The dreaded Berlin Wall actually kept the peace until 1989. When others were celebrating; I was worried
Where would a new line in the sand be drawn?
NATO invited most of Eastern Europe to join.
Belarus is run as a dictatorship and is aligned with Russia. Ukraine wasn't invited.
By NATO rushing eastward, Russia's national pride and perhaps its security were endangered. Gorbachev and Yeltsin kept a lid on it. Then came the rise of the Czar of Russia Vladamir Putin.
Any NATO push-back, made Ukraine, the easiest of targets. Now Putin is reminding the world he can use nuclear weapons in support of Eastern Ukraine. He will get Eastern Ukraine. But then where does he stop?
Where is the line in the sand? The answer is no where. Will NATO defend the rest of Ukraine? Is Moldova (to the southwest) worth as much as Poland to Ukraine's west? Is Romania and Slovakia worth the same as the Czech Republic?
The fight against Russia can't be fought militarily. It must be faught by the Russia people. The Russian people have been exposed to Western culture. They play in the Euro Cup every year. They are a must-stop for the biggest rock bands while touring. And their rise in economic prosperity would be hard to erase. Already international polling shows Russian mothers not wanting to see their sons fight for Eastern Ukraine.
The Obama administration is ready for maximum punitive economic sanctions. But the rest of Europe is not. That has to end. A new line in the sand must be formed somewhere. And the Europeans must be prepared to join the US. That means asset freezes. That means visa freezes. That means no trade. Until the Russian people and its oligarchs force regime change.
NATO poked the bear. Now the bear is upset and wants retribution. The bear can only be stopped by the other animals in the cage for their self-protection.
September 1, 2014
Not From America, but from Middle East satire -
And this from a vrial Lebanese satire -
We may have a plan to eradicate ISIS; but the people of the Mideast are most affected by ISIS. It is human nature to make fun out of fear. Especially when the enemy, read "Islam For Dummies", are short-time thrill seekers and don't even know the rules of Jihad.
August 31, 2014
Russia has ports to the Pacific. It has a port to the Northeast. But it lacked a port to the warm waters of the Southeast. The latter being more reliable in the winter.
That was the rationale for "acquiring Crimea". Crimea not only made the Black Sea more accessible; but it had the necessary port infrastructure.
Why didn't everything stop? Well, another map would be helpful.
Eastern Ukraine provides a land bridge to Crimea.
Names of battles in Eastern Ukraine that are most mentioned - Luhansk and Donetsk - happen to be major cities on this land bridge.
Russia'a actions are wrong. But they are not irrational.
August 30, 2014
Barack Obama, who by the way could make a living as a stand up comic, addressed the White House Correspondence Dinner and made a joke about not finding Osama Bin Laden.
The next day? He announced to the world the US killed OBL. He had a plan. The plan was devised months before.
James Foley was killed by ISIS. It is well-known that the US doesn't pay ransom, unlike other European countries (France $300 million). The US instead hunts you down and bombs you.
What happened next? Al-Qaeda released a US prisoner. Al-Qaeda knows, first hand the "talk softly and carry a big stick" nature of Obama. Not only did he kill OBL; but has killed most of al-Qaeda's leaders with drone strikes.
Now comes ISIS. Obama has a plan. He is going to stick with it on his terms and his timing. Foley was killed and Obama kept golfing. He wasn't dismissing the attack; rather he was signaling ISIS that by continuing to play golf, he wasn't going to let one event change his plan.
Yesterday, Obama said he didn't have a plan. What else did you expect him to say? If a country plans a military offensive, "shrugging shoulders" is just an obvious diversion. People that are weak have to inflate their power. People that are strong keep their cards close to their vest.
As a RINO Obama voter, I voted for him, because he is not reactionary, is analytical and is cool under pressure.
When will we know his plan? When he announces it, as a military attack commences.
August 29, 2014
From Part I -
Advances in productivity (globalization, outsourcing, software, and ubiquitous communication/supply chains) - has either eliminated or devalued a great deal of jobs in this country.
I have made this point before. But one my blogs, over the last four years, was sticky. The blog was called "I Am A Serial Job Killer". It was borrowed by Thomas Friedman (of "The World Is Flat" fame) and be-blogged by many blogs
The following is what Einstein called a "thought experiment". An experiment that can't be performed physically; but seeks to look at consequences.
With 3D printing and "cold spray" (three dimensional building by metallic spray without welding and machinery) - and assuming no limits to productivity - a curious mind asks "what happens when productivity is infinite? And what does infinite productivity look like?"
Our entire world-wide economy would lose its foundation by blowing up all capitalist/planned macroeconomic theory; in particular, the idea of scarcity.
Productivity is academic-speak for making more with less people. Infinite productivity is academic-speak for making infinite consumables without people.
The signs of an "infinite productivity economy" would place no value on assets (they would be infinite). An infinite productivity economy would render currency obsolete. The only limitations would be energy. An infinite productivity economy" would require finding a source (call it solar and batteries for now) that is as ubiquitous as oxygen.
Is an "infinite productive economy" possible? I don't think so. But it does give the reader an idea that "productively" constantly marches forward. And the more "productive" an economy becomes; the less people it will employ.
So what is the lesson from this Einstein Thought Experiment? Hopefully a reality check for the current labor force and the future labor force.
The latter's largest positive impact would require throwing away an Industrial Revolution education system and replacing it with a mix of the old with a larger creativity emphasis. The old can easily be taught through computer education. The latter with application in the classroom. Teaching would be less rote instruction and more creative facilitation.
The road to more productivity - puts a premium on people who are creative and increase productivity - while the non-creative people continue to be replaced.
August 28, 2014
Over the last two decades, advances in productivity - affecting the supply and demand, not just of blue collar workers, but educated white collar workers - has economically disenfranchised a great deal of people.
What no one seems to get (or doesn't want to hear) - is the advances in productivity (globalization, outsourcing, software, and ubiquitous communication/supply chains) - has either eliminated or devalued a great deal of jobs in this country.
Industrial jobs today - at high productivity levels - are only valuing two traits.
1. Creativity instead of repetition (blue collar) and creativity instead of information arbitrage (white collar) drives each new marginal job's requirements. Skills are less valued, than people who can fit in a highly productive company and make them MORE productive.
2. A worker who considers himself an army of one. Be that - sales/account management/anyone who can connect a buyer with a seller
The remaining opportunity of the army of one, is someone who starts their own business and becomes successful.
Conventional wisdom of decades past, education not recognizing reality and the denial of current adults; is at the determinant of our economy and social order.
Tomorrow, Macroeconomics Part II, will focus on what happens when an economy is infinitely productive.
August 27, 2014
You can't time the stock market.
For many reasons. The first being that professionals - experts - are less accurate than flipping a coin. The second being, if you have learned of a market-timing mechanism, you can be sure everyone knows it too. Finally, the only way people can "time" the market (see Michael Lewis's "Flash Boys") is skimming from computer driven transactions.
But while timing the stock market - either daily or over a period of time doesn't work - there is one long-term way to do it. But it takes a lot of patience. Perhaps infinite patience. My thesis is that the stock market is not as rational as Adam Smith - and MBA Finance textbooks - tell us it is.
In 2007, I moved everything into cash. I knew the debt markets were drying up from my vantage of being a CEO. But I also understand the historical averages and more importantly how to value assets (including stocks). So I focus on P/E ratios; such as the Dow, the S&P 500 and the Russell 2000. All three were all out-of-bounds high. When the market crashed in 2008; when I knew that P/E ratios had fallen below historical averages, I knew it was time to buy. With my risk tolerance being low, when the Dow hit 12,000, I cashed out. My investment (from 7,500 to 12,000) had a 60% return.
I have stayed in cash ever since; while continuing to look at macroeconomics, with an eye on P/E ratios. From a macroeconomic standpoint, it doesn't take a genius, with interest rates/bond yields historically low, to know that investors are chasing yield in the stock market.
The historical average P/E is 14. As of today, the Dow is at 16. But the S&P is at 21, the NASDAQ is at 23, and the Russell 2000 is at 79.
While I continue to watch the dials, I try and learn more quantitative methods of valuation. One that makes sense is the Shiller (CASE) P/E ratio developed by Robert Shiller (who won the Nobel Prize in Economics in 2013). The Shiller (CASE) P/E ratio is based on average inflation-adjusted earnings from the previous 10 years.
The following is the historical Shiller (CASE) P/E ratios -
You can see just how much "irrational exuberance" there was in 2008. A Shiller (CASE) ratio of 44.
You can see the Crash of 1929 had a ratio of 30.
And you can see today, the ratio stands at 26.43.
So what does this mean to me? Nothing. You can't time the market now (shorting stocks) and there is no certainty it will crash tomorow, a month from now or years from now. But if by chance the market corrects itself, I will "time the market" when the dials snap back too much and ratios are well below the averages.
What does this mean to you? You should give pause to buying more stock and should at least be re-balancing your portfolio.
Anyways, I am just saying ....
August 26, 2014
Note to Obama.
It appears that over the weekend - with the assumption that you have been leaking - the media is saying you have decided to reengage militarily in the Mideast. May I please provide some suggestions?
1. Sit down in the oval office and address the American public. Stop striding out (as you did when you killed Bin Laden) on a long carpet to a podium. That makes you look like Putin; not an American president. American's have been programmed to know something is important when an oval office speech is announced. American's respond, by sitting down and listening, when you sit down and have something to say.
2. Pivot away from Iraq and Afghanistan "re-engagement". Pivot to a continuation of a war of terror. If al Qaeda with a few million could pull off 9/11; what could happen with ISIS with many billions?
3. Don't engage Assad of Syria and don't mention your real mission's by-product is to bring down Assad.
4. You need the troops to start where there is the most stability and organization. And that is in the self-governing (since the Gulf War over 20 years ago) federal Iraqi Kurdistan and Jordan.
5. I wish this was not the case, but airpower, although required, still needs boots on the ground.
6. You have to amputate ISIS. Eradicate them. You have to protect Jordan from its refugee crisis or a key ally of the West and Israel will be lost. You have to ensure Kurdistan endures and the Kurds maintain their oil fields, while at the same time having Kurdistan sign an official treaty with Turkey, ensuring border control (to assuage the Turks that the Kurdish Turks either have to peacefully migrate to Kurdistan, acknowledge they are Turks-only, or mutually-acknowledge being a Kurd first and an Turk second is unacceptable). That will help Turkey engage as another safe partner.
7. ISIS has given you an opening. They now control a nation larger than Jordan. They are in complete control. And it stretches into Syria (with the latest news that they have taken over a Syrian airfield). Eradicating ISIS is doable. And the byproduct of their eradication is to take out Assad. You can't say you screwed up not intervening in the first place (although the American people were against intervention as much as you). But you can say that the enemy of my enemy is my enemy.
8. Eradicating ISIS, continuing to ensure Kurdistan and Jordan stability, and freeing up the Syrian people from Assad is win/win.
Finally, and I am sure I don't have to mention this to you, but your oval office speech and your military actions, not only dispel you were "just vacationing", but are earily well-timed just before the mid-terms.
Anyways, I am just saying ...
August 25, 2014
ISIS is a symptom - the same as al Qaeda but writ large - of two foreign factors affecting Iraq -
1. Saudi Arabia's continued attempts to balance the Royal Family (the haves) and Sunni Wahhabism (placating the have-nots).
2. A US foreign policy that continues to believe Iran is the biggest problem in the Middle East.
Lets start with Saudi Arabia. The House of Saud and the US have maintained a "close relationship" since World War II. They have been allied historically due to a mutual disdain of communism, a mutual need for stable oil prices and the stability of Western countries where they park their money. Add in supporting US-based troops during the Gulf War and a tacit agreement to support and share intelligence with Israel (while still not recognizing the state) and it is easy to see how Saudi Arabia has become strategically entrenched with the US.
But - unlike the more "progressive" federation of monarchies that rule the United Emirates, who spread the wealth around, and have become themselves a stable place to park money - Saudi Arabia's stability, is not maintained by more economic opportunity - but by supporting radical Wahhabism in the midst of poverty. The latter is where young men go off the fight jihad. Afghanistan against the Soviet Union in the 1980s. Afghanistan to form al-Qaeda in the 1990s. 9/11 attackers.
And as the map above clearly shows - forgetting ISIS - Saudi Arabia's Sunni non-elite are pushing into Iraq's Shia South and into Iraq's Kurdish North. Now add ISIS (Sunni terror/modern weaponry/infrastructure/social media and services) on top of an Iraqi government in Baghdad that is Shia and has marginalized the Sunni's; and you can see how much damage has been done and how hard it will be to fix.
Also, if Iran, is such a problem (outside their borders) ... why have they not come to the aid of Baghdad?
We are talking about varying degrees of things that are foreign to our Western morals. So no place in the Middle East - except Israel - can we say "they are just like us".
But the narrative of the threat of the "Shia Crescent" - which was propagated by Sunni's, in the first place, more than a decade ago - has driven US foreign policy to become out of balance.
Does the reality of the first map (today) resemble the threat of second map (yesterday)?
It maybe uncomfortable for the reader to take an objective view - given Iran's sense of morality and the hostage crisis of 1979 - but the US seems to have forget that Iran is an ancient Persian nation. And as such they want (a) respect, (b) recognition and (c) nuclear weapons. We hear more about it as a threat to Israel; but in their backyard they have to contend with Pakistan and India who are both nuclear powers. Nuclear weapons are less about being offensive; but more about providing a defensive deterrent. Since Japan in 1945, countries with nuclear weapons, don't engage in protracted wars of territory.
It also must be noted that (a) in the Gulf War, Iran provided US aircraft landing sites, (b) in the push to topple the Taliban and al-Qaeda - which took weeks not months and years - Iran provided logistical support for the US and (c) the 9/11 attackers were not Iranian Shias but Saudi Sunnis.
The mess in Iraq is going to be almost impossible to fix in years. There is not much more the US can do. But it can help the long-run by adjusting its foreign policy.
By (a) reaching out to Iran and giving them a new "ask" - recognition if they sit down with Israel and sign a peace treaty, and (b) continue to wean the US off foreign fuel dependency. The reverberations of that would reset the Middle East.
Hamas and Hezbollah would be shut out because there would be no need for proxy wars from the Gaza Strip and Lebanon against Israel respectively. Without confronting the House of Saud - it would nonetheless signal triangular diplomacy to Saudi Arabia and give them pause, without losing face.
And it would likely push Saudi Arabia to modernize and end three decades of creating Middle East instability and terrorist threats to the West.
At the end of the day, Saudi Arabia, would have to change and modernize. Not because they want to; but because they are selfish and have to.
I am just saying ...
August 23, 2014
All this talk of the whether the Fed is too "dovish" on monetary policy misses the point. And chases the wrong menace.
I don't think the mainstream press understands 21st Century Macroeconomics. Which I define, as the study of the factors of (1) globalism and (2) the after-affects of increasing productivity so rapid within a labor force.
1. In a world-wide economy, there is more competition, and sans export/import sovereign interference, prices tend to go DOWN, not up (for consumables the Fed uses to measure inflation).
2. A systemic erosion of labor demand - due to hardware/software automation and outsourcing - in such a blink of an eye, that it will take a generation or more for the economy to adjust on its own - has kept wages flat to falling.
When you mix (a) the dynamics of the US economy (largely driven by consumer consumption - 70% of GDP), (b) the headwinds of cutting government spending and (c) the two factors of early 21st Century Macroeconomics; the real menace and the right argument is exposed.
The real menace and risk is deflation; not inflation. That is the right lens to look at the cumulative Fed actions since 2008.
The real argument at the Fed - is how at this point in history - do we NOT dip into waters no economist has ever figured out how to solve: deflation.
Not only has the mainstream press been chasing the wrong menace; the real menace is infinitely more dangerous.
I am just saying ...
August 22, 2014