Foreign AFFAIRS.. CHINA EXPLAINED IN A FEW WORDS & Stratfor on ISRAEL..


SUE LITTLETON

Hoy a las 10:18 A.M.

 

Moi et les trois chats joyeux ==  ==  ==

Subject: Foreign AFFAIRS.. CHINA EXPLAINED  IN A FEW WORDS.. & – Stratfor  on  Israel: The Case Against Attacking Iran

CHINA EXPLAINED .. IN A FEW WORDS..

 

China: A Major Engine of World Growth

Hits a Bump that Upsets World Markets

James A. Hanson   jhansonecon@yahoo.com   August, 26, 2015

 

            China investment-denominated economy became a major engine of world growth and markets with its 10.8% p.a. growth from 2003-2011. By 2009, only the US had a higher GDP; China passed Germany in 2007 and Japan in 2009. China was a major factor in world trade and made investments in developing countries. It had a large domestic financial system, with 5 very large banks and an equity market, although its direct links to world markets are limited by capital controls.

China faced numerous issues, nonetheless (as I wrote in “What About China”, July 10). First, China’s growth slowed substantially after 2011, to 7.8% in 2012, 7.5% in 2013 and 2014, and 7% in each of the first two quarters of 2015, according to official figures—a growth decline of over 3 percentage points compared to the 2003-2011 average. The 7% growth had earlier been deemed satisfactory by the Prime Minister.  However, even it seems inconsistent with other indicators.  The current growth reflected a switch to a more domestically-oriented growth strategy, but seems to be leaving large construction investments unused. Second, China had built up a massive debt-to-GDP ratio, estimated at about 280% of GDP by McKinsey – far higher than the US or Germany. Reinhart and Rogoff, in This Time is Different, highlight high debt as a major factor in crises. Moreover, much of China’s debt is linked to real estate and sub-national governments, with unregulated “shadow” banks accounting for a much of the lending.  Third, China’s equity market boom heavily reflected margin loans.
            The recent fall in China’s stock market, which began in June 2015, led to international concerns about China and the implications of China’s problems for the world and falls in other markets.  The Chinese government unsuccessfully tried to halt the fall in its market with various policies—buying $200 b. of shares, limiting sales, closing trading in many listings, etc.—but it stopped purchases on Aug. 24.

            In the week of August 10, China devalued by about 4.5% against the dollar.  This devaluation eased the earlier strengthening of the renminbi, which had moved similarly to the $.  Since the devaluation, China has sold about $200 billion to ease any further depreciation against the $. The $200 billion represents only a small of fraction of China’s over-$3.6 trillion reserves.

            China’s devaluation could be interpreted as allowing a more market-determined exchange rate, but also as an attempt to return to a more externally-based, faster growth policy by cheapening exportsAlso indicative of the Government’s concern with slowing growth is its Aug. 25 cut in the interest rate —the 5th in the last 12 months, along with 4 cuts in reserve requirements.     

            China’s recent problems have spilled over into the large falls in equity markets, commodity markets, and some exchange rates that started last week around the globe. The spillover reflected concerns of global investors with China.

Two major implications of China’s problems for the rest of the world are:

  1. Problems for emerging markets and commodity exporters. China’s slowdown has already translated into lower oil and commodity prices.  The fall in oil prices, to below $40, is likely to hurt OPEC, especially Venezuela and Ecuador.  Iran, however, is likely to benefit if the treaty on atomic development is signed. Other falling commodity prices and less demand from China are likely to hurt countries that have benefitted from exports to China in the past few years, such as Brazil.
  2. The Fed is unlikely to raise interest rates for some time, until market turmoil lessens and it becomes clear how China’s slowdown affects US and World growth.  Expectations of a Fed rise in interest rates have created pressures on some countries’ exchange rates and their ability to borrow from time-to-time in the last 24 months.

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Israel: The Case Against Attacking Iran

Geopolitical Weekly

AUGUST 25, 2015 | 08:01 GMT

By George Friedman

On Aug. 21, Israeli Channel 2 Television aired a recording of Ehud Barak, Israel’s former defense minister and former prime minister, saying that on three separate occasions, Israel had planned to attack Iran’s nuclear facilities but canceled the attacks. According to Barak, in 2010 Israel’s chief of staff at the time, Gabi Ashkenazi, refused to approve an attack plan. Israeli Cabinet members Moshe Yaalon and Yuval Steinitz backed out of another plan, and in 2012 an attack was canceled because it coincided with planned U.S.-Israeli military exercises and a visit from then-U.S. Defense Secretary Leon Panetta.

The fact that the interview was released at all is odd. Barak claimed to have believed that the tape would not be aired, and he supposedly tried unsuccessfully to stop the broadcast. It would seem that Barak didn’t have enough clout to pressure the censor to block it, which I suppose is possible.

Yaalon, like Ashkenazi, was once chief of staff of Israel Defense Forces but was also vice premier and Barak’s successor as defense minister. Steinitz had been finance minister and was vocal in his concerns about Iran. What Barak is saying, therefore, is that a chief of staff and a vice premier and former chief of staff blocked the planned attacks. As to the coinciding of a U.S.-Israeli exercise with a planned attack, that is quite puzzling, because such exercises are planned well in advance. Perhaps there was some weakness in Iranian defenses that opened and closed periodically, and that drove the timing of the attack. Or perhaps Barak was just confusing the issue.

A number of points are worth noting: Ehud Barak is not a man to speak casually about highly classified matters, certainly not while being recorded. Moreover, the idea that Barak was unable to persuade the military censor to block the airing of the recording is highly improbable. For some reason, Barak wanted to say this, and he wanted it broadcast.

Part of the reason might have been to explain why Israel, so concerned about Iran, didn’t take action against Iran’s nuclear facilities. Given the current debate in the U.S. Congress, that is a question that is undoubtedly being asked. The explanation Barak is giving seems to be that senior military and defense officials blocked the plans and that the Israelis didn’t want to upset the Americans by attacking during a joint exercise. The problem with this explanation is that it is well known that Israeli military and intelligence officials had argued against an Israeli strike and that the United States would have been upset whether or not joint exercises were occurring.

It would seem, intentionally or unintentionally, that Barak is calling Israeli attention to two facts. The first is that militarily taking out Iranian facilities would be difficult, and the second is that attempting to do so would affect relations with Israel’s indispensible ally, the United States. Military leaders’ opposition to the strikes had been rumored and hinted at in public statements by retired military and intelligence heads; Barak is confirming that those objections were the decisive reason Israel did not attack. The military was not sure it could succeed.

The Potential for Disastrous Failure

A military operation, like anything else in life, must be judged in two ways. First, what are the consequences of failure? Second, how likely is failure? Take, for example, the failure of the U.S. hostage rescue operation in 1980. Apart from the obvious costs, the failure gave the Iranian government reason to reduce its respect for U.S. power and thus potentially emboldened Iran to take more risks. Even more important, it enhanced the reputation of the Iranian government in the eyes of its people, both demonstrating that the United States threatened Iranian sovereignty and increasing the credibility of the government’s ability to defend Iran. Finally, it eroded confidence in U.S. political and military leaders among the U.S. public. In reducing the threat and the perception of threat, the failure of the operation gave the Iranian regime more room to maneuver.

For the Israelis, the price of failure in an attack on Iranian nuclear sites would have been substantial. One of Israel’s major strategic political assets is the public’s belief in its military competence. Forged during the 1967 war, the IDF’s public image has survived a number of stalemates and setbacks. A failure in Iran would damage that image even if, in reality, the military’s strength remained intact. Far more important, it would, as the failed U.S. operation did in 1980, enhance Iran’s position. Given the nature of the targets, any attack would likely require a special operations component along with airstrikes, and any casualties, downed pilots or commandos taken prisoner would create an impression of Israeli weakness contrasting with Iranian strength. That perception would be an immeasurable advantage for Iran in its efforts to accrue power in the region. Thus for Israel, the cost of failure would be extreme.

This must be measured against the possibility of success. In war, as in everything, the most obvious successes can evolve into failure. There were several potential points for failure in an attack on Iran. How confident were the Israelis that their intelligence on locations, fortifications and defenses were accurate? How confident were they that they could destroy the right targets? More important, perhaps, how certain could they be that the strikes had destroyed the targets? Finally, and most important, did they know what Iran’s recuperative capabilities were? How quickly could the Iranians restore their program? Frequently, an operationally successful assault does not deal with the strategic problem. The goal of an attack was to make Iran incapable of building a nuclear weapon; would destroying all known targets achieve that strategic goal?

One of the things to bear in mind is that the Iranians were as obsessed with Israeli and U.S. intelligence efforts as the Israelis and Americans were obsessed with the Iranian programs. Iran’s facilities were built to be protected from attack. The Iranians were also sophisticated in deception; knowing that they were being watched, they made efforts to confuse and mislead their observers. The Israelis could never be certain that they were not deceived by every supposedly reliable source, every satellite image and every intercepted phone call. Even if only one or two sources of information were actually misleading, which sources were they?

A failed Israeli assault on Iran would cause a major readjustment among other regional players in the way they perceive Israel and Iran. And for Israel, the perception of its military effectiveness is a strategic asset. There was a high risk of damaging that strategic asset in a failed operation, coupled with a strong chance that Israeli actions could unintentionally bolster Iran’s power in the region. The likelihood of success was thrown into question by Israel’s dependence on intelligence. In war, intelligence failure is a given. The issue is how great the failure will be — and there is no way to know until after the strike. Furthermore, operational success may not yield strategic success. Therefore, the ratio of potential risk versus reward argued against an attack.

Considering Iran’s Capabilities

There is another side to this equation: What exactly were the Iranians capable of? As I have argued before, enriched uranium is a necessary but insufficient component for a nuclear weapon. It is enough to create a device that can be detonated underground in controlled conditions. But the development of a weapon, as opposed to a device, requires extensive technology in miniaturization and ruggedization to ensure the weapon reaches its target. Those who fixated on progress in uranium enrichment failed to consider the other technologies necessary to create nuclear weaponry. Some, including myself, argued that the constant delays in completing a weapon were rooted both in the lack of critical technologies and in Iranian concerns about the consequence of failure.

Then there is the question of timing. A nuclear weapon would be most vulnerable at the moment it was completed and mounted on its delivery system. At that point, it would no longer be underground, and the Israelis would have an opportunity to strike when Iranians were in the process of marrying the weapon to the delivery device. Israel, and to an even greater extent the United States, has reconnaissance capabilities. The Iranians know that the final phase of weapon development is when they most risk detection and attack. The Israelis may have felt that, as risky as a future operation may seem, it was far less likely to fail than a premature attack.

Barak’s Motivations

Whether intentionally or not (and I suspect intentionally) Barak was calling attention, not to prior plans for an attack on Iran, but to the decision to abandon those plans. He pointed out that an Israeli chief of staff blocked one plan, a former chief of staff blocked a second plan and concern for U.S. sensibilities blocked a third. To put it in different terms, the Israelis considered and abandoned attacks on Iran on several occasions, when senior commanders or Cabinet members with significant military experience refused to approve the plan. Unmentioned was that neither the prime minister nor the Cabinet overruled them. Their judgment — and the judgment of many others — was that an attack shouldn’t be executed, at least not at that time.

Barak’s statement can be read as an argument for sanctions. If the generals have insufficient confidence in an attack, or if an attack can be permanently canceled because of an exercise with the Americans, then the only option is to increase sanctions. But Barak also knows that pain will not always bring capitulation. Sanctions might be politically satisfying to countries unable to achieve their ends through military action or covert means. As Barak undoubtedly knows, imposing further restrictions on Iran’s economy makes everyone feel something useful is being done. But sanctions, like military action, can produce unwelcome results. Measures far more painful than economic sanctions still failed to force capitulation in the United Kingdom or Germany, and did so in Japan only after atomic weapons were used. The bombing of North Vietnam did not cause capitulation. Sanctions on South Africa did work, but that was a deeply split nation with a majority in favor of the economic measures. Sanctions have not prompted Russia to change its policy. Imposing pain frequently unites a country and empowers the government. Moreover, unless sanctions rapidly lead to a collapse, they would not give Iran any motivation not to complete a nuclear weapon.

I don’t think Barak was making the case for sanctions. What he was saying is that every time the Israelis thought of military action against Iran, they decided not to do it. And he wasn’t really saying that the generals, ministers or the Americans blocked it. In actuality, he was saying that ultimately, Prime Minister Benjamin Netanyahu blocked it, because in the end, Netanyahu was in a position to force the issue if he wanted to. Barak was saying that Israel did not have a military option. He was not attacking Netanyahu for this decision; he was simply making it known.

It’s unlikely that Barak believes sanctions will compel Iran to abandon its nuclear program, any more the current agreement does. My guess is that for him, both are irrelevant. Either the Iranians do not have the ability or desire to build a bomb, or there will come a point when they can no longer hide the program — and that is the point when they will be most vulnerable to attack. It is at that moment, when the Iranians are seen arming a delivery system, that an Israeli or U.S. submarine will fire a missile and end the issue.

If Barak didn’t want a strike on Iran, if Netanyahu didn’t want a strike and if Barak has no confidence in agreements or sanctions, then Barak must have something in mind for dealing with an Iranian nuclear weapon — if it ever does appear. Barak is an old soldier who knows how to refrain from firing until he is most certain of success, even if the delay makes everyone else nervous. He is not a believer in diplomatic solutions, gestures to indirectly inflict pain or operations destined for failure. At any rate, he has revealed that Israel did not have an effective military option to hamper Iran’s nuclear program. And I find it impossible to believe he would rely on sanctions or diplomacy. Rather, he would wait to strike until Iran had committed to arming a delivery system, leaving itself wide open to attack — a nerve-racking solution, but one with the best chance of success.
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Donald Trump Just Stopped Being Funny

By Matt Taibbi, Rolling Stone

22 August 15

Win or lose, Trump’s campaign threatens to unleash the Great American Stupid

o two yahoos from Southie in my hometown of Boston severely beat up a Hispanic homeless guy earlier this week. While being arrested, one of the brothers reportedly told police that “Donald Trump was right, all of these illegals need to be deported.”

When reporters confronted Trump, he hadn’t yet heard about the incident. At first, he said, “That would be a shame.” But right after, he went on:

“I will say, the people that are following me are very passionate. They love this country. They want this country to be great again. But they are very passionate. I will say that.”

This is the moment when Donald Trump officially stopped being funny.

The thing is, even as Donald Trump said and did horrible things during this year’s incredible run at the White House, most sane people took solace in the fact that he could never win. (Although new pollsare showing that Hillary’s recent spiral puts this reassuring thought into jeopardy.)

In fact, most veteran political observers figured that the concrete impact of Trump’s candidacy would be limited in the worst case to destroying the Republican Party as a mainstream political force.

That made Trump’s run funny, campy even, like a naughty piece of pornographic performance art. After all, what’s more obscene than pissing on the presidency? It seemed even more like camp because the whole shtick was fronted by a veteran reality TV star who might even be in on the joke, although of course the concept was funnier if he wasn’t.

Trump had the whole country rubbernecking as this preposterous Spaulding Smails caricature of a spoiled rich kid drove the family Rolls (our illustrious electoral process in this metaphor) off the road into a ditch. It was brilliant theater for a while, but the ugliness factor has gotten out of control.

Trump is probably too dumb to realize it, or maybe he isn’t, but he doesn’t need to win anything to become the most dangerous person in America. He can do plenty of damage just by encouraging people to be as uninhibited in their stupidity as he is.

Trump is striking a chord with people who are feeling the squeeze in a less secure world and want to blame someone – the government, immigrants, political correctness, “incompetents,” “dummies,” Megyn Kelly, whoever – for their problems.

Karl Rove and his acolytes mined a lot of the same resentments to get Republicans elected over the years, but the difference is that Trump’s political style encourages people to do more to express their anger than just vote. The key to his success is a titillating message that those musty old rules about being polite and “saying the right thing” are for losers who lack the heart, courage and Trumpitude to just be who they are.

His signature moment in a campaign full of them was his exchange in the first debate with Fox‘s Kelly. She asked him how anyone with a history of calling women “fat pigs, dogs, slobs, and disgusting animals” could win a general election against a female candidate like Hillary Clinton.

“I’ve been challenged by so many people,” Trump answered. “I frankly don’t have time for political correctness. And to be honest with you, the country doesn’t have time either….We don’t win anymore. We lose to China. We lose to Mexico….We lose to everybody.”

On the surface, Kelly was just doing her job as a journalist, throwing Trump’s most outrageous comments back at him and demanding an explanation.

But on another level, she was trying to bring Trump to heel. The extraction of the humiliating public apology is one of the media’s most powerful weapons. Someone becomes famous, we dig up dirt on the person, we rub it in his or her nose, and then we demand that the person get down on bended knee and beg forgiveness.

The Clintons’ 1992 joint interview on 60 Minutes was a classic example, as was Anthony Weiner’sprostration before Andrew Breitbart and Chris Christie’s 107-minute marathon apologia after Bridgegate. The subtext is always the same: If you want power in this country, you must accept the primacy of the press. It’s like paying the cover at the door of the world’s most exclusive club.

Trump wouldn’t pay the tab. Not only was he not wrong for saying those things, he explained, but holding in thoughts like that is bad for America. That’s why we don’t win anymore, why we lose to China and to Mexico (how are we losing to Mexico again?). He was saying that hiding forbidden thoughts about women or immigrants or whoever isn’t just annoying, but bad for America.

It’s not exactly telling people to get out there and beat people with metal rods. But when your response to news that a couple of jackasses just invoked your name when they beat the crap out of a homeless guy is to salute your “passionate” followers who “love this country,” you’ve gone next-level.

The political right in America has been flirting with dangerous ideas for a while now, particularly on issues involving immigrants and minorities. But in the last few years the rhetoric has gotten particularly crazy.

Texas Congressman Louie Gohmert proposed using troops and ships of war to stop an invasion of immigrant children, whom he described as a 28 Days Later-style menace. “We don’t even know all of the diseases, and how extensive the diseases are,” he said.

“A lot of head lice, a lot of scabies,” concurred another Texas congressman, Blake Farenthold.

“I’ll do anything short of shooting them,” promised Mo Brooks, a congressman from the enlightened state of Alabama.

Then there’s Iowa’s Steve King, who is unusually stupid even for a congressman. He not only believes a recent Supreme Court decision on gay marriage allows people to marry inanimate objects, but alsobelieves the EPA may have intentionally spilled three million gallons of toxic waste into Colorado’s Animas river in order to get Superfund money.

Late last year, King asked people to “surround the president’s residence” in response to Barack Obama’s immigration policies. He talked about putting “boots on the ground” and said “everything is on the table” in the fight against immigrants.

So all of this was in the ether even before Donald Trump exploded into the headlines with his “They’re rapists” line, and before his lunatic, Game of Thrones idea to build a giant wall along the southern border. But when Trump surged in the polls on the back of this stuff, it caused virtually all of the candidates to escalate their anti-immigrant rhetoric.

For example, we just had Ben Carson – who seems on TV like a gentle, convivial doctor who’s just woken up from a nice nap – come out and suggest that he’s open to using drone strikes on U.S. soil against undocumented immigrants. Bobby Jindal recently came out and said mayors in the so-called “sanctuary cities” should be arrested when undocumented immigrants commit crimes. Scott Walker and Marco Rubio have both had to change their positions favoring paths to citizenship as a result of the new dynamic.

Meanwhile, Rick Santorum, polling at a brisk zero percent, joined Jindal and Lindsey Graham injumping aboard with Trump’s insane plan to toss the 14th Amendment out the window and revoke the concept of birthright citizenship, thereby extending the war on immigrants not just to children, but babies.

All of this bleeds out into the population. When a politician says dumb thing X, it normally takes ‘Murica about two days to start flirting publicly with X + way worse.

We saw that earlier this week, when Iowa radio host Jan Mickelson blew up Twitter by calling for undocumented immigrants to become “property of the state” and put into “compelled labor.” When a caller challenged the idea, Mickelson answered, “What’s wrong with slavery?”

Why there’s suddenly this surge of hatred for immigrants is sort of a mystery. Why Donald Trump, who’s probably never even interacted with an undocumented immigrant in a non-commercial capacity, in particular should care so much about this issue is even more obscure. (Did he trip over an immigrant on his way to the Cincinnati housing development his father gave him as a young man?)

Most likely, immigrants are just collateral damage in Trump’s performance art routine, which is an absurd ritualistic celebration of the coiffed hotshot endlessly triumphing over dirty losers and weaklings.

Trump isn’t really a politician, of course. He’s a strongman act, a ridiculous parody of a Nietzschean superman. His followers get off on watching this guy with (allegedly) $10 billion and a busty mute broad on his arm defy every political and social convention and get away with it.

People are tired of rules and tired of having to pay lip service to decorum. They want to stop having to watch what they say and think and just get “crazy,” as Thomas Friedman would put it.

Trump’s campaign is giving people permission to do just that. It’s hard to say this word in conjunction with such a sexually unappealing person, but his message is a powerful aphrodisiac. Fuck everything, fuck everyone. Fuck immigrants and fuck their filthy lice-ridden kids. And fuck you if you don’t like me saying so.

Those of us who think polls and primaries and debates are any match for that are pretty naive. America has been trending stupid for a long time. Now the stupid wants out of its cage, and Trump is urging it on. There are a lot of ways this can go wrong, no matter who wins in 2016.

 

 

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