Here's to the crazy ones, the misfits, the rebels, the troublemakers, the
round pegs in the square holes... the ones who see things differently -- they're
not fond of rules... You can quote them, disagree with them, glorify or vilify
them, but the only thing you can't do is ignore them because they change
things... they push the human race forward, and while some may see them as the
crazy ones, we see genius, because the ones who are crazy enough to think that
they can change the world, are the ones who do.

Steve Jobs
US computer engineer & industrialist (1955 - 2011)

Tuesday, November 7, 2017

Why the Saudi Purge, and Why Now?

Make no mistake, the ongoing purge in Saudi Arabia is not about corruption. If you believe that, well, leave your tooth under a pillow for the tooth fairy.The purge is about one thing, and one thing only - power. Specifically, for the power of Mohammed bin Salman. The only questions to be answered is why the power grab, and why now?

The reason why: Saudi Arabia is about to go to war with Iran. There is no doubt that Salman, or MBS as he is known, has been conducting an aggressive covert war against Iran for years now. And, when I say Iran, I mean the Shiite. It's a blood feud going back thousands of years, and both sides take it very seriously. However, until now, Saudi Arabia and Iran have been able to avoid direct war with each other by sponsoring mini-wars with client states - like Lebanon, Syria, and the like. Why is that changing now? The Saudis are losing.

Saudi Arabia's military intervention in tiny Yemen, along with its (and MBS's) staunch ally the United Arab Emirates (U.A.E.) has become a disaster. Not only have the Saudis failed to defeat the Houthis (Shia), but they have lost immense prestige and influence in the Arab world and elsewhere for the failure. What they have achieved is the starvation of hundreds of thousands in Yemen, vast swaps of destruction in Yemen cities, and a massive cholera epidemic affecting hundreds of thousands of Yemen's people. What they have not achieved is any decisive, or otherwise, defeat of the Houthis. Rather than withdraw from this situation, Saudi Arabia just implemented a land, air, sea blockade of the tiny country. By any standard, Saudi Arabia's action in Yemen have been not just a war crime, but a crime against humanity. Yet, you would never hear a peep about it in the western press, or in western houses of parliament.

In addition to the massive failure in Yemen, Saudi Arabia's covert war in Syria has literally blown up in its face. Depending on which organization you believe, hundreds of thousands have been killed and maimed in Syria during the last four or so years, but the result has been abstract failure. While much of Syria lays in ruins, particularly the larger cities outside Damascus, the Syrian government itself was saved by direct Russian military intervention. Saudi Arabia attempted to bribe the Russian government into staying out of Syria by promising to hold terrorists back from attacking the Sochi Olympics - at least that is what was presented in the Russian media. Having failed to convince Russia that way, the Saudis decided to conduct an oil war against Russia. Specifically, they flooded the oil market with product and then refused to freeze or cut back production bringing the price down as low as $30 US a barrel in an all-out effort to destroy Russia's resource based economy. It failed. Instead of crippling Russia financially, the Saudis blew their own legs off, consolidated the Russia-China oil relationship, and severely discredited themselves among oil producing nations.

The common theme to all of MBS's covert and overt actions has been failure. It has become quite obvious that the US and Israel, both the powers behind MBS's moves, have lost patience with the Saudi's attempts to reverse Iranian influence in the Middle East. I say "reverse" because Iran has been present in Hezbollah (Lebanon), Syria, and Yemen for years. Therefore, it's quite obvious that MBS is not responding to any "new" Iranian aggression or threat, but rather simply taking on Iran as a regional actor. In other words, MBS is the aggressor. And by relation so is the US  and Israel. There is no better evidence of that relationship than the recent meeting Jared Kushner, son-in-law of  US President Trump and well connected member of the Jewish establishment in the US, with MBS just prior to the current purge within Saudi Arabia. In case that doesn't satisfy you, then please refer to Trump's own Twitter remarks where he states MBS "knows what he's doing".

In the nutshell, MBS, with the overt backing of the US and covert backing of Israel, took almost complete reigns over the Saudi state for the purpose of going to war with Iran. MBS's statement most recent statement that Saudi Arabia was in a "state of war" with Lebanon is  just the first step. It also jives perfectly with Israel's recent bombings of Lebanon and Syria, and matches the Israeli government's position on Hezbollah to a tee. Unfortunately it smells of desperation. With the war all but lost in Syria, and quagmire in Yemen, MBS is left with one option only - go after Iran itself. There are likely a few ways such a war can play out.

Before the US invaded Iraq, a Sunni-controlled buffer existed between Saudi Arabia and Iran. As I've often said, the only real result of the US invasion of Iraq was the ability of the Iraqi people to elect their own Ayatolla. Now Iraq is dominated by Shia, and thus Iranian, influence. So, bottom-line is this, if Saudi Arabia wants to get at Iran they'll have to do it through Iraq. Iraq and Iran are now strong allies - they're fought together to liberate Iraq from ISIS, and they'll keep fighting together to do the same in Syria - namely against the Kurds. Not to put too fine a point on it, but within the last month or so MBS has made it clear a war with Iran won't be fought on Saudi soil - so there's a process of elimination there.

So if you want to know why MBS has managed to clear the decks of all distractions in Saudi, the answer is that he is going to war with Iran directly and wants complete control of the apparatus of state to do so. If you wonder why now, the answer is he intends to go to war very soon. He has the complete backing of the US, and has given his own green light to Israel taking on Hezbollah in Lebanon - likely simultaneously. No question all of this smells like "Plan B", but we can all see what has happened to "Plan A".

What is key in all of this to remember is what aims all this serves. The world-wide economy is in a state of stagnation - essentially. Central banks have failed to create any real inflationary pressures that might allow them to raise interest rates. Oil is similarly stuck in the post-Saudi oil warfare blues. My feeling is there is a perception among those up high that a massive war in the Middle East will cause inflation to skyrocket world-wide. Saudi would theoretically benefit from a huge price increase in oil - as would the US. Russia's southern border, visa-via an Iranian defeat, would be massively exposed which of course is a major win for the US. Which brings me to a final point-Saudi's partial privatization of its huge state owned oil firm. Does MBS really want to stir Saudi Arabia on a post-oil course and diversify its economy? Or, is he raising a war chest to fight a to-the-death war with Iran? My bet is the latter. A full on war with Iran will likely triple the price of oil, so the Saudis will still get their much loved money, but they need cash to fight a big war, and their failed oil war has left them near a recession. Is it any wonder Trump encouraged Saudi Arabia via Twitter to conduct that initial offering on the New York Stock Exchange - hours before the purges started?

Monday, October 9, 2017

The Bitcoin Mirage

Let's be honest with each other here, Bitcoin is more of a home science experiment gone amok than a legitimate form of currency. In fact, Bitcoin far more resembles a classic Ponzi scheme than it does a currency, or a monetary system. It was created by a phantom figure known as Satoshi Nakamoto, whose identity has never been confirmed. The Japanese translation of his name roughly equates to "Central Source Wisdom (or Reason) in Japanese.

The basics of Bitcoin resemble a version of a video game you might play from your PlayStation. To enter you must get a "wallet". To create wealth you must "mine" Bitcoin. The mining process was easier at the beginning of the Bitcoin system - known as the "Genesis Block". However, the Bitcoin program was designed to make mining more and more difficult as more and more people joined the process. It has become so difficult that many groups of Bitcoin 'miners" have joined together in pools to share rewards, rather than strike out on their own and have nothing to show for it after months of work. Hence, the Ponzi scheme nature of Bitcoin. Easy money early, but as the pyramid grows the easy money gets to be less and less. Imagine yourself playing a simple video game that has you set up mines here and there, and transporting the "product" back to your fort. As your product grows you can cash it in for stronger fort walls, better soldiers, etc. You get the idea. Essentially, this rather basic concept is the Bitcoin concept.

Beyond the video gaming and Ponzi nature of Bitcoin, there are numerous, serious fundamental flaws in the concept. Firstly, and most importantly, Bitcoin is a decentralized currency. In other words, it is not regulated by anything other than a computer program - essentially. There is no governmental control. There is no central authority like a central bank. In this sense, Bitcoin is almost an anarchy currency - with the important exception that every single transaction of Bitcoin is recorded. Fundamentally any currency, whether gold, salt or paper currency, has as its primary objective to regulate the consumption of resources by people. Given that currency regulates consumption by citizens, and citizens belong to nations, and nations control territory, and territory produces resources, it has always been the case that nations have there own currency - or in the case of the European Union a supra-national currency. The one constant feature is these nations, and even the EU, have governments responsible to their citizens for policy, including the regulation of resource consumption. What Bitcoin attempts to do is take away the regulation of consumption from the state, including the responsibility for that regulation, and hand it over to a computer program that is not responsible for its decisions to anyone. A truly bizarre state of affairs for the human race - one which you might have seen in a sci-fi movie from time to time.

The most dangerous concept of Bitcoin is that it is not rooted in value, but rather transactions. In the Bitcoin world, transactions create value. Essentially, it has no intrinsic value. By contrast, gold is a commodity that is very limited in quantity, is physical, and is almost indestructible. What Bitcoin does is actually emphasize the basic fundamentals of our current financial state. The world now runs on debt rather than value. In this way it regulates how much each person consumes. For example, if you want to purchase a boat, but do not have the necessary cash to do so, you must have enough debt room to borrow to purchase that boat. More often than not, in todays world, you have very little physical wealth to back that loan. However, allowing you to buy that boat now, as opposed to when you have enough dollars to do so, allows companies to keep selling, growing, and so on. Bitcoin takes that a step further. Instead of having debt that is measured in dollars, which have now lost most of their value due to unsupported borrowing, a new Bitcoin system will not require any physical constraint to consumption.

Bitcoin represents a new generation of irresponsible economics, designed primarily to serve the individual rather than the collective society. Its inevitable result is the stripping of social constraints on consumption. For instance, medicare may be paid by taxes in one country, but another country may require private payment for the same services. In a Bitcoin world the transactions for such services would be between the doctor and the patient, leaving no room for societal values. In this sense, Bitcoin represents an extreme Libertarian view of the world. After all, if you take Bitcoin at face value, and take it to its logical conclusion, a Bitcoin world would be dominated solely by Bitcoin transactions - the world currency. If this isn't the case why does Bitcoin exist? It's the old "half-pregnant" argument. There is either a recognized crypto currency in the world or there isn't. If there is such an instrument, then the world recognizes that this currency based on a computer program is legitimate. If that is legitimate, then the current currency model must no longer be legitimate. There cannot be two simultaneous currencies in the world - one which is controlled by central banks and one which is not.

Our financial system is, at the moment, is unsupported and unsustainable. It is based on nothing other than debt. China, Russia and a few other countries are trying to reign in consumption of resources by tying the value of currencies to something meaningful and measurable - gold. China has basically banned Bitcoin operations in its country, and that is a wise move from one of the wisest societies on earth. Instead, it is implementing discipline by implementing a gold standard to measure its currency by. Russia is moving in the same direction. Personally, I see the Bitcoin movement as an attempt to circumvent the direction China and Russia have been moving in. It's simply a very poorly veiled attempt to convert the American dollar as the world's main reserve currency to Bitcoin. By doing so the Americans hope to halt the reestablishment of the gold standard which, if implemented on a world-wide basis, would render the US dollar almost worthless and see the Chinese currency become the world's leading reserve currency. No doubt the Chinese see this themselves as they banned Bitcoin.

The current price for a single bitcoin is $6,025.06 or about four times the price of an ounce of gold. All the gold mined in the world, since recorded history at least, could fill three Olympic sized swimming pools. So what makes Bitcoin so much more valuable than one of the least available commodities in the world? The answer is nothing. It's sheer speculation by the same folks that normally run up the stock market. In fact, they are attempting to create a market where one isn't needed. The reason: greed. It's like a new gold rush. Except it isn't gold. It isn't anything but a play on a simple video game that rewards those in early, and leaves the last arrivals holding the bag. Do yourself a big favour, see Bitcoin for what it is - a mirage.

Monday, October 2, 2017

Dear Premier Ball

Dear Premier Ball,

I know it's been awhile, and I know I've sworn off writing about Newfoundland and Labrador politics, but some things just can't be left unsaid. I've watched you now for almost two years, and am constantly amazed at how you let the issues that arise beat the bejezuz out of you before you act. Maybe it's the advice your getting (it's bad advice). Maybe it's you being bull headed (I hear you don't like dissent, but who knows). Perhaps it's a sadomasochistic enjoyment of being pummeled before cluing in (I doubt it, but who knows). Bottom line is this Dwight, when you drag your feet on obvious decisions those back biters in your party love it cause it makes you look like a weak leader, and the PCs who caused the problems in the first place love it cause you begin to wear their dirty clothes. Here's how you can turn that all around.

The Muskrat Falls nightmare. Yes, it's a doozy. One of those damned if you do and damned if you don't, cause you wanted political office too badly and now you have to live it, quagmires. The way out is like this: don't put off an obvious political decision until it looks like you're hiding something to cover your own arse. It's called political foresight. If you don't have it, and none of the people around you have it, do yourself a favour and find someone that does. When it comes to the Muskrat Falls inquiry, I've taken it upon myself to give you a free-bee.

First off, it has to be seen as beyond reproach. That's a pretty tough call in Newfoundland - as one very senior judge in Newfoundland once said to me: "If nothing else Mr. Cabana, you have managed to expose ... I'm not sure if this is the right word ... the incestuous relationship between the court and the legal profession here." When every law firm has a finger in the political pie, it is very difficult if not impossible to get a judge to preside over this inquiry that is beyond fairly easy scrutiny. Here's my suggestion: if not a judge from out of province, then try retired Justice Orsborne. He took on Danny Williams over the naming of the court house in Corner Brook so I think you would have a winner there.

Secondly, the terms of reference. It's not much good to have a great judge and then tie his hands with a restrictive terms of reference. Besides, the finger will be immediately pointed at you for trying to sabotage the inquiry before it even starts. To be honest Dwight, having the "departments" craft the terms of reference is a really bad start. The departments have a vested interest in covering their own butts in any inquiry, and you know they were up to their necks in it. Kinda like asking the thief to judge himself. You have to avoid stuff like that. What you need to do here is use your common sense. Muskrat Falls was a "political issue" from day one, and not a "departmental issue". If you want to get at the truth, and you aren't trying to white wash the deal for say a friend, like I don't know, say Brian Tobin, who is a friend of say Danny Williams, then you have an open terms of reference: The legislation that ran up to it; the awarding of contracts; the sale of the former Premier's assets to companies that won the major bids; etc, etc.

While you are at it Dwight, but only if you want to try and calm the waters, you might want to include the government and Nalcor's treatment of dissidents of the project. After all, Liberals are big champions of the Charter, right? Showing that the government is concerned about citizens being silenced and character assassinated by their own government might win you some points amongst the "Known Critics", and hey, they may not be attacking you and your inquiry every five minutes. A degree of bipartisan support never hurts. Being a statesman is never a disqualification for leadership, and hey, you and I both know some Liberals are sharpening their knives in the shadows. So do yourself a monumental favour, and make this an important part of the inquiry. After all, if a province has healthy dissent its leadership is less likely to pull bone head moves, like, say, Muskrat Falls.

Just an aside Dwight. On the whole forensic audit thing. You might as well announce that too. Just like Scrooge's ghosts, not green lighting this is gonna bury the inquiry, you, and the Liberals. You don't want that right?

Oh ya, one last thing. If you fail to take this free-bee advice, your inquiry is going to blow up into the nightmare your mother warned you about. Imagine it now: the social media, and especially us bloggers, are going to crucify you and the party for covering up for your buddies; radio shows will be giving you a throbbing head ache; and even the press will more than likely join the band wagon. They're all looking for blood - yours, Danny's - you get the idea. Do yourself a favour, Dwight, stop listening to whoever it is that's giving you the shitty advice, probably helping you out the door for their buddies, and do the sensible thing. You can't be faulted for the sensible thing. Come what may.