Harbingers, hints and allegations

As I follow the news from day to day, I find myself wondering if and when and where the last straw will finally fall. The world is far more interconnected politically and economically than it was a century ago, so what might have previously been a brief, contained event can now spread self-sustaining volatility around the globe in a matter of hours. There would likely be no single catalyst, it would be an accumulation of events.

The Euro is teetering on the brink of breakup, taking the economy of all nations in the entire Eurozone down in a possible currency collapse. Besides sparking the biggest bank run the world has ever seen, would German (and to a lesser degree, French) taxpayers be willing and able to finance bailouts for Greece, Spain and/or Italy? Would those already-restive countries accept new austerity on top of existing austerity as the price of assistance? Or would they reject additional harsh economic punishments, default, abandon the Euro and resurrect their own sovereign currencies, debased and nearly worthless (think Zimbabwe) though they would almost certainly be? Consider, how much should a reborn Drachma, Peseta or Lira be worth? How much should a loaf of bread or a liter of fuel cost, and would the average person be able to afford them? And imagine for a moment the reaction of those German and French taxpayers, should such a thing happen — they would be furious at getting stiffed, and understandably so.

Russian PM Vladimir Putin, when not burnishing his he-man credentials and building his strange cult of personality, is busily working on his return to the Russian presidency. Medvedev is and always was a mere placeholder, meant to provide continuity while Putin sits out one presidential term as required by a limit on successive terms in office. Russia, with its massive hydrocarbon deposits, is a major energy exporter to Europe. This will only accelerate as Germany and other nations shutter their aging nuclear facilities in the wake of the Fukushima incident. That money goes to businessmen (some little better than mobsters and most are cronies of Putin’s) and the state, for the benefit of businessmen and the state. The average citizen in the Russian Federation benefits little from this resource wealth, and is basically getting ripped-off no less than a citizen in the European Union. Breakdown of the economic order in Europe could easily lead to breakdown in the political order and empower Russia even further.

Iran is forging ahead with its nuclear program, damning any and all who suggest that it stop. (The Russians, for their part, are happily providing the technology and expertise that Iran lacks — for a price, of course.) Tunisia is a mess. Iraq is a mess. Libya is still fighting out the last of its civil war, and the rest of the world is trying to figure out just what the rebellion’s end result will be in Qaddafi’s absence. Fresh horrors are being visited daily upon Syrian civilians by Bashar al-Assad’s regime (about which we occasionally have a few harsh words to say, but beyond that we really don’t care, as an official matter of policy). Egypt is hardly what you could call “liberated,” despite the popular ouster of Hosni Mubarak — the military is still firmly in charge of the country, just as it was when he was at the helm. The only real difference is that now, Egyptian public opposition to the peace treaty with Israel actually matters. Palestinians and Israelis have hardened their oppositional-defiant stances ever more, with inflammatory stunts on both sides coming fast and furious. Even the sole oasis of relative calm, Saudi Arabia, will not remain immune forever. King Abdullah is nearly 90 years old; what happens when he’s gone? Political intrigues and jockeying for support within the House of Saud, with the political outcome murky at best and one economic outcome all but guaranteed: higher energy prices (and we all know what a damper that puts on economic growth). The greater Middle East, a reliable manufacturer of instability at the best of times, is presently a total train wreck.

Afghanistan is no more governable now than it was in 2001 or 1841, and there is little plausible reason to continue sacrificing American blood and treasure for the ephemeral goal of government-building in a culture that is basically allergic to central government. Small wonder, then, that Karzai’s administration is little more than a criminal enterprise, holding court over Kabul as long as Uncle Sucker is willing to hand over the cash. Complicating matters, Adm. Mike Mullen, the outgoing chairman of the Joint Chiefs of Staff, has delivered a j’accuse by openly testifying under oath that the government of our erstwhile ally Pakistan has, in the form of its famed ISI, directly supported attacks upon Americans in Afghanistan, including the most recent attack upon the US embassy in Kabul. This on top of Pakistan’s harborage of Osama bin Laden for who-knows-how-long, its refusal to engage with the Pashtun militants ensconced in the northwest frontier provinces, its refusal to provide outside access to the world’s worst nuclear proliferator A.Q. Khan, and on and on. The USA is hardly blameless here, given decades of shaky allegiance and the massive uptick in UAV strikes inside Pakistani territory since President Obama took office. We have effectively been fighting a war in (and, arguably, on) Pakistan for years, but our Pakistani “allies” have evidently decided that it’s finally time for them to quit playing both sides and pick the one we aren’t on. Let’s not forget the constant friction with India over Kashmir and Mumbai and religion and any number of other issues. Let’s not forget their three previous wars, and the ready-to-assemble nukes that each country can now slap together and fire at each other within a matter of minutes. Further, India’s regional tensions are not confined to Pakistan; the Siachen Glacier issue with China is still contested, and with China’s recent overtures to the Pakistanis, India has even less reason to trust a nation that is already its biggest regional competitor both economically and politically.

Speaking of China, what are we to make of its prospects? Its policy of maintaining a flagrantly undervalued Yuan, presently being denounced in the US Senate, maintains a firm downward pressure on what few signs of life the US economy is exhibiting. Should a Euro breakup happen, China’s substantial investment portfolio of European debt would become a massive liability quite quickly. Would they need to call in some of our IOU’s in order to provide themselves additional liquidity? They don’t dare go all-out trade war of course, because they still depend heavily on our consumer markets — at least for now. And then there are internal Chinese concerns to factor: as a developing country, China still wrestles with endemic poverty, environmental degradation, a dramatic and growing male-female population imbalance, official and commercial corruption and other long-suppressed features of social discontent (not least including the status of Tibet). In the geopolitical sphere, China’s regionally hegemonic aspirations will increasingly project against American spheres of influence. Its pursuit of an expansive China Sea policy will alarm (but likely not actually threaten) Japan, with Taiwan of course being Beijing’s core object of interest. I seriously doubt the American public supports military confrontation with the Chinese over Taiwan. What about the Japanese, suffering the aftereffects of a “lost decade,” with a revolving door on the PM’s office and then the tsunami/Fukushima combo on top of it all? How will they fare in that environment? And of course no discussion of geopolitics in Asia is complete without bringing in the wild-card from Pyongyang. Kim Jong-Il is old and frail, so the designated successor Jong-Un is being trained in the Kim dynasty’s “songun” (military-first) ideology and groomed to take over in his father’s place. The DPRK has recently reminded the world that the Korean War ended not in a peace treaty but a cease-fire, by heavily shelling a small disputed island. Presumably this was a demonstration of N. Korea’s willingness to engage in open hostilities.

Here at home, I assume that the so-called “super-committee” will fail to reach any agreement, triggering whatever “indiscriminate” cuts will get triggered. I also fully expect that whatever those cuts include will ultimately be window-dressing. I’ll not even go into the debate over Medicare and Social Security, because frankly it seems impossible to have a rational discussion with anyone about either topic. But regarding the other budget item targeted for automatic cuts, I assume that the USA will not materially reduce military spending. None of these assumptions are unreasonable given recent events, so all that really remains is determining where those cuts are likeliest to fall.

You’ll have noticed that our military officials only really seem to level with us when they already have one foot out the door. On his way out, retiring SECDEF Robert Gates warned Europe about complacency concerning the American security blanket. Closing military bases in the EU would indeed appear to be a low-cost, low-risk target for cuts. Their closure would have little economic impact on the federal budget, but would likely be a measurable loss of economic activity for Europe. Mullen’s testimony (also on his way out) almost guarantees that the trifling sum of foreign aid to Pakistan will dry up — as well it should. This could prompt the draw-down of the much more expensive effort in Afghanistan to accelerate, with the fate of our effort in Afghanistan still resting where it has all along: in Pakistan’s hands. The Iraq draw-down would likely accelerate as well. These will constitute the bulk of the military cuts, as both are already in the works and will materially affect spending. The rest, as I said, will be window dressing. Aid to Taiwan may be cut on the pretext of Chinese opposition. Some of the military’s most costly and least productive programs may be on the chopping block, like the “alternate engine” for the F-35 and the white whale (or if you prefer land-based metaphors, white elephant) of “missile defense.” The flashy, the excessive and the easy will go long before the Pentagon’s congressional allies allow any real muscle to be cut. Don’t expect military sponsorship of NASCAR teams and events to get cut, though. There are some sacred cows that shall remain sacred.

As if all that wasn’t enough to worry about in what promises to be the most expensive presidential campaign in human history (during the worst economy in generations), we will also have SCOTUS weighing in on President Obama’s signature health-care legislation (and by extension, his chances of re-election) sometime in early Summer. After having had that and several other legislative successes, as well as wins on terrorism and piracy (most notably the death of OBL), Obama appears spent, feckless and ethereal. He evidently has no more ability to press his agenda through Congress, if indeed he has any further agenda of his own (the American Jobs Act is political legislation that he knows won’t pass). The flurry of activity at the beginning of his presidency was almost exclusively Congress-driven, as is the more recent deadlocked brinksmanship. Through it all he has seemed to be little more than a disaffected bystander, at the mercy of the winds around him. It may not be Chicago, but there is certainly no shortage of wind in DC.

And what does the only other viable political party have on offer? Snake oil salesmen, carnival hucksters and voodoo economists, all of whom live in fear of the slightest belch of discontent from their party’s delusional, restive base. Only three of them have even remotely credible policy skills, and none of those three hold any particular charm for the base: Romney, Gingrich and Huntsman. Everyone but the media figured out long ago that Christie and Palin aren’t running, Perry has turned out to be an over-hyped flash in the pan (at least for now), and the rest of that lot aren’t even worth debunking. No matter who wins the presidential elections in 2012, I fear that the occupant of the White House will simply not be up to the years ahead. Global economic trends look bad, worse and OMG. Economic contagion will only accelerate the political sort; you don’t have to listen too hard to hear distant howls from the dogs of war.

I hope I’m wrong.

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