Friday, December 30, 2016

The New Cold War is out in the open now

Russian interference in US electoral affairs has finally triggered the visible emergence of the New Cold War.

There were often hints of a New Cold War, but these were limited to chatter on the internet and in the occasional outburst by official sources in the media.

The war was intense in cyber space - but now it has entered into the real world.

To recap - when the Soviets and the US realized they could not nuke each other to death, they fought a bitter and terrible conflict which we call the Cold War. While maintaining a twisted kind of nicety in public and carrying out grand gestures towards each other on the world stage, the two sides spent vast sums of money on undermining each other. A great atmosphere of tension existed and every move had to be considered with the mindset of a chess grand master.

It was a strange world, but it was one I grew up in. One that I got used to.

Most of the millennials would find these ideas absurd. I recall vividly the empty looks in the eyes of my teenaged nephews when I tried to tell them about this history. They couldn't understand how a war could be raging a few feet from their house and they would be completely clueless. The idea of a Soviet illegal living among them as a perfectly American family might was crazy. They couldn't get their head around the idea that Joe and Jill Schmoe next door might actually be Pavel and Anne Gottslieb from Finland and that when they weren't baking apple pies, they were putting together attack plans on the nuclear missile launch complex that was ten miles down the street. Naturally my nephews didn't know about the nuclear missile base either.

Unbeknownst to many in my own generation - the old Cold War was actually horribly expensive both for Russia and the United States. Not many realize how many man hours this kind of thing chews up in unproductive activity. It is always better than a nuclear war or conventional war, but it is still extremely expensive.

I don't know if Russia actually hacked the electoral machines. It may be as the evidence so far suggests Russia tried to slant the election against Hillary Clinton and leak all manner of nasty bits and bobs of information via Wikileaks, DC leaks and so on. Whatever they did - I am guessing that it was premised on the idea that somehow Donald Trump was a far easier adversary to manage in a New Cold War. 

I want to point out to the folks at Yasenevo - that premise may be fatally flawed.

Donald Trump has a well known tendency to say something and then completely reverse himself in seconds. When confronted about this he compulsively gaslights the people asking the questions.

Look at the way he treats the press in the US, the manner in which he manufactures hatred of them in special interest groups. Why would any SVR analyst think that he would not do the same with a foreign nation like Russia? If he treats his own countrymen so badly - why will he treat foreigners any better?

The simple fact is that Donald Trump only behaves nicely with people who have huge teams of lawyers to go after him. He only bows to someone he sees as a bigger and better armed fish. Therein lies the place where it all falls apart. Whatever Carter Page is saying to you, whatever "Rexie and Putie" pulled together looking at maps - the only way to actually achieve any of that is to keep RU Nuclear Forces at high alert. That is leverage that RU will not be able to do without. President Donald Trump will blow smoke up President Putin's ass just the way candidate Donald Trump blew smoke up the asses of millions of Americans that voted for him.

Raising the readiness level of Russian nuclear forces sounds possible in theory - but in practice - we all know that is very very expensive and Russia with all its infinite might can't actually afford that expense right now.

I know that sometimes in Moscow (like that time when Hitler's army charged across the border)  it becomes hard to state the obvious. How many high ranking intelligence personalities in Moscow knew that Hitler was conducting no exercise? - and how many dared tell Stalin? Is it a surprise really?

Unless someone voices the obvious - it is not clear how things will proceed divorced from the reality of the time.

If no one in Moscow dares voice the truth - the good luck -we are all going to need it.


At 9:42 AM, Blogger Wise_Ass said...

Why don’t they have the sense of urgency you feel? I ask Trump.

In part, it’s the Qaddafi’s Pilot Factor, he says.

“Those people think that because we have it and the Russians have it, nobody will ever use it because they’re assuming everybody’s not necessarily mad. They don’t see Qaddafi walking into an airplane and slapping his subordinates and screaming like a madman on the airplane to the pilots. The man is a psycho.

“I mean, what if he’s got the bomb and something happens like the time we shot down two of his planes. And he’s enraged and he can’t see straight and he’s got twenty missiles pointed right at the United States. Washington. I mean, do you think there’s a chance he won’t press the button?”


What is the Trump Plan?

It’s a deal with the Soviets. We approach them on this basis: We both recognize the nonproliferation treaty’s not working, that half a dozen countries are on the brink of getting a bomb. Which can only cause trouble for the two of us. The deterrence of mutual assured destruction that prevents the United States and the USSR from nuking each other won’t work on the level of an India-Pakistan nuclear exchange. Or a madman dictator with a briefcase-bomb team. The only answer is for the Big Two to make a deal now to step in and prevent the next generation of nations about to go nuclear from doing so. By whatever means necessary.

“Most of those [pre-nuclear] countries are in one form or another dominated by the U.S. and the Soviet Union,” Trump says. “Between those two nations you have the power to dominate any of those countries. So we should use our power of economic retaliation and they use their powers of retaliation and between the two of us we will prevent the problem from happening. It would have been better having done something five years ago,” he says. “But I believe even a country such as Pakistan would have to do something now. Five years from now they’ll laugh.”

At 10:35 AM, Blogger maverick said...

Dear WiseAss,

Apart from random references to "a deal" on "the Subject" and occasional shoutouts to his uncle Dr. John Trump - there is no meat in that article. The whole fucking thing is someone making it look like Donald has some kind of deep secret plan on the issue of nuclear weapons. This is the same bullcrap he pulled vis-a-vis ISIS. As his landing team indicates in its talking points to the DoD - there is no secret plan - the DoD is supposed to come up with a plan to "Defeat ISIS" and as long as that is put in all CAPS on the cover - Donald will pose with it on the WH lawns.

This notion that the world is somehow a better place because the two biggest nuclear powers carve it up between themselves has proven to be nonviable.

If it is attempted again - the polarization strategy will fail.

There is only one way to get this strategy in place and that is to spend your ass off on nuclear weapons. That is how they did it back in the 50s. That strategy will not work right now, neither Russia nor the US have the money to pull this polarization off.

If this is truly what Trump thinks then it shows how little he actually understands what went on. The US and USSR went toe to toe in an effort to carve up the world between them. This started numerous other nations on the path to nuclear weapons and the end result was a proliferation that neither party could control. Even when the bulk of India and China was eating grass, they still found enough resources to build nuclear explosives.

Right now the US is pretty close to eating grass. The Russians have been eating grass for the last four decades. As things stand the projected expenditure on arsenal *maintenance* is about $1T (of today's money) over 30 yrs. The total revenue of the US is currently pegged at ~$4T per year. The US does not have what it takes to maintain its arsenal.

The Russians are in even deeper shit. Not only have most of the people who worked on the weapons decades ago died or become too old to be active, the money required to train new generation of people to perform the complex tasks is lacking. In the US the gray Tsunami is going wipe out several decades of nuclear know-how. The same is true of Russia and they don't even have the resources to store what they know properly.

The idea that the US or Russia can offer something to other proto-nuclear powers today is laughable. This kind of thing would not have worked even in the 80s. The idea was brought up and discarded back then because the moment you did one deal with one proto-nuclear nation - the rest would up their price and scotch your negotiation.

That is the great negotiator for you.

Sanctions against France - that is a hoot!

Look dude - if you really want to learn something about nuclear weapons issues - don't waste your time poring over tea leaves from Trump's dinner dates. Look at the real experts. none of them talk about this kind of nonsense.

At 11:43 AM, Blogger Wise_Ass said...

1)I brought this as an example to show a consistent pro-Russia or an Obamasque G-2 with China type thinking with Trump.Except that Trump's team doesnt think Russia is a great friend but can maintain a manageable alliance against jihadists in Afghanistan+MENA.
2)Nuclear weapons's have to be upgraded anyway as all other nuclear weapons are upgrading theirs.US can perhaps discard land-based silos&bomber based nuke delivery platforms and concentrate on ship&sub-launched nuclear arsernal perhaps.This is interview from 1987,so of course France or anybody else case doesnt apply anymore or then.Nor did he had a solid security advise then.But still great clarity for a businessman.
3)I dont see any major "flip-flopping" on core issues from Trump side.Most of the literalists get caught up in rhetorical devices used by commoner politicians when they try to emotionally connect&pace their audience like "Lock her Up" etc.You can see similar "jumla" stuff hurled at Modi in India too.

At 12:45 PM, Blogger maverick said...

Dear Wise_Ass,

Thank you for the clarification.

FWIW - if President Trump loves Putin and his KGB pals - so be it. It seems he became fixated after President Gorbachev said something about him opening a Trump hotel in Moscow and then there is this whole "Bright" comment from Putin. I think Donald Trump sees praise where there is the opposite of it.

The idea that the Russians are manageable is true, but I am not sure what sense there is in an alliance against Jihadists. Are the Jihadis a mortal threat to the US? I think not. So as long as they are greater pain in Russia's ass in Syria then they are in ours - what is in it for us to get into an alliance against ISIS?

As regards Afghanistan - what can the Russians offer us that we can't get from anywhere else? The key to the situation are the Pakistanis so what can an alliance with Russia get us?

Donald Trump is like any babyboomer - torn between fantastic notions of what Russia is. At one instant it is a mortal threat capable of burning the US to a cinder - in another instant Russia is a land of beautiful women and abundant natural resources. He (like so many of his generation) do not know how to reconcile this contrasting images. They were brought up on a steady diet of conflicting information which most people didn't know how to digest.

Just like he does on everything - he will do a volte-face on his love of Putin and all things Russian too. In his case it will be some business related slight - some small little thing that will upset him and the decades of conditioning set into his psyche will kick in. At that point as Jeffrey Lewis says Trump will telegraph a decapitating strike on his business interests as an attack on the US. That is when all the folks that voted for him will be running into the backyards hoping to live when the Russian strike comes.

There is no clarity in that 1987 interview. He babbles endlessly about things that were sorted out in RAND and other places a dozen years ago. All this DENSE PACK stuff was over and done with by the time he got to hear about it. The issue of proliferation and how to cope with powers like France and UK was in stuff the Wohlstetters talked about a very long time before Donald Trump had a clue what any of that was.

The way I see that interview is that it is another exercise in Donald namedropping and making oblique references to a non-existent deep strategic thought process. This is typical Trump bs-ry, dropping in Dr. John Trump's good name when he expressly avoided Donald and his dad for decades before that. If one is totally illiterate I guess one sees any scribble as deep knowledge.

At 12:45 PM, Blogger maverick said...

contd from above

There are professional people who spend entire lives doing this work - it is best to listen to them than to some "businessman" who seems to have "clarity" but has no specifics or details.

Gaslighting is not a "rhetorical" device. It is a tool used by people of the Hitler variety. His repeated use of this technique in public has only one possible explanation, he is drawing attention away from something that the press would otherwise all too easily get its teeth into.

It is one thing for ordinary GOP voters to come up with slogans like "Lock her up" - it is something completely different for the GOP presidential candidate to pull that on the stage at a presidential debate. So no - there is no similarity between this and anything random people say about Modi. Do you recall how much it Hindu-Right-Wing's collective posterior hurt publicly when Sonia Gandhi called someone "Maut ke Saudagar"? or that time when Rahul Gandhi said "Hindu Terrorism"? - That is 100x less than what DJT has been pulling vis-a-vis HRC.

Now of course "Lock her up" has taken on a life of its own. If he doesn't "Lock her up" - his own followers will want to do him serious harm and if he does actually lock her up - he will turn her into a martyr. From that point on Republicans will find themselves wearing the same shoes that GoI did after SG killed Jarnail Singh Bhindran near the Akal Takht.

At 9:57 PM, Blogger Wise_Ass said...

"Are the Jihadis a mortal threat to the US? I think not."

MANY people have raised the objection that Islam is really not that strong a force in the world, cannot defeat the West, etc etc. My attempt at clarification follows:

1.The weaknesses/incoherence/decay of the liberal world order are mostly internal to it. They may be simply a matter of the inevitable decay and corruption of any highly successful civilization (what you call "catastrophic success"), or some blind spots in the world view, some failure to map adequately to human nature, whatever. They are not caused by Islam.
2. But Islam/Muslims are a large enough phenomenon that their failure to line up and their almost naive refusal to accept the brutal facts (that they are weak, that the liberal order is very mighty, that the washing machines and iphones come from the modern world and everyone wants those, so how could large populations possibly consciously opt for alternatives that do not prioritize washing machines) is increasingly hard to sweep under the rug. They are not killing the liberal order (at least not yet, probably never), they are making its blind spots visible to many others who can do some killing.

3. As the doubts spread, they lead to a search for alternative software. "Maybe the racists were right". "Maybe the religious revivalists were right". "Maybe the cultural nationalists were right". Maybe even that ignorant conman from Queens is right.. Whatever, the point is, the liberal order is losing the confidence of its own people. That can become a self-reinforcing downward spiral. By the way, the alternatives being considered are NOT necessarily correct. That is part of the point. The liberal order could fail, not because its failure was inevitable or because its enemies are better, but because it lost asabiya, coherence, confidence, public support, shared delusion. Something like that.

my comments"
This is a sort of dangerous denialism that should be discarded at the earliest.Islamic terror is not only tactically asymmetric,it is also a strategically asymmetric threat.We have spent trillions on dollars on post-9/11 anti-jihadists wars,billions of dollars on airport security,paramilitary deployments around "soft-targets" across the board.Most of European countries now have soldiers roaming around in public places.Completely reconfigured politics in the West.So yeah,it is a mortal threat.This is not because,Islam/jihad is in anyway remotely a compelling in market place of ideas,but because there was a huge moon sized blindspot in the prevalent globalist structure and way of doing things which Islam just exploited like a pathogen shutting down a body with weak immune system.

You can see structural weakness of society starkly in Israel vs Hamas war
Clearly Israel outmatched Hamas in all metrices and most ruthless Western country possible apart from Russia.Israel can in theory finish off Gaza+underground facilities with mix of couple of dozen bunker buster,earth quake bombs&cluster bombs,but it cannot do so without breaking Israel as a society.Though agitating external actors into full scale war with such act is part of calculation,it is not wholly due to bad PR and anti-genocide intervention.

You can similar dynamic playing out in Kashmir where Islamist/jihadist separatists are fronting children and women in stone throwing "protests" cum lynching attempts on isolated police/paramilitary pickets."

The Most Intolerant Wins: The Dictatorship of the Small Minority
How Europe will eat Halal — Why you don’t have to smoke in the smoking section —

At 9:22 AM, Blogger maverick said...

Everything you are saying applies if replace "liberal order" with "conservative orthodoxy" or "communist regime" or pick-your-political-target. That style of communication is not informative.

Jihadis are not a mortal threat to the US. DJTs association w/RU mafias is a bigger threat.

Do Mogilevich etal who are now in a position of advantage intend to invest in US growth or they intend to create a depression that allows them to consolidate their power?

The last time they raped Russia clean to the bone. Is that what they want to do to the US?

What if any leverage does one have over them?

It is a serious question.

At 5:08 AM, Blogger maverick said...

Dear Wise_Ass,

You are giving me a lot of what the wonky types call "boiler plate" material. This is the political meta-data that gets slapped on to every policy paper to make it easier for a particular political constituency to swallow.

A vast majority of people who read the report can't digest the hard policy stuff so they mistake the "boiler plate" stuff for actual discussion of policy matters. The result is the corrosive atmosphere of public debate that we see where partisanship rules.

Can you provide some actual hard information about what the real expectations of the true porfolio holders behind the DTC are?

What are they looking for as an annual IRR? is 17.5-25%? I am asking because all the ventures that Tevfik Arif and Sater etc.... have floated look like 12% IRR operations. As in the money once invested is returning about 12% IRR with a short cycle (<3 yrs) to repay the principal amount. Once the principle is repaid then the investment can deliver up to 12% (tax free of course) and things are okay.

I am assuming these people understand that you cannot expect the >100% interest rates that pay-day lenders usually charge, that high an IRR usually results in a default.

More generally I am sure a trained economist such as Mogilevich gets that you cannot demand high interest rates for Hyper Jumbo loans and that it is more trouble to cope with a large sudden/irregular flow than a small but regular flow. The question is how do the rest of the guys react to this.

At 5:24 AM, Blogger maverick said...

Again for the old economist who one hopes is able to still influence things, I wish to be clear. I am not offering you unsolicited financial advice but I want to make sure the basic elements of the situation are clear. Sometimes that gets lost in the AIs that sort out the news for us on our mobile phones.

It is not terribly hard to launder money into the US system. That is the easy part. The much harder problem is investing it in something that has a sense of security afterwards.

The US economy cannot offer anything other than slow growth at this point. The population is aging and despite technology advances productivity has not kept up with demanding nature of social security commitments. The USG is borrowing from the future at a low interest rate to pay for the social security commitments right now. I suppose the USG can skive off some of these payments - cheat a few old people and stop their checks, but that will just increase the interest rate at which they are borrowing from the future. If you look at the market, you see the asset prices rising - but this is obviously a bubble. People are pouring money into assets because they know the current productivity pattern cannot sustain long term growth.

There are strategies that yield high returns even in the slow growth situation (for helpful hints see the Medallion Fund) but you are playing market volatility games at that point and you can't have a fixed outflow structure. More generally speaking if volatility is to become available per a certain person's needs, then you will have a supply demand curve for it. Problems of managed volatility can be vexing.

A logical shift at this point would be to taper expectations about social security and medical coverage commitments. That would lead to a slow rise in growth. But that is the best one can do at this time.

You can wrap this in what colored (orange, blue, red, green) foil you want and sell it to the appropriate customers, but there is no changing the economic realities.

At 5:31 AM, Blogger maverick said...

Perhaps an analogy to 1990 USSR is appropriate.

Everyone know that given the mismanagement of technical resources and the fact that the Soviets missed the silicon revolution, the Soviet industrial sector was overvalued. It was also well known that a lot of money would have to be invested into the soviet industrial sector to make it competitive. Unless it was made competitive there would be no growth.

So at the risk of sounding "liberal" - the depression that followed the collapse of the USSR was natural. I wish to be clear to all my Russian friends, I am very sorry for your suffering in that terrible time, but bad decisions were made by your leaders and you paid the price for it.

The same is true in the US today. The American baby boomer generation has become excessively entitled and they do not produce goods and services that justify the price they ask for them. The result is a decline in competitiveness of American products and an overall decline in US revenue. Now you can impose tariffs and "bring back the jobs" etc. etc... but when you look at the net rise in productivity that all those expensive measures will bring about - it will most likely be negative and it will offset what little growth there is at this time.

A decline in growth at this time will create a run-away effect and cause a depression just like the 1930s in the US or the 1990s in the USSR.

What is a rational investment strategy in this climate? That is a good question but if you try to push the IRR up - you are going to break the camel's back.


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