4-1-08 The Iraq Bubble

Bursting bubbles is the metaphor of the day. First, it was the stock market and then it was housing. Now, I fear, the Iraq war surge is about to explode all at once and nothing first just as bubbles do when they burst.

The consequences will be a real catastrophe for the Iraqi government, a success for Iran and an important determinant in John McCain's bid for the presidency.

A bubble, in economic terms, is high volume trading at prices that are well above intrinsic values. It takes a delusional denial of reality to continue to support such an economic overvaluation because bubbles are usually quite apparent to the impartial spectator. Bubbles grow ever larger. Finally, they burst when someone tries to collect the delusional value in the real world.

The model can also apply to politics. In political terms, a bubble would be the same irrational and delusional overvaluing but of some political capital, action or program.

President Bush and this administration have an explicit history of both an overvaluation of their economic and political assets as well as the necessary delusional irrationality. Economically they missed the housing bubble and politically they continue to claim there were weapons of mass destruction. The surge in Iraq perfectly fits the model of the overvaluation of an asset.

The surge, the insertion of five additional combat brigades a year ago, is being sold as a success because it has been associated with a significant reduction in the violence in Iraq, especially in Baghdad. The delusion has to do with the claim that the surge has strengthened the government of Prime Minister Nouri al- Maliki.

If, on the other hand, the reduction of violence is unrelated to the surge and the Maliki government is making no political progress then the surge has been grossly over blown and this bubble is close to bursting.

Last week Prine Minister Nouri al-Maliki made a frontal assault on the Mahdi Army, the militia of Muqtada al-Sadr in Basra. Maliki sent his entire army and police force south to take control of Basra in a real test of his military and political support.

President Bush called it "a bold decision" and "a defining moment in the history of a free Iraq."

The Mahdi Army stopped Maliki's troops cold not just in Basra but also in Baghdad and everywhere else. Five hundred of the government's police force even refused to fight. If it was a defining moment, it defined the Maliki government as unable to govern.

At the heart of this débâcle is the hard reality that the Maliki government has not made any progress in political accommodation with the Sunnis or the Kurds or even their fellow Shi'ites yet that was the whole rationale for the surge.

The Maliki failure and these first signs of the bursting of the bubble can be traced to Vice President Richard Cheney who is the staunchest believer and the most delusional member of this administration.

Cheney, with the president's blessing, went to Baghdad and told Maliki that he had to, for what are essentially domestic US political reasons, produce a show of strength in Basra against the Sadr-led Mahdi Army.

Nouri al-Maliki personally led the attack on the Mahdi Army with all the forces he had. The world quickly learned that the Iraqi government was not able to control Basra and the oil revenues that went with it or anything else outside the Green Zone. The government called in the promised American air support but that too was not enough.

A parliamentary delegation from five Shi'ite parties had to go to Iran and to the Quds Forces which we have designated a terrorist organization. The Iranian Revolutionary Guard brokered the appropriate concessions by al-Maliki to end the fighting. The Quds Force now calls the shots in Iraq. So much for general Patreaus and his surge.

Pity poor John McCain who made the surge a centerpiece of his presidential campaign.

America is going to pay a lot for the delusions of the past seven years. The Iraqis are going to pay even more.

The bursting of this bubble and the imminent collapse of our puppet regime put the Iranians firmly in control of the future of Iraq. We best get out of the way as the bubble pops and the Middle East goes into a chaos that we enabled.