Streetwise Professor

August 17, 2016

Michael Weiss Makes the Case for the Importance of the DIA Document

Filed under: History,Military,Politics — The Professor @ 7:23 pm

Michael Weiss essayed a lame (but I repeat myself) attempt of a rebuttal of the DIA document I wrote about over the weekend: Weiss’s response was apparently sparked by the fact that Sputnik (and not me!) gave the document attention. (It came out in June 2015, not last May as I had thought.)

Weiss’ piece is classic in the annals of farcical reasoning and logical fallacies. His complete failure to address the document and its implications betrays just how damning it is to his cause. If this is the best e’s got . . .

Weiss started out his attempted rebuttal with one of his specialities, an ad hominem attack:

At the time, this document was taken up with similar if paradoxical enthusiasm by far-left anti-imperialists (such as the Guardian’s Seumas Milne, now Labour leader Jeremy Corbyn’s spin-doctor) and anti-Muslim reactionaries (such as Pamela Gellar) as proof of a nefarious conspiracy led by Washington to encourage a takfiri takeover of the Levant.

None of which has anything to do with the substance of the document.

Weiss then quotes the report:

“If the situation unravels there is the possibility of establishing a declared or undeclared Salafist principality in Eastern Syria (Hasaka and Der Zor), and this is exactly what the supporting powers to the opposition want, in order to isolate the Syrian regime, which is considered the strategic depth of the Shia expansion (Iraq and Iran).”

He fails to mention that this prediction was made in 2012, and it came to pass, almost exactly. That does speak to its credibility, no?

Weiss scorns the idea that the document was “secret”–putting that word in scare quotes. Well, it was classified as . . . SECRET/NOFORN. I guess that kinda makes it officially secret, eh? He also notes the heavy redactions. So what? Does he have any reason to believe the redactions contradict the opinions that are not redacted–which are not qualified in any way? It is far more likely that the redactions include classified information that supports the conclusions that are expressed in the underrated portions.

Weiss then tries to dismiss the report as just one of many reports turned out by the Washington paper machine:

As The Daily Beast’s Jacob Siegel reported when the document was published, appraisals such as these are too numerous count at the Pentagon, much less be read by senior military or policy planners. And few ever rise to the level of adopted policy prescription.

Nor did this one, as anyone who has watched events unfold in Syria over the last four years can easily determine for himself.

This is an inversion of the importance of the document. The reason that the document is damning is precisely that it was ignored by the administration. The DIA writes a hair on fire warning to the security establishment, and the warning is utterly ignored, with the result being that the dire predictions it made came to pass. Whereas Weiss attempts to claim that the fact that the document was ignored means that it is irrelevant, this is precisely what makes it relevant, and damning to the administration. It either ignored its predictions that were borne out in blood, or it was actually complicit in the Salafist-supporting policy that the document describes.

Weiss then plays a shell game with the chronology:

If the United States had sought to rob Iranian clients and proxies of strategic depth in Syria, then it would plainly not be “de-conflicting” at present with the Syrian and Russian air forces, both of which are providing close air support to those same clients and proxies on the ground.

The document was written in 2012. The “de-conflicting” with Syrian and Russian air forces began in 2015. Much water has passed under the bridge in that time, including Obama’s classic walkback from the “redline” on Assad in 2013, the Iran nuclear deal in 2015 (and the negotiations leading up to it in 2014), the farcical collapse of expensive US efforts to train Syrian rebels, and most importantly the spectacular rise of ISIS in 2014-2015 that the DIA document so presciently predicted. The situation is so different now that current administration policy in no way implies that it was not allying with Salafists in 2011-2012 in an attempt to bring down Assad. At that time, the administration was also crowing about its “success” in Libya, and looked to repeat it in Syria. Now it wants to be completely shed of the situation. Four years of failure will do that.

Weiss finishes with another bait-and-switch:

Moreover, given the president’s well-known reluctance—criticized by his ISIS “co-founder” Hillary Clinton—to substantively aid and arm nationalist Free Syrian Army rebels in 2012 (when the document was drafted), one could argue his policy has been the very opposite of what’s in this document.

The bait-and-switch is that the DIA document doesn’t talk about US support for Weiss’ beloved and allegedly moderate, non-sectarian FSA: it talks about the “supporting powers” favoring Salafists, including AQI, the predecessor of ISIS: the FSA is not mentioned. It is well known that the Gulf states pumped large resources into these groups. Turkey is also clearly implicated (as another leaked report, this one from German intelligence, asserts). The US was clearly aligned with these nations in the objective of “Assad must go”, and indeed, the lukewarm support for the FSA actually supports the DIA’s claim that the “supporting powers” (including the US) had put their money on the Salafists, instead of the FSA.

Further, who knows what covert support the CIA was providing, and to whom? Rumors continue to swirl about a weapons pipeline from Libya to Syrian rebels. I have always have found it more credible that the US mission in Benghazi was attempting to intercept weapons on the loose in Libya to prevent them from flowing to Syria, but I am becoming more open to the possibility that the CIA was indeed running weapons from Libya to Syria. The complete silence about what was going on at the CIA Annex there–a silence in which Republicans on the Intelligence Committee like McCain and Graham and Rubio join in–even in the aftermath of September 11, 2012 makes me suspect that the CIA was doing something much more than a gun buyback program intended to help improve the ‘hood.

I also note that Weiss makes no effort to disprove the assertions in the DIA document that Salafists dominated the Syrian opposition from the beginning. This is important because Weiss made a name for himself by playing war tourist in Aleppo, claiming that he was visiting moderate rebels, and because ever since he has been spinning the tale of a moderate opposition that was abandoned by a feckless US. If the revolution was Salafist from the get go, Weiss comes off as a fool and useful idiot at best, and a collaborator with Islamists at worst. His silence on this point in the DIA document speaks volumes.

In short, Michael Weiss makes a great case for the importance of the DIA document by failing so miserably in his lame attempt to make a case against it.

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August 14, 2016

Obama & Hillary Enabled ISIS. Trump? Putin? No–the Defense Intelligence Agency

Filed under: History,Military,Politics — The Professor @ 11:26 am

Although it is hyperbole to say that Obama and Hillary Clinton “founded” ISIS, there is little doubt that they certainly enabled its dramatic expansion. Obama’s mishandling of the American withdrawal from Iraq (scathingly documented in “Losing Iraq“, a production of the notoriously right-wing PBS Frontline) and his passivity as ISIS mounted its major drives in late-2013 and early-to-mid-2014 were necessary to ISIS’s dramatic expansion.

A declassified Defense Intelligence Agency document, made public by Judicial Watch in May, makes clear that DIA was aware of what was going on, and predicted what transpired with uncanny accuracy. More disturbingly, the document can be read to suggest that the administration willingly supported jihadist elements in Syria–including ISIS–as part of its “strategy” to oust Assad.

Insofar as predictions are concerned, these excerpts from the document (which is heavily redacted) speak for themselves:

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That’s pretty much exactly what happened.

The timing is rather awkward for the administration.

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This is exactly the time, mind you, that Joe Biden was strutting around claiming that Iraq was the administration’s greatest foreign policy achievement.

Please spare us any more such successes. A few more like them and we’ll be ruined.

Note too in particular the arrow of causality here. Supporting the insurgency in Syria blew back into Iraq, and advanced the Sunni uprising that has convulsed the country in the past four years. Meaning that the administration supported actions in Syria that destabilized Iraq precisely when it was cutting US forces there that had been essential to maintaining the country’s tenuous stability.

What is more disturbing about the document is its statements about the relation between the rise of ISIS and US policy regarding the Syrian revolution. First, the memorandum forthrightly documents that from the very beginning, the Syrian revolution was predominately jihadist in nature:

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It is not possible, therefore, to argue that once-upon-a-time there was a non-jihadist, secular, and moderate opposition in Syria that was supplanted by extremist elements only because the West did not push out Assad.

What is even more disturbing is the DIA’s statement that it was US policy, in conjunction with its “allies” in the region like Saudi Arabia, Qatar, and Turkey, to support these jihadist elements. For the very next point states:

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Read “C.” above carefully. “[T]here is the possibility of establishing a declared or undeclared Salafist principality in eastern Syria. . . . this is exactly what the supporting powers to the opposition want, in order to isolate the Syrian regime, which is consider the strategic depth of the Shia expansion (Iraq and Iran).”

Recall that the memo specifically identifies “the West” as a supporting power. Further recall that this is the time when “Assad must go” was Obama’s mantra.

This puts an entirely different gloss on Obama’s insouciance towards ISIS during this period. It is clear that the Gulf States and Turkey were all in with Salafist elements. DIA makes the US firmly complicit in this, at the very least via an act of omission (failing to oppose the actions of the regional Sunni powers), and more plausibly as an act of commission.

Understanding the necessity of reading between the lines in an official intergovernmental communication like this, it is clear that DIA is essentially telling the administration (this Secret document was distributed to Hillary and Obama, among others) that it is engaged in a dangerous policy. This is the DIA’s demarche protesting administration Syria policy. One can only imagine what is in the redacted bits.

At the very least, even if you do not believe that the public portions of the document adequately support the charge that Obama and Clinton deliberately supported the rise of ISIS as a matter of policy, it does show that they were forewarned of what was happening and did nothing to stop it. This implies either complicity in the machinations of the policy of the Gulf states and Turkey, or analytical incompetence.

Remember, this is a document prepared by a part of the US intelligence establishment, not the Russians. But it strongly echoes many things that Lavrov and Putin said at the time, and have said since.

There are other interesting aspects of the document that are illuminating. In particular, it gives the lie to claims by Michael Weiss and other anti-Assad, Salafist-supporting Neocons that Assad created ISIS to divide the opposition.

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Paragraph “B.” is of particular relevance. Please take this into account when reading future deep thoughts by Weiss et al about the nature and origins of the anti-Assad opposition, and the necessity of taking down Assad.

This internal US intelligence document clearly lays great responsibility for the rise of ISIS at Obama’s feet. This document is not hindsight brilliance and ass-covering: it is foresight and forewarning.

The document also reveals the utter incoherence of US policy in the region. The ostensible rationale for trying to topple Assad (and this was certainly the motivation of the Gulf states) was that his regime was a supporter of Shia infidels, notably Iran and Hezbollah. And there is a realpolitik logic in attacking Syria as part of a campaign against Iran. But during this time the administration was also working on a rapprochement with Iran. Square that circle for me.

One other thing. This document came out in May. Have you heard of it? Almost certainly not. I hadn’t, until an ex-intel guy on Twitter made me aware of it.

If something analogous had been about the Bush administration circa 2005, and had been released while he was still in office, it would have been the subject of non-stop frenzied–nay, hysterical–coverage. But even while the war on ISIS goes on, and ISIS and ISIS sympathizers launch terror attacks in the US and Europe, and the sectarian war in Syria drags on, this document that places considerable responsibility for ISIS’s rise on the shoulders of the current president, and the Democratic nominee to replace him, gets no coverage whatsoever. This utterly damning document speaks directly to Hillary’s mindset and competence, yet it has been consigned to the memory hole by a media that is intent on ensuring her election.


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August 7, 2016

If Trump Really Has Deep & Enduring Russian Business Connections, He’s a Machiavellian Genius!

Filed under: Economics,Politics,Russia — The Professor @ 7:45 pm

The drumbeat about Trump’s connections to Russia pounds on, and is mainly sound and fury, signifying nothing. The campaign consists mainly of unsubstantiated theories, insinuations, and innuendo. Further, these appear to be tenuous at best and are often wildly implausible.

The gist of the theory is that Trump has said nice things about Putin. Putin has said nice things about Trump. Trump has criticized Nato. Putin obsesses over Nato. The DNC email was hacked, possibly by the Russians, embarrassing Hillary. So why? Trump business connections, naturally!

This theory has been floated by Democratic operatives, by George Will (heretofore not suspected to be a Democratic operative), and the #neverTrump crowd, and echoed repeatedly in the media. In ironically Russian fashion, the campaign has moved to social media, where reliable little pilot fish plumping for media attention and maybe even an apparatchik role in the Clinton administration (yeah, I’m looking at you @CatchaRUSSpy) are spreadin’ the word.

My basic problem with this is the whole idea of secret Trump business dealings that could only be revealed by looking at his tax returns. “Secret Trump business dealings” is an oxymoron. His whole MO is self-promotion and hype. If anything, he overstates his business successes. He is not the man to hide his light under the bushel basket.

Now if you were talking about Soros, no doubt he has massive number of business dealings that have escaped the public eye. But Trump? He’s all about the publicity. What’s more, litigation and leaks from partners or bankers would have almost certainly revealed any major dealings long ago. If Trump has succeeded in keeping some big deal in Russia completely secret for years, he’s the man we need in charge of our national security! He would clearly be far more capable of keeping secrets than Hillary.

As for his not releasing his tax returns, I can think of 1,000 better reasons than concealing past dealings with Russians. This fact is overdetermined, to put it mildly.

Trump has been quite open in the past about his attempts to get into Russia, and how those attempts came to nothing. And let’s be real here. Every major business in the world looked to Russia as a huge opportunity in the 90s, and into the 2000s. For many–most, arguably–it ended in tears. Yes, look askance at businesses that did well there: many almost certainly succeeded because of corrupt deals. I’m thinking Siemens, or HP. (And to be fair, it seems that Siemens bribed everybody everywhere.) But those who tried and failed (a) can’t have continuing relationships that would be advanced or jeopardized, (b) likely didn’t pay bribes, or bribed the wrong parties, and (c) are likely to have a rather jaundiced view of Russia and Russian politics.

Further, when you are talking about Russia, past business dealings have very little connection with current conditions. One of the most pronounced regularities of Russia is that those who are riding high one minute quite often come to very hard falls somewhat later. Yesterday’s insiders are outsiders and sometimes pariahs today. If you have a connection with someone who is now on the outs with Putin, that connection is a liability to be shed, not an asset to be maintained.

Further, as Russia recovered from the 1998 crisis, and was riding high during the oil price boom, previously successful Westerners were considered less and less necessary, and were sidelined and forced out. Westerners became resented as parasites who attempted to exploit Russia’s weakness. Successful foreign investors had a huge target painted on their backs: look at TNK-BP, or Telenor/Vimpelcom. Once they didn’t need your money, they looked for any way to take the money you’d already made.

In the aftermath of the 2008-2009 crisis, Western financial connections became even more suspect as threats to Russian sovereignty.

And for those who have been paying attention Putin has been dramatically narrowing his circle of insiders, and that circle consists increasingly of those from the security services. Indeed, even some of the various security services are being left out in the cold. And worse: for instance, the head of the customs service was recently raided. Right now, the FSB, the GRU, and Putin’s new national guard are inside the circle. Everyone else dreads the knock at the door.

Insofar as biznessmen are concerned, (a) Putin has always had a deep suspicion of them, and (b) those who were seemingly favored in the 90s and 2000s are clearly on the outs now. The favored business people at present are Timchenko and the Rotenbergs. Show me any Trump dealings with them, and we’ll talk.

But this last point raises one of my pet peeves. Those who now pontificate on Russia and Trump’s connections clearly have NOT been paying attention. They betray a superficiality that would be embarrassing in a comic book. Many of the people and things that they mention became irrelevant years ago.

Further, one should be chary about claiming that they know what goes on in Russia, and in Putin’s pea-picking mind. Riddle, mystery, enigma, and all that. But fools rush in where angels fear to tread. And many a fool is making bold claims about a country and a politician they know little about, can know little about, and which until recently they ignored altogether. But now they’re experts.

The very byzantine nature of Russian politics and business over the last 25 years means that very few outsiders have navigated it successfully, even for a time, let alone many years. All I can say is that if Trump was (a) able to survive and thrive in that world, and (b) do it without anybody knowing, he’s a Machiavellian mastermind who would scare Putin to death.

The strained attempts to tie Trump to Putin are also transparently intended to distract attention from the embarrassing content of the DNC leaks–and, methinks, preempt leaks that are likely to come, from the Clinton Foundation, or even from Hillary’s server.  It’s a twofer for Hillary: discredit the message by emphasizing the malign (alleged) messenger, and tie the malign messenger to her opponent.

Beyond the implausibility of the insinuations, I doubt this will affect anyone who is not already a Hillary acolyte. Russian generally and Putin specifically are not bogeymen to most Americans. It’s not 1983. It’s not as if there are many people out there who would say “I liked this Trump fellow, but this Russia business  is just too much.” Those who don’t like Trump have many other reasons to do so; those who do are likely care little about Russia one way or the other; and those on the fence likely rank Russia low on the list of factors that will cause them to jump one way or the other.

So in the end, I find this obsessing about a Putin-Trump bromance to be amusing and embarrassing. I would be shocked that there’s any there there. It runs counter to Trump’s type, and it runs counter to history. The controversy transparently (pants?) suits Hillary’s political needs. Those who are hyping it are clearly partisan, and clearly ignorant. There are plenty of real issues to talk about, involving both Hillary and Trump. Let’s get on with that.

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August 5, 2016

Bipartisan Stupidity: Restoring Glass-Steagall

Filed under: Economics,Financial crisis,Financial Crisis II,Politics,Regulation — The Professor @ 6:35 pm

Both parties officially favor a restoration of Glass-Steagall, the Depression-era banking regulation that persisted until repealed under the Clinton administration in 1999. When both Parties agree on an issue, they are likely wrong, and that is the case here.

The homage paid to Glass-Steagall is totem worship, not sound economic policy. The reasoning appears to be that the banking system was relatively quiescent when Glass-Steagall was in place, and a financial crisis occurred within a decade after its repeal. Ergo, we can avoid financial crises by restoring G-S. This makes as much sense as blaming the tumult of the 60s on auto companies’ elimination of tail fins.

Glass-Steagall had several parts, some of which are still in existence. The centerpiece of the legislation was deposit insurance, which rural and small town banking interests had been pushing for years. Deposit insurance is still with us, and its effects are mixed, at best.

One of the parts of Glass-Steagall that was abolished was its limitation on bank groups: the 1933 Act made it more difficult to form holding companies of multiple banks as a way of circumventing branch banking restrictions that were predominant at the time. This was perverse because (1) the Act was ostensibly intended to prevent banking crises, and (2) the proliferation of unit banks due to restrictions on branch banking was one of the most important causes of the banking crisis that ushered in the Great Depression.

The contrast between the experiences of Canada and the United States is illuminating in this regard. Both countries were subjected to a huge adverse economic shock, but Canada’s banking system, which was dominated by a handful of banks that operated branches throughout the country, survived, whereas the fragmented US banking system collapsed. In the 1930s, too big to fail was less of a problem than to small to survive. The collapse of literally thousands of banks devastated the US economy, and this banking crisis ushered in the Depression proper. Further, the inability of branched national banks to diversify liquidity risk (as Canada’s banks were able to do) made the system more dependent on the Fed to manage liquidity shocks. That turned out to be a true systemic risk, when the Fed botched the job (as documented by Friedman and Schwartz). When the system is very dependent on one regulatory body, and that body fails, the effect of the failure is systemic.

The vulnerability of small unit banks was again demonstrated in the S&L fiasco of the 1980s (a crisis in which deposit insurance played a part).

So that part of Glass-Steagall should remain dead and buried.

The part of Glass-Steagall that was repealed, and which its worshippers are most intent on restoring, was the separation of securities underwriting from commercial banking and the limiting of banks securities holdings to investment grade instruments.

Senator Glass believed that the combination of commercial and investment banking contributed to the 1930s banking crisis. As is the case with many legislators, his fervent beliefs were untainted by actual evidence. The story told at the time (and featured in the Pecora Hearings) was that commercial banks unloaded their bad loans into securities, which they dumped on an unsuspecting investing public unaware that they were buying toxic waste.

There are only two problems with this story. First, even if true, it would mean that banks were able to get bad assets off their balance sheets, which should have made them more stable! Real money investors, rather than leveraged institutions were wearing the risk, which should have reduced the likelihood of banking crises.

Second, it wasn’t true. Economists (including Kroszner and Rajan) have shown that securities issued by investment banking arms of commercial banks performed as well as those issued by stand-alone investment banks. This is inconsistent with the asymmetric information story.

Now let’s move forward almost 60 years and try to figure whether the 2008 crisis would have played out much differently had investment banking and commercial banking been kept completely separate. Almost certainly not. First, the institutions in the US that nearly brought down the system were stand alone investment banks, namely Lehman, Bear-Sterns, and Merrill Lynch. The first failed. The second two were absorbed into commercial banks, the first by having the Fed take on most of the bad assets, the second in a shotgun wedding that ironically proved to make the acquiring bank–Bank of America–much weaker. Goldman Sachs and Morgan-Stanley were in dire straits, and converted into banks so that they could avail themselves of Fed support denied them as investment banks.

The investment banking arms of major commercial banks like JP Morgan did not imperil their existence. Citi may be something of an exception, but earlier crises (e.g., the Latin American debt crisis) proved that Citi was perfectly capable of courting insolvency even as a pure commercial bank in the pre-Glass-Steagall repeal days.

Second, and relatedly, because they could not take deposits, and therefore had to rely on short term hot money for funding, the stand-alone investment banks were extremely vulnerable to funding runs, whereas deposits are a “stickier,” more stable source of funding. We need to find ways to reduce reliance on hot funding, rather than encourage it.

Third, Glass-Steagall restrictions weren’t even relevant for several of the institutions that wreaked the most havoc–Fannie, Freddie, and AIG.

Fourth, insofar as the issue of limitations on the permissible investments of commercial banks is concerned, it was precisely investment grade–AAA and AAA plus, in fact–that got banks and investment banks into trouble. Capital rules treated such instruments favorably, and voila!, massive quantities of these instruments were engineered to meet the resulting demand. They way they were engineered, however, made them reservoirs of wrong way risk that contributed significantly to the 2008 doom loop.

In sum: the banking structures that Glass-Steagall outlawed didn’t contribute to the banking crisis that was the law’s genesis, and weren’t materially important in causing the 2008 crisis. Therefore, advocating a return to Glass-Steagall as a crisis prevention mechanism is wholly misguided. Glass-Steagall restrictions are largely irrelevant to preventing financial crises, and some of their effects–notably, the creation of an investment banking industry largely reliant on hot, short term money for funding–actually make crises more likely.

This is why I say that Glass-Steagall has a totemic quality. The reverence shown it is based on a fondness for the old gods who were worshipped during a time of relative economic quiet (even though that is the product of folk belief, because it ignores the LatAm, S&L, and Asian crises, among others, that occurred from 1933-1999). We had a crisis in 2008 because we abandoned the old gods, Glass and Steagall! If we only bring them back to the public square, good times will return! It is not based on a sober evaluation of history, economics,  or the facts.

An alternative tack is taken by Luigi Zingales. He advocates a return to Glass-Steagall in part based on political economy considerations, namely, that it will increase competition and reduce the political power of large financial institutions. As I argued in response to him over four years ago, these arguments are unpersuasive. I would add another point, motivated by reading Calamaris and Haber’s Fragile by Design: the political economy of a fragmented financial system can lead to disastrous results too. Indeed, the 1930s banking crisis was caused largely by the ubiquity of small unit banks and the failure of the Fed to provide liquidity in such a system that was uniquely dependent on this support. Those small banks, as Calomaris and Haber show, used their political power to stymie the development of national branched banks that would have improved systemic stability. The S&L crisis was also stoked by the political power of many small thrifts.*

But regardless, both the Republican and Democratic Parties have now embraced the idea. I don’t sense a zeal in Congress to do so, so perhaps the agreement of the Parties’ platforms on this issue will not result in a restoration of Glass-Steagall. Nonetheless, the widespread fondness for the 83 year old Act should give pause to those who look to national politicians to adopt wise economic policies. That fondness is grounded in a variety of religious belief, not reality.

*My reading of Calomaris and Haber leads me to the depressing conclusion that the political economy of banking is almost uniformly dysfunctional, at all times and at all places. In part this is because the state looks upon the banking system to facilitate fiscal objectives. In part it is because politicians have viewed the banking system as an indirect way of supporting favored domestic constituencies when direct transfers to these constituencies are either politically impossible or constitutionally barred. In part it is because bankers exploit this symbiotic relationship to get political favors: subsidies, restrictions on competition, etc. Even the apparent successes of banking legislation and regulation are more the result of unique political conditions rather than economically enlightened legislators. Canada’s banking system, for instance, was not the product of uniquely Canadian economic insight and political rectitude. Instead, it was the result of a political bargain that was driven by uniquely Canadian political factors, most notably the deep divide between English and French Canada. It was a venal and cynical political deal that just happened to have some favorable economic consequences which were not intended and indeed were not necessarily even understood or foreseen by those who drafted the laws.

Viewed in this light, it is not surprising that the housing finance system in the US, which was the primary culprit for the 2008 crisis, has not been altered substantially. It was the product of a particular set of political coalitions that still largely exist.

The history of federal and state banking regulation in the US also should give pause to those who think a minimalist state in a federal system can’t do much harm. Banking regulation in the small government era was hardly ideal.

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August 3, 2016

A Twofer: Uncle Sucker’s Air $n€ Service Strengthens Two Rogue Regimes

Filed under: Military,Politics — The Professor @ 6:35 pm

Yesterday the WSJ broke a story about a strange coincidence: nearly simultaneously with the release of four Americans held prisoner by Iran, the US shipped $400 million to Iran. The administration denies any connection between these two events, claiming that the money is related to resolution of a longstanding dispute dating back to the days of the Shah.

But who you gonna believe, them or your lying’ eyes? And truth be told, the administration–as desperate for a deal with Iran as it was–had to know how bad the optics were. If it had any choice in the matter, it would have insisted on a decent interval between the prisoner release and the flow of the money. If there wasn’t a connection, the Iranians would have likely accommodated. But the fact that they didn’t tells you that it was a deal: money for the bodies. What’s more, bad optics from the American side were good optics to Iran.

But let’s put aside the issue of whether this was a swap. Let’s suspend disbelief and assume that the bodies and money flowed pursuant to totally separate deals negotiated in hermetically sealed rooms separated by 50 Chinese walls preventing a flow of information between those negotiating about the money and those negotiating about the Americans held captive.

Even granting that wildly implausible hypothesis, the deal stinks to high heaven because of the way the money flowed. In cash. Once in Iranian hands, it was basically untraceable and there is no way the US can use its dominance of the banking system to stop the money flowing to illicit uses, or even detect when it does.

The Iranians now have $400 million of USD, EUR, and CHF to direct to terrorist groups. Even worse, you know who wants cash more than Iran because it is unable to use the banking system? North Korea. You know who has been cooperating with Iran on nuclear and missile technology? North Korea. Now the administration has gifted Iran hundreds of millions that it can send without a trace to North Korea in exchange for nuclear and missile technology. What’s even more astounding is that this coincided with a deal that was intended to delay Iran’s development of nuclear weapons. But this Air $n€ flight to Iran is directly contrary to that purpose, because it facilitates Iranian evasion of restrictions on its nuclear program.

Not to mention that it will also likely bolster another extremely bad actor, North Korea. Funding work on NoKo nuke and missile technology will make two unpredictable and dangerous regional troublemakers stronger.

This makes Operation Fast and Furious look benign and intelligent.  How soon before a US special operations raid on terrorists seizes currency sent to Iran on the night flight from Geneva? How soon before that money pays for an intensification of NoKo and Iranian weapons development?

It gets better. The Iranians, apparently knowing a sucker when they see one, have seized two more Americans. And now that he has reaped most of the financial gains from the nuclear deal, Khamenei is expressing reservations about it and suggesting that Iran will pul out.

For those who have been to the bazaar, you will realize that these are means of extracting even more from Uncle Sucker. And as long as Obama and  his hapless Sancho Panza, John Kerry, are in office, they will almost certainly get their wish.


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July 30, 2016

Dogs Fighting Under the Carpet, Ex-Mullet Man Edition

Filed under: Commodities,Economics,Energy,Politics,Russia — The Professor @ 11:54 am

There is a very revealing struggle going on in Russia right now. It is a pitch-perfect illustration of how Putinism works.

At issue is the Russian government’s privatization initiative, and specifically the privatization of the oil company Bashneft (a Russian firm with a very sordid, checkered past, but I repeat myself). Igor Sechin covets Bashneft, in large part because Rosneft production has been falling (estimates for 2016 are a 2 percent decline), and with sanctions and the company’s inefficiency, here is little hope of reversing the decline. Getting ahold of Bashneft would increase Rosneft’s production and reserves, and Bashneft’s production has grown handsomely of late (almost 11 percent in the last year): Sechin could buy what he can’t create.

But government technocrats, led by Deputy Prime Minister Arkady Dvorkovich, are adamantly opposed to a Rosneft takeover. The opposition stems in part because acquisition of Bashneft by a state-owned firm would make a travesty of privatization, and also thwart the goal of using privatization proceeds to address the government’s fiscal strains, which requires outside money. The opposition also reflects the understanding that enhancing Rosneft’s position in the Russian oil industry is detrimental to the future development of that industry. Rosneft is more parasite that creator.

Dvorkovich therefore flipped out when Russian bank VTB invited Rosneft, as well as other state-owned companies like Gazprom Neft, to participate in the privatization auction. It initially appeared that Putin had sided with Dorkovich, and an anonymous spokesman in the Presidential Administration had confirmed this. This was hailed as a huge defeat for Sechin, and perhaps a harbinger of a change in the balance of power within the Russian government.

But not so fast! An “official” said that the exclusion of Rosneft was “unofficial”. But then this week Putin’s spokesman Peskov, who had confirmed only a week before the “understanding” that Rosneft was out of the running, reversed himself, and said that “formally speaking” Rosneft was not a state owned company, and hence it could participate. You see, Rosneft is owned by a holding company, which is owned by the state. So  even though economically this is a distinction without a difference, legally it provides enough of an opening for Igor to slip through.

So who knows what will happen? Maybe Rosneft will be allowed to participate, under the understanding that it will not win. Or maybe the fix is in. Or maybe Putin is just letting Dvorkovich and (ex-)Mullet Man battle it out ender the carpet for a little while longer before ruling. This would allow him to weigh the arguments–and also to force the contenders to make bids for his support. Putin will rule depending on how he wants to balance the competing political factions, and who can offer the most to Putin or others he wants to favor.

And as in the heyday of Kremlinology, outsiders will attempt to discern deeper lessons from the outcome. Who is on top? How committed is Putin to reforming the Russian economy? How wedded is he to the idea of state champions? Or is he willing to concede that given Russia’s economic straits it is necessary to make accommodation to more Western commercial and legal norms?

The problem with the answers to all of these questions is that even if you are right today, nothing is set in stone. Putin could reverse course later. Maybe next month. Maybe next year. This is an inherent problem with autocratic systems: autocrats can’t make credible commitments. The only precedent is that there are no precedents. Today’s decision matters. . . for today.

So whatever the outcome of this current dog fight, it will tell you about the current state of play and the current balance of power, and not much more, because for an autocrat, tomorrow is another day.

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Say “Sayonara” to Destination Clauses, and “Konnichiwa” to LNG Trading

Filed under: Commodities,Derivatives,Economics,Energy,Politics,Regulation — The Professor @ 11:12 am

The LNG market is undergoing a dramatic change: a couple of years ago, I characterized it as “racing to an inflection point.” The gas glut that has resulted from slow demand growth and the activation of major Australian and US production capacity has not just weighed on prices, but has undermined the contractual structures that underpinned the industry from its beginnings in the mid-1960s: oil linked pricing in long term contracts; take-or-pay arrangements; and destination clauses. Oil linkage was akin to the drunk looking for his keys under the lamppost: the light was good there, but in recent years in particular oil and gas prices have become de-linked, meaning that the light shines in the wrong place. Take-or-pay clauses make sense as a way of addressing opportunism problems that arise in the presence of long-lived, specific assets, but the development of a more liquid short-term trading market reduces asset specificity. Destination clauses were a way that sellers with market power could support price discrimination (by preventing low-price buyers from reselling to those willing to pay higher prices), but the proliferation of new sellers has undermined that market power.

Furthermore, the glut of gas has undermined seller market and bargaining power, and buyers are looking to renegotiate deals done when market conditions were different. They are enlisting the help of regulators, and in Japan (the largest LNG purchaser), their call is being answered. Japan’s antitrust authorities are investigating whether the destination clauses violate fair trade laws, and the likely outcome is that these clauses will be retroactively eliminated, or that sellers will “voluntarily” remove them to preempt antitrust action.

It’s not as if the economics of these clauses have changed overnight: it’s that the changes in market fundamentals have also affected the political economy that drives antitrust enforcement. As contract and spot prices have diverged, and as the pattern of gas consumption and production has diverged from what existed at the time the contracts were formed, the deadweight costs of the clauses have increased, and these costs have fallen heavily on buyers. In a classic illustration of Peltzman-Becker-Stigler theories of regulation, regulators are responding to these efficiency and distributive changes by intervening to challenge contracts that they didn’t object to when conditions were different.

This development will accelerate the process that I wrote about in 2014. More cargoes will be looking for new homes, because the original buyers overbought, and this reallocation will spur short-term trading. This exogenous shock to short term trading will increase market liquidity and the reliability of short term/spot prices, which will spur more short term trading and hasten the demise of oil linking. The virtuous liquidity cycle was already underway as a result of the gas glut, and the emergence of the US as a supplier, but the elimination of destination clauses in legacy Japanese contracts will provide a huge boost to this cycle.

The LNG market may never look exactly like the oil market, but it is becoming more similar all the time. The intervention of Japanese regulators to strike down another barbarous relic of an earlier age will only expedite that process, and substantially so.

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July 28, 2016

Consigning Another US Syrian “Training” Farce to the Memory Hole

Filed under: Military,Politics — The Professor @ 7:35 pm

Today there were numerous stories in most major news outlets about a “vast new trove” of intelligence about ISIS, with the NYT (AKA administration mouthpiece and cheerleader) taking the lead in pushing the story.

You had to look a lot harder-and a lot faster-to find another story which casts US intelligence in a much, much worse light. Specifically, ISIS captured a cache of weapons and computer disks from the latest group that the US has been training in Syria, the New Syrian Army. (Coming next: The New New Syrian Army. Or maybe: And Now for a Completely Different Syrian Army.)

ISIS released some of the video contained on the captured disks, complete with English subtitles (because the dialogue is in Arabic) and commentary, and some snazzy editing. The video that got the most play featured a douchy looking American, presumably CIA, who looks like he just wandered away from a kegger at his frat. In one part of the video frat boy gives instruction to a beefy uniformed Syrian. What is the content of the instruction, you ask? Close quarter combat? Demolitions? Combat shooting?

Surely you jest. No, frat boy was giving a lesson in public communications. He was instructing the Syrian on how to deliver a recorded propaganda statement, telling him things like it’s OK to move your hands, but keep your feet still and don’t shift your weight around on your legs. He gave demonstrations of proper body language. He assured the nervous pupil that they had plenty of time to master this.

Years ago, when I joined the UH faculty, the dean had me and several other new senior hires take a course in media relations that included a virtually identical session on how to act on camera.

In another part of the video, the American gives a disquisition on why ISIS propaganda is effective. In a nutshell, it is because actions reinforce the verbal message.

So, apparently, a part of the American training operation is how to win hearts and minds through killer presentation skills. No doubt another part of the training was the art of effective PowerPoint presentations.

Meanwhile ISIS propaganda effectively wins hearts and minds through demonstrating killer killing skills.

The video really has to be seen to be believed. But that’s easier said than done. The videos were posted on Twitter. The CIA guy’s face is plainly visible, and because of this, Twitter yanked tweets embedding the video. I was able to grab it, and was planning to embed it here. I still might, but don’t want to do anything precipitatous, and I understand that there are issues with disclosing the identities of US operatives.

It’s a close call, though, because it is the (presumably) CIA’s  recklessness that created this problem. It was the CIA who allowed its operative to be filmed with his face fully visible. It was the CIA that allowed the video to be stored unencrypted on the drives captured by ISIS. It was the CIA that trained a group that was beaten by ISIS, which resulted in the capture of not just the videos and other electronic information, but weapons. Since this fiasco is completely of the CIA’s making, it is a little rich to invoke the importance of maintaining the secrecy of US operatives when the Agency itself was grossly incompetent in its personal and operational security. Methinks that this CIA CYA was more about protecting the faceless bureaucrats in Langley than protecting the face of the hapless Lawrence wannabe in the Syrian desert.

This is yet another episode in the ongoing farce that is the American effort to train fighters in Syria. Remember the tragicomic Five Guys incident? The hundreds of millions spent to outfit a handful of “fighters” who almost immediately capitulated to Al Qaeda-linked insurgents? That program was eventually terminated, but the ones that have replaced it have been conspicuous only for their utter lack of impact on the battlefield, whether it be against ISIS or against Assad. Of late, the most prominent American action in Syria has been to whinge about the Russians and Assad bombing “our” fighters (and bases used by US and UK special forces to train them–and perhaps to operate in Syria), and to attempt to negotiate some bizarre deal with the Russians to prevent that from happening again.

In fact, the effort has been so woeful that it actually makes more sense that it is intended to fail, than to succeed. Obama is under pressure to do something in Syria, but he doesn’t want to. What better way to split the baby than to fund a farcical effort? If it is intended to fail, at least we can claim a success, for fail it has.

Regardless of the explanation for the farce, there is no denying that it is a farce. One look at the video just adds an exclamation mark to that statement, but there is plenty of documentation in the public record that the effort is a litany of abject failure unblemished by a single success. (Involvement with the Kurds is a different story. I am focusing on training of Arab fighters in Syria.)

And consider this irony: a comical effort to train anti-ISIS Syrians in propaganda resulted in handing a huge propaganda victory to ISIS. Because rest assured, even though you can’t see the video, the audience in the Islamic world that matters to ISIS has or will. What better way to make a laughingstock of the US than to show some communications major lecturing about the effectiveness of ISIS propaganda, and engaging in pitiful efforts to train Syrians in fighting ISIS propaganda?

Which raises the issue: just what is the objective in Syria? Who are we fighting? Why? To achieve what? The administration goes through the motions of supporting the anti-Assad insurgency, but its heart is clearly not in it. I can understand that, and actually agree with it: the US has little strategic interest in who wins the Syrian civil war, and an Assad defeat would almost certainly empower head chopping, terrorist, anti-American Islamists. But if that’s the policy, stop the cynical game of training a few deluded fools and sending them to be killed. This accomplishes nothing strategically, and damages the reputation of the US. It bolsters the Islamist/ISIS narrative that the US is ineffectual, unreliable, and feckless.

If the objective is to fight ISIS, well, to paraphrase Napoleon speaking of Vienna–fight ISIS. And do so using proven methods. But the US now proudly boasts that it is not using methods that have worked in the past. SecDef Carter (in whom Obama has finally found a reliable water boy after firing three predecessors who dared defy him) brags that the US is NOT engaged in counterinsurgency (COIN) warfare. Why not? Because it has actually worked before? Because it is linked with the Bush administration and General Petraeus? I can’t think of a reason based on actual military realities.

The press would be savaging a Republican administration for such colossal ineptitude and cynicism. Hell, the press might even savage some Democratic administrations. But Obama is given a free pass, and the utter failure–and patent absurdity–of his Syria policy draws nary a cross word from the panjandrums of the press. Indeed, they trumpet alleged intelligence triumphs while remaining mute about proven intelligence debacles: the timing of the release of the intelligence coup story raises the real possibility that it was intended to counter to intelligence boner story. Twitter goes so far as to clean up after the circus parade to conceal the mess that the CIA made: I presume Google has too, because the video is not to be found on YouTube.

It is a performance worthy of Putin’s press, but worse, actually. It is worse because at least Putin’s press does not pretend to hold him accountable, whereas America’s preens and primps about its vital role in our democracy, and declares that it is a vital check on the skulduggery and incompetence of elected officials and bureaucrats. To the extent that it is, it is extremely selective, and this is even more dangerous in many ways than a lapdog press like Putin’s. Consigning the video of the public comms 101 class to the memory hole is just another sad demonstration of why.

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July 24, 2016

A Remedial Lesson in Internet Research for Michael McFaul

Filed under: Politics,Russia — The Professor @ 7:21 pm

I responded to a typically smarmy Tweet from ex-US ambassador to Russia Michael McFaul (@mcfaul), and this started a set-to that is so amusing that I have to share it.

Don’t bother looking for the conversation. You can see my half, but the brave Sir Robin McFaul deleted his Tweets. Gutless. But understandable, given how he fared. But (as the conversation demonstrates) Mr. McFaul is not exactly Internet savvy, and he didn’t count on the wonders of screencaps. So like a bad burrito, Mike, this conversation is going to come back up. Enjoy.

The smarmy Tweet was McFaul’s contribution to the attempt to distract attention from the DNC leak. He said (I can’t show it b/c he deleted it and since it is what I replied to it doesn’t show up in my Notifications) something to the effect that he hopes that our intelligence services are investigating Russian involvement in an attempt to influence the US election. Crucially, he said that he hoped that they would inform us of the outcome soon.

I replied:

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He responded (smarmily):

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I replied:

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His retort:

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But then McFaul lost interest in substance, and resorted to the ad hominem fallacy that has become so prominent in the Clintonoid response to embarrassing facts. Don’t argue the facts, raise questions about the person with the temerity to bring those facts to light.

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“We professors.” LOL.

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Here’s where it gets hilarious. He couldn’t figure it out!

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Try it at home! I bet you can do it. I bet your three year old can do it. Maybe if you have a really smart cat.

Then he gets nasty and personal:

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“I’m guessing the avatar isn’t you too?” Too funny! What was his first clue?

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Finally, 20 minutes later–I kid you not!–he figures it out:

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Don’t like me telling you to stick it, Mike? You got off easy. Try talking that smack to my face and see how it works out for you. And as for your “we at Stanford” snark: not impressed. More ad hominem, appeal to authority fallacies.

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As a service to other Internet challenged geniuses who are dying to know my super-secret identity in two clicks, here is a step-by-step instruction.

First, click on the link to my blog in my Twitter bio:

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Second, click on the “bio” link in the upper right hand corner:

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And voila! You learn–I hope you are sitting down–that I am Craig Pirrong. Who knew?

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Behold, ladies and gentlemen, the point man of US Russian policy 2012-2014.* Hillary, of course, was the architect of US Russian policy from 2009-2013. Should we be surprised what a total clusterfail it was?

Seriously, it is beyond rich that Hillary and McFaul and others who were involved in US foreign policy during that era shriek about how awful Putin and the Russians are today. They enabled it. Yes, Putin et al are who they are, but incompetent and feckless US policy–and policymakers–bear a large share of the blame for the dysfunctional state of US-Russia relations, and for emboldening Putin.

This is also exactly why I think people are nuts to conclude that Putin wants Trump in the White House. He has to be licking his chops at the prospect of a Hillary presidency. After all, who else than this would he want leading his primary adversary?:


A picture is worth 1000 words. Need I say more?

* More humor. The mainstream media drooled all over McFaul because of his use of Twitter. So techie of him! Oh, and by the way, his main accomplishment on Twitter as an ambassador was to provide the world with a stream of entertaining Russian Tweets trolling his idiocy.



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Hypocrites for Hillary

Filed under: History,Politics — The Professor @ 12:17 pm

The hysteria about the DNC hack and the frenzied efforts to focus blame on Putin and Russia have brought to the fore many anti-Russian/anti-Putin types who are so revolted by the prospect of a Trump presidency (in part because of Trump’s alleged admiration for Putin) that they have come out foursquare for Hillary. Most notable among these is Garry Kasparov. Neocons like Robert Kagan too. Journalists like Julia Ioffe of the Washington Post and Miriam Elder (formerly Moscow correspondent for the Guardian, now with BuzzFeed) qualify, as do myriad other journalistic and think tank pilot fish who are not really deserving of mention by name.

But here’s the funny thing. One of this crowd’s main indictments of Putin is his corruption and venality. They have a point about that, but if corruption and venality are reasons to detest a politician, how can they then turn around and support Hillary? For she is corrupt and venal as they come in American politics.

There are actually some similarities in Vladimir’s and Hillary’s trajectories of corruption. Putin’s schemes began not when he was at the center of power in Moscow, but when he was a functionary in the administration of a regional official, the mayor of St. Petersburg. Hillary’s career as a grifter also began in the sticks, when she was First Lady of Arkansas.

For who can forget cattle futures? Some years ago some academics calculated the odds that the typical trader could have turned $1000 into $100,000 in such a short period of time with such a high frequency of winning days. What were those odds, you ask? A mere 31 trillion (with a t!) to one. Yeah. It could happen to anyone who read the WSJ (which didn’t have a commodities page at the time, mind you).

Now you tell me. Would you have stopped trading if you were that good–or on that good a roll? As if: nobody would. But if these profits were part of a scheme (e.g., buying and selling the same contract, and allocating the winners to her account and the losers to the briber’s account) to pay off $100,000 to the governor and/or his wife, you’d have to stop as soon as that number was hit. So both the making of the money, and the stopping of the even trying to make more money, are damning.

Then of course there was Whitewater and Castle Grande, for which Hillary did legal work–and the developers went to jail.

Like Putin, Hillary went from the sticks to the center of power in the capital in one leap. There’s no indication that Hillary profited directly from her position in the White House, but the entire eight years of the Clinton presidency was a litany of stories about dodgy campaign finance schemes. Ironically, given Hillary’s harrumphing about the audacity of foreigners influencing American elections, the 1996 Clinton campaign assiduously courted foreign donors attempting to influence American elections–in anticipation of seeing their favors repaid by the winner.

After leaving the White House, Hillary complained of her straitened financial circumstances. Those soon changed, through the magic of her “charity”–the Clinton Foundation. The main beneficiaries of this “charity” have been herself, Bill, and daughter Chelsea. It is notorious for raising large amounts of money, very little of which goes to the causes (e.g., earthquake relief in Haiti) for which it was ostensibly intended–and large amounts of which go into salaries, travel, and “overhead.” Then there are passing mysteries, like how Bill gets paid $16.5 million dollars over a few years for being the “honorary” chancellor of a for profit education company (that is closely linked with George Soros).

With considerable justice, Putin critics look askance at his purported fortune and claim that it is evidence of his deep corruption. How can you possibly not say the same of Hillary’s wealth? For the Clinton Foundation was collecting tens of millions of dollars in contributions from corrupt governments (especially in the Middle East) at the same time as Hillary was dealing with these governments as Secretary of State. Purely a coincidence, no doubt! The Saudis are deeply, deeply concerned with the long-suffering Haitian people, aren’t they?

The nexus between the Clinton Foundation and Hillary’s role as Secretary of State shows a complete disregard for appearances of impropriety and conflict of interest, and reeks of pay-for-play. Indeed, one of the leaked DNC emails frets that “Clinton Foundation quid pro quo worries are lingering.” The DNC feared that more than her secret emails.

Such blurring of the lines between private interest and public office is also evident in Putin’s Russia, where Putin’s friends  (like the Rotenbergs and Gennady Timchenko) have profited handsomely in deals with the Russian state. There is of course suspicion that Putin shares in these windfalls. There is no suspicion that Hillary’s foundation has received windfalls from  governments with whom Hillary dealt as Secretary of State: it is a documented fact.

Hillary did her part as a high-ranking member of The Most Transparent Administration in History® by having meetings with donors, and then either (a) not recording these meetings in her schedule, or (b) the most recent revelation–burning her schedules! If there’s nothing to hide, why go to such lengths to hide them? (We can of course be completely confident that emails deleted from her private server contained only yoga routines and wedding plans, and no communications with foreign governments or their agents who are donors to the Foundation.)

Putin’s opacity is of course another subject of criticism amongst the Putin hating/Hillary loving crowd. Yet he has nothing on Hillary in that department. The entire email scheme was a pre-planned, preemptive coverup to prevent the release of information that could be used to hold Hillary to account. Putin also clearly understands the importance of the control of information.

And of course, when it comes to Russia in particular, how do Kasparov et al square their support for Hillary with this?:

The article, in January 2013, detailed how the Russian atomic energy agency, Rosatom, had taken over a Canadian company with uranium-mining stakes stretching from Central Asia to the American West. The deal made Rosatom one of the world’s largest uranium producers and brought Mr. Putin closer to his goal of controlling much of the global uranium supply chain.

But the untold story behind that story is one that involves not just the Russian president, but also a former American president and a woman who would like to be the next one.

At the heart of the tale are several men, leaders of the Canadian mining industry, who have been major donors to the charitable endeavors of former President Bill Clinton and his family. Members of that group built, financed and eventually sold off to the Russians a company that would become known as Uranium One.

Beyond mines in Kazakhstan that are among the most lucrative in the world, the sale gave the Russians control of one-fifth of all uranium production capacity in the United States. Since uranium is considered a strategic asset, with implications for national security, the deal had to be approved by a committee composed of representatives from a number of United States government agencies. Among the agencies that eventually signed off was the State Department, then headed by Mr. Clinton’s wife, Hillary Rodham Clinton.

The Canadian behind that deal (Frank Giurstra) and others associated with it have paid a mere $145 million to the Clinton Foundation. More bleeding hearts for Haiti, no doubt.

Indeed, there is a nexus between Rosatom and the email scandal. Politico(!) has documented numerous and extended lacunae in Crackberry addict Hillary’s emails. Most of the gaps are temporal: there are long time periods for which no emails on any subject have been produced. The Rosatom gap is different. During the entire period of her tenure, Hillary personally and the State Department generally were involved in Russian nuclear matters generally  (remember that Nunn-Lugar was operative until 2012) and Rosatom in particular. But despite the fact that there was extensive State Department cable traffic discussing the company, there was one lonely and innocuous email in what Hillary produced:

But then there is an instance where the State Department cable traffic rises and there are few if any Clinton corresponding emails. It’s the case of Rosatom, the Russian State Nuclear Agency: Clinton and senior officials at the State Department received dozens of cables on the subject of Rosatom’s activities around the world, including a hair-raising cable about Russian efforts to dominate the uranium market. As secretary of state, Clinton was a central player in a variety of diplomatic initiatives involving Rosatom officials. But strangely, there is only one email that mentions Rosatom in Clinton’s entire collection, an innocuous email about Rosatom’s activities in Ecuador. To put that into perspective, there are more mentions of LeBron James, yoga and NBC’s Saturday Night Live than the Russian Nuclear Agency in Clinton’s emails deemed “official.”

What could explain this lack of emails on the Russian Nuclear Agency? Were Clinton’s aides negligent in passing along unimportant information while ignoring the far more troubling matters concerning Rosatom? Possibly. Or, were emails on this subject deleted as falling into the “personal” category? It is certainly odd that there’s virtually no email traffic on this subject in particular. Remember that a major deal involving Rosatom that was of vital concern to Clinton Foundation donors went down in 2009 and 2010. Rosatom bought a small Canadian uranium company owned by nine investors who were or became major Clinton Foundation donors, sending $145 million in contributions. The Rosatom deal required approval from several departments, including the State Department.

When you’re the Dem darling, and you’ve lost Politico . . . . But she hasn’t lost the loudly anti-Russian, anti-Putin crowd, despite the fact that the stench of this particular Russian connection would make even a Rotenberg gag.

Oh, and Bill Clinton was paid $500,000 by Renaissance Capital, a Russian investment bank controlled by oligarch Mikhail Prokhorov. Clinton said “I’ve gotta pay the bills.” I guess baby’s too old to need new shoes. But the anti-Putin Hillary hive bats not an eye.

Putin critics also attack him-with good reason-for his high handed approach to the law. Who can witness what Hillary has done with regards to her server and her handling of classified information before, during, and after the fact and not conclude that she is lawless too, and also believes herself to be above the law? (FBI Director Comey’s excuse for her conduct is mental defect: she’s was too stupid to form criminal intent. He said this the day after Obama claimed that she is the most qualified candidate for the presidency since Jefferson. Maybe he meant George.)

Her complicity in the jailing of a hapless filmmaker to deflect attention from her failings in Benghazi also has more than a slight Russian smell to it: the case of the wife of a Kursk crewman who was tranquilized and bundled off while protesting against the Putin government’s handling of the sinking comes to mind. Going back to the beginning of her public career, Hillary’s desire to run roughshod over the law  was noticed during her time as a staffer on the House Judiciary Committee during the Watergate investigations. Legal nihilism is a term often used to describe Russia (Medvedev employed the term, in fact): it would be a fair way of describing Hillary’s attitude to the law.

When campaigning recently with Hillary in Charlotte (complete with a break from tradition by allowing her to speak from a podium displaying the Presidential Seal), Obama praised her for dedicating her life to public service. Whenever I hear that phrase, I reach for my wallet with one hand, and a airsickness bag with the other. This is particularly true when the alleged public servant is Hillary Clinton, who has served herself first, last, and always, grasping for more power, and more money. Putin, of course, often portrays himself as a mere humble servant, toiling ceaselessly for the benefit of the Russian people, for which he is paid a pittance. Both inveigh against the greed of others, while having fared quite well themselves. Both claim they are advocates for the little guy, while doing all they can to avoid actually spending any time with them.

I can understand disliking Putin, including because of his venality, corruption, lack of transparency as a public official, and disregard for legal norms. But if those Putin traits outrage you, you have to be outraged by Hillary too. Indeed, Putin is the product of a system that is notoriously corrupt and where the rule of law is more of an object of derision than an ideal. Hillary is contending for the highest office in a nation that believes that it operates according to a far higher standard (though her getting a pass for her flouting of the law with her private server calls those pretensions into serious doubt). For all his sins, Putin is not nearly the hypocrite Hillary is. And her coterie of Putin-hating supporters are as hypocritical as she.

Hillary’s Putinesque corruption and mendacity should be disqualifying. Her incompetence should be as well. She took pride in Libya, for crying out loud, and that was only one of the things that makes her the Mr. Magoo of international statecraft, merrily and blindly plunging ahead while leaving havoc and destruction in her wake.

But as shocking as these disqualifications are, they might not represent the greatest danger that she poses–which happens to be the very thing that attracts the neocons in particular to her, despite their professed dislike for Putin. As Libya demonstrates, Hillary is an adventurer with a predilection to intervention–another similarity with VVP (and whom the neocons berate for it). During her tenure at State, she had a reputation for advocating a far more truculent foreign policy than Obama. Libya is one example. Since her departure, she has been an advocate for a more muscular approach to Syria. In contrast, Trump has expressed skepticism about American intervention abroad.

The prospect of a corrupt, dishonest, not too bright, and demonstrably incompetent person as president should give anyone pause, especially so to alleged policy mavens. But neocons are overlooking all that, because she is the best prospect to give them the interventions-and wars-they want.


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