Another "Sucker's Rally"

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March 17, 2009

SouthAmerica: On top of all the other bad economic and financial news the coming US dollar meltdown is also already on the pipeline and Warren Buffet uses a perfect term to describe such an event: he says they are turning that currency into CONFETTI.

Here is an article published on tomorrow's Asian Times about this subject.


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Asia Times Online
Mar 18, 2009

DOLLAR CRISIS IN THE MAKING,
By W Joseph Stroupe
This article concludes a three-part report.

PART 1: Before the stampede
PART 2: The not-so-safe haven

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Part 3: China inoculates itself against the US dollar collapse

There is mounting evidence that China's central bank is undertaking the process of divesting itself of longer-dated US Treasuries in favor of shorter-dated ones.

There is also mounting evidence that China's increasingly energetic new campaign of capitalizing on the global crisis by making resource buys across the globe may be (1) helping its central bank to decrease exposure to the dollar, while (2) simultaneously positioning China to make much greater profit on its investment of its reserves into hard assets whose prices are now greatly beaten down, while (3) also affording it greatly increased control of strategic resources and the geopolitical clout that goes with it. This is turning out to be a win-win-win situation for China as it capitalizes upon the important opportunities afforded it by the present global crisis.

The exact size and the precise composition of China's huge forex reserves, the exact degree of China's exposure to the dollar and its viable options, if any, in decreasing that exposure are matters of intense interest, because China's policies in this regard could have gargantuan implications for the US and the global financial systems and for the dollar.

One of the foremost experts who continues to research and track these matters is the highly respected Brad W Setser, a Fellow for Geo-economics at the prestigious Council on Foreign Relations in New York. His work is providing significantly deeper insight into the size and composition of China's reserves and is affording the world a better view of that country's options in managing its reserves going forward and what the implications of those options might be.

Another expert whose ongoing work is also adding very important, deeper insight into such matters is the highly respected Rachel Ziemba, lead analyst on China and the oil exporting economies at the prestigious RGE Monitor, founded by Nouriel Roubini.

Drawing on the work of these two experts, let's examine the matter of the likely size and composition of China's forex reserves and its investment options going forward, and the probable implications of those options for the dollar.

The first issue is to determine the actual size of China's foreign exchange reserves. Its central bank officially confirms the current figure of about US$1.95 trillion. However, Setser's work reveals that China's actual reserves are significantly higher and may actually be as high as $2.4 trillion, according to his latest figures [1]. About $2.2 trillion of this total figure is easily identifiable, according to Setser, with the remaining $200 billion being his estimate of the amount currently held in China's state banks.

As for the issue of the composition of these reserves and its total exposure to the dollar, the most recent Treasury International Capital (TIC) report by the US Treasury has China's holdings of Treasuries at $696 billion as of the end of 2008. However, Setser's research indicates China's total holdings of US Treasuries is likely to be more than that figure, since some of the purchases of Treasuries by the UK and Hong Kong should actually be attributed to China's central bank. China also holds US government-sponsored agency debt (Fannie Mae and Freddie Mac paper) and corporate bonds, but the recent TIC reports indicate its central bank has been steadily divesting itself of these assets in favor of short-dated Treasuries.

As for China's purchases of Treasuries over the most recent three months (October - December of 2008), note this statement from Setser:

And over the past three months, almost all the growth in China's Treasury portfolio has come from its rapidly growing holdings of short-term bills not from purchases of longer-term notes.

Setser goes on to make the point that China's central bank is unquestionably divesting itself of the comparatively less-safe assets such as agency debt in favor of very short-dated Treasuries. The best estimates of the total exposure of China's central bank to dollar-denominated assets of all kinds is about 70%, or somewhere between $1.5 trillion and $1.7 trillion depending upon whether you use the $2.2 trillion figure or the $2.4 trillion figure for the total sum of China's reserves.

That uncomfortably high level of exposure to the dollar is what has been causing concern to flare in China most recently. A much more desirable figure, from China's standpoint, of its total exposure to the dollar would be 50% or less of its total reserves. A reserve composition of 50% dollars to 50% everything else is much safer because an excessive decline in the value of the dollar would tend to be offset by corresponding increases against the dollar in the value of the non-dollar assets comprising the rest of the reserves.

In order to get to that more desirable composition fairly quickly over the next several months, China would have to somehow divest itself of as much as $450 billion of its existing dollar-denominated assets, not purchase a significant amount of new dollar-denominated assets, and accomplish all this without triggering a global dollar panic. That's a very tall order indeed - but it is not by any means impossible. How so?

If we stand back to look at Setser's work from a distance, we see what appears to be a clear strategy on China's part that is potentially very compelling. The country has its official reserves, which it acknowledges now total about $1.95 trillion, and it also has its unofficial or secret reserves, which Setser estimates at about $450 billion at present.

Coincidentally (or perhaps not merely coincidentally) the secret reserves total about the same sum that China needs to divest itself of in order to reach the desired composition of its reserves noted in the previous paragraph - about $450 billion. At this point, recall the intriguing and potentially very important statement quoted earlier (see DOLLAR CRISIS IN THE MAKING, Part 2), a statement made by Fang Shangpu, deputy director of the State Administration of Foreign Exchange and reported by the Xinhua News Agency on February 18, 2009:

Fang Shangpu, deputy director of the State Administration of Foreign Exchange, noted Wednesday that the report released by the US Treasury of the amount of government bonds held by China included not only the investment from the reserves, but also from other financial institutions. It might be a hint that Chinese government is not holding as much US government bonds.

China is managing its foreign exchange reserves with a long-term and strategic view, Fang told a press briefing. "Whether China is to purchase, and to buy how much of the US government bonds will be decided according to China's need," Fang said. "We will make judgment based on the principle of ensuring safety and the value of the reserves," Fang said.

Is Fang Shangpu hinting that China has intentionally, as a deliberate strategy, divided its reserves into two general holdings, official and secret, and that SAFE (the State Administration of Foreign Exchange) has ensured that the composition of the official (government) holdings of the $1.95 trillion is such that its exposure to the dollar is not the roughly 70% assumed in the West, but rather something much closer to the desired target of 50%, while the secret reserves hold predominantly dollar-denominated assets?

If this is the case, then China could employ a number of schemes to clandestinely further reduce its total exposure to the dollar, using its secret reserves, all the while maintaining safety for the official reserves. Note Fang Shangpu's recent statement to the Wall Street Journal regarding how carefully, and with what foresight, China manages its reserve holdings:

"Since the subprime crisis evolved into the international financial crisis in September last year, we have executed the central authorities' plans to cope with the international financial crisis and launched the emergency response mechanism. We have closely followed developments, made timely adjustments to risk management, taken decisive and forward-looking measures to evaluate and remove risks ... "

Chinese officials have been painfully aware, for several years now, of the increasing risks of too great an exposure to the dollar. It simply isn't believable that their level of prudence and foresight in this regard was so low as to allow them to fail to formulate and execute strategies designed to limit that exposure to safer levels than is presently assumed in the West. But if China has indeed prudently and deliberately structured its official reserves (now totaling $1.95 trillion) to be much less exposed to the dollar than is assumed in the West, while off-loading the riskier, dollar-denominated assets into its secret reserves, how might it propose to use those secret reserves to further decrease its exposure to the dollar?

Conversion into resource reserves

Enter China's resource buys. Several Chinese experts have been saying that China needs to spend a significant portion of its dollar-denominated reserves on hard assets, thereby further reducing its exposure to the dollar. It certainly appears that China is embarking upon just such a strategy.

Part 1 of 2
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Part 2 of 2


According to research by Rachel Ziemba of RGE Monitor, in the first two months of 2009 alone China has already confirmed such deals for hard assets worth a total of over $50 billion [2]. Clearly, China is just now opening its global strategy of pursuing such resource buys at a time when the prices of hard assets are extremely attractive and many more such buys are in the offing. This is made evident by the recent February 23, 2009 report by China Daily which stated the following:

As part of the National Energy Administration's three-year plan for the oil and gas industry, the government is considering setting up a fund to support firms in their pursuit of foreign mergers and acquisitions, the report said.

Fang Shangpu, deputy director of SAFE, the State Administration of Foreign Exchange, said earlier this week that more measures will be introduced to support firms seeking to expand overseas.

Veteran analyst Han Xiaoping said the time is now ripe for China to convert some of its capital reserves into resource reserves, as global oil prices have fallen 70% since last year, to about $40 a barrel.

"We shouldn't miss this opportunity to use our foreign exchange reserves to build up our oil stocks," he said.

Jiang Jiemin, chairman of PetroChina, said recently: "The low share prices of some global resource companies provide us with some fresh opportunities."

RGE Monitor's Ziemba says the resource buys are a smart move now because they decrease the role of increasingly uncertain financial assets such as Treasuries, which now carry little profit appeal and diminishing appeal as safe stores of wealth, and increase the role of hard assets, which now carry an ever greater profit potential and a mounting appeal as safe stores of wealth: "For China, these investments seem to be a relatively efficient way to use its financial resources given the likely long-term appreciation of resource prices and uncertainty about financial assets."

Ziemba, in response to questions e-mailed to her, also alerts us to watch for forthcoming details about the currencies employed in China's resource buys. If these deals are being transacted largely in dollars, then she notes that there will likely be no negative near-term effect upon the dollar's role as the world's reserve currency. But if they are arranged outside of the dollar, it might well serve to undermine the dollar's international role to some extent.

However, it should be noted that almost no matter what currencies these resource buys are being transacted in, there does exist a potential negative impact for the dollar itself further down this path. How so?

Obviously, with China's uncomfortably large present exposure to the dollar, it is in its interests to concentrate on converting much of the dollar-denominated portion of its secret reserves into resources reserves. In other words, China will undoubtedly spend dollars, whether directly or indirectly, to fund its resource buys. But it must do so in a largely opaque manner that leaves little, if any trace in official data such as the US Treasury's TIC report. It will also be likely to be a net buyer of Treasuries, though nowhere near its 2008 pace, or else refrain from selling significant amounts of Treasuries, while it clandestinely reduces its exposure to the dollar. Otherwise, its actions could spark a dollar panic.

Increased buying of Treasuries by US citizens and investors, and by various foreign investors other than China, as the global crisis rapidly deepens and increases risk aversion, may likely take significant pressure off of China to soak up the huge issuance of new sovereign US debt now getting underway. That will help to provide breathing room for China to address its problem of reducing exposure to the dollar.

Whether China will approach the problem with a scheme of swaps amongst its various state-controlled entities and wealthy private Chinese investors, or by some other nearly opaque means, probably cannot be determined with any certainty at present. But it has undoubtedly worked out the problem of clandestinely converting significant sums of its dollar-denominated financial assets into hard assets without dumping Treasuries and triggering a dollar panic.

It is most unlikely, therefore, that its actions in this regard will be sufficiently proved before it has already succeeded in accomplishing its goals. Furthermore, since resource prices are now very attractive, China will certainly expand and accelerate its resource buys while prices remain attractive, converting ever-larger sums of its dollar-denominated reserves into resource reserves.

If China averaged a conversion of only $35 billion per month from dollars into resources, it could convert the entire $450 billion in little more than 12 months' time. Hence, I predict that the next eight to 15 months will provide China with sufficient time to bring its total exposure to the dollar much more in line with its strategic goals.

What about the problem of dealing with any ongoing accumulation of dollars? A number of analysts note that China's trade surplus is worsening even in the global slowdown because, while China's exports are falling, its imports are falling much faster. However, Chinese officials have made clear that they will use their reserve holdings to bolster imports, and that measure should alleviate China's need to accumulate large sums of dollars and other currencies in order to keep the yuan stable.

China is extremely unlikely, therefore, to accumulate dollars at anywhere near the rate at which it did in 2008. China is also funding its domestic stimulus package designed to spur domestic consumption. All these measures denote a much wiser use of its huge reserves and a steadily decreasing focus on the dollar. All in all, China looks set to weather the storm quite well in spite of some significant hardships along the way.

Summarizing the escalating risks of a dollar crisis

The bubble in US Treasuries is getting increasingly massive and unstable with each week that passes. Deepening global risk aversion is keeping investors lined up, so far, to buy Treasuries - especially short-dated ones. And the deepening economic crisis in the US is moving its own citizens to join in the buying spree.

If the Treasuries bubble persists for much longer, and especially if it continues to mount, the massive and dangerous distortions in the global financial system and the Treasuries-induced strangulation of its credit markets will only become more severe, likely leading to a meltdown somewhere in the emerging markets, one of whose effects will almost certainly spread to engulf the severely weakened Western European and US financial sectors and plunge particularly the US economy into a deep depression, with potent negative effects upon the dollar.

Such an eventuality will tend to force global investors to evaluate the safe-haven appeal of the dollar based much more on the fundamentals of the US economy, and that will portend a stampede out of the dollar and a potentially chaotic bursting of the massive Treasuries bubble. Hence, even if the US finds buyers for its huge sums of new sovereign debt now beginning to flood the markets, the picture does not look good for the dollar beyond the short term.

Obviously, if the US reaches the point where it fails to find sufficient buyers for its new flood of Treasuries, that will also become a perilous situation for the dollar and for the huge Treasuries bubble, which will almost certainly burst as global investors seek better stores of wealth in hard assets, following the lead of China's central bank.

Either way, the US is engaged in the implementation of extremely risky and potent inflationary, dollar-debasing policies, making a loss of global confidence in the dollar in the short to medium term a virtual certainty. Even if the massive spending does restore economic growth, the US economy is likely to remain very weak for some time. That will make it extremely difficult for the US Federal Reserve to tighten monetary policy to fight off the inevitable and potent inflation that will result from today's shortsighted policies.

When the Fed attempts to tighten, the US economy will likely be plunged into a second-round recession or depression, with obviously awful effects upon the dollar. But if the Fed fails to tighten sufficiently and quickly, runaway inflation will ravage the currency anyway.

Prudent, forward-looking Chinese officials have clearly assessed the entire situation as one demanding careful but swift action to ensure that its huge reserves are not imperiled by what has obviously become an untenable global rush into an unstable and perilous dollar bubble.

Hence, China's central bank is enacting with a sense of urgency prudent measures, both explicit and clandestine, to significantly decrease exposure to the dollar. If the details of such measures should become sufficiently public and should attract undue global attention before China accomplishes its goals, a dollar panic might be triggered.

This risk, though perhaps not major, does exist nonetheless, and it is significantly increasing as China undertakes new measures that might attract undue and unwanted global attention. However, it is also likely that China will enjoy cover and gain breathing space to enact its prudent measures while much of the rest of the world continues to rush into the bubble.

Notes
1. See "China's Record Demand for Treasuries in 2008", by Brad Setser, The Council on Foreign Relations.
2. See "China's Resource Buys" by Rachel Ziemba, RGE Monitor.

W Joseph Stroupe is a strategic forecasting expert and editor of Global Events Magazine

Source: http://www.atimes.com/atimes/China_Business/KC18Cb01.html
 
I'm going to pose this question for like the hundredth time to those that keeping talking about hyperinflation and the dollar collapsing. These doomsday articles and posts by people seem to always conveniently ignore international correlations.

What piece of shit currency is going to all of a sudden appreciate hundreds of times against the dollar? The US is a mature market with a highly skilled workforce and a stable government. If the dollar started cratering, every company in the world would want to take advantage of the cheap skilled labor.

So again...what piece of shit currency is worthy of all of a sudden becoming super strong against the biggest importing country in the world?
 
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March 17, 2009

SouthAmerica: Reply to tradestrong

You are assuming that the rest of the world is stupid and that the international monetary system will go back to business as usual.

Keep in mind the US economic system has died a sudden death in 2008 and just God knows what kind of economic system we have today here in the United States.

The US government already has over $ 11 trillion dollars in cumulative outstanding debt and trillions more in some kind of US government guarantees. There is also the new liabilities that are associated with the baby boom generation that is coming due very fast to the tune of another $ 70 trillion dollars.

The US financial system is in shambles and the rest of the world is aware of that and they have learnt their lesson – and you can bet that every Central banker around the world is watching and adjusting the best way they can for the day of reckoning for the US dollar.

In the coming years the US government is going to run trillions and trillions of dollars in deficit expending and the value of the US dollar it will be turned into CONFETTI.

We are heading for the biggest international monetary crisis that the world has ever seen and that will mark the end of the line for an international monetary system based on the US dollar.

The way things are going right now very soon we will be able to trade the US dollar by the kg.

You can read about this subject at the following threads:


The US dollar and the biggest default in history
http://www.elitetrader.com/vb/showthread.php?s=&threadid=121313


The end of the line for an international monetary system based on the “US dollar”
http://www.elitetrader.com/vb/showthread.php?s=&threadid=137804


Central Banks and the US Dollar
http://www.elitetrader.com/vb/showthread.php?s=&threadid=81958


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To SouthAmerica....more doomsday propaganda and still not an answer to my question. For the US to experience hyperinflation, that would mean that virtually every other currency in the world would have to simultaneously appreciate against the dollar.

Again, since the US is the biggest importer in the world, tell me what other currency is going to all of a sudden experience such demand to appreciate when their primary export customer has cut them off?

Secondly, if you are a company, are you going to go to "South America" to do business when these miracle currencies have all of a sudden experienced this miracle appreciation against the dollar? Or are you going to go to perhaps the most stable government and skilled workforce in the world which all of a sudden is dirt cheap?

Your constant hypotheticals of the US's sudden collapse reek of propaganda and wishful thinking. Or do you believe that there is going to be some unbelievable monetary transformation where every country in the world gives up the sovereignty of their currency? If so...keep dreaming because that will never happen.

So again...instead of cutting and pasting doomsday articles, how about you stick out your neck and explain EXACTLY how this hyperinflation is going to occur?
 
Yup, it's bad out there, almost as bad as the Brazilian economy. Thanks for posting these long, useless articles southamerica. Now go have a banana monkey.
 
The economy is bad and getting worst. Every day more bad news. More layoffs, lower earnings, etc..... you name it, it is bad and getting worst by the day. Gloom and doom on every hand. When everyone says the sky is falling it is time to buy. There is nothing new in the stock market. History repeats itself.
 
Yawwn, who cares.....

Just make fucking money......or loose money.

And if you stack up your win's and the world falls apart buy land and oil, cows and chickens.
 
I think hyperinflation is unlikely,

but a scenrio like the 70's where you have strong inflation trends, and weak unemployment is very real.

Inflation is an expansion of the money supply and is irrespective of currencies vs currencies.

Some argue that inflation is a general rise in the price of goods. I prefer the Austrian Model.

However understand that as the money supply expands this inflationary but you may not see it reflected in the price of common goods because of the way money is created in a fiat system. Where money is first handled by the lenders there is a lag effect before it reflects itself in the general price of goods.

In the 70's we were forced to devalue the dollar 30% against world currencies, and went of the dollar standard, because we were running large deficits.

We are heavily dependent of debt to finance our current consumtption once interest rates begin to raise, this will kick of self perpetuating inflationary cycle.

1) Government is financing todays consumption with short term treasury's. This is very risky, as the rollovers will lead to higher and higher rates.

2) Foreign investors are already giving push back on debt levels, which means high rates to entice capital. Higher Cost of capital.

3) Commodities and raw materials are being cut tremendously and inventories are liquidated. When demand returns all indicators point to rapid price increases as demand will easily outstrip supply and it will be sometime before new production is brought online. There are no new mines, farms, being built right now.

4) Fiat currencies in out of themsleves are based on trust. Any lack of trust or confidence in the government that backs the currency will reflect in the currency itself.

5) It cannot be understand how are largest demographic is moving from being producers to outright consumers. Baby Boomers are moving into their least productive roles and will be an increasing strain on government services. More Debt.

All these factors combined will provide the tinder for inflationary wildfire.

Will this lead some collapse of the currency, and people bartering, and transacting in gold. Highly dubious.

But anyone who does not anticipate 10-15% annual inflation in the coming years is deluding themselves.

The debt most addressed and it is of such a size that expedient way is a devaluation of the currency
 
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March 18, 2009

SouthAmerica: Reply to Tradestrong

All I am saying is that we are very close to the end of the line for an international monetary system based on the “US dollar” as we have had in the last 60 years.

We are going to have the mother of all international monetary crisis in the near future and out of the ashes of the current international monetary system a new international monetary system will be born – a system more in line with the new economic world order of the 21st Century.

For all practical purposes the best days of the US economy is in the past and the future it does not look too promising.

In 2008 we saw the demise of the old capitalist economic system of the United States that had been around for a long time. Today I am not even sure what kind of new economic system has been adopted in the United States, but I know one thing for sure the old economic system has died and was buried in 2008.

Soon enough the rest of the world will realize that the United States that they knew is no longer around and at that point people will start reevaluating their relationship with the new United States and they will realize that it is time for getting out of the US dollar.

The safe heaven status of the US dollar will go up in smoke at the speed of light.

I am talking about a major event and turning point in the international monetary system – an international monetary crisis as never seen before and you are asking me to describe to you in advance how this massive international monetary crisis will play with the meltdown of the US dollar.

If countries such as Brazil, China and many others don’t change immediately their strategy regarding the US dollar then they deserve to be burned again and again and to be taken for a ride.

Today we have a massive oversupply of US dollars creating a very large BUBBLE of US dollars around the world. And you know what happens in any market after a bubble bust.


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“Trade Barriers Could Threaten Global Economy”
World Bank Finds Protectionist Trend
By Anthony Faiola
Washington Post Staff Writer
Wednesday, March 18, 2009; Page D01

At least 17 of the 20 major nations that vowed at a November summit to avoid protectionist steps that could spark a global trade war have violated that promise, with countries from Russia to the United States to China enacting measures aimed at limiting the flow of imported goods, according to a World Bank report unveiled yesterday.

The report underscores a "worrying" trend toward protectionism as countries rush to shield their ailing domestic industries during the global economic crisis. It comes one day after Mexico vowed to slap new restrictions on 90 U.S. products. That action is being taken in retaliation against Washington for canceling a program that allowed Mexican truck drivers the right to transport goods across the United States, illustrating the tit-for-tat responses that experts fear could grow in coming months.

The report comes ahead of an April 2 summit in London in which the heads of state from those 20 industrialized and developing economies will seek to shape a coordinated response to the economic crisis. Their inability to keep their November promises is another indication of how difficult it will be to implement any agreement reached next month on a global scale.

Protectionist measures may also sharply worsen the collapse of global trade, which the World Bank said is facing its steepest decline in 80 years as global demand dries up.

"Leaders must not heed the siren-song of protectionist fixes, whether for trade, stimulus packages or bailouts," said World Bank Group President Robert B. Zoellick. Noting that protectionism is widely viewed as having deepened and prolonged the Great Depression, he added "economic isolationism can lead to a negative spiral of events such as those we saw in the 1930s, which made a bad situation much, much worse."

The Bank said that, since last November, a host of nations has imposed a total of 47 measures that restrict trade at the expense of other countries. The most obvious trade restrictions -- raising tariffs, or taxes on imports -- represent only about a third of all measures taken. Some countries are taking a direct approach. Ecuador, for instance, has raised tariffs on more than 600 items. But most are taking more creative steps that fall into the gray area of what is considered legal under international trade law.

Argentina, for example, has put new licensing requirements on auto parts, textiles, televisions, toys, shoes and leather goods that create a new layer of bureaucracy for overseas exporters.

The European Union announced new export subsidies on butter, cheese and milk powder. China and India have increased the tax rebates for domestic exporters, seen by critics as providing a stealth subsidy that makes their products unfairly cheaper abroad.

Some measures, the report concludes, may distort global production for products like cars and trucks. National bailouts and subsidies proposed worldwide for the auto industry, the World Bank said, now total some $48 billion globally, with aid pouring out from governments including the United States, France, Canada, Germany, Britain, China, Argentina and Brazil.

That could prevent the natural readjustment of the industry, which many experts say is greatly overcapacity, allowing automakers to continue to produce more cars than consumers need.

The report noted that current trade laws, however, make it tougher for nations to take the more sweeping measures that triggered the trade wars of the 1930s. The era of globalization has made countries more interdependent than ever before, with supply chains for a single car made in China or a plane made in the United States now often relying on components manufactured in many other nations. That has led to a new measure of caution when putting up trade barriers. Additionally, global treaties have made it more difficult to enact draconian barriers.

Yet that does not mean nations are not finding ways to engage in what critics call protectionist policies. Some are pointing to provisions in the $410 billion spending bill signed by President Obama last week, which ended a pilot program allowing Mexican truckers to transport goods throughout the United States. The program had long been a target of U.S. unions, which have decried the North American Free Trade Agreement as robbing Americans of jobs, and the move to end the program was seen by critics as part of a trend in the U.S. Congress toward curbing years of open U.S. trade policy.

The fear, critics contend, is that actions like these could touch off countermeasures that could lead to broader trade wars. "I think the one thing that people forget is that at the end of the day, our failure to comply with NAFTA is going to result in the loss of more jobs here in America," said Sean Spicer, a official at the Office of the U.S. Trade Representative during the Bush administration. "There are consequences for this kind of action, and they tend to build upon each other and provoke more responses. Is that really the kind of path we want to go down?"

Source: http://www.washingtonpost.com/wp-dyn/content/article/2009/03/17/AR2009031703218.html

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