In case you weren’t aware, I am a military operations research analyst for the U.S. Army. One of the stories associated with the origins of my field of work involves a study of Royal Air Force bombers returning to England after missions over the Continent during WWII. Time and time again the same parts of aircraft were pockmarked with holes from enemy anti-aircraft fire. A study was convened to determine ways to reinforce those areas of the aircraft in order to protect the crew. Prior to the study’s conclusion Patrick Blackett, an experimental physicist and early operations research proponent, offered the seemingly counterintuitive idea that the focus was completely wrong. Instead of looking at where the holes were, they should concentrate on where the holes weren’t. Since every part of the aircraft was equally likely to be hit by enemy fire, the real threat to the safety of the crew was in those areas of returning aircraft that almost never saw damage–his idea being that, when damage occurred in those areas, the aircraft likely didn’t return.
Blackett’s mathematically based intuition, was of course, correct. The areas of returning aircraft that exhibited comparatively little damage were places like cockpits and fuel tanks. The larger lesson was that sometimes what we see obscures our ability to see what isn’t there.
I offer that background to accompany this Stratfor article about “lone wolf” terrorist attacks. In recent months I’ve noticed that the focus of anti-terrorism has begun to shift to include countering so-called lone wolves and Al Qaeda “inspired” individual actors. Major Nidal Hassan’s attack on soldiers at Fort Hood is often identified as one such example. This Stratfor piece by Scott Stewart rejects that focus. Stewart’s key point is this: “When a group promotes leaderless resistance as an operational model it is a sign of failure rather than strength.”
Tragic though the loss of life from lone wolf attacks is, that tragedy obscures our vision of what isn’t there. And what isn’t there is an organized threat. As a military assessor, my counter-intuitive observation is that a shift to lone wolf attacks might in fact be an indicator of having achieved a desired effect against an enemy organization. In other words, is it possible that an increase in lone wolf attacks, along with a corresponding fall in organized activity, means that we are succeeding?
I passed this idea around to a few others today and would like your thoughts as well. I’d particularly like some help with this question: how would you distinguish between what I’ve postulated and “an army of Davids” networked enemy?
UPDATE: Thanks for all the responses. I’m working on piecing this together, though unfortunately, much of it may be for a product that I can’t share.
In an aside to another point, the folks at Minyanville called bond buyers “Bond speculators.” Before you revolt at the characterization as “speculators,” consider this parenthetical they added: ”is there any such thing as a genuine saver who has been buying 30-year bonds to hold for three decades?”
If the answer is “no,” and I think that it is nearly so that there are few buyers of 30-year bonds willing to accept a pittance of a return over so long a period, then I think that it’s safe to conclude that the bond market is largely, if not, almost entirely a speculative market. When speculation, as opposed to actual underlying value begins to dominate the market for an asset (think: internet stocks circa 1999, California house prices circa 2005, or the Nashville condo market of 2007), it is the clearest indicator that a bubble has developed.
The only thing that would make it worse is if speculators bought the Treasury bonds at inflated prices in hopes of selling to someone else but have also used their ownership of that speculative asset to collateralize more purchases. That kind of thing adds a multiplier effect to losses as they are transmitted through the economy. Oh wait . . . isn’t that pretty much a description of what Bretton Woods rules allow banks to do with sovereign debt?
Having lived through a few of these bubbles now, I think it’s a lot easier to identify when they exist than it is to predict when they will pop. However, the pop will come. And since the asset in question–US Treasury debt–is the most commonly held asset in the world–when this pop comes it will be a nuclear blast.
Tim “I don’t pay my taxes” Geithner blames the continued world economic crisis on a dysfunctional political system:
“You have this terribly damaging political dysfunction here and in Europe that leaves the world wondering whether the political system has the capacity to do the right thing . . . That is very damaging to confidence.”
What he means by his complaint is that in the United States, House Republicans won’t give him and President Obama carte blanche to do what they would like to do to fix the economic mess, while overseas German voters may block their country from being Europe’s checkbook. Dysfunction, in Geithner’s eyes, is anything that prevents treasury secretaries, central bankers and other enlightened economic betters from controlling the response to the crisis.
But if that’s “the right thing” to do, let’s judge the elite’s track record. More than three years into this worldwide economic downturn, and after having done precisely what the doctors prescribed–that is, protect banks, attempt to reinflate asset prices, guarantee creditors losses with taxpayer funds, and run enormous “stimulative” deficits–the economies of the United States, Great Britain, Greece, Ireland, and others are either stagnant or still in free fall.
If only there was a control case where we could compare these results with another country who let their banks fail, and didn’t run up enormous deficits in order to attempt to reinflate assets and stimulate growth . . .
Oh wait, what about Iceland?
The earliest entrant to economic catastrophe was the tiny north Atlantic island whose economy grew rapidly in the first decade of the new millenium due largely to its outsized banking sector. However, when Iceland’s economy crashed on the rocks of reality it let its three largest banks go into bankruptcy. When foreign nations asked Iceland’s pliant leaders for reimbursement in order to cover their losses, Icelandic voters told their political leaders to “piss off.” Talk about dysfunctional.
Iceland versus the world: two drastically different approaches, but what about the results?
Iceland’s unemployment now stands at 7% and its economy is growing again. It is now able to borrow again on the world market–its credit rating strengthened by having had limited ability to borrow over the last three years–while other nations maxed out their credit cards and now find themselves paying much higher rates.
This comparative lesson is worth keeping in mind as nations like France wrestle with a decision to offer a new round of loan guarantees to its banks after the inevitable Greek default. Jeremy Warner sums up the situation nicely:
“By seeking to address the last crisis with greater liquidity buffers, regulators succeeded only in sowing the seeds for the next one. A banking crisis that transmogrified into a sovereign debt crisis now shows every sign of transmogrifying back into another banking crisis.”
This newest banking crisis, in turn, is reigniting cries for more sovereign debt. Iceland’s people knew how this ride would end, so they got off early. Increasingly, the American people (as well as the Germans) know how it’s going to end for them too, hence the “dysfunction” in the eyes of the Treasury Secretary.
The point is this: every developed country in the world, save one, tried the same approach of bailing out their failing banks at taxpayer expense exactly as their economic and political leaders ordered. Iceland, the one country that deviated from that path and followed the lead of their people instead of their politicians by refusing to back failed banks with taxpayer dollars, is now emerged from economic crisis while the other nations are entering their double dip. Iceland, where political and economic dysfunction has long been on display, is now in better economic shape than all those other “functional” countries.
BTW: Is anyone else more bothered by Geithner’s guarantee that there “is not a chance” that Europe will experience an event comparable to the implosion of Lehman Brothers, than if the Treasury Secretary had said that it was possible?
The “Obama is Truman” meme is already becoming a cliche. (Not to mention, the fact that it is never a good sign for a candidate to be Trumanized–especially this early in the game.)
Nonetheless, Jay Cost dismantles the comparison by differentiating the domestic conditions of 1948 and now. While Cost mentions in passing Truman’s role in ending World War II, it merits much greater notice. Truman, after all, was the man who ordered two nuclear strikes against the nation that had attacked America only seven years before, and who–in the minds of many Americans of my grandparents era–had saved tens or hundreds of thousands of American lives from being lost in an attack on the Japanese mainland. The gratitude of a generation is still palpable as long as any of that generation still lives.
While President Obama was certainly correct to authorize the raid that killed Bin Laden, his one notable foreign policy success pales when measured against Truman’s credentials. It certainly won’t be enough to innoculate Obama from further foreign policy concerns on top of his numerous domestic failures. This lends only more weight to Cost’s criticism that Obama has dim hopes if he is planning to come from behind against a modern Dewey.
Read the whole thing.
| Category: 2012
| Posted at: Sunday, 11 September 2011
I agree with Glenn that if the Republican wins the special election to fill Anthony Weiner’s seat, that there will be greatly increased pressure on President Obama to, like LBJ, step aside. Unlike LBJ I doubt that he would do it.
Furthermore, this is not your grandfather’s Democratic Party of 1968 which nominated a moderate Humphrey who narrowly lost to Nixon. After the last three years, what remains of the Democrats is more akin to the 1972 cabal, which sent Mc Govern to lead Democrats to ignominious ruin.
Yes, a Dem loss in NYC greatly increases the odds of a Dem challenge. But even as the NYT belatedly takes notice that, heaven forbid, Sarah Palin has more independent and crossover appeal than the President’s party, don’t expect that party to notice. A primary challenge will be between hard left (Obama) and even lefter. The ones most likely to pay the price will be any Democratic Congressman who ever hoped to claim the label “moderate.”