Streetwise Professor

December 4, 2014

The Hamster Wheel From Hell: Putin’s Presidential Speech Edition

Filed under: Economics,History,Military,Politics,Russia — The Professor @ 7:58 pm

Putin gave his annual Presidential address today. It was the by now familiar combination of anti-American paranoia, historical fiction, hyper-nationalism, and economic idiocy.

The most notable thing about the speech is how much in Putins head the US is. Everything that ails Russia originates in the US. A sample:

Speaking of the sanctions, they are not just a knee-jerk reaction on behalf of the United States or its allies to our position regarding the events and the coup in Ukraine, or even the so-called Crimean Spring. I’m sure that if these events had never happened – I want to point this out specifically for you as politicians sitting in this auditorium – if none of that had ever happened, they would have come up with some other excuse to try to contain Russia’s growing capabilities, affect our country in some way, or even take advantage of it.

The policy of containment was not invented yesterday. It has been carried out against our country for many years, always, for decades, if not centuries. In short, whenever someone thinks that Russia has become too strong or independent, these tools are quickly put into use.

However, talking to Russia from a position of force is an exercise in futility, even when it was faced with domestic hardships, as in the 1990ies and early 2000ies.

We remember well how and who, almost openly, supported separatism back then and even outright terrorism in Russia, referred to murderers, whose hands were stained with blood, none other than rebels and organised high-level receptions for them. These “rebels” showed up in Chechnya again. I’m sure the local guys, the local law enforcement authorities, will take proper care of them. They are now working to eliminate another terrorist raid. Let’s support them.

Let me reiterate, we remember high-level receptions for terrorists dubbed as fighters for freedom and democracy. Back then, we realised that the more ground we give and the more excuses we make, the more our opponents become brazen and the more cynical and aggressive their demeanour becomes.

Despite our unprecedented openness back then and our willingness to cooperate in all, even the most sensitive issues, despite the fact that we considered – and all of you are aware of this and remember it – our former adversaries as close friends and even allies, the support for separatism in Russia from across the pond, including information, political and financial support and support provided by the special services – was absolutely obvious and left no doubt that they would gladly let Russia follow the Yugoslav scenario of disintegration and dismemberment. With all the tragic fallout for the people of Russia.

In Leninist terms, the US is Who, Russia is Whom.  The object, not the subject. Putin even blames the US for Chechen terrorism. The last paragraph is a great example of Putin’s historical distortions. In fact, the US was deathly afraid of a chaotic, Yugoslavia-like break up of a nation with thousands of nukes and massive stocks of chemical weapons: recall that Bush I even opposed the breakup of the USSR, let alone Russia.

The irony, of course, is that whereas Putin (and Russians generally) imagins that every American goes to bed at night and wakes every morning scheming to subjugate Russia and rob it of its riches, the truth is that 99+ percent of all Americans couldn’t care less about it. That’s a truth Putin and other Russians just can’t handle. So they construct this alternate reality in which the US is obsessed with Russia.

 

The cooperation on “the most sensitive issues” that Putin’s mentions involved mainly the Nunn-Lugar Cooperative Threat Reduction Program, which involved the US spending billions of dollars in Russia to secure nukes. Moreover, the Russian Federation assumed the USSR’s Security Council seat (with its veto), and was admitted to international organizations such as the G-8 for which it was manifestly unqualified.

Putin’s historical revisionism did not stop there. He elevated Crimea to a central-indeed holy-place in Russian history:

All of this allows us to say that Crimea, the ancient Korsun or Chersonesus, and Sevastopol have invaluable civilisational and even sacral importance for Russia, like the Temple Mount in Jerusalem for the followers of Islam and Judaism.

The equation of Crimea to the Temple Mount is, well, original. It is bizarre that Putin makes the “Temple Mount” sacral for Muslims, and puts them ahead of Jews. Yes, al Aqsa mosque is on what the Jews (with abundant historical and archeological support) claim to be the site of their Temple, but Islam’s veneration of the site has nothing to do with it being the “Temple Mount”, and indeed, there is an active campaign to deny that this was the site of the Jewish temple.

A good rule for reading the speech is to play the opposite game: take what Putin says, and interpret it the opposite way. There are far too many cases of this to cover them all, so I’ll just mention a couple of the greatest hits:

  • “We will tell the truth to people abroad, so that everyone can see the real and not distorted and false image of Russia.” (That’s what RT does, for sure!)
  • “We will actively promote business and humanitarian relations, as well as scientific, education and cultural relations.” (Tell to the “foreign agent” NGOs, the British Counsel, etc.)
  • “We will do this even if some governments attempt to create a new iron curtain around Russia.”
  • “We will never enter the path of self-isolation, xenophobia, suspicion and the search for enemies.” (My favorite, by far. Every word an inversion of the truth. This is the official Russian government translation. The New York Times quotes Putin as saying “paranoia” instead of “self-isolation, xenophobia.” Either way, pure gold.)
  • “The most important thing now is to give the people an opportunity for self-fulfilment. Freedom for development in the economic and social spheres, for public initiatives is the best possible response both to any external restrictions and to our domestic problems.” (Look at the rising flight of Russians to points west, because the opportunity for self-fulfillment in Russia is minimal.)
  • “Conscientious work, private property, the freedom of enterprise – these are the same kind of fundamental conservative values as patriotism, and respect for the history, traditions, and culture of one’s country.” (Yeah. Russia. The land of private property and free enterprise.)
  • “Finally, it’s crucial to abandon the basic principle of total, endless control.”

I could go on. And on. And on.

Some commentary I read said that Putin did not mention anti-corruption efforts, but this isn’t true. He did, but very obliquely:

A huge economic reserve is lying on the surface. It is enough to look at government-financed construction projects to see this. At a recent forum of the Russian Popular Front, examples were cited of funds being invested in grandiose buildings or the construction costs of same-type – I want to emphasise this point – facilities, differing several times over, even in neighbouring regions.

I believe that it is necessary to phase in a system of a single technical contracting authority, and centralise the preparation of standard projects, construction documentation and the choice of subcontractors. This will make it possible to overcome the existing disparity in construction costs and ensure significant saving of public funds spent on capital construction projects, between 10 percent and 20 percent. This practice should be extended to all civil construction projects financed from the federal budget. I instruct the Government to submit relevant proposals.

Yesterday, the Prime Minister and I discussed this topic. Of course, there are some pitfalls here, and knowing what they are, it is important to avoid them, move with caution, implement several pilot projects in several regions and see what happens.

However, leaving the situation as it is today is no longer an option. As I said earlier, construction costs of similar facilities in neighbouring regions differ many times over. What is this?

Diversion or embezzlement of budget funds allocated for federal defence contracts should be treated as a direct threat to national security and dealt with seriously and severely, as in the suppression of the financing of terrorism. I mention this for a reason.

I don’t think there is anything to hide or gloss over here. We have just held our traditional meeting in Sochi under the leadership of the Defence Ministry, combat arms and services commanders and leading defence company designers.

On certain positions, prices double, triple or quadruple, and in one case they grew 11 times. You realise that this has nothing to do with inflation or with anything, considering that practically 100 percent of funding is provided in advance.

In other words, state construction projections and defense contracting are rife with corruption. But Vlad has it under control. He has decreed more intensive oversight of contracting. That’s never been tried before, surely, and just as surely will work like a charm.

Putin acknowledged the fraught economic situation, including the Ruble’s decline. In that fine demagogic tradition, he rounded up the usual suspects: speculators:

Today we are faced with reduced foreign exchange proceeds and, as a consequence, with a weaker national currency, the ruble. As you are aware, the Bank of Russia has switched to a “floating” exchange rate, but this does not mean that the Bank of Russia has withdrawn from controlling the exchange rate, and that the ruble may now be the object of unchecked financial speculation.

I’d like to ask the Bank of Russia and the Government to carry out tough and concerted actions to discourage the so-called speculators from playing on fluctuations of the Russian currency. In this regard, I’d like to point out that the authorities know who these speculators are. We have the proper instruments of influence, and the time is ripe to use them.

At this point, Central Bank head Nabiullina was probably looking for sharp objects to jab into her carotid artery. The “proper instruments of influence”-presumably burning reserves to buy Rubles and hiking interest rates-will dent Russia’s reserves and hammer its already reeling economy.

Hilariously, the moment Putin mentioned the Ruble, it resumed its inexorable decline, going from 52.65 before he opened his mouth to 54.45 (more than 3 percent) by the end of the trading day.

Putin recognized the inflationary impact of the Ruble’s decline, but he has a solution! Controlling prices:

Of course, a weaker ruble increases the risk of a short-term surge in inflation. It’s imperative that we protect the interests of our people, first and foremost, those with low incomes, and the Government and the regions must ensure control over the situation on the food, medicine and other basic goods markets. I’m sure this can be done without any problem, and it must be done.

Yes. It can be done “without any problem,” just like it has been since Diocletian.

Putin also mentioned capital flight, and proposed a complete amnesty to those repatriating their money, no matter how dirty it is:

Of course, it is essential to explain to the people who will make these decisions what full amnesty means. It means that if a person legalises his holdings and property in Russia, he will receive firm legal guarantees that he will not be summoned to various agencies, including law enforcement agencies, that they will not “put the squeeze” on him, that he will not be asked about the sources of his capital and methods of its acquisition, that he will not be prosecuted or face administrative liability, and that he will not be questioned by the tax service or law enforcement agencies. Let’s do this now, but only once. Everyone who wants to come to Russia should be given this opportunity.

We all understand that the sources of assets are different, that they were earned or acquired in various ways. However, I am confident that we should finally close, turn the “offshore page” in the history of our economy and our country. It is very important and necessary to do this.

Somehow I doubt that anyone who spirited any ill-gotten gains-or even honestly-gotten gains-out of Russia will put much faith in those assurances, so don’t look for the money to start flowing east anytime soon.

The last half of the speech focused on economics, and presented a laundry list of goals without anything resembling even an outline of how to achieve them. Productivity growth, diversifying the economy, import substitution, high tech exports, and on and on and on. But unless Putin gets some ruby slippers or finds a genie who grants unlimited wishes, none of this is going to happen. This part of  the speech was just another spin of Putin’s Hamster Wheel From Hell.

Nothing in the speech should be a surprise. Putin has no economic ideas, and just repeats the same nostrums year after year after year. In foreign policy, he is doubling down on truculence and confrontation. In other words, stagnation at home and aggression abroad. The foreign adventures will rest on a crumbling economic foundation. Collapse is inevitable. The only problem is that Putin can wreak much havoc and inflict much harm before the inevitable occurs.

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November 30, 2014

The Battle of Franklin: Sublimely Valiant Sacrifice in the Service of a Bad Cause

Filed under: Civil War,History,Military — The Professor @ 4:11 pm

Today is the 150th anniversary of the Battle of Franklin, one of the most brutal and intense combats of the entire Civil War.

The battle was the pivot of Hood’s Nashville Campaign.  November, 1864 saw the bizarre phenomenon of the two major armies in the Western Theater, Sherman’s Armies of the Tennessee and Georgia, and Hood’s Army of Tennessee, marching in opposite directions. Sherman embarked south on his March to the Sea, and John Bell Hood launched a desperate lunge north, hoping to reach the Ohio River and accomplish . . . something. Just what he could have accomplished is a mystery, as the logistical obstacles alone made the campaign a forlorn hope.

That said, Hoods campaign started well. He deftly outmaneuvered John Schofield, commander of the largest force that Sherman left behind to hold northern Georgia and Tennessee. Schofield’s force consisted primarily of his XXIIIrd Corps (grandiloquently referred to as the Army of the Ohio) and the IVth Corps (of the Army of the Cumberland). Schofield retreated to Columbia, TN, on the Duck River and dug in. Department Commander George Thomas ordered Schofield to retreat to Franklin on the Harpeth River, but before he could do so, Hood stole a march and outflanked him. Schofield had to retreat precipitously from Columbia, but Hood was in position to cut him off near Spring Hill.

In events still shrouded in mystery, the Confederates did not close the trap at Spring Hill. Two rebel divisions remained in place within sight of the Columbia Pike, along which Schofield’s men were marching for their lives. Some Unionists unwittingly wandered into the Confederate lines to light their pipes in the burning fires. While the Confederates waited, Schofield slipped by and made it to Franklin.

The bridge over the Harpeth being destroyed and needing repair, Schofield had his men dig a semicircular line of entrenchments with its flanks anchored on the Harpeth. Due to a confusion in orders, one division (Wagner’s) remained a half-mile in front of the Federal main line. Well, two brigades did, anyways. The third, under irascible Emerson Opdycke, who thought the order idiotic, continued to march into the Federal lines, collapsing exhausted near the Carter House a few hundred yards fro the trenches.

Hood awoke  to find that Schofield had escaped. He excoriated some of his corps and division commanders, including Frank Cheatham and Patrick Cleburne, arguably the most able soldier in his army, for their failure to destroy the fleeing Federals. He urged his troops forward in pursuit.

There is some controversy about his mental state. Some, notably Wiley Sword (whom I know slightly) claim that Hood was enraged, and intent on punishing his army for its failure to attack with vigor at Spring Hill. Others, including Eric Jacobsen and Hood biographer Stephen Hood (a distant relative of the general) vigorously dispute this. Regardless, Hood’s subordinates, including the often inebriated  Cheatham, expressed unease at attacking a dug in Schofield, but Hood dismissed their objections, claiming that he would have to fight them somewhere, and it was better to do so in Franklin before they were able to retreat to the formidable fortifications in Nashville, to which Federal reinforcements were rushing from the west and north. He believed that these were the best odds he could hope to face, as bad as they were.

The assault was over two miles of open ground. It would have been blasted to oblivion well before it closed with the Federals, but for those two Union brigades sitting alone, 1000 yards in front of the main works. Cleburne’s division overlapped and overwhelmed Wagner’s isolated troops, who broke and ran. Up went a cry from the Confederates: “Follow them into the works!” With Wagner’s Yankees and Cleburne’s Rebels all mixed together, the Federals in the trenches held their fire and Cleburne’s men were able to surge over the earthworks between a cotton gin and the Carter House.

Enter Opdycke. The cantankerous Ohioan led his veteran brigade of Ohio and Illinois regiments in a wild countercharge that slammed bodily into the panting Confederates in the grounds around the Carter House. A swirling melee ensued. Opdycke emptied his pistol, then used the butt as a hammer to bash a Confederate over the head. In brutal hand-to-hand fighting, Opkycke’s men pushed back the Confederates, but only to the ditch at in front of the Federal lines. There ensued a battle reminiscent of the struggle at the Bloody Angle at Spottsylvania. Men at the rear would load muskets and pass them forward to soldiers who would thrust them over the top of the trench and fire them at point blank range into their enemies’ faces. When one would fall, his body would be pulled back and some other hardy soul would shoulder forward to take his place. Muskets with bayonets attached were hurled over the earthworks like javelins.

The primal combat extended into the night. The muzzle discharges flashed in the dark until the firing petered out, due to the mutual exhaustion of the adversaries.

While the face-to-face killing went on between the Cotton Gin and the Carter House in the center of the Union lines, the Confederates mounted large assaults on either flank. These attacks were shot down by the well protected Federal veterans, secure behind their stout earthworks.

The Harpeth bridge being repaired, Schofield’s men faded away from their works under the cover of darkness and the exhaustion of their adversaries, and wearily made their way north to Nashville.

The battered and spent Confederates awoke to visions of a holocaust. Dead men were heaped in the ditch in front of the Federal earthworks. Windrows of dead lay in fields over which the Confederates had charged.

But the dead were mainly on one side of the works: the Confederate side. Southern casualties were appalling, totaling about 1750 dead and nearly 4000 with disabling wounds. These represented about 40 percent of the attacking force. The size of the attacking force was larger than the Pickett-Pettigrew charge at Gettysburg, and the total casualties were larger as well.

Among the Confederate dead were six generals: Cleburne, Adams, Granbury, Gist, Strahl, and Carter.

Union losses were trivial by comparison, with less than 200 dead and about 1000 wounded, with a disproportionate share of those losses suffered by Wagner’s hapless troops. The Federals behind the earthworks suffered hardly at all.

The Army of the Tennessee dragged itself to Nashville, which it was utterly incapable of assaulting given its shrunken numbers and the city’s formidable defenses. Hood’s men dug a miserable line south of Thomas’s and sat, unable to go forward and unwilling to go back. Federal reinforcements flowed into the city, and after a two week pause (which drove Grant crazy), Thomas attacked and hammered Hood’s hopeless men in a two day battle that destroyed the Army of Tennessee as a fighting force.

But the fate of Hood’s army had been sealed  in the fields south of Franklin. The Confederate assault was insanely brave, all the more so because as veterans the men knew the fate that likely awaited them. It was a valiant sacrifice, but it was also a tragic waste made in the name of a bad cause.

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November 26, 2014

Obama: Preferring Micromanaging Failure to Delegating for Success

Filed under: History,Military,Politics — The Professor @ 9:41 pm

In a sign of the impending apocalypse, I am sorry to see Chuck Hagel depart as Secretary of Defense, because what it says about the prospects for combat operations in the Middle East, and military matters generally. I have been harshly critical of the man as being completely overmatched by the demands of the job. Alas, he was too competent and too assertive for Obama.

The initial story put forth by the administration was that this was planned, something that had been under discussion for some time. Which is patently bologna, given that the administration had no one waiting in the wings to stop into Hagel’s position: a planned transition would be much smoother than this, where the leading candidates are at pains to make clear that they have no interest. (More on this below. Compare this mess to the process of Holder’s resignation and the quick naming of a successor.)

In fact, the real reasons for Hagel’s axing are plainly obvious. He had questioned the coherence of the administration strategy in Syria. He has made statements about the dangers posed by ISIS that patently contradicted Obama’s “JV” characterization and the president’s desired softly-softly approach in Iraq and Syria. He agreed with the uniformed military and imposed a quarantine on service personnel returning from Ebola-stricken reasons. Brought into to oversee substantial budget cuts, he began to support the Pentagon’s position that the military was becoming dangerously underfunded.

In other words, he showed some spine, and pushed back against Obama and his coterie in the White House and the NSC in particular.

I am also quite sure that there is a near insurrection under way at the Pentagon, due to deep differences over the conduct of the campaign against ISIS and funding of the military. Obama wants to reassert control over the building.

Obama has now blown through three SecDefs. Two of those-Gates and Panetta-have blasted Obama for his micromanagement exercised through the White House/NSC staff. Hagel was supposedly similarly frustrated.

And indeed, the very limited nature of the campaign in Iraq and Syria provides compelling evidence of that. No serious military person would carry out this campaign in this way. There are no ground troops  to identify targets and call in air strikes. The number of sorties is laughably small, a small fraction of those mounted even during the relatively limited Serbian operation, let alone in Gulf Wars I and II. Hell, the shambolic Syrian air force is mounting more strikes than the US. (I have seen suggestions that the low number of strikes reflects the fact that the US military is overstretched. If this is true, the budgetary constraints have created a true crisis when a war ravaged Syrian military can operate at a more intense tempo.)

Obama has allegedly expressed frustration that the military has not come up with “creative solutions” to the challenges in Iraq and Syria. He has prevented them from implementing the techniques developed through long experience which have been deployed with great success ever since the campaigns in Europe in WWII, and which were perfected since the mid-1980s’ AirLand Battle concept was introduced. Apparently Obama cannot accept that military realities cannot be wished away to satisfy his personal opposition to the deployment of robust force, and particularly to the deployment of any combat personnel on the ground.

The miserly approach  to the application of force in Iraq and Syria is epitomized by what is occurring in the crucial city of Ramadi. It is a strategic location in Anbar, and ISIS, which already controlled about half of it, has launched an attack to capture the rest. Its assault has reached the government center. The town is at serious risk of falling.

Any ISIS concentration provides  the perfect opportunity to employ air power: this is what has happened at Kobani. But even though the US is only launching 20 or so strikes a day in theater, it can’t spare anything for Ramadi: it launched a single attack on a checkpoint on the outskirts of town while the center was under a serious assault. The embattled Iraqis are begging for air support, but it’s not forthcoming:

“The governorate building has been nearly cut off,” said a Baghdad security official in direct contact with the operations command for Anbar, the province where Ramadi lies. The official said that Islamic State forces had cut roads to the Iraqi Army’s 8th Division base to the west and the road to Habaniyya airbase to the east. The official spoke on the condition of anonymity because he was not authorized to talk to reporters.

. . . .

Local security forces and tribesmen initially succeeded in resisting the Islamic State’s newest advance, but commanders on the ground say a lack of continuous air support and reinforcements has made it impossible to hold that territory.

Ahmed Mishan al Dulaimi, a Ramadi police lieutenant, said that coalition airstrikes had been critical to stopping the Islamic State’s initial assault but that the strikes had stopped. “We were told (the aircraft) were occupied” with other fronts.

“If the coalition doesn’t continue targeting the nests of Daash, everything that we’re doing now will just be in vain,” he said, using an Arabic term for the Islamic State.

For the want of a nail.

And now the Pentagon is leaderless. Ominously, the two leading candidates, Senator Jack Reed and former Undersecretary of Defense Michèle Flournoy have withdrawn their names from consideration.

And is there any wonder? It is plain that Obama is hostile to and suspicious of the Pentagon. It is equally plain that those sentiments are repaid with interest. Who wants to be in the middle of that?

Moreover, it is abundantly clear that even though his micromanagement has been widely criticized, and that the results of this micromanagement have been nearly catastrophic, Obama is intent on maintaining a tight control over military operations and the budget, exercised through such lightweights as Ben Rhodes and Susan Rice: there are more munchkins in the White House (and the NSC) than there were in Oz. Hagel’s firing shows that Obama will brook no dissent. Only a cipher would be willing to work under these conditions. It is a sobering thought that Hagel wasn’t enough of a cipher to satisfy Obama.

The decline in talent at the upper echelons in an aging, lame duck administration is inevitable: Obama’s management of the Pentagon makes that decline even more pronounced. To think that we will pine for the likes of Chuck Hagel. My God.

Obama clearly prefers micromanaging failure to delegating for success. But perhaps that’s not fair. Perhaps Obama believes that letting the military devise and implement a plan that would have a realistic chance of defeating ISIS will lead to other consequences that he considers worse than the current fiasco. I shudder at the thought.

 

 

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November 23, 2014

Obama’s FOF Foreign Policy

Filed under: Energy,Military,Politics — The Professor @ 12:36 pm

The Marines have a saying: “No better friend. No worse enemy.” Obama is hell-bent on reversing that formulation.

One leg of his foreign policy could be dubbed FOF: F’ Our Friends. I’ve discussed one example of that recently: Obama’s inveterate opposition to the Keystone XL pipeline, and his fact free defense of his indefensible position. In adhering to this position, Obama is giving Canada the back of his hand.

The Australian reports of another example. Obama spurned the advice of the US ambassador to Australia, and delivered a truculent speech that directly attacked the Australian government’s climate change policies:

The US embassy, under the leadership of ambassador John Berry, advised the President, through his senior staff, not to couch his climate change comments in a way that would be seen as disobliging to the Abbott government, sources have revealed.

When The Weekend Australian put this information to the US embassy, a spokesman said: “As is the case with all presidential speeches, President Obama’s remarks at the University of Queensland in Brisbane were prepared by the White House.”

It is normal practice when the US President makes an overseas visit that the ambassador in the country he is visiting is consulted about the contents of major speeches. It is unusual, though not unprecedented, for an embassy’s advice to be ignored.

The Obama speech in Brisbane was added to the President’s program at the last minute. During his extensive talks with Tony Abbott in Beijing at APEC, Mr Obama did not make any mention of a desire to make a speech, or of any of the contentious climate change content of the speech.

Only in Naypyidaw, in Myanmar, immediately prior to the leaders travelling to Brisbane for the G20 summit, did the US party demand that the President make a speech and that it be to an audience of young people. At the speech, the President did not ­acknowledge the presence of Governor-General Peter Cosgrove.

Despite repeated Australian requests, White House officials refused to provide a text of the speech to their Australian hosts in advance, and did not provide a summary of what would be contained in the speech.

Mr Obama’s repeated references to the climate change debate in Australia, his accusation that Australia was an inefficient user of energy and his repeated references to the Great Barrier Reef, which has figured heavily in the climate change debate, have led observers to conclude that the speech was a deliberate swipe at the Abbott government.

Historians of the US-Australia relationship are unable to nominate a case of a visiting president making such a hostile speech for the host government.

That’s our Barry. Always the gracious guest, always making history.  (If you can’t access the article through the previous link, you should be able to get there from here.)

Canada and Australia have been stalwart allies for years. Both are fighting beside the US against ISIS and Afghanistan. The Australians fought with us in Viet Nam. Of course both made huge contributions in WWII, especially once their sizes are considered. Both are highly responsible and constructive nations. To a considerable degree, they share a common heritage with us, and a common belief in liberty and representative government.

Maybe it’s something about the Anglosphere. Obama’s animus against the UK (which has also fought shoulder-to-shoulder with America in Afghanistan, Iraq, Kuwait and now against ISIS) is well-known.

And for what is Obama slagging our allies? A farcical war on CO2.

While the FOF campaign is in full swing, Obama continues his Ahab-like pursuit of a deal with a nation that has been assiduously killing Americans for 25 years.

That’s Obama’s America. No worse friend. No better enemy. Two years cannot pass quickly enough.

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November 21, 2014

Swatting the Gold Bugs

Filed under: Economics,Military,Politics,Russia — The Professor @ 8:41 pm

There are idiots. There are morons. Then there are gold bugs. It would be a full time job fighting their insanity, and doing so is like kicking a manure pile: it raises a stink and a cloud of flies. But sometimes it just has to be done.

Recently it was reported that Russia has been buying gold at a furious rate. Gold now represents almost 11 percent of the country’s reserves.

The gold bugs buzzed in glee. To them, it represented another nail in the coffin of the doomed dollar, and Putin was an economic genius making a decisive move in his war against the US. And of course, Zero Hedge peddled this line (by posting an article by a bug site):

Russia’s central bank Governor Elvira Nabiullina told the lower house of parliament about the significant Russian gold purchases. She is an economist, head of the Central Bank of Russia and was Vladimir Putin’s economic adviser between May 2012 to June 2013.

This announcement is unusual and to our knowledge has not happened before. The announcement by the Russian central bank governor was likely coordinated with Putin and the Kremlin and designed to signal how Russia views their gold reserves as a potential geopolitical and indeed financial and currency war weapon.

(The comments are priceless.)

Here’s another, from July:

Reserve Currencies In History – Dollar’s Demise Cometh

Central banks continue to be buyers of gold at these attractive price levels. As sanctions, economic war and currency wars intensify we expect Russian and Russian ally buying of gold reserves and selling of dollars to intensify. Aggressive buying of gold and particularly silver by Russia will likely lead to defaults on the COMEX gold and silver futures exchanges and potentially an international monetary crisis.

See important guide to Currency Wars here Currency Wars: Bye, Bye Petrodollar – Buy, Buy Gold

The truth, of course, is much different. This is actually another symptom of Russian economic desperation, rather than a diabolically brilliant blow against the dollar:

Russia’s central bank has been forced to step up its gold buying this year to absorb domestic production that Western sanctions are making it hard for miners to sell abroad, and to boost liquidity in its foreign reserves, sources said.

Most Russian gold mine production is sold to domestic commercial banks, such as Sberbank or VTB, which can then sell the metal on to either the central bank or to foreign banks.

This year, sources say, foreign banks are holding off buying Russian gold after Western powers implemented sanctions against the country over the Ukraine crisis.

The central bank has therefore had no choice but take domestic mine production that cannot be sold to foreign banks, two sources said, and has bought most of the metal that commercial banks had available.

. . . .

While the sanctions do not expressly prohibit them from buying gold, Western banks are cautious over any business done with their Russian counterparts, sources said.

What’s more, the Russian CB can pay for the domestically-produced gold with rubles. It’s the only way it can really bolster reserves without selling rubles for dollars or euros.

Thus, rather than a blow against sanctions, it is yet another action forced on the Russians by them.

It’s also interesting to note that gold hasn’t been a great investment for the Russians. Gold purchase data is available on a quarterly basis. Assuming that Russia purchased gold in a quarter at the average price during those three months, based on IMF data and the current spot price of gold, I estimate that Russia has lost well over $1 billion on the gold purchased since 2009.

Speaking of Russia’s reserves, this piece by Anders Aslund is well worth reading. When he breaks down the numbers, Russia’s vaunted reserves look much less impressive. In particular, Anders points out that the National Wealth Fund and the Reserve Fund are not under control of the Central Bank, and committed to supporting pensions and the federal budget. Moreover, sharks like Sechin are already laying claim to big pieces of it. Further, Russia’s large external corporate debt cannot be refinanced due to sanctions, and payment commitments over the near to medium term will rapidly draw down the remaining reserves, and the current account surplus will fall substantially due to lower oil prices.  

One last gold item. ISIS are gold bugs. They have announced the creation of a currency, based on circulating gold, silver, and copper coins. They really believe the gold bug stuff. They are aficionados of ZH and currency warrior James Rickards (whose mug pops up everywhere, including on mainstream media websites like WaPo, in advertisements for his buy gold, buy a bunker, for the end is nigh book).

I was particularly amused by this:

 The gold and silver purchases are strange enough, he said. “But what is striking is how elements of the organization have seized power transmission cables and other copper components,” Obeidi said. The fighters are burning the insulation off the cables and harvesting the copper [to fashion into coins], he said.

So they’ll have metallic coins but no electricity. Which may be OK with them, given how much they want to live a 7th century lifestyle.

This is great news. If a shambolic Iraqi military can’t destroy the Islamic State, economic mismanagement based on wacko gold bug theories might achieve that result instead. I suggest that the CIA carry out a mission to translate Rickards’ Currency Wars into Arabic, and clandestinely distribute it in ISIS-controlled lands. A very cheap, but very effective, form of subversion.

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November 20, 2014

How Do You Know That Zero Hedge is a Russian Information Operation? Here’s How

Filed under: History,Military,Politics,Russia — The Professor @ 9:41 pm

I have frequently written that Zero Hedge has the MO of a Soviet agitprop operation, that it reliably peddles Russian propaganda: my first post on this, almost exactly three years ago, noted the parallels between Zero Hedge and Russia Today.

A few days ago ZH ran a post that illustrates perfectly how it spews Russian propaganda that slanders the United States and other enemies of Russia, such as Ukraine: “Ukraine Admits Its Gold Is Gone: “There Is Almost No Gold Left In The Central Bank Vault.”

The lurid post highlights a statement by the head of Ukraine’s Central Bank, to the effect that almost all the gold in Ukraine’s official reserve is gone. It states that this is news, a stunning revelation, which confirms a story that ZH reported a few weeks after the triumph of Maidan: that soon after Yanukovych fled, the gold had been spirited out of the country in the dead of night by airplane. It closes by stating the the disappearance of the gold occurred at the time that US State Department official Victoria Nuland was in Kiev. The implication is obvious. The US stole it:

In any event, now that the disappearance of Ukraine’s gold has been confirmed, perhaps it is time to refresh the “unconfirmed” story that a little after the current Ukraine regime took power the bulk of Ukraine’s gold was taken to the United States.

Wow. Quite a tale.

And one that overlooks crucial details. Most importantly, the Ukrainian CB’s “admission” of that the vaults are empty is not news. At all. A mere few days after Yanukovych fled, Ukrainian Prime Minister Yatsenuk disclosed that the country’s gold reserves had been looted:

Speaking in parliament, Yatsenyuk said that the former government had left the country with $75bn of debts. “Over $20bn of gold reserve were embezzled. They took $37bn of loans that disappeared,” Yatsenyuk said. “Around $70bn was moved to offshore accounts from Ukraine’s financial system in the last three years,” he claimed. [Emphasis added.]

The US dispatched  FBI and Treasury investigators to assist Ukraine in an investigation.

Funny how ZH left out that history, which appeared in virtually every mainstream publication at the time, and made it seem for all the world like the Ukrainian Central Bank’s revelation hit the world like a thunderbolt, nine months after Yanukovych’s flight. That distortion of history makes it plain that the ZH story is not information, but an information operation.

Shortly after Yatsenuk disclosed the theft of the gold, stories started appearing on the web, first on a Russian website, claiming that the gold had been spirited out the country: including on ZH, which quoted the Russian web story. This obviously serves a Russian purpose: it presents a counter-narrative that blames the theft of the gold not on Yanukovych, or the Russians, but on the new Ukrainian government and the United States.

This is the classic Soviet/Russian agitprop MO that I noted 3 years ago. A story appears in an obscure publication, typically outside the US or Europe, where it has been planted by Soviet/Russian intelligence. It is then picked up by another, more widely read publication, in Europe or the West. Maybe it works its way through several additional media sources. It then gets disseminated more widely in the west, sometimes making it to prestige publications like the NYT.

In the era of the web, the information weapon needn’t make it that far. Getting into a widely-read web publication like Zero Hedge which is then linked by numerous other sources and tweeted widely ensures that the lie goes viral.

ZH is an important transmission belt moving the story from Russian propagandists/information warriors to western news consumers. It happens a lot. This is a particularly egregious example, but the transmission belt runs almost daily. ZH is as much a part of Putin’s information warfare as RT. If you follow closely enough, it’s as plain as the nose on your face.

So why does anyone take Zero Hedge seriously? And believe me, many do. Many people who should know better.

And what is the US’s counterstrategy? Marie Harf’s Twitter account. I say again: we are so screwed.

 

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November 17, 2014

Obama Draws Another Red Line–On Pluto

Filed under: History,Military,Politics — The Professor @ 10:12 pm

Obama has identified a condition under which he would commit ground troops to fight ISIS: if ISIS gets a nuke.

The headline on the YouTube video is misleading. Read literally, it means that Obama has identified an ISIS nuke as a necessary condition for a commitment of US ground troops. He has instead stated a sufficient condition. There may be other sufficient conditions. Perhaps he would commit ground pounders if ISIS were to ally with space aliens whose ship landed in the Syrian desert. Or maybe if ISIS creates a zombie army. So an ISIS nuke isn’t necessary, exactly.

But it’s clear that Obama is making it plain that he would only contemplate ground troops under the most extreme circumstances. He has drawn a red line, without using the term. And learning from his Assad-uses-chemical-weapons red line blunder, he has drawn this one so far, far away that the probability it will be overstepped is vanishingly small, certainly in the two years remaining to Obama’s presidency. This red line might as well be on Pluto. Which is exactly Obama’s intent.

A reasonable interpretation of Obama’s remarks is that even though nukes are beyond the pale, chemical and biological weapons are not.

Note that the ground operation that Obama envisions is a commando raid to secure the weapon, rather than a persistent troop presence.

Further note the supercilious tone with which he delivers his statement. As if it as a nearly unbearable impertinence for someone even to broach this question.

There is a continuum of ways in which ground troops can be deployed. Obama’s scenario is about at one endpoint of that continuum. Moving close to the other endpoint, no one has seriously raised the possibility of deploying a force even remotely resembling what was on the ground in Iraq from 2003-2011. The deployments that Dempsey and Odierno and others have mooted are not far from Obama’s proposal, but would facilitate the two main pillars of American strategy, such as it is: an air campaign and relying on local troops to roll back ISIS. Ground controllers and special forces are tremendous force multipliers in an air campaign, especially when intelligence is hard to come by and avoidance of civilian casualties is vital and the battlefield is very complex. Moreover, the effectiveness of Iraqi and Kurdish troops would be greatly increased if US advisors were present at the front, at the battalion level and below. Training them in bases at the rear and then having US advisors wave goodbye as they send them off to get their asses kicked, again, is an exercise in futility. Every Iraqi battalion needs American officers embedded, and special forces should deploy with Iraqi troops at the point of the spear. These Americans can provide tactical guidance, buck up wavering Iraqis, collect intelligence, and facilitate coordination between ground units and between ground units and coalition air forces.

But no. Obama’s mulish insistence on no ground troops absent nukes/aliens/zombies substantially hampers the effectiveness of the limited resources he has grudgingly committed to the battle. He has imposed irrational limits on an already limited strategy and operational concept.

It would be reasonable to conclude that he wants to fail, because the constraints he has imposed make failure highly likely.

 

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November 12, 2014

Is the Next Invasion Coming in Ukraine? It Looks That Way

Filed under: Military,Politics,Russia — The Professor @ 2:54 pm

It is clear that things are heating up in Ukraine. Nato commander Breedlove stated that Russian troops and armor have moved into the Donbas. Even the blind OSCE has noticed their presence. There are nine battalion combat groups on the border. The intensity of combat between “rebels” and the Ukrainians is increasing. Ukraine has put its troops on alert, telling them to expect an assault.

I have predicted that the conscription cycle and the need to open a land route to Crimea would lead Putin to launch an attack soon. When the ground is reliably frozen, but before winter fully sets in, would be the optimal time. That would be very soon.

I think an attack is likely, especially since the west (Obama, Merkel, etc.) continue to avert their eyes and pretend like nothing is going on. “Leaders” who will not utter the word “invasion” even though that is clearly what has transpired obviously have no stomach for confrontation, and Putin is betting on that continuing.

I think it will proceed as follows. The “rebels” will be committed to attacks throughout Donbas to fix and attrit the Ukrainian forces. They will be cannon fodder. Once the Ukrainians are fixed in place, and their units become combat ineffective due to losses, or at least lose significant numbers of personnel and equipment, the Russian regulars will slice in to deliver the coup de grâce.

Then the castrati in western capitals will express concern, and have meetings, and end up doing nothing.

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November 1, 2014

Laying the Groundwork for the Next Phase of Putin’s Novorossiya Campaign: The Price of Pusillanimity

Filed under: History,Military,Politics,Russia — The Professor @ 12:04 pm

Ukraine held successful, and remarkably pro-Western, elections last Sunday. The result was a rebuke to Putin, and provided further proof of the adage that you catch more flies with sugar than with gall. Tomorrow, the rump/puppet statelets of Donetsk and Luhansk will hold Soviet-style sham elections, which the Kremlin will duly recognize in violation of the Minsk Protocol signed in September.

Ominously, there are numerous reports of an escalation in the intensity of combat throughout eastern Ukraine (the cease-fire being something of a joke, of course). Further, there are reports of movements of large quantities of new Russian equipment, including SAMs (e.g., S-300s) and MLRS systems considerably more advanced than the scattershot Grads that have been used indiscriminately. There are also indications that the fractious and thuggish rebels are being replaced at key points by Russian regulars.

Something is building here. The timing likely reflects the conscription cycle that led to the faux withdrawal some weeks ago that gave faux hope to those in the west who saw what they desperately wanted to see. Moreover, the passivity of the West, and the distraction of Obama by ISIS (not that he was ever really engaged with Ukraine anyways) give Putin every confidence that another strike would be met with indignant blasts of hot wind from the west, and little else. His prize of Crimea (My precious! My precious! to Gollum-Putin: it’s basically all he has to show for his Herculean labors this year)  is also barely supportable now without access to supplies from the mainland, but will be all but isolated when the slender thread of waterborne transport is frozen shut in a few weeks. Putin needs to open the land routes through the Ukrainian mainland. This requires taking Mariupol, and then continuing to advance west to Kherson.

Russia has markedly increased the intensity of its aerial aggression against Nato countries (including Turkey, which is interesting) and Japan. (Over the summer it carried out mock nuclear strikes on Denmark (!!!) , like those simulated against Sweden and Poland in previous years.) It has bullied Finnish research vessels. (For someone who fulminates about the expansion of Nato, Putin is its best recruiting sergeant.)  It recently tested two nuclear missiles, a Bulava SLBM (which is apparently finally over its serious teething problems) and a Topol ICBM. Putin’s recent rantings in Valdai included sort-of veiled nuclear threats and warnings that “the bear isn’t asking anyone for permission.”

These are all warnings to the west to stand back and not even think about interfering when Putin mounts the next phase of his Novorossiya campaign, likely in the next 10 days-two weeks. These are the wages of the west’s feckless dithering for the past 9 months. This is the price of pusillanimity.

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October 29, 2014

Did Putin Have the Hackers Insert Malware Popups Saying “Who’s Your Daddy?”

Filed under: Military,Politics,Russia — The Professor @ 6:54 pm

Although this has been rumored for weeks (due to the dogged reporting of Powerline), yesterday the White House admitted that hackers, likely Russian (I’m shocked! Shocked!), had compromised the (allegedly non-classified) computers of the Executive Office of the President.

Did Putin have the hackers insert malware that triggered a popup saying: “Who’s Your Daddy?”

But here’s the best part (and per usual, “best” means “worst”). We didn’t discover this ourselves. An “ally” informed us.

It would be so hilarious if the “ally” is Israel. (Germany would be a close second in hilarity.) It would also be so karmic.

But I guess this isn’t possible, because a confidential administration source said the information came from an ally, and we know what Obama, Kerry, etc. think of Israel, and “ally” isn’t the first word that trips off the tongue.

The hits just keep on coming, don’t they folks? But yes, by all means let’s hear some more lectures about how since “you didn’t build that” we need bigger government, delivered by the least competent administration ever.

 

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