"America won the cold war. What went wrong?"

Tear down the (Berlin) wall, 1991.

The writer Andrew Bacevich:

"Globalisation was meant to create wealth, but many Americans complain of inequality; military dominance sucked the country into never-ending wars that sacrificed the children of lower-income families (but, for the most part, no one else’s); the pursuit of fulfilment led to the withering of duty and a selfish, atomised society; and the supremacy of the presidency became a recipe for voters’ disappointment."

Which book should I buy? I'm leaning toward Bacevich's.

(He) warns that, although Mr Trump offered no definition of post-cold-war America, just a rejection, there is no going back. That is a lesson for Joe Biden, the presumptive Democratic nominee, who gives the sense that going back is what he would most like to do.

As with the coronavirus ...

The victor’s curse: America won the cold war. What went wrong? at The Economist

Three contrasting books examine a superpower’s malaise

• Do Morals Matter? By Joseph Nye. Oxford University Press; 268 pages; $24.95 and £18.99.
• The Abandonment of the West. By Michael Kimmage. Basic Books; 368 pages; $32 and £25.
• The Age of Illusions. By Andrew Bacevich. Metropolitan Books; 239 pages; $27.

The United States, Andrew Bacevich writes near the start of his account of post-cold-war America, is like the man who won the Mega Millions lottery: his unimagined windfall holds the potential for disaster. Things are not quite that bad. But almost three decades after America watched the Soviet Union fall apart, victory feels like a disappointment.

The end of the cold war established America as the most powerful country in history. Its armed forces were unmatched and its governing philosophy seemingly had no rival. Yet it has struggled either to prevail against illiterate tribesmen and tinpot dictators or to get to grips with a newly assertive Russia and a rising China. In a pandemic its allies might have expected America to co-ordinate a planet-wide response. Instead, it has turned inward. Just as startlingly, America itself fell prey to bitterness and division, culminating in the presidency of a man who won office by rejecting many of the values which had helped bring about that original victory.

This is the sombre backdrop for three very different books about America’s place in the world. Joseph Nye, a former dean of the Kennedy School at Harvard, looks at how presidents have struggled to embody their country’s moral leadership. Michael Kimmage, a fellow at the German Marshall Fund, teases out the contradictions in the idea of an American-led “West”. And Mr Bacevich, a professor emeritus at Boston University, depicts the construction (and then, he argues, the demolition) of a post-cold-war doctrine of American power.

None of these books is the last word on an important question. But each offers tantalising insights into how victory soured ...

Undisputed top MUST READ of the week: "The Iraq invasion is no longer just one of the great crimes of this or any age – it's become a crossroads event in the history of America's decline."

Welcome to rock bottom.

Taibbi: The Legacy of the Iraq War, by Matt Taibbi (Rolling Stone)

The invasion is no longer just one of the great crimes of this or any age – it's become a crossroads event in the history of America's decline

Fifteen years ago this week, George W. Bush invaded Iraq. It was an awesome drama, made more thrilling by the seemingly obvious craziness of it all.

People were looking at each other out of the corners of their eyes, shrugging, and asking: Can we really do this without a reason? That was the dramatic subtext of the invasion.

In the press, no one could really make sense of the supposed justification for the invasion. That it was compelling, no one could deny. Hell, just look at the fonts. We all used the biggest ones we had! The New York Times said it all with its dramatic banner:

"BUSH ORDERS START OF WAR ON IRAQ; MISSILES APPARENTLY MISS HUSSEIN"

GOON BOMBS CITY ON HORSESHIT PRETEXT would have been more accurate, but editors were giving everyone the benefit of the doubt back then, and getting on board, for patriotic reasons. The Gray Lady, who was playing such a key role in what was going on, was certainly getting in the spirit, giving in to the adrenaline rush of Bush's evil gambit.

It was the same with CNN's breathless coverage of that first night, with the creepy green-hued night-cams showing explosion after monster explosion.

Shock and awe, we called it: a new plan for "achieving rapid dominance." What a great Hollywood name, and goddamn if people didn't sit glued to their TVs to watch its rollout, getting off like a bunch of kids blowing up frogs.

Wars are great TV. The prolonged political lead-up, the decision to kill, it's all rich with suspense, and when wedded to the sight and the sound of the bombs, after waiting all those months for one nightfall, at the hour of crime and sex, to launch the first sorties from a secret location at sea – it all trips the senses. It's a turn on. It makes the Super Bowl look like paint drying. The sheer drama is how they sold this thing to the public, fifteen years ago this week.

But that's not how our rulers sold the war to themselves. They weren't overcome with emotion, or some post-9/11 yearning for vengeance. They knew what they were doing.

The Iraq invasion, one of the great crimes of this or any age and destined to be a crossroads event in the history of America's decline, was instead a cold, calculated, opportunistic power grab, aimed as much at future targets, and even our own population, as at the Iraqi "enemy."

As citizens, we haven't started to reckon with any of this. We write it off rather than deal with it. In fact, when we think of Iraq at all, we often describe the invasion as a mistake. Embarrassingly, even I did this a few weeks back, talking about how we "blundered" into Iraq.

It's understandable. There are superficial plot elements from the Iraq narrative we lean on to soothe ourselves that the invasion was caused by an unlikely confluence of accidents and errors, not the inherent venality of our system ...

Kunstler: "The condition of the country is pretty awful as we turn the corner onto 2017."

It's been a while since we checked in with Clusterfuck Nation, where James Howard Kunstler chronicles precisely that.

Here are a few of Kunstler's observations in vastly truncated form. Set aside 25 minutes, pour a nice coffee or stiff drink, and enjoy the ride.

Spoiler alert: We're doomed, folks.

---

Forecast 2017: The Wheels Finally Come Off

American Notes

If by some magic any new industrial capacity were built, much of the work in it would be performed by robotics, not brawny men in blue shirts, and certainly not at the equivalent of the old United Auto Workers $35-an-hour assembly line wage. We have not faced the fact that the manufacturing fiesta based on fossil fuels was a one-time thing due to special historical circumstances and will not be repeated. The future of manufacturing in America is frighteningly modest. We’ll actually be lucky if we can make a few vital necessities by means of hydro-electric or direct water power, and that will be about the extent of it. Some of you may recognize this as the World Made By Hand scenario. I’ll stick by that.

Similarly for “infrastructure” spending touted by the forces of Trump as the coming panacea for economic malaise. I suspect most people assume this means a trillion-dollar stimulus spend on highways and their accessories. Well, that also assumes that we expect another fifty years of Happy Motoring and suburban living. Fuggeddabowdit. We’re in the twilight of motoring anyway you cut it, despite all the chatter about electric cars and “driverless” cars. We won’t have the electric capacity to switch over the Happy Motoring fleet from gasoline. The oil industry itself is already headed for collapse on its sinking energy-return-on-investment. And our problems with money and debt are so severe that the motoring paradigm is more prone to fail on the basis of car loan scarcity and unworthy borrowers before the fueling issues even kick in. Every year, fewer Americans can afford to buy any kind of car — the way they’re used to buying them, on installment loans. The industry has gone the limit to help them — seven-year loans for used cars! — but they have no more room to maneuver. The car financing system is broken. Bear in mind the original suburbanization of America back in the 20th century — along with its accessory automobiles — must be regarded as the greatest misallocation of resources in the history of the world. So, a rebuild of all this stuff would represent more and possibly even greater malinvestment. We could have applied our post-WW2 treasure to building beautiful walkable towns and cities with some capacity for adaptive re-use, but we blew it in order to enjoy life in a one-time demolition derby. Life is tragic. Societies make poor choices sometimes, and then there are consequences.

Designated Bag-Holder

The American people have been punked by their own government and their central bank, the Federal Reserve, for years and the jig is now up. In 2017 both will lose their authority and legitimacy, a very grave matter for the survival of this republic ... had Hillary Clinton won the election, at least the right gang would have had to take the blame — the people in charge for the past twenty years. Instead, Donald Trump has been elected Designated Bag-Holder.

About That “Big Fat Ugly Bubble” and its Consequences, Part 1: History Lesson

The USA ran out of growth capacity around the turn of the millennium because we ran out of affordable energy to run our techno-industrial economy. It was hard to see this with seemingly plenty of oil available. And, of course, the computer tech fiesta was blossoming, but for all that glitzy stuff to attract dwindling real capital, other old stuff had to go, and did go, and when all was said and done the computers did not generate much wealth or social value. In fact, the diminishing returns and blowback of computer tech were arguably more damaging than beneficial to society and its economy. Look at where the middle class is today. Computer tech gave the magical appearance of growth while actually undermining it. By affordable energy I mean energy with a greater-than 30-to-one energy-return-on-investment, which is the ratio you need for the kind of life we lead.

Debt was the meat-and-potatoes of the Fed’s wizardry, but the “secret sauce” of Fed magic was fraud, in the form of market interventions, manipulations, regulatory negligence, and just plain systematic lying about the numbers that defined the economy. It amounted to nationalized financial racketeering. Under the consecutive Grand Vizierships of Greenspan and Ben Bernanke, control fraud (using official authority to cover up misconduct) was perfected by banking executives, eventuating in the mortgage securities fiasco of 2008, which took down the housing market and the economy. (That housing market, by the way, was made up mainly of suburban houses, the sine qua non of the greatest misallocation of resources in the history of the world.)

About That “Big Fat Ugly Bubble” and its Consequences, Part 2: 2017, the Year of Living Anxiously

Get this: the Fed is completely full of shit. It is terrified of the conditions it has set up and it has no idea what to do next. The “data” that it claims to be so dependent on is arrantly fake. The government’s official unemployment number at Christmas 2016 was 4.6 percent. It’s a compound lie. The 4.6 percent does not include the 95 million people out of the workforce, most of them able-bodied, who have simply run through their unemployment benefits and given up looking for work. Nor does it figure in the fact that roughly 90 percent of the new jobs created are part time jobs, many of them held by people working several jobs (because they have to, to pay the bills). Nor does it detail the quality of the jobs created (minimum wage shit jobs.)

Why Trump Can’t Pull a Reagan

Today, the US is in a box and Trump comes on the scene with nowhere to move. Too much debt can only be managed if interest rates are kept low. Everybody and his mother around the world is dumping US Treasuries. With a bear market in bonds on, the Fed as buyer of last resort will have to sop up whatever comes on the market to keep the interest rate from rising above three percent on the ten-year, and even that may not prevent it. Trump’s vaunted infrastructure stimulus plan will be impossible to carry out without the Fed monetizing the necessary debt. So stimulus implies bigger deficits, which means more bonded debt that nobody wants to buy. The result will be inflation and accordingly further upward pressure on interest rates. Higher interest rates, in turn, will negatively impact economic activity, lowering tax revenue, inducing larger fiscal imbalances and greater instability.

Trump may never even get the stimulus he seeks. The Republican controlled-congress has vowed not to increase the national debt. How can Trump fulfill his pledge to cut taxes and bring on stimulus without hugely increasing the debt? If there is war over spending between Trump and Congress, Congress is likely to win, since they control the fiscal purse strings. Of course, Donald Trump cannot abide not winning. Hostilities between them may become permanent early in Trump’s term and bring on even more dangerous paralysis of governance.

Desperate Measures

One of the other big and dark trends of the past year has been the move of governments around the world — and among the economist / necromancers who advise them — to ban cash from the scene in order to herd all citizens into a digital banking system that will allow the authorities to track all financial transactions and suck every possible cent of taxes into national coffers. It would also be an opportunity for the bank-and government cabal to impose negative interest rates (NIRP) on bank accounts so that money herded into the digital system could be surreptitiously “taxed” by charging account holders just for being there (against their will). It’s a little hard to see how that might happen just now in a broad rising rate environment, but it would be the natural accompaniment to banning cash — and renewed aggressive QE (QE forever!) might do the trick.

It’s hard to see the US government banning cash as clumsily as India did, but they have other ways to herd the multitudes into the black box of all-digital banking.

Wild in the Streets

The public is just plain pissed off, and remains pissed off after the Trump Victory. Their anger has been fermenting for decades as their economic prospects dwindled and they began to understand how it all worked against them. The battered middle class might have gotten a temporary thrill from the election, but an awful lot of them are still out of work, or working at the humiliating shit-jobs that replaced their old lost jobs in the old real stuff economy. Worse is coming their way in 2017. Theirs is a true existential crisis.

That may be the moment when President Trump and his militarily-weighted cabinet appointees opt for martial law. What a goddamned mess that will be. There is no civilized country on earth with as many small arms per capita than the USA, and despite the fearsome appearance of militarized police forces, you cannot overstate how much deadly mischief a small number of pissed-off people can make with automatic rifles, rocket-propelled-grenades, Semtex plastic explosive, and other fun stuff. It could morph easily to a literal war on bankers and Wall Street in particular, especially if Ice-Nine goes into effect. Bear in mind that a lot of veterans of the endless Middle East wars belong to this suffering economic class, and they actually have some training in the warrior arts.

Their political counterparts in the Democrat / Prog coastal elite, hardcore Hillary, PC-and-unicorn crowd are moving through their post-election Kubler-Ross Transect-of-Grief from denial to anger too. So both sides are quite pissed off and primed for conflict. The Left will certainly do everything possible to oppose Trump and try to make him look bad, whether it’s in the public interest to do so or not. They will throw every monkey-wrench possible into the machinery of governance, up to and including the (mostly Democratic Party weighted) Federal Reserve hierarchy, whose interest rate “dot plot” could be truly a plot to exact revenge on Trump. Of course, that would blow up in their faces since proportionately the coastal elites own much more stock than the Trumpenlumpenprole red-staters, and they could be wiped out in a significant market crash triggered by rising interest rates. But that’s the thing about political rage: it’s the opposite of rational.

There’s no sign that the Democrat / Progs have recognized that their poisonous identity politics played a significant role in their electoral defeat. They will not abandon that endeavor in 2017. They will double-down on it. And as that happens, the Democratic Party will go the way of the Whigs in 1856 — with a whimper, not a bang. God knows who or what will replace them as a credible opposition to Trumpist crypto-Republicanism, although Trump himself stands a good chance of leading that party to oblivion, too, if my forecast of a big financial blow-up comes to pass.

The Oil Quandary

The pattern nicely describes the dynamic advanced by Joseph Tainter in his seminal work, The Collapse of Complex Societies: namely that over-investments in complexity lead to diminishing returns. That is, as you keep making your systems extra-hyper-complex, you get less value back for doing it, until you get to the point where there’s no benefit whatsoever, and then the system implodes. And that is exactly what has happened with oil and the economy that was engineered to run on it, and the financial system that evolved to manage the wealth it used to produce.

Vagrant Thoughts on Geopolitics

As I write just before New Year’s Eve, President Obama is trying to start World War Three with Russia as a parting gift to the voting public. I’m among the skeptics who think that the “Russia Hacks Election story” is a ruse to divert the public’s attention from the stupendous failure of the Democratic Party to win, as expected. Rather, Wikileaks should get the Pulitzer Prize for revealing so much about the nefarious workings of the Clinton Foundation and the Democratic National Committee.

Regular readers know I didn’t vote for Trump, that I heaped considerable abuse on him in the campaign commentaries. But I didn’t take any comfort in the nostrum about being “better off with the Devil you know (Hillary) than the one you don’t know (Trump).” Both candidates were awful, and the condition of the country is pretty awful as we turn the corner onto 2017.

If you’ve gotten this far, I commend and admire you hugely for your remarkable patience. Have a happy 2017 everybody, and don’t let our Trumpadelic president get you down.

I believe drinking more Radeberger is not a potential key to resolving Russia's economic difficulties.

It's worth noting that Mikhail Gorbachev's response to the 1980s-era problems cited below was not to dismantle the Soviet Union, but to reform it, something only an "insider" could hope to achieve. However, once Gorby the Insider went under the hood and began tinkering with rotted parts, dismantlement was the direct result.

There was far too much sand and not enough cement.

Putin's new edition of Mother Russia may not be quite that dilapidated. If it is, we may wish to be ready for the consequences. I enjoyed drinking beers in Volodya's general proximity while in Dresden all those years ago, but as I've learned time and time again in my own life, nostalgic beer memories seldom pay the bills.

Russia's Economy Is Collapsing. Here's What You Need to Know, by Jenna McLaughlin (Mother Jones)

... Why did the Soviet Union lose control of its satellite states behind the Iron Curtain in 1989? Lots of reasons, but the proximate cause was a disastrous war in Afghanistan; plummeting oil prices; and a resulting economic crisis.

War, sanctions, an oil crash, and finally bankruptcy. And while history may not repeat itself, it sure does rhyme sometimes: 25 years later Vladimir Putin has managed to back himself into a situation surprisingly similar to the one that led to the end of the Soviet Union and the final victory of the West—the very event that's motivated almost everything he's done over the past few years. This is either ironic or chilling, depending on your perspective.