The American economy is now No. 2

...in terms of GDP, when compared to the Eurozone.

PARIS (Reuters) - The U.S. economy lost the title of "world's biggest" to the euro zone this week as the value of the dollar slumped in currency markets.

Taking the gross domestic product of both economies in 2007, the combined GDP of the 15 countries which use the euro overtook that of the United States when the European currency surged to a record high of more than $1.56 per euro.

"The curious outcome of breaching this latest milestone is that the size of the euro zone's annual output has now exceeded that of the U.S.," the economics department of Goldman Sachs, the Wall Street investment bank, said in a note to clients.

Taking official estimates of 2007 GDP -- $13,843,800 billion for the United States and 8,847,889.1 billion euros for the euro zone -- the economy of the latter passed the United States once converted into dollars, shortly after the euro topped $1.56.

Blame the falling dollar, if you must, but remember the dollar's fall is only a recognition of more deep-seated problems.

Defense guidance

The National Security Archive at GW has published to the web a set of declassified documents tracing the development of the 1992 "Regional Defense Strategy" which eventually served as a foundation for G.W. Bush foreign policy. For geeks like me with an interest in the process and politics of how this kind of planning is done, it's a good source for insight.

Tibet

The story in Tibet flared for a brief time, and left the news when the pictures stopped coming out. A precis of the events can be obtained from John McCreary's Nightwatch newsletter. A key section:

As in Burma and Cameroon, Chinese authorities tolerated the initial marches commemorating the anniversary of the uprising. This was the underreaction period. Unlike the Burmese and Cameroonian security authorities, the Chinese escalated to the over reaction phase at the first sign of disorder. The initial escalation by committing riot police failed to restore order. This is interesting because it indicates local analysts misjudged the gravity of the outrage.

The callout of the army including military convoys driving through the cities compensated for the earlier error of judgment. The situation is in solidly in overreaction and the protests will be suppressed because the Han Chinese have the monopoly of weapons and no outside help is coming for the Tibetans, from anywhere.

The brief Tibetan uprising is a world class loss of face for the commissars in Beijing who have worked mightily to craft China’s benign face to the world in the run up to the summer Olympics. Just when the Chinese want to show how modern, tolerant and civilized they have become, they fall back on the tools for population control prescribed by communist orthodoxy.

Some more photos:

Playing to tie

This fits with what I've seen elsewhere, as well as Freedman's recent analysis on Stratfor. I get it from the Security Framework Project. I wish people in authority would admit it, and let the public in on the secret:

I think we need to refocus our priorities on al-Qaeda, and al-Qaeda is strongest in Afghanistan, and the border of Pakistan. We need to make sure we're doing what's necessary to go after the person and the organization that killed 3,000 innocent Americans back on 9-11 of 2001. But I've talked to senior members of the Bush administration who have told me, off the record, that we're playing for a tie in Afghanistan, which is not acceptable in my view.

- Rep. Patrick Murphy, the only Iraq War veteran in Congress

Actually, I can see playing for a tie if you expect the opposition to fall apart on its own, but that doesn't seem to be the case this time.

More generally, much of what's wrong is we still don't identify the enemy, or our allies. While alliances are always imperfect, Pakistan barely even qualifies as an ally. Pakistan is not and never was a complete ally, because Pakistan is not and never was a complete country. At best, some elements in Pakistan have worked with the US (of elements thereof) on limited issues of mutual gain, or as a result of personal payoffs.

So long as there are safe havens for the enemy in Pakistan, as I suspect there will be for a long time to come, the US can't have a traditional military or political victory in Afghanistan.

Afghanistan has its own identity problems. The center of gravity in Afghanistan has never been the cities, and the sense of national identity has always been very weak. You can't defend someone who isn't really there.

So what's to do? We can (and sometimes do) play people against one another. We can (and sometimes do) develop good intelligence and act on it. We can (and sometimes do) maintain a dirty, invisible "war". We can declare a local "victory" and shift our military resources elsewhere.

Maybe I'm just tired today.