US Man At UN John Bolton Resigns

December 4, 2006

The Ambassador to the United Nations representing the United Stes, John Bolton, resigned today. The president had appointed Bolton to the post during a Congressional recess. The Senate Foreign Relations Committee, despite a lot of talk about bipartisanship, refused to consider Bolton's nomination.

Tony Snow addressed the issue more than once during today's White House Press Briefing:

Q A lot of the Democrats are saying they hope you will nominate someone for the U.N. who can gain bipartisan support. Is that what your plans are?

MR. SNOW: We think John Bolton -- John Bolton had more -- look, there were more Democrats who were going to vote for John Bolton than Republicans who were going to vote against -- there were 58 announced votes in his favor. That's bipartisan. And John Bolton was a successful U.N. Ambassador, and we grieve the fact that he was not rewarded for his success and honored for it.

And we hope that -- we think that this represents, in some ways -- rather than getting into that, let me just put it this way: If bipartisanship is to succeed, perhaps we ought to make sure that people who serve their country ably and well are sent the signal that your services will be treasured, because when a John Bolton, after the kind of success he's had as a U.N. Ambassador, cannot get out of the Senate Foreign Relations Committee, that sends a discouraging note to anybody who wants to serve their country.
….
But the American people are going to ask themselves, do we really want a system where a guy has gone through and he has led successful diplomatic efforts in dealing with North Korea, in dealing with Iraq, in dealing with Lebanon, in dealing with Darfur, and has managed -- has been a highly capable, competent and effective and sometimes very creative diplomat working with other countries, building large coalitions, as well as coalitions within the U.N. Security Council, people are going to say, why didn't that guy -- they didn't like him, why? What was it about his performance that they didn't like? Here's somebody who said, I care about the United Nations, and therefore it's important that this institution reform itself, because it is no secret that here in the United States it is not held in as high regard as it used to be. And the United States is a key contributor -- the key contributor to the United Nations.

Complete transcript at:
http://www.whitehouse.gov/news/
releases/2006/12/20061204-6.html

Look who owns U.S. debt now

USA Today (Editorial)
December 1, 2006

Other nations hold a record 52% of it, leaving U.S. economy vulnerable. For most of U.S. history, the national debt was something that America owed itself. What was borrowed by the government was lent by its people. The liabilities of one were the assets of the other.

But that has changed as the federal government has increasingly looked abroad to finance its prodigious borrowing. Foreigners now hold a record 52% of the government's $4 trillion in outside debt, up from a quarter in 1995. Later this month, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke will go to China to ask the Chinese whether they could see their way clear to buy fewer IOUs and more iPods, Boeing jets and such.

There is nothing inherently wrong with foreigners owning American debt. In fact, these and other investments pouring into the USA help keep interest rates relatively low and the dollar relatively strong. To some degree, these investments reflect confidence in the American economy. But the very things that make this infusion of cash attractive also spell trouble.

The growing reliance on foreigners, in many cases foreign central banks, reflects a nation digging itself further into debt and denial.

Perhaps the best comparison is the many credit card offers that come in the mail each month. In the short run, by making borrowing so easy, they can prop up living standards. In the long run, the bills come due.

The foreign money is no different:

It postpones the day of reckoning, allowing U.S. policymakers to act like bankrupt shopaholics, running up debt to pay for tax cuts and new programs while leaving it to another generation to repay.

It props up the nation's other deficit - its chronic trade deficit. The purchase of treasury bills is part of a broader trend of foreigners recycling their dollars back to the United States to invest in everything from government debt to the home mortgages, instead of using them to buy more American goods and services.

It makes the U.S. economy hostage to the whims of foreign investors, including governments. Eventually, they could decide they have better places to invest than in U.S. debt securities. This might be a gradual decision. Or it might not be. If the latter, it would cause a surge in interest rates (because the Treasury would have to offer more enticing terms to attract buyers) and trigger a recession.

Many developing nations buy treasury bills not because they are deemed to be the best investment, but to support their own monetary polices. The Chinese, for instance, do so as part of a strategy to keep their currency artificially low against the dollar. This holds down the cost of Chinese goods, helping the Chinese economy but making U.S. goods less competitive.

The problem needs to be attacked from a number of fronts. The government needs to borrow less. And foreign holders of all of these IOUs need to realize that a gradual diversification of their portfolios would be in everyone's interest.

If that happened, maybe our products, rather than our debts, would be our leading exports. Wouldn't that be nice?

Japan mulling joint missile-defense facility with U.S. in Nagasaki

(Kyodo) --The Japanese Defense Agency is considering building a joint Japan-U.S. facility for inspection and maintenance of the Standard Missile-3 interceptor system under the missile defense scheme in Nagasaki Prefecture, an agency source said Monday.

The candidate site for the facility is an area to be reclaimed off the coast of where the U.S. military's Hariojima ammunition depot is located in Sasebo, the source told Kyodo News.

While it is known that Japan and the United States are working on building a joint information network to prepare for the full-fledged operation of the ballistic missile defense system, it is the first revelation of a plan for a weaponry-related joint facility.

The SM-3, which the U.S. Navy and Japan's Maritime Self-Defense Force plan to deploy on Aegis warships, is a U.S.-made missile capable of intercepting incoming ballistic missiles in space at altitudes of 200 to 300 kilometers.

The United States and Japan are conducting joint development of the next generation SM-3, which will be modified to a three-stage missile to enable it to reach altitudes 10 times or higher than the conventional model.

A senior MSDF official said advanced facility and technology are needed to inspect and maintain the new SM-3 due to the complexity of the device for sending and receiving data.

According to the source, the agency is considering joint use of the facility and equipment with the United States, but each country will conduct the actual inspection and maintenance of its own missiles.

The MSDF members would be able to ask for technical guidance from the U.S. military in the event they encounter problems in the inspection and maintenance process, making it possible to cut costs, the source said.

The two countries envisage a two-stage missile interception method to deal with an attack. First, Aegis vessels from both countries would try to intercept an incoming missile in space launching SM-3 missiles.

If unsuccessful, they would employ the ground-based Patriot Advanced Capability-3 missiles designed to intercept incoming ballistic missiles in their final phase after they have reentered the atmosphere.

Japan and the United States have been developing the upgraded version of the SM-3 interceptor in a joint program that began after North Korea fired a Taepodong-1 missile, part of which flew over Japan and fell into the Pacific Ocean, in August 1998.