What?

Is it any surprise that people on the fringe look for rational explanations for what appears to be irrational behavior (i.e. “conspiracy theories”) on the part of government and military officials?

Intensifying pressure on the Islamic State, United States warplanes for the first time attacked hundreds of trucks on Monday that the extremist group has been using to smuggle the crude oil it has been producing in Syria, American officials said.

For the first time?!?!?!

American officials have long been frustrated by ability of ISIS to generate tens of million[s] of dollars a month by producing and exporting oil.

For the first time?!?!?! 

How many years has the US been bombing Syria?  Which so-called allies have been benefitting from the low-cost oil, therefore delaying action?  Rational people might wonder.

They have an excuse for the lack of earlier action:

Until Monday, the United States had refrained from striking the fleet used to transport oil, believed to include more than 1,000 tanker trucks, because of concerns about causing civilian casualties.

But what about the civilian casualties in a hospital?  No concern there.  A wedding?  Nope, no problem.

In any case, weren’t these guys bright enough to find a way of warning the drivers and destroying the trucks? 

To reduce the risk of harming civilians, two F-15 warplanes dropped leaflets about an hour before the attack warning drivers to abandon their vehicles, and strafing runs were conducted to reinforce the message.

They couldn’t have done this a year or two ago?

The area where the trucks assemble in Syria has been closely monitored by reconnaissance drones. As many as 1,000 trucks have been observed there, waiting to receive their cargo of illicit oil.

On Monday, 295 trucks were in the area, and more than a third of them were destroyed, United States officials said.

…116 tanker trucks had been destroyed.

One-thousand observed trucks, only 116 destroyed.  How many of you remember the Highway of Death at the end of the first Gulf War? 

Between 1,400 and 2,000 vehicles were hit or abandoned on the main Highway 80 north of Al Jahra (the "actual" Highway of Death). Several hundred more littered the lesser known Highway 8 to the major southern Iraq military stronghold of Basra.

The offensive action for which Highway 80 is infamous became controversial with some commentators alleging disproportionate use of force, saying that the Iraqi forces were retreating from Kuwait in compliance with the original UN Resolution 660 of August 2, 1990; and the column allegedly included Kuwaiti hostages and civilian refugees.

When they want to destroy trucks, they know how to destroy trucks.

You would have to wear a tin foil hat to take these stories at face value.  As is the case with virtually every tale told and every action taken by government officials, something doesn’t make sense.

Or it makes perfect sense.  Which story comports better with the reality, versions of the fairy tales like the one told above or the following? 

·        The United States and its allies have created, fed, and nurtured this beast now known as ISIS.

·        The US and its allies have pretended to fight ISIS, all the while fighting Assad’s forces with the objective of taking down the current Syrian government.

·        Russia enters the fight against ISIS and starts making serious headway, raising many unavoidable questions among western allies of the US.

·        ISIS (according to the official narrative) conducts a coordinated attack in a major western city.

·        As the bloodshed has been brought home, western allies decide this isn’t patty cake; they demand that the US gets serious.

·        Oil trucks get bombed.

That’s my working theory.  I readily admit it isn’t fully flushed out; it is still the early stages of this episode.

Break out the tin foil hat.

Circle of Death

I cannot let the events in Paris two days ago go without comment; at the same time, I don’t believe I have anything new or insightful to add.

I had been struggling with timing of this post, and then I read Butler Shaffer:

One reader informed me that bringing such matters to people’s attentions should not be done “when they are still mopping the blood off the floor.” This was the same appeal that was made during the Vietnam War; that people should await assessing government policies until after the war was over. I can think of no clearer evasion of one’s responsibilities than this.  It is precisely when the destructive effects of our thinking are manifesting themselves that we ought to think and speak with one another.

It’ worth a try.  Few pay attention to the atrocities of decades and generations past – the truth of which is generally available.  As time passes, the official narrative takes root.  People move on.

I write this assuming the general narrative being peddled – ISIS-trained extremists, etc.  I am certain that there are many layers to this story beyond or even outside of this rapidly forming narrative, but it is within this narrative that I will work.

Of course, there is the “why.”  Robert Wenzel has published a listing of US drone strikes in various countries in the regions of North Africa, the Middle East and Central Asia (NAMECA).  This is a good start, but the reasons run much deeper and wider.  Countless tens of millions of families have had their lives ruined by actions of western militaries – primarily that of the United States, but others such as those of France and Britain cannot be excluded, especially if a longer history is considered.

The manipulations by France and Britain in the Middle East began more than 100 years ago.  The names may have changed, but the stories have not: control, manipulation, intrigue, factions, violence, and interventions – all of it in play then and since then.

World War One was used to divide the region into controllable puppets.  Since 1948, the Palestinians have been held like animals in cages.  Elected governments overthrown and repressive regimes supported.

September 11 brought on a new hell for those in Iraq and Afghanistan.  But this was not enough.  For many in the region, the violence has only intensified in the last several years: Libya, Syria, Yemen, Pakistan, Egypt. 

Day after day, year after year.  Your wife, father, brother, children all at risk, dying here and there due to the violence which you attribute to western interventionism.  Many will take no overt action in retribution or revenge, but it only takes a few.  For every action, there is likely born one or two who decide to plan an opposite reaction.  Multiplied by a few thousand western actions and it is surprising that there have not been more reactions.

Not to justify such violence – it is deplorable.  But it must be understood by anyone who actually cares to bring an end to any of this.

Instead, the ratchet seems to be continuing.  Tough times demand tough talk.  Unlike in Spain a few years ago, which very publicly pulled back from further interventions after a terrorist event in that country, France seems to be spinning up the machine even more – because doing what they have done over the last hundred years apparently hasn’t been enough.  The United States is right there with them.

Now everyone is focused on the individual stories in this Parisian tragedy: the student, the concert-goer, the gunman.  Yet, this many and more die every single day in NAMECA due to western interventions – does anyone in the west care?

Je Suis Paris – we are being inundated with outpouring of sympathy: watch American football games today for one example.  Nothing wrong with that if the context is properly understood; but where is the outpouring of sympathy for the others?  Who is Baghdad, Aleppo, Tripoli, or Damascus?

This event is a tragedy – no ifs, ands or buts.  The world is full of tragedies – and these are not to be considered in isolation.  This is a circle, and no one in a position to do so seems to have any interest in bringing it to an end.

The 5000-Year-Old Archive of Free Traders

The 5,000-year-old Kültepe tablets:

The kiln tablets, considered the earliest written documentation of life in Anatolia, were unearthed during archaeological excavations on the Kültepe-Kaniş-Karum mound in the Central Anatolian province of Kayseri.

Was this the documentation of kings and conquerors, the glories of an ancient warlord?

“The Kültepe tablets are completely owned by the private sector, private individuals. The content of the tablets is 99 percent commercial. They are not official state documents; they are the archive of free traders. In this term, they are the earliest private sector documents. Therefore, the tablets feature the feelings of traders at that time. Thanks to these tablets, we can get information about the socio-cultural structure of people who lived 5,000 years ago. It’s not just shopping; we can see what they went through in their daily life. It is not possible to get such information in the state archives,” said [Professor Fikri] Kulakoğlu, [Ankara University Archaeology Department].

Five thousand years ago there was a trading outpost in Central Anatolia, but of what importance are a few camel traders who left behind a few notes?

Kulakoğlu said the Kültepe Tablets were registered by UNESCO because they were the biggest cuneiform tablets in the history of mankind and that they were special in terms of their number and content.

“…biggest…special in terms of their number….”  This was no small trading outpost.  What is this Kültepe?

Kültepe (Turkish: Ash Hill) is an archaeological site located in Kayseri Province in Turkey. The nearest modern city to Kültepe is Kayseri, about 20 km southwest.  It consists of a tell, the actual Kültepe, and a lower town where an Assyrian settlement was found. Its name in Assyrian texts from the 20th century BC was Kaneš (spoken: Kah nesh), the later Hittites mostly called it Neša, occasionally Anisa.

Kaneš, inhabited continuously from the Chalcolithic period to Roman times, flourished as an important Hattic, Hittite and Hurrian city, which contained a colonised large merchant quarter (kârum) of the Old Assyrian Empire from ca. 21st to 18th centuries BC. This kârum appears to have served as "the administrative and distribution centre of the entire Assyrian colony network in Anatolia."

To date, over 20,000 cuneiform tablets have been recovered from the site.

Over twenty-thousand – that sounds like a lot.

The quarter of the city that most interests historians is the Kârum Kaneš, "merchant-colony city of Kaneš" in Assyrian. During the Bronze Age in this region, the Kârum was a portion of the city that was set aside by local officials for the early Assyrian merchants to use without paying taxes, as long as the goods remained inside the kârum.

It was a free trade zone without taxes and apparently, in this free trade zone, life was thriving – over 20,000 tablets, for goodness sake.

The Fed and Interest Rates, Part III

I have written a couple of posts (here and here) on the difficulties the Fed will have in raising interest rates – the mechanical difficulties.  To make a long story short, the substantial excess reserves makes traditional policy tools impotent.  The only meaningful tool available is for the Fed to raise the rate paid on excess reserves.

I am aware that Dr. North has written on this as well, but until I worked through the first post, I didn’t understand why.  Now I have found another author writing substantially the same thing, Cullen Roche of Orcam Financial Group:

…many are still unclear about how the Federal Reserve will raise rates. After all, we're in a new monetary environment in the post-crisis period, thanks to the size of the Fed's balance sheet.

Correct.

To get to the bottom line of Roche’s view:

Importantly, it will announce a change in the "Fed Funds Target Rate", but what it will really be changing is the Interest on Excess Reserves as well as the Reverse Repo Facility. The changes in these rates will help set a target rate for reserves via arbitrage by essentially eliminating the desire to lend at a rate lower than what the Fed is willing to pay.

I have not studied the “Reverse Repo Facility” nor do I care to do so now.  However, the point remains – the Fed will have to increase the rate paid on excess reserves.

Mechanically this is simple.  Politically is another matter – this could be interesting.

The question remains – why the excess reserves?  In other words, to return to an environment of effective traditional policy tools, why doesn’t the Fed sell assets to the banks in exchange for digits that the banks are not using in any case – they are “excess”?

I can think of two reasons: first, the assets – even with the substantial asset price inflation of the last eight years – do not trade at the price the Fed paid; the Fed might not want to deal with the politics of selling assets at a loss to the same banks from which they bought the assets.

Second, a cushion.  With the excess reserves, the next financial calamity will not be as calamitous as the last – with the substantial liquidity available due to the excess reserves, panic selling will not overwhelm markets.

Probably both are in play.

A More Peaceful World

The world is not growing more peaceful….

-        The Daily Bell

November 11 is Armistice Day, marking the end of the Great War on the Western Front – the war continued for a time in parts of Russia and Turkey.  The name of the day has evolved, to Veterans Day or Remembrance Day.

The story of the war represents as much as anything else the beginning of the end of Western Civilization; a death by suicide.  In addition to the death of millions, western society was forever changed through the war.  The role of government throughout the Anglo world was sent on its way toward exponential growth, abruptly eliminating all of the gains made toward a classical-liberal society in the preceding century.

Armistice Day certainly marks the end of the Great War, but it can also be considered the father of Nazi Germany and at least the uncle of Communist Russia.  It can just as easily mark the beginning of World War II.  It was the opening act in what was the bloodiest century in history.

Which brings me to the title of this post and the quote from The Daily Bell; I guess one’s view on this all depends on two things: time and place.

Over the last twenty years or so and in specific regions, this is a reasonable position.  However, when considered globally and considered over the last 100 years, the world is growing more peaceful – far more peaceful. 

While not minimizing the horrors of today, nothing happening today compares to the Great War, Stalin’s famines, Stalin’s purges, Hitler’s aggression, the carpet bombing of civilians, Hiroshima and Nagasaki, Mao’s China, Vietnam.

Further: peace is more than the absence of war.  The world has grown more peaceful for the billions freed from what came before in both China and the former Soviet Union and Eastern Europe – whatever one might say of the economic and police-state conditions of these regions today, they are far freer than under Stalin or Mao.

Which might make today’s actions all-the-more evil.  Absent global nuclear destruction, the horrors of war could not have been put on display any more thoroughly than occurred during much of the twentieth century.  Yet war is chosen and sold to the masses as the path toward peace; even more troubling, this in a world where numerous actors have the ability to end life on earth…today.

Control and centralization could not have been more discredited than was witnessed with the collapse of the Soviet Union.  Yet we are offered global solutions to dubious (at best) problems.

After the experiences of the twentieth century, why revisit any of this?  Yet, this is what we are offered, daily.

Remember the Armistice.  Remember the bloody twentieth-century.  Remember the countless tens-of-millions who were murdered – the overwhelming majority of whom had no quarrel with “the other” before their government drove them to it.  Remember the police states and centralized control.

Remember that the world is more peaceful today than at almost any time during the last 100 years.  Remember that the lessons seem to be too-easily forgotten. 

Remember that all of the glorifying of veterans desensitizes the people to this history.

This is what today will mean for me.