Streetwise Professor

January 15, 2013

Ship of Fools

Filed under: Economics,Financial Crisis II,History,Military,Politics — The Professor @ 8:44 pm

Further my last.  Europe may be out of sight for now, but that’s only because it’s not out of the woods.

Draghi be damned: Spain still in a debt death loop.  And that doesn’t even take into account the fact that 90 percent of the Spanish state pension fund is invested in Spanish government debt.  Or that Spain has long leaned on its banks to buy its debt, meaning that Spanish banks buy the bonds of the government that is supposed to bail them out if they get in trouble.  There’s a financial Escher etching for you.

So what does Spain do? It begs Germany to increase growth. As if it’s like turning on a faucet.

And if there is such a faucet, the handle has come off in Germany’s hand: the economy contracted more in 4Q12 than at any time since the depths of the financial crisis.

Meanwhile, France is getting deeper into Mali.  IMO, best outcome: something like the American Punitive Expedition to Mexico in 1915, which futiley chased Pancho Villa around the deserts of northern Mexico for a year. Worst case: British army in Afghanistan, 1842, or Islawanda.

US support-per the linked FT article-is lukewarm at best.  We (and the Brits) are supplying airlift.  A telling illustration of the lack of sustained expeditionary capability in NATO outside of the US.  Given the extreme logistical challenges of operating in the Texas-size wilds of northern Mail it is hard to imagine a force of a few thousand frenchies doing anything but getting swallowed up in the vast, desolate expanses.

And as I noted yesterday, France is approaching economic zombiedom.

So yeah. Everything is just hunky dory. Maybe as long as Draghi’s paper lasts.  Or more accurately: as long as the bond markets believe in the magic of paper.

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3 Comments »

  1. Hello prof
    i think somehow USA will get involved along with NATO.And for one last time the inefficiencies of WW 2 type warfare will be exposed.
    From last 100 years,Western nations have been attacking African and middle eastern nations.The warring nations have forgotten very important point:
    The middle easterners and Afrikaners are learning how to play war..there is no better practice than doing actual war with enemy.The skills gained in one war are instantly transferred to other countries.
    Look at Hezbollah,afghans,touregs…they have learnt how to prolong the war and cause economic starvation of invaders.
    Air superiority and missiles can help in initial stages but in lengthy wars,fighters count…France is going to learn a bitter lesson here

    Comment by man — January 15, 2013 @ 11:14 pm

  2. I think that one thing we forget at our peril is that in order to conduct war with any chance of success in a foreign country, one either has to arrive in massive force, or one has to win the at least tacit support of the population. Without that support, it is simply to easy for guerilla forces to hide among the civilian population and impose continual losses until your own voters lose faith in the operation and you have to withdraw.

    It’s worth studying the history of the British Empire, which did not expand to such an enormous extent simply because the British fancied having an Empire, but because the British appeared to be at least “less bad” than what they replaced. Countries that had experienced a Century or more of civil strife between war-lords found that even though the British took over politically, they imposed civil peace, a non corrupt civil service and clean courts of justice, allowing ordinary people to get on with their lives.

    And guess what, the notable disaster you mention, in Afghanistan in 1842, was an example of where the British had absolutely nothing to offer the civilian population, who treated civil war as a national sport and had no interest at all in the British “product”.

    The French intervention in Mali is most likely going to have the same long-run out outcome as the US intervention in VietNam, since in both cases no-one has figured out in advance exactly what benefits they are going to sell to the population in order to gain their support.

    Comment by jon livesey — January 16, 2013 @ 7:22 pm

  3. @jon. Go large or go home. And yes: all sticks and no carrots is a recipe for failure.

    The ProfessorComment by The Professor — January 16, 2013 @ 9:15 pm

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