The Logic of War

What's happened to wars? Genghis Khan, Alexander the Great and Attila the Hun wouldn't recognize today's version at all. It used to be that if you won, you looted the country, enslaved its people and renamed cities. No questions asked. That was the way war was. It was simple and straightforward. War was a logical (although very brutal) method of settling disputes and/or increasing a country's power and wealth. An added bonus was that it also served as a pretty effective method of increasing the pool of potential brides for the victors.

 

No more. Starting somewhere around World War I, wars became much more complicated endeavors. Instead of the pure simplicity of being a conqueror, the winner suddenly was faced with the prospect of taking care of the losers and rebuilding what they had just destroyed. Wars actually cost the victor power and wealth. What a loony concept!

 

After World War II, the U.S. celebrated its victory by creating the Marshall Plan, under which it spent a fortune building up Germany and the rest of Western Europe so they could compete with the U.S. Similar support was given to Japan. This activity was a fabulous success, as denoted by the loss of the American car manufacturing industry among its other achievemnents. Some might quibble that rebuilding Western Europe and Japan was necessary to fend off the Russians from taking over, but it still seems crazy that the winner would pay the losers.

 

As I write this, the U.S. is fighting wars in Iraq and Afghanistan, while the Israelis are devastating the Gaza Strip. In none of these three conflicts will the likely victor win anything as simple as land and slaves.

 

The U.S.eradicated the Saddam dictatorship and now just wants to get the heck out of Iraq after spending 7 years, several thousand American lives and more than $600 billion first destroying and then trying to rebuild the place. The initial assault and its follow-on insurgency, along with a civil war among the entirely insane Islamic Sunni and Shia, has killed tens of thousands of Iraqis and generally turned most of the rest of the world against the U.S..

 

In Afghanistan, the U.S. is trying to erase the nutty Taliban, probably leaving a bunch of warlords to rule in its place. Given Afghanistan's history of swallowing up the British and then the Soviets, the U.S. will be lucky to extract itself from there anytime soon. How much it will cost in lives and treasure is anyone's guess; but no matter what the cost and how badly the Taliban are crushed, the odds are pretty high that Afghanistan will slide back into the 12th century rather than become the 51st U.S. state.

 

In Gaza, the Israelis are beating the pulp out of the insane Hamas zealots. The Israelis say they just want Hamas to stop firing rockets at them. They haven't yet publicly said that they want to totally eliminate Hamas, but that's what they really desire. The Israelis will probably not fully achieve either objective once they're forced by the rest of the world (but mostly the U.S.) to settle for one more in a seemingly never-ending number of cease fire agreements. Actually, a simple cease fire in Gaza may be the best outcome for the Israelis. If the Iranians, who are funding Hamas, also free Hezbollah to attack from Lebanon, the costs could escalate to really ominous levels.

 

All in all, war made a whole lot more sense in the old days. Winners won and losers lost. Nothing more, nothing less.

 

Money For Nothing - Part 3

I've ranted about "money for nothing" several times before. If, by chance, you missed it, or you just want the sheer joy of experiencing it again, you can read it here, here and here. But last week, it actually was literally true: The U.S. government auctioned $32 billion in four-week T-bills at 0% interest Tuesday, the lowest auction rate ever. In the after-market, the price rose, and people bought T-bills at a negative rate of interest, apparently extraordinarily gleeful to lock in their losses.

 

This insanity is a result of the fear that investors have of taking any risk at all. For nothing is seen to be safer than T-bills, which will be repaid in their entirety with new, crisp, freshly printed, dollar bills. If the government needs some more dollar bills, it simply prints more of them. No limit. No questions.  Pretty clever, eh? (as our Northern neighbors might say).

 

Well, all this leaves me completely baffled. Normally when a government runs its currency printing presses overtime, the inflation rate soars and suddenly wheelbarrows are required to haul around all the paper needed to purchase a loaf of bread. But it seems that every country in the world is hyperactively churning out paper money. Nobody's money is worth more than the next. You don't bail out of the dollar for Yen, Euros or Pounds because they're devaluing too. Even the Chinese are printing and spending like mad.

 

So, what does this all mean? Apparently, that there's no limit to the size of the government stimulus (sounds erotic, doesn't it?) programs that suddenly are now possible. Both namby-pamby Democrats and hard-hearted Republicans can hardly contain their excitement.

 

The U.S. has made commitments so far of upwards of $8 trillion in an attempt to halt the economic slide. Is there an upper limit? Beats me. Even the Bush Administration is now saying they are ready to pump untold billions into the moribund US Big Three auto companies before the Obama Administration gets their wack at doling out more of the cash.

 

By the way, Detroit seem to be pretty scared of using the word "bankruptcy". What's all this nonsense about getting the government to negotiate with the "stakeholders to share the pain" so they can avoid bankruptcy? Sharing the pain is just what a bankruptcy judge does in a chapter 11 filing. The difference is that the judge is doing the pain sharing pursuant to the current law, while the government actions being proposed don't pass my smell test for legality at all. They're more akin to simple extortion that's probably unconstitutional anyway (The Fifth Amendment). 

Anyway, back to the topic, in bankruptcy the auto companies continue their day to day operations. They, along with all their employees, don't disappear overnight. It's pure hogwash to say that people won't buy cars if the manufacturer is in bankruptcy. Anyone who has been paying any attention at all to the pleading on bended knee in Washington knows by now that the Big Three are in serious financial doo-doo. 

And, if you'll allow me just one more "by the way," I heard a great line which referred to the $8 billion General Motors paid last year for retirees' and current workers' medical bills. The talking head on CNBC said: "General Motors is a health care company that just happens to make cars."

 

I also recently read an  economist's apparently serious proposal to revive the housing market (remember, this is what the whole mess is about) that struck me as something Lenin would adore. He proposed that the government just buy everyone's existing mortgage and refinance it at a 1% interest rate. The government would also offer new mortgages to new buyers at the same rate. 

While we're at it, how about if the government solved the auto companies' problems by offering auto loans at 1% interest to anyone who had or could obtain a driver's license? Why stop there? How about 1% loans to buy computers and networking gear so Silicon Valley doesn't implode? You get the idea. Since the money is for nothing, nothing is off limits. Just propose it and it happens...money is no object.

 

Palin's Victory Tour

I was all set to write about the wretched economic situation and Detroit's plea for a bailout. Then, out of the blue (or is it red?), up pops Sarah Palin and suddenly I'm right back in Palinmania.

 

Did you catch any of her "victory tour" this week? It seems to have started in her kitchen in beautiful Wasilla. There she was, being  televised to the world, orating in her peculiar vernacular, while simultaneously whipping up a batch of moose stew ( do you "whip up" moose stew?). I bet you thought it would be hard for her to walk and chew gum. Not for our hockey mom. She was as smooth as a fresh sheet of ice. 

Her week continued with interviews on CNN, NBC and Fox, among others. The tour culminated with a rousing speech to the gathered Republican governors in Miami, eager to learn from Palin just how the party would be reassembled into anything that might have any chance of winning a national election again in their lifetimes.

 

Wait a minute! Did I just say that the Republican party didn't win the last election? Oops, yes, that's what happened all right. Obama did win both the popular vote and the electoral college vote. That means McCain and, I assume, Palin, must have lost.

 

Well, then how do you explain Palin taking a victory tour?

 

You can't. Unless your logic flows like Sarah's syntax.

 

Just to remind you, here's an example of "Sarah Speech", as reported by Maureen Dowd last week in the New York Times:

 

"My concern has been the atrocities there in Darfur and the relevance to me with that issue as we spoke about Africa and some of the countries there that were kind of the people succumbing to the dictators and the corruption of some collapsed governments on the continent, the relevance was Alaska’s investment in Darfur with some of our permanent fund dollars."

 

I guess that's clear enough. Even George W. would be proud to have uttered that particular string of words.

 

Re-reading that little ditty, it's easy to see why she has garnered a 98% name recognition among the great unwashed masses. Yes, of course, they like the fact that she's a hard working super-mom; and her looks, ideas and logic are simply captivating. But, most of all, they can't get enough of her folksy way of speaking. Her fans say that they would feel comfortable with her in the White House because she's just like them.

 

As Sarah herself would say, "this should result in a loud shout-out to the country's educators that they'd better get on the ball and plow through those glass doors that may be open just a crack". 

So therein lies the lesson for today:  there's a new day dawning, and it's all about teaching our children to speak with a clarity that every "Real American" (not those wussy Northeastern and West Coast elitists) can understand.

 

Oh, and one more thing. The government would be crazy to throw any money into the coffers of the big three automakers unless it's part of a pre-packaged bankruptcy proceeding in which: the management is replaced; the labor contracts are renegotiated; critical suppliers are paid so they don't go bankrupt; the common shareholders are wiped out; outstanding bonds are converted to common equity; and the government money is injected as preferred stock or senior bonds.

A New Beginning

The presidential election is over. The people have spoken. Obama clearly deserved the win. He had by far the better organized, financed and focused campaign. McCain's, by comparison, was disjointed and reactionary.

Oh, one more thing. Obama got the financial system to freeze up (or is it melt down ?) at exactly the right moment, thereby eradicating McCain's overwhelming strength on national security just weeks before the election.

 

How he pulled that exquisite piece of timing off is a mystery befitting Obama's ever expanding "walk on water" reputation. 

 

Obama's main selling point on why he would be better at solving the economic crisis was that he wasn't a Republican. Since it happened on their watch, it must have been the Republicans who got us into this mess. The voters' logical response was to throw the bums out. McCain's post convention bounce rapidly disappeared and Obama never lagged in the polls again.

 

With his election, the rest of the world appears ready to give America another chance to become good guys again. The fact that he is an African-American certainly demonstrates that Americans are willing to move past the old racial divides. Muslims worldwide, but especially in the Middle East, must have noted that Obama's middle name is Hussein. Africans surely noted that Obama's father came from Kenya. Asians probably noticed that Obama resided for a time with his mother in Indonesia. And Europe undoubtedly has paid attention to Obama's "spread the wealth" taxation and "consult with our friends" proclivities. 

 

So we wish the new president well. He will have his hands full, what with the economic mess, two wars and an eager Democratic congress straining to be unleashed.

One final comment: I will miss watching SNL and Tina Fey as Sarah Palin. It sure is hard to tell them apart. All things must come to an end, and so too must this. Alas. 

Are We Becoming Bluer?

The good ship McCain continued to take on water this week. A potential tide-turning event was the third and final presidential debate on Wednesday. McCain heaved up a "Joe the Plumber" bomb in his latest attempt to change the trajectory of the campaign. This follows his previous failed Hail Mary attempts: choosing Palin as his VP and a temporary suspension of his campaign to rush back to D.C. to rescue the economy. But the focus on the scary economic mess rather than on national security continued to help Obama.

 

According to America's most respected newsman, Jon Stewart, all Obama had to do to win the last debate was refrain from jumping up and saying "Where are all the white women at"? The Chosen One resisted that temptation and thereby maintained his momentum.

 

More bad news for McCain was that a number of Republican luminaries, reading the growing pile of tea leaves, scampered off the ship. George Will, Peggy Noonan, David Brooks and Colin Powell all bailed out.

 

The week did have some positive moments for McCain and Palin. McCain won the hilarious battle of the roasts at the Alfred Smith annual dinner. He looked like the straight talking McCain of yore and was seen having fun for the first time in the last two years.

 

Similarly, Palin finally made her anticipated appearance on Saturday Night Live. The first of the two skits was pretty lame. The second skit, however, was clever. Amy Poehler, who looks like she must be at least 10 months pregnant, rapped out a tune that had Palin swinging in her seat. The Governor came across as a good sport.

 

All the polls say Obama and Biden (remember him?) are gliding to victory. At this point, their strategy should be to just play it safe, not get drawn into any nasty name calling, avoid any memorable gaffes and pray like heck that the Dow doesn't suddenly rise 3000 points.

 

Perhaps the best tactic at this point for McCain/Palin is to jettison all pretenses of serious political talk. They should concede the boring wonkish policy stuff to Obama/Biden. The populace can't really evaluate whose plan is better and will just blame the Republicans for the economic mess since it occurred on their watch.

 

Instead, MCain/Palin should continue to do comedy for the remainder of the campaign. This will pick up the voters who base their decision on whom they want to have a beer with. But even if they lose the election, both McCain and Palin will burnish their resumes and improve their chances for future gigs during the Republican diaspora. They should have lots of juicy material resulting from observing the Democrats' attempts at dealing with the economy.

Money For Nothing - Part 2

Counting the $700 billion the congress and the president just authorized the Treasury department to use, almost $2 trillion has now been committed by the federal government to get the financial system functioning again. Several of our friends are also pitching in. The combined commitments announced by the US, Europe and Japan exceed $4 trillion.

The government politicos say "trillion" like it's an everyday number that just slips right off your lips. I can't really get my mind around such a staggering number. $4,000,000,000,000. I don't know about you, but all those digits look really scary to me.

Where does all this money come from?

I admitted in a previous post that I really don't understand money very well, but here goes. I assume that the Chinese and friendly OPEC nations will continue to lend a bunch of it to us by buying treasury bills and bonds. The rest will be created magically by just printing more of the paper variety we're used to seeing and by making some entries in an exotic "grand ledger in the sky".

This will increase our national debt to over $10 trillion. Some people think that this is really bad because our kids and grandkids will have to pay this back. But that never seems to happen. They may just pass the debt on to their kids and grandkids. In economic theory, I think this strategy is called "kicking it down the road".

Another possibility is that we'll experience a case of serious inflation (kind of like serious indigestion, but on a national scale). Thus, while we pay back the stated amount, it will not be worth very much in real money (whatever that is).

Just where does this leave us? In dire straits, where the money is for nothing (and the chicks for free). Hmm... I seem to remember something similar to that a while ago on MTV .

Is The Spoof Better Than The Original?

My question of the week: is the spoof better than the original? Let me explain. 

For comic relief, 70 million Americans tuned in for the long anticipated Vice-Presidential debate last Thursday. Just prior to the debate, we were momentarily distracted by the news that the moderator, Gwen Ifill, had a book coming out and she would clearly benefit from an Obama win in November. This little tidbit perhaps neutered Ifill from acting like a moderator who might actually try to get the candidates to answer her questions. With this limitation, rather than the train wreck everyone was anticipating, it turned out that all three protagonists in the show did OK.

 

Ifill moderated moderately, Biden behaved and Palin projected power. Ifill's questions were clear and covered a reasonable range of topics. Biden controlled his impulses to actually debate Palin, instead focusing his remarks on how much he loved McCain and how wrong McCain was on every topic discussed. He finished off each retort with a broad smile, clearly indicating what a nice guy he is.

 

But the star of the show clearly hit her marks. Palin uttered every rehearsed line in fine cadence whether or not her response had anything whatsoever to do with the question asked. Ifill's limitations clearly helped Palin in that she faced no follow-up questions. Palin talked directly into the camera, ignoring the other two on stage, smiling broadly, and even winking from time to time. All this while never uttering the "g" sound at the end of her words.

 

None of this changed anything in the slightest, but it sure was entertaining.

 

After the original debate was aired, everyone waited for the inevitable Saturday Night Live spoof. First of all, to give them the credit they deserve, the SNLers are amazingly quick. It must be pretty hard to create that good a parody in only 48 hours. The Joe Biden and Gwen Ifill (Queen Latifa) impersonations were great. The Biden smile after denouncing McCain and the looks of disbelief of Ifill after Palin spoke were right on. But, as usual, Tina Fey nails it big time. She is such a tour-de-force that an un-cued observer might have trouble guessing whether it was Tina Fey on stage Thursday night and not some hockey Mom from Alaska.

 

The question of the week is really a toss up. If I had to decide, though, I'd say the original. As Palin would say, "you betcha", it's my acting that's more real.