To paraphrase Warren Buffett's aphorism about investing, be greedy when others are fearful and fearful when others are greedy. In other words, buy low and sell high.
But what do you do when the market is beset by fear and greed? Market indexes rise to new heights almost every day. But many investors are increasingly stepping back and hoarding cash. Indeed, the greedier some get, the more fearful others get.
There's no established strategy for a pishmi-pullyu market like this. The fearful, greedy market's bipolar movements defy logic and rationality.
Much of the market's wackiness comes down to the fact that asset values today are determined as much by government policy as anything else. We live in the era of the Great Central Bank Accommodation, spiced up with bailouts of one sort or another as ad hoc government policies are slapped together in response to the crisis du jour. Even though the central banks mutter disquietingly about withdrawing accommodation, they don't really get around to it, because they remain the only show in town when it comes to economic stimulus. Investors know that government intervention is likely to continue indefinitely, so some invest. They are also fearful because they know that government support cannot continue forever. So some hoard cash.
You can't rationally invest on the political process or government policy. You can diversify. That's simply another way of admitting you don't know what's happening or what's going to happen. Then again, no one does.
Monday, November 11, 2013
Thursday, October 24, 2013
McResource And Your Tax Dollars
McDonald's, it seems, has a hotline called McResource that helps employees get food stamps and other public assistance. See http://money.cnn.com/2013/10/23/news/companies/mcdonalds-help-line-workers/index.html?iid=EL. Apparently, McPay is so low, McDonald's knows that many employees will need help from government programs. So they have institutionalized for employees the process of getting public and charitable aid.
It's nice to know that our tax dollars support McDonald's personnel costs. What could be a better use for our hard earned tax payments than burnishing the shine on the golden arches and boosting the company's earnings? Even the private charity McD's employees get is indirectly subsidized by taxpayers, since contributions are likely to be deductible.
One wonders if Micky D's ought pay its employees better. But, no. Perish the thought. Executive bonuses don't increase if employee costs go up. All the better if the government subsidizes the company.
As for right wing proclamations about cutting back on welfare programs, well, forget it. Poor people have essentially no political power. But when public assistance subsidizes Corporate America, there's no chance that those with political power will allow the programs to be substantially reduced.
It's nice to know that our tax dollars support McDonald's personnel costs. What could be a better use for our hard earned tax payments than burnishing the shine on the golden arches and boosting the company's earnings? Even the private charity McD's employees get is indirectly subsidized by taxpayers, since contributions are likely to be deductible.
One wonders if Micky D's ought pay its employees better. But, no. Perish the thought. Executive bonuses don't increase if employee costs go up. All the better if the government subsidizes the company.
As for right wing proclamations about cutting back on welfare programs, well, forget it. Poor people have essentially no political power. But when public assistance subsidizes Corporate America, there's no chance that those with political power will allow the programs to be substantially reduced.
Monday, October 21, 2013
Are Stock Prices Real Any More?
One wonders if stock prices are real. Consider the evidence. Due to political obtuseness, the U.S. barely avoided defaulting on its debt. The economy continues to expand at a disappointing rate. Employment growth is tepid. Middle class incomes are falling, on average. Consumers are gloomy. The Federal Reserve Board is gloomier. Businesses hold back on investing cash. But, last week, the S&P 500 reached record heights. When you encounter cognitive dissonance in the financial markets, be careful. Every time in the past 20 years when things seemed out of whack, it eventually turned out that, in fact, they were out of whack. In other words, if it looks too good to be true, it probably isn't true.
Could investors be wearing their stupid hats again? Their 401(k)'s got clobbered in the 2000-01 tech stock crash, and after adjustment for inflation, stocks still haven't recovered. Investors' 401(k)'s and homes got clobbered again in the financial crisis of 2008, and many haven't recovered from those losses. What does it take to move up the learning curve?
Maybe, however, the problem isn't investors. Over 50% of the trading volume in the stock markets comes from high-speed computerized trading. This activity isn't based on human judgments. It flows from algorithms and formulae. Some of the computerized trading is dynamic--it changes based on what it observes in the market. Since the activity it is often observing is computerized, we now have computers reacting to the activity of computers, which could be reactions to activity by other computers.
When stocks were valued by humans, we had some idea of what we were dealing with. Even if things seemed irrational or even bubbly, we could understand what was happening, albeit with a frown. Now, with stocks being priced by "thought" processes that are impenetrable to the average investor, the market not longer reflects the collective judgment of humans. Instead, it is an amalgamation of valuation processes that often aren't based on human judgment. The things that people are concerned with--lousy economy, sluggish jobs growth, falling incomes, dim view of the future--may not be finding their way into stock valuations, at least not in the ways that they historically did. If so, we can't be sure stock prices are real because we have no idea what the computers will do next. Caveat emptor.
Could investors be wearing their stupid hats again? Their 401(k)'s got clobbered in the 2000-01 tech stock crash, and after adjustment for inflation, stocks still haven't recovered. Investors' 401(k)'s and homes got clobbered again in the financial crisis of 2008, and many haven't recovered from those losses. What does it take to move up the learning curve?
Maybe, however, the problem isn't investors. Over 50% of the trading volume in the stock markets comes from high-speed computerized trading. This activity isn't based on human judgments. It flows from algorithms and formulae. Some of the computerized trading is dynamic--it changes based on what it observes in the market. Since the activity it is often observing is computerized, we now have computers reacting to the activity of computers, which could be reactions to activity by other computers.
When stocks were valued by humans, we had some idea of what we were dealing with. Even if things seemed irrational or even bubbly, we could understand what was happening, albeit with a frown. Now, with stocks being priced by "thought" processes that are impenetrable to the average investor, the market not longer reflects the collective judgment of humans. Instead, it is an amalgamation of valuation processes that often aren't based on human judgment. The things that people are concerned with--lousy economy, sluggish jobs growth, falling incomes, dim view of the future--may not be finding their way into stock valuations, at least not in the ways that they historically did. If so, we can't be sure stock prices are real because we have no idea what the computers will do next. Caveat emptor.
Thursday, October 17, 2013
The Fiscal Crisis: Can Kicks Are All We Can Expect
Tonight (Wednesday, Oct. 16, 2013), Congress has temporarily "fixed" the fiscal and debt crises by re-opening the government until Jan. 15, 2014, and raising the debt ceiling until Feb. 7, 2014. In other words, the government will resume operations and not default on its debt until early next year, when we return to crisis mode again.
Can kicking is all we can expect. The government that the voters elected in 2012 isn't capable of decisive action on divisive issues like government spending. With the House held hostage by a small but very loud group of Tea Partiers, and the rest of government controlled by the Democrats, dysfunction is baked into the cake the voters made last year. Maintaining the status quo--a/k/a can kicking--is the only thing a sharply divided government can do.
Early next year, when Congress and the White House revisit the fiscal and debt crises, they will again kick the can through the end of the 2014 fiscal year (which ends Sept. 30, 2014)--because they won't be able to do anything else. Maybe they'll make minor tweaks, but nothing big will happen. Come late September or early October 2014, with the 2014 Congressional elections imminent, they will kick the can again past the election date, perhaps into early 2015 for the next Congress to deal with.
To end can kicking, voters need to elect a functional government next fall. Yes, the idiots in Washington are to blame for behaving like children. But the electorate put them in office. Democracies function by compromising. If narrow-minded, uncompromising fanatics are elected, expect the can to be well-kicked for years to come.
Can kicking is all we can expect. The government that the voters elected in 2012 isn't capable of decisive action on divisive issues like government spending. With the House held hostage by a small but very loud group of Tea Partiers, and the rest of government controlled by the Democrats, dysfunction is baked into the cake the voters made last year. Maintaining the status quo--a/k/a can kicking--is the only thing a sharply divided government can do.
Early next year, when Congress and the White House revisit the fiscal and debt crises, they will again kick the can through the end of the 2014 fiscal year (which ends Sept. 30, 2014)--because they won't be able to do anything else. Maybe they'll make minor tweaks, but nothing big will happen. Come late September or early October 2014, with the 2014 Congressional elections imminent, they will kick the can again past the election date, perhaps into early 2015 for the next Congress to deal with.
To end can kicking, voters need to elect a functional government next fall. Yes, the idiots in Washington are to blame for behaving like children. But the electorate put them in office. Democracies function by compromising. If narrow-minded, uncompromising fanatics are elected, expect the can to be well-kicked for years to come.
Friday, October 11, 2013
Why the Republicans Blinked
The Republicans, especially those in the House of Representatives, are rapidly giving ground in their fiscal battle with the Democrats. A resolution is pretty likely within a week or less. It will probably provide a short term delay of the debt ceiling and re-open the government, while the parties negotiate over long term fiscal issues.
Why did the Republicans blink? Because they tried to manufacture a crisis out of a non-problem and a long term problem. The non-problem is Obamacare. The truth is that Obamacare offers valuable benefits to millions of people. The huge traffic jams on health exchange websites demonstrate that lots of people understand Obamacare's value and want to participate in the program. The Republican attempt to de-fund Obamacare would take away something millions of people want, and that's usually a very poor political strategy. The Republicans seem to have belatedly figured this out, but not before forming a circle and firing volleys inward.
The long term problem is the federal deficit. It is a serious problem. But it's not an immediate problem. The Republican effort to create a crisis at this moment over something that will play out years and decades from now is too obvious a political ploy. The minority party wants to call the shots by gratuitously inflicting damage on the economy with a government shutdown and coercing an unnecessary default on the most important financial instruments in the world, U.S. Treasury securities. Political parties thrive by winning over a majority of voters, not by wrecking economies and financial systems. The fiscal deficit is not an immediate crisis. It needs to be addressed, and will be, over the next years and decades as it becomes more pressing. But the Republican tactic--give us everything we demand or we will destroy your government and wreck your finances--is bound to, and in fact did, alienate a majority of the electorate.
After Barack Obama's re-election last year, the Republicans launched a process of reflection and reconsideration. It's unclear that they made much progress, and the fiscal brawl of the past few weeks has surely left the party more damaged than before. The Tea Partiers have prevented the Republicans from doing the thing that's necessary to political domination--shifting toward the middle. Since political power abhors a vacuum, the Democrats have easily moved into the breach.
Why did the Republicans blink? Because they tried to manufacture a crisis out of a non-problem and a long term problem. The non-problem is Obamacare. The truth is that Obamacare offers valuable benefits to millions of people. The huge traffic jams on health exchange websites demonstrate that lots of people understand Obamacare's value and want to participate in the program. The Republican attempt to de-fund Obamacare would take away something millions of people want, and that's usually a very poor political strategy. The Republicans seem to have belatedly figured this out, but not before forming a circle and firing volleys inward.
The long term problem is the federal deficit. It is a serious problem. But it's not an immediate problem. The Republican effort to create a crisis at this moment over something that will play out years and decades from now is too obvious a political ploy. The minority party wants to call the shots by gratuitously inflicting damage on the economy with a government shutdown and coercing an unnecessary default on the most important financial instruments in the world, U.S. Treasury securities. Political parties thrive by winning over a majority of voters, not by wrecking economies and financial systems. The fiscal deficit is not an immediate crisis. It needs to be addressed, and will be, over the next years and decades as it becomes more pressing. But the Republican tactic--give us everything we demand or we will destroy your government and wreck your finances--is bound to, and in fact did, alienate a majority of the electorate.
After Barack Obama's re-election last year, the Republicans launched a process of reflection and reconsideration. It's unclear that they made much progress, and the fiscal brawl of the past few weeks has surely left the party more damaged than before. The Tea Partiers have prevented the Republicans from doing the thing that's necessary to political domination--shifting toward the middle. Since political power abhors a vacuum, the Democrats have easily moved into the breach.
Wednesday, October 2, 2013
Upsides of the Shutdown
The federal government shutdown isn't all bad. Some of the good things that resulted include:
White supremacists had to cancel their rally at Gettysburg National Park, because National Parks have been closed. Poor knuckleheads.
Federal spy agencies have been cut back 70%. We now have a lot more privacy than we had just a day ago.
Spying on pandas halted, as the National Zoo's panda cam has been cut off. A lot of people are disappointed, but consider the pandas' point of view. Wouldn't it be creepy to have a camera focused on you for hour after hour after endless hour? Aren't pandas entitled to some privacy and dignity?
School lunches and breakfast still being served. Or maybe, from the kids' point of view, this isn't so good. Many of them might have been hoping for an excuse to binge on junk food.
Free and discounted food and drinks are being offered to feds and sometimes non-feds by many Washington, DC area bars and restaurants. Theaters, museums, gyms and other businesses are also advertising free or discounted admissions, goods or services. Close the government and what do you get? Party central.
Stock market up. The S&P 500 rose about 0.8%. If this is what a shutdown does, there are probably a lot of market players rooting for more government dysfunction.
White supremacists had to cancel their rally at Gettysburg National Park, because National Parks have been closed. Poor knuckleheads.
Federal spy agencies have been cut back 70%. We now have a lot more privacy than we had just a day ago.
Spying on pandas halted, as the National Zoo's panda cam has been cut off. A lot of people are disappointed, but consider the pandas' point of view. Wouldn't it be creepy to have a camera focused on you for hour after hour after endless hour? Aren't pandas entitled to some privacy and dignity?
School lunches and breakfast still being served. Or maybe, from the kids' point of view, this isn't so good. Many of them might have been hoping for an excuse to binge on junk food.
Free and discounted food and drinks are being offered to feds and sometimes non-feds by many Washington, DC area bars and restaurants. Theaters, museums, gyms and other businesses are also advertising free or discounted admissions, goods or services. Close the government and what do you get? Party central.
Stock market up. The S&P 500 rose about 0.8%. If this is what a shutdown does, there are probably a lot of market players rooting for more government dysfunction.
Tuesday, September 24, 2013
The Key To Obamacare's Survival?
Even though the House of Representatives has just voted to use the budget bill to defund Obamacare, its chances of survival are pretty good. Not just because the Senate will delink the defunding from the budget bill, but also because Obamacare suddenly seems to have some powerful supporters.
Not that these supporters are speaking openly. But here's the scoop. Major American corporations are moving their workers or retirees to the private exchanges. Wahlgreens, Sears, and Darden Restaurants (think Olive Garden, Red Lobster, Longhorn Steakhouse, Capital Grille and more) have announced that employees will move to the private exchanges. IBM and Time Warner are moving retirees to the private exchanges. Apparently, these companies will pay employees or retirees subsidies to reduce their premium costs. But these companies, and others making similar moves, are offloading a very important risk--the unpredictability of health care costs. They provide fixed subsidies, thus stabilizing their costs.
Businesses love predictability and certainty. Profits are more likely if you can control major cost items like health care coverage for employees and/or retirees. In essence, Obamacare is on the verge of becoming an important subsidy to big business.
Experience teaches that government subsidies are virtually impossible to eliminate. Long after the Great Depression and Dust Bowl, agricultural subsidies that make no public policy sense persist. Even after being nationalized just before they could bring down the entire U.S. economy, Fannie Mae and Freddie Mac roll along, now more centrally positioned in the financing of residential real estate than ever before. Virtual giveaways of access to minerals on federal land continue unabated even though the settlement of the West was effectively complete by 1890.
With Obamacare in the process of becoming a potentially really, really important subsidy to really, really big corporations, do we really think that it's going to be eliminated? The Tea Partiers in the House make a lot of noise, but can they take on the political firepower that big business lobbyists can bring to bear? Recent polls indicate that a majority of Americans support Obamacare, and politicians in a democracy eventually have to pay attention to the polls (see Obama-Syria-poison-gas-response for more on this point). But, just as importantly (or more so), powerful business interests can arrange the survival of big subsidies no matter how loud some people in the House of Representatives scream. This may reflect poorly on the nature of the political process, but it's the truth. And Obamacare may well now have the backing of some highly influential lobbyists who will speak softly (to stay out of the cross-hairs of the Tea Party) but will wield big sticks to keep their clients well-subsidized.
Not that these supporters are speaking openly. But here's the scoop. Major American corporations are moving their workers or retirees to the private exchanges. Wahlgreens, Sears, and Darden Restaurants (think Olive Garden, Red Lobster, Longhorn Steakhouse, Capital Grille and more) have announced that employees will move to the private exchanges. IBM and Time Warner are moving retirees to the private exchanges. Apparently, these companies will pay employees or retirees subsidies to reduce their premium costs. But these companies, and others making similar moves, are offloading a very important risk--the unpredictability of health care costs. They provide fixed subsidies, thus stabilizing their costs.
Businesses love predictability and certainty. Profits are more likely if you can control major cost items like health care coverage for employees and/or retirees. In essence, Obamacare is on the verge of becoming an important subsidy to big business.
Experience teaches that government subsidies are virtually impossible to eliminate. Long after the Great Depression and Dust Bowl, agricultural subsidies that make no public policy sense persist. Even after being nationalized just before they could bring down the entire U.S. economy, Fannie Mae and Freddie Mac roll along, now more centrally positioned in the financing of residential real estate than ever before. Virtual giveaways of access to minerals on federal land continue unabated even though the settlement of the West was effectively complete by 1890.
With Obamacare in the process of becoming a potentially really, really important subsidy to really, really big corporations, do we really think that it's going to be eliminated? The Tea Partiers in the House make a lot of noise, but can they take on the political firepower that big business lobbyists can bring to bear? Recent polls indicate that a majority of Americans support Obamacare, and politicians in a democracy eventually have to pay attention to the polls (see Obama-Syria-poison-gas-response for more on this point). But, just as importantly (or more so), powerful business interests can arrange the survival of big subsidies no matter how loud some people in the House of Representatives scream. This may reflect poorly on the nature of the political process, but it's the truth. And Obamacare may well now have the backing of some highly influential lobbyists who will speak softly (to stay out of the cross-hairs of the Tea Party) but will wield big sticks to keep their clients well-subsidized.
Sunday, September 15, 2013
How To Stop the Too Big From Failing
Congress, and financial regulators in America and other nations, have struggled endlessly with the problem of financial institutions too big to fail. Capital requirements have been increased, and regulation has been tightened (somewhat--much of the implementation of the Dodd Frank Act remains unfinished). But the problem remains.
There is a simple way to seriously reduce the possibility of another taxpayer-funded bailout. If a financial institution needs a government bailout, force the CEO, COO and CFO, and the members of the Board of Directors, to pay to the government the value of their entire compensation for the preceding five years. This would include salary, bonuses, stock options, restricted stock, fees, country club memberships, company cars, and all other perks and compensation. This payment would be required without regard to whether or not the executive officer or director was proven to have participated in any wrongdoing or neglect. It wouldn't be a penalty for misconduct. It would be an incentive to avoid sticking the government with the costs of mismanagement.
Any such proposal would, of course, provoke howls of outrage from financial institutions and their free-roaming packs of mouth-foaming running dog lobbyists. Such a measure would be unfair if the officer or director hadn't been shown to have engaged in misconduct, it would be argued. However, the SEC already has the legal authority to force a company's CEO and CFO to pay out all their compensation for the 12 months following the issuance of financial statements that are subsequently modified (in a form called a restatement)--see Section 304 of the Sarbanes-Oxley Act. The SEC isn't required to show that the CEO and CFO did bad things. They can be forced to make this payout simply because the original financial statements were wrong and needed to be restated. The courts have upheld this authority. There's nothing unfair about requiring senior executives to get important things right in the first instance.
Banks and other financial institutions might also object that they couldn't recruit the executive talent they need if this financial Sword of Damocles were to hang over their heads. But, when we consider the geniuses at some financial institutions in the recent past who steered their firms right over cliffs and into government safety nets, this argument loses its persuasiveness. Executive compensation arrangements at the too big to fail seem to incentivize risk-taking, even if it might entail unmanageable complexity. There needs to be a disincentive--and a strong one.
The government has been criticized for not penalizing the high and mighty for the financial crisis of 2008. Remember, however, that the statutes and regulations governing financial institutions are complex. Proof of violations can be difficult. A simple measure like a penalty of five year's compensation for a government bailout offers a way to nail the top dogs for signing a chit the taxpayers have to pay.
There is a simple way to seriously reduce the possibility of another taxpayer-funded bailout. If a financial institution needs a government bailout, force the CEO, COO and CFO, and the members of the Board of Directors, to pay to the government the value of their entire compensation for the preceding five years. This would include salary, bonuses, stock options, restricted stock, fees, country club memberships, company cars, and all other perks and compensation. This payment would be required without regard to whether or not the executive officer or director was proven to have participated in any wrongdoing or neglect. It wouldn't be a penalty for misconduct. It would be an incentive to avoid sticking the government with the costs of mismanagement.
Any such proposal would, of course, provoke howls of outrage from financial institutions and their free-roaming packs of mouth-foaming running dog lobbyists. Such a measure would be unfair if the officer or director hadn't been shown to have engaged in misconduct, it would be argued. However, the SEC already has the legal authority to force a company's CEO and CFO to pay out all their compensation for the 12 months following the issuance of financial statements that are subsequently modified (in a form called a restatement)--see Section 304 of the Sarbanes-Oxley Act. The SEC isn't required to show that the CEO and CFO did bad things. They can be forced to make this payout simply because the original financial statements were wrong and needed to be restated. The courts have upheld this authority. There's nothing unfair about requiring senior executives to get important things right in the first instance.
Banks and other financial institutions might also object that they couldn't recruit the executive talent they need if this financial Sword of Damocles were to hang over their heads. But, when we consider the geniuses at some financial institutions in the recent past who steered their firms right over cliffs and into government safety nets, this argument loses its persuasiveness. Executive compensation arrangements at the too big to fail seem to incentivize risk-taking, even if it might entail unmanageable complexity. There needs to be a disincentive--and a strong one.
The government has been criticized for not penalizing the high and mighty for the financial crisis of 2008. Remember, however, that the statutes and regulations governing financial institutions are complex. Proof of violations can be difficult. A simple measure like a penalty of five year's compensation for a government bailout offers a way to nail the top dogs for signing a chit the taxpayers have to pay.
Sunday, September 8, 2013
One and Done in Syria, Right? Right? . . . Come on, right?
Once upon a time, there were some nasty guys known as al Qaeda. In August 1998, they bombed the U.S. embassies in Kenya and Tanzania. Over 200 people were killed, including 12 Americans. In order punish the baddies, President Clinton order cruise missile attacks on al Qaeda training camps in Afghanistan and a pharmaceutical factory in Sudan which supposedly made chemical weapons. Dozens of cruise missiles were fired and hit their targets. After that, al Qaeda was never heard from again.
Unfortunately, the last part isn't true. Al Qaeda, as we all know, survived in Afghanistan, killed some 3,000 Americans on September 11, 2001, and triggered wars that have turned out to be America's longest military conflicts. Over 4,800 Americans died in Iraq, and more than 2,000 in Afghanistan. American personnel are now engaged in fighting al Qaeda or its affiliates in South Asia, the Middle East, the Arabian Peninsula, North Africa, and who knows, maybe even Southeast Asia (there are Muslim insurgencies in Indonesia and the Philippines). There is no end in sight for America's war against violent Islamic radicals.
President Obama and his supporters seem to think they can conducted a limited strike in Syria to punish Bashar al-Assad for using chemical weapons, and then be done with it. Who are they kidding? The bad guys in this scenario grow beards on the other cheek; they don't turn it. Iran, Syria and Hezbollah are all promising retaliation if America launches cruise missiles. Americans and American facilities in Iraq, Afghanistan, and probably other places are likely to be on the hit list. American allies like Israel, Turkey, and other nations may be attacked. Sooner or later, Assad or one of his allies will do something that will require further American action. That's what happened with al Qaeda 15 years ago. The 1998 cruise missile strikes on al Qaeda's training camps led to the 9/11 bombings, which then led to a war we're still fighting.
There is no chance--as in zero percent--that a U.S. cruise missile strike against Assad's forces will be the last word. President Obama has yet to explain how he will deal with the many retaliatory responses from the bad guys, all without putting boots on the ground in some distant place and without entangling us in another endless war against people who can outlast us because it's their home. In all likelihood, he has no explanation, because there is no way to contain America's involvement in Syria once we cruise in.
As Americans know from hard experience, the road to Hell is paved with good intentions, and President Obama has the road we're now on very well paved. Good intentions aren't the only thing that counts. Competence and diligence matter, too. You have to have a strategy to win--convincingly and quickly. If you don't have such a strategy, don't dive into a war. Ask the 58,000 Americans who died in Vietnam and the 4,800 who died in Iraq about this point. There doesn't seem to be much strategic thinking going on in the White House; just political maneuvering in the hope of preventing the President from losing credibility for shooting from the hip. Some of the U.S. troops in Afghanistan today were seven or eight years old at the time of the 9/11 bombings. Today's parents of elementary school students should pay close attention to the discussion of U.S. military action in Syria.
Unfortunately, the last part isn't true. Al Qaeda, as we all know, survived in Afghanistan, killed some 3,000 Americans on September 11, 2001, and triggered wars that have turned out to be America's longest military conflicts. Over 4,800 Americans died in Iraq, and more than 2,000 in Afghanistan. American personnel are now engaged in fighting al Qaeda or its affiliates in South Asia, the Middle East, the Arabian Peninsula, North Africa, and who knows, maybe even Southeast Asia (there are Muslim insurgencies in Indonesia and the Philippines). There is no end in sight for America's war against violent Islamic radicals.
President Obama and his supporters seem to think they can conducted a limited strike in Syria to punish Bashar al-Assad for using chemical weapons, and then be done with it. Who are they kidding? The bad guys in this scenario grow beards on the other cheek; they don't turn it. Iran, Syria and Hezbollah are all promising retaliation if America launches cruise missiles. Americans and American facilities in Iraq, Afghanistan, and probably other places are likely to be on the hit list. American allies like Israel, Turkey, and other nations may be attacked. Sooner or later, Assad or one of his allies will do something that will require further American action. That's what happened with al Qaeda 15 years ago. The 1998 cruise missile strikes on al Qaeda's training camps led to the 9/11 bombings, which then led to a war we're still fighting.
There is no chance--as in zero percent--that a U.S. cruise missile strike against Assad's forces will be the last word. President Obama has yet to explain how he will deal with the many retaliatory responses from the bad guys, all without putting boots on the ground in some distant place and without entangling us in another endless war against people who can outlast us because it's their home. In all likelihood, he has no explanation, because there is no way to contain America's involvement in Syria once we cruise in.
As Americans know from hard experience, the road to Hell is paved with good intentions, and President Obama has the road we're now on very well paved. Good intentions aren't the only thing that counts. Competence and diligence matter, too. You have to have a strategy to win--convincingly and quickly. If you don't have such a strategy, don't dive into a war. Ask the 58,000 Americans who died in Vietnam and the 4,800 who died in Iraq about this point. There doesn't seem to be much strategic thinking going on in the White House; just political maneuvering in the hope of preventing the President from losing credibility for shooting from the hip. Some of the U.S. troops in Afghanistan today were seven or eight years old at the time of the 9/11 bombings. Today's parents of elementary school students should pay close attention to the discussion of U.S. military action in Syria.
Tuesday, September 3, 2013
How Does Obama Define Success in Syria?
Barack Obama has flinched. Not once. Not twice. But three times in the last year or so. Each time, he rattled the saber at Syrian President Bashar al-Assad, Assad called Obama's hand, and Obama flinched. Now, evidently rattled himself by the unexpected rejection of military action by the British Parliament, Obama seems to be looking around for someone to offer a fist bump. French President Francois Hollande has been supportive, but Obama has called for Congress to pass a resolution endorsing a military response to Assad's use of chemical weapons on Syrian civilians.
The Democrats, who control the Senate, are feeling queasy, but may support a narrowly crafted resolution. The Republicans, who control the House, are skeptical and may reject the resolution.
The Administration has offered a variety of negative reasons for striking Assad's forces, arguing that bad or negative consequences will ensue if the U.S. does not strike. Chemical weapons are horrible and are prohibited by international law. The United States, and especially the President would lose credibility. The Iranians would be emboldened in their quest for nuclear weapons. The North Koreans would be emboldened to pull more septic content. The Russians would be emboldened in any number of ways.
Chemical weapons are horrible. But does the President see himself as a referee, seeking to penalize Assad for face masking? Is the President's plan to throw down a yellow flag, move Assad back a few yards, and then let the slaughter continue? Is it okay for Assad to continue his nationwide massacre if he just limits himself to conventional weapons? Why don't we issue striped uniforms to the U.S. military and give them whistles to blow along with cruise missiles to fire?
As for credibility, Assad is in a fight for his very life. He couldn't give a rat's left ear what Obama does, because Obama won't put U.S. boots on the ground and hasn't even provided military support to the Syrian rebels that he promised months ago. Obama doesn't present a significant threat to Assad. Maybe Assad's forces will refrain from obvious use of chemical weapons for a while and employ more conventional but plenty lethal weaponry to kill many more Syrians. But nothing Obama is contemplating will make him more credible to anyone who matters.
The Iranians are, if the vaguely sourced information published by the press over the past few years is accurate, hellbent on building nuclear weapons on the fastest possible schedule. It won't matter a bit what Obama does in Syria. A U.S. military strike there will only lead the Iranians to more comprehensively disguise their activities. But it won't dissuade them in the least from halting their nuclear program.
The North Koreans are constrained by the presence of 26,000 U.S. troops stationed along the demilitarized zone in the Korean peninsula. North Korea can't do anything substantial to South Korea or any other nation without affecting these troops. As long as those troops are there, what Obama does or doesn't do in Syria isn't significant.
As for Russia, Prime Minister Vladimir Putin is ex-KBG. If there was an intelligence service that knew how to spot and exploit human weakness, it was the KGB. Putin surely has Obama figured out--the man isn't bold. He's not a risk taker. He wants to be on the winning side no matter who that is or what happens (this is how the U.S. wound up being detested by everyone in Egypt--we tried to be everyone's buddy and ended up no one's buddy). Obama is like the political equivalent of Microsoft--very successful, but not so likely to continue that success in the future because of an aversion to taking real risks. Whatever carefully calibrated and narrowly focused military strike Obama now orders isn't going to convince Putin that Obama is anything except a smart, but cautious man trying to stay on his feet in a back alley brawl. The smartest man in the alley might win the brawl, but the meanest man is the one you have to watch out for.
To persuade Congress and the American people that military action in Syria is justified, President Obama has to present positive reasons. We need to know how we succeed, how we win. Waging war for the purpose of stopping bad people from being bad isn't likely to work, unless one is prepared to wage total war and completely conquer the enemy, as America did to Germany and Japan in World War II. No one has suggested that America conquer Syria. For the past fifty years, America has dived into military adventures for poorly conceived reasons, and not surprisingly done poorly. The only clear case for offensive military action--the 2001 invasion of Afghanistan-- was thoroughly botched by the second Bush Administration when it failed to deal definitively with Osama bin Laden after trapping him in late 2001 at Tora Bora. We're still suffering the consequences of that failure. If President Obama wants our support for a strike in Syria, he should tell us how we attain victory. If there is no victory that can be defined or attained, we should hold our fire.
The Democrats, who control the Senate, are feeling queasy, but may support a narrowly crafted resolution. The Republicans, who control the House, are skeptical and may reject the resolution.
The Administration has offered a variety of negative reasons for striking Assad's forces, arguing that bad or negative consequences will ensue if the U.S. does not strike. Chemical weapons are horrible and are prohibited by international law. The United States, and especially the President would lose credibility. The Iranians would be emboldened in their quest for nuclear weapons. The North Koreans would be emboldened to pull more septic content. The Russians would be emboldened in any number of ways.
Chemical weapons are horrible. But does the President see himself as a referee, seeking to penalize Assad for face masking? Is the President's plan to throw down a yellow flag, move Assad back a few yards, and then let the slaughter continue? Is it okay for Assad to continue his nationwide massacre if he just limits himself to conventional weapons? Why don't we issue striped uniforms to the U.S. military and give them whistles to blow along with cruise missiles to fire?
As for credibility, Assad is in a fight for his very life. He couldn't give a rat's left ear what Obama does, because Obama won't put U.S. boots on the ground and hasn't even provided military support to the Syrian rebels that he promised months ago. Obama doesn't present a significant threat to Assad. Maybe Assad's forces will refrain from obvious use of chemical weapons for a while and employ more conventional but plenty lethal weaponry to kill many more Syrians. But nothing Obama is contemplating will make him more credible to anyone who matters.
The Iranians are, if the vaguely sourced information published by the press over the past few years is accurate, hellbent on building nuclear weapons on the fastest possible schedule. It won't matter a bit what Obama does in Syria. A U.S. military strike there will only lead the Iranians to more comprehensively disguise their activities. But it won't dissuade them in the least from halting their nuclear program.
The North Koreans are constrained by the presence of 26,000 U.S. troops stationed along the demilitarized zone in the Korean peninsula. North Korea can't do anything substantial to South Korea or any other nation without affecting these troops. As long as those troops are there, what Obama does or doesn't do in Syria isn't significant.
As for Russia, Prime Minister Vladimir Putin is ex-KBG. If there was an intelligence service that knew how to spot and exploit human weakness, it was the KGB. Putin surely has Obama figured out--the man isn't bold. He's not a risk taker. He wants to be on the winning side no matter who that is or what happens (this is how the U.S. wound up being detested by everyone in Egypt--we tried to be everyone's buddy and ended up no one's buddy). Obama is like the political equivalent of Microsoft--very successful, but not so likely to continue that success in the future because of an aversion to taking real risks. Whatever carefully calibrated and narrowly focused military strike Obama now orders isn't going to convince Putin that Obama is anything except a smart, but cautious man trying to stay on his feet in a back alley brawl. The smartest man in the alley might win the brawl, but the meanest man is the one you have to watch out for.
To persuade Congress and the American people that military action in Syria is justified, President Obama has to present positive reasons. We need to know how we succeed, how we win. Waging war for the purpose of stopping bad people from being bad isn't likely to work, unless one is prepared to wage total war and completely conquer the enemy, as America did to Germany and Japan in World War II. No one has suggested that America conquer Syria. For the past fifty years, America has dived into military adventures for poorly conceived reasons, and not surprisingly done poorly. The only clear case for offensive military action--the 2001 invasion of Afghanistan-- was thoroughly botched by the second Bush Administration when it failed to deal definitively with Osama bin Laden after trapping him in late 2001 at Tora Bora. We're still suffering the consequences of that failure. If President Obama wants our support for a strike in Syria, he should tell us how we attain victory. If there is no victory that can be defined or attained, we should hold our fire.
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