Category: The Big Picture

Failure of western democracy, tensions between the US and China, the Arab Spring and other major global events.

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Gold: “Trump rally” unlikely to last

Gold reacted with urgency to the news that Donald Trump was closing on Hillary Clinton in the polls. After a lackluster start the rally gained new energy in the last week, with the yellow metal climbing to test resistance at $1300/ounce.

Spot Gold

Experienced pollsters seem to think that Trump’s gains are too little and too late. According to GOP pollster Whit Ayres, in this PBS Newshour interview, Trump has about the same chance of winning as drawing an inside straight in poker. “He has spent his entire campaign preaching to the converted rather than reaching out to undecided voters….”

Unless there is an upset in next week’s election, I expect gold to respect resistance at $1300/ounce, followed by a test of primary support at $1200.

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Obama’s Wrong: The New Cold War’s Only Just Begun | The Daily Beast

Michael Weiss writes: “From propaganda to missile deployments, Russian leader Vladimir Putin is testing Obama’s resolve—while claiming to be America’s victim”…..

Putin has demanded, as the price for restoring at least the first frozen accord, that Washington end all sanctions against Russian officials; pay reparations for any losses sustained from those sanctions as well as retaliatory ones imposed by Russia against U.S. entities; cancel the Magnitsky Act, a landmark human rights law passed in 2012 aimed at penalizing corrupt and murderous Russian officials; reduce NATO personnel forces to levels they were as of 2000; and essentially rewrite the original radioactive disposal deal so America bears the brunt of the responsibility for it.

In response to what was, even by Putin’s standards, a risible attempt at extortion, the Russian opposition’s Leonid Volkov wrote on Facebook: “He should have asked for Alaska back, eternal youth, Elon Musk and a ticket to Disneyland.”

….what a turn for Obama, who has spent the last eight years insisting that the “Cold War is over” only to spend the eve of his departure witnessing its renascence.

The response should be to talk softly and continue polishing that big stick.

Source: Barack Obama’s Wrong: The New Cold War’s Only Just Begun – The Daily Beast

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Why Putin will fail | UPI.com

From Harlan Ullman:

Frozen conflicts are not in Russia’s long-term interest. Of course, while the short-term aim of preventing Georgia and Ukraine from joining NATO because of contested borders is working, the long-term economic damage done to Russia will prove politically destructive. Putin certainly is riding a political tiger. However, he has no clear exit strategy for safely dismounting this dangerous beast. That is a fundamental predicament….

What should the United States do? First, common sense and not confrontation is the best means to exploit Putin’s political weaknesses. By threatening Russia, his public will rally around Putin. This does not mean granting concessions. It means being smart not petulant. It also means shifting NATO’s strategy to local defense based on a “porcupine” posture with emphasis on Stinger-like anti-air and Javelin anti-vehicle missiles all reinforced by alliance capabilities to blunt Russian cyber, propaganda, intimidation and other non-conventional forms of war.

Second, the United States needs to dial back on belligerent rhetoric. By all means plan for “full spectrum war.” But do not use a PR bullhorn to announce what is being done. Teddy Roosevelt applies — speak softly but carry a big stick….

Source: Why Russian President Vladimir Putin will fail – UPI.com

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May Looks Beyond Brexit | Bloomberg

Robert Hutton at Bloomberg discusses Theresa May’s speech, Wednesday, at the Conservative Party’s annual conference:

….May’s comments mark a change of emphasis from the views of her predecessor. In his 11 years as Tory leader, David Cameron argued that the party needed to show that it was in touch with modern Britain by focusing on climate change and gay rights. May, by contrast, argues that the party needs to reach “ordinary working-class people.”

She’ll say she sees the role of the government as providing “what individual people, communities and markets cannot.” And she’ll argue that this means “providing security from crime, but from ill health and unemployment too. Supporting free markets, but stepping in to repair them when they aren’t working as they should. Encouraging business and supporting free trade, but not accepting one set of rules for some and another for everyone else.”

….three senior figures in May’s administration said financial-services companies would get no special favors. The extracts of May’s speech suggest she thinks Cameron was too focused on that sector. “If we act to correct unfairness and injustice and put government at the service of ordinary working people,” she’ll say, “we can build that new united Britain in which everyone plays by the same rules, and in which the powerful and the privileged no longer ignore the interests of the people.”

Source: May Looks Beyond Brexit to Portray Herself as Workers’ Tribune – Bloomberg

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Kevin Andrews and the challenges for Australian conservatism

By William Hill:

The Liberals …have to decide how to confront the anti-business, anti-immigration trend that is developing on their right flank.

John Howard was able to manage One Nation by moderating his criticism and by appearing to assuage some of their concerns. On the BBC Howard responded to a criticism of his refugee policy by arguing that the handling of the former helped to mitigate opposition to orderly migration.

Concerns are real and perceived but the economic insecurity confronting so many Australians and their children is a palpable thing. Some people voice their frustration by voting for a moderate protectionist such as Nick Xenophon and others hitch themselves to One Nation’s more assertive and aggressive style. The Liberals are in difficulty when so many of its natural voters are suspicious of capitalism and the importation of more and more people into the country.

……The supporters of Hanson, Xenophon, Lambie and Katter do not feel that the present arrangements in parliament are working for them and we should not rush to dismiss them. We should also give these voters the benefit of the doubt that they do not share the faults and naiveties of the people they have elected. Andrews advocates a more conciliatory approach when it comes to Hanson’s supporters:

“You have to listen to their concerns, the fact that a person votes for One Nation doesn’t mean that they are a racist, redneck, homophobic whatever. Some might be but usually there is an underlying concern about the direction of the country and the direction of the economy that’s motivating them.”

That underlying concern is nothing less than their fear for their economic wellbeing and that of the next generation. If the Liberal Party is going to defend free enterprise, free trade and immigration against protectionists and nationalists then it had better do as Howard did successfully and give the concerns of the latter fair hearing.

Source: Kevin Andrews and the challenges for Australian conservatism after Hanson – On Line Opinion – 21/9/2016

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Niall Ferguson: The West and the Rest – The Changing Global Balance of Power

Niall Ferguson is the Laurence A. Tisch Professor of History at Harvard University.

I would love to see Ferguson re-visit this 2011 talk every five years. One certainty about the future: it isn’t what we think it’s going to be. China’s economic rise seems to be slowing far more rapidly than was expected. Foreign reserves have declined by $800 billion in the last two years (from a peak of $4 trillion) through PBOC efforts to prevent the collapse of the Yuan in the face of rising interest rates from the Fed. China’s growth-through-infrastructure-investment model seems to have run its course and is now facing diminishing returns. Transition to a consumer society is not going to be easy. And China’s property bubble has created an extremely fragile banking system with massive bad debts.

On the plus side, Ferguson seems to have been right about rising Chinese nationalism — to deflect the population’s attention from enormous inequality in the distribution of wealth — and the CCP’s ability to maintain tight political control. Let’s hope that he is also right about China’s inability to suppress personal and political freedom in the long-term if it wants to maintain stable growth.

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Margaret Thatcher: Interventions

The habit of ubiquitous interventionism, combining pinprick strikes by precision weapons with pious invocations of high principle, would lead us into endless difficulties. Interventions must be limited in number and overwhelming in their impact.

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Portugal: What Happened After It Decriminalized Drugs | VICE

By Samuel Oakford

…..16 years ago, Portugal took a leap and decriminalized the possession of all drugs — everything from marijuana to heroin. By most measures, the move has paid off.

The rate of new HIV infections in Portugal has fallen precipitously since 2001, the year its law took effect, declining from 1,016 cases to only 56 in 2012. Overdose deaths decreased from 80 the year that decriminalization was enacted to only 16 in 2012. In the US, by comparison, more than 14,000 people died in 2014 from prescription opioid overdoses alone. Portugal’s current drug-induced death rate, three per million residents, is more than five times lower than the European Union’s average of 17.3, according to EU figures.

Source: Portugal’s Example: What Happened After It Decriminalized All Drugs, From Weed to Heroin | VICE News

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