Is Syria Putin's Real Goal?

Vladimir Putin believes (probably correctly) that a fall from power will mean his death. Putin came to power after the 1998 oil price crash forced a Russian bond default, drove inflation to 80% and pushed Boris Yeltsin out of office. The price of oil has crashed again. Putin needs a higher price of oil or a significant military victory to stay in power.

Putin's military support of Bashir al Assad is designed to raise the price of oil by fomenting chaos in the Middle East. The price of oil has increased from about $45 a barrel to almost $50 a barrel for Brent crude since Putin's intervention started, nice but insufficient.

Putin has other reasons for optimism on oil prices. The Iran Nuclear deal guarantees a Middle East war in the next 6 months. It both permits unlimited Iranian oil sales and gives Iran access to $150 billion in formerly frozen assets. Iran's oil revenue last year was about $55 billion. This is big money for the Mad Mullahs to spend on weapons and training militias and terrorists.

I don't think the Israelis, Saudis and Egyptians are going to wait peacefully while the Iranians to make enough nuclear weapons to wipe them out. I expect them to attack Iran's two big economic vulnerabilities. Over 90% of Iran's oil exports flow through the Kharg Island oil terminal, 16 miles offshore. All of Iran's gasoline, kerosene and diesel fuel is imported. They have no refineries. If Iran's enemies bomb Kharg Island and mine their harbors from the air, it puts Iran out of business economically. Iran would probably try to close the Strait of Hormuz to retaliate. Most of the Persian Gulf oil exports move through the Strait of Hormuz. Even if the Iranians are unsuccessful, the threat of attack may be enough. If the strait is a war zone, oil tanker ships moving through it will have no insurance. A significant amount of oil will not reach the international market.

I come to believe that Putin's Middle East moves may be a feint. If he’s going the military route, his target is most likely one of the three former Soviet Republics that are now NATO members. It's Putin's choice of Baltic States: Estonia, Latvia or Lithuania. I think Lithuania is a logical choice because taking it would give Russia land access to the Russian enclave of Kalingrad, formerly East Prussia. Putin has recently firmed up a deal with Belarus for a big Russian air base within striking distance of the Baltic States. This will be the first Russian military base in Belarus since it became an independent country.  The agreement didn’t get much coverage in the press.  I think even a massive Russian buildup on Lithuania’s border would not get much press either.

Barry the Brilliant has made polite gestures towards defending the Baltic countries, but nothing that would actually be effective. Our Smartest President Ever refuses to have more than a few hundred American soldiers in any of these countries, and they are just passing through. Obama also refuses to establish NATO air bases in any former Eastern Block counties because there's a treaty with Russia that promises we won't do that. Russia already broke that treaty, but we're still living up to it. If any NATO country falls to Russia, the failure of NATO to defend an ally effectively would destroy the alliance. Putin is desperate enough to try it. Given the Middle East chaos distracting world leaders, the general weakness of NATO and the specific weakness of the defenses in the Baltic countries, Putin has a decent chance of getting away with it.

Is Inflation No Longer a Problem?

Short term inflation is irrelevant.  The long term pattern is easy to see for a Vietnam Era vet like me.  When I was a kid, candy bars cost a nickel, silver was $1.25 an ounce and gold was $35 an ounce.  I grew up in Missoula, Montana, where I got my allowance as a single Morgan silver dollar coin every week.

I haven't bought a candy bar lately, but the last time I did it was $1.25.  Silver is $15.96 an ounce today and gold is $1,323.  A 1921 Morgan silver dollar coin is worth about $27.

The traditional solution for bankrupt governments is to debase the money.  Henry VIII had trouble paying for his 6 wives, so he minted primitive sandwich coins with copper centers and silver overlay.  Because of where the silver wore off on the coin, he was known as "Old Coppernose."  

In modern US terms, we electronically print more money. Calling it quantitative easing doesn't change what's going on. The ultimate result is convenient only in the very short term. Longer term, it wrecks the economy and creates political instability. Hitler would have been trapped in beer halls if it hadn't been for the instability of runaway inflation.

Inflation makes it hard to estimate economic risk because the way it changes values is not uniform across asset classes. To paraphrase Orwell, some assets are more equal than others. When you add the different tax treatment for different assets, it gets worse. In general, inflation diminishes the information value of prices, which in turn reduces efficiency in the economy as a whole. Inflation is not something you wish for. It's something you live through. If the government takes the inflation to extremes, the economy breaks down, which leads to the government and society breaking down. Glib talk from liberal pundits is just whistling past the graveyard.

The US has been inflating the dollar for years.  After the Obama spending binge, I think we can expect more of the same.  The only question is the timing.

What Do We Get For Efforts in Afghanistan?

America is in an isolationist mood right now.  Lots of people are asking, “What do we get out of our efforts in Afghanistan?”  My answer is that we prevent the slaughter we're seeing now in Syria and Iraq.  The effects of our withdrawal can be seen in the disasters that happened as a result.

In Iraq, we left in a hurry so we could declare the tide of war had receded. Al Qaeda in Iraq renamed itself ISIS and seized a parts of Syria and Iraq.  They slaughtered Christians and Yazidis, saving only females of breeding age for sex slave auctions.  In the Iraqi Army, all of the senior officers the US trained were replaced by politically reliable but cowardly hacks.  They abandoned their units and fled before ISIS even got close.  Without officers or orders, the Iraqi Army ran away too.  ISIS is now using the weapons they captured from the Iraqi Army disintegration.

There were 100,000 dead Syrian civilians before we paid attention to Bashir al Assad.  Then Barry the Brilliant cancelled plans to destroy Assad's air force on the ground.  Now there are an additional 100,000 or more dead Syrian civilians.  Bashir al Assad's air force dropped improvised, shrapnel loaded barrel bombs on them.  There are millions of refugees fleeing the choice of barrel bombs or ISIS.

We could see the same in Afghanistan or worse, if we leave now.

Big News: Bombed Hospital or Taliban Attrocities?

The lead story today is that two bombs dropped by a US Air Force plane hit a Doctors Without Borders hospital in Kunduz.  Why is everyone ready to assume the US military bombed the hospital on purpose? We do more than any other military in the world to avoid hitting civilian targets. Our munitions and targeting are as accurate as we can make them. Our enemies generally intend to kill civilians. While the Taliban was in control of Kunduz they murdered and raped hundreds of civilians. Many were killed because they were family members of police or soldiers, or because they provided health care for women. Why is the outrage reserved for a targeting mistake, rather than the Taliban atrocities?

Amnesty International accuses the Taliban of atrocities against defenseless civilians, including mass rape and murder. This is war crimes on a massive scale. Maybe this isn't important because the Taliban raped and killed only Asian women and children? Well, that's racist. Maybe it's not important because that's what we expect the Taliban to do? Well, that's the bigotry of low expectations if I ever heard it. Maybe it's just the usual liberal priorities. Liberals don't care how many innocent people get raped and murdered, as long as domestic spending isn't cut and no American voters are harmed.

It’s likely American air strikes in Kunduz are being coordinated by a mix of forward air controllers (FACs) from multiple countries, including some Afghan Special Forces. This is because rules of engagement from President Obama generally restrict US Special Forces from engaging in combat. These FACs are being shot at while they coordinate the air strikes. If they read or say a coordinate wrong, the strike hits the wrong building. Two bombs could be dropped in a single pass of one aircraft.  It’s also possible that Taliban gunmen were firing from the hospital because they were hoping for an incident just like what happened.  Before the Pravda Press proclaims a war crime, perhaps they need to know something about military operations in a combat zone. They might also want to wait until the actual facts come out. So far, everything beyond the bombing itself is just speculation.

https://www.amnesty.org/.../afghanistan-harrowing.../