Wednesday, August 28, 2013

Obama's foolish "red line" statement converts Syria from a regional tragedy into a U.S. interest

The most foolish mistake that President Obama has made, I believe, was his statement that if Syria were to use chemical weapons they would be crossing a red line and that we would have to respond to that "game changer." George Friedman points out that this is normally a message from a superior power to a lesser power that although they don't like what the lesser power is doing, as long as they stay on the other side of the "red line" the greater power would not intervene militarily.  
Well, Assad crossed the red line, a couple of times, and now we are all paying the price for Assad's stupid cruelty and Obama's foolish naivete.  Before Obama made his red line statement, Syria was a tragic situation, but had no strategically important interest for the United States. Up to now only humanitarian hawks wanted the U.S. to intervene.

After his red line statement, Syria becomes enormously important to the U.S. and the world. If we let Assad cross the line, then red lines declared by the U.S. become meaningless and future much worse actors (think North Korea with nukes) will cross them as well, and the world will suffer tremendously, and the U.S. will be drawn into terrible wars as a result.

It looks like there are three options.  

First, work like hell diplomatically to move Assad out of office and try to empower the more secular forces inside Syria.  Good luck on that one. Plus, it allows a hard red line to be crossed with no consequences.

Second, punish the Assad regime with a symbolic strike that damages some chemical weapons, or some such thing.  I guess that's supposed to show him that there is a price to pay for crossing Obama's red line. I'm sure he's quaking in his boots.  The world will note that the punishment for crossing the red line is symbolic and not real.

Third, go in with air and ground troops to remove Assad just as we removed Hussein.  We all remember how well that worked out.  Just don't expect gratitude from those we help, nor expect anything other than an Islamic anti-American nutcase government to replace Assad.  Plus, don't expect a reduction in the slaughter, it will increase dramatically, with American soldiers' body count added to the dead and maimed.

All of the options are terrible - have no effect diplomatically, have no effect symbolically, have a terrible effect militarily that makes things worse and kills Americans.  

I have no idea of how the world gets out of this terrible box.  It just looks to me like the Islamic world is bent on civil wars.  Osama bin Laden kicked it off with an attack on America, Bush took it to the Middle East with invasions, and the Islamic religious factions seem to be unleashing centuries of grievance and hatred upon each other in terrible civil wars.  

My only real hope is that the Arab Spring, better thought of as the Arab Awakening, will become a meaningful force arising from the people themselves to end the tyrannies, and also end the worse tyrannies that want to replace the old tyrannies.  I have a hope for the sprouting of new green secular, inclusive, real democracies rising from the ashes of the religious and tribal wars raging throughout the Middle East.  This has little to do with the United States military, or the United States at all except as an inspiration and a guide.

One can hope.

Tuesday, August 27, 2013

Banks are still dangerously overleveraged

Stanford business professor of finance and economics, Anat R. Admati, reminds us that the financial system has not really been reformed, that the banks that are too big to fail are still too big to fail, too big to regulate, and too big to manage.  They have successfully defeated banking reform in the U.S. and around the world, the world economies are still at risk, and taxpayers will pay if and when their reckless gambling with other people’s money fails catastrophically.  2008 is waiting to happen again.

The one fundamental solution she proposes is to require banks to increase the percentage of equity.   Her key sentence:

“We will never have a safe and healthy global financial system until banks are forced to rely much more on money from their owners and shareholders to finance their loans and investments.  Forget all the jargon, and just focus on this simple rule.”

Another interesting point she makes is that other corporations rarely have debt of more than 70% of assets, whereas the banks are well over 90%.  So, when they lose just a little it has the effect of shaking the viability of the bank to the core, and in  2008, only the government could rescue them with taxpayer money.  Heads they win, hundreds of millions and billions for individuals in the banks, tails we lose, multiple billions in bailout taxpayer money.

Her hope:

“If banks could absorb much more of their losses, regulators would need to worry less about risk measurements, because banks would have better incentives to manage their risks and make appropriate investment decisions.  That’s why raising equity requirements substantially is the single best step for making banking safer and healthier.”

Sounds like sound advice to me.

Tuesday, August 20, 2013

Fukushima's contaminated water is heading for the ocean

The terrible nuclear power plant disaster at Fukushima Japan is not over.  As I understand it, the radiation is too high for people to spend time inside the reactor to actually see what is going on and fix it.  But more to the point, it is leaking radioactive water.  That water has apparently been captured in about 1000 tanks and those tanks were expected to have a five year life.  FIVE YEAR LIFE?  I guess they thought of them as being temporary and that a permanent fix would be found before then.

But, the tanks are leaking.  According to

"The latest leak comes from one of the site’s 1,000 tanks, about 500 yards inland, Tepco said. Workers discovered puddles of radioactive water near the tank on Monday. Further checks revealed that the 1,000-ton capacity vessel, thought to be nearly full, only contained 700 tons, with the remainder having almost certainly leaked out.
There had been concerns raised among some experts over the durability of the tanks. Mr. Ono said that Tepco had assumed the tanks would last at least five years, but the latest leak comes less than two years after the company started installing the storage vessels at the site to deal with the growing amounts of runoff."
No matter where the radioactive waste goes, it is a disaster, but it could get to the ocean, and that is probably the worst that could happen.  It's not just that there is a bunch of radioactive water on the loose, but it's that the destroyed power plant is generating radioactive water and can't be stopped from continuing to do so, or so I think the issue is.  
It's a big ocean, but not that big.

Friday, August 16, 2013

Religious wars escalate in the Middle East

On the one hand there was Mubarak who ruled as a dictator in Egypt.  Then there was a popular uprising against him, and the Egyptian military removed him from office, putting themselves in power temporarily.  One dictator down, hurrah!

Then there was an election, and the only faction that was prepared for an election won it - the Muslim Brotherhood.  The U.S. and the West tried to assure themselves that the Muslim Brotherhood would renounce its history of radical Islamist fanaticism and rule the country democratically, i.e. inclusively, protecting the rights of religions, minorities, and women.  Good luck on that one.

Result?  A Muslim Brotherhood President Morsi ever growing dictatorship.

So, there was a popular uprising against him, and the Egyptian military once again removed a dictator from office, putting themselves in power temporarily. Two dictators down, sounds good?

Then there was another very quick popular uprising against the military, this time from the Muslim Brotherhood, and this time not very peacefully.  No surprise there.  

And Egypt is exploding.  Good grief. Which side to root for in this battle?  

I can't root for and support the Muslim Brotherhood because they have shown themselves pretty much to be the religious fanatics that people feared they would be, and re-establishing, by violence, a Muslim Brotherhood regime would turn Egypt into an Islamist state along the lines of Iran.  Remember the Green Revolution in Iran? Smashed by the religious fanatics with an Islamist regime firmly in dictatorial control.

I can't root for and support the Egyptian military because of their long history of tyranny and their brutal, dictatorial on-going slaughter of their people. 

 I can only root for the more moderate, more secular factions inside Egypt who rose up against Mubarak and then against Morsi.  But how do they get any traction while the Islamist fanatics and the military are waging war against each other?

In hindsight it looks like the U.S. and the West made a mistake in pushing for quick elections after Mubarak's overthrow.  But would it have made a difference?  Wasn't it always most likely that the Muslim Brotherhood would win a nationwide election?  And isn't it always likely that they will rule dictatorially?  Imposing their fanatical religious rules on everyone?  

The religious wars in the Middle East have been trying to erupt for some time, and what is happening in Syria and Egypt are looking like a big step in that direction.  The Arab Awakening is becoming an Arab Nightmare.  

And the U.S. and the West are mostly bystanders watching in horror.  

Had the Muslim Brotherhood governed democratically rather than ruled religiously, this wouldn't have happened.  The country rebelled and threw them out, then the religious faithful have erupted into riots.  The conflict lays at the feet of the Islamist fanatics, in my view.

The U.S. and the West needs to find ways to help the moderates and sectarians become stronger in Egypt and the Arab world.  I have no idea how they do that. All I know is that I don't want U.S. troops in the middle of fanatical Islamist religious and civil wars.

Tuesday, August 6, 2013

Finally, baseball strikes back at A-Rod and Performance Enhancing Drugs

I have been saying for a number of years, kind of tongue in cheek but kind of seriously too, that the reason for the financial collapse was Alex Rodriguez.  What I mean by that is that as long as a baseball player is making twenty million dollars a year, how could any self-respecting financial titan at places like Bear Stearns, Lehmann Brothers, or Goldman Sachs allow themselves to make any less? 

In other words, the world has been out of balance for some time now and the symbol of that has been ridiculous compensations for superstar athletes like A-Rod, and for top employees in the financial industry.  The results showed up in destructive ways, where baseball records were obliterated by drug inflated statistics, and the financial industry changed their focus from supporting industry and business to creating wealth in ways that had little or no benefit to the economy, and the entire country got involved in chasing unrealizable financial goals (too many people bought houses they couldn’t afford), overextending themselves, and falling into financial ruin. 

So, from just the standpoint of wanting to see the world go back into balance, I am very happy to see that major league baseball has finally banned Rodriguez from playing until 2015 because of his taking PEDs (Performance Enhancing Drugs).  I would like to see a real crackdown on PEDs in all sports and have sports return to the competition between outstanding athletes rather than the shows put on by robo-humanoids.

But even deeper than that is how Rodriguez, Barry Bonds, Lance Armstrong, and the entire generation of PED athletes made their hundreds of millions of dollars.  They cheated.  And I don’t like it.  In fact, I don’t watch it. 

Baseball and football are both obviously being populated by drug pumped super-humans, and I don’t enjoy watching phony sports.  I watch golf instead where PEDs have no role that I know of, mainly because PEDs won’t be able to help someone chip and putt.  Tiger Woods has developed a pretty buffed up physique and strength, but I don’t think he is on PEDs.  Plus, his power advantage in the game was back in his first few years when he was a skinny whip-like kid. Today he has no particular distance advantage. It’s not his strength that has made him win so much on tour.

In my ideal world, top earners would make a couple of million dollars a year in sports, in finance, in medicine, in industry.  That would make them wealthy but not put them in an experience so far outside the realm of normal people that they become almost a different species on the planet. 

I think that the huge gap between the super-wealthy and the masses puts the country out of balance and sets up a dangerous environment where the country is run as a plutocracy on one side, and the country is susceptible to political demagoguery and radicalism on the other.  And it puts people like Alex Rodriquez and Lloyd Blankfien so out of touch with the experiences of common people that they have no way of gauging their impact on the world.

As the Beatles said long ago, "Get back Jojo..."