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NightWatch 20111102


For the night of 2 November 2011

China: For the record. This summary is compiled from multiple accounts.

China has built a small space station in orbit, using unmanned space craft. The unmanned Shenzhou 8 craft, launched earlier this week, made contact with the Tiangong-1 space lab at 1729 GMT. The union occurred over China itself.

Tuesday's procedure (Beijing time 0029, Thursday) took place at an altitude of about 340km. It was automated but controlled on the ground by the Beijing Aerospace Flight Control Centre. The vehicles used radar and optical sensors to compute their proximity to each other and to guide their final approach and contact.

Next steps. After a joint flight of about 12 days, the vehicles will separate," explained Professor Yang Yuguang from the China Aerospace, Science and Industry Corporation. "Then the Shenzhou 8 will draw back to about 140m. After that they will perform a second docking.

Next they will orbit together for two days. Then they will be separated to about 5km; this will be a safe distance for both vehicles. Then the re-entry procedure will be performed by the Shenzhou 8 spaceship," Yang told China Central Television (CCTV).

The Chinese station masses about 60 tons compared to 400 tons for the international space station. This is a small, low budget operation, but it is very effective.

Comment: Chinese accomplishments in space are impressive by any measure. However, they are not innovative. The Chinese are following, possibly improving upon, a trail blazed by others. 

Pakistan: A local news service reported today that the Pakistan Army is planning measures to restrict Haqqani network movement along the Afghan border as part of an understanding reached with the United States, at least two senior security officials said.

Pakistan will do its part while coalition forces stop infiltration from across the border, a Pakistani military official said. The military will restrict all militant group movements as well as deny them space within Pakistan's borders.

Comment: What is striking is the contrast between US news reporting about the visit by a high-level US delegation and Pakistani reporting. The US media presented Secretary Clinton's visit as a thrashing, but the Pakistanis treated it as a negotiation.

The US media got swindled again. There is no breakthrough. The US asked for help with the withdrawal and the Pakistanis promised to do what they could to facilitate it. That is the significance of today's report and the Clinton delegation visit.

Iran-Israel: Iran is on "full alert" and ready to retaliate for any strike against the Islamic Republic, Iranian military officials warned Wednesday amid Israeli media speculation of plans for an attack.

"We consider any threat -- even those with low probability and distant -- as a definite threat," said General Hassan Firouzabadi, the armed forces' chief of staff. "We are ready to punish them." The United States also "will suffer serious damages should there be a military attack by the Zionist regime against Iran," the Iranian chief of staff warned.

Comment: The significance of this statement is that it represents feedback to the Israelis that their chest thumping and foot stomping is registering in Tehran. It also makes clear that if Israel ever attacks Iran, Iran will attack US installations in reach as well as Israel.

Syria: The Syrian government has accepted the Arab League peace plan, according to an Arab League statement on 2 November, after Arab League officials met in Cairo. The plan includes the release of prisoners, withdrawal of security forces from the streets and negotiations between the opposition and the Syrian government.

Syrian Representative to the Arab League Yousef Ahmad said the Arab League agreement stemmed from Syria's desire to reject violence and promote reform and a national dialogue, Syria's SANA reported. Ahmad said Syria was flexible and open to negotiations with the League because it believed the League was concerned with Syria's security and stability.

Comment: Other than the release of prisoners, the Arab League plan contains no provisions that the Syrian government has not offered to the opposition in its own right. The opposition has rejected at least three government offers of dialogue. Syria gets good press from its acceptance of the plan and shifts the burden of further progress to the opposition.

That shift represents a trap for the opposition. While the League supports Sunni Arab rights in Syria, it opposes violent overthrows of Arab governments, however deviant.

Israel: Israel today tested a ballistic missile from the Palmachim base," near Rishon LeZion, a military statement said. The missile reportedly was a variant of the Jericho which is capable of reaching Tehran and can carry a nuclear warhead.

Comment: Military officials assured the public that the test is the first in three years and has been planned for a long time. The reassurances did not restrain speculation about a unilateral Israeli attack against Iranian nuclear facilities.

While Israeli leaders have long warned that a military strike was an option, the public discourse on the subject was ignited over the weekend by a report in the Yediot Ahronot newspaper that said Prime Minister Benjamin Netanyahu and Defense Minister Ehud Barak favor an attack.

The fundamental rule is that Israeli agitation is part of the "tail wagging the dog" syndrome. The agitation is aimed at prompting the US to attack Iran, not Israel. In almost any imaginable scenario, Israel gets destroyed in a war with Iran, unless the US attacks Iran first or in tandem with Israel. 

Greece: Prime Minister Papandreou won the support of his Cabinet on 2 November to hold a referendum on the EU bailout. The date for the referendum is 4 December.

Papandreou told his Cabinet that the referendum outcome will provide a clear mandate and message inside and outside Greece about its commitment to Europe and the euro.

Comment: German Chancellor Merkel said the Greek referendum will be a vote on membership in the European Union.

Concerning the impact of the euro crisis, Feedback from a brilliant and well-informed reader provided the following: US banks are lying about their European exposure.

"Guarantees provided by US lenders on government, bank and corporate debt in five European countries - Greece, Portugal, Ireland, Spain and Italy -- rose by $80.7 billion to $518 billion, according to the Bank for International Settlements. Almost all of those are credit-default swaps (CDS), said two sources familiar with the numbers."

"The CDS holdings of US banks are almost three times as much as their $181 billion in direct lending to the five countries at the end of June, according to the most recent data available from BIS. Adding CDS raises the total risk to $767 billion, a 20 percent increase over six months, the data show."

NightWatch reported a month ago that US bank exposure to European sovereign debt posed a serious threat to the US financial system. The feedback report reveals the extent of exposure which is not generally known. Direct investment is less the problem than credit default swaps, which one analysis indicates are huge for the largest US banks.

For US banks this behavior repeats that during the sub-prime mortgage crisis in the US, except this time countries are at risk, not homeowners. At least five major US banks are vulnerable to the threat of European debt default. "We could have an "AIG" moment in Europe," said Peter Tchir, founder of TF Market Advisors, a New York-based research firm that focuses on European credit markets.

On 31 October MF Global Holdings filed for bankruptcy because of its losses on its $6.5 billion gamble on Italian bonds. If Italy falls, Europe, including France, will follow, according to one analysis.

End of NightWatch for 2 November.

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