Analysis 12-06-2022

ANALYSIS

Economic Sanctions: 215 years
of Failed American Diplomatic Efforts

 

“History repeats itself, but in such cunning disguise that we never detect the resemblance until the damage is done.” Sidney J. Harris

215 years ago, this month (December) the fledgling United States instituted a foreign policy that failed then, continued to fail during several confects, and promises the same failures as nations debate the price that Russia should be allowed to sell its oil.

Someone in the State Department should take a course in American Diplomatic History and read up on the 1807 Embargo Act.

Ever since the beginning of the American Revolution, the Americans believed that not buying goods from Britain would pressure them into granting independence.  For ten years, the Nonimportation Agreements passed by several groups including the Continental Congress in 1774 created non import and non-export committees.

As we now know, the American Revolution was won on the battlefield, not by economic sanctions.  But the idea that commercial retaliation would work had ingrained itself into American Foreign Policy.  In 1806, during the Napoleonic Wars, the US Congress passed an act that limited the importation of some British goods. The act was delayed for a year to negotiate with the British.

Instead of cooling passions, Congress passed the Embargo Act in December 1807.  While it punished Great Britain by restricting British imports, it caused more harm to American farmers, merchants that traded internationally, and American shipping.  British and French merchants that had large inventories of American cotton just raised prices.

American efforts at economic sanctions would eventually lead to the War of 1812.

American economic sanctions have reached heights of ridiculousness.  While the US And Germany were at war, they both needed Switzerland – Germany for banking and the US for precision clockworks for bomb fuses.

While the Axis powers allowed smuggling of clockworks to the allies, the Bank of International Settlements, under American BIS president Thomas McKittrick, still handled foreign exchange transactions for the German Reichsbank.  These transactions were necessary for Germany to import tungsten from Spain and Portugal.

While assisting German financial transactions, McKittrick was also passing information on to American intelligence.

At the other end of the tungsten pipeline was a British Naval Intelligence officer, who monitored those tungsten movements to Germany – while gambling at a Lisbon casino with the senior German intelligence officer for Portugal.  His name was Ian Fleming the future creator of British spy James Bond.

However, modern American economic sanctions haven’t gone as smoothly as a James bond caper.  For four decades, Iran has smuggled its oil out of the country in exchange for gold, nuclear components, and military items.

American economic sanctions against Russia for its invasion of Ukraine are proving no better.  While causing inflation and threatening a winter without heat in Europe, it  is weakening relations with several American allies that need oil and can’t afford it.

Meanwhile, Biden is pushing “Green Subsidies” that help American industries, while punishing European industries at this economically sensitive time.  A senior European official told Politico, “If you look at it soberly, the country that is profiting from this war, is the US because they are selling more gas and at higher prices, and because they are selling more weapons.”

Talks have broken down amongst European diplomats on the cap on oil prices coming from Russia.  Poland has rejected a price of $65 a barrel as too “soft,” while Greece insists it will not consider any price less than $70.

The debate has been going on for a while.  The EU has proposed a cap on Russian oil of $65 – $70. Poland wants a cap of $20 and say that $30 is too high.  The Baltic nations agree.  But, Cyprus, Greece, and Malta say $70 is too low.

The market price for Russian crude is running at about $70, which means that any oil cap will mean nothing.  In addition, the US is close to issuing Chevron a license to pump oil in Venezuela, which could help ease oil prices.

Poland notes that the cost for producing a barrel of Russian crude oil is just $20, so any price higher than that rewards Russia.  Cyprus, Greece, and Malta have large shipping industries and fear that too high a price cap will destroy the shipping industry.  If the cap is too low, they want compensation.

For all this talk, it must be remembered that the nations must agree unanimously.

And, for all this talk, even the diplomats can’t figure out how to prevent cheating.

Ironically, a book was written in 1776 that explained economics and how it is harder to employ economic sanctions than one thinks.  It is called “The Wealth of Nations” and it was written by Adam Smith.  It was the first modern study of economics and while it was well received in Scotland and Britain, it must have been embargoed because it would have explained the fallacy of American economic sanctions to American diplomats.

Whenever there are economic sanctions imposed, creative minds find a way around them.  Officially full oil tankers could be partially full.  The invoice would be for the full tanker, but the amount delivered would be less – giving the Russians a higher price than allowed.

Of course, that would rely on some collusion by companies and nations, but that happens now.  Malaysia, who cooperates with oil producers like Venezuela and Iran, seems to be exporting more oil than it produces.  Undoubtedly the extra oil comes from other sources.

Greece also appears to be cheating as its tankers carry our ship-to-ship oil transfers.

OPEC could also benefit if Russia cuts back production.

All of this must be solved by December 5th as that is when the oil embargo takes effect if there is no solution.

Meanwhile, these sanctions are hurting American relations with some of its European allies.  America is pushing the oil cap proposal, which isn’t hurting the American consumer as much because energy prices are much lower in the US than Europe.  European nations would like to see more American fuel exports – at the lower American prices.

Oil caps are also threatening the European energy markets, which could cause long term damage to the free market.  Earlier this week, the European Commission issued a statement declaring a “safety price ceiling” for gas prices of $280 dollars per megawatt hour.

This move is designed to act as an “instrument to automatically intervene on the gas markets in case of extreme gas price hikes.”

Energy traders are more sanguine.  The European Federation Traders said, “Even a short intervention would have severe, unintended and irreversible consequences in harming market confidence that the value of gas is known and transparent.”

Ironically, the one time the US didn’t employ economic sanctions, they benefited.

At the beginning of the American Civil War, the Confederacy decided to employ economic sanctions against France and England to persuade them to recognize the rebelling states.  Since the South was the biggest supplier of cotton to the textile industries of France and England, they assumed that economic sanctions would put economic pressure on the two countries.

However, 1860 saw a bumper crop of cotton that filled the warehouses in Europe.  Merchants in England and France merely raised prices, which increased their profits.

Meanwhile, textile manufacturers began looking for other sources of cotton and discovered Egypt.  While the Confederacy was forced to burn surplus stockpiles of cotton, its former clients were buying from Egypt.

American diplomats really need to study their own diplomatic history.

 

Analysis 11-30-2022

ANALYSIS

Deciphering the 2022 Midterm Elections

 

After a week of counting votes, it appears that there are some solid results.

However, like the quote from Shakespeare’s Macbeth, there was “sound and fury signifying nothing.”

Or as close to nothing as possible.

Nationally, the Republicans and Democrats switched control of Congress.  The Republicans have narrow control of the House of Representatives, while the Democrats have narrow control of the Senate.

Few things changed at the state level either.  Republicans control 56 chambers of state legislatures, while Democrats control 39 chambers.  Democrats lost 16 state senate seats, while Republicans gained 24.

There was little to show a general trend.  In Arizona, which took over a week to release results, the Democrats won the highly visible governor’s race and Senate race.  However, Republicans retained the state senate and legislature despite the amount spent by Democrats.  Three Democratic House of Representatives seats were flipped to Republican so the Arizona congressional delegation going to Washington is now controlled by the GOP.

The same trend was seen nationwide, with voters seemingly splitting their votes.

However, the flipping of the House and Senate will have an impact.  The narrow Senate Democratic majority will allow Biden to nominate judges without trouble or relying on the VP’s tie breaking vote.  And, if Biden dies during his term, it will be easier for Harris to nominate and receive confirmation of her choice for Vice President.

Meanwhile, the Republican controlled House will have some unique powers.  Since all budget and revenue bills must originate from the House, Republicans can restrict funding for agencies that have abused their powers like the FBI.  They also get to pick the Speaker of the House, who is second in line for the presidency.

While there is little Democratic leadership change in the Senate, Senator Schumer (D. NY) is expected to remain Senate Majority Leader.  However, the Democratic minority leadership in the House of Representatives is expected to change dramatically.

Speaker of the House Nancy Pelosi and House Majority Leader Steny Hoyer have announced that they will step aside to allow younger leadership to head the new Democratic minority.  The expected Democratic leadership is expected to be Hakeem Jeffries, Katherine Clark, and Pete Aguilar.  The new Democratic leader, Jeffries is a member of the Congressional Black Caucus and the Congressional Progressive Caucus – which indicates a move to the left by congressional Democrats.

However, a more progressive Democratic leadership will count for little with a Republican majority.

There may very well be a fight over who the new Speaker of the House will be, since the Republican majority is so slim and some Republican members have announced they will not vote for Representative Kevin McCarthy.

In an attempt to limit the power of a McCarthy speakership, the Republican members have voted for new rules that limit the speaker’s power, which increased dramatically during Pelosi” speakership.  It allows a majority of the GOP caucus to remove the speaker, instead of giving that power solely to the House Majority Leader.

Since the Republican majority is so slim, the new rule says the Republican Caucus must agree to a motion to remove the Speaker, which prevents the Democrats from joining a few dissident Republicans to elect a different Speaker.

Other rules that will come up before the Republican Caucus will strip more of the powers garnered by the Speaker under Pelosi.

Given the sharing of power, don’t expect any major and controversial legislative bills to pass in the next two years.  In some cases, Biden may try to rule through executive action, although the Supreme court has ruled that these changes in regulations are a violation of Congress’ constitutional power to pass laws.

This leads us to the 2024 election.  While Democrats had the advantage in 2020 with fewer Democratic senators up for reelection, 2024 has changed the mathematics.  Only 10 Republican seats are up in 2024, while 21 Democratic seats are up in 2024.  In addition, two independent senators that caucus with the Democrats are up for reelection.

One of the independent seats up in 2024 is held by Senator Bernie Sanders, who is a potential presidential candidate for the Democrats.  If he decides not to run for reelection to pursue the presidency, that makes the open seat more competitive.  Democratic leadership may try to dissuade him for another presidential run to protect the seat and lessen a fight for the presidential nomination.

While the Sander’s seat is far down on the list of presidential issues, the top of the list belongs to Trump and DeSantis.

Although Trump announced that he was running for reelection as president this week, the chemistry has changed dramatically.  DeSantis’ dramatic victory in Florida on Election Day has many Republicans looking at his potential as a presidential candidate.

In what must worry Trump, his popularity has dropped like a stone, while DeSantis has gained in polls of Republican voters.

An Economist poll taken this week showed that 51% of Republicans prefer DeSantis, while 33% preferred Trump.  Both Trump and DeSantis are viewed favorably by Republicans.

A primary poll in Texas showed Trump dropping 14% between October 23rd and November 13th.  Meanwhile DeSantis gained 14% and is now at 43%.

The runner up is former VP Pence at 5%.

Of course, it is the primary elections in each state which will have the greatest impact and Trump doesn’t look any better at the state level.

Iowa, which has the first in the nation caucus, has Desantis at 48% and Trump at 37%.  Trump has lost 15% since August 13th, while DeSantis has gained 11%.

New Hampshire, which holds the first primary has DeSantis at 56%, while Trump is at 30%.  DeSantis has gained 7%, while Trump has lost 8%.

DeSantis can count on the delegate rich Florida.  DeSantis gets 56%, while Trump gets 30%.

In what may be a harbinger of the December 6th runoff election for Senate, Trump gets 35% versus DeSantis’ 55%.  Since Republican senate candidate Walker is a good friend of Trump, it appears that Trump may not have the popularity in Georgia to help Walker win.

It’s early in the 2024 GOP presidential race and there are no popular candidates outside Trump and DeSantis.  Even Texas favorite sons Senator Cruz and Governor Abbot couldn’t break 4%   in their home state.

It appears that Republican voters are willing to move away from Trump if the alternative appeals to them and the candidate has a chance to beat the 2024 Democratic nominee.

However, two years are a long time in politics.  Right now, DeSantis is the Trump alternative, but we don’t know who will inspire Republican enthusiasm a few months from now.

Since Trump has the most enthusiastic base now, as more candidates jump into the race, expect DeSantis’ polling numbers to sink as the “lukewarm to Trump” base is split between several candidates.

Currently DeSantis is ignoring Trump and focusing on running Florida.  That makes sense as there are two years until the presidential election.  That freezes other presidential contenders as they wait to see how DeSantis moves in the polls.  Will he stay in competition with Trump, or will he fade?  If he fades, we can expect other Republicans to join the race for the GOP presidential nomination.

Unlike Shakespeare’s quote from Macbeth, the 2024 presidential race will be “Sound and Fury,” signifying something.

 

 

Analysis 11-21-2022

ANALYSIS

The Red Ripple Depleted

 

Young people who want to have a career in politics usually take courses in “Political Science” in college.  But these midterm elections showed that there is no “Science” in political science.  Rather it appears to be more of a dark art that no one understands.

Everything for a Red Tide of Republican victories was there.  75% of Americans think the country is on the wrong track.  The top issues were inflation, crime, and the economy.  Biden is extremely unpopular.  Polls showed Republican strength in typically Democratic areas like New York, which sent Democrats like Obama, the First Lady, and the president to shore up their support there.

But, everyone was wrong.  The Democrats underestimated their strength and the Republicans overestimated theirs.

However, it wasn’t as simple as that.  While most voters think that Biden is suffering from cognitive problems, they voted for the party, not against the unpopular president. However, the Cook Political Report noted that Republicans had won six million more votes than Democrats in House races.

The battleground state of Pennsylvania proves how hard it is to develop a model for this midterm election.  While senate candidate Fetterman won Bucks County by seven ponts, the Republican congressman Brian Fitzpatrick beat the Democrat Ashley Ehasz by ten points.

Four counties that voted for Trump (Berks, Cumberland, Luzerne, and Beaver) voted Democrat in the governor’s race, but backed Republican Oz in the senate race.

In many ways, the election was a vote for the status quo.  Incumbents tended to win, even in the face of serious challenges.  But, Mike Lawler defeated Representative Sean Maloney the Democratic Congressional Campaign Committee Chairman – an unheard accomplishment

The GOP won the House, but the new Republican majority in the House of Representatives is so narrow that it will be hard to pass any Republican initiatives, even if they could pass it through the Senate.

So, how did the various parts of the mid-term elections go?

Senate

Republicans had hopes of defeating some Democratic senators and gaining a narrow majority in the Senate.  However, the path to a Republican Senate seems difficult, but not impossible at this time.  The Democrats flipped a Republican Senate seat in Pennsylvania.  Now Republican hopes to gain control of the Senate lie in Nevada, Georgia, and Arizona.

Senator Kelly of Arizona seems to have a comfortable lead of about 5%, which he will need as the votes remaining to be counted are Republican rich ballots that were turned in on election day or were mailed in right before election day.

In Nevada, Republican candidate Laxalt is ahead of Masto, but there are still a lot of Democrat rich votes from the Las Vegas area to be counted.

Georgia will need to have a runoff on December 6 since neither the Republican nor Democrat won 50% of the vote.  Since the Libertarian candidate won enough votes to force the runoff and Libertarians tend to be closer to Republicans philosophically, this may give Republican Walker a slight edge.

However, remember that a majority in the Senate may not be enough.  Republican Senator Romney didn’t endorse his fellow Republican Nevada senator Mike Lee and backed a Democrat turned independent Evan McMulllin.  He is seen as a loose wheel by his Republican colleagues and could turn around and vote Democrat on some issues.

On the other side of the aisle, there are Senators Sinema of Arizona and Manchin of West Virginia.  Both have disagreed with the Democratic majority in the past two years and can be expected to make passage of Democratic budget bills difficult.

Then, there is Vice President Harris, who can cast a tie breaking vote in the Senate.

No matter who wins the majority in the Senate, they will have a hard time passing meaningful legislation.

House of Representatives

The Republicans will capture a narrow majority in the House.
That means a change in Speaker of the House, who is second in line to become president if something happens to the president – more likely with someone like Biden in the White House.

The new Speaker, Kevin McCarthy, who is the current minority leader, and not a favorite amongst more conservative Republicans.

A narrow Republican majority in the House will mean that it’s up to Republican House leaders to “whip” Republican congressmen in line to pass legislation.  This was a specialty of current House Speaker Pelosi, and it remains to be seen if the GOP can develop the same skills.

Since budget bills must originate in the House, this means that the GOP will have more influence in funding during the next two years.

Biden

The better than average Democratic results in the election seems to have improved Biden’s chance for a second term.  The day after the election Biden held a press conference and made it clear that he intends to stay on course.

“We’re just getting started,” Biden said.  “I’m not going to change direction.”

When asked about running for reelection in 2024, the president indicated that he intends to be on the ballot, but the final decision hasn’t been made yet.

One item on the Republican agenda will be an investigation into President Biden and his son, Hunter Biden.  However, the elder Biden argued that it was time to move on and unify.  “I can’t control what they’re going to do.”

Trump

The midterm elections weren’t kind to President Trump.  When polls were showing a major Republican win on election day, Trump hinted at a “big announcement.”

With the mediocre GOP results, Trump has put off that “big announcement.”

While Trump’s endorsement worked well in the primaries, they didn’t have the same magic in the general election.  Endorsed incumbents won but endorsed challengers like Oz didn’t.

The biggest problem coming out of the election was the reelection of Republican governor DeSantis of Florida.  DeSantis is seen by many as a solid conservative without the brash “mouth” of Trump

22 years ago, Florida was the key to victory in the 2000 presidential election.  George W. Bush won Florida and the presidency by about 300 votes.  Since then, Florida has been considered a battleground state.

On Election Day, DeSantis won the state by about 60%.  He defeated a former governor Charlie Crist, who was a former Republican.  In the process, he won Miami-Dade County by 11% – which is usually a Democratic stronghold.  Biden had won Miami-Dade County by 7% two years ago.

Any Republican governor that can bring in Democratic voters like that is a strong candidate to win the nomination in 2024.

In the end, Republicans will want to back a candidate that can win.  DeSantis has shown that he can win, even in traditional Democratic areas.

The Trump influence may be over in the GOP.

The Next Two Years

Don’t expect any major movement on the legislative front.  As of this time, it looks like the Democrats will have marginal control of the Senate, while the Republicans have marginal control of the House.  Budgets and debt ceilings will pass because they are required.  Compromises will be made to get enough votes to pass.

Meantime, President Biden will continue in his cognitive decline.  His handlers will want him to stay in power, but the party will start looking elsewhere.

Beto O’Rourke of Texas can be counted out.  He has lost senate, governor, and presidential elections, while spending over $160 million in campaign contributions.  Stacey Abrams of Georgia should be considered out of the running after losing two elections for governor of Georgia.

Governor Gavin Newsom was reelected as governor of California, and as the Democratic governor of the nation’s largest state is a possibility, even though he has said no in the past.  However, he may jump into the race if Biden is out and there is a dearth of presidential candidates.

Transportation Secretary Pete Buttigieg remains a possibility.  However, his time as Transportation Secretary has been lackluster.

Vice President Kamala Harris.  As a Vice President, she has done little, especially as the person responsible for the Border.  Polls show her as the one with the inside track, but much of that is from name recognition.  Polls show that her support isn’t strong.

Governor Gretchen Whitmer is from Michigan and has just won reelection.   She comes from the Rust Belt, the former center of American industrial strength.  She might have the ability to reach out to the Midwest as most Democrats can’t.

Senator Bernie Sanders is 81 but shows more strength and mental capability than Biden.  He remains the favorite of the far progressive wing of the Democratic party.

There are others like Senator Elizabeth Warren and Senator Amy Klobuchar, but their Senate terms are up in 2024 and they might prefer the near certainty of winning reelection than the uncertainty of a presidential campaign.

We have mentioned Trump and DeSantis as presidential possibilities, but there is another potential candidate who is governor and who has won in a state than has gone Democratic.  His name is Virginia Governor Youngkin.  He will finish his first year in office in January and he has a majority of voters saying he is doing a good job.

What happens in the Republican race for the presidential nomination will depend on Trump.  To beat DeSantis, he will have to show that he can win again and bring Democrats and Independents back.

Trump has strong points.  He is a non-stop campaigner.  He has money and his own jet aircraft (which has just been renovated).  His comments about the Washington elite that controls the nation resonates with voters.

He only has one real weakness – his mouth.  He alienates potential allies and can be mercurial.

Therefore, DeSantis looks good to many Republicans.  He is Trump without the rough edges.

No matter what, the next two years will be interesting.  Just don’t expect them to follow the clear-cut rules of political science.

 

Analysis 11-07-2022

ANALYSIS

Who is going to win the Senate in 2022?

 

It’s pretty much a given that the US House of Representatives will be won by the Republicans in November.  However, it’s the race for control of the US Senate that has everyone’s attention.

Currently, the US Senate is tied with both Republicans and Democrats holding 50 seats each.  Vice President Harris votes in case of a tie, which gives the Democrats the edge.

The Democrats also have an edge as only 14 Democrat seats are up for election, while 21 Republican seats are up for election.

Does that mean the Democrats are going to keep control of the Senate?

Probably not.  But there are no guarantees.

Although nothing is sure in politics, one nearly solid rule is that the party in power in the White House will lose in the midterm elections.

That, and the fact that the polls are showing that the Republicans are taking the lead in many races in these last few days, indicates that the Senate probably will go Republican in a little over a week.

It’s not just the Republicans that believe that.  Senate Majority leader Chuck Schumer (D, NY) was caught on a hot mike on Thursday telling Biden that chances are slim for Democrats in the Senate.

Why is control of the Senate so important?  It is the Senate that confirms many of the decision makers in government like judges, cabinet members, military officers, and other senior members of the administration.  If the Republicans control the Senate, many people requiring Senate confirmation might not be confirmed because their politics might not be liked by Republicans.

The Senate also has an important role should Biden die or resigns because he is unable to continue as president.  Then the 25th Amendment of the US Constitution handles the transition of power.  If Biden dies or resigns, VP Harris becomes president, and it is her job to nominate a new Vice President.

Picking a new Vice President while the Senate is under Republican control would be harder than if the Senate were under Democratic control.

Right now, the tide is going against the Democrats.  As proof, just watch where the money is going.

Florida is considered a swing state, but the Republican senator Rubio is ahead, and the Democrats are conceding the state and moving advertising money to Washington State, which is usually considered a solid Democrat Senate seat.  They are also sending money to Colorado, Georgia, Nevada, and Arizona – all previously considered leaning Democratic

Another sign of Democratic problems is where the President and Vice President are visiting in the last few days before the election.  Traditionally, the President and Vice President go to swing states in the final days before the election.  However, the VP is going to traditional Democratic areas to solidify support instead of going to swing states.  Biden or the First lady is going to Democratic New York, New Hampshire, Pennsylvania, and New Mexico in order to turn out the Democratic base.

 

Senate seats to watch

Pennsylvania.  Many election models are now giving the Republicans the edge in capturing the Senate.  If that happens, the reason will be the collapse of the Fetterman campaign in Pennsylvania.

Republican Senator Toomey was retiring so it was seen as a possible pickup by the Democrats.

The ticket also favored the Democrats.  The Democratic candidate was John Fetterman, who is the current Lieutenant governor of the State and won that position with 58% of the vote.  The Republican candidate was Mehmet Oz, a celebrity doctor without any political experience.  Oz did have former President Trump’s support.

The chemistry of the election changed in May, when Fetterman had a stroke that kept him off the campaign trail for weeks.  Instead of withdrawing from the campaign and allowing the Democratic Party to pick a new candidate, Fetterman remained in the race.

It soon became obvious that Fetterman was still recovering from the stroke, including an inability sometimes to understand people speaking to him.

The Fetterman – OZ debate showed Fetterman’s stroke weaknesses and post-debate polling showed a strong movement towards OZ.  The only question is if there were enough early ballots for Fetterman to offset the current OZ advantage.

 

Arizona

Those who though that Arizona was now a Democratic state with Biden’s close win there in 2020 appear to be wrong.  The Republican candidate for governor is Kari Lake is ahead by double digits and is frequently described as a “female Donald Trump.”

This makes freshman Democratic Senator Mark Kelly very vulnerable.  Although he was a Navy pilot and a Space Shuttle pilot, he lacks luster.  He is also anti-gun in a state that ranks first in firearm enthusiam.

Kelly is running against Blake Masters, who was a venture capitalist who is supported by billionaire Thiel.  Masters is gaining ground less from his own campaign and more from the rising Republican tide.

Despite Thiel’s support of Masters, Kelly is outspending Masters by a 10 – 1 margin.  Kelly is receiving last minute money from the Democrats concerned about losing the Arizona seat

This should be an easy win for Kelley, but currently the polls show he is statistically tied with Masters.

 

Georgia

This is a traditional Republican state that went for Biden in 2020.  The Senate seat is currently held by Democratic Senator Warnock.  Warnock is the senior pastor at Ebenezer Baptist Church, where Dr. Martin Luther King once served as pastor.

In a state where college football is a passion, Republican candidate Herschel Walker has positive name recognition, despite facing a controversy about his position on abortion rights. He was a former star running back for the University of Georgia, a Hall of Fame football player, and represented the US in the 1992 Olympics.  In addition to owning a food company, Walker is a friend of Trump, who has endorsed him, been a major donor, and has campaigned for Walker frequently in the last few months.

Probably the most telling statement on how the Georgia Senate race is going is the “hot mike” statement by Senator Schumer to Biden.  He told the President, “The state where we are going down is Georgia.”

 

Nevada

Nevada is normally a Democratic state thanks to Las Vegas.  The rest of the state is Rural Republican territory.  However, migration from other states in the last few years, especially California, has narrowed the margins between Republicans and Democrats.  Unaffiliated voters are the largest voter group in Nevada now.

Biden won Nevada by 2.4%

While the Nevada economy is in terrible shape, Democratic Senator Cortez Masto has focused on abortion rights.

Republican candidate Laxalt is focusing his campaign on inflation, which is hurting the working-class voters.

The Democrats should retain this seat but could lose it in a Republican tidal wave.

 

Ohio

It was once said that “As Ohio goes, so goes the nation.”   Today, however, Ohio is trending Republican as the large cities that were once the bedrock of the Ohio Democratic Party are losing voters.

The seat is currently held by Republican Senator Portman, who is not running for reelection.

Democratic candidate Ryan is currently a Democratic representative from Ohio.  His focus is on blue collar issues and restoring the Ohio industrial base.

The Republican candidate is J.D. Vance, who was a Marine from 2003 to 2007.  He is a former venture capitalist and has been endorsed by Trump.

Recently, Ohio has voted Republican by 5 points or more.  However, if economic issues can help Democrats, this may be the state to count on.

If these states are going to help the Democrats, the polls need to reverse course soon.  A USA Today poll showed Republicans with a 4-point lead over Democrats in a generic ballot.  This figure has also been confirmed by a New York Times poll.

Inflation is the key concern and voters see Republicans as best to handle inflation.

Although things can turn around, the “smart/ bet” money is on the GOP winning the Senate next week.

Analysis 11-02-2022

ANALYSIS

Assessing America’s Military Strength

 

When Biden administration released its National Security Strategy, it was noted by some critics that the paper was heavy in political boilerplate and light in actual numbers.

This week, we have the numbers that allow us to judge the National Security Strategy.  They were released this week by the Washington think tank, the Heritage Foundation.

Unlike the administration assessment, they see critical weaknesses in the US military and their ability to defend US interests.

The Heritage Report stated, “The US military is at a growing risk of not being able to meet the demands of defending America’s vital national interests.  It is rated as weak relative to the force needed to defend national interests on a global stage against actual challenges in the world as it is rather than as we wish it were.

Some of the weaknesses were troubling.  The US Air Force, who “wrote the book” on air superiority, now it is ranked as “very weak.”  The Navy, which was so powerful that all the oceans and seas were once deemed “American lakes,” was ranked as “weak.”

Only the United States Marine Corps was ranked as strong.

Much of the problem is due according to military hawks, to cuts in the military’s budget, which prevented modernization and sustainability on the battlefield.

The rankings were based on objective goals – the ability for the US to fight in two major regional conflicts (MRC), the capacity to win against a large conventional power, the ability to carry out sustained operations, and the operational environment.

The report looked primarily at three theaters: the Middle East, Europe, and Asia.

The Middle East was a mixed report.  Although there are potential threats with growing tension between Greece and Turkey, US and Turkish tensions in Syria, and the new friendship with the US and Cyprus, the Middle East isn’t the major threat it once was thanks to the Abraham Accords one analyst is concluding.

However, given these problems, over the last three decades, the US and its allies have built an impressive infrastructure that can be quickly used to forward deploy a large force and work with regional allies.

In a slap at Biden’s Saudi policy, the Heritage document said American relationships are pragmatic and “based on shared security and economic concerns.  If these issues remain relevant to both sides, the US is likely to have an open door to operate in the Middle East.”

Europe was described as “stable, mature, and friendly to US military operational requirements.  Despite the Russian threat, Europe’s operating environment was rated favorable thanks to the NATO infrastructure.

Asia was rated as favorable thanks to relationships with Japan, South Korea, and Australia.  The biggest problem was political stability.  The Heritage Foundation warned of the “tyranny of distance and the need to move forces as necessary to respond to challenges from China and North Korea.”

In a differing opinion, the Heritage Foundation didn’t mention “domestic terrorism” as the National Security Strategy did.  It focused on ISIS and al-Qaeda instead.

The top three threats to the US were China, Russia, and Iran.  China and Russia had the greatest capability when it came to a threat to the US.

The US Army had a mixed report.  The Heritage Foundation concluded that the Army needed 50 brigade combat teams to fight in 2 MRCs.  That meant that the Army only had 62% of the force needed.  However, it noted that it had a high level of readiness with 25 of the 31 Brigade combat teams at the highest state of readiness.

One weakness was shifting the training from small operations in the Middle East to major combat operations like those seen in Ukraine.  The paper maintains that the Army’s experience in tactical operations in the Middle East is a weakness.  However, history indicates any combat experience is worthwhile as the biggest problem in battle is operating under pressure and acting as a team in a combat situation.  A combat seasoned force is better than one that merely has training experience.

There is also a question of the use of brigade combat teams in a large European conflict.  The BCT was developed for small unconventional fighting in Third World countries and training for a large conventional war should focus on brigade and larger exercises.

The Navy is graded “very weak” as it needs more ships to meet its commitments.  It also has a “weak” rating as the shortage of ships means more deployments and an inability to reach readiness levels.  The Navy needs 400 warships to meet its operational commitments, but it only has 298 ships currently.

Since ship building is expensive and takes time, Congress must change course in funding within the next few years or face a serious problem before 2030.

In addition to building more ships, the Navy must project its influence in areas that were left to their own designs after the Cold War.  For instance, the American Sixth Fleet once had two aircraft carriers stationed in the Mediterranean – one in the Western Mediterranean and one in the Eastern Mediterranean.  Today, there are usually none.

Given the disagreement on who owns natural gas deposits in the Eastern Mediterranean, Russian aggression, and the continued conflict between Turkey, Greece, and Greece’s surrogate Cyprus, the US must build a new carrier task force for this growing hot spot.

The Air Force has been degraded to “very weak.”  Mechanics and pilots are in short supply as recruitment for the Air Force is the worse of the branches of the military.

The Air Force is falling behind in pilot training and retention.  They are short 650 pilots and they barely manage to fly once a week.  They are also flying aircraft older than the pilots who fly them.

At current levels, the Air Force could probably win one major regional conflict, although they may have problems with the Chinese or Russians (at least the Russians before the Ukraine war).

The problem is that the attrition in planes and pilots would make winning the second major regional conflict more problematic.

If there is one bright spot in this analysis, it is the United States Marine Corps – considered the elite of the five branches of the military.

The Marines have 30 battalions as they are designed as a light infantry for amphibious assaults and small engagements, in various parts of the world.  Unfortunately, they can handle only one major regional conflict at a time.  They do not have the size or reserves to sustain operations.

Much of the Marine’s amphibious capability will depend on new amphibious ships provided by the Navy.

Space Force has been graded as “weak,” but that reflects its short history and the time to build its capability

Although not a branch of the military, the Heritage Foundation grades nuclear capabilities as “strong” but tending towards “marginal.”  The nuclear delivery systems and nuclear weapon designs are old, and the nuclear weapons haven’t been tested for years.  Since nuclear weapons degrade due to nuclear decay of the nuclear materials, their reliability is based on computer modeling.

Given the fact that the US is facing both Russia and China, the nuclear arsenal must be modernized.  This assessment doesn’t include threats like Iran and North Korea.

This Heritage analysis doesn’t even mention some other concerns.  Due to the Ukraine war, the amount of munitions in America’s arsenal is reaching dangerous levels.  While small arms and artillery ammunition can be quickly manufactured, smart weapons require time, and frequently requires redesigning as “smart circuitry” is no longer in production.

Recruitment is also a critical issue.  Although the Marines met 2022 recruitment levels, the other 3 branches fell behind.  Although a foot soldier can be trained in a year, technical servicemen, who maintain high tech weapons can take years to become competent.  Pilots take years of training and millions of dollars to qualify as a combat pilot.

The solution to many of these weaknesses is additional defense spending and the time to bring new weapons systems online.

Finally, Congress and the administration must realize how ever shifting politics has ruined the US military.  As the report concluded, “This is the logical consequence of years of sustained use, underfunding, poorly defined priorities, wildly shifting security policies, exceedingly poor discipline in program execution and a profound lack of seriousness across the national security establishment even as threats to US interests have surged.”

Analysis 09-20-2022

ANALYSIS

Is the United States Militarily Overextended?

 

As the world watched American helicopters evacuate American officials from the US embassy, in Baghdad last month, there was a serious question being raised; was America sliding into another Middle Eastern war?

For military types, the next question was, where would the US forces come from?  The American emergency reaction force, the 82nd Airborne, has been used to bolster forces in NATO, especially Eastern Europe.  US Special Forces are also engaged in Syria, Africa, Europe, and many other places where their presence is secret.

Then, there is China and the South China Sea, which has tied up America’s aircraft carriers and amphibious forces.

Normally, the US can rely on its allies, but NATO countries have also bolstered their forces in Eastern Europe.  And they are also facing their own problems like a cutoff of natural gas by Russia and even the serious problems with the NATO flagship, Britain’s HMS Prince of Wales, which was originally headed to the US for exercises with the F-35 fighter squadrons.

During the Vietnam War, one question asked in the Pentagon was if the US could fight two wars at one time – one in Vietnam and one in Europe?

Now the US faces three potential wars – one in Europe, one in the South China Sea and Taiwan, and one in the Middle East.

Except for Special Forces conflicts, the US isn’t in a fighting war.  However, the use of ammunition in Ukraine and the deployment demands on US forces are degrading the US military every day.  For instance, the US Army had to ground its entire fleet of 400 Chinook helicopters due to engine problems.  The Chinook is the Army’s largest heavy lift helicopter.

While there are no official US forces in Ukraine and the US isn’t at war with Russia, demand for ammunition for the Ukraine is as great as if the US were at war itself.  Pentagon officials told the Wall Street Journal that stockpiles of ammunition are running dangerously low – especially artillery ammunition supplies, which are described as “uncomfortably low.”

“The US has during the past six months supplied Ukraine with 16 rocket launchers, thousands of guns, much of that including ammunition has come directly from US inventory, depleting stockpiles intended for unexpected threats, a defense official said.”

An example of ammunition and weapons shortages was seen in the Ionian Sea three weeks ago, where the aircraft carrier USS Truman had to transfer some weapons and ammunition over the USS Bush, which was taking the Truman’s place in the Mediterranean.

As a result, the US has decided to send conventional 105mm howitzer rounds instead of the 155mm “smart” artillery rounds.  The Ukrainian Army had been firing about 3,000 rounds of 155mm rounds (not necessarily the smart rounds) a day and the US and NATO have donated hundreds of thousands of 155mm rounds to Ukraine.

The US military has requested $500 million to upgrade its ammunition factories.  However, this and contracts awarded to private companies for additional ammunition will take time to reach the front.

Another concern is the “wear and tear” on equipment, even in non-war situations.  Additional military exercises and longer deployments overseas wear out equipment and keep soldiers from maintaining it properly.  Two years ago, a Marine amphibious vehicle sunk in San Diego, killing its crewmen.  The investigation discovered maintenance had been rushed to get it ready for an overseas deployment.

The same is true with naval ships.  Aircraft Carriers are frequently extended on station overseas due to political needs.  But, for every day deployed overseas, the carrier will require one day for modifications, repairs, and installation of new equipment.  Then, a similar amount time will be needed retraining the air squadrons for overseas deployment.  That means that for every two years, an American aircraft carrier will spend about 8 months deployed, 8 months in repair, maintenance, and equipment upgrading, and 8 months in training for its next deployment.

The same is true for the amphibious task forces that can deploy F-35 aircraft.

The result is too few aircraft carriers and too many places that they need to be.

As of the end of August, there are three aircraft carriers deployed.  The USS Truman and USS Bush are in the 6th Fleet area of operations.  Despite the Chinese threat, only one aircraft carrier, the USS Ronald Reagan is in the Western Pacific at Yokosuka, Japan.  The USS Truman is in the Atlantic heading back to Norfolk, Virginia and will not be able to deploy for over a year.

The USS Bush is expected to remain at sea for 8 months.  It is the major warship in Standing NATO Maritime Group 2 (SNMG2), which includes Italian, Turkish, German Spanish, and French warships.

Two amphibious ready groups are in the South China Sea region (centered on the USS America and USS Tripoli).  Each ship carries about 20 F-35 fighters.

Should more fighting occur in the Middle East or China, or the war in Ukraine, the US Navy will be unable to deploy a nuclear carrier at all three areas of operations.

Another critical shortage is in manpower.  Every branch of the military is suffering from manpower shortages.  In fact, this is the worst time for military recruiters since the Vietnam War in 1973.  Only 9% of eligible American youth had any interest in joining and only one in four youth can meet the tough physical requirements.

Ironically, the United States Marine Corps (USMC), which has the roughest training is meeting its recruitment goals, which means that tough training doesn’t deter recruits.

 

Options

So, what options are there for the US if a war breaks out?

Conflict in the Middle East is considered the least problem.  There are enough quick reaction forces in the region to protect and evacuate Americans.  There are also airfields in the area that can base American aircraft.

Of course, a conflict with Iran, is a different situation and would require also shifting US naval forces – probably from the Mediterranean.  However, transiting the Suez Canal would be risky for an aircraft carrier during a conflict.

Short of a war with Iran, the probable course for the US is to transfer an amphibious ready group from the Western Pacific.

The largest threat to world peace is the Ukraine.  Fortunately for the US, it has NATO allies and its bases.  It also seems that Russia isn’t as much of a threat as it was believed.  Russia is suffering from some of the same problems as the US, depleted stockpiles, and manpower shortages.

For decades, the US and NATO have practiced moving US forces to Europe with success.  There is, however, a shortage of combat forces on the ground now, although that is rapidly improving.  Deployment of an Amphibious Ready Group would help provide additional carrier aircraft and a Marine Expeditionary Unit.

The downside for the US is that Marine Expeditionary Units are not designed for fighting in a conventional land war in Europe as they are moving away from heavy equipment like tanks.

The final threat is China.  As with the war in the Pacific in WWII, it will primarily be a maritime conflict.  Australian, Japanese, and American forces will try to deny Taiwan to the Chinese, while disrupting Chinese use of their artificial islands in the South China Sea.  America and its allies will try to keep Chinese submarines bottled up so they can’t threaten US carriers.

So, the question is if the US military is overextended?  The answer is yes.

Fortunately, the areas of operations match US capabilities.  The conflict in Europe is a conventional war and the US and its allies are well suited for a conflict here, especially against a weakened Russia.

The Middle East is a low intensity conflict that is suited to the American Special Forces in the region.

The Western Pacific is an area of operations that is suited to a naval force that can project power – like the US Navy and Marines.  China has yet to show that it can stand toe to toe with the US Navy.

So, the US is militarily overextended.  However, its force mix is such that it fits the current situation…..barely.

Analysis 08-23-2022

ANALYSIS

Will the Inflation Reduction Act Reduce Inflation?

 

It is ironic that 51 years ago last week, American President Nixon announced that he would “temporarily” stop redeeming US dollars for gold.  What Nixon had temporarily instituted has in many ways come true when the US passed the Inflation Reduction Act, an Orwellian name for legislation that will likely increase inflation.

Nixon’s move did more than stop the use of gold in monetary transactions, it also eliminated the age-old monetary theory that government spending should generally equal government revenues and that governments should back their currency with gold or silver.

The discipline that curbed politicians was eliminated.

Today, gold and silver are archaic metals, except in countries like Zimbabwe, which is issuing gold coins for circulation because its own paper currency is worthless.

But gold isn’t so archaic that central banks have sold their gold reserves.  Central banks hold vaults of gold, and many banks are even buying more.  And, the US, which has the largest reserve of gold, keeps it in a vault at Fort Knox, surrounded by the Second Armored Division.

The Inflation Reduction Act reflects Modern Monetary Thought, and although it has never been proven in the real world, it has become popular with central bankers and politicians who want an easy, painless way to budget government spending.

In short, Modern Monetary Theory (MMT) holds that government revenues are unimportant.  It holds that countries that make their own money like the US, UK, Japan, and Canada needn’t worry about spending, taxing, or borrowing because they can pay their debts, since they can print as much money as they need.  Government budgets should not be constrained by fears of a rising national debt.

MMT also holds that conventional monetary thinking is merely a holdover of the gold standard.  It also allows for politicians to pass expensive, popular programs like healthcare, free college education, and other programs for favorite voter groups and corporations because government debt shouldn’t lead to monetary collapse.

The Inflation Reduction Act mirrors these MMT beliefs.  $430 billion goes to new green energy programs although current evidence shows that these programs will not pay for themselves over time.

The current US national debt is over $30.7 trillion dollars and that doesn’t include obligations like Social Security.

Much of that growth in debt came under administrations that preferred politically popular MMT over conventional, but politically painful monetary thought.  Obama added $8.3 trillion to the deficit – a 70% increase.  Trump increased the debt by $7.8 trillion.  Biden has added $2.26 trillion in his first year, which will outpace Trump and Obama if he continues this pace for the rest of his administration.

Any economist will tell you that inflation is demand divided by supply.  And demand is a function of money supply.  The $430 billion in new programs will only increase the demand for goods by $430 billion.

Unfortunately, it appears that supply will not grow enough to tamper down inflation.  From 1992 to 2021, the average growth of the US economy was 2.4%.  However, the Congressional Budget Office projects that the average growth of the US economy from 2022 to 2052 will only be 1.7% per year.

Clearly the supply of goods provided by the economy will not keep pace with the additional demand caused by the increased demand caused by government spending and MMT.

The Penn Wharton Budget Model, which is associated with the University of Pennsylvania’s Wharton Business school, showed that the new law would not invigorate the economy or curb inflation.

“We project no impact on GDP (Gross Domestic Product) by 2031,” the study noted.  “The Act would very slightly increase inflation until 2024.”

The study also noted that benefits also reduced the incentive to work, which would result in a small decline in hours worked, which would reduce the supply of goods produced.

There, however, was one aspect of the law that did fit conventional monetary thought – increasing the number of tax collectors to conduct audits for those making less than $200,000.

Traditionally, audits were focused on companies and richer individuals to maximize the amount recovered because those making less weren’t profitable enough to audit in the eyes of the IRS.

The law allows for an increase of 87,000 new IRS agents.  To give a better idea of how large that number is, there are three US Armored Brigade Combat Teams in Europe, with about 4,700 soldiers in each brigade.

Those who monitor the erosion of rights for American citizens are especially concerned as the IRS has become a tool to silence government opponents.

The Obama Department of Justice refused to seek criminal charges against her although she did apologize for improper targeting of some organizations.

Another concern was an online ad for IRS applicants that said they must be willing to “Carry a firearm and be willing to use deadly force if necessary.”

The ad was quickly edited as word spread about the ad and its requirements.

Former Speaker of the House Newt Gingrich said, “When people realize that most of the IRS agents will not be going after billionaires and big companies – but will instead be auditing waitresses, Uber drivers, self-employed people, and small businesses – I expect the opposition will grow even more intense.”

Clearly, the Inflation Reduction Act has created a lot of controversy, both in economic and civil rights areas.  However, since it has been passed by Congress and signed into law by Biden, we will have to wait to see the results.

Analysis 08-15-2022

ANALYSIS

FBI Raids Trump Home

 

(This is an ongoing event and there may be some new events that haven’t been covered in this analysis)

America is undeniably divided.  And the FBI raid on former President Trump’s home in Florida only put an axe to the divided society.  Many consider the FBI raid on Trump’s home at Mar-A-Lago akin to the actions of third world dictatorships that regularly use police or soldiers to attack political opponents.  This is the first time this has occurred in the US.

While the nature of many public comments was expected based on the political beliefs of the person, there were reactions by some Democrats who were worried about this unprecedented raid.  Former Democratic presidential candidate in 2020 Tulsi Gabbard said, “This is something that every American should be concerned about.”

Another 2020 democratic presidential candidate Andrew Yang called it political and said, “I’m no-Trump fan…This raid strengthens the case for millions of Americans who will see this as unjust persecution.”

Former New York Governor Andrew Cuomo, who frequently had disagreements with Trump, demanded the Department of Justice explain its raid.

“It must be more than a search for inconsequential archives, or it will be viewed as a political tactic and undermine any future credible investigation,” Cuomo stated.

Although Attorney General Garland stated in his speech on Thursday, that the Department of Justice under him applied the law equally, he didn’t take questions after his prepared statement.  He merely admitted that he had signed the request for the warrant.  He also defended Department of Justice and FBI members as patriots who worked hard under difficult circumstances.

There are many questions that he didn’t answer.  There are questions of a conflict of interest as Trump campaigned in 2016 on withdrawing Garland’s nomination to the Supreme Court, leaving Garland’s actions on the raid seem political revenge.  There are questions on the federal magistrate’s political activities.  Nor did he answer why his department hasn’t prosecuted or raided Obama’s home over missing documents.  This doesn’t address other Obama Administration officials like former Secretary of State Hillary Clinton, former Attorney General Lynch, EPA officials or the IRS, who have not turned in files.

Although there are many rumors, the facts are scarce.  On Monday, the FBI sent in 30 agents to recover documents from Mar-A-Lago.  The search warrant was signed by a federal magistrate and concerned the failure to turn over presidential documents under the Presidential Records Act.

The Presidential Records Act (44 U.S.C. Chapter 22) has no enforcement mechanism and carries no penalties.  That, in and of itself, makes the use of an FBI raid questionable.  Many see this as what is called in legal circles as a “fishing expedition,” where prosecutors use a flimsy search warrant to give police a chance to find something that might be construed as illegal.  This is unconstitutional and is considered as illegal “search and seizure.”  There has been some speculation that the raid was to find something that could tie Trump into the January 6, 2021, invasion of the Capitol.

Others have hoped that the presidential documents can be used to prevent Trump from running for president in 2024 under U.S.C. 2071, which states that anyone guilty of hiding removing, or mutilating official documents can be kept from holding office.  However, the courts have clearly held that the only qualifications for president are in the Constitution and no other restrictions can be made unless it is added to the Constitution in an amendment.

However, this is more about presidential documents.  There is a growing perception amongst Americans that there are differing levels of law depending on who you are.  While Obama, Clinton and others are let off the hook, average citizens must meet stricter standards.  If you are perceived as an “enemy” the legal system goes even farther to destroy you.

This has been noticed by most Americans and the credibility of agencies like the FBI have suffered, even though they have ignored the problem.  In fact, the FBI seemed surprised by the largely negative response to the raid.

A look at the polls shows that the FBI is plunging in its approval.  A Gallup poll showed that most of the American people have a negative opinion of the FBI.  Only 44% had a positive opinion of the FBI in 2021 – down 13 percentage points from 2019.  It ranks at the bottom with other federal agencies like the IRS, CDC, and Homeland Security.

An example of the bias in the FBI was seen last week in Senate hearings with FBI Director Wray.  FBI whistle blowers had given senators documents showing that the FBI considered showing some patriotic flags like the Betsey Ross Flag (the first American flag) as potential signs of a domestic terrorist.  Ironically Senator Cruz (R, TX) showed that the Betsy Ross Flag was flown as part of the Biden and Obama inaugurations.

Quoting parts of the US Constitution or the Declaration of Independence were also considered suspicious.

While the FBI has had problems in the past few years, Trump has improved in the polls.  If the election were held today, Trump would soundly beat Biden.

This may be the real reason for the raid.

In the days since the raid, Trump has raised record amounts of money.  A Trafalgar Group poll done after the raid showed that the raid energized both Republicans and independents to vote in the 2022 mid-term election.

Ironically, the raid on Trump’s home may guarantee the nomination and election for Trump.  The growing lack of faith in government and the scandals that have plagued the FBI worry Americans, not just Trump supporters.  They are worried by the growing corruption in government and want someone who can do something about it.  It seems Trump is the one – especially since the government is so opposed to him.

 

The Future

Will this raid on Trump have any negative impact on Trump or the GOP?  Probably not.  Trump has survived two impeachments, attacks based on the January 6, 2021, invasion of the US Capitol, Russian collusion charges, and falsified evidence by FBI agents.  If anything, the GOP is coalescing around Trump.

Although Trump hasn’t announced he is running, his comments since the raid indicate that he is determined to run again.

This leaves the Democrats in a dilemma.  Biden is clearly senile and unable to effectively handle a campaign.  In addition, polls show Biden losing to Trump in a rematch.

VP Kamala Harris has even less support than Biden.  Secretary of Transportation Buttgieg, who ran for president in 2020, is a possible presidential choice, but he has done poorly in Washington.  The rest of the Cabinet doesn’t offer any obvious presidential candidates.

Gavin Newsome, Governor of California has made moves that indicate he may run.  But the multitude of problems in California may destroy his chances.

In desperation, the Democrats are even mentioning Hillary Clinton.

Some Democrats have argued that letting Trump have his one term, while grooming a winning Democratic presidential candidate for 2028 may be the best choice.

The only other hope is to create another Trump scandal, one that can make Trump lose.

In that case, the Republicans may very well pick Florida Governor DeSantis, who would rally the Republican base.

There is also the threat of civil unrest.  An apparent Trump supporter tried to attack an FBI office in Cincinnati.  There is also talk of civil war on the internet.

But not all the talk is being made by the political fringe.  Victor David Hanson, a classist and military historian who writes occasionally for the New York Times outlined the FBI corruption in recent years.  He noted, “The FBI’s highest officials now routinely mislead Congress.  They have erased or altered court and subpoenaed evidence.  They illegally leak confidential material to the media.  And, they have lied under oath to federal investigators.”

“The FBI is dissolving before our eyes into a rogue security service akin to those in Eastern Europe during the Cold War.”

Hanson concluded by saying that the FBI has “become dangerous to Americans and an extensional threat to democracy.”

Analysis 08-08-2022

ANALYSIS

Chinese Threats Towards Taiwan
Sound and Fury for the time being

As US Speaker of the House Nancy Pelosi landed in Taiwan, China was engaged in several military exercises that took place around Taiwan.

27 Chinese aircraft entered Taiwan’s air defense zone on Wednesday.  Chinese naval and air forces conducted live fire exercises in six zones around Taiwan, clearly threatening a possible blockade.  Conventional Chinese missiles are expected to overfly Taiwan for the first time and Chinese forces entered within 12 miles of Taiwan’s shore.

Is this the beginning of a conflict between China, Taiwan, and the United States?  Or is this merely a show of strength?

Former House Speaker Newt Gingrich, who visited Taiwan as Speaker in 1997 says China’s threats are a bluff.

Speaking of his visit in 1997, he said, “They [the Chinese] backed down…Their current bluff is just that.”

Discounting the unsubstantial war talk, the evidence is with Gingrich, while China then was” far weaker economically and militarily”.

First, investors, who usually make sound financial decisions, have moved back into the market as it became obvious that China hadn’t planned anything serious like an invasion or actual attack on Taiwan’s military forces.

Second, although military exercises seem threatening, all militaries conduct exercises all year.  This is the best way to conduct training and test weapons systems.  Live fire is a regular part of these types of exercises so the military leaders are sure that their soldiers know how to use the weapons systems and are sure that they will work in a conflict.

The fact that China held 6 exercises around Taiwan in no way guarantees that the Chinese Navy can carry out a long-term blockade in a war.

Blockades rarely occur because they require a major naval presence that can stay at sea for long periods of time.  They require large warships that can stay on station for months at a time.  They require logistics ships that can carry out underway replenishment.  And they require 24 hour a day air superiority to defend lightly armed logistics ships.

An excellent example of the difficulty of carrying out a blockade is the German blockade of England in WWII.  Despite better submarine technology, Allied air and naval superiority in the Atlantic prevented the German U Boats from cutting Britain off from its Commonwealth allies and colonies.  German attempts to conduct surface warfare with battleships like the Bismarck also failed.

Although the Chinese navy has a larger number of ships, they are lighter, have fewer weapons, and are too small to maintain station in rough seas or far from the Chinese mainland.  This includes the Chinese aircraft carriers.

Not only does the US have the nuclear supercarriers that outclass any other navy’s air wing, but it also has several allies with carriers that match or surpass China’s aircraft carriers.

Britain’s Queen Elizabeth class carriers are larger and better than all but the American nuclear supercarriers.  It is the largest Royal Navy ship built and it displaces 66,000 tons.  That makes it larger than the French nuclear carrier Charles de Gaulle at 42,500 tons, and the domestically built Chinese carriers of 50,000 tons displacement.

Just as important, these ships will interface with US carriers and Britain has pledged to support Taiwan in a war.

Japan and Australia also have aircraft capable ships.

Consequently, there is a serious question if China can maintain a naval blockade of Taiwan.

China’s air force is also questionable.  China’s aircraft are based on old Russian designs.  The Chinese Shenyang J-11, which is the backbone of the Chinese air force and the aircraft regularly used to violate Taiwan’s airspace, is based on the Sukhoi Su-27.  It is a high maintenance aircraft that has a shortage of spare parts.  Its primary role was to defend the USSR from long range American bombers like the B-1 Lancer and the B-52 Stratofortress.

Given the Su-27’s performance in Ukraine, there is a serious question if the J-11 can outperform Taiwan’s air force.

Taiwan’s air force is hampered by older American and French aircraft.  However, they have been able to purchase the American air defense Patriot PAC 3 missile system.

China’s Type 99 tank is also developed from the old Soviet T-72 tank.

The fact is that the Chinese military is stronger than Taiwan’s.  However, it is not a certainty that China can defeat Taiwan easily in a major conflict.  True, China could take some of the smaller islands controlled by Taiwan, but at a serious economic risk as most Western nations would impose sanctions.

China has threatened economic sanctions against Taiwan by blocking shipments of food like fish or sand for its semiconductor industry.  However, as China is in the middle of an economic downturn, the question is who would suffer more – Taiwan or China.

 

American Politics

Pelosi’s trip to Taiwan posed several problems back in the United States.  Clearly, this was Pelosi’s idea, not Biden’s.

The fact is that with elections coming up in a few months and Republicans expected to win control of the House of Representatives, Pelosi’s reign as Speaker is likely to end.

By going to Taiwan, Pelosi can cap off her speakership with a major diplomatic win.  She is also supported by most Republicans, some of which joined Pelosi in her trip to Taiwan.  This gives her bipartisan cover.

Biden opposed the trip on the advice of his military advisors, who were afraid of a confrontation with China.  They countered this with the movement of the nuclear carrier USS Ronald Reagan to the area and American fighter aircraft to Japan.  Two amphibious assault groups, including the F-35 fighter aircraft capable USS Tripoli and USS America, are also in the vicinity, The USS Reagan is southeast of Taiwan, the USS Tripoli is northeast of Taiwan, and the USS America is northeast of Taiwan, and close to Japan.

The problem with following the military’s advice was that backing down would show weakness to the Chinese and probably encourage them to take more aggressive moves in the future.

The future is more problematic.  How far do the US and its allies support Taiwan?  Korea appears to be remaining neutral as South Korea’s president refused to meet with Pelosi this week.

Several nations like Germany, Britain, Australia, and Japan have made it clear that they view Chinese aggression with concern and will support Taiwan.

If China continues to increase pressure on Taiwan, the US can start selling modern fighter aircraft to the island nation.  Currently Taiwan suffers from an aging air force of older F-16 fighters and French Mirage 2000s.  F-35 or F-18 fighters would be of great help, although it takes time and considerable training to make the pilots proficient in air combat in these new aircraft.

The US has sent Harpoon anti-ship missiles to Taiwan – the same that have recently devastated several Russian ships in the Black Sea.  More of these missiles would make it harder for the Chinese to invade Taiwanese territory or logistically support Chinese forces after a landing.

A more advanced air defense system would benefit Taiwan as well as US naval forces sailing the waters around Taiwan.  Although China claims to have fielded a hypersonic missile, there are probably few in the Chinese arsenal and it is uncertain if they are effective in a combat situation.

Meanwhile, the Chinese air defense system is questionable.  The Chinese HQ-9 is derived from the Russian S-300, which is showing limited success in Ukraine that the Russians are using it for a crude surface to surface missile.  The Chinese HQ-22 has a shorter range than the S-300 and is cheaper.

 

The Future

Of course, China can counter with economic sanctions or even a threat to closely ally itself with Russia.  However, Russia is currently tied down in Ukraine and can offer little to the Chinese in terms of weapon systems or spare parts.

In the end, it appears that much of China’s talk is merely a pressure buildup.  China will undoubtedly continue military exercises, especially air incursions that are designed to wear out Taiwan’s air force.  They will also try to show that they can blockade Taiwan if they choose.

However, as we have seen, China’s threat is more pressure than actual intervention.

The US appears to be calling China’s bluff and making it clear that US forces can intervene should China take an aggressive step.

A Chinese media outlet reported that RT criticized Pelosi for Taiwan trip and encouraged China with a saying “revenge is a dish best served cold,” which is similar to a Chinese saying, “it’s never too late for a gentleman to take his revenge.”

It seems China will be able to use the Pelosi trip as a catalyst to strengthen its position and display  readiness to use force if necessary to control Taiwan, but still prefer

to create the conditions to gain such control by peaceful means over time.

We must remember that the Chinese Communist Party has always made clear that reunification of Taiwan and mainland China is its “historical task” and, since coming to power in 2012, Xi has steadily underscored his commitment with active military maneuvers around Taiwan.

Analysis 07-28-2022

ANALYSIS

America’s Electrical Infrastructure
on the Verge of Collapse

 

 Europe isn’t the only region worried about a mass failure of its electrical power network.  America is also in the throes of an electrical power crisis.  In Texas, high temperatures have forced conservation measures, including cutbacks at some factories in the state. The electrical grid, however, has not failed as it did two winters ago – although it has been pushed to its limits.

However, there is a greater threat to the nation’s power system, along with the threat to the water supply of millions of citizens.  It is the 86-year-old Hoover Dam system, which borders Nevada and Arizona.  A long-term drought has caused its reservoir, Lake Mead, to drop to historically low levels, which threatens the electrical power of the American Southwest as well as water for millions of people in the West.  It also provides critical irrigation water for many farmers in the desert Southwest.

Despite the critical nature of this dam, little of the infrastructure money allocated in the past few years has gone to the dam or its reservoirs.

The Hoover Dam is responsible for the unprecedented population growth in the Southwest in the last eight decades.  Over 50% of the electricity supplied by the dam goes to Southern California municipalities.  Los Angeles, itself, uses nearly as much electricity as Arizona.  Los Angeles and Southern California take over 50%.

The dam system is so critical that after 9-11, the US government diverted US Route 93 to prevent possible terrorist attacks on the dam.

The US Army also stationed troops at Hoover Dam during WWII.

The current threat is more long term – drought.  The Southwest has been in a historical long-term drought.  Although some have blamed manmade climate change, archeologists have recorded many long-term droughts in the past – droughts so severe that it changed population movements in the region and led to the disappearance of the Anasazi civilization around 1300 AD.

“We are in the 23rd year of drought here in the Colorado River Basin and Lake Mead (the largest reservoir in America, which stores the water for the dam) has dropped down to 28 percent,” says Patti Aaron of the US Bureau of Reclamation, which operates the dam.

The lake is currently 1,200 feet above sea level, but if it drops down to 1,050 feet, it will be unable to produce electricity.

The lake is currently dropping about a foot a week.

If Lake Mead drops too much, the government can release water from other dams upstream of the Hoover Dam to keep the generators running.  However, that only delays the problem.

The short-term answer is to cut back on water demand, especially in populated areas like Southern California, Las Vegas, and Phoenix.  Reducing water for farming in the region would only exacerbate the food shortage currently driving up prices.

But America’s electrical infrastructure has more problems than the Hoover Dam.

The Midwest is at risk in addition to the Southwest and Texas.  The North American Electric Reliability Corporation warns of a high risk of its energy reserves falling short of its energy needs this summer.  Energy generation capacity has dropped 2.3%, while demand has gone up by 1.7%.

The Western US is currently at an elevated level of risk.

None of this has been helped by the Biden Administration’s attempt to regulate the fossil fuel industry out of business, the reduced supply of fossil fuel from Russia, and America’s attempt to supply its allies with a backup supply of gas for this winter.

Some power companies in America and abroad are reactivating coal powered power stations.

According to the Wall Street Journal, in 2000, there were fewer than two dozen major power failures.  In 2020, it increased to over 180.  Yet, the recent infrastructure bill only allocated $27 billion to the electrical grid, although experts say over two trillion dollars is needed – an amount of money that would have to be paid by consumers who are already facing crippling inflation.

Part of the problem is the administration’s demand for reducing fossil fuel as a source of electricity.  Renewable sources like wind and solar are unreliable, especially during extreme weather like cold weather.

That means electrical demand is expected to grow as more consumers buy electrical vehicles and move away from heating their houses with natural gas.

 

Will America Muddle Through?

America is facing several problems that could push the nation’s power industry into a crisis.  If there isn’t enough snowfall in the Rockies this winter, the Colorado River may not provide enough water to keep Lake Mead at a level to produce energy.

The same problem can occur if the Midwest experiences high temperatures that drive up electrical demand – as well as damaging crops.

The East is not immune, and a bad hurricane season can ruin the aging infrastructure of the East Coast.

One problem in the US is that the Biden Administration is tone deaf to the signs – which is why Biden’s poll numbers are at levels lower than Lake Mead.  While European nations are moving back to fossil fuel to survive the upcoming winter, the Biden Administration seems fixed on forcing US consumers to spend more on energy – both for their homes and vehicles.

Energy Secretary Jennifer Granholm said high energy prices wouldn’t impact consumers with electric vehicles, although studies show that the cost of powering an electric vehicle is four times the cost of air conditioning one’s house.

Even Transportation Secretary Buttigieg has noted that the current power grid can’t handle the increased demand for powering electric vehicles.

There has been discussion that Biden can move America dramatically towards a “clean energy” infrastructure by declaring a national emergency.  However, given the recent Supreme Court Ruling (West Virginia vs. EPA), there is little likelihood that such a national emergency will be declared constitutional.

And, given the response of the Saudis to the idea of a massive increase in petroleum production last week during the Biden Salman meeting, it appears that the Middle East will not save him.

This leaves the Biden Administration with a difficult balancing act.  They can roll back their energy policies like many European nations and not risk the anger of American voters.  Or they can use executive regulation, face higher inflation in the energy sector, risk the loss of the Senate and House in November, and a possible failure of the electrical infrastructure.

Given Biden’s past behavior, he is heading towards a major midterm election loss.  If a crisis breaks the US electrical infrastructure, civil unrest may be on the horizon.