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Looks like Scottish Independence is a “No”

2014 September 18
by Ian Welsh

The calls are coming in.

Assuming they are correct, I think this vote is a mistake, and I note that having been given a clean vote to leave and a chance to live their own values, but having given in to fear; for me, at least, Scottish complaints about privatization of the NHS and other cuts to the social state will now ring rather hollow.

However, as with Greece voting to have its economy destroyed by refusing to take a chance on Syriza, people are voting their fear and for the status quo.  Older folks seem to want to just hang on, and are unwilling to take chances for a better future and they can’t really believe that their own elites are intent on impoverishing them, and, effectively, in many cases, killing them. (Because that’s what deliberate austerity policies do.)

The Great Complacency will come to and end; but people aren’t going to like how that happens.  Oh well.


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Scotland, England and Hegemonic States

2014 September 16

When you’re on your way up, everyone wants to join or be your friend.  When you’re on your way down, well, it’s the opposite.

Scotland, with free education and a belief in social welfare that England has lost, is on the edge of voting to leave in a referendum vote. It probably doesn’t hurt that they stand to gain a lot of money from North Sea oil, but the bottom line is “why stay with England?”

The reasons offered by England are essentially “on your own, you’ll be screwed”, with an ugly undertone of “we’ll make sure of it.”  There have been some efforts to offer more money and more independence within the UK framework so they can maintain social spending, but are those offers believable from Cameron, or from Millibrand, who has said that he won’t undo most of the austerity and destruction of social policies (including piecemeal NHS privatization) under the Conservate/Lib-Dem government.

Even if they are, it isn’t credible that some future PM, and by future we mean “less than a decade” will decide that Westminster needs the money more than Scotland.

We see in Spain, the Catalonians are trying to leave as well, with as many as 2 million on the streets.

This is simple enough: under an elite consensus of austerity, why stay?

The best argument for not breaking up the United Kingdom is that local elites won’t really be better: they still want to be part of the EU, they’ll still get on the austerity train, and if they don’t, the various threats by England and other elites will, in fact, materialize, and Scotland will be destroyed so it can’t afford to give benefits to its citizens.  After all, if Scotland leaves, who’s next?

The West, with a few exceptions like Norway and Finland (even Sweden is slipping) just doesn’t offer that bright shiny future to its residents any more. There is no real narrative of “this is just going to keep getting better”. To be sure, you may get a smartphone, but it’s used to tie you to your job 24/7 and spy on you, and your job is shittier than the one your parents had, which was shittier than the one your grandparents had, at least if you’re young.

There’s still a bit of narrative power left in Europe, as we can see by how some Ukrainians so desperately want to join, thinking they’re going to get the deal Poland got. (You’re not, you’re going to be destroyed by the IMF and Europe, with the full collusion of your own oligarchs, who are what you need to deal with first.)  But there isn’t much.  The WTO can’t get new rounds through, and the new, truly terrible bilateral deals which are going through are vastly unpopular, and designed to reduce the bargaining power of workers so that even more money flows to elites.

And so the decline in legitimacy of the West will continue: the narratives are broken because the reality is broken.  Not everyone has got the message yet, and there are still many countries even worse off, but the West, for over 90% of its population, is in decline.

Devolution will only work if the people who devolve don’t assume it’s a solution by itself and stay right on top of their local politicians. Otherwise those pols will turn around and betray them as well.  If those pols don’t betray, assume international elites will want any new counter-examples to the inevitability of austerity crushed, and will make sincere efforts to do so.

Scots who think they can devolve and stay on the British pound are, thus, making a mistake.  Likewise it is unclear to me that they should stay in the EU, after how the EU has treated the PIIGS.  There is no “us” in the EU, only elites with interests: if they perceive it is in their interest for Scotland to prosper (they might, if it can be sold as a poke in England’s eye), then they will. If not, they will have no hesitation in crushing Scotland’s economy.

Best of luck to the Scot… and to the Catalonians.  The West has failed, and must be reborn.  Let us hope independence for smaller states is part of that rebirth.


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Obama’s Speech on War with the Islamic State

2014 September 12
by Ian Welsh

Let’s just quickly point out the obvious: air power only works if you have effective ground troops backing it up, or your enemy is easily dissuaded from war by losses of infrastructure. Otherwise it wrecks great destruction, and does little more.

To put it simply, this strategy will certainly help those fighting the IS, but it won’t make that big a difference, and it isn’t new, it’s what the US has been doing for some time.  Failure to coordinate with Syria is a mistake, and the only people in the region who have significant numbers of troops capable of defeating the IS are Iran and Hezbollah.  Hezbollah is unlikely to move large numbers of troops into Syria out of fear of Israel attacking them, and there is no assurance Obama can give them of that not happening, because America answers to Israel, not Israel to America.

Meanwhile the US is still giving arms to so-called moderates like the FSA, which wind up in the hands of ISIL.  The Peshmerga have proved largely incapable, though they are more willing to fight than the pathetic Iraqi army, and the IS is filling up with ex-Baathists: very capable soldiers.

The alliance is also laughable: Turkey has been funneling weapons to the Syrian opposition for some time and Saudi Arabia is the spiritual home of the form of Wahhabism the IS believes in.  That said, I do believe that the Saudi royal family is soiling themselves over the IS, because their ideology requires them to overthrow the corrupt rulers of Saudi Arabia and conquer Mecca as part of their caliphate.  The Saudi royal family deserves nothing more, this is an exact result of their pushing Wahabbism as the ideology of Jihad for decades.

And so it goes.  Obama hasn’t managed to fight a war yet that didn’t destabilize multiple countries.  I wouldn’t expect this to be any different.


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On Truth and Burning Bridges

2014 September 10
by Ian Welsh

Over the last few years, I burned a lot of bridges: first on private e-mail lists and second on twitter (and a little bit with unwelcome posts here.)

After Obama got into office and made it clear that he was going to ramp up drones (which I knew and could not publish); and that he was going to drive the West into permanent depression (which I knew and wrote repeatedly); and my compatriots, by and large, fell to their knees and lauded him, even in places which later turned on him, I became, not angry, but enraged.

There were three camps on this:

1) Those who knew Obama was going to be a disaster and would not say it, because he was popular and speaking against a popular president who had just bought the Netroots and who most netroots citizens believed in, seemed like a way to lose readership or followers.

2) Those who believed that Obama was the Panglossian choice: this is the best we can get, the best of all possible worlds.  That didn’t mean good, that meant bad, but better than terrible, so suck it up.  Billmon falls into this camp on economic policy (the bailouts were the only politically possible policy and this is the best of all actually possible worlds), and I had a huge blowout with him last year about on twitter.  He’s brilliant, but…

3) Those who believed and many of whom still believe that Obama was just swell; FDR reborn, who would (and has) accomplished more than FDR every did!

We all have our own truths and determining truth is a problem. I thought then that Obama might well be a one term president, and was wrong.  But on the economics I was exactly right; and on foreign policy I was generally right: I knew that foreign policy was going to be a fiasco when he put Hilary Clinton in charge, because the one major area Hilary was to his right on was foreign policy.  (Plus the whole drone thing.  The only major candidate to say he didn’t believe in the war on Terror was Edwards, but when the unions decided not to back him (largely from gutlessness, in my opinion) he was done.)

I also predicted, following Stirling Newberry, that on civil liberties and constitutional issues he would institutionalize Bush.  He was not the anti-Bush people imagined, but Bush’s heir, despite being a Democrat.

I got into blogging to, as the terrible cliche goes, change the world. I did not get into blogging to be a courtier to power, kissing the feet of those in power when I knew they were doing or going to do terrible things.

Add to this significant undiagnosed health problems, and I spent years angry.

I’m not someone who thinks that anger is always bad: often it gets people up off their asses.  In the same way that hating your job means you should change jobs, and being unhappy may be a sign that something is wrong with your situation not with you, and you shouldn’t self medicate (you cannot explain the massive increase in depression and many other mental illnesses over the past century using individual factors, it is clearly a social problem, with social causes).

And so, for years, I cut people dead, and cut myself off from much of my old network (though certainly not all.)  I look back now, calmer, and wonder “were these fights I needed to engage in?”  I think—probably not, and yet, and yet: we lost and too many people just wouldn’t admit and made excuses for terrible policy.

We got a president who is worse on civil liberties than George Bush, who is still destroying countries, whose policies in combination with the Fed have lead to more than 100% of all gains going to the top 10% (and really about the top 3%); with a decrease in wealth and income for the majority of Americans and a ton of Europeans.

Obama may have given Americans a shitty version of universal health care (sort of), but in virtually every other way he is an unmitigated disaster.

And it was obvious way back, or it should have been.  And people didn’t say who knew it; or didn’t know who should have because, let us be frank, they wanted the first African American president, no matter what, even if he was a right authoritarian and they wanted to live in a fantasy land where just electing a Democrat, any Democrat would fix things.

The simple truth is that the baby boomers are done.  Their positive legacy is the improvement of women’s rights and gay rights (African American rights were won by the Silent and the GI generations.)  Their negative legacy is an erosion of every other type of civil liberties that matters, right back to the Magna Carta; the vast erosion of America’s real economic power; the end of American egalitarianism and huge numbers of needless wars and deaths that have made America hated in large parts of the world.

As usual, some of my readers will object to this broad brush, but take it another way: old and middle aged people (Gen Xers too, a noxious generation politically); have had their days at bat, and those of us on the left have failed and failed and failed.

So it’s going to be another generation’s job to fix the huge mess that has been created: politically, economically and environmentally.   That doesn’t mean there’s no job for older folks: but the young people will choose which older folks to learn from, follow and emulate.  The job of those of us who are older, who lost, is to prepare the ground for the next war; the next battles.

If we do so, maybe we can keep the death toll from what is coming as low as a billion people.

Maybe.

So be it.


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Rumors of the Ukrainian Rebels demise

2014 September 9
by Ian Welsh

were exaggerated.  Or rather, the information in the Western press was essentially propaganda.

I think it’s worth acknowledging that I swallowed it, only to be corrected by a number of readers.  The Ukrainian rebels were tougher than I expected, Russian support seems to have been more significant and the Ukrainian military was simply not up to the task.  They couldn’t win the street fighting.

This means that Russia still has a strong negotiating position with regards to Ukraine’s future: their preferred option, of course, is federalization and forbidding NATO expansion into the Ukraine.

Meanwhile we must continue to keep an eye on sanctions.  The risk here is real sanctions being imposed on Russia, Russia retaliating with a gas shut off and an economic collapse in Europe.  Note that the key player here is actually China, who can easily keep Russia afloat if they choose to (China is printing far more money than the Fed was at the height of its unconventional monetary policy.)  The West keeps assuming it is the only game, and that it controls the money spigots: shut them off and they can crush anyone.  That is no longer true.  The question will be “what does China want to keep Russia afloat, or alternately, from the West, to cut them off.”

In my opinion, while China and Russia have some differing interests, those pale compared to their need for each as allies against the West.  The American Foreign Affairs and security establishment has been clear that they want to pivot against China, whom they see (correctly) as the largest threat to American hegemony.  For China to allow the West to crush Russia would be a colossal mistake, especially when the cost of keeping them alive is not that significant a world awash with printed money.

As for Europe, they are being fools and they will pay the price for it.  Satraps of a self-interested and cruel hegemonic power are never treated well, and Europe does not need to be a satrap, yet chooses that path against their own self-interest.

So be it.


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Rumors of my demise

2014 September 8
by Ian Welsh

Sorry for the hiatus, regular posting will resume soon—I was both moving and traveling at the same time.

The End of the Rebels in the Ukraine and the Ukraine’s Future

2014 August 20
by Ian Welsh

We’re down to street fighting in Donetsk.  The Russian leaders resigned in the last two weeks.  The rebels appear to be done, at least in terms of their conventional military phase (of course, I could be wrong depending on how much stomach Ukrainian troops have for house to house fighting).  It seems like that would only change if Russia decided to actually invade, and that seems unlikely (though predicting Putin’s decisions is always difficult.)

The Eastern Ukraine, bottom line, does not have enough support for joining Russia, nor coherent enough borders to avoid the West and Ukraine running an insurgency in it.  Conquering it would leave Russia controlling territory which could turn into a bleeding ulcer if it didn’t join peacefully (unlike Crimea, where the population overwhelmingly wanted to join, and where the geography is highly defensible.)

I’m not sure this is the “right” decision for Russia, because I can’t see that Ukraine won’t become a NATO member rather soon if Russia’s preferred solution, federalization with anti-NATO guarantees does not happen.

However, Russia does still have leverage: there are enough Eastern Ukrainians who will now hate the central government and want to join Russia, and the border is long enough and porous enough, that Russia can easily support an open ended insurgency within Ukraine.

Likewise, Winter is Coming, and the prospect of turning off the gas to the Ukraine and Europe will become much more effective.  Russia may believe that these two factors will enable it to get its minimal demands.  I doubt it, personally, because NATO expansion to Ukraine is something the US wants desperately, but we’ll see.

We move now to Ukraine’s future.

Dismal. Absolutely dismal.

Ukraine will be the second Greece of Europe, and soon.  Pensions slashed by half, gas prices through the roof, crown jewels sold to Westerners, civil servants slashed to the bone.  Its industry is integrated not with Europe, but with Russia, and Russia will move to get rid of its dependency on Ukrainian factories as fast as it can, especially as some of those factories create key defense equipment, and the Ukraine obviously cannot be counted on to supply them in any time of crisis, going forward.

Those factories are not competitive with Western factories, and when energy prices skyrocket, they won’t even be competitive with Russian factories.

Ukraine has some hydrocarbon reserves (though much will be lost with Crimea); it is an agricultural breadbasket, and that’s about all it has going for it.  Again, the economy will be opened by the IMF to the West, and whatever is worth buying, and throws off actual profits or can be downsized and firesaled, will be sold to Westerners.

Ukrainians, including the Western Ukrainians who think that joining the West will solve their problems, are about to find out that Russia’s deals and treatment were far more kind than anything the IMF will do to them.  Eastern Ukrainians, having lost a war, and being FAR more dependent on Russia, will find their economy devastated within a few years.  (This will make them far more willing to resort to violence again, of course.)

The key thing to watch now will be the negotiations between Russia, Ukraine and Europe to see if there are any NATO guarantees.  If not, well, we’ll see what the Russian response is.  Internally the Russian public does not want to attack Ukraine to take Eastern Ukraine, but that could change if an atrocity occurs or is created.  More likely, support for an insurgency, then the Ukraine building a huge wall across its border, and as noted, economic ruin.

This game isn’t over yet.  In a few years Russia may yet wind up with the East, with its citizens practically begging to join.  Not mostly because of anything Russia does, but because of what the IMF does.

Note also that efforts to de-dollarize the world are ongoing by the BRICS in general, and China in particular, and Russia is moving to decouple as much of its economy as it can from the West. In a few years the West will have far fewer levers to pull to hurt Russia.


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Japanification and the end of the American Dream

2014 August 14
by Ian Welsh

Stirling Newberry and I have been writing about Japanafication for years—on blogs, at least since 2004.

Those of us who are old enough remember when Japan was THE miracle economy.  Technologically advanced, vibrant and rich.  It was eating America’s lunch, and most other countries.  For peak alarmism at this fact in a fictional form, read Michael Chrichton’s Rising Sun.

Tokyo real estate was worth more than the entire world’s real estate combined.

Then the bubble crashed.  Japanese policy was to protect the banks, and to bury the bad loans on the books.  They undertook literally decades of stimulative policy, mostly pouring useless concrete (exactly the wrong thing to do unless your country really lacks that sort of infrastructure, which Japan did not.)

To put in terms familiar to my readers, they extended and pretended.

Japan went into semi-permanent stagnation.

We have, now, the news of a quarter drop in GDP of 6.8% annualized for the last quarter.  (This is blamed on increased sales taxes, but it was coming anyway.)

The long stagnation is over (it’s been over for a bit).  Japan is actually in decline.

This is important because Japanification was always the plan for the US after the bubbles: extend and pretend, stagnate wages and employment.  Pretend.

But there were significant differences between the two countries.  Japan started with massive savings and a huge trade surplus.  It is now in trade deficit and savings compared to debt are way down.  Economic equality was relatively high, as well, spreading demand.

America came out of the financial crisis with a trade deficit, a pathetic savings rate and massive inequality.  This is why I predicted that Japanification would not work in the US.  It could not, because there was no saved fat to be used to create the long bright depression the Japanese had.

This brings us to stimulus and development (not just for developing countries).  The money must be used not for pork projects with no follow on, but to create new industries or to bring money off the sides into the economy.  Pouring concrete (and not even bothering to shore up nuclear reactors in areas which were not electorally viable) was pointless in Japan.  Buying bonds is pointless and even harmful.

Likewise you cannot have real open trade flows and expect to keep whatever you are building.  You build it, you make it work and once an industry is systemized, it can be moved to a low cost domiciale. It takes deliberate government policy to prevent that.

Monetary policy in Japan could never work, because the money went to the wrong things, and much of it immediately decamped overseas in the so-called carry trade—borrow low in Japan, buy securities somewhere else where they had a higher return.

All of this should be obvious and uncontroversial. It is not, it flies directly in the face of modern neo-liberal theory and it is that theory, in the face of decades of failure, that the Japanese followed.

The human capacity for ideologically driven stupidity and atrocity is endless. (Those who do not believed me are invited to study Church history and its effect on society from 1000 AD to 1900 AD or so.)  People will ignore the evidence in front of their eyes, years of failure and continue doing the “safe”, “orthodox” thing no matter what the results.  This is true even for well-meaning people.

Of course, in the US, Japanification has a US twist: it massively increases the wealth of the already wealthy, through unconventional monetary policy.  American leaders are far too greedy to make Japanification work: any surplus, or room to lend, or room to print money, must be given away to rich people as quickly as possible.

I point out, finally, that the first sin in Japanification was buying the bad loans.  This was a huge mistake in the US too, bailing out the banks and not forcing them and their share and bondholders to take their losses was the main mistake of the financial crisis.  Yes, things might have been worse if the US had done so (though steps mitigating the hit on the regular economy would have been easy enough to take with the 4 TRILLION dollars used bailing out rich people), but even so, the US would have recovered better afterwards.

Instead the US has an economy in which 90% of the population has seen an actual decrease in income and wealth, while 10% has seen an increase: with the 1% and the .1% and the .01% benefiting most of all.

Japanification was the plan for America. It isn’t working, it could never work, but the policies in place are nonetheless doing what is most important to their architects: they are making the rich richer, and everyone else poorer and doing it quickly.

The Bush years were the long suck.  This is the deep dive, and remember, the US isn’t in recession yet (though it is in depression).  The pain when it happens (and absent nuclear war, there is always another recession), will be unbelievable.


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Belief

2014 August 12
tags: ,
by Ian Welsh

The rise of the ISA is a demonstration of the simple principle Napoleon once summarized as “The moral is to the physical as ten is to one.”

We have seen this for years, and the lesson is never learned by the West.

People who believe in what they’re fighting for, who are willing to both kill AND die are far better soldiers (and pretty much everything else) than those who aren’t.

This has been demonstrated, over and over again.  The Chinese in Korea, the Vietnamese, Afghanistan, Hezbollah.

Moreover endless low-grade war is moronic.  I once noted that Hezbollah was the perfect Darwinian organization; it had learned all the lessons Israel had taught.  It was used to fighting while outgunned and outnumbered.  It learned when not to use modern communications, to operate as a secret state, and so on, from Israel.

The modern form of electronic and surveillance warfare that the US practices is all very nice, and it is powerful, but the US and its proxies have been at war with the Islamic world for decades  The West, basically, does not learn. Its militaries are not getting better (though many will claim they are), except in terms of equipment.

The militaries of those who fight the West, on the other hand, are improving by leaps and bounds.  They move fast, give power to local commanders, isolate and destroy enemies, and regularly surprise their foes.  The ISA, to an extraordinary degree, chooses where to fight and when.  Of course they are winning.  The only people in the Middle East who are almost certainly the ISA troops equal are Hezbollah (and I would expect, their betters.  We’ll find out.)

When you fight wars as a superior power, you want to make them quick, over and out.  An America which invaded Irak, stayed in Baghdad for only two months, and installed the Colonel of its choice as the new leader would still be a US which terrified the Islamic world.

The ISA, I suspect, has another great advantage over the militaries it faces.

It doesn’t use much in the way of electronic communication (those commanders who do, get dead.)  This means that once units are given orders, the local commanders are free to execute those orders as they see fit, rather than being micromanaged by generals in the rear line.  No single person, or even staff, can react as quickly as the commanders on the ground can, or as appropriately.

The sheer stupid of Israel, of America, of the West is stunning to behold.  “Here, let us teach you how to beat us by engaging you in years of inconclusive warfare.”

The correct policy, from a hegemonic point-of-view (not what I would prefer), is to let them have their governments, let their elites rule, and if they get out of hand, knock them over.  Maintain the fear.  Let them get a bit soft and fat, let them have something to lose.

Failure to do this, and coddling of Saudi Arabian Wahhabism, has led to the rise of a truly barbaric form of militant Islam, which also happens to be startling effective on the battlefield.

Don’t teach people how to actually fight you.  Don’t support barbaric regimes like Saudi Arabia’s in exporting their loathsome ideology.  If you’re going to be an imperialist, learn how to actually play the game.


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It seems the Kurds had to retreat because they ran out of ammo

2014 August 10
by Ian Welsh

No, really.

Maybe instead of giving weapons and ammo and money to the Iraqi army so they can abandon it on the field to ISIS (now calling themselves the Islamic State), the US should be supplying the Kurds, who will actually fight.

Just a thought.

As for Iraq, the government policy of trying to fiscally strangle the Kurds is coming back to bite them,hard.  If they’d let the Kurds sell some oil, the Kurds might be holding ground.

I’m sure the supply situation will change. Once it does, there’ll be a real test of the Kurds ability to defeat ISIS.  They’ve taken two towns back with American air support, but they will have to do far more to defeat ISIS.

I suspect part of the problem here is that others who could help, like Iran, Syria, and Turkey are not doing so, since they all have Kurdish minorities and rather like the idea of Kurdistan being defeated and Kurds being slaughtered.

That’s a big mistake.  The Islamic State is far more dangerous to them than the Kurds ever were.


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