Craig Pirrong's Blog, page 92

A Twofer: Uncle Sucker’s Air $n€ Service Strengthens Two Rogue Regimes

Yesterday the WSJ broke a story about a strange coincidence: nearly simultaneously with the release of four Americans held prisoner by Iran, the US shipped $400 million to Iran. The administration denies any connection between these two events, claiming that the money is related to resolution of a longstanding dispute dating back to the days of the Shah.

But who you gonna believe, them or your lying’ eyes? And truth be told, the administration–as desperate for a deal with Iran as it was–had to know how bad the optics were. If it had any choice in the matter, it would have insisted on a decent interval between the prisoner release and the flow of the money. If there wasn’t a connection, the Iranians would have likely accommodated. But the fact that they didn’t tells you that it was a deal: money for the bodies. What’s more, bad optics from the American side were good optics to Iran.

But let’s put aside the issue of whether this was a swap. Let’s suspend disbelief and assume that the bodies and money flowed pursuant to totally separate deals negotiated in hermetically sealed rooms separated by 50 Chinese walls preventing a flow of information between those negotiating about the money and those negotiating about the Americans held captive.

Even granting that wildly implausible hypothesis, the deal stinks to high heaven because of the way the money flowed. In cash. Once in Iranian hands, it was basically untraceable and there is no way the US can use its dominance of the banking system to stop the money flowing to illicit uses, or even detect when it does.

The Iranians now have $400 million of USD, EUR, and CHF to direct to terrorist groups. Even worse, you know who wants cash more than Iran because it is unable to use the banking system? North Korea. You know who has been cooperating with Iran on nuclear and missile technology? North Korea. Now the administration has gifted Iran hundreds of millions that it can send without a trace to North Korea in exchange for nuclear and missile technology. What’s even more astounding is that this coincided with a deal that was intended to delay Iran’s development of nuclear weapons. But this Air $n€ flight to Iran is directly contrary to that purpose, because it facilitates Iranian evasion of restrictions on its nuclear program.

Not to mention that it will also likely bolster another extremely bad actor, North Korea. Funding work on NoKo nuke and missile technology will make two unpredictable and dangerous regional troublemakers stronger.

This makes Operation Fast and Furious look benign and intelligent.  How soon before a US special operations raid on terrorists seizes currency sent to Iran on the night flight from Geneva? How soon before that money pays for an intensification of NoKo and Iranian weapons development?

It gets better. The Iranians, apparently knowing a sucker when they see one, have seized two more Americans. And now that he has reaped most of the financial gains from the nuclear deal, Khamenei is expressing reservations about it and suggesting that Iran will pul out.

For those who have been to the bazaar, you will realize that these are means of extracting even more from Uncle Sucker. And as long as Obama and  his hapless Sancho Panza, John Kerry, are in office, they will almost certainly get their wish.

 

Dogs Fighting Under the Carpet, Ex-Mullet Man Edition

There is a very revealing struggle going on in Russia right now. It is a pitch-perfect illustration of how Putinism works.

At issue is the Russian government’s privatization initiative, and specifically the privatization of the oil company Bashneft (a Russian firm with a very sordid, checkered past, but I repeat myself). Igor Sechin covets Bashneft, in large part because Rosneft production has been falling (estimates for 2016 are a 2 percent decline), and with sanctions and the company’s inefficiency, here is little hope of reversing the decline. Getting ahold of Bashneft would increase Rosneft’s production and reserves, and Bashneft’s production has grown handsomely of late (almost 11 percent in the last year): Sechin could buy what he can’t create.

But government technocrats, led by Deputy Prime Minister Arkady Dvorkovich, are adamantly opposed to a Rosneft takeover. The opposition stems in part because acquisition of Bashneft by a state-owned firm would make a travesty of privatization, and also thwart the goal of using privatization proceeds to address the government’s fiscal strains, which requires outside money. The opposition also reflects the understanding that enhancing Rosneft’s position in the Russian oil industry is detrimental to the future development of that industry. Rosneft is more parasite that creator.

Dvorkovich therefore flipped out when Russian bank VTB invited Rosneft, as well as other state-owned companies like Gazprom Neft, to participate in the privatization auction. It initially appeared that Putin had sided with Dorkovich, and an anonymous spokesman in the Presidential Administration had confirmed this. This was hailed as a huge defeat for Sechin, and perhaps a harbinger of a change in the balance of power within the Russian government.

But not so fast! An “official” said that the exclusion of Rosneft was “unofficial”. But then this week Putin’s spokesman Peskov, who had confirmed only a week before the “understanding” that Rosneft was out of the running, reversed himself, and said that “formally speaking” Rosneft was not a state owned company, and hence it could participate. You see, Rosneft is owned by a holding company, which is owned by the state. So  even though economically this is a distinction without a difference, legally it provides enough of an opening for Igor to slip through.

So who knows what will happen? Maybe Rosneft will be allowed to participate, under the understanding that it will not win. Or maybe the fix is in. Or maybe Putin is just letting Dvorkovich and (ex-)Mullet Man battle it out ender the carpet for a little while longer before ruling. This would allow him to weigh the arguments–and also to force the contenders to make bids for his support. Putin will rule depending on how he wants to balance the competing political factions, and who can offer the most to Putin or others he wants to favor.

And as in the heyday of Kremlinology, outsiders will attempt to discern deeper lessons from the outcome. Who is on top? How committed is Putin to reforming the Russian economy? How wedded is he to the idea of state champions? Or is he willing to concede that given Russia’s economic straits it is necessary to make accommodation to more Western commercial and legal norms?

The problem with the answers to all of these questions is that even if you are right today, nothing is set in stone. Putin could reverse course later. Maybe next month. Maybe next year. This is an inherent problem with autocratic systems: autocrats can’t make credible commitments. The only precedent is that there are no precedents. Today’s decision matters. . . for today.

So whatever the outcome of this current dog fight, it will tell you about the current state of play and the current balance of power, and not much more, because for an autocrat, tomorrow is another day.

Say “Sayonara” to Destination Clauses, and “Konnichiwa” to LNG Trading

The LNG market is undergoing a dramatic change: a couple of years ago, I characterized it as “racing to an inflection point.” The gas glut that has resulted from slow demand growth and the activation of major Australian and US production capacity has not just weighed on prices, but has undermined the contractual structures that underpinned the industry from its beginnings in the mid-1960s: oil linked pricing in long term contracts; take-or-pay arrangements; and destination clauses. Oil linkage was akin to the drunk looking for his keys under the lamppost: the light was good there, but in recent years in particular oil and gas prices have become de-linked, meaning that the light shines in the wrong place. Take-or-pay clauses make sense as a way of addressing opportunism problems that arise in the presence of long-lived, specific assets, but the development of a more liquid short-term trading market reduces asset specificity. Destination clauses were a way that sellers with market power could support price discrimination (by preventing low-price buyers from reselling to those willing to pay higher prices), but the proliferation of new sellers has undermined that market power.

Furthermore, the glut of gas has undermined seller market and bargaining power, and buyers are looking to renegotiate deals done when market conditions were different. They are enlisting the help of regulators, and in Japan (the largest LNG purchaser), their call is being answered. Japan’s antitrust authorities are investigating whether the destination clauses violate fair trade laws, and the likely outcome is that these clauses will be retroactively eliminated, or that sellers will “voluntarily” remove them to preempt antitrust action.

It’s not as if the economics of these clauses have changed overnight: it’s that the changes in market fundamentals have also affected the political economy that drives antitrust enforcement. As contract and spot prices have diverged, and as the pattern of gas consumption and production has diverged from what existed at the time the contracts were formed, the deadweight costs of the clauses have increased, and these costs have fallen heavily on buyers. In a classic illustration of Peltzman-Becker-Stigler theories of regulation, regulators are responding to these efficiency and distributive changes by intervening to challenge contracts that they didn’t object to when conditions were different.

This development will accelerate the process that I wrote about in 2014. More cargoes will be looking for new homes, because the original buyers overbought, and this reallocation will spur short-term trading. This exogenous shock to short term trading will increase market liquidity and the reliability of short term/spot prices, which will spur more short term trading and hasten the demise of oil linking. The virtuous liquidity cycle was already underway as a result of the gas glut, and the emergence of the US as a supplier, but the elimination of destination clauses in legacy Japanese contracts will provide a huge boost to this cycle.

The LNG market may never look exactly like the oil market, but it is becoming more similar all the time. The intervention of Japanese regulators to strike down another barbarous relic of an earlier age will only expedite that process, and substantially so.

Consigning Another US Syrian “Training” Farce to the Memory Hole

Today there were numerous stories in most major news outlets about a “vast new trove” of intelligence about ISIS, with the NYT (AKA administration mouthpiece and cheerleader) taking the lead in pushing the story.

You had to look a lot harder-and a lot faster-to find another story which casts US intelligence in a much, much worse light. Specifically, ISIS captured a cache of weapons and computer disks from the latest group that the US has been training in Syria, the New Syrian Army. (Coming next: The New New Syrian Army. Or maybe: And Now for a Completely Different Syrian Army.)

ISIS released some of the video contained on the captured disks, complete with English subtitles (because the dialogue is in Arabic) and commentary, and some snazzy editing. The video that got the most play featured a douchy looking American, presumably CIA, who looks like he just wandered away from a kegger at his frat. In one part of the video frat boy gives instruction to a beefy uniformed Syrian. What is the content of the instruction, you ask? Close quarter combat? Demolitions? Combat shooting?

Surely you jest. No, frat boy was giving a lesson in public communications. He was instructing the Syrian on how to deliver a recorded propaganda statement, telling him things like it’s OK to move your hands, but keep your feet still and don’t shift your weight around on your legs. He gave demonstrations of proper body language. He assured the nervous pupil that they had plenty of time to master this.

Years ago, when I joined the UH faculty, the dean had me and several other new senior hires take a course in media relations that included a virtually identical session on how to act on camera.

In another part of the video, the American gives a disquisition on why ISIS propaganda is effective. In a nutshell, it is because actions reinforce the verbal message.

So, apparently, a part of the American training operation is how to win hearts and minds through killer presentation skills. No doubt another part of the training was the art of effective PowerPoint presentations.

Meanwhile ISIS propaganda effectively wins hearts and minds through demonstrating killer killing skills.

The video really has to be seen to be believed. But that’s easier said than done. The videos were posted on Twitter. The CIA guy’s face is plainly visible, and because of this, Twitter yanked tweets embedding the video. I was able to grab it, and was planning to embed it here. I still might, but don’t want to do anything precipitatous, and I understand that there are issues with disclosing the identities of US operatives.

It’s a close call, though, because it is the (presumably) CIA’s  recklessness that created this problem. It was the CIA who allowed its operative to be filmed with his face fully visible. It was the CIA that allowed the video to be stored unencrypted on the drives captured by ISIS. It was the CIA that trained a group that was beaten by ISIS, which resulted in the capture of not just the videos and other electronic information, but weapons. Since this fiasco is completely of the CIA’s making, it is a little rich to invoke the importance of maintaining the secrecy of US operatives when the Agency itself was grossly incompetent in its personal and operational security. Methinks that this CIA CYA was more about protecting the faceless bureaucrats in Langley than protecting the face of the hapless Lawrence wannabe in the Syrian desert.

This is yet another episode in the ongoing farce that is the American effort to train fighters in Syria. Remember the tragicomic Five Guys incident? The hundreds of millions spent to outfit a handful of “fighters” who almost immediately capitulated to Al Qaeda-linked insurgents? That program was eventually terminated, but the ones that have replaced it have been conspicuous only for their utter lack of impact on the battlefield, whether it be against ISIS or against Assad. Of late, the most prominent American action in Syria has been to whinge about the Russians and Assad bombing “our” fighters (and bases used by US and UK special forces to train them–and perhaps to operate in Syria), and to attempt to negotiate some bizarre deal with the Russians to prevent that from happening again.

In fact, the effort has been so woeful that it actually makes more sense that it is intended to fail, than to succeed. Obama is under pressure to do something in Syria, but he doesn’t want to. What better way to split the baby than to fund a farcical effort? If it is intended to fail, at least we can claim a success, for fail it has.

Regardless of the explanation for the farce, there is no denying that it is a farce. One look at the video just adds an exclamation mark to that statement, but there is plenty of documentation in the public record that the effort is a litany of abject failure unblemished by a single success. (Involvement with the Kurds is a different story. I am focusing on training of Arab fighters in Syria.)

And consider this irony: a comical effort to train anti-ISIS Syrians in propaganda resulted in handing a huge propaganda victory to ISIS. Because rest assured, even though you can’t see the video, the audience in the Islamic world that matters to ISIS has or will. What better way to make a laughingstock of the US than to show some communications major lecturing about the effectiveness of ISIS propaganda, and engaging in pitiful efforts to train Syrians in fighting ISIS propaganda?

Which raises the issue: just what is the objective in Syria? Who are we fighting? Why? To achieve what? The administration goes through the motions of supporting the anti-Assad insurgency, but its heart is clearly not in it. I can understand that, and actually agree with it: the US has little strategic interest in who wins the Syrian civil war, and an Assad defeat would almost certainly empower head chopping, terrorist, anti-American Islamists. But if that’s the policy, stop the cynical game of training a few deluded fools and sending them to be killed. This accomplishes nothing strategically, and damages the reputation of the US. It bolsters the Islamist/ISIS narrative that the US is ineffectual, unreliable, and feckless.

If the objective is to fight ISIS, well, to paraphrase Napoleon speaking of Vienna–fight ISIS. And do so using proven methods. But the US now proudly boasts that it is not using methods that have worked in the past. SecDef Carter (in whom Obama has finally found a reliable water boy after firing three predecessors who dared defy him) brags that the US is NOT engaged in counterinsurgency (COIN) warfare. Why not? Because it has actually worked before? Because it is linked with the Bush administration and General Petraeus? I can’t think of a reason based on actual military realities.

The press would be savaging a Republican administration for such colossal ineptitude and cynicism. Hell, the press might even savage some Democratic administrations. But Obama is given a free pass, and the utter failure–and patent absurdity–of his Syria policy draws nary a cross word from the panjandrums of the press. Indeed, they trumpet alleged intelligence triumphs while remaining mute about proven intelligence debacles: the timing of the release of the intelligence coup story raises the real possibility that it was intended to counter to intelligence boner story. Twitter goes so far as to clean up after the circus parade to conceal the mess that the CIA made: I presume Google has too, because the video is not to be found on YouTube.

It is a performance worthy of Putin’s press, but worse, actually. It is worse because at least Putin’s press does not pretend to hold him accountable, whereas America’s preens and primps about its vital role in our democracy, and declares that it is a vital check on the skulduggery and incompetence of elected officials and bureaucrats. To the extent that it is, it is extremely selective, and this is even more dangerous in many ways than a lapdog press like Putin’s. Consigning the video of the public comms 101 class to the memory hole is just another sad demonstration of why.

A Remedial Lesson in Internet Research for Michael McFaul

I responded to a typically smarmy Tweet from ex-US ambassador to Russia Michael McFaul (@mcfaul), and this started a set-to that is so amusing that I have to share it.

Don’t bother looking for the conversation. You can see my half, but the brave Sir Robin McFaul deleted his Tweets. Gutless. But understandable, given how he fared. But (as the conversation demonstrates) Mr. McFaul is not exactly Internet savvy, and he didn’t count on the wonders of screencaps. So like a bad burrito, Mike, this conversation is going to come back up. Enjoy.

The smarmy Tweet was McFaul’s contribution to the attempt to distract attention from the DNC leak. He said (I can’t show it b/c he deleted it and since it is what I replied to it doesn’t show up in my Notifications) something to the effect that he hopes that our intelligence services are investigating Russian involvement in an attempt to influence the US election. Crucially, he said that he hoped that they would inform us of the outcome soon.

I replied:

He responded (smarmily):

I replied:

His retort:

Me:

But then McFaul lost interest in substance, and resorted to the ad hominem fallacy that has become so prominent in the Clintonoid response to embarrassing facts. Don’t argue the facts, raise questions about the person with the temerity to bring those facts to light.

“We professors.” LOL.

Here’s where it gets hilarious. He couldn’t figure it out!

Try it at home! I bet you can do it. I bet your three year old can do it. Maybe if you have a really smart cat.

Then he gets nasty and personal:

“I’m guessing the avatar isn’t you too?” Too funny! What was his first clue?

Finally, 20 minutes later–I kid you not!–he figures it out:

Don’t like me telling you to stick it, Mike? You got off easy. Try talking that smack to my face and see how it works out for you. And as for your “we at Stanford” snark: not impressed. More ad hominem, appeal to authority fallacies.

As a service to other Internet challenged geniuses who are dying to know my super-secret identity in two clicks, here is a step-by-step instruction.

First, click on the link to my blog in my Twitter bio:

Second, click on the “bio” link in the upper right hand corner:

And voila! You learn–I hope you are sitting down–that I am Craig Pirrong. Who knew?

Behold, ladies and gentlemen, the point man of US Russian policy 2012-2014.* Hillary, of course, was the architect of US Russian policy from 2009-2013. Should we be surprised what a total clusterfail it was?

Seriously, it is beyond rich that Hillary and McFaul and others who were involved in US foreign policy during that era shriek about how awful Putin and the Russians are today. They enabled it. Yes, Putin et al are who they are, but incompetent and feckless US policy–and policymakers–bear a large share of the blame for the dysfunctional state of US-Russia relations, and for emboldening Putin.

This is also exactly why I think people are nuts to conclude that Putin wants Trump in the White House. He has to be licking his chops at the prospect of a Hillary presidency. After all, who else than this would he want leading his primary adversary?:

A picture is worth 1000 words. Need I say more?

* More humor. The mainstream media drooled all over McFaul because of his use of Twitter. So techie of him! Oh, and by the way, his main accomplishment on Twitter as an ambassador was to provide the world with a stream of entertaining Russian Tweets trolling his idiocy.

 

 

Hypocrites for Hillary

The hysteria about the DNC hack and the frenzied efforts to focus blame on Putin and Russia have brought to the fore many anti-Russian/anti-Putin types who are so revolted by the prospect of a Trump presidency (in part because of Trump’s alleged admiration for Putin) that they have come out foursquare for Hillary. Most notable among these is Garry Kasparov. Neocons like Robert Kagan too. Journalists like Julia Ioffe of the Washington Post and Miriam Elder (formerly Moscow correspondent for the Guardian, now with BuzzFeed) qualify, as do myriad other journalistic and think tank pilot fish who are not really deserving of mention by name.

But here’s the funny thing. One of this crowd’s main indictments of Putin is his corruption and venality. They have a point about that, but if corruption and venality are reasons to detest a politician, how can they then turn around and support Hillary? For she is corrupt and venal as they come in American politics.

There are actually some similarities in Vladimir’s and Hillary’s trajectories of corruption. Putin’s schemes began not when he was at the center of power in Moscow, but when he was a functionary in the administration of a regional official, the mayor of St. Petersburg. Hillary’s career as a grifter also began in the sticks, when she was First Lady of Arkansas.

For who can forget cattle futures? Some years ago some academics calculated the odds that the typical trader could have turned $1000 into $100,000 in such a short period of time with such a high frequency of winning days. What were those odds, you ask? A mere 31 trillion (with a t!) to one. Yeah. It could happen to anyone who read the WSJ (which didn’t have a commodities page at the time, mind you).

Now you tell me. Would you have stopped trading if you were that good–or on that good a roll? As if: nobody would. But if these profits were part of a scheme (e.g., buying and selling the same contract, and allocating the winners to her account and the losers to the briber’s account) to pay off $100,000 to the governor and/or his wife, you’d have to stop as soon as that number was hit. So both the making of the money, and the stopping of the even trying to make more money, are damning.

Then of course there was Whitewater and Castle Grande, for which Hillary did legal work–and the developers went to jail.

Like Putin, Hillary went from the sticks to the center of power in the capital in one leap. There’s no indication that Hillary profited directly from her position in the White House, but the entire eight years of the Clinton presidency was a litany of stories about dodgy campaign finance schemes. Ironically, given Hillary’s harrumphing about the audacity of foreigners influencing American elections, the 1996 Clinton campaign assiduously courted foreign donors attempting to influence American elections–in anticipation of seeing their favors repaid by the winner.

After leaving the White House, Hillary complained of her straitened financial circumstances. Those soon changed, through the magic of her “charity”–the Clinton Foundation. The main beneficiaries of this “charity” have been herself, Bill, and daughter Chelsea. It is notorious for raising large amounts of money, very little of which goes to the causes (e.g., earthquake relief in Haiti) for which it was ostensibly intended–and large amounts of which go into salaries, travel, and “overhead.” Then there are passing mysteries, like how Bill gets paid $16.5 million dollars over a few years for being the “honorary” chancellor of a for profit education company (that is closely linked with George Soros).

With considerable justice, Putin critics look askance at his purported fortune and claim that it is evidence of his deep corruption. How can you possibly not say the same of Hillary’s wealth? For the Clinton Foundation was collecting tens of millions of dollars in contributions from corrupt governments (especially in the Middle East) at the same time as Hillary was dealing with these governments as Secretary of State. Purely a coincidence, no doubt! The Saudis are deeply, deeply concerned with the long-suffering Haitian people, aren’t they?

The nexus between the Clinton Foundation and Hillary’s role as Secretary of State shows a complete disregard for appearances of impropriety and conflict of interest, and reeks of pay-for-play. Indeed, one of the leaked DNC emails frets that “Clinton Foundation quid pro quo worries are lingering.” The DNC feared that more than her secret emails.

Such blurring of the lines between private interest and public office is also evident in Putin’s Russia, where Putin’s friends  (like the Rotenbergs and Gennady Timchenko) have profited handsomely in deals with the Russian state. There is of course suspicion that Putin shares in these windfalls. There is no suspicion that Hillary’s foundation has received windfalls from  governments with whom Hillary dealt as Secretary of State: it is a documented fact.

Hillary did her part as a high-ranking member of The Most Transparent Administration in History® by having meetings with donors, and then either (a) not recording these meetings in her schedule, or (b) the most recent revelation–burning her schedules! If there’s nothing to hide, why go to such lengths to hide them? (We can of course be completely confident that emails deleted from her private server contained only yoga routines and wedding plans, and no communications with foreign governments or their agents who are donors to the Foundation.)

Putin’s opacity is of course another subject of criticism amongst the Putin hating/Hillary loving crowd. Yet he has nothing on Hillary in that department. The entire email scheme was a pre-planned, preemptive coverup to prevent the release of information that could be used to hold Hillary to account. Putin also clearly understands the importance of the control of information.

And of course, when it comes to Russia in particular, how do Kasparov et al square their support for Hillary with this?:

The article, in January 2013, detailed how the Russian atomic energy agency, Rosatom, had taken over a Canadian company with uranium-mining stakes stretching from Central Asia to the American West. The deal made Rosatom one of the world’s largest uranium producers and brought Mr. Putin closer to his goal of controlling much of the global uranium supply chain.

But the untold story behind that story is one that involves not just the Russian president, but also a former American president and a woman who would like to be the next one.

At the heart of the tale are several men, leaders of the Canadian mining industry, who have been major donors to the charitable endeavors of former President Bill Clinton and his family. Members of that group built, financed and eventually sold off to the Russians a company that would become known as Uranium One.

Beyond mines in Kazakhstan that are among the most lucrative in the world, the sale gave the Russians control of one-fifth of all uranium production capacity in the United States. Since uranium is considered a strategic asset, with implications for national security, the deal had to be approved by a committee composed of representatives from a number of United States government agencies. Among the agencies that eventually signed off was the State Department, then headed by Mr. Clinton’s wife, Hillary Rodham Clinton.

The Canadian behind that deal (Frank Giurstra) and others associated with it have paid a mere $145 million to the Clinton Foundation. More bleeding hearts for Haiti, no doubt.

Indeed, there is a nexus between Rosatom and the email scandal. Politico(!) has documented numerous and extended lacunae in Crackberry addict Hillary’s emails. Most of the gaps are temporal: there are long time periods for which no emails on any subject have been produced. The Rosatom gap is different. During the entire period of her tenure, Hillary personally and the State Department generally were involved in Russian nuclear matters generally  (remember that Nunn-Lugar was operative until 2012) and Rosatom in particular. But despite the fact that there was extensive State Department cable traffic discussing the company, there was one lonely and innocuous email in what Hillary produced:

But then there is an instance where the State Department cable traffic rises and there are few if any Clinton corresponding emails. It’s the case of Rosatom, the Russian State Nuclear Agency: Clinton and senior officials at the State Department received dozens of cables on the subject of Rosatom’s activities around the world, including a hair-raising cable about Russian efforts to dominate the uranium market. As secretary of state, Clinton was a central player in a variety of diplomatic initiatives involving Rosatom officials. But strangely, there is only one email that mentions Rosatom in Clinton’s entire collection, an innocuous email about Rosatom’s activities in Ecuador. To put that into perspective, there are more mentions of LeBron James, yoga and NBC’s Saturday Night Live than the Russian Nuclear Agency in Clinton’s emails deemed “official.”

What could explain this lack of emails on the Russian Nuclear Agency? Were Clinton’s aides negligent in passing along unimportant information while ignoring the far more troubling matters concerning Rosatom? Possibly. Or, were emails on this subject deleted as falling into the “personal” category? It is certainly odd that there’s virtually no email traffic on this subject in particular. Remember that a major deal involving Rosatom that was of vital concern to Clinton Foundation donors went down in 2009 and 2010. Rosatom bought a small Canadian uranium company owned by nine investors who were or became major Clinton Foundation donors, sending $145 million in contributions. The Rosatom deal required approval from several departments, including the State Department.

When you’re the Dem darling, and you’ve lost Politico . . . . But she hasn’t lost the loudly anti-Russian, anti-Putin crowd, despite the fact that the stench of this particular Russian connection would make even a Rotenberg gag.

Oh, and Bill Clinton was paid $500,000 by Renaissance Capital, a Russian investment bank controlled by oligarch Mikhail Prokhorov. Clinton said “I’ve gotta pay the bills.” I guess baby’s too old to need new shoes. But the anti-Putin Hillary hive bats not an eye.

Putin critics also attack him-with good reason-for his high handed approach to the law. Who can witness what Hillary has done with regards to her server and her handling of classified information before, during, and after the fact and not conclude that she is lawless too, and also believes herself to be above the law? (FBI Director Comey’s excuse for her conduct is mental defect: she’s was too stupid to form criminal intent. He said this the day after Obama claimed that she is the most qualified candidate for the presidency since Jefferson. Maybe he meant George.)

Her complicity in the jailing of a hapless filmmaker to deflect attention from her failings in Benghazi also has more than a slight Russian smell to it: the case of the wife of a Kursk crewman who was tranquilized and bundled off while protesting against the Putin government’s handling of the sinking comes to mind. Going back to the beginning of her public career, Hillary’s desire to run roughshod over the law  was noticed during her time as a staffer on the House Judiciary Committee during the Watergate investigations. Legal nihilism is a term often used to describe Russia (Medvedev employed the term, in fact): it would be a fair way of describing Hillary’s attitude to the law.

When campaigning recently with Hillary in Charlotte (complete with a break from tradition by allowing her to speak from a podium displaying the Presidential Seal), Obama praised her for dedicating her life to public service. Whenever I hear that phrase, I reach for my wallet with one hand, and a airsickness bag with the other. This is particularly true when the alleged public servant is Hillary Clinton, who has served herself first, last, and always, grasping for more power, and more money. Putin, of course, often portrays himself as a mere humble servant, toiling ceaselessly for the benefit of the Russian people, for which he is paid a pittance. Both inveigh against the greed of others, while having fared quite well themselves. Both claim they are advocates for the little guy, while doing all they can to avoid actually spending any time with them.

I can understand disliking Putin, including because of his venality, corruption, lack of transparency as a public official, and disregard for legal norms. But if those Putin traits outrage you, you have to be outraged by Hillary too. Indeed, Putin is the product of a system that is notoriously corrupt and where the rule of law is more of an object of derision than an ideal. Hillary is contending for the highest office in a nation that believes that it operates according to a far higher standard (though her getting a pass for her flouting of the law with her private server calls those pretensions into serious doubt). For all his sins, Putin is not nearly the hypocrite Hillary is. And her coterie of Putin-hating supporters are as hypocritical as she.

Hillary’s Putinesque corruption and mendacity should be disqualifying. Her incompetence should be as well. She took pride in Libya, for crying out loud, and that was only one of the things that makes her the Mr. Magoo of international statecraft, merrily and blindly plunging ahead while leaving havoc and destruction in her wake.

But as shocking as these disqualifications are, they might not represent the greatest danger that she poses–which happens to be the very thing that attracts the neocons in particular to her, despite their professed dislike for Putin. As Libya demonstrates, Hillary is an adventurer with a predilection to intervention–another similarity with VVP (and whom the neocons berate for it). During her tenure at State, she had a reputation for advocating a far more truculent foreign policy than Obama. Libya is one example. Since her departure, she has been an advocate for a more muscular approach to Syria. In contrast, Trump has expressed skepticism about American intervention abroad.

The prospect of a corrupt, dishonest, not too bright, and demonstrably incompetent person as president should give anyone pause, especially so to alleged policy mavens. But neocons are overlooking all that, because she is the best prospect to give them the interventions-and wars-they want.

 

Hillary Doubles Down on Blame Putin! Fat Lot of Good It Will Do Her.

Hillary is officially going with the Putin Did It! strategy to distract attention from the DNC leak. This follows official DNC response of the initial reports of a leak which says the leak may be part of a “Russian disinformation campaign.”

No one from the Clinton camp or the DNC has disputed the veracity of the material released. So we have a novel theory: the leaking of actual information is disinformation. I’ll have to remember that one. It might come in handy someday. Again, though, two! two! two! logical fallacies in one: ad hominem and appeal to motive.

Clinton better get the spin machine in prime condition, because the really good stuff might be on its way: the Clinton Foundation emails were also hacked.

Let the games begin!

Pause a moment, though, and consider this. On the one hand, Hillary blames the Russians for hacking the DNC. On the other hand, Hillary claims that her private server was immune to hacking and had never been hacked.

Yeah. That’s believable.

I mentioned Hillary’s flying monkeys yesterday, and indeed, they are swarming out of the castle as we speak, screeching that Trump is Putin’s bitch. Prominent examples include Josh Marshall and Jeffrey Goldberg. (With Obama leaving, Goldberg is busy finding another throne to sniff.)

Politically I think this is a non-starter. Most Americans don’t really give a damn about Russia. They are not enamored with it, but they don’t dread it either. It doesn’t haunt their thoughts the way that it did in the Cold War. This in fact is something that drives the Russians generally, and Putin in particular, crazy. They would much rather be hated and feared than ignored: the irrelevant are ignored, but if you are feared, you matter. The Russians want to matter. They don’t to most Americans, which will mean that Hillary’s invocation of the Russian bogeyman will likely have little effect.

In the meantime, though, I am sure Putin is basking in the attention.

But what else does she have? Zip. So she’s gotta go with what she’s got.

It is also quite rich for Hillary to bemoan foreign influence on elections. For one thing, she is the woman who brought us Johnny Chung, Maria Hsia, James Riady, and John Huang. For those of you not of a certain age, these were sources of big (and illegal) foreign donations to the Clinton campaign in the mid-1990s.

For another thing, Bill Clinton was intensely involved in influencing the Russian presidential election in 1996. He took the “just win, baby” mindset to Russia, and frankly stated that the end (re-electing Yeltsin) justified any means:

The irony in all that is just too much, especially the turning a blind eye to Putin’s elevation part.

As for the conventional wisdom that Putin favors Trump, I am a contrarian. Trump is mercurial, unpredictable, and protean. He has been on every side of every issue. Anyone who believes that he can predict what Trump would do in office is deceiving himself. His current statements are probably the least reliable guide to his future actions. No one, least of all Putin, can have any confidence in predicting what a Trump presidency would be like. Even if he makes equivocal comments about Estonia today, he could turn around and send a division there when in office.

Hillary, on the other hand, is predictable, stupid, predictably stupid, and stupidly predictable. Putin has run rings around her before, and should be licking his chops at the prospects of doing it again.

The only reasons for Putin to favor a Trump election are that he wants more of a challenge, and he’s long gamma and hence relishes volatility.

Regardless of what Putin’s views are, facts are facts. Whoever leaked the DNC emails leaked facts. Moreover, it cannot be argue that the leak was selective, and thereby misleading: everything dropped. More leaked facts are almost certain to come, from the Clinton Foundation and perhaps even Hillary’s private server. And regardless of their provenance, the facts are damning.

The Medium is NOT the Message: Hillary’s Scheming Is

Wikileaks released over 20,000 documents from the Democratic National Committee. As one would expect when such a rock is turned over, this exposed a lot of disgusting wriggling creatures.

Yes, there is a lot of traffic regarding Trump. But the most damning material relates to the fact that the DNC was/is in the tank for Hillary, and schemed continuously and extensively to undermine Bernie Sanders.

The corruption of Hillary and the DNC is hardly surprising. It is her–and their–DNA. But it is illuminating to actually witness evidence of the machinations of this crowd.

One of the more fascinating aspects of this is the reaction of those who are at pains to ignore the content of the emails, and focus on Russia’s supposed  responsibility for the leak. Just a cursory scan of Twitter and the Internet revealed a disparate and rather motley cast of characters pushing this story, including John Schindler (status of pants unknown), BuzzFeed’s Miriam Elder, neocon thinktanker James Kirchick, and Gawker.

To some it is axiomatic. Wikileaks=Russia. At least Kirchick felt obligated to come up with a more elaborate theory. Putin wants Trump to win, and the leaked emails will enrage the Bernie supporters who are also Wikileaks and RT afficionados. These disaffected Berners will either not vote or will go to Trump.

Whatever. In these situations, ALWAYS use Occam’s Razor, and that cuts against such a baroque theory. The far more parsimonious explanation is that an outraged Bernie supporter in the DNC (you don’t think there are Feel the Berners working as IT geeks at DNC?), or an outraged Bernie supporter with hacking skillz, did it. Come on. Look around. A lot of hardcore lefties are outraged at Hillary’s and the DNC’s underhanded and dirty treatment of their guy. That’s a much more straightforward explanation than Putin Did It!

There are other things that cut against the Putin theory. The reflexive attribution of Russian control to anything coming out of Wikileaks undermines the impact of the leak. If the Russians want to hurt Hillary, they would want to use an outlet that is not widely associated with them, if only to deprive Hillary and her flying monkeys and her tribe of acolytes of a way to discredit the leak–which is exactly what they are doing. The Russians aren’t stupid. They wouldn’t rely on an outlet that could be discredited precisely because of its alleged connection to them when there are many other ways of releasing the information. It would be in their interest to use a cutout that is not associated with them.

Further, if Russian hacking is so powerful (and I agree that it is), the DNC emails would not be the most damaging material. Hillary’s server material and Clinton Foundation emails would be far more damning.

As for Schindler’s argument that (unproven and implausible) Russian interference in US elections is beyond the pale: even if Russia is involved, influence by revealing facts is a different thing altogether from attempts to influence by manipulation, lies, disinformation, propaganda, or coercion. What the leak reveals is that the DNC actively manipulated the US primary elections in order to benefit Hillary: that kind of influence is more malign than influencing by making that fact known. Keeping the DNC’s and Hillary’s machinations secret would also influence upcoming presidential election. It’s better that our elections are influenced my more facts rather than less, and to argue that these facts should be ignored because of their (alleged) provenance is to commit two logical fallacies: ad hominem argument (reasoning/facts are judged based on the source) and appeal to motive (arguments/facts are to be judged based not on their logic/truth, but the motive of the party making the argument/presenting the facts).

The irony-and hypocrisy-of those rushing to pin this on Russia in order to distract attention from the content is also remarkable. Some (like Miriam Elder) have been big Wikileaks and Bradley Manning supporters in the past. Funny how alleged Russian manipulation of Wikileaks escaped their attention when Assange was leaking things that hurt their political opponents, but all of a sudden becomes THE STORY when one of theirs is targeted.

But the irony and hypocrisy don’t stop there. The DNC emails reveal that it used Russian tactics that today’s critics of the DNC data dump have assailed in the past: paying people to troll political opponents and their supporters on Twitter and elsewhere, and using employees to participate in Astroturf “demonstrations.”

And there’s more! The Attack the Messenger strategy is exactly the one that the Kremlin has employed in response to leaks about it. Putin’s spokesman Peskov tried to discredit the Panama Papers by claiming that they were a CIA information operation. Those attacking Wikileaks today went ballistic. How are they any different?

No. The medium is not the message, and attempts to make it so are discreditable and fallacious ways to distract attention from the real message in the DNC emails: namely, that the party, and its standard bearer, are corrupt, unethical slugs who have rigged the nomination process to save a wretched candidate who couldn’t win fair-and-square despite her huge advantages. Regardless of who turned over the rock to reveal that, it’s a good thing that the world can see them for what they are.

 

 

For All You Pigeons: Musk Has Announced Master Plan II

Elon Musk just announced his “Master Plan, Part Deux,” AKA boob bait for geeks and posers.

It is just more visionary gasbaggery, and comes at a time when Musk is facing significant head winds: there is a connection here. What headwinds? The proposed Tesla acquisition of SolarCity was not greeted, shall we say, with universal and rapturous applause. To the contrary, the reaction was overwhelmingly negative, sometimes extremely so (present company included)–but the proposed tie up gave even some fanboyz cause to pause. Production problems continue; Tesla ended the resale price guarantee on the Model S (which strongly suggests financial strains); and the company has cut the price on the Model X SUV in the face of lackluster sales. But the biggest set back was the death of a Tesla driver while he was using the “Autopilot” feature, and the SEC’s announcement of an investigation of whether Tesla violated disclosure regulations by keeping the accident quiet until after it had completed its $1.6 billion secondary offering.

It is not a coincidence, comrades, that Musk tweeted that he was thinking of announcing his new “Master Plan” a few hours before the SEC made its announcement. Like all good con artists, Musk needed to distract from the impending bad news.

And that’s the reason for Master Plan II overall. All cons eventually produce cognitive dissonance in the pigeons, when reality clashes with the grandiose promises that the con man had made before. The typical way that the con artist responds is to entrance the pigeons with even more grandiose promises of future glory and riches. If that’s not what Elon is doing here, he’s giving a damn good impression of it.

All I can say is that if you are fool enough to fall for this, you deserve to be suckered, and look elsewhere for sympathy. Look here, and expect this.

As for the “Master Plan” itself, it makes plain that Musk fails to understand some fundamental economic principles that have been recognized since Adam Smith: specialization, division of labor, and gains from trade among specialists, most notably. A guy whose company cannot deliver on crucial aspects of Master Plan I, which Musk says “wasn’t all that complicated,” (most notably, production issues in a narrow line of vehicles), now says that his company will produce every type of vehicle. A guy whose promises about self-driving technology are under tremendous scrutiny promises vast fleets of autonomous vehicles. A guy whose company burns cash like crazy and which is now currently under serious financial strain (with indications that its current capital plans are unaffordable) provides no detail on how this grandiose expansion is going to be financed.

Further, Musk provides no reason to believe that even if each of the pieces of his vision for electric automobiles and autonomous vehicles is eventually realized, that it is efficient for a single company to do all of it. The purported production synergies between electricity generation (via solar), storage, and consumption (in the form of electric automobiles) are particularly unpersuasive.

But reality and economics aren’t the point. Keeping the pigeons’ dreams alive and fighting cognitive dissonance are.

Insofar as the SEC investigation goes, although my initial inclination was to say “it’s about time!” But the Autopilot accident silence is the least of Musk’s disclosure sins. He has a habit of making forward looking statements on Twitter and elsewhere that almost never pan out. The company’s accounting is a nightmare. I cannot think of another CEO who could get away with, and has gotten away with, such conduct in the past without attracting intense SEC scrutiny.

But Elon is a government golden boy, isn’t he? My interest in him started because he was–and is–a master rent seeker who is the beneficiary of massive government largesse (without which Tesla and SolarCity would have cratered long ago). In many ways, governments–notably the US government and the State of California–are his biggest pigeons.

And rather than ending, the government gravy train reckons to continue. Last week the White House announced that the government will provide $4.5 billion in loan guarantees for investments in electric vehicle charging stations. (If you can read the first paragraph of that statement without puking, you have a stronger stomach than I.) Now Tesla will not be the only beneficiary of this–it is a subsidy to all companies with electric vehicle plans–but it is one of the largest, and one of the neediest. One of Elon’s faded promises was to create a vast network of charging stations stretching from sea-to-sea. Per usual, the plan was announced with great fanfare, but the delivery has not met the plans. Also per usual, it takes forensic sleuthing worthy of Sherlock Holmes to figure out exactly how many stations have been rolled out and are in the works.

The rapid spread of the evil internal combustion engine was not impeded by a lack of gas stations: even in a much more primitive economy and a much more primitive financial system, gasoline retailing and wholesaling grew in parallel with the production of autos without government subsidy or central planning. Oil companies saw a profitable investment opportunity, and jumped on it.

Further, even if one argues that there are coordination problems and externalities that are impeding the expansion of charging networks (which I seriously doubt, but entertain to show that this does not necessitate subsidies), these can be addressed by private contract without subsidy. For instance, electric car producers can create a joint venture to invest in power stations. To the extent government has a role, it would be to take a rational approach to the antitrust aspects of such a venture.

So yet again, governments help enable Elon’s con. How long can it go on? With the support of government, and credulous investors, quite a while. But cracks are beginning to show, and it is precisely to paper over those cracks that Musk announced his new Master Plan.

Paths to Redemption and the Differential Susceptibility of Religions to Terrorism

Many human conflicts and struggles are universal, but they manifest themselves very differently in different cultures. One universal struggle is between religion and morals and carnal desire. Religions and cultures differ in how sins can be redeemed, and this strongly shapes how this conflict is resolved.

In evangelical Christianity, one manifestation of this struggle is extreme hypocrisy. As La Rochefoucault said, “hypocrisy is the tribute [or homage] that vice pays to virtue.” Public acknowledgement of sin, pledges of a devotion to Christ as the redeemer of sins, and efforts to bring other sinners to Christ are all paths to redemption. The greatest sinners, and those upon whom sins weigh most heavily (in large part because they have internalized the religion’s moral code), are often the most profuse in their public acknowledgements, most intense in their pledges, and most driven in their evangelizing efforts. This is what produces types epitomized in fiction by Elmer Gantry, and in real life by the likes of Jimmy Swaggert. Bible thumpers in public, drunkards and perverts in private.

For many Muslims, martyrdom in jihad against infidels is a path to redemption of sin. Many strongly believe that dying while killing in the name of Allah is a get out of hell free card.

This comes to mind after reading a story about the mass murderer in Nice, who was apparently violent, a drug abuser, a man with an “out of control sexual life” (including bisexuality–with septuagenarians!), and a violator of Muslim dietary strictures. His sordid and dissolute and unobservant life is being seized upon to claim that since he “did not practice the Muslim religion,” Islam is absolved of any role in his heinous acts, and could not have been his motivation.

To the contrary. The fact that Muslims believe that martyrdom in waging jihad against infidels is a path to redemption means that a widely-held set of Islamic beliefs contributes directly to the murderous acts of  men like Mohamed Bouhlel. It is precisely those whose sins are so great who are most in need of redemption, and who are most likely to turn to suicide terrorism as a means of obtaining it. That’s a path offered to them by their culture and religion.

Such tortured individuals are the most susceptible to the proselytizing efforts of ISIS and its ilk. These are the people who are most vulnerable to online radicalization. These are the people who are the perfect prey for radical recruiters who can readily exploit the intense cognitive dissonance of the extreme sinner who wants to be a good Muslim.

I therefore hypothesize that suicide terrorists and recruits to terrorist groups will be disproportionately “bad Muslims”: criminals, heavy drug users, and sexual deviants (where deviance is defined by Muslim mores). An unsystematic recollection of some notable cases (e.g., the 911 hijackers) provides support to this hypothesis, but it deserves more systematic testing. (There is conflicting information on whether Orlando shooter Omar Mateen is consistent with they hypothesis.)*

Violent, drug abusing, sexual deviants are less of a concern when they are utterly amoral, and uninterested in redemption in the confines of any religion: they harm mainly themselves, a small circle of people around them, and sometimes an unfortunate stranger. They become dangerous when such people believe in a religion that offers redemption through violent action. Then large numbers of random strangers are at risk. Eighty-three corpses in Nice are only the most recent example of that.

Religions differ in the ways that they allow adherents to resolve the conflict between belief and sinfulness, and the way that Islam allowed Mohamed Bouhlel to resolve his conflict poses a grave risk to the societies in which men like him live. Europe generally, and France in particular, are at great risk because they have large populations of young, unattached, and alienated Muslim men with high rates of criminality, drug abuse, and other anti-social behaviors. Combined with ubiquitous online proselytization and a network of (often very ascetic) recruiters (including recruiters in prison), this is a combustible mix. This population isn’t going anywhere, and in fact is growing due to Europe’s immigration choices, economic malaise, and demonstrated incompetence at integrating immigrants. Islam isn’t going anywhere either, and shows no signs of leaving behind martyrdom as a path to redemption. To the contrary, Wahhabism and other fundamentalist strains of Islam are ascendent, due in no small part to massive Saudi spending to spread them.

Connect these dots, and you draw a very disturbing picture. Neither of the two things that combine to create terrorism are readily amenable to change, and if anything appear to be growing in virulence. That portends ill for the future, not just in France, but world-wide.

* There can be another causal mechanism that would create such a correlation. A game theoretic explanation of strictures against suicide in Catholicism where sins can be absolved by confession is that absent eternal damnation for suicide, one could commit mortal sins to one’s heart’s content, confess, commit suicide immediately afterward, and go to heaven. Thus, damnation for suicide is necessary to make afterlife punishments for other sins a credible deterrent when confession absolves sins. If martyrdom while committing a terrorist act absolves one for other sins, the punishments for these other sins are less credible, and they are more likely to be committed, and martyrdom through violence is also more likely.