This “The Onion” takeoff about the election machine debacle in the 2008 presidential election was seriously funny then and unfortunately will likely once again be seriously funny in 2012. Elections in the United States of America seem to be becoming more weird with each election cycle.

The Expense of Running a National Election Has Gone Through the Roof

Elections have certainly become much more expensive. President Obama reportedly plans to spend more than $1 billion to try and ensure that he will not have to move out of the White House in January 2013.

The airways are flooded with Republican candidate’s campaign ads as they pour tens of millions of dollars, probably hundreds of millions of dollars, into negative TV ads that attack not only president Obama but their fellow Republican opponents. Ronald Reagan would be ashamed.

This year Republican candidates are taking part in a long series of nationally televised debates that would cost tremendous sums of money if they were paid advertisements. This free advertising is not considered enough as candidates continue to use campaign funds and super Pac funds to lambaste every one and everything that they are opposed to, especially president Obama and his policies. Yet they offer few if any solutions to the problems.

American politics have entered a new era that is wacky, bizarre, dishonest, and damaging to the American idea of democracy. The Onion spoof has it about right. Traditional American values are under attack and it is coming largely from those who will do and say anything to become our leaders.

Most Candidates for President Only Say What They Think the Polls Suggest They Should Say

Ron Paul is the only candidate who has the guts to speak truth to the American people about our foreign and domestic policies. He is feared and discredited by the American elite as a more peaceful America would not be welcome by the military industrial complex that has so much influence as to who the next president will be.

At least there is still some freedom in America. An America with complete censorship would never allow publications like “The Onion” to exist.

Oh, by the way, there is a move to censor vast parts of the Internet. When the US government can cause the arrest of three non-Americans living in New Zealand and bring down there mega file upload and storage website the censorship process is already well underway.

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We should all pity the quarter billionaire Mitt Romney. Here is a man who desperately wants to be loved by the American people and who wants to cap his career by taking away president Obama’s job as president of the United States.

Romney Will Probably Lock up the Republican Party’s Nomination for President After the First Few Primaries

While Romney is leading in the polls as the Republican presidential candidate who most likely will be the party’s standard bearer in the November 2012 election Republican voters seem to really want to find a candidate who will be the anti-Romney figure and generate some enthusiasm within the party.

Poor quarter billionaire Mitt Romney. Even though he sports impressive credentials he just can’t seem to overcome his plastic inauthentic image and appearance and can’t seem to stir up strong positive emotions for his candidacy.

Mitt Romney is Competing Against a Weak Republican Field

In the words of Thomas Frank, writing for the TomDispatch website, and addressing the Tea Party movement, “For the last few months, the world has been fascinated by your frenzied search for a presidential candidate who is not Mitt Romney. We know that you find the man inauthentic and that you have buoyed up a string of anti-Mitts in the Iowa polling — Michele Bachmann, Rick Perry, Herman Cain, Newt Gingrich — buffoons all, preposterous figures whom you have rightfully changed your minds about as soon as you got to know them.”

But poor Mitt. Even though he has a commanding lead in the New Hampshire primary and is leading the pack in the fast approaching South Carolina race it seems that Republicans have to hold their noses while voting for the man and are still hoping, at this stage dreaming, that another candidate comes forward and saves the day. It seems that the current lineup of competitors are such preposterous buffoons that Mitt Romney becomes the favorite candidate by default.

Take the time to read “Tomgram: Thomas Frank, Why the Tea Party Needs Mitt” Posted by Thomas Frank at 8:07am, January 8, 2012. Then take a little more time to follow the links included within the article, especially those that deal with Mitt’s time at Bain Capital. While nothing illegal was done at Bain (as far as we know) questions can definitely be raised about the morality of being a key executive at a corporate raider firm. But then many questions can be raised about the morality of the too big to fail banks and Wall Street firms and how Romney is widely supported by big contributions from these rascals.

No Wonder Mitt Has the Support of the Banks and Wall Street – He Belonged to the Club

With Mitt Romney you have a candidate who over the course of his career has been closely aligned with the interests of the banks and Wall Street. It is really unfortunate that a country of about 310 million people, many of them intelligent, well-educated and astute executives and professional people, probably finds itself choosing between a plastic lacking a central core man such as Mitt Romney, whose beliefs seem to depend upon the latest polls, or a relatively inexperienced academic learning on the job sort like president Obama. Examining his actions while in office it is difficult to believe that Obama was ever a lawyer specializing in constitutional law.

Being president of the United States of America is still the most important job in the world and deserves to be filled only by extremely capable well balanced people who are excellent managers and strategic thinkers. Leadership of the highest caliber is called for.

Pity Mitt Romney for wanting that job so badly that he is willing to do or say anything to get it and pity the United States of America for its crisis in leadership. Without strong leadership America is and will remain in serious trouble. Will the next president be Mitt Romney or Barack Obama? Either way it appears that America will have a continuing leadership crisis.

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As new sanctions hit their economy Iran threatened Tuesday to take action if the U.S. Navy moves an aircraft carrier into the Gulf. This is Tehran’s most aggressive statement yet after weeks of saber-rattling as new U.S. and EU financial sanctions take an increasing toll on its economy.

New Financial Sanctions Will Cripple Iranian Economy

The new sanctions by the US and EU are designed to cut off from the American financial system any bank or central bank which conducts business with Iran’s central bank. As Iran uses it central bank to collect payment for Iranian oil shipments the implementation of the sanctions would drastically effect Iran’s ability to sell and be paid for oil that it sells on world markets.

If the sanctions are actually carried out against Iran they would drastically affect Iran’s cash flow. Just the threat of the sanctions being used has already caused Iran severe problems at home. There are reports that huge lines have formed at banks as Iranian savers atempt to purchase dollars and withdraw their money from Iranian banks to purchase gold and silver or other commodities and goods that they think will protect them from the collapse of the Rial currency.

Economic Conditions Within Iran Now Rapidly Deteriorating

The Rial has already fallen in value by 40% against the dollar over the past few weeks. Prices of just about everything, especially food and other necessities, have soared as Iranians try to convert their depreciating currency into staple goods before the next round of price increases occur. It appears that Iran is in the early stages of a hyperinflation event.

Army chief Ataollah Salehi said the United States had moved an aircraft carrier out of the Persian Gulf because of Iran’s naval war game exercises. He said Iran would take action if the ship returned.

“Iran will not repeat its warning … the enemy’s carrier has been moved to the Sea of Oman because of our drill. I recommend and emphasize to the American carrier not to return to the Persian Gulf,” army chief Salehi said.

“I advise, recommend and warn them over the return of this carrier to the Persian Gulf because we are not in the habit of warning more than once.”

Military experts still say they do not expect Tehran to aggressively commit an act of war – the U.S. Navy has far superior firepower than Iran’s sea forces – but Iran is running out of diplomatic maneuvering room to avert a confrontation.

“I think we should be very worried because the diplomacy that should accompany this rise in tension seems to be lacking on both sides,” said Richard Dalton, former British ambassador to Iran and now an associate fellow at Chatham House think tank.

“I don’t believe either side wants a war to start. I think the Iranians will be aware that if they block the Strait or attack a U.S. ship, they will be the losers. Nor do I think that the U.S. wants to use its military might other than as a means of pressure. However, in a state of heightened emotion on both sides, we are in a dangerous situation.”

The real danger is that a shooting war could easily get underway through a miscalculation or mistake on either side. For example, the United States Navy may decide to show Iran who’s really the boss of the sea lanes in the region by moving an aircraft carrier battle group back into the Persian Gulf.

The Iranians, under severe stress and backed into a corner by the new financial sanctions, may decide to show the U.S. Navy that it does have some muscle behind its threats by firing missiles at the aircraft carrier battle group. Any Iranian action against the U.S. Navy would quickly escalate into what could be a very nasty war, one that could spread throughout the region.

Increased tensions in the region have already affected the price of crude oil. Brent crude futures were up more than four dollars Tuesday afternoon in London, pushing above $111 a barrel on the news of potential threats to supply in the Gulf and the potential closing by Iran of the Strait of Hormuz.

Should war between Iran and the US occur the price of oil could easily double from current levels. This would be a tremendous blow to the world economy.

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The war of words is on. Iran’s navy chief publicly states that closing the Strait of Hormuz to oil tanker traffic would be “easier than drinking a glass of water.” U.S. analysts disagree saying it would be a big challenge for Iran.

US Analysts Doubt Iran’s Ability to Close the Strait and Keep it Closed

US analysts say Iran’s navy does not have the size for a sustained physical blockade of the Strait. They do concede that Iran has mine-laying and missile capability to wreak some havoc. “It wouldn’t be a cakewalk” for Iran, said Caitlin Talmadge, a George Washington University professor who is knowledgeable about the Strait of Hormuz. However he adds, “If Tehran really wanted to cause trouble, it could.”

The Fifth Fleet, based in nearby Bahrain, said on Wednesday that “any disruption will not be tolerated.” That came after Iran’s navy chief said closing the Strait of Hormuz “is really easy… or as Iranians say, it will be easier than drinking a glass of water.”

Iranian saber-rattling about closing the Strait of Hormuz to oil shipping is not new. Keeping a certain amount of tension alive over the possibility of closing the Strait works in Iran’s favor as it supports crude oil prices and increases Iran’s revenue from oil sales. So far Iran has made no actual attempt to close the waterway, which is only 21 miles wide at its narrowest point.

Iran’s Leaders Feel Threatened by New Oil Related Sanctions

However, this time the context of Iran’s threat is new. The oil exporter acts as if it is feeling even more threatened by the West over possible oil-related sanctions.

“We’re in the game of threats. If you’re going to cut them out of the oil market, they have no interest in the flow of oil from the region,” Vali Nasr, a Tufts University professor, said.

Iran’s message is: “If we are not allowed to play in the game, we have no interest in allowing anybody else to play,” said Nasr, a former State Department adviser.

The Danger of a Miscalculation Leading to War with Iraq is High

The danger of the word game being played is that it ratchets tensions up and any actual small incident that occurs in the Strait of Hormuz could quickly spin out of control. It also gives Neo-cons, who are still plentiful at the highest levels of the US government, the opportunity for a false flag incident along the lines of the Gulf of Tonkin episode which led to the escalation of the Vietnam War.

US analysts are probably right that the US Fifth Fleet could quickly take action to neutralize Iranian efforts to close the Strait. The fire power of the potent U.S. Navy, supported by Navy and Marine attack aircraft, would likely be able to clear the Strait of Iranian warships and patrol craft without great difficulty.

The analysts may not be considering what other actions an Iran under attack by US forces may rapidly take. US forces in Afghanistan, remaining contractors and embassy staff in Iraq, and US forces throughout the Middle East could find themselves under missile and direct attacks. These attacks would almost certainly include the U.S. Navy’s Fifth Fleet headquarters at Bahrain.

A wounded and backed into a corner Iran would likely attack the Saudi Arabian oil fields, refineries, pipelines, and ocean shipping facilities. There is no love lost between Shiite dominated Iran and Sunni dominated Saudi Arabia. Of course, Iraq leaders know that crippling the flow of oil shipments to the US from Saudi Arabia would almost immediately cripple the US and Western economies. In addition, such an attack would immediately double or triple the price of oil which would greatly add to Iran’s oil revenues for any oil it managed to sell on world markets.

The real danger of escalating tensions over the Strait of Hormuz is that a small miscalculation by either side, by the Iranians or the US, could lead to events that quickly spin out of control and lead to disastrous consequences. Increasing sanctions against Iran that would include its ability to export oil is a dangerous tactic that could push Iraq to actually carry out its threat to close the Strait of Hormuz.

Closing the Strait would bring an immediate response from the US Fifth Fleet. With tensions between the US and Iran at an all-time high a disastrous to the world economy war with Iran could begin with a miscalculation by even low-level military personnel from either side.

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“Closing the Strait of Hormuz is very easy for Iranian naval forces,” Adm. Habibollah Sayyari told state-run Press TV. “Iran has comprehensive control over the strategic waterway,” the navy chief stated.

It was the second warning in two days. On Tuesday, Vice President Mohamed Reza Rahimi threatened to close the strait if the West imposes sanctions on Iran’s oil shipments. The Strait Of Hormuz is a narrow maritime shipping channel through which approximately 40% of the world’s tanker-borne crude oil shipments flow.

Strait of Hormuz is a Vital Waterway for Crude Oil Shipments

Iran and Strait of Hormuz

Even a quick glimpse of a map of Iran shows the strategic location of the Strait of Hormuz. The narrow passage connects the Gulf of Oman and the Persian Gulf. Saudi Arabia, Bahrain, Qatar, Kuwait, and the United Arab Emirates (UAE) all load crude oil supertankers at their ports which must pass through the Strait of Hormuz and Gulf of Oman to reach the Indian Ocean and on to world oil markets.

New threats to close the Strait of Hormuz underline Iranian concern that the West is about to impose new sanctions that could target Tehran’s vital oil industry and exports. The Iranians are warning that basically they would consider such sanctions an act of war and would retaliate by closing the Strait to all maritime shipping.

Iran is the world’s fourth-largest oil producer, with an output of about 4 million barrels of oil a day. It relies on oil exports for about 80 percent of its public revenues. New sanctions proposed by the United States would penalize nations that do any business with Iran’s central bank. Since Iran’s central bank is used to collect payments for Iranian oil and petroleum products sold on the world market such sanctions would cut off a significant amount of Iranian cash flow.

Sanctions Which Back Iran into a Corner are Dangerous

If new sanctions against Iran sponsored by the US are signed into law by President Obama then Iran’s threat to close the Strait of Hormuz must be taken seriously. Iran probably has the military muscle to close the Strait, at least for some time. Iran would use a combination of warships, submarines, speed boats, anti-ship cruise missiles, torpedoes, surface-to-sea missiles and drones to stop ships from sailing through the narrow waterway.

There is a real danger that should Iran close the Strait Hormuz the United States would unleash its military against Iranian forces. Such a conflict would prove to be costly for both Iran and the United States. For one thing, the price of crude oil would likely at least double overnight. This would be a tremendous blow to an already weak US and world economy.

Then militarily Iran would likely prove to be a very tough nut to crack.The population is large, estimated to be 78 million by the end of 2011. Much of the terrain is mountainous, giving the Iranians many opportunities to have forces and equipment well positioned in hardened caves and tunnels. Iran is located in a tough region of the world and has had many years to prepare for an attack. Iran has a large number of mobile hard to locate guided missiles which could wreak havoc throughout the Middle East, including Israel and Saudi Arabia.

The Strait of Hormuz and the Persian Gulf are narrow waterways into which no naval commander would want to deploy major warships. There would be very little maneuvering room and no place to hide from shore batteries which could pound ships from artillery pieces tucked away into hidden caves near the shoreline.

Iran has Probably Brought Sizzler Missiles From Russia

It is highly likely that the Iranians have Sizzler type anti-ship missiles which could be fired from the mountainous shoreline or from especially equipped high speed patrol boats. These mach 3 plus missiles are known as aircraft carrier destroyers. No American admiral would risk placing an aircraft carrier battle group in close proximity to possible Sizzler missile locations.

While American forces could quickly establish air superiority over Iran it has been proven many times over that air superiority alone will not win a war against a determined resourceful enemy. Over Vietnam Americans dropped more tonnage of bombs than had been dropped in all of World War II, yet lost the war. More recently America completely rules the skies over Afghanistan yet has great difficulty in overcoming small highly mobile insurgent forces. After nearly 10 years of conflict insurgent forces are stronger than ever.

American generals and war planners want no part of putting boots on the ground in Iran. Fighting well-equipped forces who have had years to build defensive positions, backed up by the considerable fighting ability of Hezbollah forces which Iran would probably unleash against Israel, would quickly become a nightmare.

Iranian generals are not fools. It is unlikely they would take on American forces in head-to-head conventional warfare. Probably they would use the mountainous terrain of Iraq along with IED’s to make life miserable for American forces. A high casualty rate, much higher than in Iraq or Afghanistan, and gasoline prices of eight to ten dollars per gallon, would probably rather quickly temper America’s appetite for a prolonged war. Even the Neo-cons would become discouraged as casualties quickly mount.

Increased tensions with Iran are extremely dangerous. Iran seems to be determined to develop nuclear weapons and the US and the Israelis seem equally determined to prevent that from ever happening. The potential for conflict in 2012 is high. Sanctions which further damage Iran’s economy could lead a stressed out, backed into a corner, Iranian government to close the Strait of Hormuz.

It is almost certain that the US government would immediately take steps to open the Strait. From there, a disastrous war could quickly develop that would plunge the entire Middle East into flames. It should be remembered that wars are much easier to start than to exit. However, in the heat of the moment governments are not very astute at remembering history lessons. Horrible wars have been fought for far less reasons than economic sanctions or the closing of a strategic maritime shipping lane.

See background information about Iran at WorldAtlas.

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Lyric Hughes Hale posted an article on December 21, 2011 at YaleBooks entitled “The Conference of the Birds – The Coming Accidental War with Iran” that is well worth reading for anyone interested in Middle Eastern affairs and perhaps more importantly for Americans the state of the American economy and its prospects for recovery in 2012.

The American and Iranian Relationship Has Long Been One of Tension and Distrust

While the status of the Iranian and American relationship has been rocky and contentious for several decades the year 2011 was fairly calm compared to events happening elsewhere in the Middle East such as the revolution in Tunisia and Egypt, the death of Osama bin Laden and Muammar Qaddafi, and the withdrawal of American combat troops from Iraq.

The Failure to Talk to Iran While Isolating Iran is a Huge Mistake

However, president Obama made a decision to further impose sanctions against Iraq and apparently moved decidedly away from a policy of engagement and dialogue with the Iranian regime. President Obama has apparently fallen under the influence of the same Washington Neo-con crowd that successfully beat the Iraq war drums so vigorously that the United States invaded Iraq and for almost nine years was engaged in a disastrous and extremely costly war.

There is a great danger of an accidental disastrous war with Iran beginning sometime in 2012. The tough sanctions against Iraq seem to be increasingly effective. In the past two months the Iranian currency has lost half its value against the US dollar. Yet no matter how hard the sanctions bite Iran is extremely unlikely to give up its nuclear power development program and probably its ability to construct a nuclear bomb.

While the recent capture of a US RQ-170 Sentinel unmanned drone increased tensions between Iran and America president Obama wisely decided not to send a special forces team into Iraq in an effort to retrieve or destroy the drone. However, the incident clearly showed that the US is conducting covert operations over and within Iran and probably had some hand in sabotaging centrifuges at an Iranian nuclear material processing plant as well as in assassinating Iranian nuclear scientists.

Covert activities against a stressed-out isolated Iran are indeed dangerous. Iran is a proud nation with a civilization that can be traced back over 5000 years. Under increased stress and increasingly isolated Iranian leaders may make a miscalculation in responding to what they view as US aggression that could lead to an accidental war.

A Miscalculation by Two Nations That Don’t Understand Each Other Could Easily Lead to an Accidental War

As noted in Ms. Hale’s article a war with Iran would be a disaster for the US and world economy. For one thing, the price of crude oil would likely double overnight. In striking back against an American attack Iran would probably create difficulties for the many thousands of Americans left in Iraq. The US may have withdrawn its combat troops but there are still perhaps as many as 17,000 contractors and American embassy staff and diplomats working in the country.

In addition, Iran would probably launch missile strikes against the Saudi Arabian oilfields. There is already a great deal of tension between Shiite Iran and Sunni dominated Saudi Arabia and the Iranians know full well that America depends a great deal upon Saudi oil to fuel its military and to keep the American fossil fuel dependent economy going.

The following article makes reasonable suggestions as to how the United States government should approach the Iranians. Hopefully, a meaningful dialogue with Iran will take place before an accidental war begins. At the moment, within the US, the Iranian war drums are beating at a rather frantic tempo. That dialogue must start soon or it will be too late.

Author Article by Lyric Hale: The Conference of the Birds – The Coming Accidental War with Iran.

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Yes, of course, Saddam was a brutal dictator. No doubt Saddam was a cruel man who welded power with an iron fist and made every effort to crush anyone who spoke up against his wishes. Usually, that effort was successful and after a bit of torture the crushing was of a permanent nature.

Middle Eastern Nations Typically Have Dictators in Power. Will the Arab Spring Permanently Change the Regions Politics?

Realistically it probably took a strong man in the Middle Eastern tradition to hold a largely Shiite, Sunni, and Kurd fractured Iraq together. Saddam was a tribal leader so willing to use coercive force and brutality against his perceived and real enemies that few were willing to speak out against his policies.

Fewer yet were willing to risk his wrath by taking up arms against him. That tribal leader was able to consolidate his power and extend his influence and rule over the entire nation. As a brutal dictator Saddam Hussein was able to by force overcome religious divisions and was the glue that held a heavily divided Iraq together as a single nation.

As a Sunni Saddam favored those who were also Sunnis at the expense of the majority Shiites and minority Kurds, although for many years the Kurds were left largely alone in their own area of northern Iraq. After the occupation of Iraq by American forces a Shiite, Nuri Kamal al-Maliki, was favored as the Prime Minster. American leaders hoped that a democratic form of government would take root in Iraq.

Now that American combat forces have withdrawn from Iraq the big question is should a post-American Iraq exist as one unified nation, or will it split into a loose confederation of regions and cities unto themselves split primarily between Shiite, Sunni, and Kurd regions?

After the American troop withdrawal it took little time for the Shiite Prime Minister Maliki to move to consolidate his power. This week, an arrest warrant was issued against the Sunni Arab vice president, Tariq al-Hashimi, accusing him of running a death squad.

Many Sunni leaders have rallied against this power grab while top Shiites in Baghdad have supported Maliki, aggravating the sectarian divisions among the country’s political elite. “They feel that they have no future with the central government,” said Deputy Prime Minister Saleh al-Mutlaq, a prominent Sunni.

“We’ve reached a point where the exasperation with the entire political process is so big in Sunni majority areas,” said Reidar Visser, an expert on Iraqi politics “They are just fed up and disillusioned.”

In 2006 and 2007, during Iraq’s civil war, Vice President Joseph R. Biden Jr., who was then Chairman of the Senate Foreign Relations Committee, suggested partitioning the country into three federal states to calm the sectarian bloodshed. This process may now be under way but in a disorderly unpredictable manner.

This month a majority of the members of the Diyala provincial council announced that they were asking Iraq’s central government to hold a referendum on whether the province could form its own semiautonomous region. Diyala is roughly 60 percent Sunni, 20 percent Shiite and 20 percent Kurdish. Shiites and Kurds are strongly opposed as they fear that a Sunni majority would waste no time in putting them at the mercy of unknown new security forces. They fear a new fragmentation of Iraq.

In an effort to hold Iraq together Prime Minister Maliki appears willing to use the same strong arm tactics that Saddam Hussein used to glue the religiously and culturally fragmented Iraq together.

The prospect of another civil war in Iraq is high. When President Obama recently praised American troops and American policy makers for leaving behind a “stable and prosperous” Iraq he was speaking of a dream, not of reality.

Shiite and Sunni Animosity has Festered for Over 1300 Years

There is a real and frightening possibility that renewed conflict between Shiites and Sunnis in Iraq spreads to and envelops the entire region. Animosity between the two religious groups has been festering for over 1300 years and could explode into extended violence at any time.

One consequence of an American and or Israeli attack on Shiite dominated Iran is that Iran would immediately attack Sunni dominated America ally Saudi Arabia. One result of such an attack would be that crude oil prices would skyrocket to $200 a barrel or more and crater the world’s petroleum dependent economy.

While Saddam Hussein was a despicable tyrant since the defeat in his war against Kuwait his atrocities were pretty well contained within Iraq. The consequences of his removal from power are still spreading in the Middle East. Without strong glue to hold Iraq together religious conflict could spread throughout the region causing a catastrophe for the entire world.

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The forced departure of the Americans from Iraq left behind a country that President Obama described as “stable and self-reliant.” Surely he is not serious. Or is the leader of the free world delusional?

After Nearly Nine Years of War American Troops Kicked Out of Iraq

Let’s be honest. I say forced departure because that’s what it was. After nearly 9 years of a war of choice initiated by the Americans Iraq refused to sign a Status of Forces agreement which would have covered a continued occupation by American troops. The American president had no choice but to withdraw American troops rather than have them become subject to Iraqi law. No American president could take the heat of allowing American troops to be charged for violations of Iraqi law, imprisoned in Iraqi prisons, probably tortured and coerced, and eventually be brought to trial in Iraqi courts.

So basically, except for troops and personnel needed to staff and defend the huge American Embassy in Baghdad American troops were forced to leave Iraq, declaring victory all the way, in spite of leaving behind a shattered country with a dysfunctional political system.

In the spirit of American exceptionalism and creative spin, President Obama welcomed the last troops to leave Iraq home while declaring a great victory. Given current events it’s hard to see how even a calloused and narcissistic self serving politician could describe Iraq as stable and self-reliant without choking on his own words.

The reality is that the rivalry between Shiite, Sunni, and Kurdish leaders is already at the boiling point with the American withdrawal of combat troops complete. In a 90-minute news conference aired on state television, Mr. Maliki, the Shiite Prime Minister, defied his rivals and pushed back on all fronts in Iraq’s burgeoning political crisis, threatening to release investigatory files that he claimed show his opponents are and have been involved in terrorism.

Prime Minister Maliki Seems Determined to Waste No Time in Consolidating Shiite Power

Mr. Maliki has accused the Sunni Vice President Tariq al-Hashemi, who fled to the semi-autonomous Kurdish region in recent days to escape an arrest warrant, on charges he ran a death squad responsible for assassinations and bombings. Mr. Maliki has wasted no time in attempting to consolidate his power and threatened on Wednesday to abandon an American-backed power sharing government created a year ago.

While so far Shiite, Sunni, and Kurdish militias have not started openly shooting at each other that day may be not too far away. The outlook for Iraq is for anything other than stable and self-reliant. Even President Obama should be embarrassed to use such terms in describing the mess that the US has left behind in Iraq.

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A Greece Default in 2012 Almost Certain

Greece is flat out broke and out of time. It will most probably fail to pay its $20bn debt bill from November through January causing a default. In the last week of December, 2011 Greece has $8.9 billion of debt due. It is unlikely that Greece will be able to make this payment and that a default could occur as early as January 2012.

Will Your Investments be Safe When Greece Defaults?

The big question for individual investors is what will a Greece default on sovereign debt mean to them? Will a Greek, German, or United Kingdom investor take a huge hit, but an American investor be safe?

The answer to that question is not as straightforward as you might imagine. The entire effort on the part of euro zone members to keep Greece from defaulting is a huge scam. Other than Greece euro zone members, especially France and Germany, are not so much interested in what happens to Greece and the Greek population in the event of a default but what would happen to their nation’s banks, many who are holding significant amount of Greek sovereign debt.

A significant amount of the bailout money advanced to Greece does not at all help the Greek economy. As much as 80% of the funds are recycled back to banks within the euro zone as payments to the banks who over the years have rather foolishly lent Greece many billions of loans denominated in euros. Thus a Greek default will be extremely costly to European banks. The efforts by euro zone politicians to prevent a Greek default amounts to yet another back door bank bailout.

American Banks Have Huge Exposure to European Banking Problems

In a connected world there is a real danger to America investors when Greece defaults. Estimates vary, but American banks may have as much as $4 trillion in exposure to European banks who are holding Greek sovereign debt. Many of these banks will likely fail given a Greek default and American banks who have exposure to them as counterparties will also be devastated.

Should a Greek default occur and Greece pulls out of the euro and reverts to the drachma as its currency there would likely be a massive financial panic in world financial markets. The drachma would immediately plunge in value.Investors holding debts denominated in Euros that overnight become denominated in drachmas would suffer huge losses.

Deposits held in Greek banks in euros would be converted into drachmas with a huge loss in purchasing power. As the public panics there would be tremendous bank runs around the world, especially in Europe and America. Likely, a number of nations would impose currency controls, which would only add to the panic.

An interesting article with the title “Greek default within the euro is the only real option” by Robert Jenkins was posted in the Financial Times on November 7, 2011. The article explains why when Greece defaults it is so important that they do so while remaining in the euro zone. If a Greek default causes the breakup of the euro zone then more than likely a financial Armageddon will occur that will make the 2008-2009 financial crises seem like a picnic on a lovely spring day.

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U.S. lawmakers investigating the collapse and bankruptcy of futures brokerage MF Global showed frustration with MF Global’s leaders about what happened to hundreds of millions of dollars in missing customer funds. The trustee for MF Global believes that as much as $1.2 billion in funds that were supposed to be held in customer segregated accounts is still missing.

Will the “I Know Nothing” Defense Hold Up For Key MF Global Executives?

The three executives appearing this week before a congressional committee are CEO Jon Corzine, Chief Operating Officer Bradley Abelow and Chief Financial Officer Henri Steenkamp. All three men are sophisticated financial industry veterans. It really is unbelievable that none of the three profess to knowing anything at all about such a large amount of missing customer segregated funds.

Jon Corzine is an experienced financial executive and trader who is extremely well-connected. He served as the Managing Director of Goldman Sachs, served as a US Senator from New Jersey, and as the Governor of New Jersey. Bradley Abelow is a close associate of Mr. Corzine, having served as his Chief of Staff while Corzine was new Jerseys Gov. as well as formerly being a partner at Goldman Sachs. Henri Steenkamp is only 35 years old and was considered a rising star in the financial industry having become the chief financial officer of MF Global at such a young age.

Customer Segregated Funds Are a Key Selling Point Used by Commodity Brokerage Firms

The co-mingling of customer segregated funds with company operating funds is a big deal in the securities and commodities industries. It is a misuse of customer funds that is absolutely prohibited and unlawful. It would seem that only Jon Corzine’s formidable connections are the only thing keeping all three men from eventually receiving prison sentences.

Even if the top three financial executives at MF Global knew nothing of the apparently co-mingling of funds they should have known. While their attorneys have certainly instructed them to offer up a know nothing defense that defense lacks any semblance of truthfulness.

Jon Corzine was known as an aggressive risk taker who was heavily involved in proprietary trading operations at MF Global. He was known as a hands on manager who more often than not would be the first one in the office in the morning and the last one to leave at night. Occasionally, he was even known to stay in the office overnight overseeing trading operations in overseas markets. It is highly unlikely that such a man would not know the whereabouts of $1.2 billion in funds.

This is only speculation but I expect that the last thing in the world that Mr.Corzine wanted was to use customer funds to support MF Global as its financial crises deepened. Probably verbal instructions were given to some functionary in the accounting department to use any available funds to meet margin calls issued by MF Global counterparties. As the in-house financial crises became increasingly critical more vague instructions were probably given the firm’s accounting department to use any available funds to keep the firm afloat.

The process reminds me of a quote supposedly made by Ernest Hemingway when he was asked how a rich man becomes broke. His reply was that “at first slowly, and then all at once”. John Corzine probably knew that segregated funds were being used to support the firm but always thought that if he could keep the firm alive that the funds would be be replaced without damage to anyone. Unfortunately, near the end MF Global became insolvent so quickly the firm’s executives were likely all in a daze.

Probably, there was no preplanned criminal intent to use customer funds to support MF Global. However, as the crises developed more and more of the funds were used until near the end whatever funds were available anywhere in the company were flushed down the blackhole of increased margin calls and requests for customer redemptions from accounts.

Again, the content of the previous three paragraphs are only speculation. I have no inside knowledge of actual events that occurred at MF Global. However, as Chief Executive Officer Jon Corzine must bear the responsibility for the missing customer funds. The use of customers segregated funds is a serious blow to the entire commodities future industry as well as to the stock and bond brokerage industry.

One has to wonder in what is a tough operating environment how many other MF Global like situations there may be out there. Customer confidence in the integrity of their brokerage firms and the safety of their margin deposits has to be shaken.

There is Really No Excuse for Jon Corzine. He Was MF Global’s CEO and No Dummy

The Jon Corzine investigation is a test for the American justice system as well as for the regulators like the CFTC and the SEC. If Mr. Corzine walks away from the MF Global disaster without serving a day of jail time it would likely only be because of his juice through powerful connections and will be an indictment of the unfairness of the American legal system.

Mere mortal men who mix customer segregated funds with operating funds of their enterprises would almost surely receive stiff prison terms for violating the trust of their customers as well as for clearly breaking the law. While hopefully under American law a person is still considered innocent until proven guilty the evidence in the MF Global case appears to scream that there is enough evidence of wrongdoing so that an indictment will be served. A trial to determine guilt or innocence should be in Jon Corzine’s immediate future.

But then as already noted the man has juice. Probably he will not serve one day of jail time even though the failure of MF Global strikes yet another serious blow at the American financial system.

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