Tag Archives: Russia

American Oligarchy

Former president Jimmy Carter is now the most prominent figure to warn of America becoming an oligarchy. This term, “oligarchy,” is generally applied to post-Soviet Russia, where it took on a special meaning beyond the dictionary definition.

Oligarchy

When the Russians tried to liberate their economy, all of the important assets – oil fields, power plants, and so forth – ended up in the hands of people with political connections. The oligarchs now control the economy, the government, and the state security apparatus.

It is painful to watch a formerly free economy, like ours, degenerate into the same condition. Russia simply failed to privatize properly her state-owned enterprises. Our shame is much greater. We are standing idly by, as an emerging oligarchy takes control of our government and our economy.

The so-called left and right have made common cause. The left loves government meddling in private enterprise – while the right thinks it is protecting same, when in fact they are only protecting entrenched corporate interests. We have written before about this mote in their eye.

The bailout of General Motors nicely illustrates this convergence. The left was able to claim they were “saving jobs,” which, as we explain here, is a chimera. Capitalism, as Detroiter Seth Godin explains, means letting incompetent companies go bust. Keeping zombie companies alive, with taxpayer money, prevents the creation of new jobs in vibrant new companies.

Not only should Congress facilitate the organized bankruptcy of the Big Three, but it should also make it easy for them to be replaced by 500 new car companies.

Our auto industry is a ward of the state, as is Boeing. Banking depends on the Federal Reserve’s largesse. Mortgage lending, and thus the housing industry, depends on the Fed and the FHFA. High tech avionics and robotics, obviously, are funded by the military. Including the Pentagon, as much as 20% of America’s labor force may depend ultimately on tax dollars.

Competition is what once made our economy stronger than the command economies of Russia and China. Even as their leaders are trying to wean China off state owned enterprise, we are allowing our economy to be nationalized by stealth. Businesses are capitalist when they start up but, once they are in a position to buy favors from the government, they become statist.

It is easy to see this unholy alliance of government and big business (and big unions) as a statist conspiracy. Jeremiah does not see conspiracy, however. He simply sees moneyed interests buying influence – to make more money – and government officials selling it, with a revolving door between the two.

Here is a long article in the New York Times explaining how the Clinton family raked in a little over $35 million during a mining rights transaction involving a Russian company and uranium in Wyoming. We write “during,” of course, because we don’t want to imply anything so crass as an outright sale of the State Department’s approval. Oh, and they paid Bill Clinton $500,000 to make a speech.

As the Russians gradually assumed control of Uranium One in three separate transactions from 2009 to 2013, Canadian records show, a flow of cash made its way to the Clinton Foundation.

America is being looted, and all of our assets will soon be in the hands of an oligarchy no different from Russia’s. We will be renting tiny homes from Blackstone, on a tiny stipend from HUD. Jeremiah has been watching this for a long time, and he can tell you that the pace is picking up. There has always been corruption, of course, but nothing so big and brazen as what we’ve seen lately.

Unfortunately, we don’t have any policy recommendation much better than those naïve calls to “clean up government.” One possibility might be to dismantle the regulatory agencies, the tax preferences, and corporate welfare. At this point, a return to laissez faire would be just as painful for the (faux) right as for the left.

This is not to endorse laissez faire, mind you. That would mean big setbacks for labor and the environment. The idea would be to “drain the swamp.” The less power government has over business, the less opportunity for corruption. Unable to buy favors from the state, companies would again be forced to compete.

Admittedly, this is not a great solution. At this late stage, it’s hard to imagine the oligarchy being rolled back by any means, and certainly not by the same voters who allowed it to develop in the first place.

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Conspiracy Duckspeak

We were struck by this headline, Conspiracy Theories Abound in Nemtsov Murder. Jeremiah is intrigued by the increasing use of “conspiracy theory” to designate views outside the accepted mainstream. He has debunked a few, as here, and supported others.

The mainstream view is that the Putin regime was behind the murder. The conspiracy view is that some group of agitators, like the Ukrainian resistance or Russian nationalists, killed Mr. Nemtsov as a provocation. There are plenty of motives to embarrass Putin and goad Russia into some course of action or another. As for means and opportunity, President Putin is much more likely to arrest his enemies than to have them shot dead on a high street in Moscow.

This is not to play armchair detective. On the contrary – at this early stage of the investigation, no one should rush to judgment, and no theory should be dismissed out of hand. What we would like to see, as a gesture of good faith, is an invitation for German experts to participate in the investigation.

A right-wing media star drops dead… a coroner’s technician dies weeks later… right-wing blogs erupt! Seven months later, we know the technician died from arsenic poisoning.

Here in America, if an outspoken opposition leader dies under suspicious circumstances, the conspiracy theorists are those who suspect the government. Yes, we mean Andrew Breitbart, a strong young man who dropped dead from a “massive” heart attack while walking his dog – hours after making himself inconvenient for the Obama administration.

We might also include reporter Michael Hastings, whose Mercedes exploded after striking a palm tree in Hollywood. Of course, American spooks have the good taste to make it look like an accident – not like that maniac, Vladimir Putin. If you look into any of these stories, including the poisoned L.A. technician, you will read “conspiracy theory” prominently in every one.

Note the symmetry here. Of suspicious deaths in America, the crazies are those who suggest the government might be involved. Of suspicious deaths in Russia, the crazies are those who suggest the government might not be involved. That’s because political assassinations don’t happen in America. Right?

All of this just goes to show that you must make up your own mind. Some theories are indeed crazy, but when the press tells you a theory is crazy – that just shows whose pocket they’re in. Globalism, for instance, is a strong movement with institutional support and outspoken advocates – yet, for some reason, people outside the movement cannot talk about it without sounding crazy.

In the end we shall make thoughtcrime literally impossible, because there will be no words in which to express it.

This is a lot like the way the government controlled speech in Orwell’s 1984. Their language was designed so that it was grammatically impossible to express dissent. Anyone who tried, would sound like an idiot. They called it duckspeak. We call it conspiracy theory.

See also: Written by the Victors

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Follow the Money

Since we covered the drop in crude a month ago, prices have continued to fall. An updated chart is below. A commodity crash looks like any other crash. If you are holding oil stocks or futures, you want to get out today because it may go lower tomorrow.

This is worse, actually, because everybody knows the other guy’s cost of production. Here in America, shale oil is comparatively expensive – and subsidized with cheap (relative to risk) financing. The producers best equipped to endure price pressure are the Saudis, and they know it.

Crude

Yesterday, we read that the oil crash is not a problem for Russia because the ruble is also crashing. Jeremiah enjoys the unique insights at Zero Hedge, but this is the dumbest idea ever. They printed a chart showing that the price of oil is stable – in rubles. All this proves is that Russia has two crises, and they’re related. So what if oil consumers in Russia have a stable cost? Their purchasing power is still getting crushed.

This is an example of “reasoning from your conclusions.” The author must have some thesis about the Russian economy, and he’s looking for a way to support it. Maybe he’s long Russian stocks. The key to understanding the world is always to have an unbiased model of reality. As Saint Francis said, “Seek first to understand.” Only then is it safe to make investments – or public policy. Jeremiah is not even interested in the stock market. We only follow it because of Mark Felt’s advice.

Some pundits say the Saudis have spiked the price of oil because America asked them to help crush the Russian economy. That’s a little conspiratorial, but it does explain the (one) cause and effect. Our original post was more market oriented, and held that the target is actually marginal American shale producers. Only the Saudis know what went into their analysis, but we’d like to believe it was based on maximizing their long term revenue.

The catalyst could have been any early warning of lower prices to come. Destroying Russia? How about a slowing global economy? One would certainly want to be proactive about that – or Venezuela. The wheels have been coming off the Bolivarian Revolution since Chavez died. It was only a matter of time before a glut of North and South American supply ran into waning global demand. The present crash was unpredictable only because a key participant chose to force the issue.

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Paging Garry Kasparov

You know how, when you have two pieces and a pawn tied up attacking Q5, you can simplify the position by making an exchange? Alternatively, you can keep the pressure on and extend the attack to some of the defending pieces. That’s called “playing for complication.” It favors the stronger player, the one with greater mental stamina and determination. Let’s review the game so far.

“We are certain that the revolutions in Georgia and Ukraine are shaping the new wave of liberty in Europe”

  • In 2004, Ukraine’s orange revolution aligns that nation with the West, but it remains politically divided. For ten years, the West fails to consolidate this position, mainly because the EU is stupid and shortsighted.
  • In 2008, during the Beijing Olympics, Russia invades Georgia on a pretext, retaining South Ossetia and Abkhazia. This is some prime Black Sea coastline.
  • In 2013, Russia protests the installation of an antimissile defense system in Poland, and America backs down. Only during the Cold War were defensive systems considered “destabilizing,” a parallel the State Department chooses not to notice.
  • Also in 2013, revolution threatens the Assad regime in Syria. America makes vague threats about military intervention, and then allows President Putin to handle the removal of chemical weapons from that nation. This procedure keeps Assad alive and in power.

Having rescued Bashar al-Assad from an ugly death, like fellow dictators Saddam Hussein and Muammar Qaddafi, Russia needs no treaty to guarantee its ongoing control of Syria. Likewise, having seized Crimea by force, Putin can easily keep Ukraine unsettled enough to prevent its ever recovering, rearming, or joining NATO. He can afford to let these positions simmer – the “complication” described above.

Russia has said it will not allow use of force to be considered, even in the event that Syria fails to properly comply with the conditions.

Do not think, as John Kerry does, that this is a crude game played only with tanks. The Kremlin knows how to fight with trade and diplomacy, too. By extending his front southwards into Syria, Putin gains yet more control over Europe’s gas supply, and he will soon ink a Yuan denominated oil contract with China. He also holds the spoiler vote on sanctions for Iran, which nation was the ostensible reason for missile defense in Poland.

01-lavrov-clinton-reset-button

This game is complicated and dangerous, and millions of lives hang in the balance. Our State Department has not had the brainpower to play at this level since the glory days of Brzezinski and Kissinger.  They are doing “pivots,” “resets,” and handing out plum posts to campaign donors. John Kerry is an embarrassment. Victoria Nuland is an embarrassment. The Kremlin insults our people with impunity. It’s time to get serious.

See also: Transcript of Leaked Nuland Phone Call

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Filed under Foreign Policy

Interesting Times

rising_sun_japan_234Last week, we reported that a Russian paper had called President Obama a “communist.”  Jeremiah joked that the apocalypse must be at hand.  This week, we find the foreign minister of the Philippines calling for the rearmament of Japan.  In case you don’t remember, the Philippines were invaded and brutally occupied by the Empire of Japan – right after Pearl Harbor.  This announcement marks its anniversary.  That would be like, say, Poland asking Germany to rearm.

Every so often, world history comes to an inflection point.  It’s a fact of nature, like sunspots.  This is the root of apocalypse mythology.  As America declines, new powers will rise – and old powers will dust off their weapons.

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Obama Communist, Says Pravda

Maybe these are the “end times” after all.  Here is an editorial in Pravda, calling President Obama a communist.  In case you don’t remember, Pravda used to be the official newspaper of the Soviet Union.  In modern Russia, only rubes still embrace communism.  The editorial cites rhetoric and policy of Russian President Putin, painting him as a conservative, “like Ronald Reagan.”

We are reducing taxes on production, investing money in the economy … There are no grounds to suggest that by putting responsibility over to the state, one can achieve better results.

That’s right – Putin as Reagan, warning on the threat of communism in America.  We are through the looking glass, now.

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Adventures in Doublespeak

Today’s lesson is “antimissile system … a grave danger to Russia’s security.”  The Bush administration had planned to deploy a missile defense system in Central Europe.  Consider, for a moment, how an anti-missile system might be a threat to Russia’s security.

To be threatened, those Russian missiles would first have to be launched – at targets in Europe.  Evidently, Mr. Putin feels that Russia’s security depends on its ability to rain down nuclear destruction on Poland. Orwell would be proud.

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