Economies are funny things. I just noticed that I forgot to tie today’s video into one of the central messages of this “Markets Are Dumb” series. That’s the importance of Confidence to markets. I sometimes think that’s all there is to them. In our last installment on the Turkish economy I talked about how the fundamentals of the Turkish economy had been disastrous for half a decade. Everybody knew this. All the experts agreed. Yet the Turkish economy kept trucking along, and sometimes putting up very impressive growth numbers. How did it happen? Confidence.
The Turkish people weren’t exposed to the basic facts of their economy, and their misplaced faith, or confidence, kept the wheels spinning. The growth this led to prompted international investors to keep pouring money it. It seems that this perpetual motion machine may finally have stopped. As today’s video makes clear, Trump can’t be held responsible for any of the disastrous choices that Turkish policy makers have made over the past decade. But he is the guy who finally punctured that last bubble of confidence. And that’s actually pretty important.
So why am I the only guy talking about this? In today’s video I connect a bunch of dots to point out that Saudi Arabia’s investment program isn’t going to help them out of their current mess. In fact that investment program is more than a bit nuts. Funds that are desperately needed to reinvent the country are being sent to some of silicon valley’s riskiest money pits. It’s possible that these investments will make some money eventually, but it isn’t what I’d call likely.
The truth is that all of this information is out there. Today’s video wouldn’t be possible without some great financial journalism done by folks at Bloomberg and the Financial Times. The FT’s “Saudi Sovereign Wealth Fund Scrambles For Resources” in particular was very useful. But this stuff is often behind paywalls, and only read by nerds like myself. This information is all out there, and it’s being acted on by serious investors. That’s why that magical city, NEOM, isn’t going anywhere, and its German CEO has already been shuffled off to another job. That’s why the Saudi-Blackstone infrastructure fund announced at the Saudi-Trump orb fest last year can’t find any other investors. The broader situation really is dire, far beyond the headline grabbing problems with Tesla and Uber.
This is a slow motion catastrophe. But it hasn’t made much of an impact on the broader consciousness yet. That’s because the Saudi PR machine is still working in high gear. Bloomberg, FT, and occasionally the New York Times will follow up on all these projects and their failings, in articles that are only read by a few tens of thousands of people. But when a new project is announced it’s in ALL the outlets, with videos, puff pieces, and endless social media placements. The more disturbing facts are all out there, and I’m proud that I got to bring them to you with today’s video.
Full disclosure: I own some Tesla stock and I’m actually pretty bullish on the company’s long-term chances. If Elon Musk can get his head on straight that is. That doesn’t mean it’s a good investment for Saudi Arabia…
So how do we bring about change in 2018? It may seem like I’m doing advertising for MSNBC with today’s video, but I assure you I’m not. It’s about trying to take a chunk of media that serves a purpose and put it in front of more people. This may seem petty and small, but I really don’t think it is. In fact, I think it’s this kind of “media hacking” that can actually bring about change in the modern day.
It’s common for people to be hopeless about the way things are going. “Whatever, we’re all screwed!” is often the prevailing attitude. We’re all at the mercy of insane government institutions and the media that gave us our reality TV president. One of the central messages of this channel is that that approach is nuts. In fact, we’re in a better place than we have ever been. In the United States at least, we’ve got a 230 year old system that provides all the tools we need to change things for the better. The weird social media / news / politics ecosystem that is evolving now is tremendously disconcerting, but it also provides new opportunities. We wouldn’t have ended up with Trump without the internet. But would we have ended up with the speedy adoption of marijuana legalization, gay marriage, or the (painfully slow) fall of mass incarceration without the internet? It’s not all disaster.
If we do solve the problem of the US forever war, it’s going to be by using these new social media tools in combination with the older tools of the US political system. I have no idea what that’s going to look like. But I think the experiment that is today’s video is worth trying. Last March, when the senate was debating a resolution that could have ended the war on Yemen, I urged people to call their congresspeople. This is just another approach to the same goal.
Keen eyed viewers may have noticed something a bit odd about this video… Have I gone full tin-hat and joined the “Assad doesn’t use chemical weapons team?” No, no I have not. I feel the same way about this issue that I do about religion. I find those who claim any kind of certainty, one way or the other, deeply silly.
In April the United States bombed Syria, supposedly in response to a chemical attack that Assad carried out in the Damascus suburb of Douma. In my video on the topic I covered the two interpretations of the event, and why I didn’t find either particularly persuasive. The bombing struck me as being about US domestic politics more than anything else. My video demolished the idea that there was any real security or humanitarian rationale to the Trump Administration’s bombing, but it also pooh-poohed the claims of the “Assad was framed!” set. Today’s video is a bit more sympathetic to the idea that the rebels cooked up April’s chemical attack to get the US to bomb Assad.
People shouldn’t be forced to be on one side or the other. Neither the Assad regime, nor the US intelligence community are trustworthy actors. I tend to give the US intelligence community more of the benefit of the doubt, but perhaps I’m biased. Our opinion of a given controversy shouldn’t be black and white. It’s entirely possible that what happened didn’t fit either narrative. It wasn’t necessarily a CIA stitch-up, the US could have been manipulated, or it could have let itself be manipulated by elements on the ground. We should also change our opinion based on new information. And with respect to April’s chemical attack, the US intelligence community has burned up a lot of my good will.
In April the US government justified its bombing with assertions that the nerve agent sarin was used in the attack on Douma. This is important, because it’s well established that many actors in the Syrian war have the capacity to deliver more widely available and more easily deliverable chlorine gas. The presence of sarin was important in the US’s story that this Douma attack was different, and more worthy of punitive action. The US made this claim, and got the United Nations to back them up. Well, earlier this month, the Organization for the Prohibition of Chemical Weapons (OPCW) released its report, and they didn’t find any Sarin. So we know that a significant portion of the story Trump and Mattis was selling was bullshit.
But once again, this is a spectrum. It doesn’t mean the CIA planned this. But it seems much more likely, to me anyway, that April’s Douma attack was carried out by the rebels themselves to try to win a propaganda victory against Assad. This could very well not be the case. Who knows, maybe Assad hopped in a helicopter and dropped those Chorine canisters himself. But if that’s the story the US government wants to tell, it shouldn’t let itself get caught out in such obvious lies. It forces me further down the path to tin-foil hat territory.
Man, Timing can be awkward sometimes. My programming choices tend to be pretty free from influence of outside events. If something important happens, I’ll react to it, usually with a live video, but other than the 2016 US election and Brexit vote, I rarely tune my content towards things that are happening. I decided to finally address the Mueller investigation with today’s video, simply because my thinking on it matured to the point that a video became possible. I’m talking about Mueller investigation this week, because I finally thought I had something worth saying about it…
What I didn’t expect when I wrote this a couple weeks back, was it coinciding so directly with the Putin-Trump summit. And I certainly didn’t expect Trump to put in the performance he put in yesterday. I think the reaction to Trump’s mealy-mouthed and sycophantic approach to Putin is a bit over-blown, but only a bit. It was pretty pitiful to watch, and if you’re more invested in myths of US virtue and power than I am, it must have been especially painful. The reactions, both from my friends, and from social media have been pretty intense. The folks who have always been convinced that Trump is a Russian tool are now adding to their ranks. It’s kind of an odd environment to be releasing a video skeptical of the Mueller investigation into, but hey, that’s what I’m doing! Can’t wait to see how it goes…
Today’s video gets into some very interesting territory that I hope to cover more in future (years?). So much of today’s politics in the United States is rooted in this weird idea of “whiteness” and who is a “good American” and who isn’t. These dumb, dumb conversations are of course as old as our republic. Let’s leave aside the fact that the “realest Americans”, the indigenous, and African Americans (few of whose ancestors were forced here after the early 1800s), are somehow never invited to the party.
What today’s video gets into in a small way, is the role of folks from our last (much larger) wave of immigrants around the beginning of the 20th century. It sometimes seems like it’s the newest members of US “whiteness” that are the most vicious in its defense. I’m thinking specifically of the very Irish Sean Hannity, and the very Italian Jeanine Pirro of Fox News. In a small way, the largely illusory “clash” between Trump and the Establishment is a clash between a fresher 20th century New York, Italo-Irish version of whiteness, and an older version. It’s the Nouveau Riche vs. the folks who never let them into their yacht clubs.
This too is a tale as old as time. I’m not sure if it’s seen as not polite, or just plain not relevant to bring up, but I think it’s worth focusing on a bit. You can’t really understand the silliness of conversations around Latinos and other immigrants without understanding how foreign the Irish, and later the Italians, Slavs and Jews were once seen. This idea of “Real America” or “Whiteness” is becoming more and more of a focus of the Trump administration’s public profile. Today’s pardon of the Hammond family, a goal of domestic white terrorists, is one example. As I’ve said before, Trump’s presidency is almost certainly the dying gasp of an older version of “Real American”. Presidential politics has served this role before, though in a more positive sense. John F. Kennedy’s election in 1960 symbolized the acceptance of Catholics into the US mainstream. It didn’t prompt a Trumpian reaction the way that Obama’s presidency did. But that doesn’t mean that Trump’s version of White supremacy is any less dead than the WASP ascendancy is. Like I said, we’ve seen this story before. A new US identity is already forming. That’s why the “whites” are so pissed. Obama got into the yacht clubs before they did.
Is there a contradiction in the foregoing paragraph? Absolutely. And I think it’s worth exploring further. Someday.
Sigh. Sunday’s election in Turkey was pretty depressing. Erdogan won re-election as president of Turkey, and his coalition retained a majority in the Turkish parliament. This puts him in a dramatically more powerful position. The recently revised constitution makes the President the center of Turkey’s political system. And with this election, the office of the Prime Minister is done away with, and Erdogan is now in more full control of the country than he has ever been.
You can find an infinite number of articles talking about how bad this development is, and I largely agree with them. But I remain optimistic about Turkey, just in the longer term. Here are two things to make you feel a bit better…
First, this is exactly what we expected when the elections were announced a couple months back. I have said repeatedly in my Turkey videos that I expected Erdogan to win the next couple elections. This has happened. But over the past two months, something really exciting happened. The CHP, the party that has failed to adequately oppose Erdogan for almost two decades now, finally put up a candidate that people actually liked. Muharrem İnce is likable, has a compelling story, and actually seems to be a decent leader, which is at least two things, if not three things that the CHP’s leader Kemal Kılıçdaroğlu does not have. In the weeks leading up to the election, İnce held rallies attended by literally millions of people. This, combined with the founding of Meral Akşener’s Iyi party last year made people surprisingly hopeful.
Those hopes were dashed. The AKP, in an alliance with the (suspiciously successful) hyper-nationalist MHP party, has managed to hold onto a majority in parliament, and Erdogan himself was re-elected. This sucks. But it’s exactly what we expected out of this election before we got our hopes up. The opposition parties remain very successful in Turkey in spite of some truly extraordinary obstacles. We shouldn’t get too depressed about something we expected all along.
The Second reason not to get too depressed about this election is the topic of today’s video. Turkey’s economy is a mess. It’s been on the edge for years now, and 2018 has a good chance of being the year when it finally tips over. When that happens, whether it’s this year or next year, Erdogan will own it completely. Last week, as people were getting more excited about the possibility of an upset, all I could think about was 2015. In June of that year, Erdogan’s party, the AK party, lost its parliamentary majority for the first time. I was quite literally dancing in the streets that June. But because the opposition parties were a disaster, they couldn’t get it together to form the coalition government necessary to get rid of Erdogan. He was able to create a new crisis with the Kurds, and call a new election. He won that 2nd election in November 2015. That felt a lot worse than Sunday did. For me anyway. If the opposition had won this time, I could have easily seen that happening again. It wouldn’t have been the Kurds this time. The economy could have crashed, and as President, Erdogan could have blamed the opposition and called a new election. We’re not going to have to do 2015 again, and for that at least I’m grateful. Today’s video lays out just how difficult a time Erdogan is about to have with the Turkish economy.
With today’s video we go all in on discussing the US stock market. There’s this idea that stock markets are somehow rational, or serious. People who talk about it are always wearing suits, and we put a lot of effort into making all the details of interest rates, portfolio management, and valuations seem boring. The stock market is none of these things. In fact it’s nuts. By going through the history of the “Trump Bump”, I attempt to draw the curtain back a bit.
Unfortunately, watching the video, I think I screwed something up. It’s not that the story I put forward is wrong, it’s just that I left too much out. The video falls into the “Presidents impact everything” school of commentary. I hate that school. The differing views market makers took of Trump and Obama are tremendously important to this particular economic story, but that doesn’t mean that presidents are actually all that powerful. I really don’t want to create that impression, and I apologize if I did so with this video.
I feel like markets and economics have been an underpinning of what I’ve been talking about for quite some time now. It’s been a troubling thing for me. There’s always a lot of certainty when these issues come up in political discussions, but usually almost nothing backing up that certainty. The conditions we’re looking at are always changing, and the theories that people gravitate to are some of the least proven imaginable. Economics has pretensions to being a science. But the variables are immense, and there’s really only one result.
We have one world economy, and its performance at any given time is the only thing that we have to point to, to see whether our theories are working. There is no control group. Most of the figures we rely on to measure what’s going on are little better than rough estimates, and the political consensus rarely lasts a decade. I have high hopes for the profession of economics. People are doing amazing work in the field, and the move onto the internet that our species is currently undergoing provides the possibility of real measurement (and Orwellian nightmares). I’m confident that the future is bright, but I think we all need a lot more humility in talking about the economy. Which is why I made today’s video, and why I’ll be adding to the series in the coming weeks…
This video does a good job of laying out how ridiculous the “Democracy is Dying!!!” story is. But what it doesn’t do is lay out why the story gets so much play. The sad fact is that it’s useful to powerful people in the United States. Once again, it all comes back to the US military industrial complex. The wise men of the Pentagon have realized that “Terrorism” is losing its power as a motivating factor. Despite the best efforts of Trump & Co. it’s obvious that general white loser angst has had a much higher body count in the US over the past decade than “Radical Islamic Terrorism”. So we need something else to be scared of to justify our absurd military budgets. That’s why this narrative gets so much play.
The idea is that if “Democracy is Dying”, the world really is “more dangerous than it ever has been” as the Pentagon keeps telling us. I may do a video on this in the coming weeks… I’d be interested to know how much relevance this story has beyond the national security nerd twitter bubbles I frequent. In those circles this “Democracy is Dying” story has become the conventional wisdom. Is that the sense you get where you are at as well? Let me know in the comments.