Saturday, November 29, 2014

The Economist: 110 individuals control 35% of Russia’s wealth

[HT: OP]  In Russia, forget about the One Percent!  

Instead focus on the 0.0000008 percent. They control 35 percent of Russia's wealth, according to the new book Putin’s Kleptocracy: Who Owns Russia? by Karen Dawisha.

We can hold our noses up and feel superior to Russia, but in fact, in the U.S. the top 0.1 percent owns 20 percent of all national wealth. And things are getting worse by the year.

We in the West must come to a renewed appreciation of not just democracy, with its formalities of elections and voting, but more importantly pluralism, because real pluralism is the built-in antidote to oligarchy and the national insurance policy against any form of tyranny, exploitation or extremism. 

November 22, 2014 | The Economist 

Sikorski: Russia rejects post-WWII, Western 'world of rules'

[HT: AB]  Sikorski, known in Poland for saying controversial things, here blasts several shibboleths of official Moscow. Read on!... 

By Radek Sikorski (Speaker of the Polish Parliament)
November 24, 2014 | The World Post

This comment is excerpted from a speech at Harvard's Center for European Studies late last week.

In Harvard Yard, on 5 June 1947, on the steps of Memorial Church, momentous words were said.

It is logical that the United States should do what it can to assist the return of normal economic health in the world, without which there can be no political stability and no assured peace.

Our policy is not directed against any country, but against hunger, poverty, desperation and chaos.

U.S. Secretary of State George Marshall set in motion the most profitable financial investment in human history: the reconstruction of Western Europe:

The Marshall Plan was part of a wider Western ambition after World War II. To create a World of Rules.

New global institutions were set up, led by U.S. leadership and generosity. 

The United Nations. The World Bank and International Monetary Fund. The International Court of Justice.

Despite harsh Cold War ideological differences, these institutions took root. They grew and flourished.

Why? Because the world -- or at least a part of the world -- had agreed that explicit international military aggression had to stop.

Differences between peoples and nations should be settled by peaceful negotiation.

The first principle of this World of Rules was self-restraint: by cooperating, not fighting, we build a shared interest in success.

Self-restraint -- ruling out the war option -- creates stability. Stability encourages investment. This creates innovation and new wealth.

The European Economic Community was only one of many institutions which flourished under this regime. It grew and grew to become today's European Union, precisely because it was based on this principle of national political self-restraint. Success bred success.

The second principle was that this World of Rules was worth defending from those who didn't accept it.

During the Cold War, this required a comprehensive Western approach, with the North Atlantic Treaty Organization at the heart.

There were programs to share intelligence, especially among the English speaking nations of the West; joint military exercises; exchanges of weapons and military technology.

Institutions such as Radio Free Europe and the BBC pushed back against communist lies and propaganda.

So successful were these economic and security institutions and so attractive to those who didn't enjoy them, that when the Warsaw Pact finally fell apart after 1989, the nations of central Europe made it a national policy imperative to work closely with them, or even apply to join them.


The events in Crimea and eastern Ukraine are dramatic and dangerous.

They threaten Ukraine's stability. And they pose a new kind of test for the transatlantic alliance set up to protect the West and its rules.

Let me demolish an assertion heard quite often both in Moscow and in Western capitals: that the Ukraine crisis has been "provoked" by Western governments in general, and by NATO in particular.

As few now seem to remember, when the Cold War ended, the transatlantic team of North America and Western Europe welcomed central and eastern European countries into modern democratic society. 

But the impetus for NATO enlargement did not come from a triumphalist Washington. On the contrary, the U.S. initially resisted even the breakup of the Soviet Union.

Since 1990 12 European states have asked to join NATO. They all chose for themselves to belong to this cooperative military alliance.

NATO membership was a key part of "locking in" their turbulent democratic reforms.

NATO programs helped modernize our armed forces, and bring them fully under civilian control.

NATO played a vital role in helping all these countries make a clear break from secret communist-era military intelligence machinations, right at the heart of a supposedly independent state.

While this slow, cautious and -- as I remember well -- in some ways reluctant enlargement did eventually take place, constant efforts were made to reassure Russia.

Russia was welcomed to the Council of Europe, World Trade Organization and given closer relations with the European Union.

No NATO bases were ever placed in the new member states.

Until 2013, no NATO military exercises were ever conducted in Poland, the Baltic states or anywhere else on the eastern flank.

No nuclear installations have been moved to the territory of new member states, even though Russia has them less than 100 kilometers from our border.

A NATO-Russia Council was set up and Russia was promised that as long as it respected borders in Europe, no substantial combat forces would be moved east.

Largely in response to Russian objections, Ukraine and Georgia were in fact denied NATO membership plans in 2008.

In pressing the reset button with Moscow toward Russia, President Obama changed the configuration of the proposed missile defense installation in Poland, then suspended its Phase 4 which Russia disliked.

In short, the assertion that Russia was "humiliated" during this period is ridiculous.

Russia took charge of all the former Soviet nuclear weapons, some transferred from Ukraine in 1994 when Russia recognized Ukraine's borders, including Crimea. Ukraine's territorial integrity was guaranteed in the Budapest Memorandum by Russia, [the] U.S., [the] U.K. and France.

Presidents Clinton and Bush treated their Russian counterparts as fellow "great power" leaders and invited them to join the G-8, even though Russia did not qualify to join this group at that time, either as a large economy or as a stable democracy.

The U.S. spent billions of dollars working with Russia to reduce Cold War nuclear and chemical weapons stocks, and to achieve new, better arms control agreements.

All sorts of smaller but practical projects have been set up with Russia. The NATO-Russia Cooperative Airspace Initiative aims to prevent aircraft hijackings. We have agreed to help destroy dangerous ammunitions stocks in the Kaliningrad exclave.

Russia has benefited from all these programs, and many more.

Freed from decades of self-inflicted communism, it has joined the global economy as a normal country.

It's seen the benefits. Its GDP was a feeble $570 billion in 1990. By 2013 it has grown to $ 2.1 trillion.

So, in the years following the end of the Cold War, did NATO and EU governments show unwavering hostility towards Russia?

Did we cynically "take advantage of Russia's weakness?"

Have we been "humiliating" Russia?

I answer those three questions in three words. No. No. And no.

The record since the Berlin Wall came down shows NATO and the European Union and their individual member states all working hard, and in good faith, to build normal, purposeful relations with Russia.

And it shows that Russia itself benefiting hugely from this support.


So where has it gone wrong?

The basic problem is that the current leadership in Moscow depends on corrupt business structures and media manipulation to keep power.

The Russian elite is dominated by former KGB officers who, starting in the late 1980s, used Russian state money, sometimes laundered through Western offshore banks, to purchase land, natural resources and property on a vast scale.

To protect this wealth, they must prevent the outbreak of a democratic revolution of the kind that shook central Europe in 1989, or an anti-corruption revolution as took place on Kiev's Maidan square early this year.

Using military invasions of Georgia and now Ukraine, or strong-arm tactics as in Armenia, or corrupt political proxies in Moldova, they seek to stop nations of the former Soviet Union from daring to join the successful institutions of the West -- and from setting an example that Russians might want to follow.

They are playing games with our public opinion through propaganda tricks. Paid Internet "trolls" pollute our newspaper comment pages, and Twitter, Facebook and other sites. They roll out fake "experts" with fake authority.

They try to legitimize extreme political forces of all kinds, paying for far-left anti-American rhetoric on their English-language Russia Today channel, while simultaneously supporting far-right anti-European politicians in Europe.


Not content with all that, they are testing our very military resolve.

Russian planes buzz American, Swedish, Danish, even Canadian planes.

Russian troops have captured an Estonian security officer working on the Estonian side of the border. The Russian navy captured a Lithuanian fishing boat and held it for ransom.

All these obnoxious ploys are intended to nibble away at Western resolve, and our own and wider faith in NATO Article 5. To test the value of our mutual security guarantees. But also, as events this year in Ukraine have shown, to challenge head-on the most basic rule of international law and the World of Rules: that international borders cannot be changed by force.


The international response to Russia's policies has been restrained. It has been designed to raise the cost to Russia of undermining Western institutions.

The policy is working, up to a point.

Russia's president has admitted that the price his country is paying is high. 

In the decade from 2002-2012, Russia's economy grew on average 5 percent per year. Russia, like Poland, was integrating with the global economy, and seeing positive results.

If Russia grows at that same rate from now until 2025, its GDP will be $ 3.7 billion -- from today's $2.1 billion.

If instead Russia grows at only 1 percent over the next decade because of sanctions and global mistrust of its intentions, its GDP in 2025 will be far less -- $2.3 billion. Cumulatively over the decade, Russia will have lost the staggering sum of over $81 billion! Its leaders have decided to gamble with their own citizens' lives and hopes, by looking to the past, not the future.

Some of Russia's citizens are wondering whether this enormous price is worth paying -- and what Russia is getting for it.


Maybe Russia's leaders too are starting to conclude that this price is not worth paying. I truly hope they do. But we need to be prepared if they don't, at least in the short term. We need to think hard about the health of those institutions we set up a half a century ago.

First and foremost, we need to face a grim reality. Hard, sharp security questions are being posed to us in Europe once again.

The NATO that we have now is not the NATO we need to deal with them.

If we were starting from scratch now, nobody would put NATO troops and equipment where they are now. NATO should shut down unnecessary commands and legacy bases, and get back to its primary mission: deterrence.

NATO is a defensive alliance. But for deterrence to work, our military capability has to look -- and be -- serious.

Second, follow the money.

Have we been complacently turning a blind eye to an uncomfortable truth: that our own tangled, over-complex banking systems have been exploited by international semi-criminal networks, not only from Russia but all over the world?

Simply by firmly enforcing existing money laundering laws and asking hard questions about murky money, we will help ourselves and help others who are trying, against high odds, to join the World of Rules. Peoples around the world would be empowered and kleptocrats would be restrained if only we implemented existing laws!

Third, we need to think hard about how Europe and the U.S. work together in Ukraine and other countries wanting our help. It's demoralizing for them that so much Western money is wasted through duplication and institutional jostling for position.

Swedish technical assistance agencies and Dutch or American technical assistance agencies shouldn't be duplicating or contradicting one another's programs.

Technical expert "advice" works best when supported by pragmatic peer-to-peer consultations.

Ukrainian ministers turn to their Polish counterparts to ask what we think: "You Poles have been through this. What makes sense?"

We do our best to tell them.


Back in 1947 Ukraine, like Poland, was blocked by Stalin from taking part in the generous Marshall Fund programs offered by the U.S..

Let's help Ukraine now, when at last it is free to ask for, and ready to receive, our help.

The principled way out of this crisis is based on all sides returning to the principles that George Marshall articulated at Harvard in 1947.

Teamwork. Cooperation. Russia's return to the World of Rules.

If this happens, sanctions can be lifted. Russia can again participate normally in international financial markets and institutions.

All Russia's grievances concerning Ukraine or anywhere else can be tackled sensibly and fairly through the UN or OSCE or Council of Europe, or other fora created for precisely such problems.

Moscow itself  asked to join all these organizations when it wasn't a founder partner when they were set up.

Moscow itself  has pledged to respect their rules.

Let's be clear.

The alternative to working through these issues normally and peacefully in a spirit of successful partnership is a new dividing line across the European continent. It won't be made of iron but it'll be real enough.

On one side of the line are countries and peoples free to choose their own democratic destiny.

On the other side are countries in a decaying Twilight Zone. A blighted, unhappy and unstable place outside the World of Rules.

If we get this wrong, our shared Western decades-long strategic ambition to create a Europe whole and free will falter.

Marine Lt. Gen.: U.S. must arm Ukraine against Russian invaders

(HT: KP) Read the truth about Ukraine from a Jarhead Lt. General!

I will go further and merely repeat what most Ukrainians say: Ukraine's military was deliberately underfunded and robbed by the regime of President Yanukovych. In this unnaturally weakened state, Ukraine's military was forced to meet its most serious challenge yet: Putin's "masked" regular soldiers and paid Russian mercenaries using Russian armor and heavy weapons. 

Ukraine's brave army has reconstituted itself and is surviving now on super-human will and private donations from the populace -- everything from boots to blankets and bandages. But as Ukraine's President Poroshenko exhorted the U.S. Senate, " cannot win the war with blankets."

Ukraine needs defensive weaponry from the U.S., as former U.S. National Security Adviser Zbigniew Brzezinski has been advocating for months now: "anti-tank weapons, hand-held anti-tank weapons, hand-held rockets -- weapons capable for use in urban short range fighting."

By the way, in addition to national intelligence agencies publishing their reports, Amnesty International in September concluded, based on copious evidence, that, "there is no doubt that Russia is an active party to the conflict" in Ukraine. 

By Lt. Gen. Mark Hertling (ret.)
November 28, 2014 | Marine Times

During the latter part of my military career, I saw Ukraine's Army on exercises, in Balkan Peacekeeping Operations, and in combat. Early assessment: they had tough soldiers, and extremely bad senior officers. In the Balkans, they siphoned gas and sold it on the black market. In Iraq during the Sadr uprising of 2004, they never left their bases, and they sold ammunition to the insurgents.

Later in Iraq and Afghanistan — due to preparatory training at U.S. facilities in Germany prior to deploying and better leadership — their force began to improve. Slowly.

By 2012, the Ukrainian Army was becoming increasingly capable. My Ukrainian Army counterpart helped develop Ukraine's 2006 Defense White Paper, outlining steps to achieve a professional military led by a trained and educated officer and non-commissioned officer corps.

But the military transformation was consistently hindered by societal corruption, an excessively lean (.07% of GDP) defense budget, and a too large general officer corps, many of whom were hidebound, fat, proud of their Soviet military education, and adverse to change.

In early 2014, Ukraine's military was severely tested. But even with Putin's interference in the Kiev government and separatist activity in the Crimea and other eastern provinces, I predicted the Army of Ukraine would stand and fight in the east. It wouldn't be pretty, I told several journalists, but a revived nationalism and improved training and military leadership would count on the battlefield. And early on, Ukraine's Army did stand.

The early battles were artillery duels, with Ukraine's Special Operations Force courageously contributing. But that is about to change in Phase II of the campaign. Separatists are increasingly reinforced by a technologically-advanced, combined arms organization with large caliber rocket artillery, precise air defense missiles, layers of intelligence gathering drones, strong logistics, and a strategic information operation campaign generated by a Russian leader who believes he must win at any cost. It could get very ugly — and one-sided.

In the past nine months, U.S. governmental and military officials have continued to comment on Ukraine's political situation, their military capabilities, and their economic environment. Ukraine is — to be sure — fighting for survival on multiple fronts: military, governmental, and economic. But they are also fighting to gain support from western governments who are focused perhaps too much on the Islamic State group and Ebola, and not enough on values and the international standard of national self-determination.

If there is a positive to be found in this conflict, I saw it during a visit to Kiev in November. My military background has taught me that those who adapt during conflict the fastest, tend to survive. Ukraine is adapting, and fast. Faster than they have in the past.

They are no longer talking about gradual change, eradication of corruption, elimination of the old guard, budget reform, and military transformation. They have developed plans to do all these things, and they have a group of young mavericks who are smart and up to the task of leading and acting. War and the specter of potential destruction provide a passion and energized focus that quickly overcomes inertia.

We must help them. Vice President Biden also visited Ukraine in November, and while he likely did not give Ukraine all the support they need, I sincerely hope he has offered more support in a variety of areas. The U.S. needs to continue actively supporting Ukraine, even as we are faced with other crisis.

We must expand economic sanctions against Russia. We must find new ways to counter the information campaign Mr. Putin is waging. We must influence NATO and EU nations to make the continued hard choices that show Mr. Putin we stand united in not allowing this attack on a sovereign nation to stand. And, we must increase our training, advising, and assisting Ukraine's military in the face of bold aggression.

"We don't have a lot of real support for saving Ukraine," said a representative from the office of Ukraine's President in answering that question, "but for the first time, our countrymen are giving us support for creating a new Ukraine. I hope that will be enough to see us through this crisis."

One young Member of Parliament mentioned she had studied our American Revolution, and she had learned we did pretty well in forming a new government, even when a superior force was attacking us. She reminded me we had a little help from the French. "Yes," she said, "we could use some of that kind of help."

The U.S., and Western Europe, should give it.

DW: Russia's financing of EU far-right parties revealed

If you watched any of the Timothy Snyder videos on YouTube then you know that Russia's project to dismantle the EU is now out in the open. This project involves not just moral and diplomatic support, it involves Russian financing for *far-right political parties in the EU.

Putin's goal is to revert Europe to what he sees as its "natural" state, circa the 1930s: a group of mutually suspicious, squabbling nation-states that are largely ill-equipped to deal with Russia on a bilateral basis. The EU, by contrast, as the world's largest common market, is much better equipped to deal with relatively weak Russia, economically and diplomatically. 

* My American friends who don't follow European politics should understand that "far-right" and "conservative" parties in Europe are probably not kin with the Republican Party. Most are still to the left of the Democrats on most social and economic issues; their defining issues are anti-immigration, (France for French, Hungary for Hungarians, and so on...), "traditional" values (meaning anti-LGBT), and withdrawal from the EU.

November 29, 2014 |  Deutsche Welle

Many right-wing European political parties are anything but shy when it comes to showing their pro-Russian sentiments. Millions of euros have also been deposited by Russian banks in the pocket of France's Front National.

France's right-wing populist party, the Front National (FN), has denied claims in a media report which stated that they wanted to borrow 40 million euros ($50 million) from a Russian bank.

"This is fictitious, it's crazy," said party leader Marine Le Pen. "We have applied for nine million euros, and we got nine million euros."

Amongst other things, the Front National needs this financial top-up to organize its Saturday (29.11.2014) party congress in Lyon.

For a long time now, the Front National has been accused of receiving Russian financial support. The head of the bank is also close confidant of Russian President Vladimir Putin.

Marine Le Pen flirts with Putin

With regards to political party funding in France, the National Front is in trouble, as they have allegedly received no loans from French banks. So the support from Russia has come in handy.

According to the Front National's European Member of Parliament (MEP), Jean-Luc Schaffhauser, the nine-million-euro loan was granted only because party leader Le Pen has a good relationship with Putin.

Marine Le Pen is a great critic of European sanctions against Russia. In interviews she has repeatedly stressed that she "admires Putin" and has accused the EU of pushing for a new Cold War. Le Pen is also critical of the French government for not delivering a warship to Russia because of the Ukraine crisis.

But Le Pen herself has also been subject to criticism.

"It's remarkable that a political party from the motherland of freedom can be funded by Putin's sphere - the largest European enemy of freedom," said Reinhard B├╝tikofer, an EU parliamentarian for the German Greens, in a DW interview. Putin, he says, is antagonizing European values by any possible means.

"But the fact that enemies of European freedom in Moscow are now doing business with Europe's radical right - that's a whole new can of worms," he warned.

In EU parliament, it's not only Le Pen and members of the National Front who have advocated Putin. Leader of the British right-wing UK Independence Party, Nigel Farage, and MPs of the "Alternative for Germany" party have also made Russia-friendly comments.

Pro-Russian sentiment in the EU parliament

Although pro-Russian voices were previously heard more often amongst the EU parliament's left-wing parties, a study by Hungarian policy research institute Political Capital showed that 15 of the parliament's 24 right-wing populist parties were "open" to Russia.

That means Putin's nationalist and authoritarian leadership style is admired not only by the National Front but also Hungary's Jobbik party - an avowed admirer of Putin's power games - is suspected of being supported by the Kremlin. According to the party's members, the offensive in Crimea is "exemplary" - something they believe Hungarian minorities in Slovakia and Romania could use to alter the Hungarian border.

Legal aftermath

Europe's radical right are by no means hiding that they want to weaken the European Union. It was this attitude that helped them to win votes at the last European election.

The scandal regarding the millions of funding, however, comes at a particularly inopportune time for the Front National.

Over the weekend, Le Pen is set to be re-elected as party leader - but the loan from the Russian bank could have legal consequences. French investigative judges have, in the meantime, been examining potentially illegal party funding in the party.

Friday, November 28, 2014

Snyder: Russia seeks to undermine the West's faith in itself (VIDEO)

[HT: AB] Snyder calls Russia's current tactic "strategic relativism": Russia knows it cannot make itself stronger, so it is trying to undermine the West's faith in itself, in what it knows to be true, and make the West weaker. 

So in that sense, historian Timothy Snyder argues, Russia's war against Ukraine really is  a war with the West, just as Moscow contends. Watch as he explains how....

By Chicago Humanities Festival

Thursday, November 27, 2014

Vanden Heuvel still ignoring Ukrainians' will, defending Putin, and blaming the U.S.

About one thing vanden Heuvel and her "non-interventionist liberal" ilk always are silent when it comes to Russia's armed aggression in Ukraine: What do Ukrainians want?  

As I've written before, she and others act as if Ukrainians have no agency, no say in the matter, and that Putin never had any choice but to seize Crimea and send troops and weapons into eastern Ukraine.

The key question is: Do most Ukrainians now want to be allied with Europe and the U.S.? And if they do, what gives Russia the right to stop them? 

It's sad to see a self-styled liberal like vanden Heuvel become more cynical and realpolitik than even Henry Kissinger when it comes to Ukraine. And it is simply because her husband Prof. Stephen Cohen is a russophile who shares the anti-Ukrainian chauvanism of many Russia experts and Russian intelligentsia 

Even worse, years ago vanden Heuvels magazine The Nation was critical of Russia's brutal crackdown on Chechen separatists, calling it "Putin's War." Keep in mind though, Chechnya was and is recognized as part of Russia. Now Russia has made real war by seizing a piece of Europe by force, the first time this has happened since WWII, and is setting the stage to take even more territory... and The Nation and vanden Heuvel are not only silent about it, they blame the U.S. for Putin's armed aggression!

I have no patience for such "liberals" who think the only time it's OK to criticize the world's despots is when they oppress their own ethnic or sexual minorities, or throw a sympathetic dissident in jail; it's a safe and cowardly defense of liberal ideals.

By Katrina vanden Heuvel  
November 25, 2014 | Washington Post

Wednesday, November 26, 2014

War Nerd: Praise Gen. Sherman for burning Atlanta!

For personal reasons I've been remiss not to post this sooner. Without further ado, here is Gary Brecher, aka the War Nerd, at his best. I admit it, I love his sentiments [emphasis mine]:

Sherman was trying, in everything he did, to wake these idiots from their delusion. That’s why they hate Sherman so much, 150 years after his campaign ended in total success: Because he interrupted their silly and sadistic dreams, humiliated them in the most vulnerable part of their weird anatomy, their sense of valorous superiority. Sherman didn’t wipe out the white South, though he could easily have done so; he was, in fact, very mild toward a treasonous population that regularly sniped at and ambushed his troops. But what he did was demonstrate the impotence of the South’s Planter males.

And here's what Sherman said of himself at the time in his "Letter to Atlanta," quoted by Gary:

“You cannot qualify war in harsher terms than I will. War is cruelty, and you cannot refine it; and those who brought war into our country deserve all the curses and maledictions a people can pour out. I know I had no hand in making this war, and I know I will make more sacrifices to-day than any of you to secure peace. But you cannot have peace and a division of our country…

The only way the people of Atlanta can hope once more to live in peace and quiet at home, is to stop the war, which can only be done by admitting that it began in error and is perpetuated in pride.

“You have heretofore read public sentiment in your newspapers, that live by falsehood and excitement; and the quicker you seek for truth in other quarters, the better. I repeat then that, by the original compact of government, the United States had certain rights in Georgia, which have never been relinquished and never will be; that the South began the war by seizing forts, arsenals, mints, custom-houses, etc., etc., long before Mr. Lincoln was installed, and before the South had one jot or tittle of provocation. I myself have seen in Missouri, Kentucky, Tennessee, and Mississippi, hundreds and thousands of women and children fleeing from your armies and desperadoes, hungry and with bleeding feet…But these comparisons are idle. I want peace, and believe it can only be reached through union and war, and I will ever conduct war with a view to perfect an early success.”

And then there's this golden nugget of truth from Gary, still apropos today, (I'm thinking of Ferguson, MO and many, many other places...):

Of course, this is all lost on the Phil Leighs of the world, who—for reasons that cut deep into the ideology of the American right wing—always take burnt houses too seriously, and dead people far too lightly. To them, burning a house is a crime, while shooting a Yankee soldier in the eye is just part of war’s rich tapestry. 

Unlike most other "Northerners" today who don't give the Civil War a thought, I am so, so glad that we beat the Confederacy and preserved the Union, aka the United States of America, and sent those pompous Foghorn Leghorns home in caskets or with their traitorous tails between their legs. I tip my hat to Sherman, Grant, et al and the 300,000 truest American patriots who ever lived and kept the USA the USA by facing down and defeating the greatest existential threat we ever faced: our meaner, more prideful selves.

By Gary Brecher
November 20, 2014 | Pando Daily

Thursday, November 20, 2014

The Economist: Ukraine's economy is in the toilet

"Few people know that Ukraine is the world’s most unequal country, if you look at wealth (not income). The second-most unequal is Russia," noted The Economist.

And few people know that Ukraine's Maidan Revolution was not about the Russian language, or even about signing an agreement with the EU. It was about systemic corruption and political cronyism that was slowly yet unstoppably choking the life out of the economy, chasing out foreign investment and the country's best and brightest, and depriving a whole generation of smart, ambitious young Ukrainians of any kind of future where their hard work and merit could better their station in life.  

Russia's president Vladimir Putin cannot let the Maidan Revolution succeed in stamping out corruption and reforming the economy. Now he is perfectly content to let Ukraine be a freezing economic and political basket case with a Russian-fomented "frozen conflict" in its eastern Donbas region.

By C.W.
November 20, 2014 | The Economist

Saturday, November 15, 2014

Zakaria: ISIS wants U.S. '800-pound gorilla' to fight them

I've been saying this from the start, nevertheless, here you go, an expert opinion:

Remember, ISIS has gone from nothing to becoming the replacement for al Qaeda, the most well-known jihadi organization in the world. How? By taking on the 800-pound gorilla of the world, the United States of America.

How exactly then would that create recruitment for wannabe jihadis?

Because if you are one of the many jihadi organizations or one of the many radical Sunni organizations in Syria that is sort of struggling for market share and adherents, that's one thing. If you become the organization that battles the United States, the crusaders, the West – if you become the face of radical Islam that is up against this new crusade – now, all of a sudden, you are the place everyone wants to come to. You're the place everyone wants to send money to. There's a lot of this that has to do with fundraising.

A 'Cosby' dad's rules for his kids couldn't shield them from racism

This Cosby-eqsue Ivy League black father did everything -- and more -- that conservative Republicans said he should do to raise his privileged black kids... and yet white racism still got to them.

Reading his "rules" for his kids was a real shock to me. Black readers won't be surprised, but I think most white readers would share wonderment at just how far blacks must go not to trigger our prejudices:

My wife and I used our knowledge of white upper-class life to envelop our sons and daughter in a social armor that we felt would repel discriminatory attacks. We outfitted them in uniforms that we hoped would help them escape profiling in stores and public areas: pastel-colored, non-hooded sweatshirts; cleanly pressed, belted, non-baggy khaki pants; tightly-laced white tennis sneakers; Top-Sider shoes; conservative blazers; rep ties; closely cropped hair; and no sunglasses. Never any sunglasses.

[...] [W]e came up with even more rules for our three children:

1. Never run while in the view of a police officer or security person unless it is apparent that you are jogging for exercise, because a cynical observer might think you are fleeing a crime or about to assault someone.

2. Carry a small tape recorder in the car, and when you are the driver or passenger (even in the back seat) and the vehicle has been stopped by the police, keep your hands high where they can be seen, and maintain a friendly and non-questioning demeanor.

3. Always zip your backpack firmly closed or leave it in the car or with the cashier so that you will not be suspected of shoplifting.

4. Never leave a shop without a receipt, no matter how small the purchase, so that you can’t be accused unfairly of theft.

5. If going separate ways after a get-together with friends and you are using taxis, ask your white friend to hail your cab first, so that you will not be left stranded without transportation.

6. When unsure about the proper attire for a play date or party, err on the side of being more formal in your clothing selection.

7. Do not go for pleasure walks in any residential neighborhood after sundown, and never carry any dark-colored or metallic object that could be mistaken as a weapon, even a non-illuminated flashlight.

8. If you must wear a T-shirt to an outdoor play event or on a public street, it should have the name of a respected and recognizable school emblazoned on its front.

9. When entering a small store of any type, immediately make friendly eye contact with the shopkeeper or cashier, smile, and say “good morning” or “good afternoon.”

These are just a few of the humbling rules that my wife and I have enforced to keep our children safer while living integrated lives. 

So as it turns out, to avoid white judgment and racism, well-heeled black kids must learn not only not "act black," not only to "act white," but also to act better than white.

(UPDATE: 12.06.2014): Not to disparage Mr. Graham, I meant "Cosby" dad in the sense of the 1980s TV show with the well-adjusted black upper-middle class family interacting easily with whites. I wrote this just before all the recent accusations about rape came out about Bill Cosby. I meant no disrespect to Mr. Graham or his family, in fact the opposite. So I'm keeping the original title of this post because I think it still conveys succinctly the essence of my (well actually, his) argument.

By Lawrence Otis Graham
November 6, 2014 | Washington Post

Tuesday, November 11, 2014

Canadian takes down GOP, midterm elections, pines for their own Obama

[HT: JC]. Well said, eh!

Unfortunately, it would never occur to our President or the Democrats to brag, they're much too timid for that... because somebody, somewhere doesn't like them!  [Gasp! Shudder!]

By Richard Brunt
November 10, 2014 | Detroit Free Press

Many of us Canadians are confused by the U.S. midterm elections.

Consider, right now in America, corporate profits are at record highs, the country's adding 200,000 jobs per month, unemployment is below 6%, U.S. gross national product growth is the best of the Organization for Economic Cooperation and Development (OECD) countries.

The dollar is at its strongest levels in years, the stock market is near record highs, gasoline prices are falling, there's no inflation, interest rates are the lowest in 30 years, U.S. oil imports are declining, U.S. oil production is rapidly increasing, the deficit is rapidly declining, and the wealthy are still making astonishing amounts of money.

America is leading the world once again and respected internationally — in sharp contrast to the Bush years. Obama brought soldiers home from Iraq and killed Osama bin Laden.

So, Americans vote for the party that got you into the mess that Obama just dug you out of? This defies reason.

When you are done with Obama, could you send him our way?

Richard Brunt
Victoria, British Columbia

On Jonathan Gruber's comments 'bashing' Obamacare

which have talk radio, Fox and Republicans publicly all aflutter. So check this out:

"Healthy people pay, sick people get money," is the way all health insurance works, I'm afraid. It's the way insurance works, period: "Unsunken ships pay; sunken ships get money;" "Undamaged homes pay; damaged homes get money;" "Safe drivers pay; unsafe drivers get money," and so on.

Nevertheless the insurance companies through rescission have tried, illegally, to mitigate the economics of health insurance, retroactively; but PHSA, HIPPA and Obamacare have restricted that underhanded business practice.

No, Obamacare isn't "something for nothing." It's not "free healthcare." More people have to pay in by buying private insurance, or having their employer pay part of their insurance cost, but the economics are sound, there is no other way. The other side of the ledger, (which any accountant should acknowledge), is that having more people insured will lower health spending overall. That's what the CBO has said consistently. 

In the U.S. we're spending nearly 20 percent of GDP on health care, and that's not sustainable. It's also not competitive. Check this out from the World Bank,health expenditure, total (% of GDP):

Australia -- 9.1 percent
Canada -- 10.9 percent
France -- 11.1 percent
Germany -- 11.3 percent
Great Britain -- 9.4 percent
Japan -- 10.1 percent
... and so on.

Next, take a deep breath and check this out: "Revisions to CBO's Projections of Federal Health Care Spending" from July 2014. Upshot: The U.S. economy, at least the federal government'share of it, is projected to spend less  on health care in the long term, which is exactly what we liberal-progressives wanted, to bend the cost curve:

CBO now projects that, if current laws remained generally unchanged, net federal spending for the government’s major health care programs in 2039 would equal 8.0 percent of gross domestic product (GDP)—1.6 percentage points, or about 15 percent, less than the 9.6 percent the agency projected in 2010 (see the figure below). That revision stems in large part from the observed slowdown in health care spending in recent years, but it also includes the effects of other factors; some of those factors reduced projected spending, and others increased it.

The programs included in the calculations are Medicare, Medicaid, the Children’s Health Insurance Program, and subsidies for insurance purchased through exchanges. 

But how can that be, my conservative interlocutor will ask? How can the government be spending more on [Obamacare] subsidies yet projected to spend less, overall?  

The answer, (not to get too wonky), if you read between the lines of the CBO's revised estimate, is that growth in healthcare spending, including on Medicare, has been slowing down faster than anybody projected. 

Indeed, noted conservative Forbes, "The current numbers represent the slowest rate of growth since the government began tracking the data in 1960."

And why is that? Apparently nobody knows yet. But for four years running, the rate of spending on health care in America has slowed... just coincidentally under President Obama, under an Obamacare regime. 

Harvard economist David Cutler argued in the Washington Post a few days ago that, in fact, we do indeed have Obamacare to thank for it.

Probably it's still premature to say for sure, but the signs are good. Yet one more reason not to "repeal and replace" Obamacare when it's doing what it was designed to do -- covering about 7 million more Americans in its first full year; and lowering -- or at least not increasing -- healthcare costs for four years running.

UPDATE (11.15.2014): Here's kind of a fair and balanced analysis of what Jonathan Gruber said (on multiple occasions, unfortunately), from none other than CNN: "Obamacare: Voters, are you stupid?"

John Oliver: State lotteries are losers

I've never been in favor of state lotteries and other forms of government-organized gambling.  John Oliver shows how the numbers don't add up, not even for the supposed beneficiaries, our public schools.  

Monday, November 10, 2014

Retired general: 'Why we lost' in Iraq, Afghanistan

This is nothing new if you've been reading me for the past, oh, eight years, but since often the messenger matters more than the message, here you go, from a retired Army Lt. General.

November 9, 2014 | NPR

Thursday, November 6, 2014

Don't you need prices for a health care 'market'?

LOL, man. LOL:

The average person is not an expert at ferreting out and haggling over health care prices. It is unfair to expect them to be. The onus for clear prices on health care should fall on the providers, and the insurance companies. Get together and work that shit out. Do this one little thing to protect the morons like me. We're already sick. We're about to be broke. At least let us know how broke we're going to be in advance.

Seriously though, now that I'm done LOL, I've made this same point many times before. The fact that "free-market" conservatives never mention this little problem while praising our health system as the best in the world leads me to believe that they are either: 1) complete morons who don't know what markets are; or 2) total deceivers in the pockets of the insurance companies and health systems.

Moreover, as I've remarked before, people in ER situations don't have time to "shop around" for healthcare and the EMTs decide what hospital to take them to anyway.

By Hamilton Nolan
November 6, 2014 | Gawker

Monday, November 3, 2014

Zakaria: An Arab Spring country passes the 'democracy test'

Are we all happy about this? If not, why not? Because it doesn't fit our paradigm?

Going deeper, Zakaria posits that Tunisia succeeded where Egypt failed not because Tunisia's Islamists were better, but because Tunisia was more modern, literate globalized, urban and better-educated, with stronger civic groups and labor unions:
"And so, there was relative parity between Islamists and their opponents. Tunisia's Islamic parties shared power, in other words, not because it was better than the Muslim Brotherhood [in Egypt] but because it had to. Tunisia had more of the preconditions that have historically helped strengthen democracy than did Egypt." 

By Fareed Zakaria 
November 3, 2014 | CNN

Can Arab countries be real democracies? Well, one of them, Tunisia just did well on a big test.

More than twenty years ago, the scholar Samuel Huntington established his famous "two turnover test" for fledgling democracies. He argued that a country can only be said to be a consolidated democracy when there have been TWO peaceful transitions of power.

Tunisia passed Huntington's test after last weekend's election, when – for the second time – a ruling establishment agreed to hand over power. Tunisia's relative success is in marked contrast to the abysmal failure of Egypt, the Arab world’s largest and once most influential country.

As in Tunisia, Egyptians also overthrew a dictator three years ago...but after Egypt's brief experiment with democracy, in which the Muslim Brotherhood was elected and then abused its authority, today the country is ruled by a repressive dictatorship.

Roubini: Global economy running on one engine

More bad news from "Dr. Doom."  Doesn't Roubini know that a Republican Congress will solve everything, and that despite its higher growth rate, the U.S. is still inferior to austerity-loving Europe?

Roubini's analysis is going to be so far over the heads of my Tea Party friends who think belt-tightening by the public sector is the answer to everything, the European example be damned. 

Bottom line: Team Keynes was right. Either you're a Keynesian cheerleader and get to sip his milkshake at the victory party, or you're with the losing team sent home to your trailer community in mirthless shame on a quiet bus.

By Nouriel Roubini
October 31, 2014 | Project Syndicate

The global economy is like a jetliner that needs all of its engines operational to take off and steer clear of clouds and storms. Unfortunately, only one of its four engines is functioning properly: the Anglosphere (the United States and its close cousin, the United Kingdom).

The second engine – the eurozone – has now stalled after an anemic post-2008 restart. Indeed, Europe is one shock away from outright deflation and another bout of recession. Likewise, the third engine, Japan, is running out of fuel after a year of fiscal and monetary stimulus. And emerging markets (the fourth engine) are slowing sharply as decade-long global tailwinds – rapid Chinese growth, zero policy rates and quantitative easing by the US Federal Reserve, and a commodity super-cycle – become headwinds.

So the question is whether and for how long the global economy can remain aloft on a single engine. Weakness in the rest of the world implies a stronger dollar, which will invariably weaken US growth. The deeper the slowdown in other countries and the higher the dollar rises, the less the US will be able to decouple from the funk everywhere else, even if domestic demand seems robust.

Falling oil prices may provide cheaper energy for manufacturers and households, but they hurt energy exporters and their spending. And, while increased supply – particularly from North American shale resources – has put downward pressure on prices, so has weaker demand in the eurozone, Japan, China, and many emerging markets. Moreover, persistently low oil prices induce a fall in investment in new capacity, further undermining global demand.

Meanwhile, market volatility has grown, and a correction is still underway. Bad macro news can be good for markets, because a prompt policy response alone can boost asset prices. But recent bad macro news has been bad for markets, owing to the perception of policy inertia. Indeed, the European Central Bank is dithering about how much to expand its balance sheet with purchases of sovereign bonds, while the Bank of Japan only now decided to increase its rate of quantitative easing, given evidence that this year’s consumption-tax increase is impeding growth and that next year’s planned tax increase will weaken it further.

As for fiscal policy, Germany continues to resist a much-needed stimulus to boost eurozone demand. And Japan seems to be intent on inflicting on itself a second, growth-retarding consumption-tax increase.

Furthermore, the Fed has now exited quantitative easing and is showing a willingness to start raising policy rates sooner than markets expected. If the Fed does not postpone rate increases until the global economic weather clears, it risks an aborted takeoff – the fate of many economies in the last few years.

If the Republican Party takes full control of the US Congress in November’s mid-term election, policy gridlock is likely to worsen, risking a re-run of the damaging fiscal battles that led last year to a government shutdown and almost to a technical debt default. More broadly, the gridlock will prevent the passage of important structural reforms that the US needs to boost growth.

Major emerging countries are also in trouble. Of the five BRICS economies (Brazil, Russia, India, China, and South Africa), three (Brazil, Russia, and South Africa) are close to recession. The biggest, China, is in the midst of a structural slowdown that will push its growth rate closer to 5% in the next two years, from above 7% now. At the same time, much-touted reforms to rebalance growth from fixed investment to consumption are being postponed until President Xi Jinping consolidates his power. China may avoid a hard landing, but a bumpy and rough one appears likely.

The risk of a global crash has been low, because deleveraging has proceeded apace in most advanced economies; the effects of fiscal drag are smaller; monetary policies remain accommodative; and asset reflation has had positive wealth effects. Moreover, many emerging-market countries are still growing robustly, maintain sound macroeconomic policies, and are starting to implement growth-enhancing structural reforms. And US growth, currently exceeding potential output, can provide sufficient global lift – at least for now.

But serious challenges lie ahead. Private and public debts in advanced economies are still high and rising – and are potentially unsustainable, especially in the eurozone and Japan. Rising inequality is redistributing income to those with a high propensity to save (the rich and corporations), and is exacerbated by capital-intensive, labor-saving technological innovation.

This combination of high debt and rising inequality may be the source of the secular stagnation that is making structural reforms more politically difficult to implement. If anything, the rise of nationalistic, populist, and nativist parties in Europe, North America, and Asia is leading to a backlash against free trade and labor migration, which could further weaken global growth.

Rather than boosting credit to the real economy, unconventional monetary policies have mostly lifted the wealth of the very rich – the main beneficiaries of asset reflation. But now reflation may be creating asset-price bubbles, and the hope that macro-prudential policies will prevent them from bursting is so far just that – a leap of faith.

Fortunately, rising geopolitical risks – a Middle East on fire, the Russia-Ukraine conflict, Hong Kong’s turmoil, and China’s territorial disputes with its neighbors – together with geo-economic threats from, say, Ebola and global climate change, have not yet led to financial contagion. Nonetheless, they are slowing down capital spending and consumption, given the option value of waiting during uncertain times.

So the global economy is flying on a single engine, the pilots must navigate menacing storm clouds, and fights are breaking out among the passengers. If only there were emergency crews on the ground.