Sunday, August 02, 2009
The comments of a well regarded financial analyst follow after my modest words, some of which some of you may have seen.
The American people have become OPM addicts. They have yet to realize that there is no such thing as Other People's Money. Originally OPM was distributed by the government during balanced budget days as permitted by the second part of the Income Tax Amendment to the U.S. Constitution. It took Congress little time to learn that distributing OPM was a great path to reelection and the prestige and benefits that ensued. It worked so well that another privileged class of citizens was established -- the mandarins, unelected, on the committee staffs and in their own offices. Just like the Mings and the rest of the Chinese dynasties those elected could then pay attention to lofty ideas which would assure their position by securing contributions from their large money supporters while delivering OPM in the form of bread and circuses to their Districts.
We had been formed as a nation based on the idea that the elected viewed their position was temporary and gave them an opportunity to serve. Foolish drafters. I measure the growth of government by the increasing number of concrete edifices constructed in the District of Columbia and environs. Supposedly to provide nesting places for our elected representatives, they are in fact homes to the permanent governing class -- the unelected mandarins -- who remain forever, serving as they did the dynasties of elected officials in ever increasing numbers.
This has been going on for decades. The Senior Executive is limited to two terms. Legislators can last forever, or as long as the Depends supply holds out.
But it costs tens of millions to be elected to Congress for a two or a six year term for a salary, benefits, and prerequisites which total probably no more than $500K per year.
Your first job as a legislator is to be re-slated and reelected. Congressional safe seats are reapportioned in the states after every census. The number of truly contested seats decreases every ten years. The redistricting would make Elbridge Gerry proud.
Nevertheless there is a hot pursuit of money for campaigning and a parallel hot pursuit of money for pork. Some smart mathematician should be able to figure out the relative value of campaign dollar versus pork dollar in terms of votes.
Reelection assuages egos, provides a comfortable life and an excellent formal and informal pension. The formal pension comes computed and paid by the Federal government. In most cases it is dwarfed by the informal pension paid by special interest groups from corporate to labor to goo-goos for the services rendered in the practice of lobbying.
The reason term limits failed was because it would have released too many ex-legislators into the pool of lobbying swag, to divide it up into smaller pieces.
The veneer separating the taxpayer from his elected representative gets thicker every year. The contribution letters become more frequent, the contact directly more distant, the size of the office staffs every greater, even as the congressional staffs -- the permanent mandarins -- grow larger
The evidence is clear -- the 1,000 page bill which no body can read and understand is the product of the mandarins on the various committees who communicate with the mandarins on the office staffs. The elected official does what his mandarin tells him. The 1,000 page bill makes reference to the million pages of statutes which reference each other. Would that Gilbert and Sullivan were alive today.
Which places the ideologues in control -- the missionaries for special political interests -- firmly in the drivers' seats.
With the elected interested solely in reelection and not the welfare of the country, with the purposeful complexity of the legislation designed to obfuscate its results, the citizen is at a loss.
He is less than a semi-colon in the legislator's existence -- unless he has enough money to get some attention or can promise a differential bloc of votes, or even better, both.
On a mailing list, he receives form letter. On the internet, he receives self-serving so-called surveys.
And the OPM distribution goes on. Even the Lord stopped distributing manna from the heavens after they passed through the desert. Our lords know no such bounds.
pete speer
Date: Sun, 2 Aug 2009 02:28:19 -0400
From: David.Kotok@CUMBER.COM
Subject: Cumberland Advisors Market Commentary
To: COMMENTS@LISTSERV.CUMBER.COM
Cumberland Advisors Market Commentary
The American people have become OPM addicts. They have yet to realize that there is no such thing as Other People's Money. Originally OPM was distributed by the government during balanced budget days as permitted by the second part of the Income Tax Amendment to the U.S. Constitution. It took Congress little time to learn that distributing OPM was a great path to reelection and the prestige and benefits that ensued. It worked so well that another privileged class of citizens was established -- the mandarins, unelected, on the committee staffs and in their own offices. Just like the Mings and the rest of the Chinese dynasties those elected could then pay attention to lofty ideas which would assure their position by securing contributions from their large money supporters while delivering OPM in the form of bread and circuses to their Districts.
We had been formed as a nation based on the idea that the elected viewed their position was temporary and gave them an opportunity to serve. Foolish drafters. I measure the growth of government by the increasing number of concrete edifices constructed in the District of Columbia and environs. Supposedly to provide nesting places for our elected representatives, they are in fact homes to the permanent governing class -- the unelected mandarins -- who remain forever, serving as they did the dynasties of elected officials in ever increasing numbers.
This has been going on for decades. The Senior Executive is limited to two terms. Legislators can last forever, or as long as the Depends supply holds out.
But it costs tens of millions to be elected to Congress for a two or a six year term for a salary, benefits, and prerequisites which total probably no more than $500K per year.
Your first job as a legislator is to be re-slated and reelected. Congressional safe seats are reapportioned in the states after every census. The number of truly contested seats decreases every ten years. The redistricting would make Elbridge Gerry proud.
Nevertheless there is a hot pursuit of money for campaigning and a parallel hot pursuit of money for pork. Some smart mathematician should be able to figure out the relative value of campaign dollar versus pork dollar in terms of votes.
Reelection assuages egos, provides a comfortable life and an excellent formal and informal pension. The formal pension comes computed and paid by the Federal government. In most cases it is dwarfed by the informal pension paid by special interest groups from corporate to labor to goo-goos for the services rendered in the practice of lobbying.
The reason term limits failed was because it would have released too many ex-legislators into the pool of lobbying swag, to divide it up into smaller pieces.
The veneer separating the taxpayer from his elected representative gets thicker every year. The contribution letters become more frequent, the contact directly more distant, the size of the office staffs every greater, even as the congressional staffs -- the permanent mandarins -- grow larger
The evidence is clear -- the 1,000 page bill which no body can read and understand is the product of the mandarins on the various committees who communicate with the mandarins on the office staffs. The elected official does what his mandarin tells him. The 1,000 page bill makes reference to the million pages of statutes which reference each other. Would that Gilbert and Sullivan were alive today.
Which places the ideologues in control -- the missionaries for special political interests -- firmly in the drivers' seats.
With the elected interested solely in reelection and not the welfare of the country, with the purposeful complexity of the legislation designed to obfuscate its results, the citizen is at a loss.
He is less than a semi-colon in the legislator's existence -- unless he has enough money to get some attention or can promise a differential bloc of votes, or even better, both.
On a mailing list, he receives form letter. On the internet, he receives self-serving so-called surveys.
And the OPM distribution goes on. Even the Lord stopped distributing manna from the heavens after they passed through the desert. Our lords know no such bounds.
pete speer
Date: Sun, 2 Aug 2009 02:28:19 -0400
From: David.Kotok@CUMBER.COM
Subject: Cumberland Advisors Market Commentary
To: COMMENTS@LISTSERV.CUMBER.COM
Cumberland Advisors
614 Landis Avenue Vineland NJ 08360-8007
1-800-257-7013 http://www.cumber.com
Clunker-nomics
August 2, 2009
Genesis 1:31 says “And God saw every thing that he had made, and, behold, it was very good. And the evening and the morning were the sixth day.“ A few millennia later, we find that the world’s most popular book can be applied metaphorically to the US House of Representatives, as it labors in the creation of clunker-nomics.
The first billion voted by the Congress for the $4500 clunker rebate program was exhausted in 6 days. Practicing for deity status, the House beheld and determined “it was very good.” They immediately passed a $2 billion addition. That bill now goes to the Senate, which will pass something similar, and then to a conference committee to resolve some differences about rules. We expect additional funding will be forthcoming quickly. Congress loves to spend and Americans love to receive.
In the spirit of Genesis, Adam and Eve American, otherwise affectionately known as John and Jane Doe, recognize a good deal when they see one. They had an old clunker worth a few hundred. Suddenly they can exchange it for $4500 if they buy the new one now. The rest they can finance at very low interest rates, thanks to the Federal Reserve and the Treasury for extending TARP and other funds so that lenders can offer them liberal terms. They seized the moment – who can blame them?
This will boost short-term activity in the US. Neil Soss of Credit Suisse estimates, “Our math suggests that vehicle sales could spike in July, perhaps to a run rate near 12.5 million units (at a seasonally adjusted annual rate) from the 9.6mn average of Q2.” He adds that “in response to cash-for-clunkers … the personal savings rate will drop sharply in the next months, even as the longer run trend is still headed higher.” That will ramp up auto production in the 3rd quarter. Neil concludes, “As a consequence, we are revising up our Q3 real GDP forecast to 2.0% (from 1.3%) and our Q4 forecast to 2.5% (from 2.0%).
Okay. We know that older and fuel-inefficient cars are supposed to be scrapped. That is supposed to be an environmental improvement. And we know that the United Auto Workers like this stimulus, for obvious reasons. So do the government-owned or government-sponsored auto manufacturers. The last private firm, Ford, will benefit, too.
Does the clunker stimulus result in enough gain to offset the net present value of the perpetual cost to finance it? Fair question? We think so. Is there an answer? Maybe, but the proof is very difficult to establish. It you are interested in this discussion, invite a few friends over for a beer and talk about it. But make sure the beer is brewed in America by the United Beer Brewer Workers. And when you toast, toast Ford and be a patriot.
Did anyone ask how many of these car sales are being “borrowed from the future?” We didn’t see it in the Congressional commentary. If it was there, it did not influence the political decision.
Has anyone looked at what we have done in a macro sense? We will try.
The United States borrowed 1 billion dollars. It is unlikely to ever pay it back. The annual interest will add $50 million to the federal budget each and every year, forever. We are assuming it is financed today with 30-year Treasury bonds. The additional $2 billion of borrowed clunker money will add another $100 million in interest. So clunker-nomics has committed the nation to make this interest payment forever.
Practicing an industrial policy by inserting government into a mixed economy is the new America. No one measures the exchange of short-term gain being substituted for longer-term taxes or inflation or debt-burdened slower growth. Those economists who are full believers in expectations analysis argue that the market will immediately adjust prices to reflect this exchange. Maybe so in the mathematical models that they use to justify that argument.
We think this expectations analysis fails in the real world. Adam and Eve American are not economists. They make their decisions for their individual benefit and in terms they can understand and assess. They know what a $4500 free gift is. They understand it. They do not deal with trillions of dollars; they do not conduct ever-increasing auctions of Treasury notes and bonds; they do not deal in foreign exchange and reserve transfers. That is not their fault. The have daily lives to live and they are facing their own struggles.
So they delegate some of these borrowing and spending decisions to the Congress because they have no other choice. In the House the long term is limited to the two years until the next election cycle is faced. So the House will easily exchange $1 billion in spending for $50 million in added budget interest.
Thus we have an asymmetric exchange. We gratify now; we borrow to do it; we defer the day of reckoning; it grows bigger and bigger but seems to be perpetually deferred. Every once in a while a crisis unfolds and the system fails, as it did with Lehman Brothers last September. That triggers a new round of upward ratcheting of this asymmetric system.
When does it end? First question without an answer? Will the end be fire, or ice? Also, no answer. What should we do to protect ourselves? Much harder, but there are some answers. Diversify worldwide. Seek a mix of investing to protect wealth. Lastly, enjoy life and the weekend in the spirit of Genesis. Rest on the seventh day, if you can.
And remember that God gives you only so many days on the planet but doesn’t count the ones you spend fishing. We will wink at CNBC viewers on Friday, August 7 from Leen’s Lodge at the annual Shadow Fed fishing retreat, where 35 of us will debate and dissect asymmetric information and deficit finance. For now, we hope your seventh day is restful for you.
David R. Kotok, Chairman and Chief Investment Officer, email: david.kotok@cumber.com
*********
Copyright 2009, Cumberland Advisors. All rights reserved.
Saturday, May 24, 2008
Monday, September 27, 2004
The End Game in Sight in Iraq
The key to the successful disengagement from Iraq lies in two arenas. Its border nations must be willing and able to stop the infiltration of jihadists and jihadists in training.
On the northern border, Turkey has a vested interest in controlling its Kurdish minority. Turkey is unfortunately being pulled in two directions. Its civil leadership -- the secular authorities and the Army see that the future lies in being a member of the EU. The United States is pushing for this. We know, however, that EU membership will distance Turkey and America. Our common enemy, for the time being, is no more. This secular leadership faces a threat from a religion based party. Turkey looks like Pakistan in the days of its own democracy.
To the west are Syria and Jordan. The Ba'athist government in Syria appears to be facing now the reality of the demise of the Ba'athist party through which Hussein ruled Iraq. It gets to keep, of course, the wealth and arms transferred out by Hussein. The Ba'athist dictator Assad has indicated that it will move troops from western Syria and Lebanon to police the Iraqi border and stop the movement of the terrorist jihadists along the major highway to Baghdad. Assad may have come to realize that the coalition is winning and the unemployed Sunni terrorists would look to his country for more fun and games. He is a realist if nothing else. It was Hussein and Assad who were the primary supporters of Hamas, the Syrian based terrorist group active against Israel. Of interest was the report today of the Israeli assassination of a Hamas leader in Damascus. All praise to Mossad expertise, but one may question whether the Syrian intelligence folk, under Assad direction, might have had a hand in it. The objective would be to retain Syrian control over the organization. That direction would have the the objective of cooling the firebrands. The new Saudi interest in counter terrorism (now that they have been struck on their own territory) may be evidenced here.
Jordan's interests as well are served by an Iraqi peace. The increasing number of Palestinians resident there will in time overbalance the prior Arab/Palestinian nation. King Abdullah to date has maintained his authority just as his predecessor did. We have mentioned the Saudis earlier. Kuwait, the monarchy at the western head of the Persian Gulf needs the stability of a democratic Iraq.
To the East, however, the Persians have an opposing position. Iran, whether in the control of the Mercedes Mullahs or under an expected secular Islamic republic does not want to face a strong Iraq. It is using 'volunteers' from the Iranian Revolutionary Guard to augment their fellow Shi'ites around 'Sadr City.' The key border to be defended -- and where regional and U.N. forces are sorely needed -- is the eastern border.
Internally, the nascent Iraqi government is doing better than might be expected. In the evolution of any nation-state matters do not proceed along a constant curve upwards. Victory is a three syllable word. We have not announced our end game. But this is what I envision. We are now engaged in a strong military push to grind down the indigenous terrorists. I see, by the way, that one provincial chief of the Iraqi National Guard (a BG and former Hussein officer) has been detained. This is to be expected, or does no person remember our Benedict Arnold. Elections will be held in January will legitimize a new Government. That in turn will enable a plea by that government to obtain regional and UN resources to further train police and defense forces. U.S. military forces will be asked to do border patrol duties in the east and to further train theIraqi military in certain areas. The remainder of our forces will withdraw to Kuwait.
Ideally, the new constitution will permit the organization of three regional governments which will control provinces. Regional police forces will be established and augment local police forces. With Sunni and Shia controlling their own regions indigenous terrorism will be minimized and the foreigners exposed. Each regional government would have oil resources and an enlightened self interest in continuing the oil flow. However, the prospect of legal self policing at the provincial and regional levels is not being addressed. It is that organization by region which will provide the greatest incentive towards peace. It would be a breathtaking move. There are risks.
But if a single nation -- a democracy -- is to be formed it must be by the consent of the governed. Consent is best achieved through the expression of regional interests facing a common threat and ceding some of their powers to prevail. That was how the United States was formed. The weakness of the Articles of Confederation drove us to the strengths of the Constitution. Organization of the 'locals' creates the enlightened self interest which is needed for success. Absent that, any new constitution can be ratified but its acceptance will take some time before it is validated by the habit of peace.
Wednesday, September 22, 2004
The Future of al Qaeda
As long as the Israelis are free to achieve a Palestinian Diaspora, the fundamentalist Islamists have a rallying point around which to gather all Moslem nations and unite Sunni with Shia. We don't have a solution for the Middle East because we are jousting for election here in the United States. Our foreign policy for the region is trifurcated by the claims of the Jewish citizens ("Never Again"), the wants of our oil lobby, and the insatiable desire for petroleum products.
Worse, we have the egotistic misconception that the United States is the primary objective of the al-Qaeda movement. Attacks in America are designed to convince us to back off. The capture of Saudi Arabia with the control of the Holy Places -- the triumph of the Wah'hab -- and the oil reserves are the primary objective. The loose association with fundamentalist movements in Asia will then coalesce under the protection of the Islamists with the threat of asymmetric warfare being waged against those countries which interfere. Cooperation with other Muslim nations (in particular, Pakistan) in the obtaining of nuclear weapons and missiles can be expected.
We must do everything possible to ensure that there remain political and religious caverns between Sunni and Shia. We must not be tempted to intervene in the ongoing revolution in Iran, and drive each into the other's arms. The USSR fell over time as its militant firebrands died off and were replaced by technocrats and bureaucrats and the corruption of the third generation. The huge public trough could not be borne by the people. The Wah'hab scimitar will extend from Morocco east to Indonesia (skipping over Iran and India.) At that time Pakistan, with its nuclear program, falls into line.
But. in my view, the point of the blade does not turn north to Europe or west to the United States. The northern movement may extend to Turkey, the Moslem majority 'Stans and perhaps into the Balkans.
Here is their long term strategic plan. The blade turns south to the unlimited resources -- people and minerals -- of Africa, uniting tribes and countries, fixed with the artificial barriers set forth by the colonial nations, under a common religion. At any point along this curve of development the United States may choose to intervene. When we do we must be extraordinarily prepared for what they would call counterattacks on our home soil. And surely such attacks will from time to time occur.
Countering the Fundamentalist Threat
It strikes me that in fanaticism and religious fervor The Wah'hab and their fundamentalist Sunni ilk are close to that of the radical Marxists, who -- splitting off from their socialist brothers at the International Conference of 1905 -- became the crux of the communist movement. That conference was the high water mark of the international socialist movement. Thereafter, while state socialism continued to grow, especially in the industrialized countries of the west, there was no single, predominant socialist international movement other than the one co-opted by the Russian communists. The workers of the world would not unite, but died by the millions fighting for various nations in World War I.
Parenthetically, it is interesting that the spread of the communist ethos was successful only in countries where agriculture was the predominant economic force -- czarist Russia and China.
The bonding of individual struggle into class struggle came apart in the United States in particular through the continued availability of interclass mobility. Where class barriers permanently separated the ruling classes from a proletariat, resentment was as heated steam within a pressure vessel. This was especially true where a relatively small educated class was inspired by the thoughts of Marx, Hegel, and Feuerbach and their call for violent overthrow of an oppressive ruling class. They would lead the revolution and free -- eventually -- the ignorant and oppressed lower class. Marx described religion (except for his own creed) to be the opiate of the people.
Within the Middle East, national leaders used religion to maintain political power. Secular leaders have permitted their religious allies to direct the pent up energies of their people towards those infidels outside the country, under the guise of religion. Vast sums of wealth are used for this purpose not only within the Middle East but also to contributions to mosques and nascent madrassas around the world. Overseas Imams are beholden to money from the homelands.
We in the West believe strongly that the human spirit exercised through the family provides the energy within the system to lever economic status. Neither the secular nor the religious leaders in Muslim states focus on this. Rather, they prefer in countries they control that the economic and religious caste system remain in place. The Muslim religion at its most fundamental does not call for the economic growth that leads to interclass mobility. Instead, it calls for a satisfaction in the role that their God has given them. The patriarchs in each family unit counsel reliance on the Qu'ran to ease the burden of life in a harsh climate. The energy of the human spirit is channeled into efforts outside the state to spread the religion. Rewards are reserved to the faithful in the afterlife,
Interestingly, as the economic wealth in the upper classes makes overseas education attainable, it also fosters in these first generation bourgeoisie a reaction against the entitlements that come their way and a sense of guilt, Searching for answers points them towards a more fundamentalist set of core beliefs. Enter ben-Laden and the reawakening of the Muslim spirit. Solidly based in the Wah'hab tradition, he combines the religious with the secular. The Arabs of the prophet in the seventh century with the strength of zealots converted the unbelievers, moving north through Turkey into the Balkans and west along southern shores of the Mediterranean, then moved north through Spain and into France. The religion took hold among certain of the African tribes. ben-Laden is doing nothing more than refocusing energies outwards in a reprise of the seventh century onward. He has smartly realized the benefits of a non-hierarchical structure as an antidote to the concentration of power present in the governments of the west. al-Qaeda binds together with common purpose the frustrated and the disaffected.
Speed of communication and freedom of movement works in favor of asymmetric warfare. Losses are localized and the weapon systems employed are -- in the absence of WMD -- readily available. Attacks on the so-called developed nations force them to spend vast amounts to quarantine and defeat these Pimpernels. The media provide a frame in which all feints an all attacks are reported and circulated around the globe -- acting as recruiting data for the partly motivated.
Keeping the United States off balance with the occasional atrocity, al-Qaeda moves its agenda outwards. It need not invade us nor destroy us, but to weaken our resolve and force us to spread our resources in response to new threats. France, Germany and Great Britain are similarly threatened. In their case, however, it is the Muslim immigration that has raised the threat level. European countries have unfortunately become statist societies. Benfeits reach the new immigrants through the state dole. Public housing defines the 20th century ghetto. Unlike the United States the promise of interclass mobility is lacking. These young -- trapped -- are fertile ground for radical Sunni Imam.
Winning this ideological war -- of Muslims who believe they are following a sacred path -- will take the development of a different Muslim society. That is a task facing this generation and the next. It will require a new 'containment policy' such as that proposed by Kennan decades ago to bottle up the secular use by the USSR of the religion of communism.
In the present instance, however, there will be a series of tactical strikes and counterstrikes, the former by al-Qaeda as it attempts to keep us on the defensive, with little opportunity to deploy overwhelming force. al-Qaeda views Iraq as its "Spanish Civil War" training ground. Perseverance won for us that Cold War. Towards the end, the USSR was revealed as an imperialist nation using the communist movement as its tool. Support in the countries outside of the Iron Curtain for the international movement melted away for that reason. The relationship between modern capitalism (with all its faults) and the human spirit became apparent. Even the socialist movement has crumbled in countries in which citizens generally have disposable income and the ability for interclass mobility.
Is there any hope that the same result might happen in this new threat situation? If communism in its second generation of existence under the aegis of the Great Russian commissars could be seen as a tool for the benefit of the dictator, can Wah'hab fundamentalism be separated from its Arab masters? Alternatively, can the Sunni sect itself become subdivided and its influence over people of various races have national rather than international effect?
The discrediting of this international movement must be the focal point of our efforts. It can only come from within. Wah'habism rules through the education and training of the Imams sent throughout the world and the well funded madrassa system in which it educates the Muslim youth of all races in all countries. It has succeeded best in those nations with a permanent underclass or where the aspirations of the family towards interclass mobility have been permanently dashed. Wah'hab preaches passive acceptance of economic status and revolutionary religious fervor. It is the friend of the ruling class. It must be defeated. It can be defeated through the recognition of economic hope. The fatwah system allows individual Imams the ability to spread dogma to their followers, It is linked through the brotherhood of fundamentalist Imams.
Just as the Jewish religious split into factions as circumstances changes among the faithful, so the tide which created the fundamentalist movement can recede and more moderate Imams arise. The flower of the desert religion is the same as that of the slums of Europe and even America which are home to Muslim workers. In the desert they were without secular hope and subject to the generosity of the ruling class. Elsewhere, they can absorb the benefits of an open society, move into the sunlight of opportunity, and ameliorate the harsh constructs of the Wah'hab sect.
The weakness of Moslem fundamentalism is that there is not a single Pope. The strength is in the alliance between for whatever purpose the secular leaders and the religious. A new day, new mosques, and a new minaret. That, in turn, will mean a theological recognition within the religion of an outward and upward aiming point among the families, within the family of the value of interclass mobility to the future generations. In other words a restructuring of the tribal dynastic control of the nation states of the Middle East and the oppressive control of the fundamentalist Imams
The perseverance of the capitalist system and the republic that is the United States-- unless it corrupts itself in the interim -- will carry the day. It took from 1905 to 1985 before the Russian system disintegrated. The dangerous years were the last forty, Have we the patience and the foresight to outlast the current threat?
The Underside of Our Iraq Venture
The long and short of it was we went into Iraq, cassocks flying on some sort of a missionary trip (at least for American consumption), without a clear understanding (American History 101) of the necessary and sufficient conditions for the establishment of a democratic republic.
We also handicapped ourselves badly through the misguided strategic objective of keeping Iraq a single country with borders established by post WW I colonial powers to ensure its subservience to the needs of British commerce. We failed to act as the unipolar power and divide the territory into units which best served our needs. In this misbegotten effort we were burdened by our ignorance of the several ethnic groups making up the corpus of the population. In particular, we paid no attention to Sunni fundamentalism and their alleged fears of domination by the Shi'ite majority. Worse, we kept the Iranian monkey on our backs, not realizing the serious differences between the Persian mullahs and the al Sistani Arab clerics.
In Washington D.C. the DOD and their ISP corrupted the intelligence process, over riding the timid leadership and thin expertise in DIA, as Chalabi provided visions of sugarplums (WMD, people ready to receive us with garlands of flowers, etc.)
War planning itself appeared to have made no consideration of the likelihood of out of country fundamentalists streaming to make war on US occupiers.
Let's recognize that there is no Iraq -- a nation held together by common political, economic and security objectives. At best, there might be three federated states and a capital city. The parallel is the United States immediately after the Revolutionary War, operating under Articles of Confederation and only later adopting in the mutual interest a Constitution. In point of fact there are economic resources in each of the 'states' to support a viable government. If it was good enough for us, it should be good enough for them. But we should also place no objection should the Sunni state be courted by Jordan, which dearly needs its resources. Eventually, when Iran has morphed into an Islamic republic dominated by secular interests (the Mullahs back in the mosques), there may be a rapproachment between Arab and Persian Shia, but not for a long time.
As for the north, the Kurd genie is out of the bottle. Given the interests in Turkey and Iran, we ought to point the Kurds towards an Iraqi Federation, probably as a semi-autonomous state. It is going to take a long time to solve this mess.
The three state concept offers the best opportunity for self help on the part of the people there -- and the shortest term for our troops to be present.
Similarly, we have never understood Afghanistan. Thank God we had indigenous tribal leaders fighting the war -- not for democratic reasons but in their own self interest. Let's get the women out of their burkahs and into the schools and call it a day, nation building wise.
The key to al-Qaeda lies as it always has done not in the leadership but in the horizontal nature of its organization, like some aberrant lymph system in the body of the Moslem religion, coexisting with the blood and muscle and bone, infecting from time to time and in several places. I have separately described what I believe to be the strategic objectives of its leadership. The United States is and will remain the target of opportunity for al-Qaeda, not for strategic reasons but to demonstrate to all the impressionable poor young Muslims in Africa and Asia the power of al-Qaeda and the invincibility of the movement.
It matters not whether we capture Osama or not -- and it is highly possible that he is dead -- it is the Ideas that counts. Once the minarets of Mecca are controlled, the call to action will spread across northern Africa and along its Atlantic coast, and in Asia where Pakistan, Indonesia and perhaps the Philippines are ripe. The large Muslim minority in France will paralyze action there. Iraq has demonstrated that many nations can be blackmailed. Can we?
posted by pete speer @ 6:58 AM
Tuesday, September 21, 2004
Social Change in the Middle East
One of the problems in controlling and defeating the terrorist momentum is the social structure of Islam. It is generally assumed that the objective of al Qaeda is not the destruction of the United States -- we are a target of periodic opportunism to demonstrate to the Islamic peoples our inability to stop the progress of the movement. The interim objective of al Qaeda is to gain control of the minarets in Mecca, from which a clarion call can resonate across northern Africa and down the Atlantic and Indian Ocean coasts.
The basic problem has been how to cut apart such a movement. There are two lines of attack. The first is to retain in each country a sense of nationalism and at the same time to keep Sunni and Shia from uniting. The second is to shift the focus in each nation to economic development at all levels of income. The American model relies on interclass mobiliyu as a basis for the republic. The pan Arab movement could be dismantled by... establishing an equitable social and economic base that gives individuals hope that they will have a job and be able to provide for their family in an upwardly mobile, self respecting way.... on a nation by nation basis.
Unfortunately the unnatural country borders in the Middle East and in Africa were drawn for the benefit of the colonial powers and never changed after independence. That makes the job harder as prosperity (and even life itself) is limited to the new ruling tribes.
Islam is a religion that justifies the present place of an individual in Society. It might be called -- to paraphrase Marx -- "the opiate of the Arabs." This is especially true under the Sunni minarets. It was not unusual, therefore, to see the rise of the secular Ba'ath movement which took hold only in Syria and in Iraq and justified the dictatorships of the Assad family and Saddam.
In the underdeveloped world under Islam it is hard to imagine a society with the economic capacity to support interclass mobility. Agriculture for the peasant is a subsistence business (except for the growing of poppies). There are large farms in fertile deltas and along the river valleys which can feed the cities. Oil is an agricultural commodity of a sort -- a resource which is brought under the control of the ruling class.
True interclass mobility comes when wealth is created and distributed in the private sector of a society in excess of the requirements of production of goods and services but distributed through the production process. When the individual receives income at whatever level from the government, the process is violated.
The distribution of largesse received provides a sense of interclass mobility, but tied in with noblesse oblige. Education creates the ability to study other cultures, the struggles, the true interclass mobility which creates in the rest of the world a sense of earned self worth. Lacking that within their own culture, the young turn to dissolution or to fundamentalism.
Searching, some find the violent means to their salvation. al-Qaeda well funded, coalesced the interests of many national movements. It is never the proletariat which leads the revolution, it is the educated and dissatisfied middle class, led by so called intellectuals and supported across borders. Mussolini was the precursor for Hitler. Fascism was a construct which found support in many countries. The Socialist International was the precursor of the Communist movement. Anarchists had international conventions to justify their theories. Of the two branches of the religion only Shia philosophically establishes a separate role for secular society. The much larger Sunni nations serve as the foundation of the fundamentalism wwhich has eveolved into the terrorist movement.
The End Game in Sight in Iraq
The key to the successful disengagement from Iraq lies in two arenas. Its border nations must be willing and able to stop the infiltration of jihadists and jihadists in training.
On the northern border, Turkey has a vested interest in controlling its Kurdish minority. Turkey is unfortunately being pulled in two directions. Its civil leadership -- the secular authorities and the Army see that the future lies in being a member of the EU. The United States is pushing for this. We know, however, that EU membership will distance Turkey and America. Our common enemy, for the time being, is no more. This secular leadership faces a threat from a religion based party. Turkey looks like Pakistan in the days of its own democracy.
To the west are Syria and Jordan. The Ba'athist government in Syria appears to be facing now the reality of the demise of the Ba'athist party through which Hussein ruled Iraq. It gets to keep, of course, the wealth and arms transferred out by Hussein. The Ba'athist dictator Assad has indicated that it will move troops from western Syria and Lebanon to police the Iraqi border and stop the movement of the terrorist jihadists along the major highway to Baghdad. Assad may have come to realize that the coalition is winning and the unemployed Sunni terrorists would look to his country for more fun and games. He is a realist if nothing else. It was Hussein and Assad who were the primary supporters of Hamas, the Syrian based terrorist group active against Israel. Of interest was the report today of the Israeli assassination of a Hamas leader in Damascus. All praise to Mossad expertise, but one may question whether the Syrian intelligence folk, under Assad direction, might have had a hand in it. The objective would be to retain Syrian control over the organization. That direction would have the the objective of cooling the firebrands. The new Saudi interest in counter terrorism (now that they have been struck on their own territory) may be evidenced here.
Jordan's interests as well are served by an Iraqi peace. The increasing number of Palestinians resident there will in time overbalance the prior Arab/Palestinian nation. King Abdullah to date has maintained his authority just as his predecessor did. We have mentioned the Saudis earlier. Kuwait, the monarchy at the western head of the Persian Gulf needs the stability of a democratic Iraq.
To the East, however, the Persians have an opposing position. Iran, whether in the control of the Mercedes Mullahs or under an expected secular Islamic republic does not want to face a strong Iraq. It is using 'volunteers' from the Iranian Revolutionary Guard to augment their fellow Shi'ites around 'Sadr City.' The key border to be defended -- and where regional and U.N. forces are sorely needed -- is the eastern border.
Internally, the nascent Iraqi government is doing better than might be expected. In the evolution of any nation-state matters do not proceed along a constant curve upwards. Victory is a three syllable word. We have not announced our end game. But this is what I envision. We are now engaged in a strong military push to grind down the indigenous terrorists. I see, by the way, that one provincial chief of the Iraqi National Guard (a BG and former Hussein officer) has been detained. This is to be expected, or does no person remember our Benedict Arnold. Elections will be held in January will legitimize a new Government. That in turn will enable a plea by that government to obtain regional and UN resources to further train police and defense forces. U.S. military forces will be asked to do border patrol duties in the east and to further train theIraqi military in certain areas. The remainder of our forces will withdraw to Kuwait.
Ideally, the new constitution will permit the organization of three regional governments which will control provinces. Regional police forces will be established and augment local police forces. With Sunni and Shia controlling their own regions indigenous terrorism will be minimized and the foreigners exposed. Each regional government would have oil resources and an enlightened self interest in continuing the oil flow. However, the prospect of legal self policing at the provincial and regional levels is not being addressed. It is that organization by region which will provide the greatest incentive towards peace. It would be a breathtaking move. There are risks.
But if a single nation -- a democracy -- is to be formed it must be by the consent of the governed. Consent is best achieved through the expression of regional interests facing a common threat and ceding some of their powers to prevail. That was how the United States was formed. The weakness of the Articles of Confederation drove us to the strengths of the Constitution. Organization of the 'locals' creates the enlightened self interest which is needed for success. Absent that, any new constitution can be ratified but its acceptance will take some time before it is validated by the habit of peace.
Wednesday, September 22, 2004
The Future of al Qaeda
As long as the Israelis are free to achieve a Palestinian Diaspora, the fundamentalist Islamists have a rallying point around which to gather all Moslem nations and unite Sunni with Shia. We don't have a solution for the Middle East because we are jousting for election here in the United States. Our foreign policy for the region is trifurcated by the claims of the Jewish citizens ("Never Again"), the wants of our oil lobby, and the insatiable desire for petroleum products.
Worse, we have the egotistic misconception that the United States is the primary objective of the al-Qaeda movement. Attacks in America are designed to convince us to back off. The capture of Saudi Arabia with the control of the Holy Places -- the triumph of the Wah'hab -- and the oil reserves are the primary objective. The loose association with fundamentalist movements in Asia will then coalesce under the protection of the Islamists with the threat of asymmetric warfare being waged against those countries which interfere. Cooperation with other Muslim nations (in particular, Pakistan) in the obtaining of nuclear weapons and missiles can be expected.
We must do everything possible to ensure that there remain political and religious caverns between Sunni and Shia. We must not be tempted to intervene in the ongoing revolution in Iran, and drive each into the other's arms. The USSR fell over time as its militant firebrands died off and were replaced by technocrats and bureaucrats and the corruption of the third generation. The huge public trough could not be borne by the people. The Wah'hab scimitar will extend from Morocco east to Indonesia (skipping over Iran and India.) At that time Pakistan, with its nuclear program, falls into line.
But. in my view, the point of the blade does not turn north to Europe or west to the United States. The northern movement may extend to Turkey, the Moslem majority 'Stans and perhaps into the Balkans.
Here is their long term strategic plan. The blade turns south to the unlimited resources -- people and minerals -- of Africa, uniting tribes and countries, fixed with the artificial barriers set forth by the colonial nations, under a common religion. At any point along this curve of development the United States may choose to intervene. When we do we must be extraordinarily prepared for what they would call counterattacks on our home soil. And surely such attacks will from time to time occur.
Countering the Fundamentalist Threat
It strikes me that in fanaticism and religious fervor The Wah'hab and their fundamentalist Sunni ilk are close to that of the radical Marxists, who -- splitting off from their socialist brothers at the International Conference of 1905 -- became the crux of the communist movement. That conference was the high water mark of the international socialist movement. Thereafter, while state socialism continued to grow, especially in the industrialized countries of the west, there was no single, predominant socialist international movement other than the one co-opted by the Russian communists. The workers of the world would not unite, but died by the millions fighting for various nations in World War I.
Parenthetically, it is interesting that the spread of the communist ethos was successful only in countries where agriculture was the predominant economic force -- czarist Russia and China.
The bonding of individual struggle into class struggle came apart in the United States in particular through the continued availability of interclass mobility. Where class barriers permanently separated the ruling classes from a proletariat, resentment was as heated steam within a pressure vessel. This was especially true where a relatively small educated class was inspired by the thoughts of Marx, Hegel, and Feuerbach and their call for violent overthrow of an oppressive ruling class. They would lead the revolution and free -- eventually -- the ignorant and oppressed lower class. Marx described religion (except for his own creed) to be the opiate of the people.
Within the Middle East, national leaders used religion to maintain political power. Secular leaders have permitted their religious allies to direct the pent up energies of their people towards those infidels outside the country, under the guise of religion. Vast sums of wealth are used for this purpose not only within the Middle East but also to contributions to mosques and nascent madrassas around the world. Overseas Imams are beholden to money from the homelands.
We in the West believe strongly that the human spirit exercised through the family provides the energy within the system to lever economic status. Neither the secular nor the religious leaders in Muslim states focus on this. Rather, they prefer in countries they control that the economic and religious caste system remain in place. The Muslim religion at its most fundamental does not call for the economic growth that leads to interclass mobility. Instead, it calls for a satisfaction in the role that their God has given them. The patriarchs in each family unit counsel reliance on the Qu'ran to ease the burden of life in a harsh climate. The energy of the human spirit is channeled into efforts outside the state to spread the religion. Rewards are reserved to the faithful in the afterlife,
Interestingly, as the economic wealth in the upper classes makes overseas education attainable, it also fosters in these first generation bourgeoisie a reaction against the entitlements that come their way and a sense of guilt, Searching for answers points them towards a more fundamentalist set of core beliefs. Enter ben-Laden and the reawakening of the Muslim spirit. Solidly based in the Wah'hab tradition, he combines the religious with the secular. The Arabs of the prophet in the seventh century with the strength of zealots converted the unbelievers, moving north through Turkey into the Balkans and west along southern shores of the Mediterranean, then moved north through Spain and into France. The religion took hold among certain of the African tribes. ben-Laden is doing nothing more than refocusing energies outwards in a reprise of the seventh century onward. He has smartly realized the benefits of a non-hierarchical structure as an antidote to the concentration of power present in the governments of the west. al-Qaeda binds together with common purpose the frustrated and the disaffected.
Speed of communication and freedom of movement works in favor of asymmetric warfare. Losses are localized and the weapon systems employed are -- in the absence of WMD -- readily available. Attacks on the so-called developed nations force them to spend vast amounts to quarantine and defeat these Pimpernels. The media provide a frame in which all feints an all attacks are reported and circulated around the globe -- acting as recruiting data for the partly motivated.
Keeping the United States off balance with the occasional atrocity, al-Qaeda moves its agenda outwards. It need not invade us nor destroy us, but to weaken our resolve and force us to spread our resources in response to new threats. France, Germany and Great Britain are similarly threatened. In their case, however, it is the Muslim immigration that has raised the threat level. European countries have unfortunately become statist societies. Benfeits reach the new immigrants through the state dole. Public housing defines the 20th century ghetto. Unlike the United States the promise of interclass mobility is lacking. These young -- trapped -- are fertile ground for radical Sunni Imam.
Winning this ideological war -- of Muslims who believe they are following a sacred path -- will take the development of a different Muslim society. That is a task facing this generation and the next. It will require a new 'containment policy' such as that proposed by Kennan decades ago to bottle up the secular use by the USSR of the religion of communism.
In the present instance, however, there will be a series of tactical strikes and counterstrikes, the former by al-Qaeda as it attempts to keep us on the defensive, with little opportunity to deploy overwhelming force. al-Qaeda views Iraq as its "Spanish Civil War" training ground. Perseverance won for us that Cold War. Towards the end, the USSR was revealed as an imperialist nation using the communist movement as its tool. Support in the countries outside of the Iron Curtain for the international movement melted away for that reason. The relationship between modern capitalism (with all its faults) and the human spirit became apparent. Even the socialist movement has crumbled in countries in which citizens generally have disposable income and the ability for interclass mobility.
Is there any hope that the same result might happen in this new threat situation? If communism in its second generation of existence under the aegis of the Great Russian commissars could be seen as a tool for the benefit of the dictator, can Wah'hab fundamentalism be separated from its Arab masters? Alternatively, can the Sunni sect itself become subdivided and its influence over people of various races have national rather than international effect?
The discrediting of this international movement must be the focal point of our efforts. It can only come from within. Wah'habism rules through the education and training of the Imams sent throughout the world and the well funded madrassa system in which it educates the Muslim youth of all races in all countries. It has succeeded best in those nations with a permanent underclass or where the aspirations of the family towards interclass mobility have been permanently dashed. Wah'hab preaches passive acceptance of economic status and revolutionary religious fervor. It is the friend of the ruling class. It must be defeated. It can be defeated through the recognition of economic hope. The fatwah system allows individual Imams the ability to spread dogma to their followers, It is linked through the brotherhood of fundamentalist Imams.
Just as the Jewish religious split into factions as circumstances changes among the faithful, so the tide which created the fundamentalist movement can recede and more moderate Imams arise. The flower of the desert religion is the same as that of the slums of Europe and even America which are home to Muslim workers. In the desert they were without secular hope and subject to the generosity of the ruling class. Elsewhere, they can absorb the benefits of an open society, move into the sunlight of opportunity, and ameliorate the harsh constructs of the Wah'hab sect.
The weakness of Moslem fundamentalism is that there is not a single Pope. The strength is in the alliance between for whatever purpose the secular leaders and the religious. A new day, new mosques, and a new minaret. That, in turn, will mean a theological recognition within the religion of an outward and upward aiming point among the families, within the family of the value of interclass mobility to the future generations. In other words a restructuring of the tribal dynastic control of the nation states of the Middle East and the oppressive control of the fundamentalist Imams
The perseverance of the capitalist system and the republic that is the United States-- unless it corrupts itself in the interim -- will carry the day. It took from 1905 to 1985 before the Russian system disintegrated. The dangerous years were the last forty, Have we the patience and the foresight to outlast the current threat?
The Underside of Our Iraq Venture
The long and short of it was we went into Iraq, cassocks flying on some sort of a missionary trip (at least for American consumption), without a clear understanding (American History 101) of the necessary and sufficient conditions for the establishment of a democratic republic.
We also handicapped ourselves badly through the misguided strategic objective of keeping Iraq a single country with borders established by post WW I colonial powers to ensure its subservience to the needs of British commerce. We failed to act as the unipolar power and divide the territory into units which best served our needs. In this misbegotten effort we were burdened by our ignorance of the several ethnic groups making up the corpus of the population. In particular, we paid no attention to Sunni fundamentalism and their alleged fears of domination by the Shi'ite majority. Worse, we kept the Iranian monkey on our backs, not realizing the serious differences between the Persian mullahs and the al Sistani Arab clerics.
In Washington D.C. the DOD and their ISP corrupted the intelligence process, over riding the timid leadership and thin expertise in DIA, as Chalabi provided visions of sugarplums (WMD, people ready to receive us with garlands of flowers, etc.)
War planning itself appeared to have made no consideration of the likelihood of out of country fundamentalists streaming to make war on US occupiers.
Let's recognize that there is no Iraq -- a nation held together by common political, economic and security objectives. At best, there might be three federated states and a capital city. The parallel is the United States immediately after the Revolutionary War, operating under Articles of Confederation and only later adopting in the mutual interest a Constitution. In point of fact there are economic resources in each of the 'states' to support a viable government. If it was good enough for us, it should be good enough for them. But we should also place no objection should the Sunni state be courted by Jordan, which dearly needs its resources. Eventually, when Iran has morphed into an Islamic republic dominated by secular interests (the Mullahs back in the mosques), there may be a rapproachment between Arab and Persian Shia, but not for a long time.
As for the north, the Kurd genie is out of the bottle. Given the interests in Turkey and Iran, we ought to point the Kurds towards an Iraqi Federation, probably as a semi-autonomous state. It is going to take a long time to solve this mess.
The three state concept offers the best opportunity for self help on the part of the people there -- and the shortest term for our troops to be present.
Similarly, we have never understood Afghanistan. Thank God we had indigenous tribal leaders fighting the war -- not for democratic reasons but in their own self interest. Let's get the women out of their burkahs and into the schools and call it a day, nation building wise.
The key to al-Qaeda lies as it always has done not in the leadership but in the horizontal nature of its organization, like some aberrant lymph system in the body of the Moslem religion, coexisting with the blood and muscle and bone, infecting from time to time and in several places. I have separately described what I believe to be the strategic objectives of its leadership. The United States is and will remain the target of opportunity for al-Qaeda, not for strategic reasons but to demonstrate to all the impressionable poor young Muslims in Africa and Asia the power of al-Qaeda and the invincibility of the movement.
It matters not whether we capture Osama or not -- and it is highly possible that he is dead -- it is the Ideas that counts. Once the minarets of Mecca are controlled, the call to action will spread across northern Africa and along its Atlantic coast, and in Asia where Pakistan, Indonesia and perhaps the Philippines are ripe. The large Muslim minority in France will paralyze action there. Iraq has demonstrated that many nations can be blackmailed. Can we?
posted by pete speer @ 6:58 AM
Tuesday, September 21, 2004
Social Change in the Middle East
One of the problems in controlling and defeating the terrorist momentum is the social structure of Islam. It is generally assumed that the objective of al Qaeda is not the destruction of the United States -- we are a target of periodic opportunism to demonstrate to the Islamic peoples our inability to stop the progress of the movement. The interim objective of al Qaeda is to gain control of the minarets in Mecca, from which a clarion call can resonate across northern Africa and down the Atlantic and Indian Ocean coasts.
The basic problem has been how to cut apart such a movement. There are two lines of attack. The first is to retain in each country a sense of nationalism and at the same time to keep Sunni and Shia from uniting. The second is to shift the focus in each nation to economic development at all levels of income. The American model relies on interclass mobiliyu as a basis for the republic. The pan Arab movement could be dismantled by... establishing an equitable social and economic base that gives individuals hope that they will have a job and be able to provide for their family in an upwardly mobile, self respecting way.... on a nation by nation basis.
Unfortunately the unnatural country borders in the Middle East and in Africa were drawn for the benefit of the colonial powers and never changed after independence. That makes the job harder as prosperity (and even life itself) is limited to the new ruling tribes.
Islam is a religion that justifies the present place of an individual in Society. It might be called -- to paraphrase Marx -- "the opiate of the Arabs." This is especially true under the Sunni minarets. It was not unusual, therefore, to see the rise of the secular Ba'ath movement which took hold only in Syria and in Iraq and justified the dictatorships of the Assad family and Saddam.
In the underdeveloped world under Islam it is hard to imagine a society with the economic capacity to support interclass mobility. Agriculture for the peasant is a subsistence business (except for the growing of poppies). There are large farms in fertile deltas and along the river valleys which can feed the cities. Oil is an agricultural commodity of a sort -- a resource which is brought under the control of the ruling class.
True interclass mobility comes when wealth is created and distributed in the private sector of a society in excess of the requirements of production of goods and services but distributed through the production process. When the individual receives income at whatever level from the government, the process is violated.
The distribution of largesse received provides a sense of interclass mobility, but tied in with noblesse oblige. Education creates the ability to study other cultures, the struggles, the true interclass mobility which creates in the rest of the world a sense of earned self worth. Lacking that within their own culture, the young turn to dissolution or to fundamentalism.
Searching, some find the violent means to their salvation. al-Qaeda well funded, coalesced the interests of many national movements. It is never the proletariat which leads the revolution, it is the educated and dissatisfied middle class, led by so called intellectuals and supported across borders. Mussolini was the precursor for Hitler. Fascism was a construct which found support in many countries. The Socialist International was the precursor of the Communist movement. Anarchists had international conventions to justify their theories. Of the two branches of the religion only Shia philosophically establishes a separate role for secular society. The much larger Sunni nations serve as the foundation of the fundamentalism wwhich has eveolved into the terrorist movement.
