Transparency...

One of the most important things any investor should know about any financial instrument is what that instrument does. It is not merely due diligence, but has to do, more fundamentally, with holding those who run the funds accountable: you should know what your money is doing.

What do you call a financial instrument that provides no information regarding investment structures, let alone what the guiding principles are behind investment decisions, besides describing them as "ethical" or "socially acceptable"?

I'd call them a seriously flawed and completely unacceptable financial instrument.

Why? Should be fairly obvious: as an investor, you are paying the salaries of those making the investments for you. They need to be doing that for which they are being paid for. As an investor, you've made a choice of taking your hard-earned money and allocating to a certain portfolio mix to meet and match your expectations regarding returns, be these low volatility and income streams or high volatility and capital gains.

But investing your money in an investment instrument that lacks even the most basic transparency, where you cannot know where the money is being invested? That blind trust, trust that no investor should ever grant except in very unusual circumstances, usually having to do with the necessity of avoiding conflicts of interest when elected to a political office.

I'd call such financial instruments an invitation to fraud, corruption and a great, great way of getting away with lying to your investors. Especially so when there is no standard law or practice for these instruments.


Others, of course, call them Sharia-compliant.

See this.


What are these instruments? They're not allowed to charge or pay interest, may not invest in activities that are "harmful" under sharia law, such as the manufacture of alcohol or gambling, and both risks and profits are shared.

That, apparently is the basis of what entails a sharia investment: you can see more of what they entail here, which gives a basic overview.

This is an interesting quote:

A heavy non-performing portfolio and default on part of clients is a serious problem confronted by the Shariah compliant financial product provider.

In other words, reality is different than ideology. While sharia is supposed to be faith-based and reflect cooperation and mutual interests, reality is such that fraud and deceit on the side of the borrower appears to be about as easy as it may be on the side of the lender.

Looking beyond these mundane problems, there is something more fundamentally flawed with the sharia philosophy: that no one should profit from the indebtedness of others.

The obverse is the core of modern finance, which is based on the idea that money itself has a cost, and that if you want to use money that is not yours, you should pay a price to do so.

Sharia would turn that around and bring back traditional, conservative banking practices that have proven to be corrupt and incompetent (because they are based not on objective analysis, but rather on the personal preferences of the banker). It has all the hallmarks of long-lost days when investment decisions were made on the basis of what the bankers wanted to happen, rather than the best allocation of capital for the best return given acceptable risk limits. Sharia is inefficient and breeds inefficiency, forcing banks to get into areas of activity that it shouldn't be in.

Let me give you an example: you need a car. Normally you could go to the bank, they'd check your credit references, make you the loan, i.e. give the money to you, and you'd then buy a car. A murabaha loan, on the other hand, has you going to the bank, the bank then buying a car for you, and you paying installments on that car until it was paid for (plus a fee that substitutes for interest payments).

This is inefficient, as the bank has no business being in the business of buying cars for you. As a consumer, you will pay for that: as a bank, your flow process will be slowed and you will be carrying personnel in excess of what you really need to conduct your core business. It's not like you can't do it: it's just not efficient.

But there's more to it: it removes risk for borrowers, which is not a good idea. If I take a musharaka loan, the bank becomes co-owner of a property that I buy. Under normal banking, someone getting a mortgage has an enormous incentive to repay it promptly, since failure to do so generally leads to default and loss of the property. In other words, when I buy a house via a mortgage, I'd better pay the mortgage every month, since I will, otherwise, lose my ownership rights to that house. Under musharaka, there is no such construction: the consumer keeps his partial ownership, and it is the bank's problem of recovering their costs: the risks here are highly asymmetrical, since if you have a non-performing exclusive tenant, you as lender will not be able to recover your costs.

Fundamentally, sharia does no cover what the Germans called "Trittbrettfahrer", or those who simply jump on the running boards of an auto and let them be taken wherever the car is going, taking advantage of the fact that the driver doesn't want the hassle of stopping and getting them away from the car: it's all about getting something for nothing.

Sharia investing, beyond the lack of transparency, means emulating the philosophies and principles that have led Muslim nations to be the great economic powerhouses they are today (subtracting oil revenues, of course). Nothing more, nothing less. It has become attractive only because there is simply so much money available for investing in these instruments. That can be the only rationale for sharia investing.

What is the saying? A fool and his money?

Yet Another Reason Why Wind Energy Doesn't Work...

Here.

The problem is that wind energy can actually cause fluctuations in existing networks, leading to these problems.

In this case, energy demand was on an upswing as 1700 MW of wind power suddenly declined to 300 MW, leading to a load imbalance that required 1100 MW of demand to be denied. The customers who were turned off were so-called interruptible customers, in this case industrial customers who have agreed to be shut down in such cases. The power was off for 90 minutes until the net stabilized and all told the disruption lasted 3 hours.

Wind Energy: it's a bad idea.

And Furthermore...

Following up on the last post, I ran across this at Spiked. Alexander Cockburn is a hoot in the very, very best sense of that term.

This made me laugh...

You can now buy Indulgences to offset your carbon guilt. If you fly, you give an extra 10 quid to British Airways; BA hands it on to some non-profit carbon-offsetting company which sticks the money in its pocket and goes off for lunch. This kind of behaviour is demented.

This is so true on so many levels it's almost not funny.

It gets better:

The marriage of environmental catastrophism and corporate interests is best captured in the figure of Al Gore. As a politician, he came to public light as a shill for two immense power schemes in the state of Tennessee: the Tennessee Valley Authority and the Oak Ridge Nuclear Laboratory. Gore is not, as he claims, a non-partisan green; he is influenced very much by his background. His arguments, many of which are based on grotesque science and shrill predictions, seem to me to be part of a political and corporate outlook.

And:

It is increasingly difficult to challenge the global warming consensus, on either a scientific or a political level. Academies can be incredibly cowardly institutions, and if one of their employees was to question the discussion of climate change he or she would be pulled to one side and told: 'You're threatening our funding and reputation - do you really want to do that?' I don't think we should underestimate the impact that kind of informal pressure can have on people's willingness to think thoroughly and speak openly. One way in which critics are silenced is through the accusation that they are ignoring 'peer-reviewed science'. Yet oftentimes, peer review is a nonsense. As anyone who has ever put his nose inside a university will know, peer review is usually a mode of excluding the unexpected, the unpredictable and the unrespectable, and forming a mutually back-scratching circle.

This has been one of the things that has bothered me as well: what good is peer review if the peers are all in on the deal together? Deal here in the sense of receiving the same funding and supporting the same programs in order to make it in the academic world. Has peer review sunken to this, of being the litmus test of politically appropriate research, denying those that dissent from whatever mainstream may exist a chance of getting the all-important list of published works together?

Scarcely. Peer review still works.

Just not in this field.

The Closing of the Blogger Mind...

There are several kinds of web sites I never visit. Groupthink sites, largely: DailyKos, Free Republic, you know the kind. Where you have a huge community united by one or two simple themes - usually BDS and conspiracies - and where dissent is ruthlessly purged, either deliberately by censorship or haphazardly by peer abuse. While ad hominem abuse wasn't invented there, it has been refined to quite a high art by the fact that you can generate quite a bit of it on the Internet, and it apparently is something intensely enjoyed by the left in particular, albeit there are enough on the right to make it a wide-spread phenomenon.

I started using UseNet back in the mid 1980s, when I first got a PC. That PC had a NEC V20 inside, 640 Kb of memory (in 64kb chip form!), a Hercules graphic card (amber monitor...), as well as two floppies. One of the first things I bought, after a 32MB RLL drive from Seagate (which I still have...) was a 1200 baud internal modem. Ah, the hours I spent fine-tuning my modem parameter strings to get that last bit of operating efficiency...

I stopped reading UseNet in 2002. I had been fairly active on sci.econ and similar groups, but they had become so populated with wackos and one-note Johnnies - the Georgists on sci.econ were particularly absurd in their religious convictions and their ability to constantly reframe everything to show that George was the messiah and that you only needed to believe to understand the world - that the ratio of signal to noise had become so bad that noise was all you could see.


But there is this strange and perverse need I have to comment and make fun of idiots, and since I cannot become a journalist - I don't want to dumb down that much - I started to blog.

Now, I'd like to think that I've not been guilty of closing my mind: however, I do have principles that I live by, and you've got to give me a huge reason to change those, because they are a part of who I am. But that's not my real point.

Over at the Register, which I regularly read because I know many Bastard Operators From Hell and was one once myself, Andrew Orlowski has a great interview with Adam Curtis, which you can read in its entirety here.

High recommended.

Here are a few quick quotes:

We live in an age where we think we're completely individualistic, but actually, we're more conformist than we have been since the 1960s.

I mean, cry me a river about those poor people with obsessive compulsive disorders! That is such a low horizon of what human beings can achieve.

It's a time of great technical invention but it's a time of [artistic] stagnation.

TV now tells you what to feel.

It doesn't tell you what to think anymore. From EastEnders to reality format shows, you're on the emotional journey of people - and through the editing, it gently suggests to you what is the agreed form of feeling. "Hugs and Kisses", I call it.

If you look at the Soviet Union the 1980s under Brezhnev were called the years of stagnation. I would argue that we are living through our own years of stagnation.

Read it and think.

I get really annoyed by my daughters' TV habits: they love the shows that emote. I hate those shows, since they are completely and totally artificial. The girls know that they are being manipulated, but they also enjoy it too much.

Reality is so much better.

How Financial Crises Lead To Recessions...

Just saw this: Société Générale, the French bank that really, really, really screwed up a while ago, has withdrawn from the financing of the Tamarack Resort. They had invested $118 mn and originally wanted to finance it all themselves, but it was decided to do it with five banks in a consortium. Two of these five still want to finance, but they lack the required capital to do it by themselves. This doesn't affect the current operations, but it does stop the expansion of the only ski resort to expand like this since the 1980s.

This is how recessions start in the face of financial pressures: because the bank screwed up, an investment is stopped. While Tamarack may well be financed elsewhere, the withdrawal is not good: penalty clauses in contracts get activated, construction gets stopped, and the economy suffers. Jobs are lost, people suffer.

All do to a lack of due diligence and incompetence on the part of the bank, in a completely and totally unrelated area of business.

Fun times...

A Really, Really Bad Idea...

This is in today's FT.

It's a really, really bad idea. Time for some fisking...

First large downhill flows of capital – from rich countries to poor countries – led to the Latin American debt crisis of the early 1980s. In the 1990s similar flows begat the Asian financial crisis.

And large inflows of capital also made it possible for these countries to actually finance projects and businesses, allowing their economies to expand. The debt crises that developed, however, aren't a function of capital flows, but a lack of due diligence and proper credit risk analysis. Here the authors are confusing cause and effect, or at least they are muddling them. Again: the problem is a failure of capital management, and not inflows as such.

Since 2002 the flows have been uphill, from emerging markets and oil-exporting countries to the developed world, especially the US. But the outcome has not been very different. So, it does not seem to matter how capital flows. That it flows in sufficiently large quantities across borders – the celebrated phenomenon of financial globalisation – seems to spell trouble.

Again: confusion as to the problem. The real problem is that the lending banks and investors are failing to perform due diligence and to properly manage their credit portfolios, and has nothing to do with the volume of capital flows. Again, muddled thinking about what the problem is.

Causes and consequences vary, depending on which way capital flows. Developing country borrowing was associated with unsustainable fiscal policies (Latin America) and inappropriate exchange rate policies (Asia). But the financial sector was not blameless: for every overborrower there was an overlender.

Now this is indeed accurate. The financial sector has lost, basically, the ability to do good risk analysis, as lawyers and accountants make the decisions, not economists.

The pathologies were different when the US went on a borrowing binge. Large current account surpluses and the associated savings glut in the rest of the world fed a global liquidity boom, which stoked asset prices. Even though the roots of the subprime crisis lie in domestic finance, international capital flows magnified its scale.

Well, first of all the term "pathologies" is completely inaccurate. The US has not gone on a "borrowing binge" unless you refer solely to the volume of deals: measured as a percentage of GDP, other countries should be so lucky. But the next sentence is critical: current account surpluses are posited as the cause of a savings glut, when in reality the two positions are reversed: because local consumers do not have adequate consumption choices - and live in unstable countries where continuity is a problem - they save involuntarily, resulting in a savings glut that, due to the lack of investment choices domestically, leads to a current account surplus. Capital always seeks its rent: it is also uniquely fungible and goes to where the rents are. This can drive asset prices up, but not necessarily so: the problem arises when you do not have enough good bankers out there who can balance, properly, risks and returns.

Some would claim that the problem in all these instances was not liquidity but lax regulation, which turned what should have been prudent borrowing into a destructive binge. But this argument is too optimistic about the potential of prudential regulation to stem excessive risk-taking. In the US the entire policy apparatus avoided any regulatory action against lax lending. Even when the will is there, prudential regulation is bound to remain one step behind financial innovation.

Now this is where their analysis starts to turn silly. They are correct in saying regulation failed, abysmally, in preventing stupid people from being separated, permanently, from their money (aka they lost it all). But is that the job of bank regulations? Simply put, no: bank regulations exist to ensure that financial transactions are transparent and that risks are clearly stated: they do not exist to "protect" people from making stupid investment decisions. And that regulation always lags innovation: duh.

If the risk-taking behaviour of financial intermediaries cannot be regulated perfectly, we need to find ways of reducing the volume of transactions. Otherwise we commit the same fallacy as gun control opponents who argue that "guns do not kill people, people do". As we are unable to regulate fully the behaviour of gun owners, we have no choice but to restrict the circulation of guns more directly.

And this is where the idea goes really, really bad. Basically: if we can't stop people from making bad decisions, then they shouldn't be allowed to invest. The "fallacy" that the authors bring up is a straw man: the error is that you cannot regulate everything. The British experience now with the basic ban of firearms has led to a major upswing in criminal behavior, as criminals no longer need fear that their victims will defend themselves: if you do so in the UK right now, you may well end up being prosecuted for having defended one's self, rather than waiting for the police to do so.

This is throwing the baby out with the bath water: they are basically saying that if people can't be prevented from making bad investment decisions, that they should not be allowed to invest. What comes next, prove that you are a good parent before you can become a parent? Do the writers fail to see the absurdity of that position?

What this means is that financial capital should be flowing across borders in smaller quantities, so that finance is "primarily national", as John Maynard Keynes advised. If downhill and uphill flows are both problematic, capital flows should be more level.

Ah, the long, cold, dead hand of Johann Gottlieb Fichte and his Closed Trade State (Der geschlossne Handelsstaat. Ein philosophischer Entwurf als Anhang zur Rechtslehre und Probe einer künftig zu liefernden Politik, 1800), which should be a part of everyone's education to show how not to do things. Put simply, Fichte called for state control of each and every external transaction, and the role of the state is to a) beggar thy neighbor and b) ensure that the guilds and closed economic systems never see any change. Historically a really, really bad idea: mercantilism and the guild system, dedicated to maintaining local monopolies on the means of production and coupled with the allocation of resources on the basis of power politics, invariably lead to economic crises as the misallocation of capital bears its bitter and indigestible fruit and local monopolies become repressive and prices become punitive, as they invariably do within monopolies.

The greatest achievement of the last millennium has been the liberalization of trade and market-based allocation of capital: that these do not work perfectly and have negative side effects is vastly outweighed by the very real positive benefits of both.

But how is such a levelling-off of flows to be achieved? In the current context, the source of liquidity is large current account surpluses in the oil-exporting countries and east Asia, especially China. Reducing these should be a high policy priority for the international community. Two concrete actions – one for each source of liquidity – suggest themselves.

The source of the large current account surpluses is that the countries they list have comparative advantages and it is in the interest of the consumer, the ultimate beneficiary of the world economy, to have them make goods and sell oil: reducing these comparative advantages is hidden mercantilism, plus the absurd Utopian idea that each and every country should be an island unto itself. Reducing consumer utility should be the LAST priority for the international community, not the highest: this is a fundamental misunderstanding of what economics is all about (hint: the best possible allocation of scarce resources is identical with the smallest ecological impact of such allocation, per definition).

First, some variant of petrol tax in the main oil-importing countries (including the US, China and India) is essential to cut demand and reduce oil prices and hence the current account surpluses of oil exporters. That such measures should be taken for environmental reasons or that they would reduce the size of sovereign wealth funds only adds to their attractiveness. Second, some appreciation of east Asian currencies is necessary to reduce their surpluses. Even though undervaluation is a potent instrument for promoting growth in low-income countries in general, at this juncture self-interest on both sides calls for an orderly unwinding of current account imbalances.

Translation: Tax the consumer to make him poor, making also those who supply the goods to the consumer poor as well. Raise exchange rates to make imports more expensive and further reduce consumer choices.

Further, and here is the real problem: current accounts, given comparative trade advantages, are never balanced, but always show imbalances. It's the way the world economy works, and the authors apparently really don't want the world economy to work, preferring, instead, poverty for billions, rather than using trade to improve their lives.

This appreciation can be achieved either unilaterally or, if necessary, multilaterally through the World Trade Organisation, as a recent Peterson Institute paper has proposed.

Again: a really, really bad idea. What makes this idea even worse is that the authors believe, apparently that the WTO, the World Bank, etc., can actually manage the world economy: they can't, just like NÖSPL failed to manage the economies of the former Warsaw Pact. People, it doesn't work, it makes things worse.

What the WTO can do is to help policy makers make policy that alleviates negative impacts of changes in the world economy that lead to runs on currencies, banking failures and the like. It can't run the world economy, deciding what interest rates should be, what exchange rates should be, what tariffs should be. That was the world of back when, which led to Smoot-Hawley and the Great Depression. The road there is paved with the best intentions, but please, learn from history.

Measures needed for when capital flows downhill are likely to take a different form. When appetite for emerging market debt is strong, neither prudential regulation nor macroeconomic policies does much to stem capital inflows. Developing nations need to rely on a broader set of instruments, targeting the capital account directly. Deposit requirements on capital inflows and financial transaction taxes are some of the tools available.

Again, throwing the baby out with the bathwater. Their approach is to stop change, rather than to ride it to greater prosperity for the greatest number: they want to stop markets from functioning, and we should know by now how well that works.

We need an enlarged menu of such options. Unfortunately, capital controls are such a bugaboo that the International Monetary Fund, to its discredit, has done little work on capital-account management techniques.

Uh, it's really a credit to the IMF that they don't get near the topic with a ten-foot pole.

But will not such interference with capital flows reduce the benefits of financial globalisation? Even leaving financial crises aside, those benefits are hard to find.

Tell that to the hundreds of millions in China and India who have moved into what passes for the middle class there.

Financial globalisation has not generated increased investment or higher growth in emerging markets. Countries that have grown most rapidly have been those that rely least on capital inflows. Nor has financial globalisation led to better smoothing of consumption or reduced volatility. If you want to make an evidence-based case for financial globalisation today, you are forced to resort to indirect and speculative arguments.

Sigh. Since when has financial globalization had anything to do with "consumption smoothing" or reduced volatility? There is so much wrong with these two sentences...

It is time for a new model of financial globalisation, one that recognises that more is not necessarily better. As long as the world economy remains politically divided among different sovereign and regulatory authorities, global finance is condemned to suffer deformations far worse than those of domestic finance. Depending on context, the appropriate role of policy will be as often to stem the tide of capital flows as to encourage them. Policymakers who view their challenges exclusively from the latter perspective will get it badly wrong.

Translated: as long as the world doesn't have a right and proper government, trade should be forbidden, unless it's done the way we want it to be done.

These ideas are really, really bad. They lead to greater poverty and reduce standards of living, all in the name of preventing the destruction of capital.

Got news for you: the destruction of capital is part and parcel of how the world economy works.

Capital is destroyed when bad investment decisions are made and as a result, capital is poorly allocated. This has everything to do with risk analysis and risk control: the authors seem to advocate the elimination of risk from financial transactions. This is so far removed from the realities of the world economy as is possible.

The problem that the authors try to address is that international financial transactions are fraught with risks and that probably the vast majority of these risks are not identifiable or even knowable when the transaction is made. The abysmal failure of national and international finance to do due diligence and proper risk analysis is a very serious problem, one that needs to be worked on (but which costs time, money, and denying the BSDs of the industry their playgrounds).

But these ideas? Really, really bad.


PS: NÖSPL is the German acronym for the closed feedback loop system for planning and direction (Neues Ökonomisches System der Plannung und Leitung) that was implemented in the COMECON in the 1960s. The man who was in charge of implementing it in Eastern Germany committed suicide instead. Literally.

Asymmetry and the Law...

There's good article by Michael Pawlik in today's FAZ, titled "Der Terrorist will nicht resozialisiert werden", or "The Terrorist Does Not Want To Be Resocialized".

As usual, behind the subscriber firewall, link here. I'm not translating, merely laying out what he says and commenting on that.

The key point is that what terrorists do falls into gray zones, quite deliberately so.

On the one hand, terrorism, in its modern transnational form, is an act of war.

On the other hand, it's something that good police work has successfully dealt with on a local scale.

But the critical thing is that the standard ways of thinking about how to deal with terrorism - concerted police work with some involvement by the military - doesn't work with transnational terrorism, especially as the terrorists practice it and exploit the system to create sanctuaries and infrastructures.

The greatest danger is not realizing this and allowing them free action by not pursuing them as if one were at war: while those attacked may not have wanted a war and tried to prevent it, you only need one side to have a war, the side that doesn't resort to diplomacies and the niceties, but simply starts killing in order to achieve their political gains.


This is the critical point of Pawlik's post: the difference between the West and islamic terrorism is so great that there cannot be peace. This doesn't mean that there can't be peace between Islam and the West, but simply that the islamic terrorists are only concerned with winning. They have declared, effectively, an asymmetric war where they believe they can manipulate the rules of standard international relations to their advantage - and they have been very, very successful to date - because they know that they cannot match the West in a field of battle, regardless of how brave their fanatics may be and how willing they are to die for their cause.

Hussein Mussawi, who was head of Hisbullah in Lebanon in 1992 when the Israelis killed him, said, according to Pawlik, that they were not fighting for recognition and settlement of their grievances, but rather to destroy their enemy.

Now, without going into extreme detail, people like Mussawi do not believe that they are bound by the international rules governing warfare or international relations. Their most important tool is "senseless violence" or simple destruction, without warning or sense, because their goal is to destroy western societies and force them to behave as the terrorists so wish.

As an aside (Pawlik doesn't mention this), Spain was such a target: the Madrid bombings were aimed at changing Spanish politics, and it did: Spain left the Coalition and appeased the terrorists so as not to become targets again, an act of fundamental cowardice that has deeply, deeply chilled US relations with Spain and will continue to do so until Spain, as it were, "grows a pair" and starts acting like a sovereign nation, rather than doing exactly what the terrorists want them to do.


You can't deter terrorists; you can't take anything away from them, since they don't "have" anything to take away, there can be no reciprocal actions taken (excepting perhaps the Israeli eye-for-an-eye tactics, which don't prevent terrorists from acting, but goes ahead and kills them any way).

Now, Pawlik's point is that law has ignored the terrorist as he really is, an actor who has declared war. The problem is the asymmetry of the war: law is based on symmetrical relations between the parties.

Hence the difficulties the law has with dealing with terrorists: while they have done things that are illegal, treating them as common criminals ignores the reality of the situation, that they must be dealt with under the laws of war, meaning, for instance, that the detention of terrorists is not a legal matter, but rather one that follows the rules of war, with permanent detention until the conflict is resolved.

Normally, during wars between states, this is not a problem: a soldier, as Pawlik says, is a soldier and basta. Terrorists are a different breed, with nuances of seriousness and deadliness. Supporters of terrorism are as involved in the acts as the terrorists themselves, but how does one deal with them within a framework of law? Can one simply toss them into permanent detention and wait until the conflict is over - if it ever is - or does one differentiate and deal with the degree of complicity?

These are all gray areas that have been largely unexplored. Terrorist sympathizers and supporters are clearly complicit in the acts and can be just as dangerous and unrepentant as the terrorists themselves, but arresting people for their beliefs is abhorrent to any western legal system.

So what does one do? Ideally, laws are created to handle the problems with clear distinctions for the police and government lawyers to use. Germany, for instance, does not have a detention-style arrest, and no one wants it, celary for historical reasons. There is the infamous §129a, which makes the establishment of a terrorist organization a crime, but this is inadequate.

The alternative is the §89a of German law - and I am not a lawyer here, just an interested observer - which makes spending time in terrorist training camps a crime. Learning how to fire a gun, build bombs and fly planes is not itself a crime, but learning them to do terrorist acts should be.

This is legally difficult, since it is a crime of belief, rather than a play between actions and guilt, which is how western legal systems are built. Here you have to detain someone not because they are guilty of an action, but rather because that what they believe may entail an action that forces the state to prevent: you can't wait for a terrorist crime to happen before doing anything about it, unless, of course, you want to grant the terrorist legal sanctuaries for their preparations.

What this entails, however, is being able to make a distinction that cannot easily be made. On the one hand, the state can detain someone that they think is going to commit a crime if they have adequate proof thereof; on the other hand, how are they to be detained? Normally they'd go before a court of law, have their day in court, and most likely be freed, as there is no act-guilt chain to keep them in jail. The fact that they aren't soldiers, per se, means that normally you can't put them in a POW camp and simply hold them until the war is over; further, how can one make the differentiation in this case between soldier and non-combatant?

Ahhhh. This is where the asymmetry between transnational terrorists and western states really hits home. There has to be a legal way to define this problem, and the terrorists operate in such a way that it becomes, basically, impossible to resolve: on the one side you have Guantanamo with all the associated problems of civilian combatants, while on the other side you have the impossibility of normal legal resolution.


Hence there needs to be a third way. Pawlik points out that intelligence agencies, the military and police need to cooperate and merge in ways that are currently unthinkable, using methods that the police would reject but are widespread within the intelligence communities, such as misleading and confusing prisoners, isolating them and making them very uncomfortable in order to break their will to resist and tell what is needed to be known in order to prevent terrorist acts. This cannot be done by the police: they do not have the tools or the laws to do so.

Fundamentally, intelligence agencies must target the terrorists, either destroying them with military or police means, but also destroying their infrastructures and support networks. This is a key point that many underestimate: intelligence agencies must mutate, as it were, to anti-terrorist agencies that don't merely provide information that is then passed on, but rather integrate with the military and police in order to eliminate the threat, be it by physical elimination ala the Israelis, or by subverting the terrorists themselves and destroying them financially, morally and politically.

Pawlik also makes an interesting point regarding what he calls post-heroic societies, societies that see themselves as the culmination of societal development and who view any sort of harsh treatment as morally repugnant. Further, and this is the hard one, the question is also how much sacrifice can post-heroic societies demand of their citizens in the war against terror: there is great asymmetry between the sacrifice, be it simple data-protection laws that are loosened, and the effects, but the legal community does not appear to be willing to even contemplate this.

Pawlik makes the point that the terrorist challenge can be met, is being met, without giving up fundamental liberties: however, we need to get our concepts about fundamental liberties clear and call things by their true names.


And Pawlik's best point, perhaps, is that he clear states that none of this is very pretty, and you can't win elections with it.



Good work, worth a read if you know German.

Quote of the Month...

In today's Handelsblatt, a certain Torsten Hinrichs of S&P has, for me, the quote of the month:

in German: Die Black Box Rating muss möglichst transparent sein.

in English: The Black Box Rating has to be as transparent as possible.

Ouch.



Does he even think about what he is saying?

Now, to be fair, he doesn't mean that the rating itself is transparent, but rather that the relationship between rating agencies and emitters of financial instruments needs to be as transparent as possible.

Still, he chose his words ... poorly.

Why I Am Not A Democrat...

But rather a Reagan Republican...

This is the reason.

Now, I was 8 years old in 1964. As a matter of fact, I had just turned 8. I remember politics back then only as a very, very, very vague memory, disbelief a short time before that Kennedy had been shot and not understanding why we were in Vietnam, but also not understanding why people were calling the soldiers baby killers.

Simple stuff like that.

Simple stuff like this:

If you and I have the courage to tell our elected officials that we want our national policy based upon what we know in our hearts is morally right. We cannot buy our security, our freedom from the threat of the bomb by committing an immorality so great as saying to a billion now in slavery behind the Iron Curtain, "Give up your dreams of freedom because to save our own skin, we are willing to make a deal with your slave masters." Alexander Hamilton said, "A nation which can prefer disgrace to danger is prepared for a master, and deserves one." Let's set the record straight. There is no argument over the choice between peace and war, but there is only one guaranteed way you can have peace--and you can have it in the next second--surrender.

Admittedly there is a risk in any course we follow other than this, but every lesson in history tells us that the greater risk lies in appeasement, and this is the specter our well-meaning liberal friends refuse to face--that their policy of accommodation is appeasement, and it gives no choice between peace and war, only between fight and surrender. If we continue to accommodate, continue to back and retreat, eventually we have to face the final demand--the ultimatum. And what then? When Nikita Khrushchev has told his people he knows what our answer will be? He has told them that we are retreating under the pressure of the Cold War, and someday when the time comes to deliver the ultimatum, our surrender will be voluntary because by that time we will have weakened from within spiritually, morally, and economically. He believes this because from our side he has heard voices pleading for "peace at any price" or "better Red than dead," or as one commentator put it, he would rather "live on his knees than die on his feet." And therein lies the road to war, because those voices don't speak for the rest of us. You and I know and do not believe that life is so dear and peace so sweet as to be purchased at the price of chains and slavery. If nothing in life is worth dying for, when did this begin--just in the face of this enemy? Or should Moses have told the children of Israel to live in slavery under the pharaohs? Should Christ have refused the cross? Should the patriots at Concord Bridge have thrown down their guns and refused to fire the shot heard 'round the world? The martyrs of history were not fools, and our honored dead who gave their lives to stop the advance of the Nazis didn't die in vain. Where, then, is the road to peace? Well, it's a simple answer after all.

There are times I wonder what would have happened if Barry Goldwater had been elected president, rather than the charming, corrupt and amoral Mr. Johnson.

There is, of course, a parallel between the election of 1964 and the election of 2008. We have, once again, a charming candidate in the form of Barack Obama. Whether he is amoral and/or corrupt is something we may find out if he takes office and reveals his true character.

On the other hand, much like Barry Goldwater, we have someone who has time and time again proved his character: John McCain. While he's not perfect, nobody really is.

And that's the beauty of the US political system at its finest: it is designed for imperfect people. The founding fathers knew a great deal more about human nature, it seems, than all the modern-day pundits are capable of understanding.

PS: hat tip to No Pasarán. Check them out...

Implications...

Well, the intercept worked. Which shouldn't have been that surprising, despite what some arms control wonks thought (you know who you are...).

Details here: a single RIM 161 SM 3 mod was fired, intercepted the satellite at 153 miles altitude with a closing speed of 17k mph. Pretty damn close to the proverbial BB-hitting-a-bullet and a tribute to good old American engineering. More on the missile here: it is based on a SM2 Block IV missile with an additional third stage, guidance and warhead technologies. It is a follow-on system from Terrier LEAP of 1992.

So, what are the implications of this successful intercept - and I'm not going to get into whether this was a hidden test or not, that's for the folks who pretend that such things matter - and what does it mean?

First of all, it changes the status of any US ship capable of firing the SM 3 mod missile, from "mere" warship to anti-ballistic missile capable warship. This is a huge, huge change: it means that the capabilities of the US Navy have expanded enormously, giving them the ability not merely to defend against aerial attack, but also against missile attacks that were, up to now, considered invulnerable. There was no way, to date, to attack a ballistic missile once it was fired and had passed the boost phase (theoretically, you could use a conventional antiaircraft system to attack during the boost phase if you were within range; alternatively, you could use fighter aircraft to attack directly during the boost phase as well. But until this test, a potential enemy could place their missiles well out of range during the boost phase and you couldn't defend against them, just hunker down and hope for the best.

No longer: intercepting a ballistic missile with the SM-3 mod is now eminently feasible, unless, of course there are active measures involved from the ballistic missile, such as decoys and/or manouevering, and even then there'd be a very good chance of intercept, even from a single missile fired at the target.

This means that you can defend against ballistic missile attack on a tactical level: all you need is a US warship capable of firing the SM-3 mod.

Now, what are the implications of this?


One scenario for a US-Chinese conflict is a massive attack by the PRC against Taiwan over the Taiwanese Straights, which would entail heavy use of ballistic missiles to knock out the majority of Taiwanese air assets to prevent a massacre as the PRC transports troops to force a landing. If the PRC fails, they will lose the vast majority of their troops and the attack would fail. Further, given that the US would come to Taiwan's aid in the case of such an attack, the Chinese have invested heavily into medium-range, non-nuclear ballistic missiles to attack not only Taiwan, but also US carriers coming to Taiwan's aid: while Chine might have to fire 30 such missiles to get a hit, that is, for them, an excellent neutralization of the threat of US carriers (and it is a massive threat to such a landing attempt). China has put in some 800 medium and short-range missiles in and around the Taiwanese Straights for this purpose.

Basically, the Chinese plan was to identify a rough area of where the carrier and support ships would be, within a 5 square mile area, and then fire enough missiles to saturate that area within a very short period of time, forcing the US either to break off and run or face severe damage from such an attack, with a very decent probability of sinking not only a carrier, but most of the support ships in the task force as well.

Now this alternative has been, largely, removed. Being able to fire the SM-3 mod, support ships could destroy only those missiles that would actually come close to hitting US ships, enabling them to continue operations.

This means that the US interception now has created a great deal of uncertainty with Chinese planners: they cannot count on being able to take out a carrier and most of its support ships. They can continue to engage such ships, but unless they can destroy them or put them out of commission - kinetics alone would be damaging, let alone a conventional warhead - then the costs to the Chinese will be enormous in terms of US ability to destroy their invasion force.

That's deterrence.

It goes, of course, much further: if any ship capable of firing a SM-3 mod is also capable of intercepting a ballistic missile, that means that certain horror scenarios - of, say, Iran firing an IRBM from a freighter off the Eastern seaboard - can be called into question: instead of merely having to execute such a plan, now such a country would have to also know where such warships were to ensure that they are out of range, and this exceeds the abilities of such a country by quite a large margin - are no longer feasible.

That's deterrence as well.

Further, it disrupts any opponents' ability to use space-born assets with impunity for reconnaissance in wartime: they can be brought down, and without great effort. Just move the ship, charge up a SM-3 mod and move the ship to intercept: as far as these things go, fairly trivial, as has been proven.

That's deterrence as well.

The implications are severe: the US, basically, has proven to now possess a working anti-ballistic missile defense that has shown itself capable of working under real-world conditions.

For the US and their allies, that's good news: it is very, very bad news for anyone planning a war against the US and their allies.

And that is deterrence.


Oh, and what ships can fire this? Anything with an Aegis system.

Expect significant orders from both Japan and Taiwan...

Update on Islamophobia...

The article referred to here is now available, in German, online here.

Just thought you'd like to know... :-)

Marry Him...

I ran across this, which basically talks about how aging is affecting career women who find that they do want a family and children. It's by Mary Gottlieb, titled "Marry Him": very good read.

I've been married 18 years now, on 4 Aug it'll be 19 years.

When my wife and I were first going out, one of our conversations touched on what Mary has written. My wife basically asked "Why give up all the women in the world for me?" My answer - the only right one - was "Why give you up for all the women in the world?".

That's all. There is nothing more to say.

Most Astute Comment on the US Election So Far...

This is the best comment I have seen on the US election to date, and needs no additional commentary:

"The 2008 Democratic and Republican candidates for President will be...John F. Kennedy and Ronald Reagan."

'nuff said, Flame out!

What The Real Problem Is...

Well, Zumwinkler, the head of the German Post Bank, resigned on Friday because he's being nailed with a nasty tax evasion process.

The German government has started a wide-spread anti tax-evasion investigation, aimed mainly at those in higher income brackets that are using loopholes that aren't really loopholes (i.e. exist only in their imagination) to avoid paying German taxes. They've raided many offices searching for monies deposited illegally in countries like Lichtenstein, invested in ways so that income doesn't get reported, usually simply by obfuscation.

Let's take a look, briefly, at tax rates in Germany.

Let's start at the bottom: the first 7 664 € annual income are tax free. The tax rate runs progressively higher to the largest tax bracket, incomes from 52 152 to 250 000 €, where the marginal rate is then 42%. Beyond 250 000 € the marginal rate is 45%.

That is only for income tax: you have, then, as well, your state-mandated social security equivalent payments, which are 23% of your gross income up to a certain level, which for the employee works out to paying 21.4% of your income for social security, up to around 6 500 €/month: earnings beyond that are exempt from social security taxes. We're going to ignore health insurance for the time being...

Add that together, and you can see why tax evasion is probably numerically the greatest white-collar crime in Germany.


Now, what is a poor manager to do? We're talking folks earning beyond 250k €/year: let's take the example of someone earning 265k €/year. That's €22k/month: his income tax withholding on that is about €10k, and his contributions to social security is around €1500. Hence, without any other items, his €22k income has dropped to less than half that, with just a tad more than €10k. Now, while that sounds like a lot, it's not really, given the reasons why such folks earn such monies: their productive lives are being bought for the company, and nothing should distract them (well, that's the reason: reality, of course, is rather different, as we've seen by the number of incompetent and criminal managers...).

If that person can avoid paying taxes on, say, half of his taxable income, that's equivalent to getting a 100% raise. If half of your income is taxed away - and given German demographics, your social security contribution's return on investment will be negative if you are under the age of 60 or so - then you've got great incentives to find ways of avoiding paying those taxes.

Now, I'm not advocating not paying taxes: duh.

But the real problem isn't so much that these folks have to pay higher taxes: it's much more that the state in Germany, which of course has to be financed by taxes, is too large.

The real reason why tax evasion in Germany, amongst white-collar workers and managers, is a problem is that the taxes are, for the real world, too high. Tax evasion, to the extent that it is the problem that it is in Germany, is a symptom, rather than the result.

And given the amounts of waste and fraud - don't get me started, I'd have to spend the rest of my life working on it - in Germany, which of course white collar workers know about quite well, the motivation to play their part in the general welfare is downright negative.

Dezinformatsia and Active Measures...

This caught my eye this lovely morning.

It's, of course, typical active measures: it is the deliberate use of false information, be it forged documents, manuscripts, photos, or the spreading of malicious propaganda and fabricated intelligence.

In this case the disinformation that the CIA is transporting heroin out of Afghanistan with military aircraft.

In other words, the deliberate spreading of false information.You can see more about this here. We're not talking speculatively here: the link takes you to what a former KGB general says about the Soviet Union's active measures campaigns aimed at undermining the West, especially in the Third World. Active measures ("Активные мероприятия") was first and foremost a method of political warfare: the reason it was called "active measures" is that it involved actively setting up the means of spreading disinformation, such as the use of front organizations that would not exist otherwise. This wasn't some sort of side show: it was the heart and soul of Soviet intelligence efforts to weaken the West and, more fundamentally, to make the US look as bad as possible in order to discredit the enemy of the Soviet Union. Hence the spreading of the rumor by Jakob Segal that AIDS came from a biological war lab and is aimed at black people (see here).

But it didn't stop there: the Soviets were more than happy to use this to attack western allies in other countries, people who were true leaders and were, hence, obstacles to the triumph of Soviet politics, such as Masyrk of Czechoslovakia and the Shah of Iran; the attempt of Pope John Paul II was most likely an active measure as well.

What were other active measures? How about the training of terrorists, including the idea of hijacking airplanes. The Soviets actively backed the development of international terrorism: that is not speculation, that is what they, themselves have said (see here). Sure, they were able to build on resentments and prejudices, but the goal was, in the words of Andropov, "to install a Nazi-like hatred of Jews throughout the Islamic World, and to turn this weapon of the emotions into a terrorist bloodbath against Israel and its main supporter, the United States."

Well, that sure seems to have worked.


The point of disinformation and active measures isn't necessarily to support Soviet goals anymore: after all, the Soviet Union collapsed. But nowadays it is all about furthering Russian goals, and for the FSB, the follow-on of the KGB, the world is a zero-sum game that means that if the US and its allies are harmed, then Russia is helped.

Hence the stated goals of Soviet active measures have been adopted by the Russians. Fundamentally, these cover six points:

1. To influence America, European and world public opinion to believe that US military and political policies are the major cause of international conflict and crisis.

2. To demonstrate that the United States is an aggressive, militaristic, and imperialistic power.

3. To isolate the United States from its friends and allies, and to discredit those states which cooperate with the United States.

4. To discredit US military and intelligence establishments.

5. To demonstrate that the policies and objectives of the United States are incompatible with those of the under-developed nations.

6. To confuse world public opinion concerning Soviet global ambitions, creating a favorable environment for Soviet foreign policy

(source here)

Replace "Soviet" with "Russian" and everything applies.

And the Soviets taught well.

The war with Iraq was based on a web of lies and disinformation, but not that of the West: see here.

The main tools of disinformation in the Middle East are as follows:

• Staged suffering and grief
• Co-location of military assets and civilians
• Restricting journalists' movements
• False claims or disclosures
• False man-in-the-street interviews
• Self-inflicted damage
• On-the-record lies
• Covert dissemination of false stories
• Censorship
• Bogus, edited, or old footage and images
• Fabricated documents

We've seen all of these in action in the Middle East, be it in Gaza, Lebanon, the West Bank, or Iraq. To repeat: these are not the things that the West has done, but rather is done locally, or, in the case of Al Jazeera, internationally. Al Jazeera can be considered to be an independent news source only in the sense of contextual objectivity, i.e. Al Jazeera is viewed as more objective than the heavily censored official TV of Arab states, but it has proven to be the channel of choice for disinformation campaigns from non-government sources, and hence is included here.

Disinformation and active measures continue today. If you take a look here you can see what the post-Soviet Russians were doing immediately after the end of the Cold War. The "new thinkers" saw that they had to learn how to dominate the political arena in order to gain power.

Astute thinking: it underscores, however, the direction that active measures have been taking and, to a large degree, the success that they have enjoyed.

Western societies are under attack not merely from islamists, but also from the radicalized environmentalists. Part and parcel of a disinformation campaign?

Watermelons, anyone?

Islamophobia...

There is an interesting article in today's Handelsblatt: unfortunately, it's not online. Which is a shame.

Basically, Ferdinand Knauss has done a good job: he's identified what Islamophobia is and why it's important to know what it is.


First and foremost, it's got nothing to do with rejecting Islam: it's got everything to do with turning critics of Islam into mentally disturbed people.

Sound familiar? If you have ever taken a look at Soviet jurisprudence, one thing that stands out is the fact that many dissidents were condemned not for criticizing the Soviet state, but rather for being mentally ill.

The same is true for Islam.

Or, more specifically, the attempt to radicalize the religion and turn it into a mobilization tool to achieve political gains.

The first use of the concept "Islamophobia" was used - o wonder of wonders - in Tehran to stigmatize the opponents of the clerics, starting in 1979. The intent of those introducing the word was to pathologize opposition to Khomeini's brand of Islamism, to turn criticism into mental instability and sickness. This was fairly successful, and the Islamic Human Rights Commission used the term in advance of the fatwa against Salman Rushdie in 1988 to properly label him as someone sick and deranged.

This use has spread: the Commission for British Muslims and Islamophobia brought out a report in 1997 that demonized islamophobia as being equivalent to racial violence and anti-muslim discrimination. The commission belongs to the Runnymede Trust, a British think tank, financed in part by the British government. This was the first large-scale use of the concept in the press and spread the idea, the meme, that islamophobia is the same as racism.

This has spread to academia: the purported identity "islamaphobia = racism = danger" is not merely popular amongst political activists of the left, but has entered the mainstream in public documents. The EUMC, the European Monitoring Centre on Racism and Xenophobia, stated in Dec 2006 that Muslims in the European Union were victims of islamophobia.

But they don't define it.

How could they?

Fundamentally, a phobia, as Herr Knauss rightfully points out, is an irrational fear of something. Afraid of small areas? Claustrophobia. Fear of spiders? Arachnophobia. The problem is that this is rightfully a psychological disorder, where, for instance, someone literally panics when a small spider appears, or is constitutionally incapable of sitting in a small room. A phobia is an indication of severe emotional problems, and is right and properly a sickness.

Not so "islamophobia".

Here is an excellent example of political correctness run amok: for daring to criticize the darlings of the left and the media, the use of the label "islamophobic" is a pejorative, a mislabeling, a deliberate misrepresentation of the facts. This is not about an irrational fear, but rather it is one of criticism: the left and radical islam is absolutely intolerant of the existence of any kind of criticism.

The core of Islam critics aren't western intellectuals, but rather what Islam considers apostates, former Muslims, such as Ali Sina and ibn Warriq. They know Islam from the inside, and their criticism is viewed by the dogmatic representatives of that faith as being nothing less than a sickness.

The use of "islamphobia" to describe critics of Islam is nothing more than an ad-hominem attack: by placing criticism on the same level as mental illness, Islamics can work without fear of criticism.


Like I said, this is nothing less than what Soviet psychiatry practiced. Criticize the regime, and you end up in a mental institution for the criminally insane: the mere idea that you would even want to criticize is proof of your insanity, as the state is the embodiment of the best of human endeavors and is as such beyond criticism.

Those using the term are themselves nothing more than dogmatic islamophiles, using the term deliberately to slap down dissent and criticism. If you can't criticize the religion, you can't differentiate it form your own: if you can't criticize the religion, then what is the the difference between it and your own? If you can't criticize the religion, then by what means can you say that you don't want sharia law? If you can't criticize the religion, then how can you prevent it from taking over everything?


You can't. That is the nature of totalitarian movements, and, bluntly, that is what the Islamists are all about. Their fellow travelers of the left have plenty of experience with that.

True Stupidity and the Left...

True stupidity and the left... but I repeat myself.

We've all seen this by now. Berkeley wrote a nastygram to the Marines and gave Code Pink a parking permit in front of the office.


Now, that was stupid enough in itself.

But not the real stupidity comes: this is a quote from the link above.

"I was under the impression that we have the right of free speech," said Xanne Joi of Code Pink. "To me, I thought free speech meant you get to say what you want without recrimination."

Sorry: free speech means that you can say anything you want (within limitations that should be jealously guarded, such as calling "Fire" in a movie theater) and that no one can stop you from saying it.

It does not mean, has never meant, and never should mean that what you say should not have any effects.


Believing that is true stupidity, and explains a lot of the verbal nonsense that comes from the left.

Free speech has never meant that you can say whatever you want and no one can criticize you for it.

Free speech has never meant that you are not responsible for your words.

Free speech has never meant that others may not act upon what you have said.

Free speech has never meant that you are free from the effects of what you have said.

Free speech has never meant that you are free from restrictions, legal ones, on what you say, such as slander, libel, obscenity, perjury, contempt of court, hate speech, noise pollution, copyright infringement, divulging classified information, sedition, treason, blasphemy, just to name a few restrictions.

Free speech has never meant immunity from social approbation, of social criticism for what you have said.

And most importantly:

Free speech has never meant that you can force people to think of you as being anything but a complete and total idiot and fool.


Dear sycophants of the left, you nattering nabobs, free speech means that you can say whatever you want: it also means that I can say whatever I want. It also means that you bear the responsibility for what you say: if you find that chilling, then put on a sweater.

Escalatio and Salami Tactics...

First of all, hat tip to Belmont Club and also to Snapping Turtle, both via InstaPundit, for getting me to pay attention. Reality has been intruding lately...

Let's talk first of deterrence. Deterrence takes many forms: the various words for deterrence - Abschreckung (German), dissuasion (French) and устращение (Russian), as well as the Anglo-Saxon deterrence each have different meanings, even when the same thing is meant. The differences are subtle, but meaningful: while the English "deterrence" points to a weighing of alternatives and then a deliberate and conscious decision to not do something - a criminal is deterred if he decides not to rob someone because they may be armed, for instance - while the French "disuassion" points more to something along the line of dissuading someone, of the opposite of persuasion, which has fundamentally the same thing as the English.

The German "Abschreckung" isn't so simple: it's less a matter of intellectual analysis, but much more an emotional thing, of springing back from an action, and the word is based on the German for terror, with the "ab-" prefix adding to the effect.

The Russian устращение, ustrasenie, doesn't mean what the English and the French mean, let alone the German: the word means to cow or intimidate: back in the Soviet days (and according to the Soviet Military Encyclopedia) this word was always - with no exception - used in connection with NATO. It was first and foremost an ideological definition, and underscored what American nuclear weapons meant for the Soviets: they were there to intimidate them.

 

But back now to the topic at hand: the rebirth of deterrence.

 

Now, what is the whole point of deterrence?

 

Basically and most fundamentally, we have to go back to the immediate post-war period. The West had, largely, demobilized, while the Soviets, largely, had not. I'm simplifying, of course, but the countries of Western Europe, devastated by the war, had no will to remilitarize and create a large standing army. What to do, then?

Rely on nuclear weapons to dissuade, to deter, the Soviets.

But how did deterrence actually work?

Let's go back to the Soviets: they were, after all, those who were to be dissuaded, deterred. What would deter them?

Correlation of forces deterred them, dissuaded them: the calculus of Soviet military doctrine, of acquiring such superiority of force that their victory, whilst never guaranteed, would be inevitable. Great believers in inevitability, the Soviet military. If the correlation of forces were not favorable, the Soviet military informed the Politburo and decisions were made to address this. The Soviet military was tasked with ensuring that the Politburo could use the military to further its goals: to intimidate the bourgeois governments of the West in order to get them to stop resisting the inevitable development of history: the triumph, of course, of Soviet communism over capitalism.

So, what is the point of the links? What do they mean?

A group of retired military officers - actually, the elite of NATO - says quite bluntly that NATO must consider the first use of nuclear weapons, that NATO must retain a first-strike capability, nay a pre-emptive capability to destroy, utterly, the threat of attack by an enemy.

The reason behind this? Simply put, proliferation, or, more exactly, the threat of proliferation: the danger that with more and more countries - with less and less responsible leaders - will acquire the ability to use nuclear weapons in a conflict, leading to an increased likelihood that they will be used.

You see, after the collapse of the Soviet Union and the Warsaw Pact, the threat of the use of nuclear weapons was largely removed from the realm of politics.

It is now returning with heavy, heavy footsteps. It's not so much the simple likelihood that nuclear weapons are apparently being developed: it's much more that those developing them are not doing so because they want to shift correlation of forces to place pressure on the West (or, more exactly, that is not the primary reason), but those who are actively developing them - let's drop the sham, that's Iran - are developing them because they want to use them.

And that is what is so intensely dangerous.

The pundits in the West who seem to care little of whether Iran develops nuclear technology to the point where it can generate enough weapons-grade fissile materials to manufacture nuclear weapons, as long as they don't actually do it, are missing the point about nuclear weapons: they are a Rubicon that has not been crossed since 1945.

With the weakening of the UN and the apparent increasing rise of non-nation players - be these NGOs or movements like al-Qaeda - that do not play with the same rules as the classic nation-states of Westphalia, the problem becomes more acute.

So, what is the point of the threat of pre-emptive usage?

Simple: however organized the non-state actors may be, they still must operate within a framework of nations. Right now there is no way to prevent weak states - or sympathetic ones - from harboring non-national actors, and indeed these actors predicate their operations on being able to hide amongst the populations of such countries.

Political attempts to make this impossible have failed: both Afghanistan and Iraq underscore the fundamentally messy and protracted nature of asymmetric, but conventional, non-nuclear combat.

The generals here are pointing out that if the West is to succeed in fighting an ideologically motivated opponent, one committed to intimidating the secular governments of the West in order to get them to stop resisting the inevitable development of history, the triumph of Islam over the West, then it must revert to the balance of terror that sustained it through the Cold War.

But not, this time, by believing in rational, cool thinking that characterized Soviet military planning, but in recognizing that the opponent is, in our eyes, in the eyes of the enlightenment, fundamentally irrational. Hence the need to transform deterrence into what the Soviets always believed that it was: intimidation.

A pre-emptive philosophy, of fundamentally saying to the Muslim world, "Do not think of obtaining nuclear potentials to use against us, for we shall destroy you beforehand", can function only if it is used to intimidate, in the sense set out above, the nations involved into refusing to be a part of anyone's plans to actually use nuclear weapons.

And there are reasons that this needs to happen: if, for instance, a modest nuclear weapon of, say, Hiroshima yield, were to be detonated in Tel Aviv (after, say, being smuggled there by truck), it would gut Israel's society and kill between 1mn and 2mn people. The reprisals, say against Iran, would, given a 15-missile counter attack against the major Iranian cities, kill over 30mn.

What the real threat, though, is for the attack to be on Rome.

Normally, this would be deterred by guaranteed retaliation: but if al Qaeda executes the attack, who do you retaliate against? This is, of course, the deliberate policy of al Qaeda, of asymmetric warfare, of denying the West the ability to use the strengths of the West against al Qaeda,

But put nuclear pre-emption into the equation, believable - and that is the point the generals are making - pre-emption, and you get vastly different kinds of behavior.

But it's all a question of believability: call NATO's bluff on such, and you've exposed the paper tiger and won a massive propaganda victory. If NATO is going to go for such a philosophy, it has to be believable, which is what the generals are saying.

With the way things are going right now in NATO, with the abject German inability to grow a backbone and live up to its treaty commitments, believability is a major issue.

Put simply, deterrence will not work, has not worked, and believing that al Qaeda is a rational actor - as we understand that - and can actually be deterred is foolish at best and downright criminal at worst.

Hence: let NATO intimidate the countries we are talking about into deciding that they will no longer suffer al Qaeda to operate within their national borders. That is essential to destroying that group.

Escalatio, or the art and science of political intimidation by military threats, is a moot point; the enemy is engaged in operating at very low levels, of always making sure that they remain under the threshhold, operating as the Soviets did with "salami tactics" that constantly, slowly shift the barriers around. The West has lost its ability to play escalatio, not the least due to the nattering nabobs of the MSM, and if that is gone, there is only one game left to play, that of naked power politics.

And a small follow-up...

I ran across this today.

It just goes to underscore that the Greens are willing to sacrifice anything and everything to protect their version of the truth and remove any dissent from the program: it is, has been and will always be about control.

And here is a top-ten list that simply - and sensibly - lays out what environmentalists need to consider:

10. Go after pollution sources with the highest benefit/cost ratio, not those which are most noticeable.

9. It is always best and often vital to utilize existing infrastructure and capabilities when implementing new methods or technologies.

8. "Natural" "Organic" and "Bio" do not mean "good."

7. Plans for the future should not be made on the most optimistic predictions and should consider the most pessimistic reasonable predictions.

6. Simply attacking an environmentally damaging activity is not effective unless a better alternative of similar or better economics and usefulness is presented.

5. Taxation, price increases and caps on energy are inherently regressive and cause great damage.

4. It is unreasonable to expect the general public will accept major reductions in living standards or comfort and convenience. Simply put, it won't happen.

3. Depending on continuous heavy subsidies is not sustainable.

2. Every little bit does not help.

1. Sacrificing the needs of an economy for the environment will destroy both.

While each and every point is good, it is 5 and 4 that lead to 1. The damage caused is real, in terms of opportunities lost and futures denied: anyone wanting to deny progress, real progress instead of the reactionary nature of "progressives", is fundamentally interested in controlling his fellow men and should be seen as a fundamental threat to any and all democratic, representative governments. It's really as simple as that...

And now I'm just waiting for someone to tell me to take this down because it's harmful to the environmental movement...go to the link to see what I mean (see the comments...)

Global Warming Redux...and the Watermelon Movement...

This time it's a lacunae by Cockburn. You can read it here.

What Cockburn says is that he doesn't quite understand why the left has gone so heavily for the environment and the scare tactics of global warming.

He says:

This turn to climate catastrophism is tied into the decline of the left, and the decline of the left's optimistic vision of altering the economic nature of things through a political programme. The left has bought into environmental catastrophism because it thinks that if it can persuade the world that there is indeed a catastrophe, then somehow the emergency response will lead to positive developments in terms of social and environmental justice.

What really is going on is this: the left is really only interested in one thing only, and that is control. They still truly believe that they can reach the promised land if they can only control the means of production.

What Cockburn really should have written is this:

The left has usurped the environmental movement because it thinks that if it can persuade the world that there is indeed a catastrophe, then by giving the environmentalists control over the world's economy, the catastrophe can be averted.

Now does that make more sense?

His further points, however, are completely correct and underscores how truly, deliberately anti-progressive the left has become: the Luddite aspects of the environmental movement mesh beautifully with the left's desperate desire to control how people live their lives.

But this time it's enormous: they want to stop the Third World from moving away from poverty into affluence: just think of it, if the Third World lived like us how much damage that would create! Hence we have to keep those poor and misled fools from making a mess of their lives and ensure that they only may live as we see fit to choose.


Seriously, how can anyone, nowadays, be a leftist? Be a progressive? The world has turned these movements on their head, exposing their absurdity, and yet...

There is indeed a sucker born every minute. Those on the left who truly believe this are the useful fools of Lenin. They work, to borrow from Chomsky - hah! - with the bought priesthood of the left, the climate priesthood of the global warming apocalypse, kept happy and complacent with academic grants and positions of power within the climate science peer group and who ensure that peer review takes on new meaning.

The mainstream media, the synodiporia of the Watermelon Movement - green on the outside, red inside - is complacent as well. They are fellow travellers, at the best unwitting agents of influence, manipulated to take actions in the interest of the Watermelon Movement. These are those whose opinions fit into the goals of the Watermelon Movement, for whatever personal reasons: they are interested, for instance, in furthering their own careers, and are more than willing to cooperate, to accept support that would otherwise be severely embarrassing if found out.

Wonder why the image of the US has been so under attack? it is because so many have been able to do so well by attacking the image of the US for their own reasons and interests. The constant beating of the BDS drum, the constant harping and criticism by journalists whose only real interest is ensuring that they get more column-inches than anyone else working for their paper, has a cumulative effect, especially when alternative news sources are limited.

The seduction of the Watermelon Movement is fairly straightforward and literally takes its cues from Soviet-era KGB false flag recruitment techniques (i.e. telling someone that they are spying for Israel when in reality they are being run by the KGB), where careful and deliberate duplicity is the main mode of operations.

This method is goal-oriented disinformation, and the global alarmists are excellent at manipulating the main-stream media journalists: after all, their work is peer-reviewed (failing to mention that the peers in this case all share, basically, the same goals of getting money for their academic careers) and they're scientists, they can't be wrong. So let's not learn the science, find that non-statisticians are using advanced statistical methods that they don't know how to use (and try to hide how they manipulated the tools so that they always get the results they want), that the fundamental data underlying the models is biased due to urbanization and incorrect proxies and is increasingly simply bad science, but instead parrot the goal-oriented disinformation that the activists want spread.

But back to Cockburn: he's right. The global warming alarmists are truly medieval with their new-found ability to buy indulgences.

The Kyoto Accord is and remains fundamentally reactionary, with the goal of ensuring that underdeveloped countries be actively denied progress in meeting the needs of their citizens.


So who are the members of the Watermelon Movement? They are the the NGOs and government people who attend the conferences on global warming, they are the NGOs and government people who write the articles and are quoted in the mainstream press. They range from all over, but have one goal: to get their own goals advanced.

In other words, the Watermelon Movement is based on individual self-interest, but not in terms of the matter at hand, but rather how these groups can best attach themselves parasitically to the world's economy.

Who's behind them?

Good question.

It's a mixture of guilt-ridden financiers like Soros, dinosaurs of the left like MoveOn and the other ancient leftist groups. But who are they exactly, what are their interrelationships?

Good question.