Tag: War

CCCXVI – The World’s Big Bath

I was talking to Hambone about something unrelated and he made a remark which would probably sound shocking to the uninitiated or the uncynical. Hambone and I went to undergrad together and become acquainted due to being in many of the same classes together. We then briefly worked at the same auditing firm together, before parting professional ways. So for context, both Hambone and I are accountants.

“As accountants, we should know that the numbers are all [garbage] anyway. It’s all grift.”

Be very cautious if you take up this line of thought. Many people wield it imprecisely–you might be tempted to think that “Corporations make up numbers”, which they do not. That’s the great thing about accounting: None of the numbers are made up. The numbers are all accurate inputs into an algorithm that churns out results that match expectations. The Accounting Algorithm can only do so much, it cannot make a bad company look profitable, but it can exaggerate mediocre times or mask exceptional times. Corporations do this for a variety of reasons. Auditors exist to make sure that the Accounting Algorithm doesn’t produce results that are too dramatically different from the real inputs, and in many cases are just looking to make sure that this year doesn’t look too different from last year. When times are good, this process works great. When times are bad, they tend to be REALLY bad, and take auditing firms down with them.

The headline that stirred up this line of thought in me was this one, from my Ukraine War source: “World Bank Warns of Global Recession“ caused by the war in Ukraine.

There is an illegal accounting technique–a technique that has been forbidden from Accounting Algorithms–called the Big Bath. The Big Bath is when a firm takes all of their losses all at once, so that the rest of the year looks good by comparison. “Man, there was a hurricane so Q3 Earnings were terrible, but look, Q4 showed huge growth year-over-year!”

There are signs that corporations are already contemplating this. I saw a headline somewhere that said a certain company was forecasting low earnings for Q1 reporting since the war in Ukraine began in February. Other tech firms have been committing layoffs. The sanctions have disconnected Russia from the global economic order and many corporations are terminating their operations there.

There is a discrete and definite impact of all of this on the individual firms and on the economy writ large. But if everyone starts reaching for the excuse “But the War in Russia!” then a Global Recession becomes more than just likely, but becomes certain.

This applies to more than just corporations too, it’s important to note. Governments control the levers of their economies. Debt and taxation have risen to terrible and drastic heights, and being able to take a “Big Bath” in the form of an economic collapse–and being able to blame it on Russia— probably looks like an appealing prospect.

Down that road leads war, unless some other path is taken. A global scale economic collapse with Russia as the scapegoat would create cultural animosity that can’t help but explode. I pray this is not the outcome, but it is hard for me to claim that it is something our politicians would not do even with full knowledge of the consequences of their actions.

The good news is that if we do undertake a global economic reset, there will be no bailouts because there will be no global economic system to rescue anyone. We will be forced to have an economy based on productivity and value, at least for a while–and only the productive and valuable will keep the economic dynamo running. It will be a healthy thing to drain the bad economic humors. We just have to make sure that what replaces it isn’t the same thing we had before.

AMDG

CCCXIV – Rubles, Rai Stones, and War By Other Means

I am writing this at 10:00am on April 27th, 2022. This is important because in War, the mornings intelligence briefing is obsolete by the time it reaches the hands of the President, and the decisions he’s made in response to that briefing is obsolete because the next intelligence briefing is already on the way with updated information. This is one reason why Truth is always the first casualty of war. So this article will likely be obsolete by the time it publishes.

The news I read this morning went something like this: Russian state Gas corporation Gazprom has cut off Poland and Bulgaria from their supply of Liquid Natural Gas. Poland’s response has been “We are going to be OK”, Bulgaria has responded with “This is a breach of contract.” This is all I know.

All of this is interesting to me because it represents a discussion of Economics and Currency as well as War by Other Means. Lets try to get a feel for what’s going on:

The European Union sanctioned Russia by cutting them off from the mechanisms of Foreign Exchange. This had the effect of making Russia’s supply of foreign currencies useless, and the Ruble useless to other countries.

Russia responded by saying that payments to Gazprom must be paid in Rubles. This had the effect of turning the tables on the European Union–now their currencies cannot be used to pay for Gas, and because they cut Russia out of the mechanisms of Foreign Exchange, they cannot get more Rubles than what they already have in reserve.

The European Union prior to this morning has responded that requiring payment in Rubles is a breach of contract plus a lot of other legalistic hemming and hawing. Russia and the European Union know that if Russia cuts off the gas supply then there will be extraordinary human suffering on a massive scale in Europe–my understanding is that this gas supplies power and heat to most of the population of Europe.

Let’s start by talking about Currency. Why does the denomination of Currency matter? Here in the US, my experience with foreign exchange has been that when I get a Canadian Quarter I can’t use it in vending machines, and in the past when I visited my family in Canada I would come back with a lot of colorful bills that I can’t use. Some banks will accept foreign currencies and exchange them for US dollars, but that is a bit of a hassle. I have the knowledge that I can exchange Canadian bills for US Dollars but I choose not to because I don’t have enough to make it worth the trouble.

When we talked about foreign exchange in my graduate studies, it was treated as a given. There is a calculation you can do to decide whether to “Build or Buy” a given product in a foreign country, so you plug in the inputs and make decisions based on the exchange rate at the time. There was no discussion of the specific mechanism of foreign exchange.

We know based on our discussions here that Currency represents the delegated authority of the sovereign and that the denomination someone uses tells you who their king is because we put the sovereign on the bill (American dollars say e pluribus unum which means “out of many, one”–a perhaps accidental reference to the fact that the people are sovereign in aggregate).

So why does the denomination of currency matter? Because the denomination tells you who is boss; the denomination determines who matters when you make decisions; the denomination determines how challenging a given transaction is.

The EU wants to be boss, so the EU wants gas to be paid for in Euros. The EU doesn’t want to consider Russia when making decisions, and so far Russia hasn’t cared enough since foreign exchange was relatively easy, so the EU wanted to pay in Euros. When the world cut Russia out of the foreign exchange system, that particular sword cut both ways, and made Foreign supplies of Rubles useless. Immediately after this decision, Russia put limits on how much money Russians could send outside the country or even carry with them, because the supply of Rubles suddenly mattered a great deal. This move by Gazprom to require payments in Rubles is a way for Russia to call back foreign reserves of it’s currency, which struck me as a very clever way of turning the tables.

Considering the Economics of the decision allows us to factor the actual gas into the calculation. When Russia was supplying gas, nobody really was motivated to address the Rubles demand–they felt Russia would keep supplying and accept whatever they paid. Russia turning off the supply is simultaneously increasing demand for the gas, and when demand increases we know also that price increases. Poles and Bulgarians who were previously comfortable in their heated and powered homes will clamor for Russian gas at any price if a cold snap strikes. Honestly–I think Russia waited as an act of mercy, supposing that the human suffering would be limited in warmer weather. I don’t know how much warmer it is at the end of April than it is at the end of February, but I am sure it is noticeably warmer in both countries.

Russia in this move has created a domestic popular demand for Russian gas, and Poles and Bulgarians will be advocating on Russia’s behalf in short order, when gas shortages are felt. The price of gas will increase, which will increase Russia’s demand for Rubles, and amplify the difficulty of the decision before the European Union. Russia is turning the economic screws.

Now we can talk about War by Other Means with a complete understanding. I mean by this phrase to invert an old saying I heard somewhere that “War is politics by other means”–now, politics has become war by other means.

If the international order exists in a state of Anarchy, the levers of war are pretty sparse. If Russia has no connections to the United States, the United States has no means of influence over Russia. The Global Order is a way of inventing ways for the United States to be able to influence Russia and conduct a war by other means. Every Embassy, every trade deal, creates a bond which can be leveraged for conflict or to avoid conflict. The world responded to Russia’s invasion of Ukraine by isolating them and cutting them out of the global mechanisms that have been invented. But the mistake they made was to cut them out all at once. Now Russia is figuring out how to operate in a globally isolated way, and everyone else has run out of levers. Russia’s biggest levers are it’s gas supply and the threat of war, which it is now using to the fullest extent. And Russia didn’t make the mistake of cutting off the entire gas supply, but doing so selectively. After they see the reaction, I bet they will evaluate the decision and either cut off more countries or negotiate some concessions.

All of this is supremely interesting political gamesmanship, if one completely ignores the massive human suffering the depleted gas supply will cause and the ongoing war in Ukraine is causing. That is where world leaders need to remember their role as custodial sovereigns: the care of their people ought to be the foremost concern, not the preservation of their regime. The war is not a just war, and both sides are in the wrong in their conduct and both sides are victims in their own way. Aggravating human suffering as a bargaining chip is an inhumane act of cruelty.

O Lord, Jesus Christ, have mercy on us, and on the whole world.

AMDG

CCCII – The After-War

I know I said I wasn’t going to do it but by golly it’s my blog and I do what I want. In fairness though, this is not so much about current events as it is about future ones. Somehow that distinction excuses this article.

I saw a headline that showed promising signs of movement towards peace, that Russia and Ukraine have “made progress on a 15-point peace plan”. The details of the 15 points remain a mystery, but the article contained some speculation about what the result could be. In effect, the result looks like military peace between Russia and Ukraine.

A question I’ve had, and I don’t remember if I have expressed it here on this blog in an article or comment or whether I’ve only expressed this verbally to people around me: What happens if Ukraine comes to a peace agreement that is not agreeable to the United States? I have a suspicion that we are going to have that scenario, especially with all the political bluster surrounding the defense of Ukraine. “Russia will not win in Ukraine”–and then Ukraine comes to a peace deal that (for example) allows Russia to annex the Donbas region. How will America respond to that? Surely with good natured de-escalation, right?

The problem is, even if Ukraine and Russia find some resolution to their war the moment I hit publish on this article, there is still an After-War that is inevitable. The sanctions are a big deal–do those come down as soon as the peace deal is signed, or do they stay up? Russia has started to implement counter-sanctions, the most recent one I saw being that BBC is now blocked in Russia. Besides this: What ought Russia do about all the NATO and other countries that sent military aid to Ukraine? What ought Russia do to the people who sent money? What about the “foreign mercenaries” who traveled from around the world to fight for Ukraine?

The explicit military conflict was between Russia and Ukraine, but the diplomatic war was between Russia and the world. THAT war is very far from being over.

Just to state the moral of the story explicitly: This is why it is important to remain neutral or to join a fight, and why it is dangerous to sit on the sidelines and give guns and money to the participants. Because if the side you’re supporting loses, suddenly you are a valid target–you can’t claim to have “stayed out of it”.

The After-War is going to last much longer than the War, because America is proud and we refuse to admit when we have made a mistake.

For the sake of His sorrowful passion, have mercy on us, and on the whole world.

AMDG

(r) – I’m Not Going To Write About Ukraine Anymore

I’ve had a nice flurry of posts but I have to remember that I am a peasant and have no influence over this. It’s sucked me in to reading the news again, which is something I don’t enjoy and doesn’t help me get to heaven. Yes the world is messed up; yes the headlines make me think of snappy one-liners and hot takes; fundamentally we all have to get through the day and find a way to love God in the process, whatever circumstances He sends us. I wrote a while ago that we shouldn’t live as if each day were our last day but rather we should live as if each day were our only day. We have been deployed to the Earth for 24 hours and have whatever circumstances we have. How can we make the most of it and report back to base what we have done? For me, reading news about Ukraine is not helping me.

So these will be my parting snappy one-liners about the Ukraine situation, and then I’m done.

President Biden Claps For Ukraine – Still refuses to consider no fly zone.
Prime Minister Johnson Claps for Ukraine – Still not sending troops.
Human Rights Council Claps for Ukraine – Still not doing anything.
Corporations Need Diplomats – When Apple can execute an embargo on Russia independent of the United States, something is wrong.
Who Cares About Sports – Various sports leagues are forcing Russia to compete as neutral. Meanwhile, Russia is bombing the heck out of Kharkov. One of these things is an act of war, one of these things is not.
Using Children As Political Pawns Is Wrong – Children were arrested in Russia for holding anti-war signage; Ukrainian highschool kids posted videos asking for the world to stop the war. Using children in this way is wrong.
Globalism Is Dead – Isn’t it funny how quickly the nations and companies of the world can act to isolate a rogue actor? Peer pressure at its finest. “Join us or die”. We are forcing Russia to be stronger by forcing them to be self reliant.

That’s it. I commend to God the fate of the conflict and I resolve to not get invested in the outcome. God’s will be done.

For the sake of His sorrowful passion, have mercy on us, and on the whole world.

AMDG

CCXCV – Thoughts While Reading Headlines

But it’s CURRENT YEAR!
I’ve seen my first article decrying the fact that this conflict is happening in the CURRENT YEAR. It had an added element of decrying white/European racial prejudice. It went something like this: “All these white people are only upset because they only thought this could happen in third world countries.”

I have mentioned multiple times that military history is one of my hobby horses. From my casual study of the subject–far from exhaustive, but more than the average layman–I was able to see that human nature doesn’t change. You don’t have to study military history to see that this is true, it is visible in every arena of human involvement. The period of peace we have experienced since the fall of the soviet union is unprecedented. There was no way it would last forever. This conflict I think will tip the scales back towards a war filled world, because the previous peace was held together by Nuclear weapons and fear of America. When Atlas stops propping up the world, what can happen but chaos? There is a major geopolitical shift that is happening and we will not know the consequences immediately. Current Yearism presupposes that we are smarter than our grandfathers. It’s important to remember we are not. We are just as dumb as they were.

Weird Wartime Grey Areas
There are two odd situations happening. First, I saw a headline of an Indian National who was killed in Kharkov (or Kharkiv). Next, I see many European nations are sending weapons to Ukraine. When I was a yoot, there was (and may still be) a web based game created by an author I like, called NationStates, that allows you to play-act as a country and answer issues about how your country will develop politically, civilly, militarily. Through that game I found a forum where we would “role play” fictional geopolitics. It was an extremely frustrating experience–a bunch of edgelord yoots pretending to hit each other with imaginary sticks. “I nuke you.” “Nuh uh I have super shield.” “NUH UHHHH”. But one circumstance that came up a lot was foreign nationals being killed in foreign wars and sending weapons to help the war effort in other countries. How ought that be treated? Sending money seems fine on the face of it, because it can’t really do anything other than help defray the cost of the war. Sending guns feels a little more aggressive, even though you’re just short cutting the middle man, so Ukraine doesn’t have to use your money to buy your guns. Russia has made a statement about how this is bad and has not gone unnoticed. In my internet play acting, we at least had the courtesy to pretend to send military aid covertly. All these headlines about it feels rather brazen. If John says “I want to shoot Bill because Bill punched me.” I can pretend giving him $20 is for medical bills, but I can’t pretend that giving him a gun is anything but actively pushing him towards his goal of shooting Bill. It will be interesting to see what Russia does in response, if anything.

No “No Fly Zone” Zone
Ukraine is desperately trying to entangle it’s supporters. I almost wrote allies but none of them are willing to fight Russia, so just “thoughts and prayers for Ukraine” style supporters. Ukraine has expedited a request to join the EU (Entangling Europe) and has expedited a request to join NATO (entangling America). Ukraine is asking anyone who will listen to send military aid. Most recently, Ukraine has been asking their supporters to establish a no fly zone–meaning anything that flys get shot down, meaning American assertion of Air Superiority. The USA sensibly wrote off the suggestion completely. Essentially: We are willing to support, we are willing to send you money, we are willing to send you guns, but you have to do the fighting on your own.

“Putin Didn’t Expect Such Resistance!”
A common quick-take I have been hearing around the office and among my social encounters is that Putin didn’t expect stiff resistance from Ukraine. No plan survives contact with the enemy, and I doubt Putin expected to just roll in unopposed but I also doubt he expected to be stopped cold. I don’t like this take because it imagines that Putin is an overconfident buffoon who believes his own hype when he’s making strategy. The Russians are too pragmatic, by my estimation, and that kind of thinking doesn’t match my observations about Putin. Whether it’s true or not, it doesn’t tell us anything. The fact of the matter is that Ukraine is putting up resistance and Putin is overcoming it with violent force, and bringing up more troops by the day. War is not pretty, and most of society has not experienced a real war. Only the oldest of us remember the last true war and only a few of the fighting-age population have actually fought in any combat at all. This is a new thing for all of us, and it is not going to be pretty.

War Crimes and the Death of Globalism
The West’s bitter losers have already begun to cry war crimes. I have seen a headline about a thermobaric explosive and a video of a missile hitting a city plaza. I don’t know much about military equipment but if the missile strike was an accident (seems unlikely given modern technology), and if the thermobaric report is true (one never knows) then it seems there have been war crimes by the Russians. The problem is–what do they expect to happen? Russia can just simply ignore any international court and shoulder any international sanctions. These sanctions only hurt if you want to be a part of the international system, and Russia doesn’t care. Once people realize the international system doesn’t have any punitive power, they will realize it doesn’t provide much benefit either. As Zippy says: Authority is the moral capacity to oblige a subject to choose x rather than z; Power is the capacity to make x happen rather than z. When people realize the international system can’t oblige Russia to choose x and neither can the system make x happen in Russia, then it has no authority and it has no power.

This will not be immediately obvious, but Russia has already proven it to be true, so now we just need to wait 50 years.

For the sake of His sorrowful passion, have mercy on us and on the whole world.

AMDG

CCXCIV – A(n Attempted) Realist Take

I have been thinking about how to parse the conflict in Ukraine. There’s a lot of issues tied up in this bundle and you could take any one of them and write a thesis on it and still miss 90% of what is going on. So I like to zoom out, but before I zoom out it’s helpful to have a couple ideas in mind and see what events transpire to confirm or reject that hypothesis.

For me, the single headline that did the trick was this one: “Kosovo asks for permanent military base, NATO membership“

What Kosovo is asking is to become a protectorate of the United States, that is what those things mean. NATO means the US Defense budget will pay for your protection, and a permanent military base means that US Personnel will be tasked with your protection. A lot of hay is being made out of Article 5 of the NATO treaty, which means “An attack on one is an attack on all”–but when only one of them all has the capacity to fight on a global scale, what it really means is “An attack on one is an attack on the USA”. And if we are further distilling this down, this means that NATO protectorates are really American unincorporated territories.

This also explains that absolute panic over the Trump Administration. Does my home state of Virginia pay extra for defense by the American Military? No. So why should Lithuania? Trump wanted budgetary parity, and it drove the protectorates apoplectic.

So the geopolitical world since the fall of the Soviet Union has been defined by American hegemony and the establishment of a network of protectorates and unincorporated territories. Ukraine was a bridge too far for Russia, and so Russia is moving to protect it’s sphere of influence and establish Ukraine as a Russian protectorate and not an American one.

Europe is the only place where the Russian and American spheres overlap. There probably wouldn’t be much hay to make over an invasion of Kazakhstan–but Ukraine was the last gap in the NATO vice that was closing around Russia and it is of strategic importance for Russia to preserve it. If Russia smells weakness or there is a global economic hardship of some variety, it would be a very scary time to be in Estonia, Latvia, or Lithuania. If the United States cannot defend it’s protectorates then they are unprotected.

Watch for this dynamic and see if I am right. I understand Russia and Ukraine are holding talks as we speak–if Ukraine comes to peace terms that the United States does not find agreeable, watch how the United States reacts.

Interesting times, indeed!

For the sake of his sorrowful passion, have mercy on us and on the whole world.

AMDG

CLX – Historical Interlude

Today I just want to share one of my favorite pieces of historical trivia.

The Battle of Leyte Gulf took place in October, 1944 as part of the American campaign against the Japanese in the second World War. The strategic objective of the Americans was to occupy the Philippines and from there cut off the Japanese supply lines through southeast Asia. The landing force was commanded by Admiral Thomas Kinkaid, and the Naval protection was commanded by Admiral William Halsey’s Task Force 34.

On the morning of the battle, Adm. Halsey identified the Japanese “Northern Force”. He considered them the primary threat, and committed his entire force to pursue them. Adm. Kinkaid was left to commit his landing without his northern flank covered by Adm. Halsey. Shortly after Halsey departed, the Japanese “Center Force” and “Southern Force” came into sight, and threatened Kinkaids landing. Halsey had fallen for a feint!

Kinkaid sent a desperate message to Fleet Admiral Chester Nimitz at headquarters in Hawaii. Nimitz drafted the message: “Where is, repeat, where is Task Force Thirty Four?” As part of their encryption protocol, Nimitz’ message would have gibberish phrases put in the beginning and end to hinder decryption by the Japanese. When his message was transmitted, it read as follows: 

"TURKEY TROTS TO WATER GG FROM CINCPAC ACTION COM THIRD FLEET INFO COMINCH CTF SEVENTY-SEVEN X WHERE IS RPT WHERE IS TASK FORCE THIRTY FOUR RR THE WORLD WONDERS"

When Halsey’s aids received the message, they either were confused or made a mistake, and they relayed this message to Adm. Halsey: “Where is, repeat, where is Task Force Thirty Four? The World Wonders.”

Adm. Halsey later recounted his reaction to the unintended rebuke: “I was stunned as if I had been struck in the face. The paper rattled in my hands, I snatched off my cap, threw it on the deck, and shouted something I am ashamed to remember.”

Halsey sulked for a full hour and eventually returned to the battle, after any important action and too late to have any impact. The Allies were able to turn Leyte Gulf into a victory, despite Halsey’s failure and subsequent sulkiness.

There is no moral to this story. I think, frequently, about the phrase “The world wonders” as a sarcastic rebuke, and thought I would share this story in case any of you had not heard it before.

AMDG