Morning Brief: Here comes another $800 billion

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In yet another radical move, the U.S. Federal Reserve and the Treasury Department announced $800 billion in new financing Tuesday.

The first $600 billion, from the Fed, is going toward purchases of debt guaranteed by Fannie Mae, Freddie Mac, and other government-sponsored mortgage institutions.

With the second $200 billion, the Fed and the Treasury will provide support for securities related to credit-card debt, student loans, car loans, and small-business loans.

The news sent 30-year mortgage rates down to 5.5 percent, spurring a wave of refinancing.

"This is a win-win," Susan Wachter of the University of Pennsylvania's Wharton School told the Wall Street Journal. "It will directly increase demand for housing and help with the downward spiral in home prices."

According to the New York Times, however, "the program would do little to reduce the tidal wave of foreclosures" that is roiling the markets, because those foreclosures are mostly taking place among mortgages that aren't backed by Fannie Mae or Freddie Mac.

U.S. Presidential Transition

President-elect Barack Obama intends to keep Robert Gates as defense secretary, at least for now.

Former Fed Chairman Paul Volcker will likely be tapped to lead a new financial advisory panel.

Helene Cooper points out that the role of incoming Vice President Joe Biden remains largely undefined.


Thailand's powerful military is calling for new elections after anti-government protesters seized control of the airport. The government is resisting.

Sri Lanka's army expects to storm the headquarters of the Tamil Tigers soon.

Amid rapidly slowing growth, China's central bank slashed a key interest rate.

Middle East and Africa

Iran announced the test launch of a new rocket, the "Kavosh 2."

Libya is sending an aid ship to break Israel's blockade of Gaza.

Palestinian security forces are having some effect in Hebron.


Europe's attempts at fiscal stimulus are widely seen as too small to be effective.

The people of Greenland voted overwhelmingly in favor of increased autonomy from Denmark.

Political analysts see Russia's joint naval exercises with Venezuela as a challenge to Obama.

The mayor of Vladikavkaz, North Ossetia, was killed by unknown gunmen.

Today's Agenda

Amid tensions, the Iraqi parliament is expected to vote on the troop agreement with the United States.

President-elect Obama holds his third press conference of the week. President Bush will be pardoning the Thanksgiving turkey.

Photo: KAREN BLEIER/AFP/Getty Images


Will Obama push for Arab-Israeli peace?

Steve Clemons on the Gates reappointment:

My hunch is that Gates wants a chance to make the kind of leaps in the Middle East I have been writing about for some time. He wants to try and push Iran-US relations into a constructive direction. He wants to change the game in Afghanistan -- and the answer will not be a military-dominant strategy. He wants to try and stabilize Iraq in a negotiated, confidence building process that includes Saudi Arabia, Iran, Turkey and other regional forces. And he wants to support a big push on Israel-Palestine peace and reconfigure relations between much of the Arab League and Israel.

Most of these ideas, regardless of whether Gates really intends to implement them, are worth exploring. I really, wonder, though, about the viability of a "big push on Israel-Palestine peace" at this point.

It hasn't gotten a lot of coverage, but the Palestinian Authority is in huge trouble right now. Hamas insists that Mahmoud Abbas's term as president expires on Jan. 9. For his part, Abbas is threatening to call presidential and parliamentary elections, the latter of which Hamas would deem illegal.

It's a huge mess, making it hard to imagine Israel engaging in serious negotiations, much less allowing a failed state to set up shop next door. As peace process veteran Aaron David Miller bluntly puts it, "The dysfunction and confusion in Palestine make a conflict-ending agreement almost impossible."

None of this means there is no hope in the region. First, I would keep the parties negotiating, even if it doesn't seem likely to lead anywhere. That's likely to be Hillary Clinton's thinking as well. "When he had a process going that kept Israelis and Palestinians talking to each other, people didn't die," she told Jeffrey Goldberg in 2006, referring to her husband.

Second, if I were Barack Obama, I'd probe the Syrians to find out what their price is for making peace with the Israelis. If it seems doable, I'd start laying the groundwork so that once the new Israeli government is in place, direct talks could quickly follow with the United States, not Turkey, as a mediator.

Claims that getting the Syrians to stop supporting Hamas will cause the Palestians to be less radical are probably overblown -- if anything, the exiled political leadership in Damascus is more pragmatic than the guys in Gaza -- but a Syria-Israel peace deal has its own logic. Syria has foolishly spurned such opportunities before, but it's worth a shot.

UPDATE: Miller weighs in further today with an op-ed in the Washington Post. He stresses that "it would be folly to go for broke" on the Arab-Israeli question, though it's worth keeping negotiations and security and economic aid to the Palestinians going. But the Syria track, though certainly no cakewalk, is definitely the better bet in his view.