Discouraged by the Primaries

This is going to be a little bit of a non-PC rant, so I apologize in advance.

I'm not happy with the way the GOP primary is going so far. I'm especially irritated this time around because this has been the first presidential election I can remember where I actually liked a candidate. That doesn't mean I was 100% behind him, but favorable enough that it didn't feel like a lesser of two (or six) evils situation. And that felt really good. But alas, it looks like we're headed for more of the same.

I liked Thompson (who announced yesterday that he is dropping out). He campaigned horribly and had a hard time getting his message across, but eventually in addition to just having "good feelings" about him I started to understand his "conservative principles" agenda in a more concrete way, rather than the vague statements he campaigned on. I appreciated that Thompson was not conspicuously religious, which for someone who emphasizes his conservatism was remarkable. Conservatism to him meant strong defense, strong economy, and placing greater trust in the people rather than expecting government to take care of everyone. He did not spend much time on "moral majority" type "values." On issues, I considered Thompson the strongest on foreign policy, although I thought he was a bit too into the "war" model where it started to bleed into domestic policy.

Things are not looking good for Giuliani. It seems he forgot something fundamental about the way Americans think: as Patton said (according to the movie anyway, I have no idea if he really said that), "America hates a loser." No one cares that he's conceding states he can't win to focus on Florida. They just see him coming in below Paul and think "loser." So his national numbers have slipped. And now he's probably going to lose Florida to McCain and maybe Huckabee or Romney too, and if that happens he's done for. Giuliani is definitely my favored pick. Strong on defense, lots of executive experience--with great results, and most importantly for me, moderate on social issues. That's not about electability to me--it's the key feature I need in a Republican to feel like the candidate represents me and not the enemy.

I really think that if Giuliani goes down, it's back to a lesser of evils contest. Huckabee I won't consider for a second; he doesn't have the fortitude to make the hard calls and do what's right (he's a pussy), he knows dick about foreign relations, and he's got a shitty record as governor. So it's between Romney and McCain. I don't like either.

McCain is probably the BEST candidate with respect to many of the liberty issues associated with the war on terror, and on top of that he "gets" the global aspect of the fight was well as his top competitors. But he has poor ethical judgment. He's the last person out of all of them I trust to wield the veto responsibly, and by responsibly, I mean with gusto. I want a president who is going to give Congress the finger and shut them down to keep them from eroding our freedom. McCain isn't that guy--not only did he vote for the laws that eroded our freedom, he fucking authored them! And then there was his attempt to solve the immigration issue without regard for the ethical boundary of ensuring that no one was to receive a benefit for breaking the law or an incentive to break it. The power of the veto needs to be weilded by someone who knows where to draw the line in the sand, not by someone who says "let's make a deal." And maybe this is going too far, but I can't help but think that maybe the reason he's willing to make a deal and do wrong is because it is politically advantageous---the last think I want in November is a choice between two Clintons.

And then there's Romney. Strong conservative, yeah yeah. But a bit of a boilerplate candidate who says what he needs to. My biggest problem is who's behalf he's running on--the social conservatives. And that's not something I can get behind. At all. I'm fucking tired of them. I'm tired of their attempts to make the entire world safe for children (or for adults with a stick up their asses). I'm tired of them arguing by mystical authority instead of thinking for themselves. I'm tired of the bigotry. I'm tired of them putting the Party on the wrong side of the new frontier of the civil rights movement, a sin which history will not forgive. I'm tired of the conspicuous piety. I'm tired of the scapegoating. And I'm downright pissed off about their unceasing attempts to use the coercive power of the government to impose their values and way of life on everybody else, when those "values" have nothing to do with any concept of rights or ethics but are grounded solely in a "morality" derived from their inability to consider for one moment that people who are different are human beings too.

I'm tired of not having a major party that represents me. I know there are plenty of libertarian-leaning Republicans feel the same way too, but yet it seems that this small but active faction of zealots have been at the wheel. I desperately want the tables to turn. I want them to be the politically marginalized faction of the Party. I want them to feel disenfranchised and isolated. I hope they feel the government is out of their hands and they just give up. Stay home. So we can have at least ONE party that believes that people should be free to live their own lives in their own way, and so we turn to a politics of thinking and deliberating instead of one that celebrates ignorance.

Come on Rudy, you can still pull it off....

BSG is coming back!

I'm hearing April 4. The bad news is that IIRC only 10 episodes are completed, and with the writer's strike ongoing, we can expect that the midseason hiatus will be a tradition not only continued, but expanded upon.

Hype posted a teaser (mild spoilers). Be prepared for significant casualties....

Update on the Disposition of the F-15C Fleet

Direct Link

Video report link

The short version is that the E models are fine, but the C models have a manufacturing defect that is going to send about 1/3 of them to the scrap heap. Meanwhile we have to task F-15Es, F-16s, F/A-18, and F-22s to pick up the slack, diverting them from training or operations in Iraq and Afghanistan.

No word yet on how this affects Japan, Saudi Arabia, or other states flying F-15s.

The part that aggravates me is that we've never had a realistic replacement plan for the F-15. The F-22 was always an ambitious "super-fighter" project that no one should have thought was going to become our front line air-to-air workhorse. The final bill came out to $180M per plane. A fighter is "supposed" to cost $20-$60 million. Would it have been so difficult to have a few squadrons of 22s for high intensity work while building a fleet of "normal" high-performance fighters at around $50-80M a pop for the meat and potatoes work? Or could we at least have continued production of the 15 until we had something else ready to go, so we could phase out the older ones as new ones are built? No, we had to arrogantly bank on the 22.

So now what? The F-35 won't have the speed or range to do what the F-15 does. We won't restart production on the -15. And we have no other designs. So we're pretty much screwed, and we're screwed at a time when 4th and 5th generation fighters are finding their way to potentially hostile states like China, North Korea, and Iran (and those planes, IIRC, tend to cost in the $30-40M range, so we should expect to see a lot of them).

WASHINGTON (AP) -- An Air Force investigation of the crash last fall of an F-15C Eagle concluded that a defective metal beam in the frame cracked, causing it to disintegrate during flight.

In a report being released Thursday, obtained in advance by The Associated Press, Air Force investigators said they had found the sole reason for the accident was the faulty support beam, called a longeron, which failed to meet the manufacturer's specifications.

The investigation was led by Air Force Col. William Wignall. Video Watch animation and audio from F-15 crash »

"The accident investigation board president (Wignall) found, by clear and convincing evidence, the cause of this accident was a failure of the upper right longeron, a critical support structure in the F-15C aircraft," the report says.

About 20 minutes after takeoff from an airfield near St. Louis on November 2, the forward fuselage of Maj. Stephen Stilwell's $42 million F-15C Eagle shook violently and then broke apart 18,000 feet above the ground. Stilwell, his left shoulder dislocated and his left arm shattered, barely had time to safely eject as pieces of his aircraft tumbled from the sky over the Missouri countryside.

More troubling, however, are the results of a parallel examination finding as many as 163 of the workhorse aircraft also have flawed support beams, or longerons. The aircraft remain grounded as the Air Force continues to search for how serious the problem is and whether extensive, costly repairs are needed. Another 19 of the aircraft have yet to be inspected and also remain grounded.

Nearly 260 of the A through D model F-15s, first fielded in the mid-1970s, were returned to flight status Tuesday following fleet-wide inspections.

The twin-engine aircraft are used primarily for homeland security and are a key link in the nation's air defense network.

"Two November, my world really changed," Air Force Gen. John Corley, head of Air Combat Command at Langley Air Force Base, Virginia, said at a Pentagon news conference. "And it changed in a catastrophic way."

The Air Force's fleet of 224 newer F-15E Strike Eagles, which are used in Iraq and Afghanistan, do not have the structural problem. Those jets, whose role is more oriented toward ground attack missions, were temporarily grounded after Stilwell's crash, but returned to service shortly thereafter.

The older F-15s are stationed at many so-called "alert" sites around the country, where planes and pilots stand ready to take off at a moment's notice to intercept hijacked airliners and guard protected airspace.

Among the Air Force's other workhorse fighter jets is the F-16, which performs multiple roles, including air-to-air combat and air-to-ground attack. It entered the operational fleet in 1979.

With the F-15s temporarily grounded, F-16s and other aircraft are pulled away from their regular duties to fill the gaps. That makes it difficult for the Air Force to accomplish its mission and leaves Air Force pilots unable to train properly.

"This is systemic," Corley said.

The longeron helps support the cockpit and strengthen the jet as it moves through high-stress maneuvers while traveling hundreds of miles per hour.

Analysis of recovered parts from Stilwell's jet identified a crack in the beam near the fuselage that investigators say grew over time and was not detected during regular maintenance of the aircraft.

In the report, Wignall said that prior to Stilwell's flight, "no inspection requirements existed for detecting a crack in the longeron."

The F-15A through D models were built by McDonnell Douglas. That company merged with defense manufacturing giant Boeing in August 1997.

Company spokeswoman Patricia Frost said Boeing representatives have not seen Wignall's final report and could not comment on it.

"However, we are working with the U.S. Air Force to analyze the data gathered from fleet-wide inspections," Frost said. "Once all of the data have been analyzed, a need for further inspection or repair can be determined."

No decision has been reached as to whether Boeing might be liable for the repairs, which could cost as much as $500,000 per aircraft.

"This is the starting point for looking into that question," said Lt. Gen. Donald Hoffman, a senior Air Force acquisition official. "I'm not going to speculate."

The F-22 Raptor, a stealth aircraft intended to replace the F-15, is being fielded but in smaller numbers than initially planned. The Pentagon has said it will buy just 183 Raptors due to their high cost, but members of Congress are pressing Defense Secretary Robert Gates to buy more. A single Raptor costs about $160 million, according to the Air Force.

The Air Force has said it needs 381 of the F-22s.

Corley did not endorse more F-22s as the solution to the F-15 problems. But he indicated buying more F-15s would not be the Air Force's preference.

"It was the best of breed at its time," said Corley, who was an F-15 instructor pilot in 1979. "It's not anymore."
advertisement

Loren Thompson, a defense analyst with the Lexington Institute in Arlington, Virginia, said it may make more sense to retire the older F-15s rather than fix them. Due to their age, another part could fail even after the longerons are repaired.

"This is an aircraft that was designed during the Nixon administration," Thompson said. "It doesn't seem sensible to be making fixes so late in the game."

Not only did he not kill himself...

...but that was a good landing!

If Pete and Kristina jumped off a bridge, would I?

67% Mitt Romney
62% Fred Thompson
61% John McCain
59% Ron Paul
56% Mike Huckabee
55% Tom Tancredo
52% Rudy Giuliani
50% Bill Richardson
46% Chris Dodd
44% Joe Biden
42% Hillary Clinton
41% Mike Gravel
39% Barack Obama
39% John Edwards
38% Dennis Kucinich

2008 Presidential Candidate Matching Quiz

I don't think this quiz registered my distaste for social conservatism very well.

Net Assessment of the United States

This is a STRATFOR article posted on one of the forums I frequent. It's a very astute neo-realist assessment, far better than anything you'll hear through normal channels, although I think at times it tries to use realism beyond the limits of its usefulness. A good read, nevertheless.

Net Assessment: United States
Stratfor Today » December 31, 2007 | 2343 GMT

Brendan Smialowski

There are those who say that perception is reality. Geopolitics teaches the exact opposite: There is a fundamental reality to national power, and the passing passions of the public have only a transitory effect on things. In order to see the permanent things, it is important to tune out the noise and focus on the reality. That is always hard, but nowhere more so than in the United States, where the noise is incredibly loud, quite insistent, and profoundly contradictory and changeable. Long dissertations can and should be written on the dynamics of public opinion in the United States. For Stratfor, the root of these contradictions is in the dynamism of the United States. You can look at the United States and be awed by its dynamic power, and terrified by it at the same time.

All nations have complex psyches, but the American is particularly complex, contradictory and divisive. It is torn between two poles: dread and hubris. They alternate and compete and tear at each other. Neither dominates. They are both just there, tied to each other. The dread comes from a feeling of impending doom, the hubris from constantly overcoming it.

Hubris is built into American history. The American republic was founded to be an exemplary regime, one that should be emulated. This sense of exceptionality was buttressed by the doctrine of manifest destiny, the idea that the United States in due course would dominate the continent. Americans pushed inward to discover verdant horizons filled with riches one after another, indelibly impressing upon them that life was supposed to get better and that setbacks were somehow unnatural. It is hard not to be an economic superpower when you effectively have an entire continent to yourself, and it is especially hard not to be a global economic hegemon once you’ve tamed that continent and use it as a base from which to push out. But the greatest driver for American hubris was the extraordinary economic success of the United States, and in particular its extraordinary technological achievements. There is a sense that there is nothing that the United States cannot achieve — and no limits to American power.

But underlying this extraordinary self-confidence is a sense of dread. To understand the dread, we have to understand the 1930s. The 1920s were a time of apparent peace and prosperity: World War I was over, and the United States was secure and prosperous. The market crash of 1929, followed by the Great Depression, imprinted itself on the American psyche. There is a perpetual fear that underneath the apparent prosperity of our time, economic catastrophe lurks. It is a sense that well-being masks a deep economic sickness. Part of the American psyche is braced for disaster.

This dread also has roots in Pearl Harbor, and the belief that it and the war that followed for the United States was the result of complacency and inattentiveness. Some argued that the war was caused by America’s failure to join the League of Nations. Others claimed that the fault lay in the failure to act decisively to stop Hitler and Tojo before they accumulated too much power. In either case, the American psyche is filled with a dread of the world, that the smallest threat might blossom into world war, and that failure to act early and decisively will bring another catastrophe. At the same time, from Washington’s farewell address to failures in Vietnam or Iraq, there has been the fear that American entanglement with the world is not merely dangerous, but it is the path to catastrophe.

This fault line consistently polarizes American politics, dividing it between those who overestimate American power and those who underestimate it. In domestic politics, every boom brings claims that the United States has created a New Economy that has abolished the business cycle. Every shift in the business cycle brings out the faction that believes the collapse of the American economy is just over the horizon. Sometimes, the same people say both things within months of each other.

The purpose of a net assessment is not to measure such perceptions, but to try to benchmark military, economic and political reality, treating the United States as if it were a foreign country. We begin by “being stupid”: that is, by stating the obvious and building from it, rather than beginning with complex theories. In looking at the United States, two obvious facts come to light.

First, the United States controls all of the oceans in the world. No nation in human history has controlled the oceans so absolutely. That means the United States has the potential to control, if it wishes, the flow of goods through the world’s oceans — which is the majority of international trade. Since World War II, the United States has used this power selectively. In general, it has used its extraordinary naval superiority to guarantee free navigation, because international trade has been one of the foundations of American prosperity. But it has occasionally used its power as a tool to shape foreign affairs or to punish antagonistic powers. Control of the oceans also means that the United States can invade other countries, and that — unless Canada or Mexico became much more powerful than they are now — other countries cannot invade the United States.

Second, no economy in the world is as large as the American economy. In 2006, the gross domestic product (GDP) of the United States was about $13.2 trillion. That is 27.5 percent of all goods and services produced in the world for that year, and it is larger than the combined GDPs of the next four countries — Japan, Germany, China and the United Kingdom. In spite of de-industrialization, industrial production in the United States was $2.1 trillion, equal to Japan’s, China’s and Germany’s industrial production combined. You can argue with the numbers, and weight them any number of ways, but the fact is that the United States is economically huge, staggeringly so. Everything from trade deficits to subprime mortgage crises must be weighed against the sheer size of the American economy and the fact that it is and has been expanding.

If you begin by being stupid instead of sophisticated, you are immediately struck by the enormity of American military power, based particularly on its naval power and its economic power, which in turn is based on the size and relative balance of the economy. The United States is the 2,000-pound gorilla of the international system. That means blows that would demolish other nations are absorbed with relative ease by the United States, while at the same time drawing howls of anguish that would lead you to assume the United States is on the eve of destruction. That much military and economic power does not collapse very easily or quickly.

The United States has two simple strategic goals. The first is to protect itself physically from attack to ensure its economy continues to flourish. Attacks against the United States are unpleasant, but invasion by a foreign power is catastrophic. Therefore the second goal is to maintain control of the seas. So long as the oceans are controlled by the U.S. Navy — and barring nuclear attack — the physical protection of the United States is assured. Therefore the United States has two interests. The first is preventing other nations from challenging American naval hegemony. The second is preventing other nations from acquiring nuclear weapons, and intimidating those who already have them.

The best way to prevent a challenge by another fleet is to make certain the fleet is never built. The best way to do that is to prevent the rise of regional hegemons, particularly in Eurasia, that are secure enough to build navies. The American strategy in Eurasia is the same as Britain’s in Europe — maintain the balance of power so that no power or coalition of powers can rise up as a challenger. The United States, rhetoric aside, has no interest in Eurasia except for maintaining the balance of power — or failing that, creating chaos.

The United States intervenes periodically in Eurasia, and elsewhere. Its goals appear to be incoherent and its explanations make little sense, but its purpose is single-minded. The United States does not want to see any major, stable power emerge in Eurasia that could, in the long term, threaten American interests either by building a naval challenge or a nuclear one. As powers emerge, the United States follows a three-stage program. First, provide aid to weaker powers to contain and undermine emerging hegemons. Second, create more formal arrangements with these powers. Finally, if necessary, send relatively small numbers of U.S. troops to Eurasia to block major powers and destabilize regions.

The basic global situation can be described simply. The United States has overwhelming power. It is using that power to try to prevent the emergence of any competing powers. It is therefore constantly engaged in interventions on a political, economic and military level. The rest of the world is seeking to limit and control the United States. No nation can do it alone, and therefore there is a constant attempt to create coalitions to contain the United States. So far, these coalitions have tended to fail, because potential members can be leveraged out of the coalition by American threats or incentives. Nevertheless, between constant American intrusions and constant attempts to contain American power, the world appears to be disorderly and dangerous. It might well be dangerous, but it has far more logic and order than it might appear.

U.S. Foreign Policy
The latest American foreign policy actions began after 9/11. Al Qaeda posed two challenges to the United States. The first was the threat of follow-on attacks, potentially including limited nuclear attacks. The second and more strategic threat was al Qaeda’s overall goal, which was to recreate an Islamic caliphate. Put in an American context, al Qaeda wanted to create a transnational “Islamic” state that, by definition, would in the long run be able to threaten U.S. power. The American response was complex. Its immediate goal was the destruction of al Qaeda. Its longer-term goal was the disruption of the Islamic world. The two missions overlapped but were not identical. The first involved a direct assault against al Qaeda’s command-and-control facilities: the invasion of Afghanistan. The second was an intrusion into the Islamic world designed to disrupt it without interfering with the flow of oil from the region.

U.S. grand strategy has historically operated by splitting enemy coalitions and partnering with the weaker partner. Thus, in World War II, the United States sided with the Soviet Union against Nazi Germany after their alliance collapsed. During the Cold War, the United States sided with Communist China against the Soviet Union after the Sino-Soviet split. Following that basic strategy, the United States first sided with and then manipulated the Sunni-Shiite split. In all these cases the goal was to disrupt and prevent the formation of a coalition that could threaten the United States.

Looked at from 50,000 feet, that was the result of the invasion of Iraq. It set the Sunnis and Shia against each other. Whether this idea was subjectively in the minds of American planners at the time is not really relevant. That it played out the U.S. model in foreign policy is what matters. The invasion of Iraq resulted in chaos. About 3,000 American troops were killed, a small number compared to previous multiyear, multidivisional wars. Not only did the Islamic world fail to coalesce into a single entity, but its basic fault line, Sunnis versus Shia, erupted into a civil war in Iraq. That civil war disrupted the threats of coalition formation and of the emergence of regional hegemons. It did create chaos. That chaos provided a solution to American strategic problems, while U.S. intelligence dealt with the lesser issue of breaking up al Qaeda.

The U.S. interest in the Islamic world at the moment is to reduce military operations and use the existing internal tension among Muslims to achieve American military ends. The reason for reducing military operations is geopolitical, and it hinges on Russia.

The total number of U.S. casualties in Iraq is relatively small, but the level of effort, relative to available resources, has essentially consumed most of America’s ground capabilities. The United States has not substantially increased the size of its army since the invasion of Iraq. There were three reasons for this. First, the United States did not anticipate the level of resistance. Second, rhetoric aside, U.S. strategy was focused on disruption, not nation-building, and a larger force was not needed for that. Third, the global geopolitical situation did not appear to require U.S. forces elsewhere. Therefore, Washington chose not to pay the price for a larger force.

The geopolitical situation has changed. The U.S. absorption in the Islamic world has opened the door for a more assertive Russia, which is engaged in creating a regional sphere of influence in the former Soviet Union. Following the American grand strategy of preventing the emergence of Eurasian regional powers, the United States must now put itself in a position to disrupt and/or contain Russia. With U.S. forces tied down in the Islamic world, there are no reserves for this mission. The United States is therefore engaged in a process of attempting to reduce its presence in the Islamic world, while repositioning to deal with the Russians.

The process of disengagement is enormously complex. Having allied with the Shia (including Iran) to disrupt al Qaeda, the United States now has shifted its stance toward the Sunnis and against the Shia, and particularly Iran. The U.S. interest is to re-create the balance of power that was disrupted with the invasion of Iraq. To do this, the United States must simultaneously create a balance in Iraq and induce Iran not to disrupt it, but without making Iran too powerful. This is delicate surgery and it makes the United States appear inconsistent. The recent contretemps over the National Intelligence Estimate — and the resulting inevitable public uproar — is part of the process of the U.S. rebalancing its policy in the region.

The Iraqi situation is now less threatening than the situation to the east. In Afghanistan, the United States and NATO have about 50,000 troops facing a resurgent Taliban. No military solution is possible given the correlation of forces. Therefore a political solution is needed in which an accommodation is reached with the Taliban, or with parts of the Taliban. There are recent indications, including the expulsion of EU and U.N. diplomats from Afghanistan for negotiating with the Taliban, that this process is under way. For the United States, there is no problem with a Taliban government, or with Taliban participation in a coalition government, so long as al Qaeda is not provided sanctuary for training and planning. The United States is trying to shape the situation in Afghanistan so those parts of the Taliban that participate in government will have a vested interest in opposing al Qaeda.

Pakistan obviously plays a role in this, since Afghanistan is to some extent an extension of Pakistan. The United States has an interest in a stable Pakistan, but it can live with a chaotic Pakistan provided its nuclear weapons are safeguarded and the chaos is contained within Pakistan. Given the situation in Afghanistan, this cannot be guaranteed. Therefore, American strategy must be to support Pakistan’s military in stabilizing the country, while paying lip service to democratic reform.

The United States has achieved its two major goals in the Islamic world. First, al Qaeda has been sufficiently disrupted that it has not mounted a successful operation in the United States for six years. Second, any possibility of an integrated Islamic multinational state — always an unlikely scenario — has been made even more unlikely by disruptive and destabilizing American strategies. In the end, the United States did not need to create a stable nation in Iraq, it simply had to use Iraq to disrupt the Islamic world. The United States did not need to win, it needed the Islamic world to lose. When you look at the Islamic world six years after 9/11, it is sufficient to say that it is no closer to unity than it was then, at the cost of a fraction of the American lives that were spent in Vietnam or Korea.

Thus, the United States at the moment is transitioning its foreign policy from an obsessive focus on the Islamic world to a primary focus on Russia. The Russians, in turn, are engaged in two actions. First, they are doing what they can to keep the Americans locked into the Islamic world by encouraging Iran while carefully trying not to provoke the United States excessively. Second, they are trying to form coalitions with other major powers — Europe and China — to block the United States. The Russians are facing an uphill battle because no one wants to alienate a major economic power like the United States. But the longer the Americans remain focused on the Islamic world, the more opportunities there are. Therefore, for Washington, reducing U.S. involvement in the Islamic world will be acceptable so long as it leaves the Muslims divided and in relative balance. The goal is reduction, not exit — and pursuing this goal explains the complexities of U.S. foreign policy at this point, as well as the high level of noise in the public arena, where passions run high.

Behind the noise, however, is this fact: The global situation for the United States has not changed since before 9/11. America remains in control of the world’s oceans. The jihadist strategic threat has not solidified, although the possibility of terrorism cannot be discounted. The emerging Russian challenge is not trivial, but the Russians have a long way to go before they would pose a significant threat to American interests. Another potential threat, China, is contained by its own economic interests, while lesser powers are not of immediate significance. American global pre-eminence remains intact and the jihadist threat has been disrupted for now. This leaves residual threats to the United States, but no strategic threats.

Economics
Capitalism requires business cycles and business cycles require recessions. During the culmination of a business cycle, when interest rates are low and excess cash is looking for opportunities to invest, substantial inefficiencies creep into the economy. As these inefficiencies and irrationalities become more pronounced, the cost of money rises, liquidity problems occur and irrationalities are destroyed. This is a painful process, but one without which capitalism could not succeed. When recessions are systematically avoided by political means, as happened in Japan and the rest of East Asia, and as is happening in China now, inefficiencies and irrationalities tend to pyramid. The longer the business cycle is delayed, the more explosive the outcome.

Historically, the business cycle in the United States has tended to average about six years in length. The United States last had a recession in 2000, seven years ago — so, by historical standards, it is time for another recession. But the 2000 recession occurred eight years after the previous one, so the time between recessions might be expanding. Six years or nine years makes little difference. There will be recessions because they discipline the economy and we are entering a period in which a recession is possible. When or how a recession happens matters little, so long as the markets on occasion have discipline forced back upon them.

In the most recent case, the irrationality that entered the system had to do with subprime mortgages. Put differently, money lenders gave loans to people who could not pay them back, and sold those loans to third parties who were so attracted by the long-term return that they failed to consider whether they would ever realize that return. Large pools of money thrown off by a booming economy had to find investment vehicles, and so investors bought the loans. Some of the more optimistic among these investors not only bought the loans but also borrowed against them to buy more loans. This is the oldest story in the book.

The loans were backed by real assets: houses. This is the good news and the bad news. The good news is that, in the long run, the bad loans are mitigated by the sale of these homes. The bad news is that as these houses are sold, housing prices will go down as supply increases. Home prices frequently go down. During the mid-1990s, for example, California home prices dropped sharply. However, there is an odd folk belief that housing prices always rise and that declining prices are unnatural and devastating. They hurt, of course, but California survived the declines in the 1990s and so will the United States today.

In an economy that annually produces in excess of $13 trillion in wealth, neither the subprime crisis nor a decline in housing prices represents a substantial threat. Nevertheless, given the culture of dread that we have discussed, there is a sense that this is simply the beginning of a meltdown in the American economy. It is certainly devastating major financial institutions, although not nearly as badly as the tech crash of 2000 or the savings and loan crisis of the 1980s devastated their sectors. It is having some effect on the financial system, although not nearly as much as one might think, given the level of angst expressed. And it is having a limited effect on the economy.

A liquidity crisis means a shortage of money, in which demand outstrips supply and the cost of money rises. There are, of course, those who are frozen out of the market — the same people to whom money should not have been lent in the first place, plus some businesses on shaky ground. This is simply the financial system rebalancing itself. But neither the equity nor the money markets are behaving as if we are on the verge of a recession any time soon.

Indeed — and here sentiment does matter, at least in the short run — it would appear that a recession is unlikely in the immediate future. Normally, recessions occur when sentiment is irrationally optimistic (recall the New Economy craziness in the late 1990s). What we are seeing now is economic growth, stable interest rates and equity markets, and profound anxiety over the future of the financial system. That is not how an economy looks six months or a year before a depression. Those who believe that major economic disaster is just around the corner have acted on that belief and the markets have already discounted that belief. It would certainly be reasonable for there to be a recession shortly, but we do not see the signs for it.

To the contrary, we see a major stabilizing force, the inflow of money into the American economy from what we might call the dollar bloc. During the period of European imperialism, one of the characteristics was politically enforced currency blocs (sterling, franc, etc.) that tied colonial economies to the mother country. We are now seeing, at least temporarily, a variation on that theme with a dollar bloc, which goes beyond the dollar’s role as a reserve currency.

For a decade, China has been running massive trade surpluses with the United States. Much of that surplus remained as cash reserves because the Chinese economy was unable to absorb it. Partly in order to stabilize currencies and partly to control their own economy, the Chinese have pegged their currency against the dollar, varying the theme a bit lately but staying well within that paradigm. The linking of the Chinese economy to the American led to the linking of the two currencies. It also created a pool of excess money that was most conservatively invested in the United States.

With the run up in the price of oil, another pool of surplus money that cannot be absorbed in native economies has emerged among the oil producers of the Arabian Peninsula. This reserve also is linked to the dollar, since oil prices are dollar-denominated. Given long-term oil contracts and the structure of markets, shifting away from the dollar would be complex and time consuming. It will not happen — particularly because the Arabs, already having lost on the dollar’s decline, might get hit twice if it rises. They are protected by remaining in the dollar bloc.

Those two massive pools of money, tightly linked to the dollar in a number of ways, are stabilizing the American financial system — and American financial institutions — by taking advantage of the weakness to buy assets. Historically (that is, before World War I), the United States was a creditor nation and a net importer of capital. That did not represent weakness. Rather, it represented the global market’s sense that the United States presented major economic opportunities. The structure of the dollar bloc would indicate a partial and probably temporary return to this model.

One must always remember the U.S. GDP — $13.2 trillion — in measuring any number. Both the annual debt and the total national debt must be viewed against this number, as well as the more troubling trade deficit. The $13.2 trillion can absorb damage and imbalances that smaller economies could not handle. We would expect a recession in the next couple of years simply based on the time since the last period of negative growth, but we tend to think that it is not quite here yet. But, even if it were, it would simply be a normal part of the business cycle, of no significant concern.

Net Assessment
The operative term for the United States is “huge.” The size of its economy and the control of the world’s oceans are the two pillars of American power, and they are intimately connected. So long as the United States has more than 25 percent of the world’s GDP and dominates the oceans, what the world thinks of it, or what it thinks of itself, is of little consequence. Power is power and those two simple, obvious facts trump all sophisticated theorizing.

Nothing that has happened in the Middle East, or in Vietnam a generation ago or in Korea a generation before that, can change the objective foundations of American power. Indeed, on close examination, what appears to be irrational behavior by the United States makes a great deal of sense in this context. A nation this powerful can take extreme risks, suffer substantial failures, engage in irrational activity and get away with it. But, in fact, regardless of perception, American risks are calculated, the failures are more apparent than real and the irrational activity is more rational than it might appear. Presidents and pundits might not fully understand what they are doing or thinking, but in a nation of more than 300 million people, policy is shaped by impersonal forces more than by leaders or public opinion. Explaining how that works is for another time.

The magnitude of American power can only be seen by stepping back. Then the weaknesses are placed into context and diminish in significance. A net assessment is designed to do that. It is designed to consider the United States “on the whole.” And in considering the United States on the whole, we are struck by two facts: massive power and cultural bipolar disorder. But the essence of geopolitics is that culture follows power; as the United States matures, its cultural bipolarity will subside.

Some will say that this net assessment is an America-centric, chauvinistic evaluation of the United States, making it appear more powerful, more important and more clever than it is. But in our view, this is not an America-centric analysis. Rather, it is the recognition that the world itself is now, and has been since 1992, America-centric. The United States is, in fact, more powerful than it appears, more important to the international system than many appreciate and, if not clever, certainly not as stupid as some would think. It is not as powerful as some fantasize. Iraq has proved that. It is not nearly as weak as some would believe. Iraq has proved that as well.

The United States is a powerful, complex and in many ways tortured society. But it is the only global power — and, as such, it is the nation all others must reckon with.