Posts Tagged ‘economics’

Is War Coming ?

Wednesday, February 11th, 2015

There are three, possibly four, major areas of international strife and all are getting worse as we watch.

Europe is trying to deal with Vladimir Putin and the new Russia. It is not doing well.

There was a palpable tone shift in U.S. policy toward Ukraine this week, when the Obama administration signaled that it was ready to consider sending the country lethal military aid. A confluence of factors is pushing President Obama toward this decision. The fragile ceasefire brokered in September between Ukraine and Russian-backed separatists has failed, manifested in the series of recent and high-profile separatist advances against the Ukrainian military this week. Bipartisan congressional support for sending weapons to Ukraine, championed by Sens. John McCain (R-Ariz.) and Robert Menendez (D-N.J.), as well as a newly released report by former senior U.S. and European officials recommending lethal military aid for the embattled country, have also contributed to Obama and his tight inner circle of foreign policy advisers reconsidering the lethal aid option.

Will this happen ? I doubt it.

As Kadri Liik of the European Council on Foreign Relations pointed out recently , many Western leaders persist in seeing the Ukraine invasion as a hiccup in relations with Russia that can be smoothed over, rather than as a demonstration that Mr. Putin’s agenda is fundamentally at odds with Europe’s security interests and its values. Because of their attachment to the hiccup theory, governments — including the Obama administration — have refused to take steps, such as providing the Ukrainian government with defensive weapons, that could help stop Mr. Putin’s aggression. Instead, they concoct futile schemes for “reengaging” the Russian ruler.

The next crisis will be the end of NATO.

Late this week, the Obama administration unveiled its new National Security Strategy, amid less than fanfare, with the execrable Susan Rice explaining in “remain calm, all is well!” fashion that things are really much better globally than they look. This White House’s new foreign policy mantra is Strategic Patience, which seems to be the been-to-grad-school version of “don’t do stupid shit.” Since nobody inside the Beltway is taking this eleventh-hour effort to articulate Obama’s security strategy seriously, it’s doubtful anyone abroad, much less in Moscow, will either.

Soon, Putin will turn his gaze on the Baltics.

Jaws dropped this week when Anders Fogh Rasmussen, who until recently was NATO’s civilian head, stated that it is highly likely that Russia will soon stage a violent provocation against a Baltic state, which being NATO countries, will cause a crisis over the Alliance’s Article 5 provision for collective self-defense. Rasmussen merely said what all defense experts who understand Putin already know, but this was not the sort of reality-based assessment that Western politicians are used to hearing.

NATO has disarmed and is in panic mode now if they have to face Russia, weak as it is in the long term. As Keynes said, “In the long term we are all dead.” We are partly responsible for this state of affairs.

Not all the fault for this sorry state of affairs lies in Europe. Here America has played an insidious role too, encouraging spending on niche missions for the Alliance at the expense of traditional defense. Hence the fact that Baltic navies have considerable counter-mine capabilities — this being an unsexy mission that the U.S. Navy hates to do — yet hardly any ability to police their maritime borders against intruding Russians. To make matters worse, since 2001 the Americans have encouraged NATO partners to spend considerable amounts of their limited defense budgets on America’s losing war in Afghanistan.

We should have gotten out in 2009. The absurd Rules of Engagement are only part of it.

Now, we face another major threat in the Middle East, Theater Two.

For the situation with Iran, I have long relied on the writing of Spengler.

Dying civilizations are the most dangerous, and Iran is dying. Its total fertility rate probably stands at just 1.6 children per female, the same level as Western Europe, a catastrophic decline from 7 children per female in the early 1980s. Iran’s present youth bulge will turn into an elderly dependent problem worse than Europe’s in the next generation and the country will collapse. That is why war is likely, if not entirely inevitable.

The rulers of Iran have shown no moderation of their messianic beliefs and their willingness to destroy themselves to bring about the coming of the Twelfth Imam.

Twelver Shi‘a believe that al-Mahdi was born in 869 (15 Sha‘bin 255 AH) and assumed Imamate at 5 years of age following the death of his father Hasan al-Askari. In the early years of his Imamate he would only contact his followers through The Four Deputies. After a 72-year period, known as Minor Occultation, a few days before the death of his fourth deputy Abul Hasan Ali ibn Muhammad al-Samarri in 941, he is believed to have sent his followers a letter. In that letter that was transmitted by al-Samarri he declared the beginning of Major Occultation during which Mahdi is not in contact with his followers.

The coming of the Imam is part of the end of the world and the rulers of Iran are “Twelvers.”

Shi’as believe that Imam al-Mahdi will reappear when the world has fallen into chaos and civil war emerges between the human race for no reason. At this time, it is believed, half of the true believers will ride from Yemen carrying white flags to Makkah, while the other half will ride from Karbalaa’, in the `Iraq, carrying black flags to Makkah. At this time, Imam al-Mahdi will come wielding `Ali’s Sword, Zulfiqar , the Double-Bladed Sword. He will also come and reveal the texts in his possession, such as al-Jafr and al-Jamia.

The Shi’ites have this belief as part of their religion and the rulers of Iran seem to be sincere in their beliefs, which is why Obama is insane to consider them rational.

The Sunni equivalent is the new group called Islamic State in Syria and various other names.

The recent rise in terrorist attacks is only one part of the problem. We also see the collapse of Iraq after Obama removed all US troops.

What are we going to do about all this? Probably nothing as Obama has a master plan that will solve all our problems. He will make friends with our worst enemies.

What about China ? We were going to “pivot to Asia.”

One question is whether China is stable. There are questions about China’s economic future.

Beijing can manage a rapidly declining pace of credit creation, which must inevitably result in much slower although healthier GDP growth. Or Beijing can allow enough credit growth to prevent a further slowdown but, once the perpetual rolling-over of bad loans absorbs most of the country’s loan creation capacity, it will lose control of growth altogether and growth will collapse.

The choice, in other words, is not between hard landing and soft landing. China will either choose a “long landing”, in which growth rates drop sharply but in a controlled way such that unemployment remains reasonable even as GDP growth drops to 3% or less, or it will choose what analysts will at first hail as a soft landing – a few years of continued growth of 6-7% – followed by a collapse in growth and soaring unemployment.

What would happen then ? I just don’t see a war with China in our future, partly because neither of us can afford it. China is threatening its neighbors, like Japan and the Philippines, but we are unlikely to intervene. Our former allies in the east are now seeking help from each other as Obama destroys the US influence.

Unemployment benefits and jobs

Wednesday, January 28th, 2015

The Pelosi Congress extended unemployment benefits in 2009 to a maximum of 53 weeks. This has been renewed until the new Republican Congress after 2010, unable to get Obama to negotiate, allowed the extra benefits to lapse.

Federal unemployment benefits that continue for 26 weeks after a person uses up the 26 weeks of state unemployment benefits ended Saturday, so now some 1.3 million people won’t be getting their $1,166 (on average) monthly check. By June, another 1.9 million will be cut off.

Many in the federal government are talking about the need to extend benefits. President Obama labelled it an “urgent economic priority” and called a couple of senators to pressure them to bring the matter up when the Senate reconvenes next week, and is urging Congress to extend the benefits for another three months. Senate Majority Leader Harry Reid has promised a vote no later than January 7 for the three month extension. Gene Sperling, the head of Obama’s National Economic Council, lamented the end of the federal aid…

Disaster was predicted.

Amazingly, the disaster did not happen. In fact, job growth went up.

Just looking at the economy’s overall size, you wouldn’t think that the last year was much different from any of the others since the recession. The U.S. economy grew at about the same rate in 2014 as it did in the previous four years — less than 2.4 percent, according to the Federal Reserve’s most recent projection. Yet last year was different. People started going back to work. The percentage of Americans working, more or less stuck in a ditch since 2009, increased from 58.6 percent in December 2013 to 59.2 percent last month. Employers added an average of 246,000 positions a month, about 3 million jobs overall.

What happened ?

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Chewing Gum

Monday, January 26th, 2015

gum

UPDATE: We now have a report that the former commander of the DIA (Defense Intelligence Agency) has accused the administration of ignoring and even falsifying the Islamist threat.

“You cannot defeat an enemy you do not admit exists,” he said.

The administration, he continued, wants “us to think that our challenge is dealing with an undefined set of violent extremists or merely lone-wolf actors with no ideology or network. But that’s just not the straight truth.”

Flynn left government last summer, a year before scheduled. He did not provide a reason for his early departure, but sources close to Flynn told THE WEEKLY STANDARD that he was forced out after years of making arguments the Obama administration did not want to hear.

Flynn, and many of the analysts who worked for him, consistently reported on the global nature of the jihadist threat and the interconnectedness of the groups driving it. They mapped overlapping networks of al Qaeda and its offshoots and rejected arguments, pushed primarily by the White House and the CIA, that killing leaders of “core al Qaeda” inevitably meant a diminishing threat.

The Obama people do not want to hear what DIA says.

Sources familiar with the documents tell TWS that they include troubling information about al Qaeda’s plans to empower its franchises, new details about the many relationships with Pakistan’s powerful intelligence service and, significantly, support that the group has received over the years from senior figures in the Iranian regime.

In classified analyses based heavily on the documents, the DIA directly challenged the Obama administration’s claims that the threat from al Qaeda was diminished or fading. Flynn hinted at this in an interview he gave to James Kitfield of Breaking Defense shortly after he left government. “When asked if the terrorists were on the run, we couldn’t respond with any answer but ‘no.’ When asked if the terrorists were defeated, we had to say ‘no.’ Anyone who answers ‘yes’ to either of those questions either doesn’t know what they are talking about, they are misinformed, or they are flat-out lying,” Flynn said.

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Gruber’s lies.

Wednesday, December 10th, 2014

The left does not do economics. They do politics and elections and lying to get past the “stupid voters” but, when pressed, nothing they do qualifies as numerically or mathematically sound. Social Security worked until everyone found the queue and until Congress raided the trust fund in the 90s.

Obama and the Democrat leaders knew that Hillary made enemies of the insurance companies in 1992. The insurance companies funded devastating TV ads with “Harry and Louise” that cost the Democrats Congress in 1994. Therefore, they had to do what was necessary to get the insurance companies “inside the tent pissing out and not outside the tent pissing in” in Lyndon Johnson’s immortal words.

Insurance companies have considered health insurance a loser for 25 years now. What they prefer is becoming “Administrative Service Organizations” which administer self funded health plans by employers.

Corporate benefits include- organizing/ negotiating health insurance, group dental, STD, LTD, life, etc.

The plan the Democrats came up with, with Gruber’s help, was to make the government the funding entity and pay the insurance companies to run the program. That way everybody is happy, except, of course, the taxpayer. The taxpayer does not like tax increases which would be needed to pay the bills. Therefore the taxpayer has to be fooled.

The excise tax on high-cost health plans was among the many fees and taxes proposed as offsets to help slow the rate of growth of health costs, particularly premium growth, and finance the nationwide expansion of health coverage. When the Affordable Care Act was signed into law in March 2010, its coverage provisions were estimated to cost more than $900 billion over the next decade, from 2010 to 2019, and were to be paid for by fees and taxes on both individuals and businesses. At the time the health reform bill passed, the excise tax on high-cost plans was estimated to raise roughly $32 billion in revenue over the next decade, or by 2019.

Without the taxes to pay the bills, the whole plan collapses. At its base, Obamacare is Medicaid for everyone. The employer mandate has been, contrary to the text of the law, postponed as the flaws in implementation appear. If it were to be enforced, there would be a revolution. The funding from employee plans is called “The Cadillac Tax which is an excise tax on employer plans that exceed the benefits of Medicaid.

As health coverage expands to tens of millions of Americans–through Medicaid expansion in states and the new state health insurance exchanges that will soon begin selling individual health coverage–some Americans with employer-sponsored health coverage are seeing their benefits decrease.

One of the most significant, and controversial, provisions of the Affordable Care Act is the new excise tax on high-cost health plans proposed to both slow the rate of growth of health costs and finance the expansion of health coverage. The provision is often called the “Cadillac” tax because it targets so-called Cadillac health plans that provide workers the most generous level of health benefits. These high-end health plans’ premiums are paid for mostly by employers. They also have low, if any, deductibles and little cost sharing for employees.

If this is ever implemented, the Medicaid-for-all nature of Obamacare will become obvious. That’s why it will not happen. The fundamental premise behind Obamacare is not viable. That is why it will fail and the numbers do not add up.

Gruber can’t say this. All he can do is obfuscate.

Medicine is coming to be a government benefit.

Sunday, August 3rd, 2014

Obamacare is having serious trouble as I have discussed. The success stories, like California, are an example of what I have called Medicaid for All.

“It’s a total contradiction in terms to spend your public time castigating Medicaid as something that never should have been expanded for poor people and as a broken, problem-riddled system, and then turn around and complain about the length of time to enroll people,” said Sara Rosenbaum, a member of the Medicaid and CHIP Payment and Access Commission, which advises Congress.

Most of the new enrollees are Medicaid members and those enrolled in “private insurance” learn that they have severely restricted choice of doctor or hospital.

Now we have a new development.

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An Update on Medical Reform

Monday, July 21st, 2014

Cash medical practice or, in the phrase favored by leftists critics, “Concierge Medicine,” seems to be growing.

Becker is shifting to a new style of practice, sometimes called concierge or retainer medicine. With the help of a company that has been helping physicians make such shifts for over 13 years, he will cease caring for a total of 2,500 patients and instead cut back to about 600. These patients will pay an annual fee of $1,650. In exchange, they will receive a two-hour annual visit with a complete physical exam, same-day appointments, 24-hour physician phone access, and personalized, web-based resources to promote wellness.

The article suggest that all these doctors choosing to drop insurance and Medicare are primary care. Many are but I know orthopedists and even general surgeons who are dropping all insurance.

The concierge model of practice is growing, and it is estimated that more than 4,000 U.S. physicians have adopted some variation of it. Most are general internists, with family practitioners second. It is attractive to physicians because they are relieved of much of the pressure to move patients through quickly, and they can devote more time to prevention and wellness.

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Global Warming and the Divestment Movement

Thursday, May 15th, 2014

I have previously posted on global warming, at least back as far as 2007.

If you want to know the costs associated with the “Cap and Trade” system proposed by Kyoto, look at this report. If you can’t decipher the bureaucratic language, here is the conclusion. GDP and consumption impacts in the Full Auction case are substantially larger than those in the Phased Auction case. Relative to the reference case, discounted total GDP (in 2000 dollars) over the 2009-2030 time period in the Full Auction case is $462 billion (0.19 percent lower), while discounted real consumer spending is $483 billion (0.29 percent) lower. In 2030, projected real GDP in the Full Auction case is $94 billion (0.41 percent) lower than in the reference case, while aggregate consumption is $106 billion (0.69 percent) lower, almost twice the estimated consumption loss in the Phased Auction case. A reduction in GDP is called a recession.A reduction that is permanent is called a Depression.

It’s no wonder that nothing was done. First, the risks of serious harm are small. The small amount of warming suggested by more serious studies has nothing to do with the alarmist views.

Now, we have a new strategy. The alarmists are going to try to destroy the fossil fuel industry.

The fossil free movement has spread far and wide on American campuses. Fossil Free Stanford organized in fall 2012 after McKibben visited Palo Alto on his “Do the Math Tour.” Two of the founding members, Michael Penuelas and Yari Greaney, both from the class of 2015, proclaimed their commitment. Greaney held that “our tuition money…is going to support industries that are polluting our future.”

This is standard student radical rhetoric. What is new ?

The students waged a textbook campaign, assembling impressive numbers, soliciting key testimonials, maintaining a respectful tone towards authority while at the same time keeping up the pressure.

The question is really: to what end? The answer is, sadly, self-delusion. No one doubts that Stanford students are smart, but their intelligence is not much of a defense against irrational enthusiasms that can sweep through a community. What the divestment movement has sold to Stanford students is a bit of flummery. When Stanford announced on May 6 that it would divest “direct investments in coal mining companies,” President John Hennessy issued a statement that begins, “Stanford has a responsibility as a global citizen to promote sustainability for the planet…”

Got that? Stanford is no longer a university. It is a “global citizen.” And global citizens, of course, are charged with promoting “sustainability.”

Delusions of this magnitude seem to be getting more common. As at Dartmouth, for example.

The activists unveiled a Freedom Budget in February with over 70 specific actions they want the Dartmouth administration to take to address students’ concerns over diversity, perceived sexism and the campus climate for minorities and the LGBT community. Students entered President Phil Hanlon’s office Tuesday afternoon at 4 p.m. asking for a point-by-point response, following what they felt was a half-hearted statement about their budget from Dartmouth a day before finals on March 6.

What do they want ? Why not much, just turn Dartmouth into an insane asylum.

The Freedom Budget’s items include hiring more racial minorities as faculty, implementing more gender-neutral housing and bathroom options, banning the term “illegal immigrant,” evaluating the Greek system’s role in sexual assault, and harsher punishments for those who commit sexual violence.

Stanford assigned another Constitutional Law professor to teach the course that Derrick Bell was teaching. Why should this be ?

Stanford at that time had one of the leading scholars in constitutional law, Professor Gerald Gunther — and Derrick Bell was no Gerald Gunther. A hastily created program of study of constitutional law was then used to teach that subject to students who were not getting what they needed in Professor Bell’s course.

When this clever finessing of the problem came to light, the administration apologized — to Derrick Bell for the embarrassment this caused him.

They should have apologized to the law students for short-changing them with a professor who was not up to the job — and to those who donated money to the university to advance the cause of education, not to allow administrators to play racial quota politics on campus.

As a full professor at the Harvard law school, Derrick Bell was also surrounded by colleagues who were out of his league as academic scholars. What were his options at this point?

Here is one example of the result of affirmative action. What about global warming ?

The orthodoxy of the left is just as powerful. It recently claimed another scalp.

Dear Professor Henderson,

I have been put under such an enormous group pressure in recent days from all over the world that has become virtually unbearable to me. If this is going to continue I will be unable to conduct my normal work and will even start to worry about my health and safety. I see therefore no other way out therefore than resigning from GWPF. I had not expecting such an enormous world-wide pressure put at me from a community that I have been close to all my active life. Colleagues are withdrawing their support, other colleagues are withdrawing from joint authorship etc.

No mercy for those who say the earth revolves around the sun. Anyway, the alarmists have a big agenda.

This is not a single-issue movement. This is a space where environmental justice, climate justice, and economic justice have come into contact. We understand that we will not win the fight against the fossil fuel industry without confronting racism, classism, homophobia, and other systems of oppression in our movement spaces.

My colleagues and I at the National Association of Scholars have been pointing out for some time how fluidly the sustainability movement changes from clean energy advocacy to a hard left agenda on social issues. Official Stanford no doubt brushes aside these elaborations, thinking that it has discerned the core issue: dirty industries that pollute the water, blight the landscape, and foul the air. But the true core issue is the effort of a movement to foster in students a lifelong aversion to Western values.

How well it will succeed in that no one knows, but there is no comfort in the ease with which Bill McKibben in a little less than two years has conjured this movement into existence.

Personally, I see this as another example of how environmentalism has become a religion that tolerates heretics not at all. The similarity to the Puritans is striking, even to the region that has given rise to the leftist ideology.

Joseph Bottum, by contrast, examines post-Protestant secular religion with empathy, and contends that it gained force and staying power by recasting the old Mainline Protestantism in the form of catechistic worldly categories: anti-racism, anti-gender discrimination, anti-inequality, and so forth. What sustains the heirs of the now-defunct Protestant consensus, he concludes, is a sense of the sacred, but one that seeks the security of personal salvation through assuming the right stance on social and political issues.

Environmentalism is but one branch of leftism but is a particularly intrusive one.

Where is housing going ?

Sunday, March 9th, 2014

UPDATE: Megan McArdle has some doubts about house prices.

housing

The housing inflation seems to be limited to certain cities. How will this last in the poor (except District of Columbia) economy ?

I live in south Orange County and have noticed a huge amount of rental construction going on. This area has been mostly single family homes and condos since 1972 when I moved here. Now, we see big projects like this and others nearby that I don’t know the name of. These are big projects including hundreds and perhaps thousands of units. The builder is the Irvine Company which, in my previous experience, has built mostly homes and condos. Recently, I began to notice more rental projects in Irvine.

The Irvine Company Apartment Communities is dedicated to making it easy to find a home you’ll love with unsurpassed services meeting your every need. With approximately 122 exceptional apartment communities located throughout the prime California regions of Orange County, West Los Angeles, San Diego and Silicon Valley, we offer choices to fit every lifestyle and budget.

They seem to be going to rental property in a big way. Maybe this is the reason.

From reading the mainstream press all you hear are glorious signs of housing resurrection! Come one come all into the house of real estate where the almighty Fed will allow no harm to occur. Just sign and pray and the next thing you know you’ll be the next Donald Trump. The flipping, rehabbing, and housing shows are once again filling the space on a cable station near you. The perception of the Fed being this almighty protector of housing makes a bit of sense but where was the Fed in 2007?

I see lots of housing flips in southern California, not in Orange County so far.

foreclosure-completions

Even in 2013 we had 1.4 million properties with notice of defaults, scheduled auctions, and full on REOs taken on. Early in the crisis these stories were common since they were a novelty to the press. Now however, many of these properties are shifting over to large investors pushing inventory up. A clear consequence of this is a large pool of potential buyers that are unable to buy.

These may be the renters.

first-time-home-buyer

Yup. The would-be first time buyers have student loans and bad credit. They are renting.

The number of first time buyers is pathetic because household formation is weak and many young Americans are living at home with mom and dad. Forget about buying, they are having a tough time paying higher rents to the new feudal landlords. You would expect with the rapid rise in prices that existing home sales are off the charts but they are not.

Housing prices do NOT mean buyers who will be occupants. Look at mortgage applications !

mortgage-apps-for-purchase

Wow ! We are back to levels last seen nearly 20 years ago! Only difference is that we have 50,000,000 more people today walking the streets of the U.S. of A. than we did back then. Since access to middle class living is getting tougher thanks to weak income growth, more people are opting to rent:

rentals-vs-households

This is what I am seeing in Orange County. I have been looking in San Pedro for a small house near the ocean. I can no longer afford Orange County except condos. I sold my house four years ago and bought a house in the mountains. That was a bad move. I found that I could not tolerate the altitude. I had to sell into the bad market of 2012. That cost me a lot. Now, I have to lower my sights and may just stay a renter for a while. At my age, it may make better sense.

Putin, Crimea and Ukraine

Wednesday, March 5th, 2014

UPDATE: Michael Totten has an update on Crimea.

The new ruler is a former gangster whose street name was “Goblin.”

Lawmakers were summoned, stripped of their cellphones as they entered the chamber. The Crimean media was banished. Then, behind closed doors, Crimea’s government was dismissed and a new one formed, with Sergey Akysonov, head of the Russian Unity party, installed as Crimea’s new premier.

It if was a crime, it was just the beginning. Akysonov’s ascent to power at the point of a gun presaged all that has happened since — the announcement of a referendum on Crimean independence and the slow, methodical fanning out of Russian forces throughout the peninsula, ostensibly to protect Russians here from a threat no one can seem to find.

But here’s the most interesting bit: Aksyonov’s sudden rise as Moscow’s crucial point man in Crimea has revived simmering allegations of an underworld past going back to the lawless 1990s, when Akysonov is said to have gone by the street name “Goblin,” a lieutenant in the Crimean crime syndicate Salem.

Putin is dealing from a weak hand but Germany was near bankruptcy when Hitler invaded Poland. Holman Jenkins at WSJ, has a nice summary of where we are.

Vladimir Putin probably would not have spent 90 minutes on the phone with President Obama on Saturday if he intended to make a grab for eastern Ukraine. He would not have jawed twice on Friday and Sunday on the phone with German Chancellor Angela Merkel, who subsequently doubted his grip on reality.

He is not going to try to annex the eastern Ukraine where Russian speakers are alleged to be crying for rescue from The Ukraine.

He is even using fake videos like the Palestinians have done before to make his argument. The Russian speakers are not buying.

The Russian speakers are only about 17% of the whole Ukraine population.

350px-Russians_Ukraine_2001

They are concentrated in the eastern portions which are also the poorest and least productive. Ukraine could do without them except for the precedent set.

Western leaders are a risk-averse, short-term-minded lot, but if their decisions are dictated by a conviction of Mr. Putin’s iron grip on Russia, they make a mistake. Many sanguine voices, in fact, already note how the U.S. shale revolution has weakened Mr. Putin’s hand. If Western leaders were so inclined, they might surprise themselves at how vulnerable Mr. Putin’s petro-dependency makes him.

Ukraine has signed contracts with western oil firms to explore what seems to be a large area of oil shale. This is a big threat to Russia’s sole export and prop of its declining economy.

Withdraw Europe’s support for pipelines Mr. Putin wants to build. These, by way of the Black Sea and the Baltic Sea, aim to reduce Ukraine’s leverage as transit path for gas exports that generate much of his regime’s income. Mr. Putin might like to shut off the gas but he can’t. He needs the money.

Get moving on the pending U.S. trans-Pacific and trans-Atlantic trade partnerships, which grant member countries automatic approval of U.S. liquefied gas exports. The mere prospect of U.S. exports has already eroded Russia’s pricing power.

Let Exxon and other Western oil firms queuing up to explore Siberia and Russia’s Arctic know their efforts are not currently appreciated. A single caustic hearing on Capitol Hill should do it.

They could do as well in Ukraine.

Ukraine, with its control of strategic pipelines, moving toward energy independence and even energy competition with Russia (it recently signed shale deals with Shell and Chevron ) was not acceptable.

Most of all, “Putin lost Ukraine” would have been a powerful meme in the hands of his enemies, who are numerous and don’t actually care about Ukraine.

The West followed down his path, which bears passing resemblance to the petro-regime of Saddam Hussein, because Russia has nuclear weapons and Mr. Putin seemed preferable to chaos. The West may eventually get chaos anyway. Secretary of State John Kerry managed to put his finger on a truth. Mr. Putin knows no more about the true sources of 21st-century wealth and power than a swordfish knows about macramé. No, the Cold War is not returning. Russia does not have the heft to sustain a Cold War even against placid Europeans or a strategically listless President Obama. His current Western enablers just hope Mr. Putin self-destructs on somebody else’s watch.

The Russian speakers in east Ukraine are not convinced this is the right course.

But in Monday’s survey, 82% of his party’s loyalists rejected any such generosity. Even the adherents of the Communist Party, who tend to feel entitled to all of Russia’s former Soviet domains, said with a broad majority — 62% — that Russia should not jump into Ukraine’s internal crisis.

Putin’s captive media in Russia can convince Russians in Russia that the west was behind the coup in Ukraine.

Moreover, 45% blamed western influence for bringing people on to the streets of Kiev, where the “Euromaidan” protests that were originally in favour of further European integration later turned into a general condemnation of the corrupt regime.

The results are still in doubt.

Ukraine

Saturday, February 22nd, 2014

UPDATE: Max Boot, who I also respect, adds some thoughts.

The Orange Revolution failed because of corruption and inertia in the economy. What now?

This is, after all, the second popular uprising against Yanukovych, the first being the Orange Revolution of 2004-2005. Although thwarted in his attempt to steal that election, Yanukovych returned to power in 2010, managing to win a fair election after his political adversaries failed to show results while in office.

This is a second chance for the pro-Western parties in Ukraine to deal with the deep-seated malaise of the economy, the pervasive corruption, and all the other ills that afflict this troubled land. They had better do better than last time–and all the while fending off what are sure to be determined attempts at sabotage emanating from Moscow.

What to do about Ukraine ? Michael Totten has some ideas.

Ukraine's Day Infamy

He has several suggestions about other sources. I pretty much rely on him as he has been all over and has a good eye.

I spent a week in Ukraine a few years back when I traveled by car from the Polish border through Lviv to Kiev and down to Odessa and Yalta. I wrote about it at length in my book, Where the West Ends. So I feel obligated to write about it now that the capital is on fire.

Kiev is a magnificent city, and it pains me to see it like this, but I should not be surprised. Almost every country I’ve ever written about is either in hell, has only recently recovered from hell, or is on its way to hell. I hoped when I visited Ukraine that it was on its way out, but I did not have a good feeling about it, as you’ll recall if you read my book.

From his recommended source,

First let’s consider the bad reasons for a breakup—Ukraine’s diversity in general and the regional, ethnic, confessional, and cultural divisions between its “West” and “East” in particular. A good place to start is a recent article by Orlando Figes, professor of history at Birkbeck College, University of London, “Is There One Ukraine?” Figes, who should know better coming from the UK, writes about Ukraine’s divisions as if they were unique and as if diversity alone justified or led to breakup. He’s wrong on both counts. Ukraine’s diversity is pretty much the norm for all stable states everywhere.

He has some excellent points. One is about The Party of Regions.

What is unusual about contemporary Ukraine is that it’s exploited by a criminal gangster regime—Yanukovych’s— in cahoots with another criminal gangster regime—Putin’s. Many countries have the misfortune of being misruled by homegrown camarillas. Many countries have the misfortune of being dominated by predator states. Ukraine has the double misfortune of being misruled at home and “mis-dominated” abroad.

The president, who has now fled Kiev, is described a a “criminal madman.”

Remove the southeast and Ukraine’s treasury experiences an immediate boon; its demographics, energy consumption, and health improve; and its politics automatically become more democratic and less corrupt.

Although lopping off the Donbas would benefit the rest of Ukraine, Yanukovych’s mafia regime desperately needs Ukraine to be whole. If Luhansk and Donetsk were to split away, their rust-belt economy would collapse without Kyiv’s financial support and the Regionnaires, trapped in their polluted bailiwick, would have nothing to steal. And what would Yanukovych’s multibillionaire pal, Rinat Akhmetov, do without easy access to Ukraine’s resources?

There appears to be no good solution to Ukraine, including partition although that may be what will happen.

The moral for the democrats is simple. If and when they return to power, the democrats should call the Regionnaires’ bluff. Next time the Regionnaires threaten to leave, the democrats should point to the door, and say, “Don’t call us. We’ll call you.”

The same might apply to Quebec.

The Wall Street Journal had a good piece yesterday comparing Ukraine with Georgia 5 years ago.

The West dragged its feet on financial sanctions against the Yanukovych circle, but on Thursday last week a move by the EU—after 77 protesters were shot dead in broad daylight—helped bring down the Ukrainian leader. Fearing for their assets and visas, his cronies quickly dropped him.

and: At every opportunity, Mr. Saakashvili says that Ukraine’s best defense against Russian pressure is a successful move to European-style rule. This is what the revolution was about. “Change must come fast,” he says. “I’m worried about Crimea, but I’m more worried about Kiev. If Kiev goes into protracted political crisis, then everything else will explode.”

If Ukraine starts to go after its oil and gas reserves with fracking, a lot may change.