Monday, May 25, 2015

Memorial Day 2015


For my U.S. readers, a moment to pause and reflect. To think upon the past and to wonder on the future.

Thursday, May 21, 2015

Middle Eastern Mood and Markets

Precipice Living by Splitting Borders
Well, we do certainly live in interesting times. The markets and mood continue to remain elevated in the U.S. and most other large Western market-economies. While the smell of rot underlies it all, the myth of Fed omnipotence is strong and the assumption the Welfare-Warfare-Security State is all-encompassing and unassailable continues to be peddled in the mainstream propaganda most people consume.

The flashpoints we have seen in Ferguson/New York/Baltimore (ethnic tensions and anti-police sentiment), in Waco (potential for mass gang violence), and the ongoing efforts to expand the formal reach of the Security State (debates over the PATRIOT Act), will inform the boundaries of this coming negative mood era.

In addition, what had once been regarded as a dark fantasy of hardcore conspiracy theorists has now become a mainstream push by "respectable" economists - banning all cash and allowing Central Banks and/or Governmental agencies the power to make you use your money in a way they see fit.



At this point, I cannot say exactly what kinds of crazy will irrupt across America and the world once this fever-dream we have been living over the last few years cracks. We'll continue to try and find the outlines of what is to come, but it looks like the first move will be towards a formally authoritarian regime with absolutely massively intrusive financial controls over the population, probably in response to some combination of internal unrest and some sort of terrorist attack. Combine this with pushing quick adoption of self-driving vehicles (for our own good), which obviously implies the people who control that network can control whether you travel or not, it looks like we have a recipe for the initial crackdown.

Now, the shape of the whirlwind which will result from that coming crackdown is a mystery to me, but I suggest you have a good social network (not an electronic one, but a network of friends and family in your immediate area upon whom you can rely) in place. Success is a team sport in all endeavors, but especially during hard times.

Middle East Overview

With much attention being paid to the ongoing ability of the Islamic State to not only survive, but thrive, let's take a look at the markets of a few of the countries in the region and see how they might correlate to the kind of negative mood which might make them susceptible to IS (I especially think Saudi Arabia is particularly vulnerable to this group - time will tell).

Five Year Chart of the TA-100 Index, from Bloomberg
This the five-year chart of the Tel Aviv 100 Index out of Israel. It looks like a picture of confidence and generally positive mood. With the recent reelection of Netanyahu, it would seem to reinforce the current positive trend.

Five Year Chart of the Amman Stock Exchange General Index, from Bloomberg
The Jordanian index over the past five years looks steady in the near-term. I won't comment on any potential wave counts, leaving that to the experts at Elliott Wave International, but you might keep an eye on this chart in the coming months.

Five Year Chart of the Tadawul All Share TASI Index, from Bloomberg
And here is an index chart from the great prize of the Middle East - the Kingdom of Saudi Arabia. I will refrain here as well from giving you my wave counts, but implore you to put this stock chart on your watch list. If the Kingdom goes down under the next push from the Islamic State, or if their Shi'a minority rises up as part of an Iranian-sponsored push against the Sunnis, well then, we have ourselves one ugly situation. 

Housekeeping Notes

The Nuclear Strike of the Month feature will return in June. I didn't have time to do such a post justice. I want to make sure I create useful scenarios and sometimes that takes a bit more planning than I've put into the blog recently.  We'll cover a few more single strikes and I'll be working my way up to a review of the concept of Nuclear Winter and a few other fear-inducing aspects of nuclear war to help you think more clearly in what I am assuming will be tumultuous years to come.

Thursday, May 7, 2015

Quick Check-In

Pardon the lack of posts lately. Dealing with various things in work and life. A couple of posts in the cooker that need more thought. Keep your eyes on the Middle East and Ukraine, but I suggest ignoring headlines and the first three paragraphs of any story you come across and try to dig deeper. Lot's of cross-currents out there and we continue to see signs of building negative mood, though the various markets in most major countries continue to be elevated.

Remain alert, but don't let them blind you with fear.

Tuesday, April 21, 2015

The Abandoned Middle

It Can't Happen Here, Sinclair Lewis
Driving in to work today, I caught snippet of an interview with former Senator Trent Lott who was discussing a report on how the political process is doing here is tense and fracturing America. The report, Governing in a Polarized America: A Bipartisan Blueprint to Strengthen our Democracy (link is to an executive summary in .pdf) provides a variety of analyses and recommendations, most of which you can expect will be ignored "[i]n today’s hyper-partisan era, when citizens are more politically divided and get more of their news and information from ideologically driven sources..."

This was yet another NGO staffed by yet the same cast of political characters recycled over the past few decades through government, corporate America, and the NGO borg, trotting out yet another report which will be ignored. So what? Well, it reminded me of a series of blog posts by John Michael Greer from early 2014 which I think you will find of interest.

Mr. Greer holds a lot of unpopular opinions about Industrial Society, humanity's place in the Universe, and the rise and fall of societies and empires. That said, he does a tremendous amount of novel and informed thinking on a wide range of what ails the world right now and, whether you agree with the assumptions or not, his blog is on that short list of routine internet commentaries which are worth the time to read and ponder.

The posts in question revolved around fascism. He noted that the term has been thrown around as a label of abuse since World War II by all sorts of groups, but very little discussion is actually done on what the tenets of fascism are or how fascist governments actually rose to power in Europe in the early and mid Twentieth Century.

I want to draw particular attention to the second post, entitled "The Totalitarian Center," centering on the destruction of the concept of political conservatism as it had been understood up until the early 20th Century and the concept of the "abandoned middle" of politics:
...Americans may not agree about much, but a remarkably large number of them agree that neither political party is listening to them, or offering policies that Americans in general find appealing or even acceptable. Where the two major parties can reach a consensus—for example, in giving bankers a de facto amnesty for even the most egregious and damaging acts of financial fraud—there’s normally a substantial gap between that consensus and the policies that most Americans support. Where the parties remain at loggerheads, there are normally three positions: the Democratic position, the Republican position, and the position most Americans favor, which never gets brought up in the political arena at all.

That’s one of the pervasive occupational hazards of democratic systems under strain. In Italy before and during the First World War, and in Germany after it, democratic institutions froze up around a series of problems that the political systems in question were unwilling to confront and therefore were unable to address.  Every mainstream political party was committed to maintaining the status quo in the face of a rising spiral of crisis that made it brutally clear that the status quo no longer worked.  One government after another took office, promising to make things better by continuing the same policies that were making things worse, while the opposition breathed fire and brimstone, promising fierce resistance to the party in power on every issue except those that mattered—and so, in both countries, a figure from outside the political mainstream who was willing to break with the failed consensus won the support of enough of the voters to shoulder his way into power.

When fascism succeeds in seizing power, in other words, it’s not a right-wing movement, or for that matter a left-wing one. It seizes the abandoned middle ground of politics, takes up the popular causes that all other parties refuse to touch, and imposes a totalitarianism of the center. That’s the secret of fascism’s popularity—and it’s the reason why an outbreak of full-blown fascism is a real and frightening possibility as America stumbles blindly into an unwelcome future...
I suggest you read the short series and keep that in mind as you watch the U.S. teeter here at the edge of the abyss. When social mood makes the Great Turn which is setting up before our eyes, keep an eye out on the various third parties which will attempt to rise up and see if any of them figure out how to cash in on this insight.



Friday, April 10, 2015

Ode to the Hunching Goblin

Smart Phone Fear by Matthew English
Recently it has struck me just how amazingly dependent many of the people I know and meet, and in the places where I work, shop, or do business, are on technology, especially the now-ubiquitous smart phone.

Sorry if I come across as a tiresome curmudgeon, but I ask you next time you are out and about to look around and see just how many people are sitting or standing, hunched like a goblin over this tiny box, pouring their time and attention into this glass screen.

The image nagged has nagged at me for several weeks now - I've read a novel or short story about what we seem to be turning into, but couldn't place it until today.

If you have the chance, please take a few minutes to read E.M. Forster's novella, The Machine Stops. If you are driving or otherwise unable to read the story, check out the audio version below.

No rant here. Just something to contemplate.

Have a safe weekend. Don't let the SOBs get you down.



Thursday, April 9, 2015

Nuclear Strike of the Month (April 2015): Target Ukraine

100 kT Air Burst over the Home Base of the Ukrainian 1st Guards Armored Brigade

Note on the Nuclear Strike of the Month Series: In this series I want to illustrate various ways attacks using nuclear weapons can play out.  I will be using Dr. Alex Wellerstein's online NUKEMAP tool to generate the estimates of the blast and follow-on effects.

My rationale is to show a wide range of nuclear attack scenarios short of all-out thermonuclear war. The idea is to give readers a feel for the destructive power of nuclear weapons, provide scenarios as thought experiments for your own planning, and to discuss what nuclear weapons can and (sometimes more importantly) what nuclear weapons can't do.

For a variety of reasons, it is my opinion we will see nuclear weapons used in warfare sometime between now and 2030. We might as well brush up on the basics.


Nuclear Strike of the Month: Tactical Exchange over Ukraine

This month's scenario has been particularly difficult to implement. My initial goal was to attempt to show what an exchange of tactical nuclear warheads across Eastern Europe might look like, simulating an eruption of war spinning out from the current hostilities in Ukraine. Properly showing what that would look like and the research required to pin down likely attack sites would make a fine Masters thesis. I therefore scaled back my ambitions and instead show what an exchange of tactical nuclear weapons might look like over the Russian-dominated parts of Ukraine that are at the center of the current conflict.

The Scenario
A new U.S. President is sworn into office, after basing her campaign on being tough and experienced in Foreign Policy matters.This proves helpful as she attempts to pivot the national conversation in the U.S. to foreign policy matters as a distraction from an ongoing slide in the financial markets, scandals erupting around the Federal Reserve Bank's various assistance programs for the banking sector, as well as ongoing and pernicious gridlock in Congress which led at one point to a fistfight between a Congressman from South Carolina and a Senator from Massachusetts, leaving the Senator hospitalized for several days.
 
In this environment, a major clash erupts around Mariupol, Ukraine. In a matter of two days, assisted by a substantial 5th column in Urkainian ranks, Russian-speaking separatists occupy the city. A multi-pronged counterattack led by Ukrainian armored brigades is crushed and waves of separatist militia units, armed with a wide variety of modern weapons systems from Russia, begin a drive towards the Dnieper River.

The President sends large numbers of advisors into Ukraine, funds training efforts via Private Military Corporations, and begins putting advanced weaponry in the hands of Ukrainian troops.

Tensions rapidly escalate and long negotiations commence between the US and Russia in the UN Security Council. When a strike team of military contractors is captured near Luhansk in the aftermath of an assault on the headquarters of one of the militias, the Russian response goes into overdrive. The dossiers of each contractor are splashed across the RT website and are lead on their news programs. The operatives all have deep ties to U.S. Special Forces and various U.S. intelligence agencies.

Two days later, a Russian surveillance aircraft is shot down. Russia claims it was attacked while in Russian airspace. The U.S. and NATO claim the plane was flying illegally over Eastern Ukraine. Three weeks later, Russia conducts an underground nuclear test for the first time since the fall of the Soviet Union.

The next week a hardline member of the Russian Duma is killed in Luhansk where he had been giving a speech in support of the separatists efforts. The tide on the battlefield turned as even larger numbers of NATO advisors were pouring into Ukraine. Media reports show U.S. and U.K. officers leading Ukrainian battalions, accompanied with advanced weapon systems and supported by drone strikes from what are reported in the Western media as Ukrainian drones.

Donetsk fell and Luhansk came under serious pressure. Russian media reports on massive atrocities against Russian-speaking civilians and Ukrainian artillery shells reportedly fall on Russian soil.

Two nights later, a nuclear warhead detonates east of Lviv, in Western Ukraine. It exploded roughly 75,000 feet above the city, blasting out windows in many of the homes and dropping power lines throughout the district. The attack is immediately followed by a television announcement from President Putin, indicating this attack was in response to NATO attacks upon Russia under the guise of assisting Ukrainian troops. He stated bluntly this attack was meant to get the attention of the Western Powers.  Russia would not allow NATO troops to conduct armed action on and over the Russian border. The U.S. and its allies could come to the negotiating table in good faith or the world could cross over into the horrors of nuclear war.

The U.S. President responded that evening, stating in no uncertain terms that the U.S. would never bow to nuclear blackmail. U.S. troops had been ordered into Ukraine at the request of the Kiev government in order to secure the country's borders and prevent the use of force to redraw political boundaries in Europe. It was hinted they might cross over into Crimea as part of this action as well.

In the next three days, Russia scattered her ground forces along a wide swath of the border with Ukraine, never having more than a company massed in any one location. All Russian forces were put on high alert.







Four nuclear weapons, each estimated to yield 100 kT were detonated by Russia over ostensibly military and logistics targets across Ukraine. The blasts mostly avoid heavily populated areas and the detonations occur at higher than optimal altitudes. Analysts later assume this is to minimize any fallout which might blow back over Russia.




A day later, Luhansk was leveled by a 300 kT W-87 warhead delivered by a U.S. Minuteman missile, also as an air burst.

Finally the U.S. and Russia agreed to meet in emergency session at the UN after strong-arming from the Chinese government...  

Discussion
Looking this over, I will admit to struggling as to the actual usefulness of nuclear weapons in this context.  Tactical nukes might be applicable for attacking hardened positions or massed troop formations, but in the context of a dispersed hybrid war involving separatists and multiple outside players, I had a hard time finding the lever point for making such attacks useful in a regional proxy war context such as Ukraine. There might be a different answer if one were to analyze realistic Pakistan-India conflict scenarios. I am not sure.

One rather unfashionable thing I want to point out is just what this would mean in the larger context. Assuming airbursts, take a look at the five attack sites as we pull the map to broader views:

 


While I grant you I wouldn't want to be at ground zero, the strategic effect of airburst type attacks would probably be limited, as would the fallout. Yes, groundbursts would be a different story (and one which I am planning for another Nuclear Strike of the Month post), but even then, this is five attacks, totaling roughly 750 kT of explosive power (roughly 20x the force used against Hiroshima and Nagasaki) and in the context of the world at large - life would go on. 

Against dispersed forces, aside from disruption of supply lines, I don't see how a limited tactical exchange has a major effect, aside from the initial shock factor - which should not be underestimated.

There are going to be many, many dead. No question. Especially if you hit a major city. But barring unexpected EMP effects from high altitude bursts, fifty miles away, life is going on. That's what worries me.

The breaking of the taboo is the biggest fear in my mind. Nukes don't end the world. Sorry to break the cardinal law laid down by generations of non-proliferation experts and pundits. Yes, there will be radioactive contamination and horrible death. There is already horrible death in the way we conduct war without nukes (see Iraq, Afghanistan, Syria, Libya, et al). What concerns me is that we'll use several of these weapons, get a sense that we can get away with it, and then do something colossally stupid like start a major war using strategic nukes and lots of groundbursts. More to come on that in the future.



Clown Show Disclaimer

Due to the subject matter of this post, it will be necessary to provide the following disclaimer.

I am not promoting nuclear war, nor am I attempting to paint any potential Russia nuclear strikes in retaliation for war in Ukraine as justified, nor a counterstrike on Luhansk as justified.  I am attempting to provide a plausible scenario which might lead to the exchange of nuclear weapons and use that scenario to help you in whatever plans you may be putting into place to deal with this new era we find ourselves in.

Monday, April 6, 2015

The Iran Framework

The Devil's Dice, Carlydraws

Let's take a brief moment to look over "framework" which is being wrestled to the ground between Iran and the key Western Powers over its nuclear program.

In the words of President Obama:
...Over a year ago, we took the first step towards today’s framework with a deal to stop the progress of Iran’s nuclear program and roll it back in key areas.  And recall that at the time, skeptics argued that Iran would cheat, and that we could not verify their compliance and the interim agreement would fail. Instead, it has succeeded exactly as intended.  Iran has met all of its obligations.  It eliminated its stockpile of dangerous nuclear material.  Inspections of Iran’s program increased.  And we continued negotiations to see if we could achieve a more comprehensive deal.

Today, after many months of tough, principled diplomacy, we have achieved the framework for that deal.  And it is a good deal, a deal that meets our core objectives.  This framework would cut off every pathway that Iran could take to develop a nuclear weapon.  Iran will face strict limitations on its program, and Iran has also agreed to the most robust and intrusive inspections and transparency regime ever negotiated for any nuclear program in history.  So this deal is not based on trust, it’s based on unprecedented verification...
On the other hand, Republicans and various groups adept at getting U.S. Congressfolk to see things their way are denouncing the deal in heated terms.

Leaving the political machinations and evaluation of the deal to the experts, let's take a quick look at the details of the framework and see if the socionomic model can help us see how likely it is to be implemented.

The Framework
CNN has a list of the key parameters of the framework deal here and is well worth reading if you enjoy the technical issues behind these kinds of agreements.

Of the items listed I'd like to point out that backing off from 20,000 centrifuges to roughly 6,000 centrifuges (all of the old model IR-1's, which are not very efficient) and the reconfiguration of the Arak core are quite substantial in terms of reducing the ability to quickly produce the raw material for a nuclear weapon. Combined with the strong inspection regime, it looks like as solid of a deal as you could expect.

The key thing in my mind is that, should Iran decide to stop the inspections and trash the deal, it would take many months to get ramped back up just to acquire the raw materials of a bomb - and that is not counting any other activities that are necessary to prove a bomb works. And during those months, one might expect a number of bombs and missiles to land all over the place and the War Party will finally get its wish to march on Tehran.

The Context
For those who follow socionomics, seeing this framework come out at a time when U.S. stock markets are at or near record highs comes as no surprise. To see this framework turn into an enforceable agreement will take several more months. Hopefully mood can stay elevated long enough to produce a deal all sides can agree to.

Thoughts
I've long been skeptical a deal worth having could be reached with Iran. Assuming what we are being told about the deal is accurate, and assuming Iran actually agrees to it, I will be proven wrong. The technical basis on this framework is a solid way to keep Iran from surprising the world with a nuclear weapon. The ability to hide a parallel program in some evil lair will be limited as well as all aspects of the nuclear supply chain are open to robust inspections.

Interesting and amazing to say the least.

It also makes one wonder just how this might change things in the entire region if Iran can become less of a pariah state - especially since our Iraq War made Iran the pre-eminent Power in Iraq. A certain monarchy in the region who provided most of the terrorists for the 9/11 attacks is probably deep in thought today, and if they, along with their Israeli partners, can't scuttle the deal, it opens up a brave new world of shifting alliances and provides the Shi'a bloc with more formal power than it has seen in ages.

If these shifts can be put in place before the bottom falls out on this rickety corrupt market structure the West has banked its future on, we may have a very different set of allegiances lined up in the Middle East when the next Great War erupts...