Here's to the crazy ones, the misfits, the rebels, the troublemakers, the
round pegs in the square holes... the ones who see things differently -- they're
not fond of rules... You can quote them, disagree with them, glorify or vilify
them, but the only thing you can't do is ignore them because they change
things... they push the human race forward, and while some may see them as the
crazy ones, we see genius, because the ones who are crazy enough to think that
they can change the world, are the ones who do.

Steve Jobs
US computer engineer & industrialist (1955 - 2011)

Sunday, March 4, 2018

Is Putin hurting Russia?

A strong Russia, or perhaps a strong Eurasia, is in the interest of a peaceful world. That may not be the most politically correct position to take as a writer in the West, but I'm convinced of it. Growing up in the Cold War era wasn't easy on the nerves as the great powers from each side starred each other down, but with age comes wisdom, and for me that means an unshakeable belief that nations are people - people are possessed with "want" - and want creates tension. In other words, we as a species aren't happy unless we can control and consume everything we choose, and when we choose it.

Enter modern day Russia. Enter Putin. Ostensibly, Vladimir Putin is serving the function of President of Russia, but in the bigger picture his role (and responsibility) is far greater than that. He, and Russia, are the major force behind a greater Eurasia. You can call it the "Silk Road" or whatever you like, but in reality Eurasia represents a deterrent to American unilateralism (or domination if you like). Putin's job has been to use oil money to rebuild Russia after the fall of the Soviet Union, and he has done so with great discipline. The question, however, is whether he can place Russia in the shoes of the Soviet Union and re-establish a multi-polar world. That question is both burning and unanswered.

Just like most things in life, Putin's great strengths are also in many ways Russia's great weaknesses. On the one hand, Putin is a master of the concept "don't use a hammer to kill a fly", but on the other hand he is failing to realize that great statesmanship may necessitate the use of a hammer to send a message to the rest of the flies. In other words, a taking of one's place with authority. His decision to allow Russian athletes to compete at the Olympics while Russia itself was humiliated as a sort of "non-country" is a case in point. Putin had all sorts of reasons for sending his athletes, but he failed his country horribly by doing so. A great power, or even just a self-respecting power, does not allow other nations to disrespect its colours. That is as old as humans' presence on this earth. Yet, Russian athletes were subjected to just that in South Korea. It was the Russian men's hockey team that refused to allow that humiliation to taint them, yet their "unlawful" singing of the Russian national anthem was more an act of defiance than a proclamation. That is a key difference. Great nations do not commit acts of defiance, because to do so is to admit they are unequal - as defiance is the act of the weaker while principled decision is the role of the strongest.

It's important to note, and their must be many in Russia that would agree with this, that a country is meant to be run as a country and not an intelligence agency. Putin, out of necessity and likely habit, has run Russia like an intelligence agent - harkening on his old career no doubt. While those skills may have been well placed in placing Russia back to a position of strength, they now hold Russia back from its position as a great power, and without Russia being a great power America is free to continue its relatively unopposed world rule. The best current example of that is Syria.

Syria is really more of a Putin failure than it is an American success. Putin is deathly afraid of  "another Afghanistan". Afghanistan rings in the Russian ears as Vietnam rang in American ears before Ronald Reagan. Reagan, however, used his popularity  to move the American people past the Vietnam era, and pushed them into global military supremacy. Think what you will of Reagan, but that was an act of great leadership. Unfortunately, it appears Putin is not as confident in his ability to lead the Russian people past their Afghanistan mindset and into their place as an equal super power. Instead he prefers to sit himself, and Russia, in the shadows of international conflicts. His approach is that of an experienced intelligence officer - careful, targeted, and effective. What's wrong with that you might say.

It boils down to this: It's a totally predictable weakness. Great nations make great gestures. The prerequisite of a great nation status is that you will fully commit to the defence of your allies. Now just this week Putin claimed he would do just that, but it's been taken as just talk. And he has often wondered publicly why the West doesn't listen to him. Well the answer is quite simple - they don't respect him. Talk is cheap. The willingness to sacrifice is strength. Putin has not proven by action that he is willing to sacrifice for hos allies or even his country (ie. the recent Olympics). He's going along to get along. Sure Russia has intervened with primarily safe air force assets to stop the overthrow of Assad in Syria, but what else has it accomplished? Syria sits divided, with a now dug in American military presence insuring it remains that way. Instead of taking decisive military action at the very beginning of the conflict, which in this case would have meant sending armed divisions into Syria back in 2013, Putin took the least costly option possible and now faces a direct confrontation with the US to make Syria whole again. Ditto for Ukraine - another frozen conflict and another broken ally.

Indeed, the answer to Putin's public ruminations about the West not listening to his dire warnings lies in his mirror. When unfettered strength has been called for he has used measured responses rather than decisive strength. He has failed to set the tone that would demand respect. You don't pick your battles as the leader of a great nation. Rather, you forcefully engage those that bring battle to your doorstep. If it's war then it's war. If it's peace then it's peace. Israel is a good example of this. The reason the world listens to Israel is because they know that Israel will act - and forcefully so. There is no such feeling now for Russia. That lack of respect is something that is severely undermining the idea of a multi-polar world, and without a multi-polar world then why does Russia even matter? For Putin, the person who  is in place at this time in world history to make it happen, the mission is forget your KGB mentality and be a great statesman of a great power.

Tuesday, November 7, 2017

Why the Saudi Purge, and Why Now?

Make no mistake, the ongoing purge in Saudi Arabia is not about corruption. If you believe that, well, leave your tooth under a pillow for the tooth fairy.The purge is about one thing, and one thing only - power. Specifically, for the power of Mohammed bin Salman. The only questions to be answered is why the power grab, and why now?

The reason why: Saudi Arabia is about to go to war with Iran. There is no doubt that Salman, or MBS as he is known, has been conducting an aggressive covert war against Iran for years now. And, when I say Iran, I mean the Shiite. It's a blood feud going back thousands of years, and both sides take it very seriously. However, until now, Saudi Arabia and Iran have been able to avoid direct war with each other by sponsoring mini-wars with client states - like Lebanon, Syria, and the like. Why is that changing now? The Saudis are losing.

Saudi Arabia's military intervention in tiny Yemen, along with its (and MBS's) staunch ally the United Arab Emirates (U.A.E.) has become a disaster. Not only have the Saudis failed to defeat the Houthis (Shia), but they have lost immense prestige and influence in the Arab world and elsewhere for the failure. What they have achieved is the starvation of hundreds of thousands in Yemen, vast swaps of destruction in Yemen cities, and a massive cholera epidemic affecting hundreds of thousands of Yemen's people. What they have not achieved is any decisive, or otherwise, defeat of the Houthis. Rather than withdraw from this situation, Saudi Arabia just implemented a land, air, sea blockade of the tiny country. By any standard, Saudi Arabia's action in Yemen have been not just a war crime, but a crime against humanity. Yet, you would never hear a peep about it in the western press, or in western houses of parliament.

In addition to the massive failure in Yemen, Saudi Arabia's covert war in Syria has literally blown up in its face. Depending on which organization you believe, hundreds of thousands have been killed and maimed in Syria during the last four or so years, but the result has been abstract failure. While much of Syria lays in ruins, particularly the larger cities outside Damascus, the Syrian government itself was saved by direct Russian military intervention. Saudi Arabia attempted to bribe the Russian government into staying out of Syria by promising to hold terrorists back from attacking the Sochi Olympics - at least that is what was presented in the Russian media. Having failed to convince Russia that way, the Saudis decided to conduct an oil war against Russia. Specifically, they flooded the oil market with product and then refused to freeze or cut back production bringing the price down as low as $30 US a barrel in an all-out effort to destroy Russia's resource based economy. It failed. Instead of crippling Russia financially, the Saudis blew their own legs off, consolidated the Russia-China oil relationship, and severely discredited themselves among oil producing nations.

The common theme to all of MBS's covert and overt actions has been failure. It has become quite obvious that the US and Israel, both the powers behind MBS's moves, have lost patience with the Saudi's attempts to reverse Iranian influence in the Middle East. I say "reverse" because Iran has been present in Hezbollah (Lebanon), Syria, and Yemen for years. Therefore, it's quite obvious that MBS is not responding to any "new" Iranian aggression or threat, but rather simply taking on Iran as a regional actor. In other words, MBS is the aggressor. And by relation so is the US  and Israel. There is no better evidence of that relationship than the recent meeting Jared Kushner, son-in-law of  US President Trump and well connected member of the Jewish establishment in the US, with MBS just prior to the current purge within Saudi Arabia. In case that doesn't satisfy you, then please refer to Trump's own Twitter remarks where he states MBS "knows what he's doing".

In the nutshell, MBS, with the overt backing of the US and covert backing of Israel, took almost complete reigns over the Saudi state for the purpose of going to war with Iran. MBS's statement most recent statement that Saudi Arabia was in a "state of war" with Lebanon is  just the first step. It also jives perfectly with Israel's recent bombings of Lebanon and Syria, and matches the Israeli government's position on Hezbollah to a tee. Unfortunately it smells of desperation. With the war all but lost in Syria, and quagmire in Yemen, MBS is left with one option only - go after Iran itself. There are likely a few ways such a war can play out.

Before the US invaded Iraq, a Sunni-controlled buffer existed between Saudi Arabia and Iran. As I've often said, the only real result of the US invasion of Iraq was the ability of the Iraqi people to elect their own Ayatolla. Now Iraq is dominated by Shia, and thus Iranian, influence. So, bottom-line is this, if Saudi Arabia wants to get at Iran they'll have to do it through Iraq. Iraq and Iran are now strong allies - they're fought together to liberate Iraq from ISIS, and they'll keep fighting together to do the same in Syria - namely against the Kurds. Not to put too fine a point on it, but within the last month or so MBS has made it clear a war with Iran won't be fought on Saudi soil - so there's a process of elimination there.

So if you want to know why MBS has managed to clear the decks of all distractions in Saudi, the answer is that he is going to war with Iran directly and wants complete control of the apparatus of state to do so. If you wonder why now, the answer is he intends to go to war very soon. He has the complete backing of the US, and has given his own green light to Israel taking on Hezbollah in Lebanon - likely simultaneously. No question all of this smells like "Plan B", but we can all see what has happened to "Plan A".

What is key in all of this to remember is what aims all this serves. The world-wide economy is in a state of stagnation - essentially. Central banks have failed to create any real inflationary pressures that might allow them to raise interest rates. Oil is similarly stuck in the post-Saudi oil warfare blues. My feeling is there is a perception among those up high that a massive war in the Middle East will cause inflation to skyrocket world-wide. Saudi would theoretically benefit from a huge price increase in oil - as would the US. Russia's southern border, visa-via an Iranian defeat, would be massively exposed which of course is a major win for the US. Which brings me to a final point-Saudi's partial privatization of its huge state owned oil firm. Does MBS really want to stir Saudi Arabia on a post-oil course and diversify its economy? Or, is he raising a war chest to fight a to-the-death war with Iran? My bet is the latter. A full on war with Iran will likely triple the price of oil, so the Saudis will still get their much loved money, but they need cash to fight a big war, and their failed oil war has left them near a recession. Is it any wonder Trump encouraged Saudi Arabia via Twitter to conduct that initial offering on the New York Stock Exchange - hours before the purges started?

Monday, October 9, 2017

The Bitcoin Mirage

Let's be honest with each other here, Bitcoin is more of a home science experiment gone amok than a legitimate form of currency. In fact, Bitcoin far more resembles a classic Ponzi scheme than it does a currency, or a monetary system. It was created by a phantom figure known as Satoshi Nakamoto, whose identity has never been confirmed. The Japanese translation of his name roughly equates to "Central Source Wisdom (or Reason) in Japanese.

The basics of Bitcoin resemble a version of a video game you might play from your PlayStation. To enter you must get a "wallet". To create wealth you must "mine" Bitcoin. The mining process was easier at the beginning of the Bitcoin system - known as the "Genesis Block". However, the Bitcoin program was designed to make mining more and more difficult as more and more people joined the process. It has become so difficult that many groups of Bitcoin 'miners" have joined together in pools to share rewards, rather than strike out on their own and have nothing to show for it after months of work. Hence, the Ponzi scheme nature of Bitcoin. Easy money early, but as the pyramid grows the easy money gets to be less and less. Imagine yourself playing a simple video game that has you set up mines here and there, and transporting the "product" back to your fort. As your product grows you can cash it in for stronger fort walls, better soldiers, etc. You get the idea. Essentially, this rather basic concept is the Bitcoin concept.

Beyond the video gaming and Ponzi nature of Bitcoin, there are numerous, serious fundamental flaws in the concept. Firstly, and most importantly, Bitcoin is a decentralized currency. In other words, it is not regulated by anything other than a computer program - essentially. There is no governmental control. There is no central authority like a central bank. In this sense, Bitcoin is almost an anarchy currency - with the important exception that every single transaction of Bitcoin is recorded. Fundamentally any currency, whether gold, salt or paper currency, has as its primary objective to regulate the consumption of resources by people. Given that currency regulates consumption by citizens, and citizens belong to nations, and nations control territory, and territory produces resources, it has always been the case that nations have there own currency - or in the case of the European Union a supra-national currency. The one constant feature is these nations, and even the EU, have governments responsible to their citizens for policy, including the regulation of resource consumption. What Bitcoin attempts to do is take away the regulation of consumption from the state, including the responsibility for that regulation, and hand it over to a computer program that is not responsible for its decisions to anyone. A truly bizarre state of affairs for the human race - one which you might have seen in a sci-fi movie from time to time.

The most dangerous concept of Bitcoin is that it is not rooted in value, but rather transactions. In the Bitcoin world, transactions create value. Essentially, it has no intrinsic value. By contrast, gold is a commodity that is very limited in quantity, is physical, and is almost indestructible. What Bitcoin does is actually emphasize the basic fundamentals of our current financial state. The world now runs on debt rather than value. In this way it regulates how much each person consumes. For example, if you want to purchase a boat, but do not have the necessary cash to do so, you must have enough debt room to borrow to purchase that boat. More often than not, in todays world, you have very little physical wealth to back that loan. However, allowing you to buy that boat now, as opposed to when you have enough dollars to do so, allows companies to keep selling, growing, and so on. Bitcoin takes that a step further. Instead of having debt that is measured in dollars, which have now lost most of their value due to unsupported borrowing, a new Bitcoin system will not require any physical constraint to consumption.

Bitcoin represents a new generation of irresponsible economics, designed primarily to serve the individual rather than the collective society. Its inevitable result is the stripping of social constraints on consumption. For instance, medicare may be paid by taxes in one country, but another country may require private payment for the same services. In a Bitcoin world the transactions for such services would be between the doctor and the patient, leaving no room for societal values. In this sense, Bitcoin represents an extreme Libertarian view of the world. After all, if you take Bitcoin at face value, and take it to its logical conclusion, a Bitcoin world would be dominated solely by Bitcoin transactions - the world currency. If this isn't the case why does Bitcoin exist? It's the old "half-pregnant" argument. There is either a recognized crypto currency in the world or there isn't. If there is such an instrument, then the world recognizes that this currency based on a computer program is legitimate. If that is legitimate, then the current currency model must no longer be legitimate. There cannot be two simultaneous currencies in the world - one which is controlled by central banks and one which is not.

Our financial system is, at the moment, is unsupported and unsustainable. It is based on nothing other than debt. China, Russia and a few other countries are trying to reign in consumption of resources by tying the value of currencies to something meaningful and measurable - gold. China has basically banned Bitcoin operations in its country, and that is a wise move from one of the wisest societies on earth. Instead, it is implementing discipline by implementing a gold standard to measure its currency by. Russia is moving in the same direction. Personally, I see the Bitcoin movement as an attempt to circumvent the direction China and Russia have been moving in. It's simply a very poorly veiled attempt to convert the American dollar as the world's main reserve currency to Bitcoin. By doing so the Americans hope to halt the reestablishment of the gold standard which, if implemented on a world-wide basis, would render the US dollar almost worthless and see the Chinese currency become the world's leading reserve currency. No doubt the Chinese see this themselves as they banned Bitcoin.

The current price for a single bitcoin is $6,025.06 or about four times the price of an ounce of gold. All the gold mined in the world, since recorded history at least, could fill three Olympic sized swimming pools. So what makes Bitcoin so much more valuable than one of the least available commodities in the world? The answer is nothing. It's sheer speculation by the same folks that normally run up the stock market. In fact, they are attempting to create a market where one isn't needed. The reason: greed. It's like a new gold rush. Except it isn't gold. It isn't anything but a play on a simple video game that rewards those in early, and leaves the last arrivals holding the bag. Do yourself a big favour, see Bitcoin for what it is - a mirage.