The S&P 500 is headed for its biggest annual decline since the Great Depression, when it fell 47 percent in 1931.

``The final low will be much lower than this,'' and may not occur before the fourth quarter of next year, de Graaf said.

At a minimum, stocks are likely to revisit their lowest levels of 2002 and 2003, when a 51 percent slide from the March 2000 peak sent the S&P 500 as low as 768.63, said Mary Ann Bartels, chief market analyst at Merrill Lynch & Co. in New York.

The S&P 500 is likely to fall to around 680, 20 percent lower than yesterday's close, probably by the end of the year, said John Roque, senior technical analyst for New York-based brokerage Natixis Bleichroeder Inc.

This isn't the bottom

This is an excellent analysis of the situation that Petraeus confronts in Afghanistan and Pakistan. The original article at Japan Focus includes hyperlinks to all of the quoted material, as well as photographs and annotated maps of the region. The author, China Hand, runs the China Matters blog.

All parties agreed that the only solution to Afghanistan's conflict is through dialogue, not fighting.

It appears that the key job before General Petraeus will be to co-opt the regional impetus toward a negotiated settlement, prevent Saudi Arabia from mid-wifing a power-sharing arrangement favorable to the Taliban, assert American control and direction over the process to assure America's continued presence at the center of Afghan's security equation, and spike the loose cannons that threaten his plan.

First, from 1973:

The Art of Fighting Without Fighting

Now, some selections from the archive.

Steve Coll, from 2004:

If at first you don't succeed, at least learn from your mistakes.

Google's Eric Schmidt:

Failure is an essential part of the process.

NYT's Eric Schmitt, from May 2006:

"I'm more concerned in the long term about the results of the drug war in Afghanistan than I am about resurgent Taliban," said the NATO military commander. The government and its NATO allies have not lost the people yet, officials say. But it is getting close to that.

Carlotta Gall, reporting after the late 2006 peace deal:

Javed Iqbal, the newly appointed Pakistani secretary of the tribal areas, defended the North Waziristan accord:

"We have tried the coercive tactic, we did not achieve much. So what do you do? Engage."

Steve Coll, reporting shortly after Bhutto's death (also, audio):

I asked if the local Taliban played favorites at election time. “The Taliban have no part in politics,” Paracha answered emphatically. “They are totally against democracy and the ballot. They will decide everything under the Holy Koran or with the bullet.”

General Rashid Qureshi, Musharraf’s spokesman, said the notion that Pakistan might support the Taliban was “a ridiculous argument, really. We have lost over a tho... [ Read More (0.3k in body) ]

'We're not going to win this war'

It was in St. Paul last week that Palin drew raucous cheers when she delivered this put-down of Obama: "Al-Qaeda terrorists still plot to inflict catastrophic harm on America and he's worried that someone won't read them their rights."

But Obama, who taught constitutional law at the University of Chicago for more than a decade, said captured suspects deserve to file writs of habeus corpus.

Calling it "the foundation of Anglo-American law," he said the principle "says very simply: If the government grabs you, then you have the right to at least ask, 'Why was I grabbed?' And say, 'Maybe you've got the wrong person.'"

"The reason that you have this principle is not to be soft on terrorism. It's because that's who we are. That's what we're protecting."

Palin's quip was troubling; I'm pleased to see Obama call her on it, but I don't expect her to seriously engage the subject. It was a throwaway line for her.

Here are two threads on the subject from earlier this year:

Benjamin Wittes’ Law and the Long War is required reading for anyone interested in the legal challenges posed by the war on terror.

Six years after the September 11 attacks, America is losing a crucial front in the ongoing war on terror. It is losing not to Al Qaeda but to its own failure to construct a set of laws that will protect the American people—its military and executive branch, as well as its citizens—in the midst of a conflict unlike any it has faced in the past.

Obama to Palin: 'Don't Mock the Constitution'

We are a lost generation, desperately clinging to anything that feels real, but too afraid to become it ourselves. We are a defeated generation, resigned to the hypocrisy of those before us, who once sang songs of rebellion and now sell them back to us. We are the last generation, a culmination of all previous things, destroyed by the vapidity that surrounds us. The hipster represents the end of Western civilization – a culture so detached and disconnected that it has stopped giving birth to anything new.

From the archive:

I was surprised to find out during a campus visits with my son that the '80s are now a big nostalgia craze for college students. To those of us who lived it, it's as weird as nostalgia for polio.

The end of western civilization

The eXile, the Moscow-based alternative paper founded by Mark Ames and Matt Taibbi — and which has been home these past few years to occasional TAC contributor Gary Brecher, the War Nerd — has been shut down by Russian authorities.

The American Conservative -- Save the War Nerd

"The best test of truth is the power of the thought to get itself accepted in the competition of the market," wrote Justice Oliver Wendell Holmes in his 1919 dissent in Abrams v. United States, which eventually formed the basis for modern First Amendment law.

"Canadians do not have a cast-iron stomach for offensive speech," said Jason Gratl, a lawyer for the British Columbia Civil Liberties Association. "We don't subscribe to a marketplace of ideas."

"Western governments are becoming increasingly comfortable with the regulation of opinion. The First Amendment really does distinguish the U.S., not just from Canada but from the rest of the Western world."

What much of West bans is protected in US

Now you can see what gas prices are around the country at a glance. Areas are color coded according to their price for the average price for regular unleaded gasoline.

USA National Gas Temperature Map

The presidential campaign has gone on for so long that it feels like one of those bad dreams in which you run in slow motion but never get anywhere.

There will be blood.

From the archive:

I was describing this to a friend over lunch in Palo Alto. As I was describing this the waiter came up behind me to take our order. I was in the middle of saying "it's very hard to enter the rectum, but once you do things move much faster", only to hear the waiter gasp. Whoops. I tried to explain saying "well, this is about" but with a horrified look he said "I do NOT want to know what this is about! Some people are just not interested in natural history, I guess.

A war born in spin has now reached its Lewis Carroll period. (“Now here, you see, it takes all the running you can do, to keep in the same place.”)

People say to me, "Whatever it takes." I tell them, It's going to take everything.

I've come to the conclusion that you actually want shifty, dishonest politicians elected by an apathetic populace. This means that things are working.

There are two reasons that people act: Carrots and Sticks. Lowering the barrier to entry might be a carrot, but the sticks are much more effective and come when the political situation makes it impossible for people to go about their lives without acting.

I'm confident that technology has improved the resources available to people if/when they choose to act. So far they don't need to, largely. Don't wish for times when they do. When people are involved and committed and political leaders are honest and have clear vision; that usually happens when things are really, really fucked up. Who are the U.S. Presidents we most admire? What was going on during their presidencies?

Eloquence is a sign of interesting times.

The Next Administration's Economy

To demonstrate why using fingerprints to secure passports is a bad idea, the German hacker group Chaos Computer Club has published what it says is the fingerprint of Wolfgang Schauble, Germany's interior minister.

According to CCC, the print of Schauble's index finger was lifted from a water glass that he used during a panel discussion that he participated in last year at a German university. CCC published the print on a piece of plastic inside 4,000 copies of its magazine Die Datenschleuder that readers can use to impersonate the minister to biometric readers.

Good Job!

Hackers Publish German Minister's Fingerprint | Threat Level from Wired.com

The crisis will only end when house prices stop falling and banks stop racking up huge losses on their loans. Doing that, however, will require the US government to intervene directly in the real estate market to end the wave of foreclosures. Ideologically, it is ill-equipped to take that step and, as a result, property prices will fall and the financial meltdown will go on and on.

Business, of course, needs consumers to carry on spending in order to make money, so a way had to be found to persuade households to do their patriotic duty. The method chosen was simple. Whip up a colossal housing bubble, convince consumers that it makes sense to borrow money against the rising value of their homes to supplement their meagre real wage growth and watch the profits roll in.

As they did - for a while. Now it's payback time and the mood could get very ugly. Americans, to put it bluntly, have been conned.

In the longer term, lessons must be learnt from the turmoil. One is that you don't solve the problems of a collapsing bubble by blowing up another, which is what Alan Greenspan did after the dotcom fiasco in 2001 - the most irresponsible behaviour of any central banker in living memory.

From the archive:

The belief that corporate power is the unique source of our problems is not the only idol we are subject to. There is an idol even in the language we use to account for our problems.

... Perhaps the most powerful way in which we conspire against ourselves is the simple fact that we have jobs. We are willingly part of a world designed for the convenience of what Shakespeare called "the visible God": money. When I say we have jobs, I mean that we find in them our home, our sense of being grounded in the world, grounded in a vast social and economic order. It is a spectacularly complex, even breathtaking, order, and it has two enormous and related problems. First, it seems to be largely responsible for the destruction of the natural world. Second, it has the strong tendency to reduce the human beings inhabiting it to two functions, working and consuming. It tends to hollow us out.

From last summer:

How far do housing prices have to fall before a slump becomes a bust?

If the pessimists are right that there’s more to come, look out. A 10 percent decline in prices is likely to feel pretty awful. And then everyone might agree on what a housing bust is.

From January:

Because all asset hyperinflations revert to the mean, we can expect housing prices to decline roughly 38 percent from their peak.

America was conned - who will pay?