Streetwise Professor

February 16, 2018

Now That He’s Tackled the ORGANIZATION, When Will Mueller Indict Grandfather Frost?

Filed under: Politics,Russia — The Professor @ 10:19 pm

Today Mueller indicted 13 Russians for “interfering” in the US election.  The indictment would be hilarious, if it weren’t so tragic: for nigh on a year the country has been transfixed and the government convulsed by an investigation that is descending into farce.

So this is the best that a “dream team” (nightmare would be more like it, given the presence of people like Andrew Weissman) of prosecutors can come up with:

August 18, 2016, Defendants and their co-conspirators sent money via interstate wire to another real U.S. person recruited by the ORGANIZATION, using one of their false U.S. personas, to build a cage large enough to hold an actress depicting Clinton in a prison uniform.

No, really.

The ORGANIZATION. Yeah. Just like the cosa nostra or the Cali Cartel or something. You cannot make up this stuff.

As yet there is no evidence of collusion (which is not a crime, actually), let alone a conspiracy, between anyone in the Trump campaign or administration and any Russian individual or organization. Indeed, the fact that Mueller apparently feels that he can waste his time on such trivialities suggests strongly that there is no evidence of anything untoward, let alone criminal.

Amidst all the harrumphing, all I can say is that if the republic can’t survive such Mickey Mouse efforts as described in the Mueller indictment, it doesn’t deserve to survive.

Deep thinkers like Ben Sasse say that Putin is attempting to raise doubts about American institutions.  That is unnecessary: the institutions are doing a bang up job at that without any foreign assistance.

Further, as I noted in a talk on the forthcoming Russian election at Rice University last week, there is nothing new here. Nothing. The Russians have been doing this (and far worse) continuously since, oh, around November 8, 1917.  They almost certainly did it 99 years later out of habit, rather than conviction, or a sincere belief that it would have any effect.

But it has had an effect, because by obsessing about it the American political class is actually ensuring that Putin and his creatures are succeeding beyond their wildest dreams.  This obsession, moreover, is not driven by the real threat posed by the Russian effort, but by the need of the political losers to excuse their failure, and to destroy the usurper who deprived them of what should have been theirs by divine right.

The indictment is all for show, because the Russians are in, well, Russia, and hence out of reach of US law enforcement. Mueller might as well have indicted Putin–or Grandfather Frost, for that matter–for all the real effect it will have.

But Mueller desperately needs to show that he is actually doing something.  In this he has succeeded. He has shown that he is chasing phantoms, and wreaking havoc in the process.  But since he is accountable to no one, and politically sacrosanct, he will go on and on, to serve the political class and to justify his existence. A perfect illustration of the a-constitutional monstrosity that is a special counsel.

Shut. It. Down.

Print Friendly, PDF & Email

The Answer to Systematic Law Enforcement Failure is Not More Laws

Filed under: Guns,Politics — The Professor @ 4:16 pm

The horrific school shooting in Florida has elicited the same responses from the same people.  Truth be told, there are no easy answers. Or even hard answers.

What adds to the horror is the realization that it was eminently preventable, and should have been prevented. Not by different laws, or more laws, but by merely minimally competent exercise of existing law enforcement authority.  The hours since the shooting have revealed systematic government failures at every level. The school administration, yes, but especially local law enforcement and especially especially the FBI.

The local police responded to 39–yes, 39–separate calls about shooter Nikolas Cruz, yet he was free to buy guns and to kill indiscriminately. Cruz was a textbook case of a dangerous threat who scared the bejezus out of everyone who came in contact with him. But he skated time after time after time.

Even more shockingly, the FBI had at least two separate warnings about Cruz. Very specific warnings.

One warning pointed them to a YouTube video on which Cruz had made threatening and disturbing comments and identified himself. But the FBI claims it couldn’t find him.

The response to the second warning suggests they didn’t try very hard.  This one came more than a month ago from someone “close to” Cruz and specifically stated that he intended to shoot up a school.  If they knew someone close to him, they should have had no problem finding him, right?

Well, that would require that they tried. And today FBI director Wray admitted that the agency had not lifted a finger in response to this very specific threat.  Not. A. Finger.

After all, the FBI obviously had more important things to do. Like fight furiously to protect disclosure of its actions before, during, and after the issuance of the FISA warrant against Carter Page.  Priorities, dontcha know.

I am literally nauseated–yes, literally–at the juxtaposition between the FBI’s appalling inaction in Florida and its frenzied actions in DC.

And this is not the first time someone that someone on the FBI’s radar has committed mass murder–Orlando, San Bernardino, NY bike path, the Tsarnaevs. And why is Stephen Paddock a mystery to them to this day? Perhaps they have derailed many more plots, but this litany of false negatives is beyond disturbing.

What’s the point of passing new laws when those who would be responsible for enforcing them and the existing laws are capable of such systematic failures of omission and commission?

That is not a rhetorical question. The institutional decay in the United States is beyond obvious. Yet the institutions fight tooth and nail to avoid accountability. Before entrusting these institutions with any more power, it would be far better to fix them–which may require a root-and-branch restructuring–so that we can be confident that they can responsibly exercise the vast powers they already wield.  To say that no such confidence is warranted today is beyond cavil.

Print Friendly, PDF & Email

Putin’s Rock-and-a-Hard-Place Situation in Syria

Filed under: Military,Politics,Russia — The Professor @ 11:17 am

The Syrian war has been dragging on for a bloody seven years, but now the sh*t is truly getting real–because now it has become a cockpit for global and regional power rivalries. The most fraught development involves the potential for escalating conflict between Iran and its proxies (notably Hezbollah) and Israel–and that puts Vladimir Putin and Russia into a very difficult position.

Last week an Iranian drone allegedly violated Israeli airspace. The Israelis shot down the drone, and then launched a massive attack that apparently destroyed half of Syria’s air defenses, losing an F-16 in the process.  The Israelis also bombed Iranian forces in Syria. Things have settled down a bit since then, but the potential for escalation is clearly present.

Despite Russia’s long-term (and by long-term I mean centuries-long) rivalry with Iran/Persia, the countries have been de facto allies in Syria because both have a strong interest in saving the Assad regime.  But the interests in Assad are vastly different, and now that the Syrian regime’s survival seems assured, those interests are not aligned.

Iran views the Assad regime as vital because under its control Syria is a vital component of Iran’s anti-Israel strategy.  In particular, Syria is the essential logistic bridge to Hezbollah in Lebanon.  With Syria in unfriendly hands, Hezbollah would be completely isolated.  With Syria in Assad’s hands, Iran can funnel massive supplies to Israel’s arch-foe.  Given the centrality of Israel to Iran’s strategic ambitions, Assad is a vital Iranian national interest, and an ongoing national interest.

Putin’s interests in Syria were always more limited.  A naval base (which would be completely useless in a real shooting war given its isolation and Russia’s lack of a real blue water navy), a few airbases, and an ability to reassert Russia as a player in the Middle East. Those objectives have largely been achieved, and Putin was no doubt hoping that the stabilization of the Syrian regime would permit a drawdown of Russian activities there.

Furthermore, Putin has always tried to maintain good relations with Israel.  Netanyahu and other high-ranking Israelis have made numerous trips to Moscow.

But if Iran pushes issues with Israel, the Jewish state’s heretofore relatively benign approach to the Syrian regime (which has involved no more than occasional punitive strikes and a largely hands-off attitude in the Syrian civil war) will change. The regime is Iran’s and Hezbollah’s center of gravity, and if Iran escalates confrontation with Israel either from Lebanon or Syria directly, Israel will hit Assad’s regime very hard.  This will again put its survival at risk, and cost Putin what he has gained so far.

In other words, it is in Russia’s interest to restrain Iran, but it is not clear that Iran can be restrained. Putin has nothing to gain from an Iran-Israel conflict in Syria and Lebanon, and all that he has gained so far is at risk from such a conflict.  For its part, if Iran decides to escalate, it means that it has decided that the Syrian regime’s vulnerability to local forces has been largely eliminated, and it doesn’t really need Russia anymore.

All of which means that Putin is now largely at the mercy of a highly ideological regime with an agenda that not only does Putin not share (the destruction of Israel), but which he actually opposes.

Note that Russia has also been exploring cooperation with Iran’s other arch-enemy, Saudi Arabia, especially in the field of energy.  Siding with Iran puts that at risk too.

So what will Putin do? Hard to know. But it is clear he has no real good options.

The other big story involving Russia in Syria relates to the devastating American response to an attack mounted on a base of US-supported fighters where some American advisers were located. The US responded with extreme–and I mean extreme–violence. In response to a battalion-sized attack, they threw just about everything in the arsenal at the assault–artillery, F-15Es, MQ-9 drones, AH-64 Apaches, B-52s(!), and AC-130s.

This extremely forceful response was clearly sending a message.  It reminds me of what Mattis told Iraqi tribal leaders: “I come in peace. I did not bring artillery. But if you fuck with me, I will kill you all.”  The assaulting force was f*cking with the US, and Mattis’ military responded by pretty much killing them all.

They’ll think twice next time. And that’s the point.

The biggest mystery is the identity of “them all.” Was it regime paramilitaries leavened with a few Russians, or a force predominately made up of Russian mercenaries? The Russians first denied Russians were killed, but after some widows went public it admitted to the deaths of 5 Russians.  Other reports, supposedly sourced from Russian military sources, put the casualty toll in the hundreds, with 100-200 KIA. (The Russian government dismisses these reports as “disinformation,” but its credibility is near zero.)

The big question is why was the attack made? A purely regime-directed operation that used Russian mercenaries without the knowledge or approval of the Russian military? (Highly doubtful.) An attempt by the Russians to test the Americans, or to send a message? (If so, the answer was given with extreme prejudice.) One theory floating around in Russia is that the mercenaries (from the firm Вагнер) had become inconvenient to the Russian military and government, and were set up to be destroyed.  I have no idea–I just hope that Mattis, Trump, et al do.

Then there’s the conflict between the US and Turkey over support for Kurdish fighters (who were the only anti-ISIS troops who can, in the words of George Patton, “fight their way out of a piss-soaked paper bag”).  Turkey has mounted an attack into Syria, and Erdogan has threatened to give the US an “Ottoman slap” if we interfere. (By the way–did the Ottomans have nukes? Just wondering.)

All in all, Syria makes Game of Thrones look simple, and now the potential for a conflict between the big dogs is greater than ever. It’s hard to see this ending well for anyone–Vladimir Putin least of all.

Print Friendly, PDF & Email

February 10, 2018

Counterintelligence Follies–What a Country!

Filed under: Politics,Russia — The Professor @ 8:02 pm

One thing that seems to have passed without notice in the furore over Carter Page is the utter implausibility of the Russians using him in a high-level clandestine outreach to Donald Trump.  No, implausible not because of Page’s fringe-status–though that would have probably been sufficient–but because of the fact that Page had been in contact with Russian intelligence operatives who were eventually arrested by the FBI.

We now know that Page was one of the individuals (“Male-1”) cited by the FBI agent in the complaint against the three Russians.  Now the Russians might not have known for certain that Page was “Male-1” or anyone else cited in the complaint, but you can be damn sure that they would have identified every American the indicted Russians had been in contact with, and every one of them would have been under suspicion.  Indeed, the detail from the recorded conversation involving Page and his background included in the report would probably have been sufficient for Russian intelligence to identify him.

So we are supposed to believe that less than two years after the indictment, the Russians would have thrown open the doors to Page, granted him an audience with Igor Sechin, and then proceeded to include him in a campaign to bribe an American presidential candidate?  A guy who had already been interviewed by the FBI, and hence was at the very least in the crosshairs of US counterintelligence, and even possibly an asset thereof?  A guy who had been involved in burning three of their operatives?

As. Effing. If.

Except, maybe, as part of an elaborate scheme to spread disinformation about Trump.

But there is no way that that anyone who had come in contact with the indicted Russian agents would have been used as part of a serious operation to bribe a US president.

If the FBI had actually entertained the possibility that the Steele dossier was legitimate (which, of course, they might never have done), they would have had to asked themselves: why would the Russians conspire with a guy that they had every reason to suspect was in league with, or compromised, by the US counterintelligence? That alone should have been sufficient either to discredit the dossier, or conditional on accepting the truth of the dossier, concluding that the Sechin offer was part of a disinformation scheme.

Stephen McIntyre makes an important observation about the dossier’s claims regarding the Page-Sechin meetings.  Specifically, the first mention in the dossier (in July) of the meetings is lacking in specifics regarding (a) the “brokerage fee”, and (b) Page’s assurance that Trump would lift sanctions.  Miraculously, the second mention of the meeting–in a Steele report three months after the alleged meeting–includes these details.  Said details, of course, were included in the FISA application. And get this: the last Steele report that adds these apparently essential details was produced (or should I say “invented”?) 4 days before the FBI approached the court.

You know exactly what happened, don’t you? The FBI tells Steele: “This is all you got? We need more than this.” And like a short order chef, Steele starts cooking, hits the little bell with his spatula, and serves up a steaming pile of hash, made to order.

Which provides further evidence that the FBI knew all along that it was providing fiction to the FISA court.  Unless, of course, you are going to choose option “B”–that the FBI were clueless, credulous morons.  (There is no option “C”.)

In other counterintelligence follies, the NYT reported that the CIA was duped into paying a Russian $100,000 (and had agreed to pay $900,000 more) in exchange for stolen hacking tools and dirt on Trump. The story is sourced to the Russian, and to US officials.

The CIA denies, of course.

It is clear that the story about paying for stolen hacking tools is utter tripe. You don’t pay for what can be–and has been–copied, and what you already own. So if this did happen, it means that what was really bought was dirt on Trump, and that was the intent all along. If this is what went down, then no doubt that the arrangement broke down after the first meeting because the Russian delivered such obvious garbage that even anti-Trump CIA people realized it was worthless.

If this deal did occur, it’s also almost certain that the Russian approached the CIA because word was out that the agency was actively seeking information on Trump, and the Russian sensed an opportunity.

Whether this happened or not is actually far less interesting than why it was leaked.  Maybe the Russian was the one who initiated the contact with the NYT, but somewhere along the line “US officials” corroborated it.

Now who would that be? My guess is that these are pro-Trump officials engaged in a clandestine war with elements in the CIA.

Like Yakov Smirnoff says–“What a country! America–I love it!

Print Friendly, PDF & Email

February 3, 2018

Sources and Methods

Filed under: Politics — The Professor @ 6:09 pm

One of the oft’ told horror stories in the runup to the release of the House Intel Committee memo was that it would scandalously harm national security by disclosing sources and methods.

This is largely true! Not the harm national security part.  But the memo did indeed disclose that the FBI used highly disreputable and biased sources obtained by nefarious methods in order to find a backdoor to spying on a presidential campaign, and this is indeed highly scandalous.  If I were the FBI and DOJ, I would want to keep these sources and methods secret too.

It is appalling that this happened in at least one instance.  But it raises an even bigger question: was this truly a one-off (bad enough), or was it representative of a more systematic practice (which would be far worse)?

I can understand why DOJ and the FBI would fight tooth-and-nail (including, if some late reporting is correct, Rosenstein threatening to subpoena House Intel Committee member/staff text and emails) to prevent the revelation of “sources and methods” in this instance.  What was revealed when the rock was turned over was quite shocking, and it cannot rest here. It is necessary to know whether the entire FISA process is routinely corrupted.

Print Friendly, PDF & Email

February 2, 2018

American Siloviki

Filed under: Politics,Russia — The Professor @ 3:43 pm

The long anticipated–and by many feared–release of the House Intelligence Committee majority’s letter on the origins of the Carter Page FISA warrant came out today.  From the pre-release wailing, rending of garments, and gnashing of teeth over the grave threat that it posed to national security, one would have thought it would have contained nuclear launch codes and shocking revelations about Area 51.  In fact, it was anticlimactic, and demonstrated what any sentient being should have been able to figure out: that the FBI and DOJ relied upon the dodgy, fundamentally tainted Fusion GPS/Steele/DNC dossier to obtain a FISA warrant to spy on Page–and hence on others in the Trump campaign.

Anticlimactic, but damning and disgusting nonetheless. Particularly given the revelation that Andrew McCabe, erstwhile deputy director of the FBI, admitted under oath that but for the dossier, the FISA warrant would never have been sought in the first place.  It was clearly pivotal, despite all of the desperate attempts in the media and among Congressional Democrats over the last few days to insinuate that Page had long been on counterintelligence radar.  (This actually cuts the other way–if the pre-dossier evidence against him was so strong, why wasn’t he under surveillance until after the dossier was obtained?)

The essence of the memo (just described) doesn’t really require much discussion.  Those facts speak for themselves. A few details do deserve some comment.

One is the use of a tactic that I have mentioned as being characteristic of KGB methods (though they are no doubt a staple of all intelligence services): planting “information” in a media source as a way of laundering it, enhancing its credibility, and getting it into circulation.  The typical use of this technique is to get the planted information (or disinformation) into the media foodchain so that it gets disseminated more widely.  Here the use of the technique was far more sinister. It was recycled through a friendly journalist (Michael Isikoff) who was then cited as corroboration in the FISA application.

The memo leaves some wiggle room for the FBI and DOJ to claim that they didn’t know that Steele had approached Isikoff, but this requires them to claim that they can’t add 2 and 2: once they read the Isikoff article, knowing what Steele had told them they had to have known that Steele was the source. (Steele apparently tried to craft a cover story by pointing the FBI to a report containing similar information prepared by Clinton crony Cody Shearer–thereby providing a possible alternative source for the Isikoff story.)    Furthermore, within a few weeks the FBI learned that Steele was talking to journalists, and they fired him–yet they did not inform the FISA court about that their initial application was tainted in their applications for renewal.  (I further note that since the FBI fired him–that means they hired him!)

And the renewals brings up another issue: one of the signatures on at least one renewal was Rod Rosenstein’s.  You know, the guy who appointed Mueller and who is overseeing the independent counsel investigation for DOJ because of Session’s recusal.  What the holy F? Rosenstein’s involvement in the FISA process, which is deeply embedded in the Russia investigation, means that he is conflicted as hell.  He should have had nothing whatsoever to do with the appointment of the Special Counsel, and nothing to do now with overseeing him.  This is particularly true since Rosenstein’s knowledge must have included the fact that the original warrant was the fruit of a poisoned tree, and that he failed to disclose that to the FISA court.

James Comey’s fingerprints are all over this as well.  I can’t wait to hear his deep exegesis on the ethics of swearing to a court about the veracity of “salacious, unverified” (his words!) info produced by a rabid partisan and paid for by a presidential campaign to get a warrant to spy on Americans.  And to the ethics of withholding material information from the FISA court.

This last is particularly and disgustingly ironic given that one of the FBI’s objections to the release of the memo was that it omitted relevant facts. I can’t imagine what omitted fact would reverse the conclusions that flow from those that are included.  Putting that aside, the FBI’s objections give a new meaning to chutzpah.

The pre-release shrieking about the memo was beyond hysterical.  Among the most hysterical claims (made by Leon Panetta and others) was that a release of the memo would unleash a Constitutional crisis.

Just how would the Chief Executive’s declassification of a document about the actions of parts of the executive branch constitute a Constitutional crisis? The President holds ultimate classification authority, and is responsible for the execution of the laws and the conduct of executive branch departments, agencies, and employees. Disclosing information about the misbehavior of executive branch officials does not represent a Constitutional crisis: if anything, it is the misbehavior of those officials during a presidential election that raise the issue of such a crisis.

Some of the reporting and commentary on this issue has been utterly incredible (in many senses of the word).  For example, Trump overruled current-FBI director Wray’s objection to releasing the memo.  The WaPo framed this as “Trump defies Wray.” Um, who the hell works for whom? If there is defiance going on, it is Wray’s going public with his objections to the actions of his Constitutional superior.  Wray should have raised his objections in private to Trump, and if overruled (as he was, in the event), kept his mouth shut in public, or resigned–and then kept his mouth shut. To lobby publicly (and disingenuously, by raising national security concerns) in an attempt to pressure his superior into doing something is beyond the pale.

Or should be, anyways. But one thing that this entire sordid episode has demonstrated is that the bureaucracy generally, and the intelligence and federal law enforcement agencies in particular, consider themselves an independent power, a co-equal–superior actually–branch of government, the Constitution be damned. Trump is deemed the usurper.  Indeed, it is clear that many senior members of the FBI, DOJ, and the intelligence community considered it their right to intervene in the election in order to prevent Trump’s election, and failing that, to kneecap his presidency. And virtually all of the political class in the US is on their side. This is the real Constitutional crisis.

You should view this as a Constitutional danger regardless of your partisan leanings. For ask yourself: would you like the same to be done to your guy (or gal)?

It is also disgustingly ironic that in a fervid controversy about the alleged intervention of the Russian siloviki into an American election reveals that high-ranking American officials in control of the vast powers of US law enforcement and intelligence used siloviki methods (including most likely disinformation planted by Russian siloviki!–you can’t make this up!) in an attempt to influence an American election and then to cripple the winner of that election when their original plotting failed

Indeed, the Russian siloviki have it going for them that they aren’t nauseatingly sanctimonious about their skullduggery–refreshingly cynical is more their style. James Comey and others cannot say the same.

And if you think the siloviki analogy is overwrought, consider the not-so-veiled threats expressed on the pages of the WaPo and NYT and by politicians and political pilot fish (e.g., Ben Rhodes) about how dangerous it is to confront the FBI.  Further proof that this rogue influence must be tamed.

Trump showed stones in confronting the FBI and the political class. But perhaps this just demonstrates that he has a strong survival instinct. He knows that he is in a knife fight for his political life–and perhaps his freedom and fortune–and it seems that he has decided that compromise is impossible so escalation is necessary.

This is not the end.  This is at most the end of a beginning. For the acknowledgement that the FBI and DOJ–and the Obama administration–used under false pretenses a dossier paid for by a political campaign and assembled by rabid partisans to obtain permission to spy on an American just raises other questions. Who other than Page was spied on? Were their names unmasked? What use was made of the information obtained from the Page surveillance? By whom?

Given the Herculean effort required to get the memo released, I doubt that these questions will be answered, and if they are answered, it will only happen in after a political brawl that makes the fight of the last few weeks look like childs’ play. The siloviki and their political handmaidens play rough, and play for keeps.

 

Print Friendly, PDF & Email

January 31, 2018

Hoist the Stars and Bars Over Sacramento!

Filed under: Economics,Politics — The Professor @ 7:56 pm

California voted overwhelmingly against Trump in 2016, and today, butthurt losers that they are, California’s government is now leading the “resistance” against him.  As described by its cheerleader–the all-but-unreadable Financial Times–it is taking up the standard for states rights in its resistance campaign:

From immigration, to tax policy, to internet regulation and environmental standards, a growing number of California policies confront or contradict federal policies — a test of states’ rights that will ultimately play out in court.

For example, a state Senate committee will discuss this week a measure that would in effect reverse the Federal Communications Commission’s new policy on internet regulation. The measure would require internet service providers in California to adhere to the net neutrality standards governing internet traffic that were enforced during the Obama administration, which had been supported by much of Silicon Valley.

Similar efforts are under way on tax, with a legislative proposal designed to partially circumvent the federal tax bill that was signed into law by Mr Trump in December. The federal bill raised the burden for many people in high-tax states such as California, because they will no longer be able to deduct state tax payments from their federal income tax return

Raise the Stars and Bars over Sacramento!

The tax issue is particularly amusing. Leftist bastion that it is, coastal California has been a huge proponent of soak-the-rich-taxation and income redistribution.  Except California’s rich. Soak other states’ rich (like where, Mississippi? West Virginia?), not ours!

More generally, California has been obnoxious in its use of its own economic heft to force its policy preferences on the rest of the country.  Regulations regarding automobile emissions and safety standards are a prominent example. California quite deliberately imposes standards preferred by its coastal elites precisely because it knows that automakers are not going to build cars that do not meet California standards for sale outside the state.

States rights advocates 1.0–in the South, pre-1861–were also notable for their highly situational–not to say hypocritical–adherence to this principle.  At the same time they breathed fire in denunciating even the prospect of Federal government interference with their “domestic institutions”, they demanded that the self-same Federal government enforce the Fugitive Slave Act and chase down escaped in states whose domestic institutions explicitly rejected slavery.

California’s most aggressive states rights stance relates to immigration, where it has basically said “nice little business you got there–shame if anything happened to it” to any firm in California that is even thinking about cooperating with Federal law enforcement of immigration laws:

The state’s top cop issued a warning to California employers Thursday that businesses face legal repercussions, including fines up to $10,000, if they assist federal immigration authorities with a potential widespread immigration crackdown.

“It’s important, given these rumors that are out there, to let people know – more specifically today, employers – that if they voluntarily start giving up information about their employees or access to their employees in ways that contradict our new California laws, they subject themselves to actions by my office,” state Attorney General Xavier Becerra said at a news conference. “We will prosecute those who violate the law.”

Becerra’s warning comes as fears spread of mass workplace raids following reports that immigration agents plan to target Northern California communities for deportations due in part to the state’s “sanctuary” law, which seeks to restrict local law enforcement agencies’ ability to cooperate with immigration authorities.

In essence, the State of California is avowedly nullifying Federal immigration laws, a la South Carolina and tariffs circa 1832.

In fact, California does some things that go beyond what the Gamecocks did 186 years ago.  The main mechanism in the 1832 Nullification Ordinance was a prohibition on state and Federal employees acting “to enforce the payment of duties imposed by the said acts within the limits of this State.”  California hasn’t attempted to impose its authority on Federal officials, but it has gone beyond South Carolina in its imposition of steep fines on private citizens who cooperate with Federal authorities. Why pick a direct fight with the Feds, when you can grind down the little guy?

This is beyond audacious, and beyond hypocritical for a political class that was largely an advocate for increasing the power of the national government–until it lost sway with the election of Trump.

Immigration has been recognized as the exclusive preserve of the Federal government since 1876, when the Supreme Court so ruled. This made sense even when people were less mobile–it makes all the more sense today. Yet California advocates nullifying Federal immigration law, and is willing to bring the full force of its own police powers to bear against anyone who flouts its nullification.  Somewhere in the nether regions, John C. Calhoun and Robert Barnwell Rhett are smiling.

No doubt any action to enforce its nullification laws would result in a legal challenge.  Given the realities of the 9th Circus, and a Federal judiciary that is willing to grant convicted fraudsters a “right to say goodbye” (heretofore undiscovered in almost 230 years of Constitutional jurisprudence), it is quite possible that the state will prevail in court–for a while.  But I can’t imagine that it would prevail in the end, especially when the broader ramifications of a “victory” dawn even on leftists.

For a victory would be a classic example of “be careful what you ask for–you might get it.”  California liberals might gloat at prevailing over the hated Trump administration, but the precedent would live on long afterwards, and provide a road map for other states (and even local jurisdictions) to thwart the Federal government even when liberals are in control of it–as California’s elite believes is the natural order of things, an order which has been violated by Trump’s presidency. Such an outcome, of course, would be a cue for California to go all situational and reject its current states rights position.

Which would prove yet again, as if further proof is necessary, that if politicians didn’t have double standards, they’d have no standards at all. Especially on the Left Coast (a phrase that is descriptive in more ways than one).

 

 

Print Friendly, PDF & Email

January 23, 2018

Why Are ABCD Singing the Blues?

Filed under: Commodities,Economics,Russia — The Professor @ 9:49 pm

It’s pretty clear that the major agricultural trading firms, notably the ABCDs–ADM, Bunge, Cargill, and Dreyfus–are going through a rough patch of tight margins and low profits.  One common response in any industry facing these conditions is consolidation, and in fact there is a major potential combination in play: ADM approached Bunge about an acquisition..

I am unsatisfied with most of the explanations given.  A widely cited “reason” is that grain and oilseed prices are low due to bumper crops.  Yes, bumper crops and the resulting low prices can be a negative for producers, but it does not explain hard times in the midstream.  Ag traders do not have a natural flat price exposure. They are both buyers and sellers, and care about margin.

Indeed, ceteris paribus, abundant supplies should be a boon to traders.  More supply means they are handling more volume, which is by itself tends to increase revenue, and more volume means that handling capacity is being utilized more fully, which should contribute to firmer margins, which increases revenues even further.

Greg Meyer and Neil Hume have a long piece in the FT about the potential ADM-Bunge deal. Unfortunately, they advance some implausible reasons for the current conditions in the industry. For example, they say: “At the same time, a series of bumper harvests has weakened agricultural traders’ bargaining power with customers in the food industry.” Again, that’s a flat price story, not a spread/margin story.  And again, all else equal, bumper harvests should lead to greater capacity utilization in storage, logistics, transportation, and processing, which would actually serve to increase traders’ bargaining power because they own assets used to make those transformations.

Here’s how I’d narrow down where to look for more convincing explanations. All else equal, compressed margins arise when capacity utilization is low. In a time of relatively high world supply, lower capacity utilization would be attributable to increases in capacity that have outstripped gains in throughput caused by larger crops.  So where is that increased capacity?

There are some hints of better explanations along these lines in the FT article.  One thing it notes is that farmer-owned storage capacity has increased.  This reduces returns on storage assets.  In particular, when farmers have little on-farm storage they must sell their crops soon after harvest, or pay grain merchants to store it.  If they sell their crops, the merchant can exploit the optionality of choosing when to sell: if they store at a local elevator, they pay for the privilege. Either way, the middleman earns money from storage, either in trading profits (from exploiting the timing option inherent in storage) or in storage fees. If farmers can store on-farm, they don’t have to sell right after harvest, and they can exploit the timing options, and don’t have to pay for storage.  Either way, the increased on-farm storage capacity reduces the demand for, and utilization of, merchant-owned storage. This would adversely impact traders’ margins.

The article also mentions “rivals add[ing] to their crop-handling networks.” This would suggest that competitive entry/expansion by other firms (who?) is contributing to the compressed margins.  This would in turn suggest that ABCD margins in earlier years were abnormally high (which attracts entry), or that the costs of these unnamed “rivals” have gone down, allowing them to add capacity profitably even though margins are thinner.

Or maybe it’s that the margins are still healthy where the capacity expansions are taking place. Along those lines, I suspect that there is a geographic component to this. ADM in particular has its biggest asset footprint in North America. Bunge has a big footprint here too, although it also considerable assets in Brazil.  The growth of South America (relative to North America) as a major soybean and corn exporting region, and Russia as a major wheat exporting region, reduce the derived demand for North American handling capacity (although logistical constraints on Russian exports means that Russian export increases won’t match its production increases, and there are bottlenecks in South America too).

This would suggest that the circumstances of the well-known traders that have more of a North American (or western European) asset base are not representative of the profitability of grain trading overall. If that’s the case, consolidation-induced capacity “rationalization” (and that’s a major reason to merge in a stagnant industry) would occur disproportionately in the US, Canada, and western Europe.  This would also suggest that owners of storage and handling facilities in South America and Russia are doing quite well at the same time that owners of such assets in traditional exporting regions are not doing well.

So I am not satisfied with the conventional explanations for the big ag traders’ malaise during a time of plenty. I conjecture that the traditional players have been most impacted by changes in the spatial pattern of production that has reduced the derived demand to use their assets, which are more heavily concentrated in legacy production regions facing increased competition from increased output in newer regions.

Ironically, I’m too capacity constrained to do more than conjecture. But it’s a natural for my Université de Genève students looking for a thesis topic or course paper topic. Hint, hint. Nudge, nudge.

 

 

Print Friendly, PDF & Email

January 21, 2018

Somebody Better Put a Tachometer on Lenin’s Corpse

Filed under: History,Politics,Russia — The Professor @ 6:50 pm

One of the most remarkable events–non-events, actually–of 2017 was the virtual total lack of any official Russian recognition of the centenary of the Bolshevik Revolution.  The dilemma is particularly acute for Vladimir Putin, a proud Chekist–and, of course, the Cheka was the creation of the Revolution, and arguably essential to its survival.

But the Revolution’s legacy–including its anti-religious, anti-nationalist ideology, as well as tens millions of dead and the ultimate collapse of the Soviet Union–clashes with Putin’s current ideology of autocracy, orthodoxy, and nationality 2.0.  Hence the low-key (bordering on no-key) recognition of the events of October, 1917.

Last week Putin attempted to square this circle with a truly Orwellian formulation: Communism was Christianity. No–really:

“Maybe I’ll say something that someone might dislike, but that’s the way I see it,” Putin said in an interview for the documentary Valaam, an excerpt of which was broadcast on Russia 1. “First of all, faith has always accompanied us, becoming stronger every time our country, our people, have been through hard times.

“There were those years of militant atheism when priests were eradicated, churches destroyed, but at the same time a new religion was being created. Communist ideology is very similar to Christianity, in fact: freedom, equality, brotherhood, justice – everything is laid out in the Holy Scripture, it’s all there. And the code of the builder of communism? This is sublimation, it’s just such a primitive excerpt from the Bible, nothing new was invented.”

Look, Lenin was put in a mausoleum. How is this different from the relics of saints for Orthodox Christians and just for Christians? When they say that there’s no such tradition in Christianity, well, how come, go to Athos and take a look, there are relics of the saints there, and we have holy relics here,” Putin concluded.

Somebody should look in said mausoleum to see if Lenin is spinning at about 1000 RPM at the the assertion that his creation and ideology were mere sublimations of primitive Christianity.  Ditto Marx’s grave in London.

Make no doubt that Putin is going all in on Orthodoxy: just note his recent frigid dip to celebrate the Epiphany.

Moreover, Putin is being very selective in his commemorations of Russian history. For instance, largely reviled by the Orthodox, Peter the Great is virtually absent. And now we see that he reinterprets the most epochal–and apocalyptic–event in Russian history, a Revolution that was driven by a hatred and rejection of orthodox, nationalist autocracy, as some sort of historical continuity.

This is all quite amazing. Evidently Putin does not believe that he can attack communism, Bolshevism, and Leninism outright, because they resonate with too many people–particular among his political base. But he is acutely aware of the tension between his current crypto-tsarist ideology and the militantly anti-tsarist ideology that dominated Russia for 75 years.  So in a very Soviet way he completely rewrites history to assert that black is really white.

When Putin says “that’s the way I see it” what he really means is: that’s the way Russians are supposed to see it–get with the program. Who are you going to believe, Putin or your lying eyes?

 

Print Friendly, PDF & Email

January 17, 2018

No Yodeling Required!: Swiss Sanity on Citizenship

Filed under: Economics,Politics — The Professor @ 7:39 pm

Not long after finishing my immigration post, I came across this article that cracked me up:

Dutch vegan who applied for a Swiss passport has had her application rejected because the locals found her too annoying

Nancy Holten, 42, moved to Switzerland from the Netherlands when she was eight years old and now has children who are Swiss nationals.

However, when she tried to get a Swiss passport for herself, residents of Gipf-Oberfrick in the canton of Aargau rejected her application.

I guess they can’t kick her out, but they can deprive her of citizenship.  (And “Oberfrick”–heh.)

This is an amusing illustration of a broader Swiss principle: who gets to be Swiss depends on their contribution to Switzerland, and their ability to integrate with those already there.  A more serious illustration comes from a recent change in Swiss citizenship law:

On 20 June 2016, the Swiss Parliament voted on the new Swiss Citizenship Act, which will come into force together with the relevant Ordinance on 1 January 2018. The main aim of the new law is to limit the issuance of Swiss citizenship to well-integrated foreign nationals only. Furthermore, the Citizenship Act also aims to harmonise the residence requirements and implement into a law the authorities’ practice. [Emphasis added.]

. . . .

Under current law, the basic requirements to obtain Swiss citizenship can be summarised as follows: a. The applicant must have resided a minimum of 12 years in Switzerland (of which at least three years within the five years prior to the application) and a certain amount of time (usually between two to five years) in a specific canton and in a specific commune prior to being able to apply. Shorter periods apply to certain categories of applicants aged between 10 and 20 years for whom the years spent in Switzerland between their 10th and 20th birthdays count double in the calculation of the 12- year period required at the federal level. b. The applicant must prove that he/she is well integrated in Switzerland. As per the current practice of the Swiss authorities, the following requirements usually need to be fulfilled: the applicant must have a clean criminal record, prove that he/she fulfils all financial obligations, in particular with respect to tax payment, has a good reputation, has a good knowledge of a Swiss national language (i.e. French, German or Italian), has a basic knowledge of Swiss geography and history, and knows how the Swiss political system functions. c. Additional requirements may need to be met according to the respective cantonal and/or communal laws.

. . . .

Only applicants holding a C-type permit (permanent residence permit) may apply for Swiss citizenship (currently, holders of B-type residence permits may also apply). The applicant must have resided a total of 10 years in Switzerland (not 12 years as today). The ordinance to the SCA now details the concept of ‘good integration’. According to the ordinance, an applicant is deemed as being well integrated if he/she:

• has good oral and written language skills in one of the national languages;

• respects the public order and security;

• respects the Swiss federal constitution;

• participates in the economic life or undergoes education, i.e. the applicant is employed or attends a school/university;

• ensures that his/her family members are integrated;

• is not a threat to the internal and external security of Switzerland;

• is familiar with Swiss living conditions.

Applicants with a criminal record or who are dependent on Swiss social welfare will most likely be rejected.

Indeed, regarding the last point, the new law precludes citizenship for those who have been on public assistance in any time in the past three years.

Fortunately, it appears that yodeling is not a requirement!

Note that none of these criteria are based on nation of origin.  There will no doubt be a relationship between the likelihood of meeting these criteria, and whether one emigrates from a s***hole, but the law does not discriminate or create quotas on the basis of national origin (which is likely by itself to be a very crude proxy for ability to contribute, and which is part of US law primarily as the result of ethnic politics).

Certain aspects of the Swiss naturalization system are not practical for the US.  In particular, the role of cantonal and communal authorities in authorizing citizenship (as the Annoying Dutch Vegan found out to her chagrin) is a non-starter here.  This conflicts with the US Constitution, and is at odds with the much greater mobility of Americans vs. Swiss.  But the principle of conditioning citizenship on integration, fluency in a national language, non-dependence on public assistance, lack of a criminal record, etc., is certainly possible in the US, and makes sense.  It is certainly a more rational and sober policy than one that revolves around nauseating pap about “dreamers” and the like: whenever a debate centers on agitprop and euphemisms you know it is fundamentally dishonest and manipulative.

You can’t paint the Swiss as mouth-breathing populist, nationalist wackos: if anything, they are a little too control-freakish for me (and most Americans, I’d wager).  Indeed, the Swiss have been very successful at balancing a deep integration in the world economy and international institutions with a pride in their own national traditions and mores, and a desire to preserve them.  They have avoided many of the problems that somewhat similar nations (notably Sweden and the Netherlands) have experienced with their immigration policies. (There’s nothing like Malmo or Gothenburg or Rotterdam in Switzerland.)  The Swiss have struck a reasonable balance between openness to foreigners and national pride, and are not consumed by the neurotic complexes and self-loathing that have paralyzed many Swedes, Dutch, Germans, etc. (and the governments of these nations).

Switzerland therefore represents a plausible example/role model for a reasoned immigration debate in the US. Yet it is almost never mentioned here.

And it’s not just immigration.  The Swiss health care system has much to recommend it–far more than the dysfunctional system that prevails in the US.  The Swiss model would be a great starting place for a transformation of US healthcare.  I’d prefer an even more market-based system, but politics is the art of the practical, and I realize that my ideal is not gonna happen. But the Swiss model meets many of the goals of the left in a much more efficient way than our current system, and certainly dominates monstrosities like the UK or Canadian systems.

It would be impossible–and indeed, highly objectionable–to try to make the US like Switzerland. For myriad reasons. But there are some things we can take from Switzerland, or should at least consider seriously. Not that I’m holding my breath.

Print Friendly, PDF & Email

Next Page »

Powered by WordPress