sâmbătă, 9 august 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Scathing Anti-West Editorial in German Handelsblatt; Reader Emails on "Small Price to Pay"

Posted: 09 Aug 2014 01:10 PM PDT

Yesterday, a reader told me about a must-read article in the German financial newspaper Handelsblatt.

Having no details other than it was a"must read" I failed to locate the article after attempting translations of the Handelsblatt home page.

Zero Hedge did find the article, entitled "West on the Wrong Path".

It turns out, there is a version of the editorial in German, English, and Russian.

Citing parallels to WWI, author Gabor Steingart, publisher of Handelsblatt, Germany's leading financial newspaper, blasts the Western response (especially US and German) response to the situation in Ukraine.

"Small Price to Pay" vs. "West on the Wrong Path"
 
Interestingly, Steingart's article is nearly identical in tone and message to my article "Small Price to Pay".

Steingart kicks off with "Every war is accompanied by a kind of mental mobilization: war fever. Even smart people are not immune to controlled bouts of this fever."

Steingart is precisely correct. The War in Vietnam, and the War in Iraq are cases in point. Both were based on lies, distortions, gross underplay of risks, and gross overplay of concerns.

Consider the ridiculous Vietnam "Domino Theory" and the trump-up of WOMD concern of Bush  when it turns out Hussein did not have any.

History Repeating?

Steingart continues ...
We interrupt our own train of thought: "History is not repeating itself!" But can we be so sure about that these days? In view of the war events in the Crimean and eastern Ukraine, the heads of states and governments of the West suddenly have no more questions and all the answers. The US Congress is openly discussing arming Ukraine. The former security advisor Zbigniew Brzezinski recommends arming the citizens there for house-to-house and street combat. The German Chancellor, as it is her habit, is much less clear but no less ominous: "We are ready to take severe measures."

The Tagesspiegel: "Enough talk!" The FAZ: "Show strength". The Süddeutsche Zeitung: "Now or never." The Spiegel calls for an "End to cowardice": "Putin's web of lies, propaganda, and deception has been exposed. The wreckage of MH 17 is also the result of a crashed diplomacy."
Many Questions, Few Answers

I raised a number of questions. Steingart did the same.
Did it all start with the Russian invasion of the Crimean or did the West first promote the destabilization of the Ukraine? Does Russia want to expand into the West or NATO into the East? Or did maybe two world-powers meet at the same door in the middle of the night, driven by very similar intentions towards a defenseless third that now pays for the resulting quagmire with the first phases of a civil war?
Hitler Card

I noted a close friend played the "Hitler Card". Steingart discusses the issue as well.
When Hillary Clinton compares Putin with Hitler, she does so only to appeal to the Republican vote, i.e. people who do not own a passport. For many of them, Hitler is the only foreigner they know, which is why Adolf Putin is a very welcome fictitious campaign effigy. In this respect, Clinton and Obama have a realistic goal: to appeal to the people, to win elections, to win another Democratic presidency.

Angela Merkel can hardly claim these mitigating circumstances for herself. Geography forces every German Chancellor to be a bit more serious.
Self-Inflicted Punishment

Free trade by definition, is a good thing. Both sides benefit or they would not enter into the trade. It stands to reason, sanctions must be a bad thing. Both sides get hurt.

By the way what did the US achieve with sanctions on Iran other than raise the prices of gasoline for everyone and make enemies with the Iranian people?

Steingart elegantly states the case.
Even the idea that economic pressure and political isolation would bring Russia to its knees was not really thought all the way through. Even if we could succeed: what good would Russia be on its knees? How can you want to live together in the European house with a humiliated people whose elected leadership is treated like a pariah and whose citizens you might have to support in the coming winter.
My friend says sanctions are a "small price to pay".

For whom? For the farmer who is stuck with rotting produce he cannot sell? For the Russian citizen who has to suffer with higher prices? 

No, I'll tell you who pays the small price: It's the warmonger who benefits from artificial demand for guns and ammo.

Everyone else pays a huge price.

Legal vs. Reality
Just consider what Willy Brandt had to listen to when his fate as mayor of Berlin placed him in the shadow of the wall. What sanctions and punishments were suggested to him. But he decided to forgo this festival of outrage. He never turned the screw of retribution.

When he was awarded the Noble Prize for Peace he shed light on what went on around him in the hectic days when the wall was built: "There is still another aspect – that of impotence disguised by verbalism: taking a stand on legal positions which cannot become a reality and planning counter-measures for contingencies that always differ from the one at hand. At critical times we were left to our own devices; the verbalists had nothing to offer."

With the advice from Egon Bahr, he [Brandt] accepted the new situation, knowing that no amount of outrage from the rest of the world would bring this wall down again for a while. He even ordered the West-Berlin police to use batons and water cannons against demonstrators at the wall in order not to slip from the catastrophe of division into the much greater catastrophe of war. He strove for the paradox which Bahr put as follows later: "We acknowledged the Status Quo in order to change it."
My friend lives in the contradictory world where international legalities must be enforced to preserve peace, even if enforcement means war.

History clearly shows the folly of such beliefs.

Case for Mediation Without the US

Several times recently I called for all involved to get together and talk. By "all involved" I meant the EU, Russia, Ukraine, and the rebels.

The US has no legitimate role in this mess, although it helped start it.

Europe can come to a reasonable solution far easier without the US than with it.

Steingart also wants talk, not war, correctly calling the status quo of sanctions and retaliations a "dead end".

Dead End Policies
It is not too late for the duo Merkel/Steinmeier to use the concepts and ideas of this time. It does not make sense to just follow the strategically idea-less Obama. Everyone can see how he and Putin are driving like in a dream directly towards a sign which reads: Dead End.

"The test for politics is not how something starts but how it ends", so Henry Kissinger, also a Peace Nobel Prize winner. After the occupation of the Crimean by Russia he stated: we should want reconciliation, not dominance. Demonizing Putin is not a policy. It is an alibi for the lack thereof.

At the moment (and for a long time before that) America is doing the opposite. All conflicts are escalated. The attack of a terror group named Al Qaida is turned into a global campaign against Islam. Iraq is bombed using dubious justifications. Then the US Air Force flies on to Afghanistan and Pakistan. The relationship to the Islamic world can safely be considered damaged.

If the West had judged the then US government which marched into Iraq without a resolution by the UN and without proof of the existence of "WMDs" by the same standards as today Putin, then George W. Bush would have immediately been banned from entering the EU. The foreign investments of Warren Buffett should have been frozen, the export of vehicles of the brands GM, Ford, and Chrysler banned.

The American tendency to verbal and then also military escalation, the isolation, demonization, and attacking of enemies has not proven effective. The last successful major military action the US conducted was the Normandy landing. Everything else – Korea, Vietnam, Iraq, and Afghanistan – was a clear failure. Moving NATO units towards the Polish border and thinking about arming Ukraine is a continuation of a lack of diplomacy by the military means.

This policy of running your head against the wall – and doing so exactly where the wall is the thickest – just gives you a head ache and not much else. And this considering that the wall has a huge door in the relationship of Europe to Russia. And the key to this door is labeled "reconciliation of interests".

Brandt and Bahr have never reached for the tool of economic sanctions. They knew why: there are no recorded cases in which countries under sanctions apologized for their behavior and were obedient ever after. On the contrary: collective movements start in support of the sanctioned, as is the case today in Russia. The country was hardly ever more unified behind their president than now. This could almost lead you to think that the rabble-rousers of the West are on the payroll of the Russian secret service.
Reader Email on "Small Price to Pay"

I received many emails from readers with all kinds of comments.

Reader "James" writes ...
Hello Mish

Your blog "Small Price to Pay" shows how too big to fail is essentially an ego feeding exercise, on itself, like Goering in prison or any other tyrant. What keeps a tyrant in power are their mercenaries who in turn keep the minions in box cars heading for death in service of the tyrants eternal bliss.

Friends and family, and farmers and traders, all go along with "small price" without ever questioning the overall cost of paying "small prices".

I re-read your fine post and marvel at the number of questions raised and wonder if all have a common answer? Humans apparently have to kill other humans just to feel comfortable being themselves. The thought of exposing their own empty and blank self is just to big a price to pay.

In the name of Christianity and democracy, we kill those who get in the way of what our leaders think is the greater good for all of mankind.

Look at the total destruction of lives and property in Iraq and Vietnam. Supposedly, it was a "small price to pay". For Whom?
Questions of the Day

Anyone recall the estimated cost of the second Iraqi war?

Paul Wolfowitz, assistant to Defense Secretary Donald Rumsfeld said the "war would largely pay for itself".

Inquiring minds may be interested in a US Department of Defense Transcript of Defense Secretary Donald Rumsfeld in January of 2003.
Q: Mr. Secretary, on Iraq, how much money do you think the Department of Defense would need to pay for a war with Iraq?

Rumsfeld: Well, the Office of Management and Budget, has come up come up with a number that's something under $50 billion for the cost. How much of that would be the U.S. burden, and how much would be other countries, is an open question.
$50 billion was surely a "small price to pay" was it not?

Two trillion dollars later, with Isis now in control of much of Iraq, and with the 4th consecutive president taking military action in Iraq, I believe you have the answer.

Negotiation or Escalation?

Will the pragmatists win the day? Will it be negotiation, widening trade war, or escalation into a bigger military war?

History suggests the "Hitler Card" will get played so many times in so many places, and the "small price" downplayed so much that escalation easily wins out over common sense.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.
Publicat de 1 la 23:02

Niciun comentariu:

Trimiteți un comentariu

Abonați-vă la: Postare comentarii (Atom)