Streetwise Professor

Apparently there is buyer’s remorse in Moscow, as Putin and his coterie are disappointed at Trump’s failure to change dramatically the relationship between the US and Russia. Don’t believe me? The WaPoo and the FT say so.

This is no surprise to me at all. Indeed, from the time that the hysteria over alleged Russian manipulation of the US election broke out, I said Putin should be careful what he asks for, because it was be unlikely that Trump would behave as expected–and hoped, in Moscow, apparently. There are several reasons for this, some of which I pointed out at the time.

The first is Trump’s mercurial nature. Counting on what he says at time t to be reliable information for forecasting his behavior at T>t is a mugs’ game, because much of what he says is for tactical value and to influence negotiations, and because he changes his mind a lot, in part because he does not have strong ideological convictions.

I think Trump’s stand on Nato–an issue of particular importance to Putin–is a classic example. There is good sense at the core of Trump’s position: European Nato states have been free riding for years. He wants to get them to stump up more money. What better way than to threaten to ditch Nato? He has quite clearly put the fear into them. Then he dispatches his reasonable emissaries–Mattis and Tillerson–to lay out the framework of a modus vivendi.

The second is that Trump’s assertion of an independent United States with attenuated ties to traditional multilateral organizations is hardly helpful to Putin. This is especially true because part of Trump’s program along these lines is to revitalize the US military. Russia has strained mightily to overcome the decrepitude of its 1990s military, and has managed to recapitalize it sufficiently to make it a credible force. Even after these efforts, however, it can only dimly see the tail of the American military in the distance. If Trump goes into super-cruise mode, Russia’s expenditures will have largely been for nought. Closing the military gap required the US not to compete. Trump made it clear he would compete. How could Putin have desired that?

Nato was already the US military plus a few European military baubles hung on for decoration. A stronger US military makes Nato stronger, regardless of what the Europeans do. If the Europeans kick it up a bit too, well that all really sucks for Vlad.

The third is something that has only become manifest in the past months. Namely, the Democratic loss left them desperate to find a scapegoat. Russia has become that scapegoat, and anything said that is remotely positive about Russia unleashes paroxysms of fury–not just from Democrats, but from many Republicans as well. Any positive move that Trump would take towards Russia would be seized upon as evidence of a dark bargain with the Kremlin. So (as he acknowledged in his press conference) he has no political room to deal with Russia. Indeed, if anything he might be forced to being more Russophobic Than Thou in order to put this issue to rest.

That is, the dynamic created by his intervention has completely undermined Putin’s purpose. A self-inflicted wound.

There is yet more irony in this development. Along with their spawn, 1980s peaceniks who shrieked that Reagan’s robust stance with the Soviet Union threatened the earth with nuclear annihilation now sound like those in the hard right in the ’80s who thought Reagan was a wimp, and a traitor for talking with Gorbachev. Trump, of all people, is the one lamenting that defusing conflict and talking with the Russians would reduce the risk of nuclear holocaust.

All this calls into considerable doubt Putin’s vaunted tactical and strategic acumen. If indeed Russia intervened heavy-handedly in the US election, it is not turning out well for Putin. And evidently he recognizes this, and is sharply reducing his ambitions. Maybe, pace Stalin, we’ll see him write an article where he claims Russia is dizzy with success, and needs a respite to consolidate its gains.

Truth be told, I do not think that Putin thought that his machinations (whatever they were–and I am skeptical about some of the more lurid claims) would result in Trump’s election. I surmise that his objective was to damage Hillary, in the full expectation that she would win and it would be advantageous to deal with a weakened president. But, he was too clever by half, outsmarted himself, and now has to deal with an unpredictable dervish capable of turning any which way.

Viewed in this light, Putin is less Sorcerer, than Sorcerer’s Apprentice, who cast a spell he could not control: authoritarians who have been in control too long have a tendency to do that, because they are convinced of their own greatness. Whatever his intent, the unintended consequences of his actions have arguably left him worse of than if he had left well enough alone. I do not believe that it was his intent to elect Trump. When Trump was elected, he let his mind run wild with the possibilities, but he has now come crashing to earth.

Wiley Coyote comes to mind. That Acme Election Kit (or would it be the Acmeski Election Kit) hasn’t worked quite as planned, has it Vlad?

At his Thursday press conference Trump unleashed a frontal attack on the press, and appealed directly to the American people: he said, in not so many words, that he would not accept the press as an intermediary standing between him and the electorate  because it is not an honest broker, but is instead  tendentiously partisan, and fundamentally dishonest in its partisanship. Trump followed this fusillade with a Tweet labeling an alphabet soup of media organizations “enemies of the people.”

The media reacted predictably, and indeed as Trump predicted during his press conference. And you know what: He doesn’t care! Indeed, he relishes it, precisely because he knows that the people to whom he is appealing detest the media. And the primary reason that they detest the media is that they know the media detests them, and indeed, largely considers them beneath contempt.

Which brings me to my main subject, which is the left’s doubling down on identity politics post-election. This is the subject of an excellent essay in the Claremont Review of Books by William Voegeli (unfortunately behind a paywall).

Voegeli brings out a couple of very important points. One is the relentless, and indeed militant, subjectivity of identity politics. (This is something I’ve remarked upon going back at least 25 years.) The premise is that there are no universals, but that everyone’s beliefs,  mind, and behavior are determined by their identity, which is the function of a nexus of primarily race and gender (with the latter definitely NOT being binary) and sexual orientation (and crucially, only to a very minor degree class/economic status–more on this in a bit).

This leads to an intense tribalism.*  This tribalism inherently creates conflict and makes dialogue impossible. This is greatly exacerbated by the leftist belief that language itself is highly subjective and the product of power relationships. When the possibility of a common meaning of language is denied, conversion by persuasion and the demonstration of error through argument become impossible. The left thinks the Tower of Babel is, if not a good thing, an inevitable thing. In such a world, dispute can be settled only by conflict and the assertion of power. In this situation, language serves the purpose almost exclusively of signaling one’s identity tribe, and to one’s identity tribe, rather than to engage in civil discourse with those outside it.

Moreover, the most crucial part of these identities is victimization. Which requires a victimizer. The left of course has that all figured out, and of course it is identifiable by race, gender, orientation etc.: the victimizers are white, primarily male, heterosexual, and middle class. Often rural or exurban, living in the Heart of Darkness that stretches from the Hudson to the San Andreas fault (with a few small islands inhabited by good tribes, namely college towns, scattered there).

And as Voegeli notes, this creates a tremendous problem for the left. They were convinced that demography, combined with raising the identity consciousness of the victimized categories, would result in an electoral majority that would sweep them into power. Once in power, they could take their revenge on the benighted–and Voegeli points out that many (e.g., Harvard’s–go figure!–Mark Tushnet) were quite explicit in their desire to exterminate the American kulaks as a class.

But the demographic revolution has not proceeded as quickly as the left had anticipated, and they launched their revolution too quickly, while the hated kulaks were still in a majority (and in particular, in an Electoral College majority–pesky Constitution!). They also misjudged their enemy. (And I am not being hyperbolic here–they definitely view whites in flyover country as the enemy.)

They should have read Walter Russell Mead’s description of the Jacksonian American. It is usually politically detached and rather passive. But when it perceives it is threatened, it reacts with a rather frightening intensity, latent with the threat of violence.

A historical example illustrates this. During the American Revolution, the “Overmountain Men” of Tennessee, the proto-Jacksonians, largely remained aloof from the conflict. They wanted to be left alone. But neutrality did not satisfy the British crown. The British demanded subservience and support. British commander Patrick Ferguson made blood curdling threats to attack Over the Mountain unless subservience was forthcoming, post haste.

These threats pushed the Overmountain Men into outright defiance. Believing their liberty to be at risk, and not willing to bend to any man (which is why they were living in the wilderness in the first place), they flooded out of their mountain fastness and gathered near King’s Mountain, North Carolina, where they met Ferguson and his Redcoats. And proceeded to shoot them to pieces, killing Ferguson in the process, in one of the most decisive and one-sided battles of the war.

The Trump election bears some similarity to this. The left’s identity politics requires that their enemies either deny their own identity and submit, or commit suicide (which, in fact, some on the left have helpfully suggested). Yes, this may work with pussified white males at Oberlin (obedient products of the feminized primary and secondary education systems in the US), but it doesn’t work with high school graduates in Gunland. As the left found out to its horror and shock on November 8, 2016.

The old Marxist left always went on and on about how the internal contradictions in capitalism would cause its collapse. The new cultural left is blind to the internal contradictions of identity politics. One cannot reasonably expect that the Evil Identity–which the Good Identities constantly call out by name–will not itself consolidate on identity lines and fight back, but that is exactly what the left’s strategy requires. A strategy based on one’s enemy’s self-abnegation can hardly be calculated to succeed, especially if that enemy is Jacksonian America, which (a) already has a well-formed identity, and (b) has a nasty habit of fighting war to the knife when threatened.

Indeed, the irony here is almost too much. The gravamen of the left’s criticism of the white middle class focuses on the very characteristics (which Obama conveniently summarized as clinging to guns and religion) that make it dangerous when threatened. So it’s not like this should have been a surprise.

One last thing about economic status and class that is worth mentioning. Although Trump’s message does appeal mainly to the white middle and working class, the fact that it is primarily economic (jobs! factories! Make America Great Again!) its appeal is not limited to whites. Indeed, it has the potential to appeal to blacks and Hispanics who are in similar economic circumstances to the whites who put Trump in the White House, especially in places like Wisconsin, Michigan, and Pennsylvania.

This is a mortal threat to the left, because the supposed demographic inflection point has not arrived, meaning that the left needs every black and Hispanic vote, and it needs these groups to turn out in number. Indeed, by pushing away many whites who have in the past voted Democratic, the left needs these minority voters all the more. Therefore, Trump’s attempts to appeal to these voters, and the inherent appeal of his program to those in the 30th-50th income percentiles, and those without advanced degrees, regardless of ethnicity, is potentially disastrous for the left. This is why Trump has to be portrayed as a racist indistinguishable from Bull Conner.

The left has responded to the Trump defeat not by questioning the wisdom of its identity-based strategy, but by doubling down on it. Those who question–such as Columbia Historian Mark Lilla–are subjected to a torrent of abuse not much different from that directed at Trump. If you want to see the doubling down, look at the contest for DNC chair, which is all about identity politics. The most flagrant example of this being the statement of one candidate to the effect that she (a white woman) believes that her “job is to shut other white people down when they want to interrupt.” Yeah. That will work really swell with Jacksonian America. You go, girl!

Thinking about these things, and reading things like Voegeli’s essay, leaves me very dispirited. The entire premise of the left is that there is no common ground among Americans. We are a collection of tribes defined by racial, ethnic, gender, and sexual orientation categories. Language is a reflection of oppressive power relationships, and is not to be trusted. If this is what one believes, then persuasion and debate and appeal to sweet reason are futile. It all comes down to a fight.

And the left’s big mistake is not recognizing that they have picked a fight with people who outnumber them, are quite disposed to fight back, and who now have as president someone who is quite willing to bring it on, and won’t back down.

I say this not because it is something I want. It is a diagnosis of what I believe the situation to be, independent of my desires. What I desire is that Americans accept a common civic creed applicable to all, and where diversity is respected by letting heterogeneous people pursue happiness according to their own lights, and where the role of the state is largely limited to protecting individuals from force and fraud attempted by foreign nations and fellow citizens.

But that is not what the left desires. It demands obedience to its (self-contradictory) creed of no common creed, and is willing to crush those that do not submit. It is acting like a modern-day Patrick Ferguson, and has stirred the descendants (some literally, most figuratively) of the Overmountain Men to take up their arms and fight. That did not work out well for Major Ferguson, and is unlikely to work out well for the left. Not that such an outcome would disappoint me. What is disappointing is that they have brought on this battle. Whoever wins, America would have been much better off had it not been fought at all.

*Reading Voegeli’s essay I was reminded of something else that I read recently, namely that most Native American tribe names were not given by the tribes themselves: most tribes referred to themselves by a word meaning “the people.” Instead, tribes were named by their enemies, and the name was usually something meaning enemy, or some negative characteristic.

A former advisor to the Dallas Fed has penned a book blasting the Fed for being ruled by a “tribe” of insular egghead economics PhDs:

In her book, Ms. Booth describes a tribe of slow-moving Fed economists who dismiss those without high-level academic credentials. She counts Fed Chairwoman Janet Yellen and former Fed leader Ben Bernanke among them. The Fed, Mr. Bernanke and the Dallas Fed declined to comment.

The Fed’s “modus operandi” is defined by “hubris and myopia,” Ms. Booth writes in an advance copy of the book. “Central bankers have invited politicians to abdicate leadership authority to an inbred society of PhD academics who are infected to their core with groupthink, or as I prefer to think of it: ‘groupstink.’”

“Global systemic risk has been exponentially amplified by the Fed’s actions,” Ms. Booth writes, referring to the central bank’s policies holding interest rates very low since late 2008. “Who will pay when this credit bubble bursts? The poor and middle class, not the elites.”

Ms. Booth is an acolyte of her former boss, Dallas Fed chair Richard Fisher, who said “If you rely entirely on theory, you are not going to conduct the right policy, because policies have consequences.”

I have very mixed feelings about this. There is no doubt that under the guidance of academics, including (but not limited to) Ben Bernanke, that the Fed has made some grievous errors. But it is a false choice to claim that Practical People can do better without a coherent theoretical framework. For what is the alternative to theory? Heuristics? Rules of thumb? Experience?

Two thinkers usually in conflict–Keynes and Hayek– were of of one mind on this issue. Keynes famously wrote:

Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

For his part, Hayek said “without a theory the facts are silent.”

Everybody–academic economist or no–is beholden to some theory or another. It is a conceit of non-academics to believe that they are “exempt from any intellectual influence.” Indeed, the advantage of following an explicit theoretical framework is that its assumptions and implications are transparent and (usually) testable, and therefore can be analyzed, challenged, and improved. An inchoate and largely informal “practical” mindset (which often is a hodgepodge of condensed academic theories) is far more amorphous and difficult to understand or challenge. (Talk to a trader about monetary policy sometime if you doubt me.)

Indeed, Ms. Booth gives evidence of this. Many have been prophesying doom as a result of the Fed’s (and the ECB’s) post-2008 policies: Ms. Booth is among them. I will confess to have harbored such concerns, and indeed, challenged Ben Bernanke on this at a Fed conference on Jekyll Island in May, 2009. It may happen sometime, and I believe that ZIRP has indeed distorted the economy, but my fears (and Ms. Booth’s) have not been realized in eight plus years.

Ms. Booth’s critique of pre-crisis Fed policy is also predicated on a particular theoretical viewpoint, namely, that the Fed fueled a credit bubble prior to the Crash. But as scholars as diverse as Scott Sumner and John Taylor have argued, Fed policy was actually too tight prior to the crisis.

Along these lines, one could argue that the Fed’s most egregious errors are not the consequence of deep DSGE theorizing, but instead result from the use of rules of thumb and a failure to apply basic economics. As Scott Sumner never tires of saying (and sadly, must keep repeating because those who are slaves to the rule of thumb are hard of hearing and learning) the near universal practice of using interest rates as a measure of the state of monetary policy is a category error: befitting a Chicago trained economist, Scott cautions never argue from a price change, but look for the fundamental supply and demand forces that cause a price (e.g., an interest rate to be high or low). (As a Chicago guy, I have been beating the same drum for more than 30 years.)

And some historical perspective is in order. The Fed’s history is a litany of fumbles, some relatively minor, others egregious. Blame for the Great Depression and the Great Inflation can be laid directly at the Fed’s feet. Its most notorious failings were not driven by the prevailing academic fashion, but occurred under the leadership of practical people, mainly people with a banking background,  who did quite good impressions of madmen in authority. Ms. Booth bewails the “hubris of Ph.D. economists who’ve never worked on the Street or in the City,” but people who have worked there have screwed up monetary policy when they’ve been in charge.

As tempting as it may sound, “First, kill all the economists!” is not a prescription for better monetary policy. Economists may succumb to hubris (present company excepted, of course!) but the real hubris is rooted in the belief that central banks can overcome the knowledge problem, and can somehow manage entire economies (and the stability of the financial system). Hayek pointedly noted the “fatal conceit” of central planning. That conceit is inherent in central banking, too, and is not limited to professionally trained economists. Indeed, I would venture that academics are less vulnerable to it.

The problem, therefore, is not who captains the monetary ship. The question is whether anyone is capable of keeping such a huge and unwieldy vessel off the shoals. Experience–and theory!–suggests no.

Many neoconservatives are devotees of Leo Strauss. Among the hallmarks of Straussian thought and rhetoric are indirection and concealment. The Straussian neocon does not make statements and arguments that are transparent to, understandable to, and have common meaning for, all. Instead he writes or speaks in a language that conveys very different meanings to the initiated, and to mere hoi polloi who are duped into supporting things from which they would recoil from in horror if they actually understood what is going on.

Thus, Bill Kristol is to be congratulated for being transparently evil, rather than deviously so as a Straussian would be. This afternoon he tweeted:

Obviously strongly prefer normal democratic and constitutional politics. But if it comes to it, prefer the deep state to the Trump state.

The phrase “deep state” has its origins in Turkey, and means that a nation’s true rulers are the security and intelligence apparatus working behind the scenes, rather than the duly constituted civil authorities to whom the said apparatus is formally subordinate. In the deep state, the de facto rulers are quite different from the de jure government: a very Straussian arrangement, come to think of it, because the surface appearance is completely at odds with the reality.

In addition to Turkey, Egypt is considered to be another exemplar of the Deep State phenomenon. And viewed objectively, a siloviki-dominated Russia is another exemplar. The Duma plays for show: the siloviki play for dough.

So it is ironic that someone who has excoriated Trump for his alleged affinity to Russia is an avowed supporter of bringing Russian (and Egyptian and Turkish) deep state methods to the United States. All because he doesn’t like the current occupant of the White House.

I called Kristol’s statement evil, and I mean that. It is evil unadulterated. The gravest threat to individual liberty and safety is an unaccountable state. The entire American Constitutional system of checks and balances is predicated on the bedrock principle that every person in every branch of government is accountable and subject to checks and balances that constrains him (or her) from wielding power not authorized under law and the Constitution.

Lincoln called this system “the last, best hope of earth.” And Bill Kristol is willing to sacrifice this last, best hope because he doesn’t like Donald Trump.

The Sorcerer’s Apprentice comes to mind here. Kristol blithely summons forces that he cannot control–and that no one can control. Once these powers are invoked, they will do as they will, not as Bill Kristol and all the others who are totally OK with an intelligence agency coup would like. Once the Deep State is empowered, it will not go away. It will be emboldened to enhance that power. Again, the siloviki model shows that clearly.

And there are so many historical examples that demonstrate how these bargains almost always go wrong. Consider the Roman rulers who invited barbarians to intervene on their side in internecine conflicts. . . . and then couldn’t get rid of the barbarians when “victory” had been achieved.

The Founders were deeply suspicious of a standing army because of the threat it posed to liberty and republican government. The United States has proved remarkably successful at constraining the uniformed military. But the intelligence establishment presents a threat far, far more dangerous than anything that the Founders could have possibly imagined, and a far greater threat than the uniformed military, precisely because it operates in the shadows and because it controls information–and information is power. It also controls misinformation and disinformation, and those are powerful too.

The right and proper way to deal with Donald Trump–or any president, for that matter–is to ensure that the existing system of checks and balances works, rather than undermine it in a way that will result in its destruction. We have already seen this in action. The Ninth Circuit–wrongly in my view, but that is not the point–has already stopped one administration initiative. The likelihood that Trump will get most of his legislative agenda through is extremely low. His executive orders have been more symbolic that substantive, precisely because the power of the presidency does have limits. For all his bluster, there are many ropes that keep Trump tied up like Gulliver.

It is beyond disgusting to see people like Kristol pay lip service to “normal democratic and constitutional politics,” and then cheer the subversion of those norms. Disgusting, but useful. At least those who actually do believe in democratic and constitutional politics know who they are fighting, and what those they are fighting stand for.

Update (2239 CST, 2/13/17). The pack has caught its quarry: Flynn has resigned. The taste of blood will just excite their appetite for more. Further, this will show that leaking works. Unless this is rooted out ruthlessly, this administration will die the death of 1000 leaks. Regardless of what you think of Trump, the ramifications of this are disturbing indeed.

The hounds are baying at the heels of National Security Advisor Michael Flynn. Flynn’s sin was to discuss sanctions with the Russian ambassador Sergey Kislyak before inauguration. Flynn denied this when the issue was allegedly raised.

Flynn’s denial has been challenged by the Washington Post, which relied on descriptions of intercepts of Flynn’s communications with the Russian ambassador. Flynn’s alleged dishonesty has allegedly led Trump to “evaluate” his status.

The substance of Flynn’s conversation with the Russian ambassador was benign. The WaPoo reports it thus:

Two of those officials went further, saying that Flynn urged Russia not to overreact to the penalties being imposed by President Barack Obama, making clear that the two sides would be in position to review the matter after Trump was sworn in as president.

“Kislyak was left with the impression that the sanctions would be revisited at a later time,” said a former official.

“Cool your jets.” Wow. How incendiary. Even if the interpretation placed on Flynn’s alleged words is correct, he did nothing more to say that sanctions would be part of broader discussions with Russia. This is a surprise why, exactly?

I further note that the WaPoo is basically serving as a ventriloquist’s dummy, dutifully mouthing “a former official’s” interpretation. (My nominee for the “former official”: Ex-CIA director and all around slug John Brennan.) Everything about “making clear” and “left with the impression” is the “former official’s” interpretation. Does he read minds? Kislyak’s in particular?

If Flynn is to be axed because he dissembled, every figure from every past administration should be sanctioned in some way. It’s almost amusing how the WaPoo is SHOCKED! SHOCKED! at the thought. FFS. Ben Rhodes comes out and says that the Obama administration lied to the media and the public as a matter of policy, and the WaPoo shrugged its shoulders so hard it took months of chiropractic treatment to straighten out.

And none of this is the real story. The real story is that this is just another act in the intelligence community’s attempted coup of the duly elected president of the United States. Consider the facts here. First, the intelligence community was surveilling Flynn’s communications. Second, it leaked those communications in order damage him and the president of the United States over a matter of policy disagreement.

The chin pullers seriously intone that Flynn may have violated the Logan Act, i.e., that he was conducting diplomacy as a private citizen. But if he was a private it was unlawful to surveil him without a warrant, or if his communications were intercepted while communicating with a legitimate target of surveillance, his communications had to be discarded/minimized, and certainly NOT leaked. (Exceptions include those communicating with Al Qaeda and other terrorist organizations. Russian ambassadors don’t count.)

If he was not a private citizen, the Logan Act allegation is bullshit. In that case, Flynn had some official status, and his communications were almost certainly classified, which would make leaking them a crime.

So whatever way you cut this, someone in the intelligence community has committed a crime, or multiple crimes.

This episode also gives the lie to the IC’s justification for not providing anything more than a Wikipedia entry to document alleged Russian hacking of the election. Recall that the IC claimed that releasing specific communications was impossible, because it would compromise sources and methods.

Um, this leak about Flynn doesn’t?

Evidently–and not surprisingly–the IC’s concerns about “sources and methods” are oh-so-situational, aren’t they?

This is all beyond the pale. Yet anti-Trump, pro-IC fanboyz (e.g., the execrable John Schindler) think it’s just great! Trump is the security risk, so everything’s fair! The ends justify the means!

Um, no. If these IC people have a basis to believe that they should resign publicly. They are not judge and jury. To arrogate those roles is a violation of the constitutional order, and they should be terminated forthwith, and prosecuted if they are revealing classified information. (Funny how Schindler was all for hanging Hillary from the highest tree for jeopardizing classified information on her server, but he’s all in with these leaks.)  Those who are currently outside government should be prosecuted as well.

The irony meter has exploded from being overloaded, but I will mention another irony: Schindler, Brennan, and other critics of Snowden constantly said that he should have taken his concerns through channels, rather than leaking classified material based on his own political views. More situational “ethics”: apparently this “go through channels” dictum is not operative when Trump or Flynn are involved.

Yet another irony: those baying the loudest here also constantly intone ominously about the threat that Putin and the siloviki pose. But what is the siloviki (one component of it anyways) but senior intelligence personnel acting outside the law in order to exercise power and decapitate political enemies and rivals? So those who warn of the danger of the Russian siloviki grab their pom-poms and lead the cheers for American siloviki.

Why is this happening? I think the problem is overdetermined, but there are a couple of primary drivers.

First, there is intense bad blood between Flynn and the CIA. This apparently goes back to Flynn’s opposition to the CIA’s glorious endeavors in Syria, most notably his incredibly prescient prediction of the rise of ISIS, and his insinuation that this would be the direct result of US policy (acting largely at behest of the oil ticks in the Gulf), either intentionally or unintentionally. This is payback, and also an attempt by the CIA in particular to defend its prerogatives against someone who is deeply skeptical of its (disastrous) machinations.

Second, it is a well known strategy of those who want to attack the king to strike at his trusted retainers first. This isolates the king; makes him reluctant to rely on others (because in so doing he makes them targets too); and sends message to those who dare to support the king.

It is for this reason that I believe that Trump will not throw Flynn to the hounds, at least not now when the baying and panting is at its most intense. He knows that it would just encourage his enemies to select a new fox once they tear this one to pieces. And he also knows that eventually they will be emboldened to go after him directly.

Regardless, this is an extremely dangerous turn of events. The intelligence community (which has a litany of failures to its “credit”) cannot be allowed to use leaks and surveillance to undermine the legal order, either because of a policy disagreement, a dislike of the man elected president, or to protect its institutional interests (including protecting it from being held accountable for past failures). Once upon a time the left–the Washington Post prominent among them–told us the same. But that was then, and this is now.

PS. I suggest you also read Spengler’s take on this, which is similar to mine.

There has been a lot of controversy about the first (that we know of) major special operations raid carried out post-inauguration. The raid–in Yemen–did not go according to plan. A member of Seal Team 6 was killed. Two other Americans were seriously injured. A V-22 Osprey was damaged in a hard landing and had to be destroyed. Civilians were killed, including (allegedly) the 8 year old daughter of Anwar al-Awlaki, and several other women (who may, or may not, have been firing weapons).*

Immediately the raid was politicized. An ex-Obama administration official, one Colin Kahl, immediately took to Twitter to claim that, contrary to Trump administration statements, the raid had not been considered or planned under the Obama administration. Instead, Kahl claims, only a “broad package” of operations was discussed prior to the departure of the Obama administration, and this “information was shared” with the incoming administration.

I call bullshit. This kind of operation requires detailed planning and extensive intelligence collection, both of which take time. It takes more time for this to work its way up through the chain of command, including I might add a review by the lawyers to evaluate the risk of civilian casualties. There is no bleeping way in hell this went from a “broad package” to lead flying in a week. It would have been reasonable for the lame ducks to leave the decision to the new team, but it is risible to claim that this was an impromptu rush job undertaken by a rash Trump administration. (For one thing, there is no way Mattis would have signed off on any such thing.)

So what went wrong? Murphys Law. Shit happens. That is the nature of special operations raids. They are inherently risky, tightly coupled operations where pretty much everything has to go right in precise sequence. When they go wrong they tend to go horribly wrong, because they involve small elements who are usually outgunned, relatively immobile, and isolated if they lose the element of surprise or run into an obstacle that delays their quick ingress or egress.

These operations rely on surprise, speed, and sometimes brutal shock action.  All the planning and training and experience in the world cannot guarantee these things will work. The “for the want of a nail” phenomenon is baked into special operations.

Apparently the SEALs operating in Yemen in late-January lost the element of surprise, and rather than abort they relied on aggression to attempt to complete the mission. In so doing, they suffered casualties and inflicted a lot of them, including some on civilians.

This is nothing new. Almost exactly two years earlier, a raid to rescue western hostages in Yemen was compromised by a barking dog. A week before the election, a Special Forces team was shot up in Afghanistan because it ran into an unexpected gate: two very experienced SF men were killed and several others were wounded.

The Obama administration obviously owns that last one, and arguably is was more of a clusterfuck than what happened in Yemen last month. But you haven’t heard much about it, have you? Go figure.

As for the Osprey, they are prone to “brownouts” (i.e., the pilot losing his bearings when the huge rotors blow up a cloud of dust while landing), as occurred in Hawaii in 2015. They can also lose lift because they enter a vortex ring state. (This is the leading theory of the crash of the stealth helo during the bin Laden raid.) Again, this is another roll of the dice with this kind of operation with this kind of aircraft.

I could go on and on. The success rate of US (and also UK and Australian) special operators is amazing, but periodic disasters are part of the package.

As for the civilian casualties, that to is inherent in the nature of these operations, and the enemy against whom they are directed. These terrorists, be they in Afghanistan or Yemen or wherever, are typically embedded in the civilian population. In Afghanistan in particular, they are just part of the ordinary menfolk. Such is guerrilla warfare. Even if civilians are not targeted, they will be killed.

What happened in Yemen a couple of weeks back is not extraordinary, given the nature of the operation, and most importantly, the extent and intensity of these kinds of operations that the US is conducting in Southwest Asia, Africa, and the Middle East. Indeed, it is a testament to the skill of US special operators that these things don’t happen more often.

It is therefore incredibly disgusting to see this politicized. Yes, ex-Obama admin people and their water carriers in the media are primarily culpable in this incident, but they have help, notably from John McCain who really needs to STFU: his hatred of Trump leads him to make opportunistic statements (e.g., calling this mission a failure) that convey a very misleading picture of realities. This politicization does not help the US military, or enhance the effectiveness of its operations. Most of the politicized criticisms also tend to be blissfully ignorant of military realities.  There is a justification for having a debate about whether the current anti-terror strategy that relies heavily on high tempo special operations is worth the risk. But that discussion has to be predicated on the understanding that things like those that transpired in Yemen in January (and in December, 2014) are inherent to that strategy, and do not necessarily imply failure or incompetence.

*The only basis for the claim that Awlaki’s daughter was killed is a statement by her grandfather.

Fearing Trump, the Union of Concerned Scientists has advanced the Doomsday Clock, indicating their belief that the risk of nuclear war has increased. This is actually quite confusing. After all, the Clock has historically waxed and waned based on the perceived (by the pointy heads at the UCS, anyways) threat of a nuclear exchange between the US and the USSR, and since its demise, Russia. So wouldn’t Trump’s supposed softness on Russia and the prospect of a rapprochement between Trump and Putin (which elicits shrieks of horror from the Democrats) reduce the risk of such an event? Shouldn’t the clock have moved backwards, not forwards?

But that’s not the button I refer to in the title. Actually, I should have written buttons, plural, because what I am thinking of is Trump’s pushing of the progressive left’s buttons. We’re only a week into his administration, and already he has pushed so many of their buttons that they are on the brink of psychological collapse–many past the brink, actually.

I could mention several examples, but one stands out even though it is the most symbolic and least substantive of the things he’s done since January 20: the announcement that he will return a portrait of Andrew Jackson to the Oval Office.

Trump’s core constituency is Jacksonian America (as Walter Russell Mead and then I pointed out in 2015), but truth be told, most Jacksonians don’t know a lot about him. Pace Willie Dixon, he’s just one of those Dead Presidents they’d like to get their hands on: “Jackson on a 20 is really great.” But the left does know Jackson, and hates him with a passion: he is one of their bêtes noires. Slaveholder. Ferocious Indian fighter. Author of the Indian Removal Act (a/k/a Trail of Tears). Unabashed American nationalist (heaven forfend!). Further, the left also hates his political heirs: they are the kind of people that an execrable candidate for DNC chair said it would be her job to shut down.

So Trump’s announcement regarding the portrait probably didn’t really make a ripple in his Jacksonian constituency, and that’s not why he did it. But it did unleash an uproar among the progressives–and that’s exactly why he did it. A very deliberate push of a prog button.

Personally, I have considerable ambivalence about Jackson. Much of the criticism is presentism that ignores the historical context: of course men of the 19th century frontier thought and decided differently than those on the Upper West Side for whom Harlem is the frontier. Jackson’s greatest modern biographer, Robert Remini, argues that Jackson believed that removal was the only way to prevent the annihilation of the eastern tribes at the hands of rapacious whites. Others clearly disagree, and believe that Jackson was motivated by bigotry and hatred. The point is that the story is much more complicated than the morality play presented by the left.

Jackson’s economic policy was a very mixed bag. He was in favor of small government, and was the last president to leave the US with no government debt. But his banking policy was disastrous, and was directly responsible for the Panic of 1837.

Politically, of course, he was the avatar of populism and popular democracy. This is is also a mixed bag, but the pluses are bigger and the minuses smaller when the government is small than when it is large.

He was a slaveholder, but an ardent foe of secession, as his actions during the Nullification Crisis showed.

He was also one of the most consistently successful military commanders in US history, beating both Red Coats and . . . Indians (and Spaniards too) in both conventional and unconventional warfare.

But the progressive left is anything but ambivalent about Jackson. To them he is a devil figure, which Trump surely knows–and which is why his portrait will hang in the Oval Office.

As men, Jackson and Trump have myriad differences. Their biographies are obviously utterly different. Where Trump only mused about shooting people in the street, Jackson actually did it. But they have some great similarities, and these will loom large during Trump’s presidency. Both are outsiders who express their disdain for the system and the supposed elite–and the disdain is returned with interest. Neither is constrained by elite convention, and indeed, each takes great glee at sneering at convention and brutally trampling the political establishment. Both rely on advisers who are outside the establishment. Both easily take offense, hold grudges–and take revenge.

It is therefore deeply symbolic that one of Trump’s first acts was to restore Jackson to a place of prominence in the White House. It is pushing the left’s buttons, yes. But he is also signaling how he will act as president. Aggressive–indeed, truculent. In your face. Defiant of the political establishment. Totally unafraid of confrontation and driven to prevail–utterly.

I fully expect that Trump will share other similarities with Jackson. I think that it is likely that his economic policy will be a mixed bag with extremely varied effects: protectionist insanity will sit juxtaposed with a sensible rollback of regulation and the administrative state. Trump will face international issues as president that dwarf anything Jackson had to, but his American nationalism will also lead to very varied effects, as did Jackson’s various foreign engagements (most as a general, rather than president, as in Florida).

And along the way he will push many buttons. But not the nuclear one.

So it’s official. Donald John Trump is now president of the United States. Buckle in. It will be a wild ride.

One reason it will be wild is that Trump has much contempt for the status quo, and shows no hesitation in saying so. He gave a taste of things to come in an interview last week. He questioned the viability of the EU, saying that it disproportionately benefited German at the expense of other countries. He also called Nato obsolete.

The reaction was immediate and hysterical. Was this warranted?

Not in my view.

Take Germany. Trump was making an observation. It is an opinion shared by large numbers of Europeans, especially in the south. It is a reasonable observation. And that’s probably why the Europhiles are freaking out: they know that the EU is under great strain and that its popular support is thin and wavering, and would prefer that everybody Believe! Believe! so Euro-Tinker Bell lives.

But what about dissing Germany, our stalwart ally? First, anti-American sentiment is very strong in Germany, and is often expressed by government officials. Second, the German government has often made unfavorable comments about American policy.  If you can’t take it, don’t dish it out.

Given all the frenzy about Trump’s alleged affinity for Russia and threat it poses to the west and western solidarity, let’s remember that there are very strong pro-Russian elements in Germany. Especially in the business community. Germany, don’t forget, is the country of “Putin Verstehers”–Putin understanders. It’s ex-chancellor is on the board of a Gazprom subsidiary, and Germany has actively supported Nord Stream against the objections of neighboring EU countries. Putin can only dream that Trump will be as accommodating to Russia as Germany has been. So don’t put the onus on Trump for compromising western interests in dealing with Russia. Merkel’s worries about that are far closer to home, as in her coalition partners, notably her Foreign Minister.

Insofar as Nato is concerned, it is obsolete, in the sense that it has not updated its mission, strategy, or capabilities in response to dramatic changes that have occurred in the last 25 years, let alone the nearly 70 years since its founding. Indeed, it is arguable that Nato is not just obsolete, but dysfunctional.

Nato countries spend piteously small amounts on defense, and the capability that they get is not worth what little they do spend. Germany spends around 1 percent of GDP on defense. There have been times recently that German troops had to train with broomsticks. Recently 2/3s of its combat aircraft were inoperable. It has zero capability to deploy anything overseas. The Dutch have no tanks. I could go on. Suffice it to say that Europe does not put its money where its mouth is when it comes to Nato. They pay lip service, rather than for troops and weapons. I would take their pieties about Nato more seriously if they actually sacrificed anything for it.

(By the way, this is why Russian hyperventilating about the Nato threat is absurd. It poses no military threat, beyond that which the US poses unilaterally. Indeed, for reasons that I discuss below, the European Nato Lilliputians tie down the American Gulliver.)

Another example of dysfunction is Montenegro’s impending bid to join Nato. Just what is the rationale for this? There is none: Montenegro brings no military capability, but just adds an additional obligation.

But it’s worse than than. Nato’s biggest weakness is its governance structure, which requires unanimity and consensus in major decisions. This is flagrantly at odds with one of the principles of war–unity of command–and makes Nato decision making cumbersome and driven by the least common denominator. Nato’s governance, in other words, makes it all too easy for an adversary to get inside its decision loop.

Coalitions are always militarily problematic: Napoleon allegedly rejoiced at the news that another nation had joined one of the coalitions against him. Nato’s everybody gets a vote and a trophy philosophy aggravates the inherent problems in military coalitions.

Put differently, decision making power in Nato bears no relationship to contribution and capability. This is a recipe for dysfunction.

So what is the point of adding yet another non-contributor (population 620K!) whose consent is required to undertake anything of importance? This is madness.

It is especially insane when one considers that Montenegro is a Slavic country with longstanding ties to Russia, and in which Russia has a paternalistic interest. Parliamentary elections last year were extremely contentious, with the pro-western incumbents barely hanging on. Post-election, there were allegations of an attempted coup engineered by the Russians. The country is extraordinarily corrupt. All of which means that if you are concerned about Russia undermining Nato, Montenegro is the last country you would want to admit. It is vulnerable to being suborned by Russia. Outside of Nato-who cares what Russia does there? Inside of Nato-that is a serious concern, especially given the nature of Nato governance.

But apparently current Nato members believe that it would be really cool to collect the entire set of European countries: frankly, I can think of no other justification. There is no better illustration of how Nato has lost its way, its strategic purpose, and its ability to think critically.

So yes, Trump is more than justified in raising doubts about Nato, and if questioning the relevance of the organization is what is needed for people to get serious about it and to reform it to meet current realities, then he’s done a service.

Following the shrieking and moaning on Twitter today during the inauguration, it struck me that the most prevalent theme was that Trump is turning his back on X years of US policy in this, that, and the other thing. The reaction shows that the real conservatives–in the literal, traditional sense of the word meaning unflinching defenders of the old order and status quo–are on the leftist/statist side of the political spectrum. They are petrified at the thought of disturbing in the least way the existing order. To them, it is apostasy even to question this order. Trump is challenging all their verities, and it drives them to apoplexy.

The EU and Nato are two examples of institutions that are supposedly sacrosanct, but which Trump has had the temerity to question. The defense by the real conservatives–the real reactionaries, actually–on the left and left-center has been unthinking and reflexive. They refuse to acknowledge the rot and decay that exists, and which threatens the viability of the things they claim to admire. Rather than neurotically projecting their fears on Trump, they should thank him for giving them the opportunity to reform dysfunctional bodies, and join in the work of reforming them. Not that I expect that they will, because this is not in the nature of conservatives and reactionaries.

The “intelligence community’s” serial effort to beclown and degrade itself reached a new low today with the release of the much touted report that we were breathlessly told would prove that Russia (a) hacked the DNC and Podesta, (b) provided this information to Wikileaks, and (c) did so with the specific intent of securing a Trump victory (or, a Hillary defeat). It did none of these things. If anything, this report was less substantive than the one that was previously released.

As an indication that even the IC is hardly proud of this effort, the report was released exactly at the time you would do so with the intent of burying it: late in the afternoon of a Friday. Apparently even the FBI, CIA, DNI, etc., are ashamed for prostituting themselves to Hillary, the DNC, and the lame duck administration.

One thing that had been promised–by leaks, of course–that the report did not deliver was the identity of the party who delivered the DNC and Podesta emails to Wikileaks:

US intelligence has identified the go-betweens the Russians used to provide stolen emails to WikiLeaks, according to US officials familiar with the classified intelligence report that was presented to President Barack Obama on Thursday.

So why didn’t the public report name names? And don’t tell me that the IC is loath to disclose such information for fear that it would compromise precious methods and sources. In the past, the government has determined that a hacking offense was so egregious that naming and shaming–and indeed indicting–was necessary. In 2014, the government indicted Chinese military personnel that it alleged had hacked private US corporations. It took this measure precisely because it believed that this was necessary to deter future such acts:

“This is a case alleging economic espionage by members of the Chinese military and represents the first ever charges against a state actor for this type of hacking,” U.S. Attorney General Eric Holder said.  “The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response.  Success in the global market place should be based solely on a company’s ability to innovate and compete, not on a sponsor government’s ability to spy and steal business secrets.  This Administration will not tolerate actions by any nation that seeks to illegally sabotage American companies and undermine the integrity of fair competition in the operation of the free market.”

“For too long, the Chinese government has blatantly sought to use cyber espionage to obtain economic advantage for its state-owned industries,” said FBI Director James B. Comey.  “The indictment announced today is an important step.  But there are many more victims, and there is much more to be done.  With our unique criminal and national security authorities, we will continue to use all legal tools at our disposal to counter cyber espionage from all sources.”

“State actors engaged in cyber espionage for economic advantage are not immune from the law just because they hack under the shadow of their country’s flag,” said John Carlin, Assistant Attorney General for National Security.  “Cyber theft is real theft and we will hold state sponsored cyber thieves accountable as we would any other transnational criminal organization that steals our goods and breaks our laws.”

“This 21st century burglary has to stop,” said David Hickton, U.S. Attorney for the Western District of Pennsylvania.  “This prosecution vindicates hard working men and women in Western Pennsylvania and around the world who play by the rules and deserve a fair shot and a level playing field.”

The administration has represented that what transpired in 2016 was far worse than what the Chinese did. So why no indictment? Why no names? The double standard here is flagrant.

It gets better. Earlier this year the US indicted two Russians, and the FBI admitted it had reverse hacked into Russian computers. Or better yet, it indicted seven Iranians allegedly members of the Iranian Revolutionary Guard Corps in March. At the time, Reuters characterized this as part of an administration policy to confront publicly foreign state hackers. And check out what our soon-to-be-erstwhile Attorney General said at the time:

“An important part of our cyber security practice is to identify the actors and to attribute them publicly when we can,” Lynch said Thursday. “We do this so that they know they cannot hide.”

“An important part of your cyber security practice is to identify the actors and to attribute them publicly when we can.” That was then, this is now, apparently.

As for what is in the report, well, there is nothing, really. There are five pages of ex cathedra assertions of “assessments” that Russia intervened in the election with the intent of aiding Trump/hurting Hillary. These are mere appeals to authority, with zero–literally no–supporting factual evidence. (And even these appeals to authority are hedged with caveats that intelligence judgments can be wrong. Believe us. We know.)

At times the report descends to farce. It cites the fact that Russian information/propaganda outlets attacked Hillary and appealed to the Trump constituency as evidence of Russian intent to sway the election. But it also states that Russian reticence in explicitly supporting Trump is also evidence of the very same intent:

• Beginning in June, Putin’s public comments about the US presidential race avoided directly praising President-elect Trump, probably because Kremlin officials thought that any praise from Putin personally would backfire in the United States.

It tolls for the NYMEX floor, which went dark for the final time with the close of trading today. It follows all the other New York futures exchange floors which ICE closed in 2012. This leaves the CME and CBOE floors in Chicago, and the NYSE floor, all of which are shadows of shadows of their former selves.

Next week I will participate in a conference in Chicago. I’ll be talking about clearing, but one of the other speakers will discuss regulating latency arbitrage in the electronic markets that displaced the floors. In some ways, all the hyperventilating over latency arbitrages due to speed advantages measured in microseconds and milliseconds in computerized markets is amusing, because the floors were all about latency arbitrage. Latency arbitrage basically means that some traders have a time and space advantage, and that’s what the floors provided to those who traded there. Why else would traders pay hundreds of thousands of dollars to buy a membership? Because that price capitalized the rent that the marginal trader obtained by being on the floor, and seeing prices and order flow before anybody off the floor did. That was the price of the time and space advantage of being on the floor.  It’s no different than co-location. Not in the least. It’s just meatware co-lo, rather than hardware co-lo.

In a paper written around 2001 or 2002, “Upstairs, Downstairs”, I presented a model predicting that electronic trading would largely annihilate time and space advantages, and that liquidity would improve as a result because it would reduce the cost of off-floor traders to offer liquidity. The latter implication has certainly been borne out. And although time and space differences still exist, I would argue that they pale in comparison to those that existed in the floor era. Ironically, however, complaints about fairness seem more heated and pronounced now than they did during the heyday of the floors.  Perhaps that’s because machines and quant geeks are less sympathetic figures than colorful floor traders. Perhaps it’s because being beaten by a sliver of a second is more infuriating than being pipped by many seconds by some guy screaming and waving on the CBT or NYMEX. Dunno for sure, but I do find the obsessing over HFT time and space advantages today to be somewhat amusing, given the differences that existed in the “good old days” of floor trading.

This is not to say that no one complained about the advantages of floor traders, and how they exploited them. I vividly recall a very famous trader (one of the most famous, actually) telling me that he welcomed electronic trading because he was “tired of being fucked by the floor.” (He had made his reputation, and his first many millions on the floor, by the way.) A few years later he bemoaned how unfair the electronic markets were, because HFT firms could react faster than he could.

It will always be so, regardless of the technology.

All that said, the passing of the floors does deserve a moment of silence–another irony, given their cacophony.

I first saw the NYMEX floor in 1992, when it was still at the World Trade Center, along with the floors of the other NY exchanges (COMEX; Coffee, Sugar & Cocoa; Cotton). That space was the location for the climax of the plot of the iconic futures market movie, Trading Places. Serendipitously, that was the movie that Izabella Kaminska of FT Alphaville featured in the most recent Alphachat movie review episode. I was a guest on the show, and discussed the economic, sociological, and anthropological aspects of the floor, as well as some of the broader social issues lurking behind the film’s comedy. You can listen here.