Streetwise Professor

Last week marked the 1000th dreary day of the Russo-Ukrainian War. It also saw a new, and disturbing, phase in the conflict.

Specifically, the Biden Administration (not the non compos mentis Biden, of course, but some shadowy cabal of aides) granted permission to Ukraine to utilize Army Tactical Missile Systems (ATACMs) to attack targets on some Russian territory, specifically Kursk oblast and environs. In response, the Russians launched a nuclear capable experimental intermediate range ballistic missile (IRBM) into Ukraine: the missile was topped with six non-nuclear (and in fact non-explosive) warheads.

In many respects the western response to Russia’s launch was overwrought. It was obviously a signal of escalation dominance that reminded me of Crocodile Dundee and the knife:

“That’s not a missile. That’s a missile.” I see your tactical missile and raise you a ballistic missile. I call.

Regardless of the merits of unleashing the ATACMs (which I will discuss below) it was utterly irresponsible for a lame duck administration to do so. It will not have to deal with the consequences. The incoming Trump administration will. And it can only complicate Trump’s already daunting task in Ukraine. Given how clearly disruptive this move was, it could only have been undertaken with malign intent. An “if we can’t rule, nobody will,” spiteful decision.

Regarding the merits. On the one hand ATACMs do not represent a substantial escalation: Ukraine has for months launched attacks on Russia using drones, and on soil Russia has claimed its own (notably Crimea) using various western-made cruise missiles. However, and ironically, by previously pointedly refusing to permit the use of ATACMs on targets in Russia the administration effectively deferred to Putin’s declaration that doing so would cross a red line. Thus, the volte face can only be interpreted as a deliberate flouting of said line, and therefore a deliberate escalation.

And for what? ATACMs, especially in the limited numbers that the US has supplied to Ukraine, cannot have a decisive effect on the war. (Nor can Storm Shadows, or SCALPs, or Taureses, or JASSMs). At most they can disrupt to some degree Russian logistics (e.g., by blowing up munitions depots) or command and control (by striking headquarters). (The fact that the administration made this argument to justify its previous denial of permission for using ATACMs in Russia demonstrates that it recent reversal was an act of spite rather than a reasoned military judgment).

But Ukraine’s military problems so fundamental that inconveniencing Russian operations in these ways will not be decisive.

Ukraine’s first fundamental problem is manpower. Yes, Russia is suffering far larger casualties, but the bloody minded Putin has shown his willingness to tolerate them, and Russia can absorb them far more readily than Ukraine.

Ukraine’s second fundamental problem is air defense, which has both a tactical and a strategic dimension. Tactically, after almost two years of complete ineffectualness, the Russian air forces finally found a way to influence the battle zone by dropping large numbers of FAB glide bombs (some weighing 3 metric tons) on Ukrainian positions from beyond the range of Ukrainian air defenses. Yes, ATACMs can be used to strike the airfields hosting the SU-34s that drop the bombs, thereby forcing the Russians to base them further away and reducing the number of sorties they can launch, but this effect is at the margins. Strategically, through drones and missiles (like iskander, which is more capable than ATACMs) Russia has devastated Ukraine’s energy infrastructure. Whether Ukraine can survive another winter of concerted attacks on its power grid is debatable.

Zelensky has been screaming for more anti-aircraft missile systems (especially Patriots) and some have been forthcoming, especially from Europe. But the need far outstrips the capacity of the US to provide more.

Ukraine’s third fundamental problem is its military command, starting with Zelensky himself, his military chief Syrski, and his general staff (“GenStabU”). The excellent Sarcastosaurous substack is the go to source on this, but its critique is echoed by Ukrainian troops that bear the consequences of the command’s incompetence.

The problems are myriad. The underlying problem is that old Soviet habits die hard. Most notably, command is overly centralized, leading to slow responses to battlefield crises, and a shocking indifference to information coming from those on the front lines.

The centralization has also led to an extremely defective organizational structure. The Ukrainian army has brigades which control battalions, but it has no divisions that control brigades, or corps that control divisions.

Supposedly because divisions are too expensive. Getting brigades and battalions destroyed due to command and control problems isn’t?

The lack of divisions leads to poor coordination between adjacent brigades, and the Russians have learned to exploit these seams. (Seams between units are always a vulnerability. Multiplying the seams multiplies the vulnerabilities). Moreover, Syrski et al control the brigades and even battalions directly, and shuttle them around willy-nilly in response to the latest front line crisis. This has created numerous opportunities that the Russians have exploited, for example by attacking when a new unit is shuffled into line without adequate preparation, or by putting units with no communication channels next to one another, making coordinated response to Russian attacks almost impossible.

When you see reports of this brigade or that being in some place, it is often not an intact brigade, but just a few battalions (and sometimes only one) from that brigade. Meaning that Ukrainian lines are held by jumbles of units controlled (or pretended to be controlled) by generals in Kyiv with minimal operational awareness. It makes the (often exaggerated) Chateau Generalship of World War I look good by comparison.

The Ukrainian command has also exhibited at times a Hitleresque (or Stalinesque) tendency to demand that units fight to the last and not withdraw when caught in an untenable situation, leading to pointless casualties (including the loss of prisoners who are executed by the Russians). This is particularly disastrous when manpower is in precious short supply–as it is.

Ukraine’s only saving grace is that Russian command is even more incompetent. The difference is that Russia has the material resources to compensate for this incompetence. Ukraine does not.

Ukraine has also made some incomprehensible decisions on how to allocate its scarce resource. Most notably, despite the demonstrated effectiveness of the Russian prepared defenses (and in particular the use of heavy minefields) in stopping the much vaunted but failed Ukrainian counteroffensive of 2023 (the Surovkin Line), time and again Ukraine has failed to fortify obvious targets of Russian offensives.

So as it is, Ukraine is barely hanging on. It’s not losing yet, but it certainly is not winning. And definitely not by Zelensky’s definition of victory: regaining all occupied Ukrainian territory. That is the pipe dream to end all pipe dreams.

Yet he insists on it.

The situation now is that both sides need an end to the fighting, but neither is willing to acknowledge it. Ukraine’s dire circumstances are evident, and although Russia’s aren’t quite so dire, they are bad, and the cost Russia is incurring is certainly not worth the possible gain–adding another string of shitholes to Putin’s collection. Eastern Ukraine was a shithole before Russia invaded: now it is a depopulated shithole buried under rubble.

And the economic consequences for Russia have been baleful. Speaking of rubble, that describes the ruble now: it is now worth less than a penny. Official Russian statistics tout the strength of the Russian economy, but it is a war economy. Shoveling massive resources to the military, to be blown up in Ukraine, props up GDP, but people don’t consume aggregates. The economic circumstances of Russians have degraded substantially in the past 1000 days, and will only degrade more every additional day the war goes on. The Portuguese living standards that Putin once promised are a bad joke now.

Neither side can achieve victory as they have defined it. Heretofore neither side has been willing to acknowledge that.

Trump has boasted that he will end the war. Given the intransigence of the parties, this boast seems unrealistic. But perhaps he can exploit the fact that neither side gains from continuing the war to to cobble together something resembling peace.

The most likely path: another frozen conflict in which Putin will get de facto control of what he has grabbed in the past two plus years.

The biggest obstacle to this outcome is Zelensky. I think he is genuinely dead set (emphasis on the dead) on driving the Russians from Ukrainian territory. But that is a delusion.

Zelensky, apparently not realizing that he who pays the piper calls the tune, has demanded that the west supply the resources to achieve his objective. For one thing, such resources don’t exist, and meeting even a fraction of Zelensky’s demands would denude the US’s already scanty stocks of missiles and shells. The US has more pressing concerns than eastern Europe: eastern Asia in particular. Moreover, the real binding constraint on Zelensky’s ambitions is not hardware but meatware. Ukraine has too few soldiers, a large fraction of its military-age population is unwilling to serve, and it is even more of a demographic basket case than Russia.

In brief, Zelensky played a vital role at the outset of the war, and his conduct then was exemplary. But it has quite clearly gone to his head, and he is now a delusional autocrat who is an existential threat to the people he claims to represent. Not to mention a military incompetent (as discussed above).

The establishments in the United States and Europe inveigh against a settlement that leaves Putin in control of even a sliver of Ukraine. They invoke the ghost of Munich, and claim that Putin will use the respite to rearm and will then set his sights on Nato’s eastern flank.

As if. If this war has shown anything, it has shown that Russia’s ability to project conventional military power beyond its borders is virtually non-existent. Further, the army that went into Ukraine was supposedly the product of serious reforms that addressed the flaws exposed in Georgia in 2008. In the event, it wasn’t. Given the systemic defects of the Russian system (of which corruption in the military is just one symptom) any future “reforms” are almost certain to be as tragicomic as the previous ones.

And how long would they take? Years. The establishments obsess on Putin, who is already 72. He will be well past his sell by date (especially by Russian male standards) by the time his allegedly reformed military will be capable of doing anything. And that is time that the Europeans can use to put on their big boy lederhosen and pantalons and create something other than Potemkin militaries that Putin (or more likely his successor) would be unwilling to confront.

That is, deterrence of Russia is completely in European hands. And if they decide to forego it, that’s their choice and their problem.

So Trump has a chance to realize his boast by negotiating (a la Teddy Roosevelt perhaps) an outcome that satisfies no one. But war is politics by other means, and politics is the art of the possible. The dreams of Putin, Zelensky, and the establishment are impossible. If Trump can get them to accept that, an imperfect peace is possible. And an imperfect peace is far preferable to the current nightmare.

The biggest challenge to achieving this is making it clear to Putin that he cannot prevail. Abandoning Ukraine altogether now would undermine that. So, rhetoric and I think genuine belief notwithstanding, to get his peace Trump will have to hold his nose and continue to fund Ukraine to some extent. The delicate balance to be found is between providing enough support to persuade Putin that continuing the war is futile, but not so much as to refill Zelensky’s pipe of dreams.

The acts of the dying Biden administration are certainly no help. The road to a settlement is torturous enough as it is without its malign actions.

Give Trump a chance. The odds are against him, given the characters involved in the conflict. But the Biden administration seems hell bent on stacking the odds against him and denying him–and hence those dying in Ukraine–that chance.

Trump’s cabinet nominees are provocative, to say the least. There has to be some stratagem behind Gaetz in particular, because it is facially hard to understand on the merits, but I’ll be damned if I know what that strategem is. Yes, I can see Trump wanting Gaetz or someone like him. But a choice should depend on both the desirability of the outcome conditional on its occurrence, and the probability of it occurring. Since Gaetz’s odds seem extremely low, and Trump must know that, I infer that Trump is deliberately courting rejection. But why? I have nothing.

I could go through all of them, but there’s only so many hours in the day. I will therefore focus on the one closest to my interest, SecDef (Hegseth). I will try to do a post on Tulsi Gabbard soon.

Of course the assault on Hegseth started nanoseconds after his name was announced, and was launched from the usual swampy quarters on the usual swampy grounds. He hasn’t served in the swamp! Therefore he is unqualified to be SecDef! There is also a concerted personal attack under way: racist, white supremacist, alleged sexual assailant. The usual, in other words.

Now those are the stated reasons for opposing him, but as we’ll see, not the real reasons. Indeed, I think the real reasons are that the swamp fears that he is capable of running DoD in the way Trump wants it run.

As for qualifications, just what are they? What individual who has run for, or has been, commander in chief or in line to be commander in chief, has the qualifications? For example, Tim Walz was supposedly qualified to be commander in chief, but based on what? Twenty plus years as a National Guard NCO who bugged out when there was a risk he’d actually get shot at? If so, and I see no other qualifications, Hegseth–20 year NG veteran, retired as major, multiple combat tours, two Bronze Stars–is qualified to be SecDef. If someone is qualified to be CinC, they should be more than qualified to be SecDef. Similar things could be said about Obama, Harris, Biden, and Trump, and pretty much any late-20th-21st century president or veep you could name except for Eisenhower. Their military and managerial bona fides ranged from non-existent to extremely limited.

Our current SecDef has the kinds of credentials the swamp thinks necessary–general who retired to clean up in the MIC–and he’s been a complete dolt who cannot claim any positive accomplishment. (Name one. I dare you). The fact that he could go missing for several days without anybody really noticing, a la Major Major Major Major, tells you all you need to know about his contributions to our national defense.

In recent decades most SecDefs have been apparatchiks who had no lasting impact.

Meaning that the background that the swamp demands is neither necessary nor sufficient for success. I doubt it is even a strong predictor of performance.

The SecDef’s job consists of two basic parts: establishing policy objectives, and steering the Pentagon towards achieving them. The swamp tut-tuts about Hegseth’s ability to do the latter, but they really fear the former, and his ability to achieve the latter.

In rather outspoken, and frequently salty, remarks before his name was floated as the nominee, Hegseth revealed that his overriding policy objective is to change fundamentally the culture of the military. In particular, to change it back to what it was. MMGA. Make the Military Great Again.

The uniformed and civilian incumbents who advanced in that culture, and who have actively promoted it, detest Hegseth on those grounds alone.

In particular, Hegseth has made it plain that he believes that the DEI culture that pervades today’s military is inimical to the purpose of the military–war fighting–and must be eliminated root and branch. Part of that rooting out means terminating many general officers, including (and he has called him out specifically) the Chairman of the Joint Chiefs.

He has said that the expression “diversity is our strength” makes him throw up in his mouth. I can relate.

In my reasons to vote for Trump post, I specifically listed elimination of DEI, in the military in particular. It is vital for restoring the culture of the military.

So yes, he is a “culture warrior.” A “warrior culture warrior” actually. “Culture warrior” is hurled as an epithet against him. It’s actually a great qualification given the depths to which the military has descended.

He’s absolutely right that rescuing and restoring the culture is necessary to rescue recruiting, which is one of the military’s current grave problems.

In interviews he has suggested going back to the standards and procedures in place around 1995. That is actually a very thoughtful idea. Not necessarily to be applied literally, but as a useful exercise in resetting the military.

The mid-90s represents what is arguably the acme of American military power and performance. The military of that era was optimized for peer and near-peer conflicts, and had yet to have experienced the corrosive effects (doctrinally, force design, weapons acquisition, morale, etc.) of decades of counterinsurgency focus. We are again in an era where we need to focus on peer conflicts. Moreover, it predates the descent into DEI madness (though that had begun, with “don’t ask, don’t tell”).

So use the mid-90s as a baseline. See what has changed, and determine why. See what effects the changes have had. Get rid of the pernicious changes–of which there have been many.

As for firing generals, this will be salutary for many reasons. To get rid of those responsible for the cultural decay and prevent them from doing further damage. And pour encourager les autres.

Indeed, although a board to vet the current generals has been mooted, maybe that isn’t necessary, or at least could be supplemented by instituting the Roman practice of decimation. Just axing 10 percent at random. I say that only partly in the spirit of A Modest Proposal.

Decimation was adopted and worked for a reason. It was a punishment exacted on an organization (a cohort, a legion) that had failed. It was a signal that the failure was collective, and the responsibility of all. It incentivized each legionnaire to police others, for each knew that they could pay a price for the failure of others.

The American military has failed in recent decades. The failure is collective. Take it from there.

Fixing the culture is an overriding priority. Another is fixing procurement–another collective failure. Current flag ranks plus senior civilian DoD staff are responsible for that. This is another reason for a thorough culling.

Here’s an area where Elon Musk could provide very valuable insight. Name one procurement program that has come close to matching what Musk has done with SpaceX, or Tesla for that matter. You can’t.

Indeed, I’d prefer Musk focus his DOGE efforts on this, rather than spread them across the entirety of the US government. Military procurement is government inefficiency par excellence, and needs a major overhaul.

I therefore agree with Hegseth’s policy priorities, as he has expressed them in pre-nomination interviews.

And I don’t GAF that he has bad tattoos.

The jury is of course out on how successful he can be in implementing them.

He will face intense internal opposition. Which is precisely why a thorough culling of the flag ranks and senior civilians is imperative.

Hegseth obviously can’t do it alone. Strong and aligned service secretaries are essential. As are the various under- and assistant secretaries and their staffs.

But it can be done. Reagan inherited a dispirited and lost military when he took office in 1981. Under his leadership, and that of Caspar Weinberger (who definitely did not have a MIC background, and indeed wanted to be Secretary of State but was given Defense instead) and his deputies, the military was turned around within a few short years.

I believe that the task will be more difficult, 44 years later. The institutional rot and bloat is worse now than then. But it must be done. And it must start with the culture. For that, a culture warrior is essential.

Donald Trump’s post-election blitzkrieg (see! He is Hitler!) has shocked and awed the ruling class. One of his moves that has attracted the most attention is his announcement of a “Department of Governmental Efficiency” (“DOGE”) to be headed by Elon Musk and Vivek Ramaswamy.

Musk has promised to use the yet-to-be-formally-established non-department department to trim trillions of dollars from federal spending (although it is somewhat unclear if this is an annual number or a cumulative total over some period).

The mechanism by which this laudable goal can be accomplished is unclear, given Congress’ power of the purse, and previous Supreme Court rulings regarding things like impoundment by which the president can thwart Congressional appropriations. Various stratagems have been floated, but these will set up a Constitutional clash, which, ironically, will get bogged down in the political and judicial quagmire that is the source of much inefficiency.

Moreover, it must be recognized that the room for budgetary maneuver is quite limited. Entitlements plus interest (including spending on veterans in entitlements) consume about 53 percent of federal spending. Discretionary spending accounts for “only” $1.6 trillion, half of which is for the Pentagon. Even axing entire departments, like the Department of Education, would only free up modest sums: Department of Education spending accounts for 4 percent of the budget, and no doubt closing down the entire monstrosity would result in a lot of that spending being shuffled elsewhere. (The case for eliminating Education rests–and rests quite firmly–on non-budgetary grounds, namely its destructive effects on American education at all levels).

Looking at trends, the Covid spending spikes (which added appreciably to debt and per the Fiscal Theory of the Price Level were a major contributor to inflation) stand out, but so does the increase in the growth rate of federal spending under Biden.

Notably, Federal spending plateaued during the post-2010 period of divided government, then ticked up under Trump (no budget hawk he), and accelerated markedly under Biden.

Therefore, the best outcome is to try to recapture the (relative) budget discipline that prevailed post-GFC, and post-Republican capture of the House in 2010. This is something that will have to come from Congress, and from Trump. Not from Elon and Vivek.

This is not to say that DOGE is futile. It can–and should–focus on non-spending sources of government inefficiency, but particularly on the inefficiencies that the government inflicts on the private sector through regulation. Especially during the Biden administration, the administrative agencies have run amok in imposing new rules, interpreting existing ones in pernicious ways, and regulating by enforcement. The new administration has considerable–though not untrammeled–power to cut back on this thicket, and pretty much complete discretion at not adding to it.

This is exactly the domain which exercised Musk most, as epitomized by his Parable of the Sharks and Whales:

Gulliver Musk’s SpaceX in particular (but Tesla too) has been attacked by regulatory Lilliputians. And X would clearly have been in a Harris administration’s regulatory cross hairs.

Here DOGE can perform yeoman’s service to propose, but it will still be up to the agencies to dispose. And those efforts will also trigger protracted legal battles. But there are battles that must be waged, and DOGE can perform a vital role of identifying the most egregious problems, the fixing of which would generate the most benefits.

This is also the area where the name-and-shame aspect of DOGE can work best. Lacking any real authority, DOGE can best serve as a bully pulpit (and hopefully a bullying pulpit) to galvanize public support for anti-regulatory efforts. As a strategy guide, I recommend Alinsky’s Rules for Radicals. Virtually all of them could be quite useful to DOGE, including “ridicule is man’s most potent weapon” and “pick the target, freeze it, personalize it, and polarize it.”

Back in the day, Senator William Proxmire had his Golden Fleece Award that ridiculed particularly absurd examples of government spending. DOGE should initiate something like that, perhaps even on a weekly basis. It could echo Proxmire’s focus on spending, but it should especially focus on regulatory outrages and absurdities.

It could also serve as a clearinghouse for complaints about regulatory abuse. You know, sort of like from the days when the doges ruled Venice:

No doubt the most useful information would come from within the agencies themselves, as many of the apparatchiks within said agencies will no doubt be waging guerrilla war against de-regulatory efforts and only their peers will be able to expose them.

There are two ways to rescue the United States from its parlous fiscal circumstances: cut spending, or increase growth. I doubt DOGE can do much regarding the first, but can contribute materially to the second. Attacking regulation-induced economic sclerosis would provide a much needed fillip to the American economy, which would spur federal revenues and help boost primary surpluses. This would also have salutary effects on inflation, again per the Fiscal Theory of the Price Level.

I wish Musk and Ramaswamy and those they attract to DOGE the best. They have set for themselves the Herculean task of cleaning the Augean Stables in DC. The best way to perform it is to prioritize and to optimize the use of the tools at hand. Given the numerous obstacles to tackling spending directly, this dictates a focus on regulation, and the mobilization through transparency of popular awareness of its myriad perversities.

Note. According to Wikipedia, the word “doge” “originally referring to any military leader, becoming in the Late Roman Empire the title for a leader of an expeditionary force formed by detachments (vexillationes) from the frontier army (limitanei), separate from, but subject to, the governor of a province, authorized to conduct operations beyond provincial boundaries.” That actually seems quite appropriate here, especially the authorization to conduct operations beyond boundaries.

There is a bit of a kerfuffle in futures world about the CME winning approval from the Natinoal Futures Association (NFA) to operate its own brokerage firm (futures commission merchant “FCM”). The industry is pretty unified in its opposition to this “vertical integration” by the CME that will put it into competition with some of its customers.

(Once upon a time I worked on the 15th floor of the tower on the left).

I think this will turn out to be much ado about nothing. Yes, CME has the right to open an FCM, but whether it will, or how big it will be if it does, is very much open to doubt.

Recall that the CME launched this initiative in response to FTX’s adoption of this model. (The fact that the CME obtained approval almost exactly 2 years after FTX went kaput tells you a lot about the speed at which regulators work). FTX is no more, and no other exchange, crypto or otherwise, has adopted the model. So there’s no perceived competitive threat from an integrated exchange, which reduces (and perhaps eliminates) the CME’s need to bring the FCM to life. It likely pursued the application after FTX’s demise as a precautionary measure.

If that’s right, the FCM will remain on the shelf.

And I think it will because it’s hard to make a business case for it. Let’s consider the various economic rationales for such integration.

One commonly asserted one is to leverage monopoly power. Commonly asserted, and wrong. The one monopoly rent theorem implies that except under very special (and usually quite contrived) circumstances, a monopolist (which CME arguable is in most of its products, and in clearing) can extract all the rents from its market power by pricing its own product, and cannot increase profit be obtaining market power upstream or downstream.

Regulated monopolists have sometimes integrated to circumvent rate regulation. For example, ATT owned its equipment supplier Western Electric. ATT operated under rate of return regulation, but could circumvent that by purchasing equipment from its subsidiary at inflated prices.

That doesn’t apply to CME. It is a regulated monopolist but not subject to rate of return regulation.

Integration can also be a way of circumventing price controls. That’s also not an issue here.

Vertical integration can mitigate transactions costs when there are bilateral monopolies (at least after the “fundamental transformation” that occurs when the upstream and downstream firms make relationship specific investments). The FCM sector is pretty fragmented and competitive, and does not fit this “scorpions in.a bottle” template.

Another reason for vertical integration is double marginalization. This occurs when both the upstream and downstream firms have some market power. Each charges a price above marginal cost, and in general the all in price exceeds the joint profit maximizing price.

Again, the FCM sector, though more concentrated than it was historically, is still highly competitive. It’s not impossible that FCM prices (commissions and data charges) exceed marginal cost, but not by much.

But it is not outside the realm of possibility that CME believes that the more concentrated FCM industry could use a little price competition. An exec at Interactive Brokers apparently thinks so: “If they’re going to undercut our pricing and offer cheaper market data then that will be a problem.” (It’s quite interesting that market data is mentioned. That’s a big deal in the modern electronic world).

Pro tip: “we don’t like the fact that they may compete with us on price” is not a public spirited rationale for opposing a competitor’s or potential competitor’s action.

I consider this to be the most likely reason for CME to activate an FCM and operate it seriously. And that would not be a bad thing. Although the impact on the ultimate customer is likely to be modest because lower FCM prices would permit CME to jack up its price. But the combined CME+FCM price would be lower if there is indeed double marginalization going on. That would benefit the ultimate customer.

Another reason for integration would be for the CME to secure better information on the costs of supply and the demand for FCM services. This could help it optimize its pricing.

The one potential real concern about CME’s move is that it is a self-regulatory organization that polices FCMs, and that it might favor its own or try to raise its rivals’ costs through exercise of its oversight facilities. But note that the NFA, which granted approval, regulates FCMs (under CFTC auspices).

In sum, absent competition from a new integrated FTX copycat, I don’t see a compelling business case for the CME to turn on the lights to its newly approved FCM, or at least to operate one at a scale that would compete seriously with the bank-owned big boys. (Funny how that form of integration gets little comment or scrutiny, eh?). The reason that it might–to stimulate price competition in the FCM space and mitigate double marginalization–would benefit customers, though perhaps not by much. The self-dealing issue is ameliorated considerably by the fact that the NFA regulates FCMs. (Indeed, political economy considerations, namely pressure from other NFA members, might make the NFA be harder on the CME).

So all in all, nothing to get hot and bothered about.

On Tuesday, the American people gave a new reason to remember, remember the 5th of November. Unlike the original Gunpowder Plot memorialized in the English verse, however, the 2024 version succeeded, and blew the establishment/ruling class/elite all to hell.

There was definitely a V for Vendetta vibe about this too. Ordinary people revulsing against a censorious and controlling regime.

To put it in a more American idiom, it was Jacksonians Strike Back. A populist hoi polloi giving the finger to their alleged betters. And Trump is–as I have said since his political emergence in 2016–the closest thing to Andrew Jackson in American politics since the man hisself 200 years ago. In personality, surely.

Trump’s triumph represents an extreme act of will, and his vendetta against the establishment forces arrayed against him. Any normal person would have collapsed in the face of the multi-front war waged on him by the powers that be. Just as Andrew Jackson’s rage against the machine that he believed had done him wrong in 1824 drove him forward in 1828, through grim determination Trump’s rage at the machine he believes did him wrong in 2020 propelled him to victory four years later. And as Jackson’s victory in 1828 was decisive and his loss in 1824 was extremely suspect, the same can be said of Trump in 2024 and 2020. And both men waged their campaigns in a fashion that violated contemporary rules of political decorum, to the outrage of their foes.

Jackson transformed American politics for decades, but he had two consecutive terms to engineer this transformation. The nature of Trump’s political career–with his two terms interrupted by that of a regime placeholder–will make it more difficult for him to have the same effect. But it is almost certain that American politics and government will not be the same.

The recriminations of the losers–in the Democratic Party and its media adjunct–have begun. It is quite a spectacle. Given the characters involved, unsurprisingly these recriminations have a strongly identitarian cast. It was the white bitches that did it! No! It was the misogynist black dudes! No! It was the racist Latinos!

They just don’t get it. It was them. They have yet to learn the wisdom of Pogo:

I wrote in the summer of 2016 that the “elite”/regime/establishment created Trump. He was a reaction to them. Without them, he would not exist as a political force. The Biden interregnum only reinforced the popular disgust with the regime, and powered Trump to a decisive victory. Trump’s victory is a repudiation driven by revulsion of a discredited regime.

But the Democrats/regime/establishment cannot bring themselves to face this reality. Normal people would react to such a humiliating defeat by taking a hard look at themselves. Or in the words of Chuck Leavell:

And it’s agonizing reappraisal,
Says Dusty Rhodes
And he’s the American Dream.

But no. They live so far up their own asses that honest self-appraisal is impossible for them. Perhaps not surprisingly, because they really don’t believe in the American Dream.

Normal people would say: “How did we possibly lose to the worst person in the world, Mr. Literally Worse Than Hitler? We must really suck. A lot of people must really hate us.”

But they are not normal people. Their answer is: “YOU really suck.”

They are in desperate need of a 12 Step Program–the first step of which is to admit one has a problem. But in their narcissism, they are constitutionally incapable of this.

I am of mixed minds on this. On the one hand, it will delay, and quite possibly prevent, their political rehabilitation. On the other, it condemns us to yet more years of hysterical (in the neurotic sense of the word) ranting and obstructionism and political and legal warfare.

Some leftist recognize all this. From the Nation, of all places: “This Time We Have to Hold the Democratic Party Elite Responsible for This Catastrophe”:

Democrats will need to radically reform themselves if they want to ever defeat the radical right. They have to realize that non-college-educated voters, who make up two-thirds of the electorate, need to be won over. They need to realize that, for anti-system Americans, a promised return to bipartisan comity is just ancien régime restoration. They need to become the party that aspires to be more than caretakers of a broken system but rather is willing to embrace radical policies to change that status quo. This is the only path for the party to rebuild itself and for Trumpism—which without such effective opposition is likely to long outlive its standard-bearer—to actually be defeated.

The Democrats are not the only ones who need to have a Come to Jesus moment. The regime adjacent, controlled opposition, traditional Republicans need to change as well. The Grand Old Party is just old. The nation’s political polarity has shifted completely, and the traditional Republican base has flipped to D, and the traditional Democratic base has flipped to R. The Mitch McConnells et al need to go away, and new people that align with the current political realities must replace them. (J.D. Vance provides a good role model here). In the words of Oliver Cromwell: “In the name of God, Go!”

The timing and the magnitude of the changes cannot be predicted with any precision. But they will come. And when they do, remember, remember the 5th of November. Because that will be the catalyst of those changes.