Beautiful end of summer days

While the calendar suggests that summer ends on September 21, Labor Day weekend is unequivocally the end of summer in the northeast.  Recent days have been perfect, blue skies, temperatures with highs from the low to mid-eighties, cooling at night, with any rain just soothing showers at that time.   While it's hard to believe that summer is already over, time flies as one ages it seems.

This pleasant weather has been enough to turn the interest here in ISIS and Russia in Ukraine back for a day or two, like holding crossed arms up in the face of evil.  Yesterday included a visit to the library to check for any hidden gems that might be among the new popular fiction overload, an unsuccessful attempt to watch college football that reinforced the fact that I have no interest this year as always, and a relaxed drive south on the Island to Gonzo's, our favorite burrito and salad shop for some evening take-out.

Doing casual research Friday evening and Saturday morning, it was determined that there was a stock that unequivocally looks like one of those bargains where the risk reward is heavily tilted toward the investor at this point.  For those who believe in efficient markets, close your eyes.  The company is clearly out of favor, has a 4% dividend based on the current depressed price, and is the third largest online U.S. retailer behind Amazon and Apple, and just ahead of Walmart.  Take a guess if you want.  Unfortunately, it was learned later in the day that it was mentioned as an opportunity in this week's Barron's financial newspaper, not necessarily helpful to the entry point on Tuesday and based on experience with Barron's track record, not necessarily encouraging in the long term.   We'll see.

It will warm up today from this temperate morning, and thunderstorms are possible in the late afternoon.  Errands, exercise, and cleaning projects will fill the day, but it is also hoped that spending an hour in my chair to read on the barely covered front stoop is possible.  It is certainly easy to miss the southern allure of front porches in this area of backyard patios and decks, with stoops even being unusual in front of the house.  The front of the house is where one can wave to or say hello to people, something that once seemed to be a part of life.  Occasional nostalgia has always been a been a part of adapting to time's advance.

That's today's snapshot of life here, different from the usual post.    

The ISIS that was missed

Obama's unfortunate comment to "The New Yorker" in January that ISIS was just a "jayvee" team will not burnish his legacy.  How did we know so little about this horrible organization of Islamic nihilism and jihad before it emerged fully formed.  The organization that we see today could not have happened overnight.  It must have been the result of several years of development and planning.

Why say that?  They have a command structure in place with leadership established at the top and former top leaders of Saddam's armed forces holding key positions of responsibility in Iraq.  They use social media to advance their cause in a coordinated way, sickening as it is.  Their moves appear planned to take advantage of clear weaknesses that they exploit, they use drones to survey positions, and they even came with a friggin' flag. 

The Islamic State Caliphate, as they apparently prefer to be called now, is nothing if not relentless, and brutal.  One can wonder whether intrepid reporters noticed this phenomenon rising before anyone in the CIA or military realized what was coming.  That is entirely possible.  Obama seems to have deferred to drone surveillance and the Navy Seals as what the government needs to rely on for current information.  Obviously, as it always has been in Iraq, the U.S. needed more reliable on the ground contacts and not the advice of elder statesmen or narrow minded leaders.

The question remains.  How did the U.S. completely underestimate this until it was upon us and the world.

Putin orchestrates not so stealth invasion of eastern Ukraine

Russia seems unequivocally to be participating in an invasion of eastern Ukraine.  Their participation appears to be not just delivery of humanitarian aid but also surreptitiously arms, not just firing at Ukraine forces from Russian territory, but also moving Russian troops into the territory.   Just a day after what he stated was a conciliatory meeting with Ukraine President Poroshenko and professing that there was no Russian involvement in Ukraine, the fighting escalated.  Like Saddam Hussein of old, or Bashir al-Assad recently, Putin feels secure in blatantly lying to the world.  His main audience of concern is the Russian home front, where his 80% approval rating due to the propaganda whipped up nationalist fervor makes him feel invulnerable.

After demonstrations against his regime two years ago, Putin apparently and correctly, I guess, decided that the liberals in the Russian mass media, culture, and the economy had no core to their movement, and began a major suppression of their rights.  He combined that with a propaganda campaign focused on all other people in Russia, the propaganda focusing on Russia's place in history and its rightful place now.  The Crimea invasion and painless takeover was a huge positive after the table had been set by the relentless government orchestrated media messaging .

With that kind of support within Russia, the U.S. and European sanctions focused on Putin associates and his supported oligarchs will be digested, and any fall over into higher prices and less goods for the majority of the Russian populace will be accepted as the price of an eventual and deserved return of Russia to its place of global prominence, and certainly European prominence.  The people will follow Putin for now.  In the Russian kleptocracy, the oligarchs and Putin sycophants have more than enough to carry themselves through the sanctions, sanctions that will cut both ways in places like London that have greatly benefited from Russian investments and lifestyle choices.

It is unclear what serious options NATO, Europe, and the U.S. have to deal with this.  If it's just international opprobrium, that will not phase Putin.  There are no answers here, but these developments in Ukraine are not promising.

Resilient equity market defies skeptics for now

News about the U.S. equity market these days leads with the new S&P record, non-inflation adjusted of course.  Most investors will ignore the "record" talk, but can't argue with the ongoing positive direction, slowly but one could wonder how surely.  As long as that's the "wonder", one could suggest that the modest upward bias can continue near term.

Certainly compared to Europe and Japan, the U.S. economy looks strong, not strong by absolute standards but strong by today's relative measure.  Consumer confidence polling suggests a more positive bias than would be expected here and consumer spending is stable to growing modestly, although some suggest that more of that spending is being financed by debt when compared to recent recovery years.  Confidence begets risk taking, however mild relative to pre-recession levels.

The unemployment outlook is said by many to be improving, but any analysis of the components of employment growth do not suggest such a rosy picture.  Any type of growth is welcome, but this is not the type that is needed for middle class security for more.  Wage growth remains stagnant except in a few distinct areas despite continued modest improvement in productivity.

There are two big positives seen here.  First is the growth in durable goods orders in recent months, durable goods ordered for factories and as capital investment.  Other than the current purchases, this is not a short term pop for the economy but over time it could be immensely positive if it continues and impacts efficiency and production capacity.  The second, not documented by any concrete statistics but widely anecdotal, is the continued increase in small business start-ups, across many areas of commerce.  It should be noted that JPMorgan had a significant increase in small business lending in the second quarter.  It suggests that the U.S. innovation model is alive and well and that more goods and services are tending to be "made in America" businesses, ones that will keep profits to be invested in this country.  That is the hope.

The two big clouds that are not on the horizon but instead are hanging directly overhead are geopolitical events and the "functioning" of the U.S. government.  At the moment both issues seem to be in the back of investor's minds.

Whistling while not working, off to another market day.

"Colorless Tsukuru Tazaki", a novel by Haruki Murakami

This is a well written and thoughtful book, and worth every cent and minute one puts into it.  Despite his great reputation, Murakami had been read here only once before, that being "after the quake", a book of short stories.  That was several years ago, but the impression that is remembered from then was that the writing was in one sense understated and in another as much an expression of virtuosity than a cohesive reading experience.  This is the first time back, and it was worth the leap.

"Colorless Tsukuru Tazaki" is an accessible and in one sense a conventional novel.  The magical realism and surrealism that is in some of Murakami's work was absent, that is if one accepts that dreams don't count, and they don't.  Everyone has dreams.  This is the story of five extremely close high school friends, three boys and two girls, who have bonded into a unit of one, and then what happens as they move on in life and become fragmented.  It is in one sense a mystery that takes years for the protagonist to solve.  In another sense it is the story of an evolving life that is universal and accompanied by prodigious storytelling that unfolds in a way that can hold one's attention completely.

Much of the story keeps coming back to a piano piece from Lizst's Years of Pilgrimage, "Le mals du pays."  It began with one of the teens being a pianist and that being her most frequently played melody which she did with eloquence.  For several of the characters it became almost the background music of their lives.  Music played a role in the one Murakami book that was read, and I understand that it is an important aspect in many others.  As an aside, he and his wife once owned a jazz club in Tokyo.

This has not been an adequate description.  "Colorless Tsukuru Tazaki" is a wonder, a novel on the edge of philosophy.

"We've got to clean up, the housekeeper is coming tomorrow"

What sounds ironic is the way it is here now, and it would have been in the past if we used housekeepers.  We didn't primarily because we were as a family generally too messy to be uniformly ready for one.  Room by room we had to wait until someone did enough clean up in their room or area, and then get the vacuum out and the resident serial vacuum man here did the job.  Two exceptions to the areas of dysfunction were the den with its books and the ping pong room.  Those two areas were under one person's care.

When a housekeeper comes they need to have a room reasonably organized or at least close to it.  That makes complete sense.  They don't want to decide where to put things that are on the floor or how to organize a desk and you don't want them to do that either.  "Where's that serrated knife" or "where is the packing tape" are not what you want the result of a housekeeper's efforts to lead to.

We need and have a weekly housekeeper now, but the day before is now and it is a chore.  Does that sound familiar to others? 

Next Army on tap ---- Ye Olde Afghanistan

We've just seen the effectiveness of the Iraqi army that we left behind, heavily armed and with all of the latest equipment and vehicles.  The Iraqi army had active duty soldiers of 300,000 and 600,000 in reserves.  Estimates vary, but one reliable source says ISIS entered Iraq with 3,000 militants that quickly routed the Iraqi army, sent them running, and thus gave ISIS an incredible arsenal to carry on their attack.  That Iraq had a real and capable army was a facade. That should not have been a big surprise.

When the U.S. leaves Afghanistan at the end of the year they will leave behind an Afghan army of a reported 200,000 soldiers with of course considerable U.S. made and supplied armaments and equipment.  Unlike the Iraqi army, it has seemed from afar that they have not even been putting up the facade of reliable and well-coordinated force.

Fortunately there is not an ISIS type movement there and geographically speaking there will not be.  Afghanistan remains a nation of competing ideologies, tribes, and provinces as it always has been.  To think that the Taliban, the Northern Alliance, the Pashtun area tribes, and many others have gone away would be hopelessly cavalier.  After the U.S. leaves, a national government may maintain control, but who will control the national government.  Someone, some group or competing groups will gain control of the U.S. arms and munitions and it will at some point be used.  The supposed national army will lose control to the traditional tribal disputes.

The current election impasse is crucial here.  Abdullah won the first election handily but his 46% was not a majority while Ashraf Ghani with 32% became his opponent in a run-off.  In that vote, Abdullah simply maintained his 46% while Ghani won with 54%.  This was clearly the work of the hopelessly corrupt current President Karzai.  There is a recount underway and there is the appearance of the two sides working together for a coalition when the outcome is determined.  Unlikely.

Abdullah was head of the Northern Alliance when it kicked the Taliban out of Kabul while the U.S. forces mainly watched and provided weapons.  Ghani has worked for Karzai as an administrator and what looks like a CFO.  Karzai clearly wants to maintain control, Putinesque-like, and keep the U.S. dollars flowing into his pockets.  Karzai will compromise with the Taliban to get this outcome and Abdullah definitely will not.

You get the picture as seen from here.  The U.S. will be leaving nothing seriously intact behind and the outcome is not clear.  Afghanistan has a huge informal army called the mujahideen.  They are experienced but minimally educated men who have lived their whole lives as fighting nomads, going where the work is, and based on how their loyalties are bought and traded.  They are the wild card, literally.

Abdullah is the best hope for this nation, for whatever form of democracy they may have, for some freedom of religion, and for women in general.  That is the strong opinion here, which is obvious.

"Your FATHERS, where are they and the PROPHETS, do they live forever?", the latest Egger's book

This is not a book for everyone.  When Dave Eggers writes a book, it is generally read here soon after it is published.  One can never predict the subjects of his books as they are distinctly varied., and this one maintains that unpredictable trend.  Their common link is distinct clear writing and bits of humor no matter how serious the subject.  One would need to have a seriously dark and sardonic outlook to find to easily find that humor here, but it must be admitted that some of the attacks on the language and phrases used by others were both unpleasantly and pleasantly familiar, and have been experienced here, "if you will."

The book was aggressively panned in "The New York Times Book Review" section four or five weeks ago.  That is not the attitude here.  It is extremely current in some of its societal observations and cuts into interpersonal thoughts that are often painful without hesitation.

The main character is a troubled and intelligently insane 34 year old who, in an effort to understand better why he became the person he is, kidnaps six people who had major influences on his life.  He puts them in restraints in different segments of an abandoned military base, and with threats of violence and tasers, forces them into conversations about his interactions with them.  He relentlessly demands the truth.

Commentary at ENS is never, or maybe almost never, one of telling a book's story.  It is just meant to provide a capsule of information.  Was "Your Fathers...and the Prophets" rewarding reading.  In the end the answer here is, without hesitation, yes.  At various points while reading it was necessary, if you know the feeling, to push on to get that point.  It was worth it, as there were insights in this book that will linger with me for a long time.     

The ISIS fighters from Europe and elsewhere

Even beyond what carnage ISIS has already inflicted in Syria and Iraq, there are real worries about what these fighters with no limit to their brutality could do in other countries.  The immediate concern is not whether they will spread to Saudi Arabia, Jordan, or other Middle East countries, but whether they will initiate terrorist attacks in Europe or the U.S.  With some members of ISIS from those countries now trained in their tactics, it is not a trivial concern.

On some television newscast seen here over the last couple of days, there was a brief interview with four British citizens who were part of ISIS.  They did not seem to be senior members, and they all had Middle Eastern features and English accents.  When one was asked why they were there he responded, "it was better than sitting around being depressed."  One could guess that he had grown up in one of those large grim apartment estates of subsidized housing.

The take here on that statement was that they were as motivated by boredom as by some intense Islamist beliefs, but once part of ISIS they thrived on the activity and the extreme beliefs that they were trained to have.  It's disturbing.

AFTERWORD, "the Assassins' Gate", 10 more pages

This is all one really needs to read today.  Packer's 2006 follow up to his book in 2005 has relevance now.

Robin Williams

What a loss.

For those having the unfortunate ability to recognize what he was going through it was not a surprise.  Maybe two years ago he did an HBO special of a tour that he was doing around the U.S.,  and it was just foul, not funny.  The audience was there paid big money to laugh and it did, but almost nothing was humorous about his performance.  Despite his recent television show, I knew then that he was in big trouble.

In his earlier stages he was incredibly and manically insane, he could not stop talking and he was a riot, but he was definitely not normal.  In a middle life he calmed down and played in some great films, like "Good Morning Vietnam", "Mrs. Doubtfire", and "Good Will Hunting", but that show of performances slowed down.  He was apparently most recently at Hazelden, whose "renowned" therapy approach is based on making one as humiliated about oneself as possible, as hated as much as possible by anyone close to them, as hurt as possible by anyone that they know. The food is tasteless and the place is like a prison.  Despite it's stellar reputation, not understood here in the least, it would absolutely not have been the right place for Robin.

Strike up another suicide for the formidable Hazelden.

Our sympathy to his family.

"The Assassins' Gate" non-fiction from 2005 by George Packer

Maybe four months ago I bought three non-fiction books that were meant to give deeper insight into the U.S.morass of the Iraq and Afghanistan conflicts.  Of course there have long been opinions here as noted in first in the ENS post on February 1, 2006 that was meant to be seen as a speech that Bush should have given if he wanted to honestly explain why were in Iraq, or in fact if he knew the answer to that question.  Some people mistook that post for an endorsement of the U.S. executive position but that is not the case.  I did support the removal of Saddam Hussein and felt that it was a big big mistake of the first Bush to not have done so in 2001.  In 2006 I was ambivalent about the situation, with too little information as just an independent writer and uncertain about the consequences of backing off of the situation that we had committed to, and committed our young soldiers and their families too as well.

The three books, all of which were ambitiously started at the same time were "The Assassin's Gate" by George Packer, "The Way of the Knife" by Mark Mazzeti, and "The Forever War" by Dexter Filkins,  and were sorted and began all at the same time.  "The Forever War" quickly riveted my attention, as this first hand account of fighting in Iraq and Afghanistan was reality in my hands written by an exceptional reporter who joined the troops on their missions, even in Falluga, the Anbar province big city that was devastated by the war.  Along with Filkens, Mazzetti was part of a team of New York Times reporters that won a  Pulitzer prize in 2009 for their war reporting.  Mazzetti's book, focused on the CIA, and was interesting in maybe the first 100 pages but became far too detailed to the point of being unreadable as it progressed.  It promoted a "so what" attitude in this reader.

That was the stint of Iraq reading done here until recently, but with the action there now I picked up "The Assassin's Gate" again, and only half way through at this point, I can say without question that this book is completely relevant to what is going on in Iraq today.  It details the decisions made by the Bush administration to invade Iraq, and the many voices that he listened to.  It quietly made clear that Bush himself knew nothing and had little curiosity.  The thoughts and the understanding of the Iraqi people were based primarily on wealthy 30 plus year exiles from the country.

The disaster that followed is still with us today,  and with many the losses of U.S. families and wounded veterans today.  With the impending revival of conflict with ISIS in Iraq, it seems important to dig deeper into understanding what happened in Iraq more thoroughly.  My opinions, in recent posts on Eyes Not Sold about what is happening now in the Kurdish region stand firm, but one can always learn more.  This book "The Assassins'  Gate", nine years after being written, is still relevant and exceptional.

"U.S. Pursues a Military Middle Road in Iraq"

The above is a headline in a New York Times article today about the actions that the Obama administration is finally taking in Iraq  It may be just a headline writer's view, but it is not without merit.  The article does not mention the fact that Obama was completely aloof from this "road" until all of a sudden it appeared to his extremely politically astute consciousness that ISIS could create another and much more consequential Benghazi in Irbil, Kurdistan's capital where many U.S. diplomats reside within the consulate and elsewhere, and U.S. expatriates doing business there make Irbil their home.  Just prior to the November elections, a negative event there would almost guarantee a Republican controlled Senate.

In the summer of 2004 I spent time in Texas and some of the people that I met there had a saying, "If you are in the middle of the road you will get run over."  It was good advice to me, not always followed.  That certainly may apply here.  This comment is not meant to seek more American soldiers going to war in Iraq, not at all, but to suggest that Obama's late and naive response to what has happened needs to be serious and consequential for this renegade band of terrorists and people who dare to call themselves Muslims when they represent almost nothing of which that religion truly represents.  They are just violent misognist and nihilist bands of criminals with no morality whatsoever.  They want to rid the Arab world of any authoritarian regimes but have no plans other than immediate violence against ordinary citizenry.

Obama's actions now are certainly welcome, even if too late.  There seems to be little way to save the lives of many of the thousands of Yazidi people in the mountains near Sinjar, and there is realistically no way now to create a functional Iraqi army, something that Obama suggests as political cover.  He must know that it can't be done. The Iraqi soldiers just wanted the pay, food, and  benefits and had no commitment to the state, always depending on U.S. soldiers to do the job.  They felt no support whatsoever from the corrupt, brutal, and divisive al-Maliki government that the U.S. has still not officially denounced.

This is a really big and serious crisis, and one could think Obama still just wants it to go away.  Maybe and hopefully his bombs will help, but that will unlikely be the answer in the longer term, or even short term.  This is his problem that maybe he ignores because he views it as Bush legacy event.  Obama has been president for almost six years and there is no legacy. 

"A Gate at the Stairs", a novel by Lorrie Moore

After being introduced to Lorrie Moore's writing in recent months, two of her books of short stories have been read here, both books, one from the late 1980's and one from this year, with stories that are serious, wry, humorous, gloomy, and heart wrenching, some all at the same time.  They were rewarding reading and have been commented on here.  "A Gate at the Stairs" is one of three novels written by Moore, and this is her latest from 2009.

Anyone can Google or Wiki the book to get the basic story, which, briefly, is about a small town mid western girl, named Tassie, heading off to a challenging college in a bigger city, meeting different types of people, and still living a life involved in family issues back home while experiencing new things in her own life.  Realist fiction is what this might be called because, like her short stories, the mood can distinctly vary at different points.  It is set after the 9/11 terrorist attacks and that is a cloud that hovers over the events in the novel.

At the beginning it is just lucid story telling with some of Moore's incredible sentences and observations thrown in as gems to keep the reader in touch, in close.  As the story develops, and Tassie's college job as a part time caretaker for an adopted 2 year old comes to life, the story develops depth, and Moore blatantly reflects a reality which few current popular fiction writers ever get near.  At other times there are some humorous sequences, the most amazing by far is one in which her on again off again college roommate Murph, both Tassie and Murph having ended in some despair year long college romances, begin making up songs with Tassie on her translucent bass guitar and Murph on a xylophone left behind by Tassie's former boyfriend.  It's a hilarious( I never use that word, but I guess it will pass because it works here) sequence that reminded me of the several page English candies sequence in "Gravity's Rainbow".  Could they be equals in unexpected exceptional humor showing up from out of nowhere in what on the surface is a story of serious and atypical fiction.

Enough has been written here.  As indicated, the novel was well written and had reality and not reader inspired satisfaction as a goal.  At the end, an older man that she had met in a college job calls her a few times and persists in asking her out to dinner.  Not to be a spoiler, but the novel ends with, "Reader, I did not even have coffee with him.   That much I learned in college." 

Too little, too late, Obama makes impotent effort to help Kurdistan

Heralding their efforts to drop 8000 ready to eat meals and 5000 water containers to 50,000 Yazidi(so much?) Kurdish speaking refugees in the mountains near Sinjar, the U.S. is now making some efforts to bomb ISIS troop positions(details still unclear) that are coming close to American diplomats, consulates, and offices near Irbil, the capital of Kurdistan.  This is so lame after ignoring requests over many weeks from the Kurdish army to give them material aid, no U.S. soldiers were requested, just support against this jihadist group of homicidal Islamist terrorists.  Some Kurdish army groups protecting Christian villages were forced to retreat after running out of ammunition.  ISIS has no such problem, as they have all of the armored Hummers, equipment, and multiple powerful weapons abandoned by the phony Iraqi army that dropped their fatigues under which they wore non military clothing and evacuated positions all over Anbar province,

Still deferring to al-Maliki's limited position of power, Obama is playing this all wrong.  It is hard to imagine that some members of his administration and some of his advisers don't disagree strongly with his approach.  Having worked here in major corporations, it was clear that there could be open disagreements about strategy and actions in discussions, but once the CEO said that his opinion was final, even the most outspoken and highly paid Vice Chairmen and strategic planners would all obsequiously fall in line, and do their best to humiliate their subordinates who continued to raise questions.  There is no reason to think that this is different from the way that the Obama administration works.  There certainly are other opinions there held by intelligent and better informed people than Obama, who cannot be an expert in everything, but in his arrogance he rules all.  Maybe that is not different from other presidents, but one gets the feeling that with Obama his intuitive opinions rule in the extreme.  This may be one of those instances, in the extreme.

We wait day by day to see if his reticence to aid America's longtime Kurdish supporters is fatal.

As Obama watches, Kurd defenses wither on border

Following up on earlier posts, news today that ISIS has taken control of the largest dam in Iraq, the Mosul dam, that was being protected by Kurdish troops, and that several predominantly Christian towns and villages near the Kurdish border have also been invaded as Kurdish troops were forced to retreat, the worst outcome possible is becoming a fact.  The Obama administration could have helped in many ways, and  it was asked but it did nothing as was detailed in an the August 4th post here, as well as the fact of the Sinjar takeover at that time.

News reports on Bloomberg indicate that approximately 140,000 people from Sinjar and the Christian villages have fled to safer territory in northern and central Kurdistan, while as many as 50,000 residents from Sinjar are refugees without shelter, adequate food, or water in the mountains that are near that area.  Among those displaced, a resident of one of the Christian villages was quoted on Bloomberg as saying, "At the very least, they would have let us leave with the clothes on our backs and taken our money, jewelry, and car, but that is if they decided to have mercy on us." 

"The Grand Budapest Hotel"

We enjoyed this film tonight.  Realizing that we may have been the last appreciators of film to see this well publicized and well watched movie, the only reaction can be that it was a good viewing tonight.  As one who enjoys films but does not read much about current ones or follow the players closely at all, it was a shock to see the credits at the end and recognize the names of so many actors that had not been identified during the film.  Oh well, that's not important really, but it would have been nice to have said that's "so and so" at some points during the film.  I had no such moments.

It was an unusual and strangely entertaining film, with more depth to it than might initially be internalized or intended  At least that's the take here just moments after watching.

The Kurdish people, a follow up to yesterday's comment

While standing firmly behind yesterday's comment about the Obama administration's seriously mistaken approach to Iraqi Kurdistan, this post is meant to add more facts, some of which may have added to Obama's timidity.  While what is written here may be well known to many, the readers here are diverse but, outside of friends and family, are largely unknown beyond their country of origin, so here goes some more information.

The majority of the Kurdish ethnic group, Indo-European by background, live in Turkey, Iraq, Iran, and Syria.  In Turkey they are at least 20% of the population, at least 15 million people, and at times are at odds with the government there on policy and discrimination issues that can turn into small scale military issues or infrequent but attention getting guerrilla activity, whether Turkish leadership has been Islamist or secular over many years.  This certainly must be a factor in the exceedingly short sighted and cautious advice that Obama is given by his advisers.  In Syria, the Kurdish people represent around 9% of the population and live in semi-independent enclaves in the northeast and northwest of the country, and until recently have not been actively involved in any significant protests against or attacks by the Assad regime.  There is no idea here what has happened to Syrian Kurds with the rise of ISIS.  In Iran, the Kurdish people are approximately 7% of the population and for the most part seem to have been allowed to be successfully integrated into Iranian society, while maintaining in many cases their own neighborhoods and traditions.  In Iraq, the Kurds are approximately 18% of the population, and their situation was discussed in yesterday's comment.

Beyond those major concentrations, approximately 2 million Kurdish people live around many parts of the world, with the great majority of those in European countries.  The largest Kurdish community in the U.S. is in Nashville, approximately 12,000 people.  Maybe they like the music.

   

Obama foreign policy team ignores Kurdistan's immediate needs

Kurdistan is an autonomous region of the country of Iraq, with its own parliamentary democracy, a Presidential election every four years, and its own but not so robust army.  Its relationship with the Iraq central government is often fraught with disagreements but in recent years it has meant negotiations rather than any but the most minor military skirmishes.  Now ISIS, repelled once by the Kurds a few weeks ago, is on the attack.

The headline on page A7 of today's New York Times reads, "Sunni Extremists in Iraq Seize 3 Towns From Kurds and Threaten Major Dam".  Among the three towns seized, two were on the border between Kurdistan the major part of Iraq and in an area close to the Syrian border.  The other town seized, Sinjar, was in the traditional area of Iraq near Syria, but protected by the Kurds apparently due to its unique status as home to a major population of Yazadis, Kurdistan speakers who ascribe to a religion that combines Islam and ancient Persian religions.  They are considered as heathens by the Muslim extremists, and their situation in now dire.

When discussing what ISIS has turned into, one cannot minimize how extreme they are.  They practice jihadist criminal "justice" and freely kill anyone who is not devoted to Islam or will not commit to it immediately.  The core leaders and militias of the group seem to be homicidal maniacs with no limits.  Extremist is too mild of a word to describe what they are.  Disenchanted Sunnis who have joined their cause are now in a quandary, detesting the al-Maliki government but not intensely extreme Islamists like many of the core ISIS fighters.

While a U.S. state department spokesman said that the U.S. would continue to seek ways to support the Iraqi security forces and the Kurdish pesh merga, "pesh merga" apparently being the Kurdish name for their defense forces, any aid from the U.S. is not visible with the exception of the few hundred advisers holed in the green zone in Baghdad.  The following is a paragraph from later in the NYT article.

"The Kurds, who have been longtime American allies, recently asked for military assistance from the United States to fight ISIS.  American officials, determined to keep Iraq together as one country, are reluctant to supply weapons to the Kurds without the approval of the central government in Baghdad.  That is unlikely to happen given the worries by Iraq's Shiite-dominated leadership that the weapons would further embolden the Kurds to form a new state."

So that statement means that the Obama administration will wait for approval before helping the Kurds despite the Kurds longtime support for the U.S.  The Obama administration will wait for approval from Prime Minister al-Maliki, and that will never come.  He is corrupt, he is divisive, and he has alienated, imprisoned, or killed many Sunnis over the last three years.  The Kurds are for the most part moderate Sunnis, but have included minorities of Christians, Shiites, Yazadis, and Jews in their diversified citizenry.

For Obama to defer to al-Maliki now is hard to believe.  When the peaceful people of Homs in Syria held a mass demonstration over three years ago, it was almost all regular citizens who wanted to get more freedom from the abusive and corrupt Assad regime.  Obama just winked his support and did nothing.  Soon the Homs demonstrators were being shelled and picked off by snipers.  But in that case, Homs was not in any way an independent region, not one with its own army or independent government.  Obama's reluctance then can be justified or rationalized if not admired by many because of that.

Today, there is no excuse for his administration's refusal to come to the aid of the autonomous and self-governed Kurds.  The Kurds are not looking for American soldiers, just military equipment and related support for surveillance and humanitarian needs if necessary.

Obama's timidity and lack of leadership in foreign policy is more than embarrassing in this particular situation.  It is shameful.   

Inexplicable Federal Reserve interest rate policy

From this perspective, the U.S. Federal Reserve Bank's virtual zero interest rate policy makes little sense and is restraining economic growth.  This opinion is not coming from an economist who is trained to focus on academic and detailed market data so these thoughts may be questionable to some, but it is also not coming from a specialist who is blinded by anything outside of his or her small area of expertise.

Currently the Federal Reserve is committed to a Fed Funds rate of between 0 to 25 basis points for the foreseeable future.  If this is meant to continue to insure the solvency of the banking system, it makes no sense.  Banks are almost uniformly profitable now and have adequate to strong capital positions.  Any bank that actually needs this level of Fed Funds rate should be shut down, merged into another, or have a wholesale change of management.  The historically steep yield curve that has been created is no longer necessary.

If this low Fed funds rate is meant to create an incentive for credit creation, it is not needed.  Few banks are likely making credit decisions based on cost of funds, because cost of funds, whether overnight or two year or higher is minimal by historic standards.  Banks are making credit decisions based on their more rigorous credit analysis and the regulatory scrutiny that they remain under that makes them minimize any risk taking.  While the Obama administration encourages more lending by the banks, the Obama appointed regulators are discouraging it by their petty and short sighted view reflected in their audits.  In addition, with the major regulators and federal prosecutors on this never ending binge of extorting money from banks for past actions, some actions clearly wrong and some not so clearly at all(some of the latest charges are related to loans sold to the FHA in 1999, that's 15 years ago, and one could ask how the supposed mortgage experts at this HUD cabinet office could only discover these issues now).  Banks get stung by the regulators and cooperate, and then get stung again.  This is the reason for the unprecedented number of homes being bought today being cash only deals, meaning no debt. Buyers that have the money can't or don't choose to get loans at times due to the banks' and the borrowers' fear of the harsh and out of control behavior of the regulators.

Would raising interest rates gradually and minimally over time hurt the housing market or capital investment spending due to higher interest costs for buyers or investors.  This is possibly a contrarian  thought, but it may do exactly the opposite of that.  If prospective home buyers have been on the fence about making any long term commitment, or if mid-size commercial enterprises have been undecided about adding that new warehouse, service center, or factory, the thought of or fact of modestly rising rates may shake them into action.  For those thinking of buying homes, in most areas of the country rents have been going into the stratosphere as allowed, slowly but surely.  With the prospect of higher mortgage rates over time, those prospective buyers could be, may likely be, motivated to get off their ass and act now, buy something while mortgage rates are still near these historic lows.  This could create a more active housing market, not one that is impacted negatively.

For small commercial and industrial companies the same thought process applies and then some.  Get in on these still low rates now and don't wait for possibly a time when rates will, as they almost definitely will, eventually get higher.  Whatever they build now will serve as collateral for their loans, and with any inflation that accompanies somewhat higher rates this would be, to use a cliche, a win win situation for them if they act at the right time.

If this speculation is by any chance correct, those who worry that a modest rise in interest rates would negatively impact equity markets by raising the discount rate are right only in the short term.  Traders who have a one or two day mentality might push the market down temporarily, but if the initially small rate hikes led to more growth vibrancy in companies and in housing, the equity market would flourish over time.

Then we move on to the disgraceful impact that the Fed's far too longstanding policy has had on people who want to save for the future, for those living on fixed incomes, and for retirees.  Safely saving for retirement, for children's education, and the future had until recent years been one of those American "values" that was held dear.  That has been demolished by the Fed's policy, and the only way to get any return on one's savings is to invest in stocks, real estate, or other assets with a higher degree of risk.  As said in an earlier post, the long held value of compound interest is lost on investors today, and it is really just a myth to younger working people who have watched their parents, friends, and relatives live through recent times.

Most financial planners, when analyzing a middle to upper middle class client's portfolio, encourage them to set aside anywhere from two years to five years of readily liquid and stable assets to be able to maintain a necessary lifestyle and withstand unexpected events like job losses, expensive or disabling health issues, the need to assist an ailing or impoverished parent or child, or broader economic events that have radical effects, such as a bubble busting recession, a geopolitical crisis that paralyzes international trade for some period, and we must now even include a tragic weather event that is devastating to some area of the country.  Now those recommended asset positions just sit there losing money on an economic basis, since they earn almost nothing and any knucklehead knows that the government's inflation figures are understated for a variety of reasons that can't be delved into in this ever lengthening comment. The most recent inflation figures from last week were at 1.6% which by itself indicates a meaningful economic loss to those holding readily liquid and stable savings when the yield on a two year treasury is 0.446%.  To many who are not economists that understates the economic loss.  Do the people who develop the models for these inflation calculations go to the grocery store, heat or air condition their homes, have the ever increasing costs of home insurance, or send their kids to college.  Apparently not.

Someone please give one good reason that a layman can understand to explain why interest rates must stay at these ultra low levels.  The Fed should beware.  They are a proxy for the government's view of the market, but if the market changes its tune and sends rates up sharply it will be out of the Fed's control, as in the late 1970's/early 1980's, and the economic effects could be as damaging as anything that we have just seen in the so-called Great Recession.

That may seem unlikely, but the future is an unknown.  Don't tell the headline seeking pundits and those who promote their own portfolio positions that fact.  They want people to think that they know.


 

"In America", a fine film from 2002

Here is yet another film that was completely missed during my years of wandering in the banking wilderness.  Somehow it was found on Netflix, and the brief summary made it look like a light "feel good" movie that may or may not be that good, but would not be taxing, or in other words could be relaxing.

It was a welcome surprise here.  Sure, it had its emotionally set up moments, but they were so well done that it was not a concern here, and one or two really got me.  All that was known here was that it was a PG film about an Irish family moving to New York City, and the difficulty of adjusting to a different life.  It was so much more than that.  The film often built up a level of tension as it was full of uncertainty that kept one watching intently.

The two stars of the film from this perspective were Sarah and Emma Bolger, the two young sisters, in real life and in the film. They were natural, spontaneous, and spirited.  At 10 and 6 years old in the film they provided the humor and the 10 year old gave what was a narrative from time to time that gave background information not otherwise explained by other characters.  She was scripted to do so in a way that was not at all stilted or invasive.  It was part of her character to be the observer who opened up at rare times while her younger sister was the spontaneous joker and emotional one.  When the 10 year old said to her father toward the end of the film, "I am the one who has been holding this family together for the past year", it was an entirely believable comment, and that's spoken here as both an observer of the film as a parent who has seen the capacity for maturity in young children.

Of course, after watching the film I turned to Wikipedia and learned that it has been a widely respected film when released, with one player nominated for best actress and one for best supporting actor.  It was not a major hit at the box office, although it probably met or exceeded its expenses with $25mm in sales.  It is unclear whether this would have been seen here in 2002 or 2003 even if my work schedule at the time did allow more time for films.

"In America" was a good film to see tonight, and that was all that was needed here and much more than what was expected.

Friday's equity market tempers yesterday's freefall

Compared to yesterday, the equity market was relaxed today.  There was volatility that led to some midday uncertainty, but the day ended with the Dow down .42%, S&P down .29%, Nasdaq down .39%, mid-cap 400 down .11%, and extended market small caps down .24%.  That was welcome news after yesterday, and as good as could be reasonably expected after retail investors and some smaller leveraged hedge funds had the bejesus scared out of them yesterday.

While not reading any reports today or following CNBC, Bloomberg, or any other media outlets, just looking at the group of 75 or so stocks that are followed closely here, it is clear that financials were the one area that took it on the chin.  Bank of America, American Express, JPMorgan, Goldman, Citigroup, and U.S. Bancorp were all down from 1.7% to 1.8%.  The only outlier among the major banks was Wells Fargo which was just down 1.1%, still down obviously.  Investors are apparently expressing their concern over the possibility of higher rates in the future that would make the yield curve less generous to these banking concerns.  While few small banks are followed here, the two that are were down 1.2%.

Other sectors of note were energy stocks, which were tepid to down at best due to an outlook for lower oil prices, and the technology sector, which had a decidedly mixed performance.  Stocks with extremely high valuations continued to decline, albeit modestly relative to yesterday, while more mature tech companies with strong balance sheets regained a portion of yesterday's losses.

It seems as if we may again be entering a period in which the price action in the bond market will once again have an important impact on the stock market outlook.  That would be overcome only if real economic growth became more sustained, not economic and earnings growth driven by further cost cutting, stock buybacks, and efficiencies but economic growth that comes from revenue growth and heightened capital investment.

One could begin to muse about the impotence of Congress and its inability to pass any long term infrastructure spending that is both needed for long term economic progress and would provide decent jobs for many seeking to join or stay in the middle class.  That is not possible now, as digesting my Gonzo's Shrimp Veracruz burrito and bowl of chili has satisfied me to the point of relaxation and lanquid fatigue such that only quiet reading in a comfortable chair can provide any motivation now.