Streetwise Professor

April 20, 2015

A Russian Troll Trolls From the Land of Trolls

Filed under: Climate Change,Military,Politics,Russia — The Professor @ 2:22 pm

Trolls are characters from Scandinavian folklore who inhabit desolate islands, so it only seems fitting that Rogozin the Ridiculous trolled Nato from a desolate Norwegian island. Rogozin, who is banned from traveling to Norway due to sanctions, showed up on Svalbard (formerly Spitsbergen), which is sovereign Norwegian territory (though Russians have residence and commercial rights there under the Svalbard Treaty). Rogozin obnoxiously (but I repeat myself) tweeted that “the Arctic is Russian Mecca.” The Norwegians are not amused. Nor should the US. But we seem unfazed.

Wouldn’t you know, the United States is assuming the chairmanship of the Arctic Council from Canada. In the face of Russia’s quite in-our-face assertion of control over the Arctic (of which the Ridiculous One’s “Russian Mecca” Tweet is just an example), and its dramatic increase in its military activities and presence in the Arctic, what is John Kerry’s priority for the Council? You guessed it: climate change. You know, for the polar bears.

Back to Rogozin, last seen here performing so marvelously in his role as commissar of the Vostochny Cosmodrome. His intervention into the management of the troubled project (including threats to “rip off the heads” of those holding up construction) has worked wonders. Well, mainly, it has resulted in a spread of strikes protesting lack of pay. And to save costs, the construction of infrastructure to support manned launches is being deferred, resulting in at least a two year delay in the use of the facility for such purposes. Well played, Bozo! The mind boggles at the thought of what you’ll accomplish in your icy Mecca.

Believe it or not, Rogozin has intense competition for the title of most insane Russian official today. His competition is Nikolai Rogozhkin, Putin’s representative in the Siberian Federal District. (Hey. Rogozin, Rogozhkin: pretty similar! Lame attempt at a pseudonym? Or is “Rogoz” a Russian prefix meaning “moron”?) Siberia is beset by wildfires already, and there are fears that this summer will make 2010 look like child’s play. So whom does Rogozin-sorry, I mean Rogozhkin-blame? Saboteurs, of course! Wreckers! Fifth Columnists! Oppositionists! As for his reasoning, check out the most outrageous flouting of Occam’s Razor I have ever seen:

Rogozhkin said he had flown in a helicopter and seen fire sites in “places where a normal person cannot go, even one who is well-prepared.”

“A specially trained person would be needed for this, and it would take at least 24 hours,” he said.

So rather than reason: “It is nearly impossible for a normal person to set these fires, so they must have a natural cause”, Rogozhkin the Almost as Ridiculous concludes that it isn’t a normal person after all. It is a specially trained person.

You literally cannot make up this stuff.

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April 18, 2015

Alfred E. Obama

Filed under: History,Military,Politics,Russia — The Professor @ 2:37 pm

Obama reacted in his best Alfred E. Newman “what? me worry?” fashion to Putin punking him by selling S-300 missiles to Iran. Short version: “What took you so long, Vova?”:

President Obama said that he was “not surprised” Russia sold an advanced missile system to Iran in the midst of his negotiations with the Ayatollah to prevent Iran’s nuclear facilities from making a bomb. He went even further to say that he expected the deal to happen a lot sooner than it did.

“I’m frankly surprised that it held this long given that they were not prohibited by sanctions from selling these defensive weapons,” President Obama said on Friday.

Another example of the flexibility that Barry promised Vladimir via the whisper to messenger boy Dmitri.

Correct me if I’m wrong, but supposedly the big payoff to the Reset was Russian cooperation on Iran. But apparently Obama believes that the sell-by date of that cooperation has long passed. Or , he doesn’t really give a damn about keeping Iran in a box.

And look at what he did there. He totally buys the Russian and Iranian line that these are “defensive weapons”, and hence pose no problem: again, “what? me worry?” Is he that stupid? Does he not realize that a strong shield protects those who wield the sword? These AAMs dramatically undercut the credibility of any military response to Iran’s developing nuclear weapons: they thereby undercut the credibility of Obama’s vaunted deal. (Although that presumes that Obama actually intends to deprive Iran of the bomb. His actions repeatedly cast doubt on that presumption.)

If defensive weapons as so benign, why doesn’t Barry supply them to Ukraine? Indeed, the defensive weapons (e.g., ATGMs) that Ukraine is pleading for cannot serve the same strategic function as the S-300s supplied to Iran. They are truly useful only in local defense, particularly by an army like Ukraine’s that is hard pressed to hold its own ground, let alone attempt to project power. They can help make a Russian invasion too costly for Putin to undertake, but cannot provide a shield behind which an aggressive power can develop the means to carry out its expansionist schemes. So Obama should shove Putin’s words about the benignity of defensive weapons back in his botoxed face. “What’s good for Iran is good for Ukraine, Vlad.”

But instead, Obama (and the feckless Europeans) cringe before Russia’s freak outs about providing one bandolier, bullet, bayonet or trainer to Ukraine, or stationing one tank in the Baltics. Indeed, the Russians also went ballistic (figuratively) by threatening to go literally ballistic over Nato ABM systems.

Ponder the hypocrisy here. It is a thing to behold. Russia told Israel to lie back and enjoy it because S-300’s are purely defensive. But any Nato defensive missiles in Europe have become “objects of priority [Russian] response [i.e., they are now nuclear targets].” (General Dempsey has Obamaitis, apparently, saying that he’s “not surprised” by Russia’s rhetoric. This guy is becoming a daily embarrassment.)

Obama also channeled good old Alfred E. when he downplayed Khamenei’s insistence that sanctions would be eliminated immediately upon reaching an agreement, and that military sites were completely out of bounds to inspectors:

“It’s not surprising to me that the supreme leader or a whole bunch of other people are going to try to characterize the deal in a way that protects their political position,” Obama said in a news conference Saturday at the Summit of the Americas in Panama.

Talk about projection! What the hell has Obama been doing in the past three weeks other than “try[ing] to characterize the deal in a way that protects [his] political position”?

Obama is also demonstrating that his vaunted flexibility is not limited to Russia, saying that he is open to “creative” approaches to lifting sanctions early. He claims that he insists on “snapback” capability, but anyone who believes sanctions can be snapped back is out of his bleeping mind. Or is a liar that is “characteriz[ing] the deal in a way that protects his political position.” That is, saying anything to protect a deal that he wants, hell or high water.

If Obama is Alfred E. Newman, I am definitely not. Me worry. In particular, me worry that we are bumping against the limits of the amount of ruin in a nation that Adam Smith wrote about.

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A Greek Gas Farce

Filed under: Commodities,Energy,Financial Crisis II,History,Politics,Russia — The Professor @ 11:44 am

Der Spiegel reported that Greek officials claim that the country is on the verge of signing a deal with Russia that would give the Greeks €5 billion upfront, to be repaid from transit fees on a yet-to-be-built Turkish Stream pipeline: the Russians deny any deal. The quoted (but anonymous) Greek official said that this would “turn the tide” for Greece.

Really?

Some thoughts off the top.

First, Greece owes €320 billion, including payments of €30 billion in 2015 alone. It is “scraping the bottom of the barrel” by borrowing from various state entities (e.g., the public transport system) to meet April payroll. It has a budget deficit of €23 billion. Deposits at Greek banks fell by about €20 billion last week. This creates a liability for the Bank of Greece to Target2 (i.e., to the members of the ECB). A measly €5 billion will buy it a few weeks time, at best.

Second, it’s not as if creditors (e.g., the EU and the IMF and Target2 members) are going to give Greece discretion over how to spend this money. And they have many levers to pull. So it would set the stage for more arguments between the creditors and the debtor.

Third, the Russians are likely to write terms that secure the debt and give it priority over other creditors (at least with respect to any future transit fees). (Just remember how tightly the Russians crafted the Yanuk Bonds.) The Euros will flip out over any such terms. This would set up an epic The Good, The Bad, and the Ugly three-way standoff.

Fourth, this initiative would be directly contrary to European energy policy, which is finally attempting to reduce dependence on Russia and limit vulnerability to Russian gasmail and the use of energy as a wedge to create divisions within the EU.

Fifth, what are the odds that the pipeline will get built? The Europeans are against it. It requires the Greeks and the Turks to play well together, and we know how that usually works out. It requires additional investment in infrastructure in Turkey, which is problematic. Further, the Russian track record on these sorts of projects leaves much to be desired.

So what happens if the pipeline isn’t built, or is delayed significantly. No doubt the Russians will anticipate this contingency in the debt agreement, and write things in such a way that they have security or priority, which will just spark another battle with Greece’s European creditors.

In sum, such a deal would hardly be a solution to Greece’s problems. Indeed, it only escalates conflicts between Greece and the EU.

Which may be Putin’s purpose, exactly. Exacerbating Greek-EU conflict over a matter involving Russia directly at a time when Greece could scupper the extension of sanctions against Russia suits Putin perfectly. The fact that the pipeline is as much pipe dream as realistic project doesn’t matter a whit. This is all about stirring trouble. And that’s Putin’s speciality.

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April 14, 2015

Obama the Negotiator at Home and Abroad: Compare and Contrast

Filed under: History,Military,Politics,Russia — The Professor @ 6:56 pm

We know that Obama knows how to play tough in negotiations. We know that he can engage in brinksmanship. We know he can draw red lines, and stick to them. Just look at past confrontations with Congressional Republicans, especially over budgetary issues, the debt ceiling, and Obamacare.

This contrasts starkly with his abysmal negotiating strategies with foreign adversaries. The unilateral concessions, by the bagful. The failure to extract any meaningful concessions from his interlocutors. The declaration of red lines, followed by at most mewling protests when the lines are crossed.

The Iran negotiations are of course the most prominent example. But consider the opening to Cuba. Indeed, it is really impossible to consider this a negotiation at all. Instead. Obama has just unilaterally undone a set of restrictions that have been in place for years, including today’s removal of Cuba from the State Department’s terror supporting nations list.

And Cuba has done what in return? Bupkis.

Whatever you think about the embargo and the terrorism list designation, we have issues with Cuba, notably its expanded cooperation with Russia (which last year Newsweek called “Partying like it’s 1962“), including the reopening of the Lourdes surveillance facility: note, that the Cold War is not over for everyone. To ease up on Cuba at the very same time it is increasing its cooperation with an aggressive and truculent Russia is astounding. Human rights is another issue.

So we have things that we should want from Cuba, and the means to extract them. Cuba is in dire economic straits, especially since its most recent patron, Venezuela, is circling the bowl at mach speed. So the US has leverage, just as it does with Iran. And the costs to the US of continuing the embargo are trivial. Threats to walk away-or to increase the pressure-are quite credible. There is a huge asymmetry in bargaining power here.

You know how Obama would play this hand with Republicans. We see how he plays it with the Castros and Khamenei. It’s not that he doesn’t know how to play hard ball: It’s that he doesn’t want to.

The question is why? I keep returning to the theory that he  believes that the exercise of American power abroad is illegitimate, and that in the cases of countries like Iran and Cuba, he actually believes that the US owes redress for past transgressions.

If you all have a better theory, I’d like to hear it. But your theory has to explain why a man who can be so obdurate in negotiations at home is so pliable-to put it mildly-in negotiations abroad.

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Putin Punks the President. Again.

Filed under: Military,Politics,Russia — The Professor @ 9:34 am

Putin just punked Obama. Again. This time by announcing the resumption of the delivery of S-300 antiaircraft missiles to Iran, and the beginning of the oil-for-goods swap that had been mooted some months ago, and doing so before the non-ink on the nuclear non-deal with Iran has dried. Lavrov put the boot in, by stating that the moves advanced the negotiations on Iran’s nuclear program:

“It was done in the spirit of good will in order to encourage progress in talks,” Lavrov said. “We are convinced that at this stage there is no longer need for such an embargo, specifically for a separate, voluntary Russian embargo.”

The Daily Beacon goes into the wayback machine and reminds us that in 2010, the administration asserted that the sale of S-300s was a red line. But we know about Obama’s red lines, don’t we? And you know Putin does.

Shockingly, Kerry expressed “concern” at the Russian move. (That was sarcasm, people.) Kerry is doubly punked, because just the other day he cited the Russians as agreeing with him on the understandings reached in Lausanne.

Kerry is the biggest buffoon and chump to serve as Secretary of State in the 229 year history of the republic (but perhaps the most arrogant). (And that includes James Buchanan! At least we will probably be spared a Kerry presidency.) He has been spinning and harrumphing non-stop in defense of the non-deal. For instance, he claims that we will be able to detect any Iranian violations because Science! (the usual lefty magical incantation). Further, he says Congress (and everyone else) should but out because Obama has a “global mandate”:

Secretary of State John Kerry described the nuclear agreement with Iran as a “global mandate” that Congress only “assisted” in creating. “This is a global mandate issued by the United Nations,” Kerry said Sunday on CBS’ “Face the Nation.” “Congress assisted by passing sanctions.”

Um, you would have thought that Kerry would have given up such “global” formulations after the “Global Test” fiasco of 2004. But of course not.

And I think my copy of the Constitution is complete, and I can’t find “global mandate” anywhere. Interesting, isn’t it, that two ex-Senators who were once insistent on Congressional prerogatives are now utterly dismissive of the legislative branch. Further proof that where you stand depends on where you sit.

And of course genuflecting to some “global mandate” gives power to malign actors, like Putin, who can jerk us around at will. This is particularly disturbing when we have an administration that is quite willing to be jerked around by not just Putin, but Khamenei, Assad, and assorted other thugs and punks.

So what’s Putin’s game here? Beyond the sadistic pleasure of torturing Obama, I mean. Economically, an Iran deal does not favor Russia. So is this part of a particularly Byzantine plot to undermine the deal? It certainly gives lots of ammunition to opponents of a deal in the US, Israel, and even France. (Germany and the UK are hopeless.) But perhaps as this Bloomberg piece suggests, Putin is willing to take an economic hit for a geopolitical gain. I don’t know exactly.

But what I do know is that Putin is re-fighting a Cold War that Obama believes is over because he wants it to be over. Because Obama doesn’t believe that in war, the other guy gets a vote: Obama believes his is the only vote that matters. This delusion is refuted daily, but Obama persists in it.

 

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April 11, 2015

The Obama Doctrine: Incompetence or Intent (Bordering on Malice)?

Filed under: History,Military,Politics,Russia — The Professor @ 4:27 pm

There have been several attempts lately to discern some sort of “Obama Doctrine” in foreign policy. This piece from the FT is just the latest example.

Actually, the doctrine has been apparent from the first, to those paying attention. To put it crudely, but oh-so-accurately, it is “F*ck our allies, let our enemies f*ck us.”

The roots of this doctrine have also been quite obvious. There are two main ones.

The first is his very progressive view that the United States has been a malign force in the world. This is best encapsulated in his Cairo speech, with its criticism of American arrogance. It is also demonstrated in word and deed, in his insistence that American presence in foreign places creates disorder rather than reduces it, and his concerted effort to withdraw from the world and to defer to others (to “lead from behind”, if you will).

In his younger days, he was a supporter of the nuclear freeze movement, which was animated at the very least by morally relativistic beliefs, but that moral relativism was usually merely a fig leaf to disguise deep-seated anti-Americanism (and anti-Westernism). He is a product of romanticism about the Third World that flourished in the 70s and 80s, and he came by it honestly, from both parents, inveterate leftists both.

It shows.

Indeed, Obama’s views on these matters are quite aligned with Ayatollah Khamanei’s, as set out in this fawning (but revealing) piece in Foreign Affairs. Khamenei’s constant invocation of American arrogance is an eerie echo of Obama’s: or is it the other way around? Either way, it is easy to understand Obama’s benign attitude towards the most strident rhetoric coming out of the Iranian regime, e.g., the motto of “Death to America.” (One of Obama’s spokesman said that this rhetoric should be ignored, even when uttered by the Supreme Leader, because it is just “background noise” intended for domestic consumption.) He views it as an understandable, if somewhat overwrought, expression of a legitimate critique of the United States.

This helps explain his willingness to treat with Iran, and to make concession after concession. From the “closed fist/open hand” rhetoric of his first campaign and first term, to his recent statements that Iran would moderate its behavior and become a responsible nation when it achieves a rapprochement with the US and the West, it is clear that he believes that Iranian actions are an understandable response to American and Western hostility, rather than a dangerous brew of Persian chauvinism and imperialism on the one hand, and fanatical Islamist ideology on the other.

This can lead him to deny some very basic and obvious realities about the Iranian regime. For instance, he pushed back against Arab criticism of his quest for a deal with Iran by saying that they needed to pay less attention to an Iranian threat, and realize that their greatest risk was “dissatisfaction inside their own countries”.

Truly, there is much to criticize about the Saudis and Qataris and Egyptians: I find the oil ticks particularly loathsome. But Obama’s criticism of the Arabs is not matched by a similar criticism of Iran, even though by every measure (e.g., public executions of gays, oppressive lifestyle police, totalitarian control of civil life), Iran is as bad or worse than the Saudis et al. But Obama is silent about Iranian repressions and internal dissatisfaction even as he criticizes the Saudis and Egyptians.

Indeed, in 2009 Obama notoriously spurned a broad-based expression of popular dissatisfaction in Iran during the “Green Revolution,” yet disastrously embraced the Arab Spring: the fervent support for Morsi and  the Muslim Brotherhood in Egypt was particularly disastrous.

Looking at this history, it is clear that the best predictor of whom Obama will support (or at least not criticize) and home he will oppose (and criticize) is not the political system, or the repressiveness of the government, but whether it is allied with the US, or not.

Cuba is the latest example. The spectacle that is occurring in Panama is sick-making in the extreme. The Cuban regime has not reformed, in the least. It remains oppressive, and inveterately anti-American. Yet Obama strives to normalize relations without demanding the slightest moderation of Cuba’s domestic oppression or anti-American foreign policy.

Obama’s progressive blaming of the US is implicit in these actions. His words also betray the second taproot of his “doctrine”: his overweening arrogance. I have mentioned several times that I was going to start dating things “BO” for “Before Obama” and “AO” for “After Obama”, because he quite evidently believes that things that happened before his birth are irrelevant, and that his arrival makes a new world possible. Whoops, he did it again!:

“The Cold War has been over for a long time,” Obama said. “And I’m not interested in having battles frankly that started before I was born.”

As if the date of his birth has any relevance whatsoever to the historical, political, economic, and social forces that drive the relations between nations. (BTW, Raul Castro obviously knows how to play Obama: with obsequious praise for his genius.)

This statement about the Cold War is particularly amazing, given recent developments, including developments involving Cuba. I recalled just the other day Obama’s sneer at Romney’s warning about Russia, saying that the 80s wanted their foreign policy back, because the Cold War is over, and noted that this statement was risibly clueless because Putin clearly wants to refight it: a war ain’t over if one guy is still fighting it. (This is another principle that Obama seems to ignore because of his narcissism: in Iraq and Afghanistan, he declares peace simply because he has stopped fighting. But there is no peace.) If you’ve been paying attention (and Obama clearly hasn’t been, or worse, has been and doesn’t care) you will have noticed that one Cold War strategy that Putin is resurrecting is extensive military and intelligence cooperation in the Caribbean, in particular with Nicaragua, Venezuela . . . and Cuba.

That’s all right out of the Cold War. And believe it or not, some of it happened after Obama was born!

So while Putin is busy trying to reignite superpower competition, Obama acts as if it’s a thing of the past, to be ignored. Which explains why Obama does not condition dealing with Cuba on its agreement to forego military ties with a revanchist and revisionist Russia.

This all demonstrates another symptom of Obama’s narcissism: his mental rigidity and inability to admit a mistake, or that conditions have changed in a way that invalidate his original judgments. He has believed that the Cold War is over, and nothing will budge him from that view.

My conclusion is based on observation from a distance. Someone who observed him up close for many years, Richard Epstein, has noted the same thing. His criticism of the Iran “deal” is withering, and it culminates with this conclusion (at about the 14:35 mark):

I see no sign that he will change his mind. He is always the smartest man in the room. That’s true when there’s one person there.

In other words, Obama believes that he is incapable of error; that facts cannot change in ways that make it necessary to change his mind; and that he can ignore criticism because no one is capable of achieving his Olympian insights.

I am not alone now in trying to determine whether Obama’s actions are the results of incompetence or intent: this question is debated with some regularity, and this is not limited to the right anymore (though of course it is predominant there). I do not discount that he is incompetent and over his head, but I think he is intentionally pursuing these various courses out of a firm set of beliefs rooted in a progressive, fundamentally anti-US and anti-Western worldview, and in a belief in his transcendent superiority. Isis and other disasters are unintended consequences, but by and large he ignores them because he is convinced that these are irrelevant to his ultimate quest to remake the world and redeem America’s sins, original and derivative.

Hanlon’s Razor says never attribute to malice what can be explained by incompetence. What Obama is doing cannot be explained by mere incompetence alone. It has to be intentional, and is arguably malicious.

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April 9, 2015

Rashomon Meets Rouhani, or Oh, Obama You’ve Done It Again!

Filed under: History,Military,Politics,Russia — The Professor @ 8:50 pm

The days after the alleged consummation of the nuclear “deal” between Iran and the the US and other P5+1 nations bears a strong resemblance to the famous Kurosawa film Rashomon: the participants have totally different accounts of what happened, and what was agreed to.

In the US version, Iran agreed to many terms that will make it impossible for it to “break out” to build a bomb in less than a year during the 10 year term of the deal. Centrifuges will not process uranium. Stockpiles of processed uranium will be neutralized. There will be intrusive inspections. Sanctions will not be eliminated immediately.

In the Iranian version, none of these things are true. Indeed, the Iranians characterize them as “lies”. In particular, sanctions will be lifted immediately, and there will be no inspections of military sites.

So which version is true? Who knows? All we have to go on is the accounts of the participants. No document detailing the understandings reached has been released. Instead, each side has released “fact sheets” which are wildly contradictory. At least in Rashomon the basic contours of every story were the same, even if key details differed. Here, one wonders if these people were even in the same room.

Astoundingly, even if the American account is accurate, the US has made major concessions on every key issue. Obama had originally said Fordow (the hardened uranium processing facility) and Arak (the heavy water reactor) would be closed. Both will remain open, although allegedly they will be repurposed. For a while, anyways. There will be no accounting of past Iranian violations, making it impossible to establish a baseline against which to evaluate future actions. There will be no snap inspections. And on and on. All of these reflect dramatic concessions from the original American negotiating position. Iran made no similar concessions.

Remarkably, the CIA director John Brennan claimed the Iranians finally agreed to a deal because the Iranian economy was “about to go down” due to the existing sanctions regime. If that’s true, why didn’t our crack negotiating team present Iran with a take it or leave it offer that forced Iranian concessions on every matter, rather than fold on issue after issue? Why did the allegedly stronger party make all the concessions? Why didn’t Obama play good cop to the Republican bad cop, and tell the Iranians “unless you take give up your nuclear program, these crazy Republicans will impose even more sanctions”, instead of fighting the Republicans tooth and nail? Either (a) Brennan is wrong, (b) Obama is the world’s worst negotiator, or (c) Obama really had no desire to force Iran to give up its program.

Given the utterly ineffectual, inept and/or feckless American negotiating strategy, it is hardly surprising that the Iranians are now demanding yet even more concessions. In particular, they are saying that immediate elimination of sanctions is a red line: no lifting, no deal. They are also saying that there will be no inspections of Iranian military facilities. Another red line.

Obama apparently operates under the delusion that a revisionist, revanchist, and messianic power that is involved deeply in conflict throughout the Middle East, and which has made “Death to America” words to live by for the last 37 years will somehow become a normal, non-aggressive nation when sanctions are eased, the money flows, and it is on its way to getting the bomb, in 10 years even if Obama is accurate in his description of the deal and his belief that Iran will adhere to it, or even sooner if he isn’t. This is delusional. Iran didn’t become an aggressive, revanchist, terrorism-supporting nation because it was isolated from the international community: it was isolated from the international community because it has been aggressive, revanchist, and terror-supporting. Now it will be able to pursue its messianic and imperialist goals under far less constraint. Yes, this will work out well.

Outside of Obama’s amen corner, virtually everyone in the foreign policy establishment is aghast. Eminences grise Henry Kissinger and George Schultz wrote a long and devastating oped in the WSJ that eviscerated virtually every aspect of the deal. The administration’s response? State Department interim spokesidiot Marie Harf (whom I would say is right out of a dumb blonde joke, except that would be insulting to the subjects of dumb blonde jokes) said that the Kissinger-Schultz piece was “sort of” full “a lot big words and big thoughts.” Wow. What a telling riposte to the two most experienced diplomats of the post-WWII US.  The only more inane response would have been “Is NOT!”

And then there’s Obama himself, dishing out his usual sneering disdain at critics. For instance, he said that those who opposed the deal were taking “a foolish approach” and needed to “bone up on foreign policy.”

Maybe what he meant to say is that they need to be boneheads on foreign policy, and therefore more like him. This is a guy who has lurched from one foreign policy misjudgment (or disaster) to another. The examples are endless. Calling ISIS the JV is one. The recent FUBAR with the Chinese International Development Bank is another. But my favorite, because it illustrates Obama’s unique (and toxic) mixture of warped judgment and narcissistic belief in his own Olympian discernment, was his response to Romney’s statement that Russia is the US’s greatest geopolitical threat: “The 1980s are now calling to ask for their foreign policy back because the Cold War’s been over for 20 years.”

Hahahahaha. Touche! What a zinger! Silly Romney, living in the past, not like the progressive, hip, future-focused Obama.

Well, the problem with that is that Putin is living in the past too, and is itching to refight the Cold War. But our Barry knows better.

So yeah. Based on his stellar track record of being wrong 99.8 percent of the time we should totally trust his judgment that his “deal” with the Iranians will tame them and thereby usher in an era of peace and tranquility to the Middle East. In fact, the opposite is true, and we see more evidence of that daily, as Arabs gear up for a civilizational and sectarian war with Persians (with Yemen being only the first theater in this conflict).

Obama is the Mr. Magoo of foreign policy. He blindly and happily tools along in his jalopy, thinking he is accomplishing great things, totally oblivious to the chaos and destruction that he is leaving in his wake, proudly proclaiming “Oh, Obama! You’ve done it again.”

Yes. Yes he has. And every time he does it, the nation-and the world-moves one step closer to the abyss.

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April 4, 2015

If Putin Ripped Off Rogozin’s Head, Would Anybody Notice a Difference?

Filed under: Economics,Politics,Russia — The Professor @ 9:13 am

Rogozin the Ridiculous™ is in charge of the massive Russian Vostochny Cosmodrome project. It is not going well. The project is way behind schedule, and way over budget. It is beset by corruption, running into the hundreds of millions of dollars.  Labor problems are rife.

And apparently Russia’s financial difficulties are also starting to bite. It can’t pay the light bill. Workers haven’t been paid since January, and are starting a hunger strike. The delays and the labor problem are leading Rogozin to conscript college students in “Soviet-style work gangs”  to complete the project. In the winter. So, how was your internship, Yuri?

In response, Rogozin is acting like the simulacrum of a Stalinist. He has installed “an array of webcams to be able to personally monitor construction from Moscow, some 7,000 kilometres to the west.” He has fired several construction managers, and has initiated some criminal prosecutions for corruption. He rages about sabotage and has threatened to “rip the heads off” anyone who impedes completion of the project.

If someone, Putin say, ripped off Rogozin’s head, would anyone notice a difference? Other than improving his looks, that is.

The only surprise is that Rogozin is not blaming he delays on the evil Americans, and their diabolical HAARP.

In fact, Rogozin is a faux Stalinist. All bluster. A farcical, pale imitation.

This project, invested with all the prestige and rubles Putin can manage, is a very public demonstration of the dysfunctional nature of the Russian state, and the utter impracticality of an economy dominated by state  corporations engaged in megaprojects. Putting someone like Rogozin in charge just provides some comic relief.

Keep this all in mind when evaluating Yakunin’s proposal for a superhighway, pipeline and rail route spanning Siberia and permitting one to drive from Moscow to Alaska. Read this, and have a good laugh:

The scheme was unveiled at a meeting of the Moscow-based Russian Academy of Science.

Dubbed the Trans-Eurasian Belt Development (TEPR), the project calls for a major roadway to be constructed alongside the existing Trans-Siberian Railway, along with a new train network and oil and gas pipelines.

“This is an inter-state, inter-civilization, project,” the Siberian Times quoted Yakunin. “The project should be turned into a world ‘future zone,’ and it must be based on leading, not catching, technologies.”

This in a country that does not have a highway connecting its two largest cities, and which is renowned for its horrific roads.

And its fools, of whom Rogozin is only the most prominent.

(h/t to commenter Ivan for pointing me to this story.)

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March 25, 2015

What Do You Get When You Cross Nero With Ahab?

Filed under: History,Military,Politics,Russia — The Professor @ 9:02 pm

Obama.

The world spins into chaos, and Obama is so detached and indifferent, fiddling while it all burns. But maybe the comparison with Nero is unfair. To Nero. After all, Nero allegedly had a purpose in mind when burning Rome: it allowed him to bypass the Senate and rebuild Rome to his grandiose plans. (Bypassing the Senate . . . maybe there are more parallels than I thought!) Obama just appears to not want to be bothered. Or perhaps he is like Major Major Major Major, promoted well above his competence and knowing it, and retreating to the confines of his office and quarters in order to avoid confronting things he is incapable of solving.

Exhibit 1. Yemen is exploding, with Iranian-backed Houthis seizing power and the desperate Saudis striking back with air strikes. This obviously raises the possibility of conflict between the Saudis (and the rest of the GCC) and Iran. But the administration still defends the “Yemen model” as a success. No. Really. Spokesman “Josh Earnest” (that has to be a made up name, right?) says the concept of relying on foreign governments to fight terrorism is right, even though the government we relied on in this case has utterly collapsed.

Exhibit 2. Even though the tension between Russia and Nato is at Cold War levels; even though Russia is making nuclear threats against Nato members; even though the easternmost nations in Nato are increasingly anxious that Putin has them in his sights; even though there are doubts about the credibility of Section V of the Nato treaty; and even though Nato is struggling to find a way to respond to hybrid war, Obama is refusing to find time in his busy schedule to see the new head of Nato, Jens Stoltenberg. No doubt because Nato (through Stoltenberg, his predecessor Rasmussen, and military head Breedlove) have been the most hawkish on the need to confront Putin. This is something Obama has zero appetite for.  Don’t think for a moment that Putin doesn’t notice this obvious signal of Obama’s indifference to what is transpiring on Nato’s eastern flank, and will escalate there soon.

But perhaps I am being harsh in saying that Obama doesn’t care about defeat after defeat. After all, there is a collapse that makes him distraught. . . that of his NCAA bracket.

But while he remains utterly detached from crises that threaten the world order, he persists in his Ahab-like pursuit of a deal with Iran. Empowering the mullahs (as a deal would do) will only further contribute to the already perilous situation in the Middle East, as a combination of national self-interest and religious hatred will force Gulf Sunnis (and arguably Egypt too) to confront a resurgent Iran freed from the shackles of sanctions, and progressing towards nuclear weapons.

And how does Obama rationalize negotiating a nuclear deal with a country that is openly supporting the overthrow of a government that he repeatedly identified as a major ally against Al Qaeda, and upon which the US has lavished billions of dollars in aid (much of which is in the hands of the Houthis, not to mention a major cache of US intelligence documents, which the Houthis obligingly turned over to Iran)? These are the people he trusts?

As I read somewhere: if he wanted to undermine America’s national interests, what would he do differently?

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March 23, 2015

The Systemic Risk, or Not, of Commodity Trading Firms

Filed under: Commodities,Derivatives,Economics,Energy,Financial crisis,Politics,Russia — The Professor @ 2:03 pm

My latest white paper, “Not too big to fail: Systemic Risk, Regulation, and the Economics of Commodity Trading Firms” was released today. A video of me discussing it can be found here (as can my earlier white papers on commodity traders and LNG trading).

The conclusion in a nutshell: commodity trading firms do not pose systemic risks, and therefore it is inappropriate to subject them to bank-like prudential regulations, including capital requirements. Commodity trading firms are not systemically risky because (a) they aren’t really that big, (b) they are not that highly leveraged, (c) their leverage is not fragile, (d) the financial distress of a big trader is unlikely to result in contagious runs on others, or fire sale problems, and (e) their financial performance is not highly pro cyclical. Another way to see it is that banks are fragile because they engage in maturity and liquidity transformations, whereas commodity trading firms don’t: they engage in different transformations altogether.

Commodity traders are in line to be subject to Capital Requirement Directive IV starting in 2017. If the rules turn out to be binding, they will cause firms to de-lever by shrinking, or issue more equity (which may force them to forego private ownership, which aligns the interests of owners and managers). These will be costs, not offset by any systemic benefit. All pain, no gain.

It is my understanding that banks obviously think differently, and are calling for “consistent” regulations across banks, commodity traders, and other intermediaries. Since these firms differ on many dimensions, imposing the same regulations on all makes little sense. Put differently, apropos Emerson, a foolish consistency is the hobgoblin of little minds. Or bankers who want to handicap competitors.

The white paper has received some good coverage, including the Financial Times, Reuters, and Bloomberg. I will be writing more about it when I return to the states later in the week.

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