and the Hong Kong brokerage house Reorient Group estimated NPL’s at 4.2% of bank assetsin a recent report.

To be updated post verdict….rsk

“Presumed innocent until proven Serb”
–Balkans forum commenter

“The falseness of the entire situation here defies description.”
– Radovan Karadzic, Opening Defense Statement

Well, at least this Hague-held Serb didn’t turn up dead like six or so others.

Very little in or about the Balkans happens by accident. In 2008 Radovan Karadzic was arrested at a time that the U.S. and EU were desperately ramming through statehood for a criminal enclave named Kosovo. Conveniently, the arrest of Karadzic reinforced the image of Serb as war criminal just as they were looking to have fewer questions about officialdom’s obsession with this tiny place.

And it is again no accident that the date of the Karadzic verdict eight years later was “set for March 24th,” the infamous date in 1999 of America’s greatest international crime and shame, when a purportedly anti-war president took us to war against a Christian, European population that had been America’s historical ally. All for doing battle against domestic terror and the ambitions of Greater Islam which, having little experience with it at the time, Washington dubbed “genocide” and “ethnic cleansing.” As did Berlin, Paris and Brussels.

Payback is a bitch. Particularly when it’s self-orchestrated, as Europe and America are today reaping the karma and consequence of what they’ve sown, making Serbs of us all. As publisher Milo Yelesiyevich, who has translated Karadzic’s Opening Defense Statement, put it in a letter to me:

I hope the Europeans give Dr. K a second look, because they’re in for it now. In a few short decades, they’ve been cast in the role of “Serbs” in their own countries, yet they still refuse to acknowledge their complicity in their own downfall, which stems from having attacked Serbs and Serbia throughout the 1990s [on behalf of what would become the next nexus of jihad — Bosnia and Kosovo].

From the back cover of the hard-copy version of the opening statement, by Kirkus Reviews:

Karadžić’s defense itself is remarkable, by turns eloquent, historically provocative…. Karadžić claimed Serbs had long been champions of peace and compromise, but they met an intransigent Muslim faction that all but insisted on either war or submission. Moreover, he contended that the “forcible removal of Bosnian Muslims and Croats was never our plan.” In many ways, the full account of Karadžić’s defense does add valuable perspective, especially in pointing out that Muslim insurgents were themselves guilty of extraordinary war crimes and that they were often stubbornly unreasonable partners in political dialogue…. This translation remains an important contribution to the understanding of a historically significant war.

No doubt one U.S. presidential candidate in particular will seek to capitalize on the carefully timed verdict to burnish her credentials, for having urged her husband to wage that “successful” 1999 war and for the overall ’90s Balkans legacy that today culminates in this “important” conviction of yet another Serbian official.

A salient point from the book’s web page:

The U.S. and NATO used the Bosnian War as a laboratory to test weapons as well as new methods of perception management, which they deployed in a long series of wars. Americans who no longer believe the U.S. government’s selective presentation of its foreign policy will find much to consider in Dr. Karadžić’s Opening Defense Statement.

With that, a few relevant snippets. First, an October 2013 email from the American who first coined the term “ethnic cleansing” in the context of Bosnia while serving as a foreign service officer, George Kenney. (Kenney subsequently subscribed to a more balanced version of the war than the cartoon that Americans were fed.):

I am still mystified as to why, but last Friday I was invited to a lunch at a fancy restaurant on K Street for Zeljka Cvijanovic, the Bosnian Serb Prime Minister. She was in town for a couple days, opening an office here. About a dozen people attended, including several former government types. After the meal, over coffee, about half a dozen of us lingered, swapping stories

While England Slept is the title of Winston Churchill’s 1938 book documenting the failure of England to counter Germany’s rearmament. Despite the gruesome price paid for ignoring Churchill’s warnings, postwar Europe has slumbered for decades while its cultural dysfunctions have nurtured the jihadist violence erupting across Europe. Last week’s attacks in Brussels, coming four months after the Paris attacks that killed 130, suggests there are more attacks to come. According to AP, 400-600 ISIS-trained terrorists are making their way to Europe.

Europe can’t say it wasn’t warned. In 2002 Oriana Fallaci published The Rage and the Pride, a passionate defense of Western civilization and an indictment of those who appease Islamic illiberalism. Ten years ago Bruce Bawer’s While Europe Slept gave first-hand reports of Europe’s feckless immigration policies that fostered and appeased Muslim radicalism and violence. A year later Claire Berlinski’s Menace in Europe and Melanie Phillips’ Londonistan sounded the same alarms. And there are the dystopian novels of Michel Houellebecq like Platform and last year’s Submission, which link Europe’s cultural and spiritual exhaustion to the rise of homegrown jihadism and Islamization.

An even more important prophet is Bat Ye’or, whose Eurabia (2005) documented “Europe’s evolution from a Judeo-Christian civilization, with important post-Enlightenment secular elements, into a post-Judeo-Christian civilization that is subservient to the ideology of jihad and the Islamic powers that propagate it.” The result is the dhimmi mentality of Europe’s elites, which manifests in word and deed Western inferiority to Islam, and guilt over alleged crimes against the Muslim world.

But a secularized Europe committed to multicultural fantasies and la dolce vita as the highest goods has dismissed these prophets as bigots and “Islamophobes” who distort the “religion of peace.” Yet after the collapse of the Ottoman caliphate in 1923––the “catastrophe” Osama bin Laden mentioned after 9/11–– the theorists of modern jihadism were forthright and plain in expressing the intolerant and triumphalist Islamic beliefs and jihadist imperative consistent with Ye’or’s analysis. Islam’s nature, Muslim Brotherhood founder Hassan al-Banna wrote, is “to dominate, not to be dominated, to impose its laws on all nations, and extend its power to the entire planet.” Fellow Muslim Brother Sayyid Qutb concurred: “Islam has a right to remove all those obstacles which are in its path.” The Ayatollah Khomeini, leader of the Iranian Revolution, agreed: “The great prophet of Islam carried in one hand the Koran and in the other a sword; the sword is for crushing the traitor and the Koran for guidance . . . Islam is a religion of blood for infidels but a religion of guidance for other people.”