Category Archives: general

So this is how the world ends… isn’t it? – Telegraph

4. Nuclear war

Still the most plausible ‘doomsday’ scenario. Despite arms limitations treaties, there are more than 15,000 nuclear warheads and bombs in existence – enough, in theory, to kill every human on Earth several times over. Even a small nuclear war has the potential to cause widespread devastation. In 2011, a study by NASA scientists concluded that a limited atomic war between India and Pakistan involving just 100 Hiroshima-sized detonations would throw enough dust into the air to cause temperatures to drop more than 1.2C globally for a decade.

Probability: High. Nine states have nuclear weapons, and more want to join the nuclear club. The nuclear wannabees are not paragons of democracy.

Result: It is unlikely that even a global nuclear war between Russia and Nato would wipe us all out, but it would kill billions and wreck the world economy for a century. A regional war, we now know, could have effects far beyond the borders of the conflict.

So this is how the world ends… isn’t it? – Telegraph

Thoughts from the Frontline – On the Verge of Chaos

“There are some geopolitical thinkers I respect who argue that all this could trigger a regime change in Russia. And others who argue that it will make Vladimir Putin even stronger and that he will want to double down on his policy of destabilizing Ukraine sooner rather than later. Putin does not strike me as being willing to step aside in the manner of a Boris Yeltsin. I doubt he will go gently into that good night. He is a wildcard on the geopolitical stage.”

The “this” referred to above is about low oil prices and the fact that China will be devaluing its currency soon. That big energy deal between Russia and China is in yuan. If China is forced to devalue its currency in order to respond to Japan, then that is going increase pain on Russia.

Concerning Russia, there is a threat of regime change, instability plus limited options. Sounds like revolution will soon enough start brewing in Russia unless Putin can somehow redirect everybody’s attention. And truly Putin is not kind of guy (so far) that is likely to go quietly in the night. Things are more likely to get worse before they get better.

Thoughts from the Frontline – On the Verge of Chaos [Excerpt]

Complexity and Collapse

Okay class, for those who want a little extra credit, I’m going to give you some extra reading and viewing. Lacy Hunt encouraged me to listen again to our friend Niall Ferguson’s speech entitled “Empires on the Edge of Chaos” (Note: the introduction is 10 minutes long and can be skipped. You know who Niall is. And there is considerable Q&A at the end, so the speech itself is roughly 40 to 45 minutes. But the Q&A has lots of laughs, which makes it worth it.) Or you can read this article by Niall in Foreign Affairs, which has much of the same content.

I want to repeat the two quoted paragraphs that opened this letter, along with one more from the Foreign Affairs article. (Again, all emphasis mine.)

Great powers and empires are, I would suggest, complex systems, made up of a very large number of interacting components that are asymmetrically organized, which means their construction more resembles a termite hill than an Egyptian pyramid. They operate somewhere between order and disorder – on “the edge of chaos,” in the phrase of the computer scientist Christopher Langton. Such systems can appear to operate quite stably for some time; they seem to be in equilibrium but are, in fact, constantly adapting. But there comes a moment when complex systems “go critical.” A very small trigger can set off a “phase transition” from a benign equilibrium to a crisis – a single grain of sand causes a whole pile to collapse, or a butterfly flaps its wings in the Amazon and brings about a hurricane in southeastern England.

Not long after such crises happen, historians arrive on the scene. They are the scholars who specialize in the study of “fat tail” events – the low-frequency, high-impact moments that inhabit the tails of probability distributions, such as wars, revolutions, financial crashes, and imperial collapses. But historians often misunderstand complexity in decoding these events. They are trained to explain calamity in terms of long-term causes, often dating back decades. This is what Nassim Taleb rightly condemned in The Black Swan as “the narrative fallacy”: the construction of psychologically satisfying stories on the principle of post hoc, ergo propter hoc.

Defeat in the mountains of the Hindu Kush or on the plains of Mesopotamia has long been a harbinger of imperial fall. It is no coincidence that the Soviet Union withdrew from Afghanistan in the annus mirabilis of 1989. What happened 20 years ago, like the events of the distant fifth century, is a reminder that empires do not in fact appear, rise, reign, decline, and fall according to some recurrent and predictable life cycle. It is historians who retrospectively portray the process of imperial dissolution as slow-acting, with multiple overdetermining causes. Rather, empires behave like all complex adaptive systems. They function in apparent equilibrium for some unknowable period. And then, quite abruptly, they collapse.

The single most commented-upon letter that I have written was called “Fingers of Instability.” Longtime readers know it well, and I would suggest new readers take the time. It contains extremely important concepts for understanding why financial markets can advance smoothly for so long, and then all of a sudden there is chaos. The fingers of instability distributed throughout the sand pile of the global economic system end up getting triggered by some event that may in itself be quite minor. Yes, there are many factors contributing to an unstable global sand economic pile (think massive global debt, wanton overleverage, mischievous central banks with immoderate views of their importance, etc., etc.), but it only takes that fateful final grain of sand, dropped on just the right spot in the pile, to bring the whole thing cascading down.

What Niall is talking about is something that goes far deeper than another financial crisis like the one we recently experienced. What he is pointing out is that countries in financial distress are more constrained than normal in their actions. They have less ability to respond to crises. And some countries in crisis react in very unpredictable ways. Let’s talk about a second-order problem stemming from the fact that Japan is doing what it feels is necessary to keep from suffering a deflationary collapse. Understand, I’m not being critical of the Japanese for taking the actions they have, because I simply don’t know what other choice they have. That’s what makes their situation so difficult.

Japan’s major economic competitors – Germany, Korea, and China – will all have to respond, or their businesses will lose competitive advantage. Okay, we have seen large-scale currency movements all our lives. We adjust. That’s what businesses do.

Except, China and Russia have just signed an agreement for Russia to export rather massive amounts of energy to China, and they will take payment in yuan rather than dollars. A yuan that is going to be falling in value against the dollar as China responds to Japan.

In an ideal world for Russia, the Russian central bank would simply take the Chinese currency and add it to their reserves. But that would trigger a rather large “oops” that was not in the equation when they signed that deal. The yuan they are going to get is going to be losing value on the international market, and Russia is going to need hard currency (i.e. dollars) to pay down its large dollar-denominated debt and buy equipment to maintain and increase its ability to produce energy. And that equipment is generally sold in dollars and not in renminbi.

Couple that situation with the real potential for oil to go below $70 and Russia would have significant budgetary problems. And as David Hale pointed out recently in a private letter, if the US and Iran actually settle their differences over nuclear armaments later this month and sanctions are lifted, that could bring another 1–1.5 million barrels of oil a day onto the world energy markets. (He suggests it would have the same effect as a $400 billion global tax cut.) Mexico is committed to increasing its output, as are other countries, including the US. Sub-$70 oil is not out of the question, and in a global recession we could touch $50 easily. And while that would be good for consumers everywhere, it would certainly put a strain on Russia and other oil-producing countries. In fact, the scenario portends a major crisis for Russia.

And while we’re not as worried about Venezuela or other smaller oil producers, Russia is a potential problem, simply because it is so unpredictable. As noted above, the Japanese population is willing to take a great deal of pain. I don’t think we can say the same thing about the Russians at this point.

There are some geopolitical thinkers I respect who argue that all this could trigger a regime change in Russia. And others who argue that it will make Vladimir Putin even stronger and that he will want to double down on his policy of destabilizing Ukraine sooner rather than later. Putin does not strike me as being willing to step aside in the manner of a Boris Yeltsin. I doubt he will go gently into that good night. He is a wildcard on the geopolitical stage.

Russia has been willing to let the ruble fall rather precipitously rather than supporting it with their dollar reserves, which they are saving for other purposes. Even though the Russian economic situation is deteriorating due to sanctions, the Russian people have so far seemed to tolerate the downturn. As noted in last week’s Outside the Box, the West in general and the US in particular are blamed for Russia’s woes multiple times daily in the Russian media. Given the unpredictability of the current Russian leadership, there is simply no way to guess the outcome. That should make you nervous.

The Fragile Eight

The 2008 crisis demonstrated that the global economic system is far more connected than most imagined. There has been no real deleveraging since that time as nations everywhere have doubled down on deficits and debt. European banks are just as leveraged to sovereign debt as they were before the crisis hit.

The recent Geneva Report on global deleveraging highlighted what the authors termed the “fragile eight” countries of Brazil, Chile, Argentina, Turkey, India, Indonesia, Russia, and South Africa as an “important source of concern in terms of future debt trajectories.” China and the “fragile eight” could find themselves in the unwanted role of hosts to the next phase of the global leverage crisis, it warned.

The accumulation of household, corporate, and government debt in both the emerging and developed worlds has been made all the more troubling by stubbornly low and slowing growth rates. The global capacity to take on more debt is rapidly diminishing because of the combination of low growth and low inflation, if not outright deflation, that we are beginning to see in major countries.

There seems to be a stubborn unwillingness on the part of authorities to recognize the problems that come along with swelling sovereign debt. We are coming ever closer to the point at which countries are going to have difficulty raising debt at interest rates that makes sense, absent the ability to create a shock and awe campaign like Japan’s. And few countries (actually, none come to mind) have the ability to monetize their debt to the tune of 200% of GDP, as Japan is setting out to do, without causing a dramatic currency collapse.

I have this argument all the time with fellow analysts. I get that “austerity” in a deflationary or even disinflationary environment is not exactly pro-growth. And if a country’s debt is low and there is growth, then you can get away with increasing debt. But there is a limit to the amount of debt that a country can take on, and we are approaching it in country after country. This trend is not good for global economic growth or stability. The second-order unintended consequences, such as those Niall describes, are very difficult to contemplate.

The world is not going to come to an end. I will be writing this letter and hopefully you will be reading it in 10 years. But economies and markets are going to get more fragile and volatile in the meantime. This is not the time to be a full-throated bull in the equity markets. And given the potential dollar bull market, there is going to be pressure on most commodities. Corporate debt, especially high-yield debt, is priced for perfection. When I look out over the horizon, I simply don’t see perfection. At a minimum, you should not be long high-yield debt. And if you’re running a business, you should get all the debt you can, even if you bank the cash, at today’s low rates for as long a term as you can get it. Take advantage of this unbelievably forgiving debt environment.

Thoughts from the Frontline – On the Verge of Chaos

George Orwell’s 1984: Summary + Video + Audio Book

Check out George Orwell’s 1984 Video SparkNote: Quick and easy 1984 synopsis, analysis, and discussion of major characters and themes in the novel. For more 1984 resources, go to

Video SparkNotes: Orwell’s 1984 Summary – YouTube

Video SparkNotes: Orwell’s 1984 Summary

1984 is a 1956 film loosely based on the novel of the same name by George Orwell. This is the first cinema rendition of the story, directed by Michael Anderson, and starring Edmond O’Brien. Also starring are Donald Pleasence, Jan Sterling, and Michael Redgrave. Pleasence also appeared in the 1954 television version of the film, playing the character of Syme, which in the film was amalgamated with that of Parsons. O’Brien, the antagonist, was renamed “O’Connor,” possibly to avoid confusion with lead actor Edmond O’Brien.

After the customary distributor agreement expired, the film was withdrawn from the theatrical and TV distribution channels by Orwell’s estate and was not legally obtainable for many years

Eric Arthur Blair (25 June 1903 — 21 January 1950),[1] known by his pen name George Orwell, was an English novelist, essayist, journalist and critic. His work is marked by lucid prose, awareness of social injustice, opposition to totalitarianism and commitment to democratic socialism.[2][3]

Commonly ranked as one of the most influential English writers of the 20th century and as one of the most important chroniclers of English culture of his generation,[4] Orwell wrote literary criticism, poetry, fiction and polemical journalism. He is best known for the dystopian novel Nineteen Eighty-Four (1949) and the allegorical novella Animal Farm (1945), which together (as of 2009) have sold more copies than any two books by any other 20th-century author.[5] His book Homage to Catalonia (1938), an account of his experiences in the Spanish Civil War, is widely acclaimed, as are his numerous essays on politics, literature, language, and culture. In 2008, The Times ranked him second on a list of “The 50 greatest British writers since 1945″.[6]

Orwell’s work continues to influence popular and political culture, and the term Orwellian — descriptive of totalitarian or authoritarian social practices — has entered the language together with several of his neologisms, including Cold War, Big Brother, thought police, Room 101, doublethink, and thoughtcrime.

? 1984 George Orwell – Full Movie – Hollywood best Greatest blockbuster movie Film – YouTube

1984 George Orwell – Full Movie

The audio book:

CITI: These 6 Huge Trends Are Completely Reshaping The World Economy | Business Insider

Trend 1: The world is getting more integrated.
Trend 2: The global population is getting older.
Trend 3: Next-generation technology will enter the global market place.
Trend 4: Emerging economies will drive global economic growth.
Trend 5: Systemic risks are a threat to globally integrated companies.
Trend 6: Global governance systems will fail to solve international problems.

CITI: These 6 Huge Trends Are Completely Reshaping The World Economy | Business Insider

What Firechat’s Success in Hong Kong Means for a Global Internet – The Atlantic

And, crucially, it [FireChat] doesn’t need the Internet to work. It connects users directly to each other through their phone’s wi-fi or Bluetooth.

Firechat is, in the word of Stanislav Shalunov, “an electronic megaphone, that’s more resilient and goes further” than other tools. Shalunov is a co-founder and CTO of OpenGarden, the startup behind Firechat.

Firechat, in other words, erects a mesh network among its users. Unlike the modern Internet, which is essentially built around certain huge centralized hubs,  mesh networking allows users to connect directly to each other. Even if “the Internet” is still blocked, a mesh network still works—there’s no main outgoing connection to block.

What Firechat’s Success in Hong Kong Means for a Global Internet – The Atlantic

“Where is liberalism going?” – Toward authoritarianism

But in order to achieve this goal of a soft, liberated citizenry, the left will have to dominate and to control more of society—a tendency that is already in evidence, Williamson argued.

“At some point we’re going to have to really face in a very difficult way that we’re dealing with a really naked, aggressive authoritarian movement,” he said.

Recent events testify to this tendency, Williamson said. Robert Kennedy, Jr., a climate change activist and part of the most famous political family in America, argued recently that conservatives who disagree with the climate-change alarmists should be jailed. Senate Democrats just voted to repeal the First Amendment’s protection of free speech. Several proposed graduation speakers were forced to withdraw from speaking because of protests from students who disagreed with some of the speakers’ past work.

These events and the ideology undergirding them are a far cry from the democratic constitutional republic envisioned in the Declaration of Independence and the Constitution. The progressive agenda is, according to this panel, diametrically opposed to the American political project, as it wants to dismantle the constitutional order and the personal mores necessary for self-government and replace them with a much more authoritarian system.

But the question the panel did not really answer is why the left exists now and, more specifically, whether there is anything about the American system that naturally gives rise to the political left.

Liberalism in America | Washington Free Beacon

The modern liberal believes that men basically have a good heart. But that´s not what the Bible says:

Jeremiah 17:9 – The heart [is] deceitful above all [things], and desperately wicked: who can know it?
Mark 7:21 – For from within, out of the heart of men, proceed evil thoughts, adulteries, fornications, murders,

So the foundation of the liberal is diametrically opposed to that of the conservative.

The article goes on the say that ultimately liberals are going nowhere. I think that statement is misleading. I think liberals will ultimately drive the US over a cliff. Maybe they´ll end up nowhere, but most of the people are going to suffer a lot in the process.

What President Obama left out of his ISIS address

The rise of the Islamic State, Hamas aggression against Israel, Russia’s revanchism in Eastern Europe and China’s territorial assertion in the Pacific have ended the most recent spell of U.S. isolationist delusion. Disparate in nature, these international crises share common features: exploitation of perceived U.S. weakness and repudiation of an international system that recognizes the territorial integrity of nation-states. Addressing these challenges must begin at home.

While President Obama promised to fundamentally change America, few realized his policies would fundamentally weaken it. Yet, the administration’s defense priorities and international retrenchment increasingly reflect a pre-Sept. 11, 2001 mindset. Moreover, the administration has sought to erode America’s national identity by dissolving our borders and nullifying immigration laws essential to U.S. sovereignty and security.

TRACCI: Restoring international stability begins at home – Washington Times

John Kerry Places Climate Change On Par With Ebola and Isis

US Secretary of State John Kerry has placed climate change on the top of world agenda, alongside Ebola and Isis, saying it has an immediacy that people have come to understand.

In remarks to foreign ministers of the 20 biggest economies, Kerry said climate change should be at the top of the agenda despite competition from more immediate challenges, according to The Guardian.

Experts and climate activists are raising the pitch to get world leaders to commit to limiting global temperatures to 2 deg C using strong policies.

This is the tipping point in temperature beyond which climate change effects will become irreversible.

John Kerry Places Climate Change On Par With Ebola and Isis

Dear Fellow Liberals: I’m Done Apologizing for Israel | TIME

As a species, we don’t seem to cotton to facts—especially when it comes to Jews

Some years ago, I was seated at dinner next to a British law professor, whom my husband, also a law professor, had invited to a conference that he’d organized. The conversation soon turned, as conversation often does among professional intellectuals, to Israel, specifically to the then-recent conflict between Israeli soldiers and Palestinian fighters in the West Bank town of Jenin, which my dinner partner (and much of the European press) referred to as the “massacre of Jenin.”

Oops—forgot about it already? Here’s a refresher: in 2002, the IDF went into Jenin during the Second Intifada, after Israel determined that the town served as a launching pad for missile and rocket attacks against Israeli civilians. The 10-day operation claimed the lives of around 50 Palestinian gunmen, and 23 Israeli soldiers. My acquaintance, after repeating Palestinian claims of atrocities committed by Israeli forces—claims that had already been roundly debunked—capped off his assessment by saying, “What happened in Jenin was no more and no less than another Holocaust.”


Dear Fellow Liberals: I’m Done Apologizing for Israel | TIME

“As a liberal American Jew, I’m tired of apologizing for Israel’s actions regarding its own security, and as of last month, I’m done with it.”

You don´t need to tell us if you are liberal and Jewish. You only need to tell us if you are not liberal.

Here is a Jew basically complaining about other liberals. That they don´t like facts. Of course they don´t like facts. If they liked facts then they wouldn´t be liberal. The reality is slightly more complex, though. Liberals can understand facts but there is always so much background noise that reality gets flipped upside-down. The facts end up not mattering. But how can you argue with someone where the facts don´t even matter? Exactly!

The problem here is a little like banging your head against the wall. It feels so good when you stop. That´s what it is like arguing against liberals. You can´t agree on many of the facts, and even when you can agree they just don´t matter. Nothing matters. The facts end up not mattering because liberals have a model for how the world works. You won´t be surprised to learn that this model is the opposite of the conservative world model. Anyway, facts that don´t fit into this model just don´t register. It is as if they don´t exist.

Liberals believe that people behaving badly, like the Palestinians, are only reacting to their environment. When they seek to kill Jews and attack Israel it is only because of the oppressive environment that Israel created. Therefore, anything the Palestinians do is the fault of Israel. And Israel´s reaction may only be proportional as measured by deaths. Any kinds of facts otherwise are irrelevant. More Palestinian deaths is evidence of more cruelty (and evil) by Israel. Again, the actual facts of the situation are irrelevant.

Israel, and America too, fit into the bad-guy mold of the liberal world model. The only way out of that mold is to let the Palestinians kill more Israeli Jews. Insane, no?

In the end, one can´t argue so much about Israel. One has to attack the entire liberal model of how the world works. Good luck with that.

Think Tanks for Sale or Rent :: Daniel Pipes

In a eyebrow-raising 4,000-word exposé, “Foreign Powers Buy Influence at Think Tanks” published in the New York Times on September 7, Eric Lipton, Brooke Williams and Nicholas Confessore look into the novel issue of foreign governmental financing for American think tanks.

The trio found that while the total scope “is difficult to determine … since 2011, at least 64 foreign governments, state-controlled entities or government officials have contributed to a group of 28 major United States-based research organizations.” Using the sketchy available information, they estimate “a minimum of $92 million in contributions or commitments from overseas government interests over the last four years. The total is certainly more.”

In exchange for this largesse, the research institutions in question offered their donors two main benefits: One, they pressured staff members both to “refrain from criticizing the donor governments” and “to reach conclusions friendly to the government [that had provided] financing.” And two, they have been “pushing United States government officials to adopt policies that often reflect the donors’ priorities.” The result: Overseas money has thrown doubt on the legitimacy and objectivity of think-tank research while “increasingly transforming the once-staid think-tank world into a muscular arm of foreign governments’ lobbying in Washington.”

My responses, a week later, to this bombshell of a report:

Think Tanks for Sale or Rent :: Daniel Pipes