Putin's Victory in America

 The Donald Trump-instigated right-wing storming today of the U.S. Capitol while Congress was counting the electoral votes for Joe Biden's and Kamala Harris' victory in last November's election is the pinnacle of Vladimir Putin's attack on America.  Since 2016 and perhaps before, Putin has sought to undermine democracy in America, since American democracy, the fount of freedom in the modern world, is a titanic embarrassment to dictators and demagogues such as Putin.  Putin has some strange influence over Trump, and Trump throughout his Presidency has sought to emulate Putin and other autocrats.  Putin's intelligence services have massively hacked the U.S. government and American businesses, with nary a whisper of protest from Trump.  For all we know, Putin has access to the inner workings of all significant parts of the U.S. government, apparently with Trump's acquiescence.  

The American people, however, weren't prepared to knuckle under to demagoguery.  Last November, they stood by their democratic principles and freely elected Joe Biden President and Kamala Harris Vice President, thus delivering to Putin a massive defeat in his war against American democracy.  But Trump and his goon-followers, in the most unAmerican way, have disgracefully refused to participate in a peaceful transfer of authority.   They assaulted one of the most fundamental symbols of our nation, the U.S. Capitol, and besmirched it with their unAmerican, undemocratic, violent malice.  Trump's goons won for Putin.

But their victory was short-lived.  Even as I write, Congress, which had to temporarily stop counting electoral votes because of the mob violence, has resumed its work and will count the votes electing Biden and Harris.  Putin's victory will prove Pyrrhic.  Democracy has survived and won.

Will Russia Blackmail Mark Zuckerberg?

The news media has been running many stories lately about calls for the U.S. government to break up Facebook.  One idea is to separate Facebook, Instagram and WhatsApp, all of which are owned by Facebook and all of which are controlled by Mark Zuckerberg.  These three websites together dominate social media, and advocates of a breakup express concern about monopolization, and also the potential impact on freedom of speech of having so much of the social media business under a single corporate roof.  Indeed, it's not just a concern about a single corporate holding company.  We're talking about one guy--Mark Zuckerberg--who controls all three of these dominant sites.  Zuckerberg arranged to have himself given supervoting shares of Facebook when the company went public.  So he single-handedly controls everything at these three companies even though he has taken a lot of money from public investors.

Special Robert Mueller indicted a bunch of Russians and Russian companies for interfering with the 2016 election, and his redacted report discusses this problem in some detail.  U.S. intelligence agencies are supposedly combating Russian efforts to muck around in the 2020 election.  Only time will tell how effective the countermeasures are.  We may get a preview from the European Parliament election taking place later this month, which Russia is reportedly trying to influence.

But there's a simpler strategy for Vladimir Putin:  blackmail Mark Zuckerberg.  After all, Zuckerberg controls the whole shebang, and if you control him, you're in a sweet spot.  Zuckerberg is human like the rest of us, and all Putin and his henchmen need to do is find out what his weaknesses are.  This surely has already occurred to them, and they no doubt are nosing around in Zuckerberg's past as much as they can.  They'll try to tally every beer he drank before turning 21, and everything he may have smoked or snorted.  They no doubt will be pro-active, which is an integral part of Russian spycraft.  Pro-activity in this regard could mean things like ensuring that Zuckerberg has the opportunity to meet very attractive, friendly and easy-going women wherever he is, and only later might he find out that they had tiny cameras.  If Putin succeeds in getting a pee tape or its equivalent featuring Zuckerberg, Mark will be in a bad place.

U.S. antitrust law doesn't provide that a company can be broken up because its CEO is subject to blackmail by a foreign nation.  But there seem to be good arguments for contending that Facebook satisfies the legal requirements for splitting it up.  And the distinct possibility that a hostile foreign nation would want to blackmail Zuckerberg provides additional reason to be concerned about allowing today's monolithic Facebook to keep lumbering along. 

There may be some who would suggest that Putin already controls the U.S. government, and would through his proxy (you know who) stop the Justice Department and Federal Trade Commission from taking action to break up Facebook.  Whether or not this is true, Putin would want to blackmail Zuckerberg if he can.  The government--at least those parts of the government that still adhere to their oaths to support and defend the Constitution--should do whatever is possible to stop this from happening.  The rest of us may want to consider taking a break from Facebook, Instagram and WhatsApp.

Trump Defeated by North Korea

Notwithstanding President Trump's summit with Kim Jong Un early this month, North Korea has continued to make progress in building its nuclear arsenal (https://www.cnn.com/2018/06/27/politics/north-korea-infrastructure-improvements-nuclear-facility/index.html).  Trump has abysmally failed.  He agreed to a no-conditions summit with Kim, a gesture that legitimizes Kim's standing in international diplomacy.  Trump also ordered the U.S. military to stop participating in war games with South Korea, which the North Koreans have whined about for years as a major provocation.  These were substantial concessions that Trump made, and he got nothing in return.  It's business as usual in North Korea, with strengthening their nuclear arsenal while the U.S. retreats.

Trump has done far worse with North Korea than Barack Obama did.  After taking office, Trump scared the North Koreans badly, and Kim accelerated work on his weaponry.  Now he has intercontinental ballistic missiles that can reach the American mainland and perhaps can or soon will be able to carry the hydrogen bomb he developed in response to Trump's belligerence.  While arranging for the no-conditions summit, Trump called Kim "very honorable" (https://nypost.com/2018/04/24/trump-calls-kim-jong-un-very-honorable/).   With war games halted and Kim diplomatically elevated, America is now weaker and North Korea is much stronger.  Trump was snookered by a kid tyrant.  And he thinks he knows something about the art of the deal?

We must be concerned about Trump's forthcoming summit with Vladimir Putin.  Putin is far more formidable than Kim Jong Un.  What could happen at this summit?  Will Trump surrender to Putin?  Will Western Europe become part of the new Soviet Union?  Will America become a province of Russia? 

Russia's Nuclear Missile Defeat

When Vladimir Putin, Russia's President, recently announced an array of new Russian nuclear weapons (see https://www.cnn.com/2018/03/02/europe/putin-russia-weapons-analysis-intl/index.html), he unwittingly acknowledged another strategic defeat for Russia.  To be an effective threat, these weapons will have to produced in significant numbers.  Russia is relatively poor nation with a falling life expectancy.  The price of petroleum, its primary export, has fallen sharply in recent years, causing economic contraction.  It has massive environmental problems and a slow birth rate that will lead to the same demographic time bomb that bedevils many nations today. By any reasonable estimation, Russia doesn't have the money for these new weapons.

Putin, like a bad general, is fighting the last war.  For understandable reasons, Russians are paranoid about being attacked militarily by other nations.  They suffered terribly at the hands of the Nazis during World War II, losing 20 million or more people.  But generals who prepare for the next war, not the last one, are the ones headed for victory.  Whether or not Putin believes it, America won't attack Russia militarily.  It will only defend itself, as it did recently when Russian mercenaries attacked U.S. troops in Syria.  The lopsided American victory in that instance should give Putin pause about further military engagement with the United States.  But who knows what goes on in his head.

By diverting large sums of money into weapons technology and the building of a new, large nuclear arsenal, Putin guarantees that his nation will be economically crippled for decades.  The United States won the Cold War because its economy vastly outgrew the Soviet economy, and the Soviet Union no longer had the wealth to maintain its Eurasian empire.  It had to break up and it did.  China is far more powerful than Russia today, not because it has better weapons but because it has a far stronger economy.  America, too, is far more powerful because it is economically way ahead of Russia and widening the gap.  By designing and building more nuclear weapons, Putin has put Russia on the path to another defeat.

How Putin Has Already Blown It

On election day in 2016, Vladimir Putin must have thought he was a pretty smart guy.  The candidate for President of the U.S. that he favored, Donald Trump, had won.  Putin, according to America's intelligence agencies, tried to help Trump out through various nefarious means to discredit Hillary Clinton.  Although it's unclear how much Putin's underhanded tactics affected the actual vote, he probably wasn't averse to giving himself a pat on the back.

That was then.  Things are different now, just two months later.  U.S. intelligence agencies have revealed Putin's shenanigans. Important leaders in Congress, including Republicans as well as Democrats, are alarmed.  Trump nominees for cabinet positions, when asked about Russia, have been very careful to distance themselves from Putin and Russia.  Even Trump has had to admit that Russia tried to interfere in the election.

The uproar will limit Trump's options with Russia and Putin.  Congress won't give him a free hand in dealing with them.  It will be tough on the issue of sanctions.  It will insist that the U.S. honor its pledge to defend NATO members.  It will insist that human rights still exist and must be defended.  It will insist that Russia's military aggression not be rewarded with friendship,

Putin has already blown it.  He incorrectly assumed that his misdeeds would go undetected.  But that didn't happen, and now he's been exposed.  He's proven to be an embarrassment and a liability to his buddy, Trump.  The bromance may have to cool off.  Trump has been on the defensive about Putin and Russia, and his post-election sheen is a little tarnished.  Trump has lost some power even before he took office, power he might have needed to cozy up to Russia and Putin.  Too bad, Vlad.  You may have outsmarted yourself.

Everyone's a Loser in Syria

With Russia's entry into the bag of dog doo that is Syria, the chattering classes are all astir over who's up, who's down, who's winning and who's losing.  Russia is the usual nominee for winner.  But what exactly has Russia won?  It can't win the war.  Between ISIS, the Kurds and various other rebel groups, most of Syria is no longer in the hands of the Assad regime.  Russia can't afford to commit the tens of thousands of ground troops, equipment and air power that would be needed to retake and hold all this ground, and the Assad regime's army appears too depleted to mount the major offensives that would be needed.  All Russia can do is prop up an Assad rump regime in western Syria that would be under constant attack.  That would mean an indefinite commitment to a war with no end in sight and no possibility of a Russian victory.  

Russia's puppet in Syria, Bashar al-Assad, isn't a winner; he has only avoided becoming a big loser.  His diminished army can't reconquer what he's lost in Syria.  Russian air strikes will allow him to bolster his lines and tighten up his defenses.  But a few dozen Russian air craft don't begin to provide enough air power to support an offensive that could retake all of Syria.  At the same time, Assad's authority is diminished.  Now, he will have to do whatever Putin tells him to do, and like it, as well.

The Iranians, who apparently negotiated an alliance of sorts with Russia, have had their weakness revealed.  For all their bluster and unacknowledged efforts to build nuclear weapons, they don't have the strength to prop up a two-bit dictator in a small nation.  They had to call in first, their Hezbollah allies, and then Russia.  Maybe the Iranians are claiming a propaganda victory.  But they just ceded power to Vlad the Invader, and it's generally a bad idea to give power to an aggressive despot.  Has the Islamic Iranian government forgotten that one reason Shah Mohammed Reza Pahlavi allied himself so closely with the United States was because the Russians wanted to take over Iran after World War II?

The Shiite dominated government of Iraq has cozied up to Russia and allowed Russian military planes to fly over Iraqi air space in order to reach Syria. Maybe it had no choice; its Iranian handlers could have told it to cuddle up to Putin.  But, reality is you can't be an ally of America and an ally of Russia.  If the Iraqis snuggle up to Putin too much, America may not provide as much military equipment or intelligence to Iraq as it once did.  It may see less value in supporting a Shiite government in Baghdad and perhaps more value in supporting the Kurds.

The Sunni rebel groups--ranging from ISIS to the various metastasizes of al Qaeda to the tiny and shrinking handful of moderate rebels supported by the United States--are ships out of luck.  They can't win, not with Russian military assets located in and protecting western Syria.  They will be battered by Russian air power, and will have to hunker down.

Saudi Arabia and its Sunni allies have quietly been supporting various of Assad's opponents, hoping to unseat him and install a Sunni-friendly government.  That ain't happening now, not with Russian soldiers in Latakia.

The Kurds have enjoyed notable success in Syria, carving out safe havens for themselves and others who aren't Sunni or Shiite crazies.  But Russian air power will likely preclude further Kurdish gains.  The Kurds will have to concentrate on holding what they have.

Turkey has been fighting Russia for centuries.  Now, with Russian military aircraft in Syria, the Russians just flanked Turkey and can hit it from two sides.  Not that Putin has expressed any unfriendly intentions toward Turkey, but given the centuries of war between these two nations, nothing needs to be said.

Israel has been fighting various Russian allies almost since its inception.  Never, however, have Russian military assets been so closely positioned to Israel.  Had Iran been so brazen as to station military aircraft in Latakia, Israel's more advanced air force would have swarmed in the next morning before dawn and walloped the warm living yogurt out of the Iranians.  But Israel cannot attack Russian forces.  It can only watch, and hope that Syria proves to be a hopeless morass for Russia.

And last, but not least, the United States has seen its modest influence in Syria diminish even more.  By propping up Assad, Putin precludes any possibility of an American victory.  Not that it matters since, at this point, America isn't even really engaged in Syria.  The Obama administration issues a steady stream of press releases about Syria, but it's doing little more than talking. Since it's not engaged in Syria, it doesn't have the leverage to get the Russians out.  Hopes that Russia will join hands with the U.S. in attacking ISIS are delusional.  ISIS has weakened America's position in the Middle East.  Why would Putin want to weaken ISIS, which is doing the dirty work for him?  All he needs to do is prop up Assad, his puppet in Syria, while ISIS and America batter away at each other, neither able to conclusively defeat the other.

In the end, the absence of anyone strong enough to impose peace and order in Syria means that the country will be de facto partitioned.  That's what happened to Yugoslavia.  It's what's happening now in Iraq.  The flood of refugees into Europe will continue.  The truth is everyone is a loser in Syria.

Vladimir Putin and the Art of War

Sun Tzu, the Chinese military strategist, wrote in The Art of War:  "[T]hose skilled in war subdue the enemy's army without battle.  They capture his cities without assaulting them and overthrow his state without protracted operations."*  This would seem to have been Putin's approach from the beginning of Ukrainian crisis.  Without a shot fired, Russian troops seized Crimea.  Crimea was low hanging fruit, since Russian military personnel were already there on a base that Ukraine had allowed Russia to maintain.  Vlad the Invader was no doubt emboldened by the ease and bloodlessness of this victory to seek control of eastern Ukraine.  And he probably hoped to use his success in Crimea to bluff and bully Ukraine into surrendering without Russia having to fight a hot war.

But things haven't gone Putin's way.  After initial ineffectiveness, the Ukrainian military has rallied and is now on the way to retaking all of eastern Ukraine (except perhaps for Crimea).  Only two major cities (Donetsk and Luhansk) remain in rebel hands, and both are surrounded by the Ukrainians. While a substantial news blackout seems to exist with respect to combat operations, it's clear that the Ukrainian military has suddenly attained the ability to use heavy weapons effectively against the more lightly armed separatist forces.  The success of Ukraine's air force is unclear; the separatists tout shootdowns, but the Ukrainian military is mum on successes.  If Ukraine's air force can now effectively support its ground forces, the separatists haven't got much of a chance.  Air power, as the Islamic State learned the hard way in Iraq, is still the trump card on the battlefield.

How has Ukraine so suddenly become so capable in battle?  One wonders if there aren't advisers in Ukraine, who speak the language with non-native accents and can offer the benefit of experiences from other wars.  No military in the world has as much experience as the U.S. military.  And the Iraq War, fought on flat terrain in and around towns and cities, would have been similar in many ways to the fighting in Ukraine,  It is hard to imagine that there aren't U.S. Special Ops personnel and CIA agents working with the Ukrainians.  Recent claims by Ukraine that its artillery pummeled a Russian armored column entering Ukraine at night, if true, would strongly indicate an American role.  How could Ukrainian artillery smack the yogurt out of a Russian column at night without precise targeting information, such as might be provided by American satellites and drone aircraft? 

But now is not the time for Ukraine and the U.S. to celebrate.  Putin cannot afford to be seen as a loser in this war.  If he were, he'd lose his job, and maybe more.  He'll lash out like a cornered rat if forced to face definitive defeat.  Even as we write, there are reports of rebel reinforcements being sent from Russia into Ukraine--some 1,200 men with 150 armored vehicles, including 30 tanks.  (There we go with U.S aerial surveillance again.)  Putin won't stop fighting.

Yet, the Ukrainian military is holding its own and more.  If Putin overtly sends Russian troops into Ukraine, he'll probably sustain more casualties than the war weary Russian people will tolerate.  (Russia took painful losses in Afghanistan and in the wars in the Caucasus.)  Western sanctions would escalate sharply and capital flight from Russia, already a torrent, would become a flood that would impress Noah.  The Russian economy could crater, threatening to take Putin down with it. So an overt invasion of Ukraine by Russian troops entails tremendous risk.

Putin is for practical purposes limited to using the separatists rebels, who are now outnumbered and outgunned.  As a result, he has violated one of Sun Tzu's principles:  "If weaker numerically, be capable of withdrawing."  He cannot commit the forces needed to win, but he cannot withdraw.  He is trapped.

What will Putin do?  Most likely, he'll continue and perhaps increase the covert assistance and support he's been giving the separatists.  The more success the Ukrainian military enjoys, the more desperate Putin will become, and the more covert action he will take.  Since there seems to be a ready supply of separatist rebels, Putin could keep the war going at least for a while.  If the Ukrainian military defeats the separatist forces on the battlefield, the rebels could go underground and fall back on terrorist tactics that have become all too familiar in today's world.  And Putin could apply the economic weapons he's used in the past, such as shutting off the natural gas Russia exports to Ukraine and Europe.  Ukraine may well be on the way to battlefield victory.  But instability and disruption will continue.

*Sun Tzu, The Art of War, translated by Samuel B. Griffith, Oxford University Press, 1963. 

The Failure of European Economic Integration

Economic integration--intertwining the economies of nations--was supposed to promote economic efficiency, prosperity and ultimately peace.  The idea was that if nations need each other to keep their economies humming, they wouldn't start a shooting war.  Continental Europeans, having suffered tens of millions of deaths in two world wars, were particularly impassioned with this idea.  Who can blame them?  Arms races and wars hadn't solved their problems.  The League of Nations didn't solved their problems.  Why not give mutual dependence on each other for cheese, wine, sardines, sausage, and pasta a chance?

At first the idea seemed to work.  The EU prospered in its early years.  We now know those salad days resulted to a large degree from inexpensive borrowing by poorer EU nations, who snarfed up too much easy money and now struggle to avoid the death of a thousand budget cuts.  But optimism held sway in the early days of the EU, and economic kumbaya was extended to the nations of the former Soviet Union, including the big brown bear itself.

Economic integration provides leverage.  The proponents of the EU thought that the leverage would be used to restrain aggression. But leverage by itself is morally neutral, and can be used for good or evil.  Give leverage to a son of a ditch (sp), and he'll use it for evil.  This is what we see in Ukraine today, where Vlad the Invader has seized Crimea, and is sponsoring a "rebellion" in eastern Ukraine against the Kiev government, a war that is increasingly being conducted by Russian soldiers and Russian operatives.  As Russian personnel take over the fighting, the war is morphing into a clash between nations.  This is exactly what economic integration was supposed to prevent. 

Europe's response to Vlad's invasions has hardly gone beyond a tepid wrist slap, and talk of stronger sanctions is matched by behind the scenes maneuvering to prevent any economic consequences from the sanctions.  The horror of the shoot down of Malaysia Airlines Flight MH 17 was quickly followed by France reaffirming its intention to deliver a Mistral class helicopter carrier to Russia, a substantial warship that Russia apparently could not itself build.  Economic integration, it would appear, trumps moral rectitude.

Putin is using economic integration as a weapon, and in his insidious hands, it's devilishly effective.  Europe is dependent on Russia for gas and oil, and can't easily substitute other suppliers for Russia.  Putin has apparently increased his support for the rebels in Ukraine since the Flight MH 17 atrocity. He has much to gain by doubling down.  His increased aggressiveness forces the U.S. and Europe to struggle to respond, and this struggle heightens the divisions between the New World and the Old. He renders NATO a hollow shell, something the Poles have publicly admitted.  Putin doesn't have to conquer Ukraine, or even eastern Ukraine.  All he has to do is keep stirring the pot, and in so doing highlights Europe's dependence on Russia and America's weakness.

Economic integration doesn't turn a monster into a nice kitty.  When done with a dastard (sp), he remains dastardly, and will look for opportunities to slip the knife between the ribs of his trading partners.  The Europeans have, through economic integration, delivered themselves unto evil, and they are now paying the price.

Malaysia Airlines Flight MH 17: Putin's Money Problem

Inevitably, lawsuits will be filed over the shoot down of Malaysia Airlines Flight MH17 in eastern Ukraine.  Typically, the plaintiffs' attorneys will name as defendants just about everyone who had any connection with the shoot down and his uncle.  The airline itself will surely be a defendant.  But we know that.  What's interesting is that Vladimir Putin might, depending on circumstances, be a defendant.

In a civil lawsuit, such as those that will be filed, legal liability does not necessarily depend on proving that the defendant deliberately pulled the trigger or ordered the downing.  A person who was negligent or reckless with respect to supporting and arming the rebels in eastern Ukraine (assuming they're the ones who actually fired the missile) might have civil liability.  Information reported indicates that Flight MH 17 was following a well-established international route at a cruising altitude of 33,000 feet, which is typical of commercial airliners.  Just what do you think might happen if you give a bunch of Ukrainian rebels under air attack from the Ukrainian air force a missile system capable of reaching that high?

Since the Ukrainian separatists might not have the expertise to operate a missile system such as the one that evidently downed Flight MH 17, Russian personnel may have had their eyes on the radar screen and fingers on the trigger.  If so, the link to Putin may be strengthened, and his potential for personal liability increased.

If Vlad faces potential personal liability to the Flight MH 17 plaintiffs, he could have a serious money problem.  Although he denies having money stashed in the West, news reports have suggested he may control tens of billions of dollars of assets, maybe as much as $50 billion.  The plaintiffs' attorneys and the insurance companies that make payouts to MH 17 claimants have a powerful incentive to hunt down that money, if it exists.  And who knows?  Maybe they'll succeed.  In that case, Vlad could lose some or all of his hell or high water fund.

The nation of Russia, too, might be liable if it is shown to have provided the missile system.  And it's potential for liability would be heightened if Russian personnel actually operated the missile system.

There is historical precedent for holding bad actors on the international scene liable for civil liabilities.  In 1988, Libyan agents bombed Pan American Airlines Flight 103.  The next year, Libyan agents bombed a commercial airliner flown by UTA, a French airline (UTA Flight 772).  In both cases, the nation of Libya ultimately paid substantial sums of money (totaling billions of dollars) to settle civil claims. 

One big problem for Vlad is that the toothpaste is out of the tube and he can't put it back.  With the plane already shot down, all he can do is scramble to cover his butt.  Current news reports indicate that heavily armed men of uncertain identity are blocking international investigators from getting to the crash site.  Perhaps other men of uncertain identity have recovered the black box and . . . well, maybe the black box will be another victim in this tragedy.  Possibly, many bankers in Western nations are working day and night to shift assets of shadowy Russian entities to new and more obscure locations that are likely to entangle the curious in a briar patch of banking secrecy laws.  But Russia itself can't disappear, nor can it conceal all of its assets. 

The Obama administration has been accused of taking a tepid tack on sanctions over the Russian invasion of Ukraine.  European nations have been criticized for being even more equivocal.  But, to make a living as a plaintiff's attorney, you have to be as shy as a great white shark.  And, unless they have accidents with poison-tipped umbrellas, plaintiffs' counsel for Flight MH 17 claimants may be relentlessly pursuing Vlad and Russia for years.

Fed Guidance in a Fog

The terrain is getting foggier and foggier for the Federal Reserve.  Most recently, GDP barely grew (at an annual rate of 0.1% for the first quarter of 2014).  But nonfarm employment grew by 288,000 jobs in April, a pretty good pace.  And the unemployment rate dropped to 6.3%.  Not that many Fed Open Market Committee meetings ago, an unemployment level of 6.3% would have been below the point where the Fed's guidance dictated a rise in short term interest rates.  But rising rates would make the stock market pout and sulk.  So the Fed has backed away from firm benchmarks for monetary policy and is electrically sliding its way toward a strictly "data-based" policy.  What does that mean?  Apparently, it means whatever the Fed thinks the data indicates it should do in order to promote full employment. But if the data is becoming less clear, then what?

For more than a decade, the Fed has worked to provide greater transparency.  That's perceived to be a good thing because it tells the financial markets what to expect.  Presumably, investors will make wiser decisions if they better understand the lay of the land.  But transparency also encourages risk-taking.  If you know what the central bank will do, you can layer on more speculative bets because one factor that might blow you up now seems predictable.  This perhaps unintended consequence of transparency tends to lock the Fed into its guidance, and limit its options, because if you do something other than what you say, all the hedge funds, big banks and other speculators might get hosed.  And then the specter of a systemic tummy ache would loom. 

With the data getting murkier as the economy recovery sputters along, the Fed has become less transparent.  Most likely, this isn't accidental, as the Open Market Committee no doubt can see that the data is telling them less and less, and benchmarks don't mean what they used to mean.  The gamblers in the stock markets can't be happy, as the odds have become harder to calculate.  Fed policy now depends on the data, and recent data resembles a pushmi-pullyu.  

The Fed still hums the low interest rate melody even though it doesn't sing the lyrics any more.  That's a pretty good pacifier for the stock market, at least for now.  But with foreign affairs descending into the mosh pit (who wants to bet Vlad the Invader won't strike again?), and the economic recovery constantly shifting back and forth between first and second gears, the data--and consequently the Fed's guidance--will probably get foggier.

The Limits of Globalization

Russia's seizure of Crimea reminds us that globalization isn't all it's cracked up to be.  The fall of the Soviet Union led to self-satisfied proclamations in the West about the triumph of capitalism and history ending in a glowing halo of liberal democracies.  Economic globalization would supposedly lead to worldwide reallocation of capital and resources to ever more efficient applications, with the result that economic tides would rise everywhere and prosperity would simmer in every pot. Nations and peoples worldwide would become increasingly interdependent and interlinked, making mutual tolerance in everyone's pecuniary interest.  Pots would melt around the world, diversity would be embraced, and preschoolers everywhere would learn the lyrics of Kumbaya.

Russia is interlinked with the rest of the world today:  economically in the energy markets and the financial markets, and securitywise with America and Western Europe in terms of dealing with Islamic radicals.  But none of that made a difference when Ukraine moved toward closer links with the West.  The centuries old Russian imperial imperative--that the Eurasian heartland be controlled from Moscow--howled.  Russia endeavored to maintain strategic geographic advantage by snatching control of Crimea's ports and naval bases, securing military and trade access to warm water.  Political machinations inside Ukraine have increased, in an effort to impede its Westward shift.  Russian troops in large numbers coincidentally gather for exercises within spitting distance of Ukraine's borders.  The economic sanctions imposed and threatened by the West have had no discernible impact on Russian policy. 

Globalization was an illusion fancied by people who fancied themselves elites.  This fancy illusion could be maintained as long as one cultivated ignorance of history.  But globalization is nothing new.  Europe in 1913 had extensive cross-border economic and financial relationships.  The European elites of the day were multilingual, cosmopolitan and cultured.  Somehow, none of that prevented the ignition of World War I over . . . well, nothing.  The most ridiculous war ever fought, World War I resulted in 20 million dead and peace terms imposed on Germany that were so harsh they practically guaranteed another war.  And that war--the Second World War--would require only 21 years before exploding in a frenzy of land grabs disturbing similar to what Vladimir Putin is doing now.  Whatever economic, financial, cultural and other ties are fostered by globalization, they don't trump the tribalism that characterizes almost all peoples in Europe, Asia and Africa.

Tribalism is difficult for Americans to grasp.  Having built a remarkably successful, diverse nation, Americans struggle with the idea that narrow concepts of group, based on cultural and historical ties, could somehow be so important as to justify conquering and killing.  Surrounded by the enormous economic benefits of the Melting Pot, Americans don't understand why other peoples can't embrace tolerance when tolerance will allow them bigger shopping sprees at the mall. But history tells us that you have to understand and deal with other peoples' irrationalities.  War, after all, is essentially always irrational.  But there are plenty of wars, all the time.  A smart foreign policy incorporates the need to consider and address other peoples' motivations, whatever they may be.

Economic sanctions have a role in America's and Europe's response to Russia.  But it would be a mistake to think they will be enough.  The sheer exertion of power will also have a place.  This doesn't mean triggers need to be pulled.  Strengthening NATO would get through to Putin, whose attention you get only if you exert power.  A pragmatic alliance with China should be sought (recall that Russia and China fought brief shooting wars in 1929, 1934, 1937 and 1969, so the Chinese have no illusions about Russian intentions).  The Japanese, who fought two wars with Russia in the 20th Century, should get a fist bump and more.  Unavoidably, America's Cold War coalition will have to be rebuilt.  And that's okay.  What's not okay is to believe that reason, plus maybe a few trade deals, will bring Putin around.

How Putin Makes America Look Good

Not long ago, America was having a lot of bad hair days in foreign affairs.  The war in Iraq ended without stirring speeches or victory parades.  The war in Afghanistan is winding down, but won't have a prettier conclusion.  America led from behind in Libya and messed up in Benghazi.  Then, America led from even farther behind in Syria and, not surprisingly, got an aviary flip from the Assad regime when President Obama objected to the use of poisonous gas.  To avoid being totally blown off by a two-bit tin pot dictator, the Obama Administration had to work with Vladimir Putin's autocracy for a face-saving compromise that still isn't near full implementation.  America's grand strategy of pivoting toward Asia has floundered as extremism of numerous varieties keeps provoking eruptions in the Middle East and Europe.

Now comes Vladimir Putin--let's call him Vlad the Invader--who puts the shine on the United States.  Using the most transparently farcical of pretexts, Putin seized Crimea from Ukraine.  Okay, so there was a referendum in Crimea as to whether or not to "validate" the Russian land grab.  But with thousands of Russian troops "guarding" the polls to ensure "integrity" to the voting process, we knew how the vote would turn out before the polls opened.  There is nothing America can do to prevent Russia's annexation of Crimea, just as there was nothing America could do to stop Putin's 2008 land kleptomania in Georgia.

But America can and will react.  The EU will talk a lot--and then talk some more.  It will issue a few condemnations and maybe even an excoriation.  But sanctions?  Well, let's talk some more. 

America's sanctions will be primarily economic.  And Russia will respond in kind.  America's economic interests will suffer.  But Russia's economic interests will suffer more.  Not necessarily in terms measured by dollars (or rubles), but in terms of relative pain.  Russia has a much smaller and weaker economy than America.  And Russia's economy is growing slower, with continued prospects for slow growth.  Crimea requires significant subsidies, which will further drain Russia's resources, along with the added cost of all the military "exercises" the Russian Army is staging with walking distance of the Ukrainian border.  From a strategic standpoint, Russia's nuclear arsenal is a match for America's.  But Russia's economic arsenal is far weaker.  And Russia's energy customers and trade partners will look elsewhere for supplies and opportunities, not wanting to give leverage to a bully with a powerful military.

The Cold War was primarily an economic struggle.  America and the Soviet Union engaged in a 50-year competition to build to the most advanced and powerful military.  Arsenals cost money, and America's vastly greater wealth left the Soviet Union moribund, unable to deliver prosperity or even anything approaching a First World standard of living for its citizens.

As America and Russia swap sanctions, it is important to keep in mind that, realistically, the goal isn't to force Russia out of Crimea.  That won't happen.  The goal is to turn the crisis into an opportunity to make America once again the world's shining beacon of freedom and democracy.  America's sanctions, although likely to be ineffectual in terms of sending Russian troops back to the barracks, will contrast sharply with the EU's decrepitude, and the near silence from the Asia.  As an ironic consequence, America's influence around the world, and especially in the periphery of Russia's borders with many former members of the Soviet Union and former Soviet satellite states, will likely grow.  After all, no one likes a bully.  The bottom line is Putin has made America stronger.

The outcome of the looming war of sanctions is difficult to predict with precision.  But the advantage lies with America and its great economic strength.  Germany and Japan won the early rounds of World War II.  The Soviet Union won most of the early rounds of the Cold War.  But we know how those stories ended.  Even if Putin will be able to feel like a studly fellow for a while, time isn't on his side.  Keep the faith.