1994 Budapest Agreement

In February of this year, I posted an article regarding Ukraine and Russia regarding the likelihood of Russia attacking Ukraine to artificially elevate oil prices.  I am still quite surprised that Putin did not attack, because his country is suffering economically; but it looks like he decided that the risk of escalation and expansion of a focused conflict was too great.  Given this new reading the Budapest Memorandum, he probably was not sure that the U.S. would even respond militarily, which would have defeated the purpose of that stunt entirely.

Today, I found a copy of the Budapest Agreement of 1994 made between the Presidents of Ukraine, Russian Federation and United States of America, and the Prime Minister of the United Kingdom.

The article stipulating territorial integrity was written with regards to not attacking Ukraine or violating their territorial integrity, which Russia unquestionably violated.  However, I misread the section regarding the U.S. guarantees of maintaining the territorial integrity of the Ukraine.

The actual excerpt of the agreement reads as such:

a4. The Russian Federation, the United Kingdom of Great Britain and Northern Ireland and the United States of America reaffirm their commitment to seek immediate United Nations Security Council action to provide assistance to Ukraine, as a non-nuclear-weapon State party to the Treaty on the Non-Proliferation of Nuclear Weapons, if Ukraine should become a victim of an act of aggression or an object of a threat of aggression in which nuclear weapons are used; (bold mine)

Which effectively only says this: "In the event that Ukraine is attacked or nuked, we will talk about it in the UN."  Obviously, there were probably some non-legally binding assurances that were probably relayed to the Ukrainians along the lines of: "Of course the UN will back you up." but this was not written into the agreement.

So, I was incorrect in my assessment of the situation based on a misinterpretation of the 1994 Budapest Agreement.  Apparently, the 1994 Budapest Agreement does not bind us in guaranteeing the territorial integrity of Ukraine.  It is an important nuance that I missed in my initial read through of this agreement.

Donald Trump: Showman, Braggart, and a Conduit for Anger

 Donald Trump has been leading in all of the polls, particularly on the Republican side of the house; but I am afraid that this may be a phenomenon of people finding a suitable conduit through which to channel their anger.  I appreciate the anger that people feel, because I have been preaching this anger for many months now and sacrificed my job to it as well.  The government is broken.  Integrity and honesty, the foundational pillars of honorable politics, are dead in the public sphere.  Few people care for keeping their word in this age of transient technological apathy.  The amount of information available to us has anesthetized us to the thread of absolute truth winds quietly beneath all of this reality, and the resulting moral decay is a natural, if improper response to it.

Donald Trump fills a role as a manifestation of anger, but this is a dangerous role for we the people to cling to.  Rarely are good decisions made in anger; at least in my own life, this is unequivocally true.  When this legitimate anger permeates the culture, it makes us prone to making rash decisions simply to effect a powerful change.  This is the same type of anger that borne Communism and Nazis to power in the past.  We the people must exercise extreme caution when reacting out of base anger.  We must remained focused on what is critically important in any political figure.

Politics is based on policy, which is founded on honesty.  If you do not have an honest politician than nothing they say in the policy realm matters because you cannot rely on them to fulfill their policy promises.  Sadly, honesty cannot normally be measured objectively or quantitatively in most circumstances.  So honesty, as best that we can perceive it, is a necessary precondition for a qualitatively good politician.  Without honesty, there is no good politician.

So, how does one go about determining the honesty of a politician ahead of time?  For myself, I measure what they say against what I know is realistically possible.  One hallmark sign of a bad politician is unrealistic or inherently dishonest policy.  If they cannot ever fulfill wild promises, then you know immediately that they are playing your emotions, which should immediately trigger guards in yourself.

The first step in doing this is finding legitimate information regarding policy positions of Donald Trump.  My first stop is his official website, in order to get it from the horse's mouth.  To my shock and horror, he has only one official position: Immigration reform.

So, let's address immigration reform first.  For people who follow me on Facebook, I have been largely silent on this topic, with the exception of vocal opposition to violent illegal immigrants who need to be imprisoned or shot on sight without mercy and without trial.

Trump's position on illegal immigration has three primary philosophical points:

1. A nation without borders is not a nation.  There must be a wall across the southern border.

2. A nation without laws is not a nation. Laws passed in accordance with our Constitutional system of government must be enforced.

3. A nation that does not serve its own citizens is not a nation. Any immigration plan must improve jobs, wages and security for all Americans. 

His first two points are fairly solid.  Nations are defined by borders.  However, he fails to address the first half of the definition of 'nation.'  Nations are united by common descent, history, culture, or language.  There is a certain level of cultural assimilation that must occur, and does normally in order for us to be considered a 'nation.'  This implies that a national language should be enforced, or at the very least highly encouraged, since language is one of the most fundamental levels of understanding and communication of precise meaning.  People who fail to assimilate culturally, linguistically, are not truly part of our nation.  The natural question that follows is how we define citizenship.  People must culturally assimilate before we grant them citizenship.  They must speak English if they are to be given citizenship and I would argue that they be forced to learn the fundamentals of our government system, that power is derived from the people and that all laws are derived from the Constitution.

Which brings us to Trump's second point.  A nation without enforced and enforceable laws is not a nation.  While I could argue semantics, this statement is mostly in line with reality.  Without laws derived from and congruent with the Constitution which are easily and fairly enforced any kind of order breaks down and you breed contempt and despair for the unity of a nation.  So this is mostly in line with reality, but could be more nuanced.

Trump's third point is much more questionable, not in principle but in implementation and connotations.  A nation that does not serve its own citizens is not a nation.  Technically there is nothing in the definition of nation that requires service to the people, but in the case of the United States this is true because of the way our Constitution was authored.

So let's look at his proposed implementation.

Make Mexico Pay for the Wall.

There are a number of practical issues with this, but let's address the fundamental incentivization scheme that he is proposing.  He refers to the Mexican balance of trade with the U.S. implying that he will hold U.S.-Mexican free trade hostage until they pay for a wall.  In 2014, the U.S.-Mexico trade balance was 53 billion USD in Mexico's favor out of a total 294 billion USD in total imports from Mexico.  So, I have no doubt they would build a wall if he asked them to backed up by tariff threats, however the damage done to the U.S. economy would limit the practicality of this approach.

The bulk of the trade was in automobile vehicle parts and accessories, at 13.2% of the trade, crude oil (really?!) at 9.4%, trucks, buses and special purpose vehicles at 9.2%, and new passenger automobiles at 7.2%.  The chief ways to attack this is to either build an intellectual property wall around the U.S. to prevent U.S.-developed technology from being used in manufacturing processes abroad, build tariff regimes, or pull U.S. labor costs down to be globally competitive.  Pulling U.S. labor costs down can be done one of two ways, either lower U.S. wages, which is not a legitimate option, or lower costs on businesses to hire people, which means lowering taxes on businesses.  This will allow businesses to cut expenses on personnel and accordingly sell their products for less on the global market.  There are likely other methods to lower the U.S. cost of labor that I am missing, but we will stop on this topic for now.   The second way to pull the balance of trade down is to build tariff walls around the U.S. by taxing imports.  This involves taxing goods coming across the U.S. border, which will drive the price of goods in the U.S. up accordingly making it more expensive to do business in the U.S.  I am not sure that tariffs (except in the oil industry) are a good idea, at least not until technology advances enough to offset the increased costs.  The final and, in my opinion, the most effective, is to outlaw advanced technology transfer across U.S. borders such that companies cannot take advanced product designs and manufacturing processes out of the U.S.  This would involve incredibly stiff penalties (40% tariffs on their product) against any company exporting technology out of the U.S. and should discourage companies from exporting manufacturing processes abroad to exploit cheap labor abroad.  This will still cause the price of goods in the U.S. to rise, but hopefully not as much as a straight tariff.

Trump doesn't seem to see this though, which is troubling.  He is more interested in channeling voters' anger than actually presenting legitimate or effective solutions to our problems.

The idea of building a physical wall is absurd.  A physical wall will only address one of about six different means of accessing the U.S. and thus is inherently flawed.  It would be much more effective to build a psychological wall around the U.S. by implementing extremely merciless policies around immigration, particularly proven criminal immigrants with felony records.  If we start by eliminating the anchor baby policy, executing violent felony criminal immigrants, and deporting non-criminal immigrants on a regular basis, the flow of immigrants across the border will cease as people with criminal intent will stop coming here and forcing legitimate immigrants to follow legal means for becoming citizens.  However, we need a flow of immigrants to make up for our declining population, so legal immigration needs to be streamlined according to the philosophical principles listed above (cultural and linguistic assimilation and political education) and the overall quota adjusted annually with the demographics chiefly in mind.  If the U.S. demographics situation improves than we lower the quota to slow the flow of immigrants into the U.S.

Trump seems to not want to look that deeply into the immigration situation though.

 The final piece of immigration oddities with Trump is his insistence that he "likes" Mexico and is happy to hire Mexican immigrants.  This is fundamentally at odds with his protectionist  stance, which is aggressive against Mexico and Mexican people and culture, which is another hallmark of a dishonest man.

This article is getting excessively long, so let me address only one more policy stance of Donald Trump, Chinese trade and economic policy.

He said recently, "They keep devaluing their currency until they get it right. They're doing a big cut in the yuan, and that's going to be devastating for us."  This is not wholly true or honest.  Yes, lowering the value of their currency will affect our trade balance with them in their favor, but it also has deleterious effects on the Chinese economy that will hurt them in the longer term.  The immediate effects of lowering your currency versus implementing tariffs are similar, but the longer term effects are considerably different.  Devaluing causes additional long term effects that distort the use of capital in the market causing money to flow into non-productive asset classes.  Just look at the U.S. economy.  After attempting to devalue our currency consistently from 2008-2015, the U.S. stock market, which is not as productive as infrastructure or research investments or increasing consumer spending, was correspondingly driven to new highs.  When you make capital gains possible in the less productive asset classes, you encourage capital to move from longer term productive investments into short-term speculative assets that offer suitable returns pumping asset prices above historic or rational levels, producing bubbles in U.S. stock assets.  When the monetary policy stimulation ends, you get the deflation of the U.S. market bubble recently experienced restoring the stock market to a more sensible level.  These same kinds of domestic effects will occur in China, which will harm them in the longer term, despite the fact that they will receive the immediate benefits of such a move.

So, saying that China is "destroying us" by devaluing is taking a very short-sighted view of the laws of economics and constitutes a blatant failure to consider unintended consequences, both of which are dangerous for someone seeking the office of President of the United States of America who needs not only to consider the laws of economics intimately in all of his policy positions but also needs to make every effort to foresee unintended consequences of his policies.

Based on this analysis above, Trump is clearly not an honest candidate and clearly cannot be trusted to actually implement anything that he states now.  If you vote for Donald Trump, you are voting on a wisp that may or may not materialize and will more than likely result in a whole host of unintended consequences.

If you want a more honest candidate who also still embodies the anger against blatant corruption in Washington, Ben Carson is your man.  He clearly lays out all of his positions and all of his policies that I have looked over and taken time to think about seem plausible and consistent with the rest of his narrative.

Jesse Ausubel: Nature Rebounds

I found a curious article, distributed by John Mauldin, an economist that I follow regularly, regarding the restoration of natural lands in something of an environmental renaissance.  As humanity increases the efficiency with which we produce both food and fuel and consume the same, we are seeing a rebirth of the wildlands of the nature.  This is exactly the kind of economic efficiency necessary to evoke expanding environmentalism without simultaneously destroying the human economy.

This article was written by Jesse Ausubel, who is a renowned climate and ecological scientist who has chartered and led several climate research groups such as the first UN World Climate Conference and the Climate Task of the Resources and Environment Program of the International Institute for Applied Systems Analysis, near Vienna, Austria, an East-West think-tank created by the U.S. and Soviet academies of sciences.  This man has more serious ecological and climate science under his purview than a host of climate scientists combined.

His article is in PDF format here: http://phe.rockefeller.edu/docs/Nature_Rebounds.pdf and is well worth the read.

A Win for Liberty: The Patriot Act Expires

This is a great day for liberty in America.  Rand Paul managed to halt the renewed passage of the Patriot Act, which will help remove some of the legal framework for the NSA bulk phone collections.

Hopefully, the Libertarians can build on this momentum and attack other key issues, like welfare reform.

Open Source Software, Many Eyes, and Many Bugs

I am a software programmer.  Not by choice, but by will.  I like open source software as much as the next guy, but the problem of how to reliably fix bugs still has not been solved by open source.

Between Heartbleed and Shellshock, the "many eyes" theory put forth by Eric Raymond in The Cathedral and the Bazaar is fairly conclusively dead.

So what is a programmer to do?

How does one fix bugs that you write into your own software?

My mentor who taught me a vast amount of the architectural programming that I know now had a method that he used to debug his own code.  It involved copious amounts of paper, which is why I don't use it more myself.  He printed out his entire source on paper.  Cut it to ribbons.  Tossed the giant pile of source ribbons into the air and collected, sorted, and reassembled the code.

The success of this method relies on forcing entropy and chaos into your brain and forcing you to look at your code from another perspective.  It breaks the "what you imagine, is what you see" paradigm in coding.

This works for debugging individual source files, but what about component and system-level bugs?

The best method that I have found so far for debugging system level bugs, is comprehensive component and system-level diagrams and application programming interfaces that define "how it should work."  Then I have to pick through the entire system, call by call, and interface by interface, to find places where the component or system operation is inconsistent with my design bible.

It is, ironically, a lot like my philosophical life, where I have my design bible -- the Bible -- and I have to pick through my own life in order to find places where it is inconsistent with the "how it should work" principles laid out in the Bible.

It is curious... and kind of crazy.  Everything really is connected in some manner.

McGonigal: Are video games good for us?

I found a fascinating article regarding video games and their effects on society.  The basic premise of the article is that not only are games good for us as a society, but that games are transcendent.

Perhaps it’s the social and communal aspect of games, that we must all cooperate together to play by the same rules and respect the same values and stay with each other until the game is done, even if we are losing.  Games bring us, and keep us, together – and the more people who know how to play a game, the bigger a community we become.

Perhaps it’s the architectural and mathematical elegance of games, the structure of their goals and rules and scoring that produce heightened ways of thinking and interacting that don’t happen in our normal daily lives. Games are structure, carefully designed structure, and structure is art.

Being exposed to these things – to freedom, to community, to art – is a transcendent good, a good that, as Sutton-Smith said, makes life worth living.

The article itself is filled with examples of research that suggests that this is the case.

So I say, it's a good day to be a game designer. :-)

The full article is here:
https://www.bigquestionsonline.com/content/how-might-video-games-be-good-us

Mauldin: Living in a Free-Lunch World

John Mauldin has another piece that is absolutely essential to understanding where all of this socialistic free-lunch is leading us.

As always he backs his work up with copious amounts of research, for which I am quite grateful.

The original paper can be found at his site: http://www.mauldineconomics.com/frontlinethoughts/living-in-a-free-lunch-world

Mauldin: Debt Be Not Proud

John Mauldin has a good piece explaining how debt, both private and sovereign, works.  Debt is one of the pieces of economics of which my understanding  is limited.  I have a much more dynamic and vibrant understanding of currencies than I do debt, despite that the two interplay intricately.

This is a good piece for people who are not as familiar with economics.

The original article is here.

Beware the Ides of March

As anyone who follows this blog knows that I am an avid reader of geopolitics and economics.  I have been loathe to make predictions; but the closer we get to what I perceive as a geopolitical and economic nexus, the more true I believe my prediction is.  I've drawn information from a very broad range of sources, personal, private, and official.

Those who know me personally know that I have said many times that I believe Russia will start an open war this year, in March, I believe.  They have been preparing for this for a long time through various political and subterfuge means.   Their ultimate goal is to fracture the European Union and NATO for the purpose of using underhanded means to pull previously Soviet states back into their geopolitical orbit, or failing that to at least elevate the oil prices enough to delay (or prevent) internal political collapse.

I believe that this larger war will (and in fact already has) begun in the Ukraine.  The Russians have been flooding the separatists in the Donbas with men and materiel for warfare to help organize and train the Ukrainian separatists.  So the stage is already set.

I expect that in March, Russia will officially declare war on Ukraine and invade.  The purpose of this is twofold.  First, they will be obliquely testing the resolve of the EU and NATO to uphold commitments made in the past, namely the 1994 Budapest Memorandum, in which Bill Clinton and NATO guaranteed Ukrainian national security in exchange for Ukraine giving up their nuclear weapons stockpiles leftover from the Soviet collapse.  This agreement was also signed by Russia, who agreed not to invade Ukraine.  Obviously they are not holding up their end of the bargain, and the Ukrainians suffer as a result.  The piper will have to be paid though with regards to this agreement.  America cannot afford to break anymore agreements without losing all credibility abroad, and ultimately, this is what Vladimir Putin is testing, American integrity and resolve.  If we fail this test, not only do we lose any chance at making any kind of diplomatic deals with anyone, -- after all who can believe anything we say after we have reneged on so many agreements? -- but we also will be opening the door for Mr. Putin to begin invading and creating vassal states of any number of states bordering Russia, such as Estonia, Latvia, Belarus, and others.

So, I believe America will have to respond.  I don't think we have a choice in this.  How exactly we respond though is up for debate.

Given the reticence of the American public -- and rightfully so -- to deployment of American ground forces, I suspect that an agreement will be made, and perhaps already has been, to arm the Ukrainian national government with modern weapons from the U.S. or the E.U.  The Ukrainians have plenty of manpower at this point in time, so arming them with modern weapons that are capable of defeating the modern weaponry that Russia is deploying with the separatists will at least stabilize the ground war in the Ukraine.  However, if Russia declares war on the Ukraine, they will begin attacking the Ukrainian army with their air force, which is vastly superior to Ukraine's air forces.  This development will dictate that the U.S. become involved directly with our air forces.  Fortunately, our air force possesses a distinctive edge on Russia, and I expect that the U.S. could declare and enforce a no-fly zone over the Ukraine that will effectively shut down any Russian air support of the separatists in the Donbas.  I believe this combination should be adequate to effectively win the war brewing in the Ukraine, and hopefully nip future Russian aggression in the bud before it becomes a more serious problem.

Several news and research outlets have posted articles about how the Ukrainian conflict could escalate into a nuclear war.  While I will not completely dismiss the possibility, I like to think that mutually assured destruction still holds sway both in the U.S. and Russia.  So, while I think that the possibility exists, I believe that it will not occur unless all other conventional means are exhausted.

Similarly, news and other outlets have reported on neo-Nazi death squads operating with the sanction of the Ukrainian government.  These death squads, while alarming and disturbing, are largely inconsequential to the overarching conflict.  They are little more than a foot note that will have to be dealt with once the broader conflict is stabilized.  The core of the matter is American integrity and fulfilling agreements that we have made in the past.  If we do not, then nothing else matters; not our high and blackened morals, nor our liberal culture, none of it matters if we do not maintain impeccable integrity on the world stage.  The neo-Nazi death squads will have to be dealt with and brought to justice once the conflict in the region is stabilized and Ukrainian national integrity is re-established, but nothing can be done about them if we do not intervene.

So, long as the U.S. and E.U. support for the Ukrainian government remains focused on the task at hand and does not exceed it in any way -- for example placing cruise missiles in Ukraine would be counter-productive and an escalation of provocations -- then we should be able to veritably maintain a defensive posture in this war.  We must be completely vigilant to prevent any Ukrainian soldiers from setting foot in Russian territory, likewise any American combat aircraft must be kept out of Russian airspace in order to preserve the defensive posture.  We cannot give the Russian propagandists any ammunition whatsoever to work with.  We must avoid even the appearance of aggression, insofar as we can while still upholding our agreements.

I don't think this war is avoidable, but hopefully through quick and decisive action it can be lessened, and prevent future provocations by the Russians.  Ultimately, I do not believe that the Russians want a long drawn out war in Eastern Europe.  They only need enough war to restore the price of oil to a manageable level to achieve their primary goals, although exactly how Putin will spin this into a 'victory' for Russia remains to be seen.  I imagine that it will be very interesting to see what story comes out of the propaganda machine in Russia after this conflict is over.

Public Announcement: Password security

After reading this article on Gizmodo, I feel the imperative to make a public announcement from the bottom of my withered little cybersecurity heart (only withered because I witness on daily bases people violating principles that seem to be foundational to being secure online... it tends to make you apathetic).

For the love of all that is good, green, and holy on this world, DO NOT USE simple passwords!

Look over that list on the Gizmodo article.  If your password is on that list, CHANGE IT.

12345 is a password that can be easily guessed.  As is password, as is any other dictionary word.  There are specific attacks called dictionary attacks that use -- you guessed it -- a dictionary to direct the computer's password guessing scheme.

You should always have at least 1 number, 1 special character, one capital, and one small letter.  It should be at least 8-10 characters long.

If you would all do this, and tell your friends too, maybe we will save our country headache and money tracking your stolen assets down after some cyberthug steals your passwords by guessing them.

"But what about the 10,000 passwords that I have to remember already?!" you ask.  Well, they make password safes for this exactly this problem.

PasswordSafe (http://passwordsafe.sourceforge.net/) is a password generation and storage program.  It will store your passwords in a 1024-bit encrypted database on your computer with no access to the internet.  If you need mobility you can install a mobile version on a flash drive.  They also have an iPhone version here: https://itunes.apple.com/us/app/pwsafe-password-safe-compatible/id440783112?mt=8

So, now you have the tools.  You have the power!  Go forth and secure your virtual world!  Everyone else will thank you for it.

Russia's Options Are Narrowing

My recent pessimism on the Russian economy in general and Putin's autocratic willingness to sacrifice his people to his political agenda for Russia is founded primarily on the global macroeconomic effects of currency exchange rates.  With the U.S. dollar value increasing with respect to every other country in the world, the pressure on Putin to do something to stabilize and turn the Russian economy around will increase.

As Mohamed El-Erian, an economist whom I have read extensively in the past, says in his article on Project Syndicate,

"The final group comprises the “wild card” countries, whose size and connectivity have important systemic implications. The most notable example is Russia. Faced with a deepening economic recession, a collapsing currency, capital flight, and shortages caused by contracting imports, President Vladimir Putin will need to decide whether to change his approach to Ukraine, re-engage with the West to allow for the lifting of sanctions, and build a more sustainable, diversified economy.

 The alternative would be to attempt to divert popular discontent at home by expanding Russia’s intervention in Ukraine. This approach would most likely result in a new round of sanctions and counter-sanctions, tipping Russia into an even deeper recession – and perhaps even triggering political instability or more foreign-policy risk-taking – while exacerbating Europe’s economic malaise."

Putin's recent comments blaming the West, and particularly the U.S., for his country's economic malaise, and rightfully so in many respects, indicates that he is not interested in coming to the table and is simply building up the broad political will for a military action.  Significant -- and by significant, I mean Western and/or U.S. involvement -- military action would be required to push oil prices higher, which is the only means of respite for his energy-dominated Russian economy.

I bet Putin is wishing that he did not imprison, and remove from influence, Khodorkovsky, who was actively pushing for a more diversified Russian economy based on technological innovation.  It was a geopolitical gamble that Putin took during his ascendency to power.  One with huge implications for the Russian people, and one that I am betting that he will lose.

Mauldin: Is Bitcoin the Future?

I have been aware of Bitcoin for sometime, and I have followed its various travails and hardships, including being hacked by the U.S. Government for God-only-knows what purpose.   I agree with Worth though, that this currency has the significant potential to completely change the financial world.  Being a cybersecurity person, I have been waiting for them to get their operations in order before I actively invest in Bitcoins.    You can read a nice historical analysis of Bitcoin's fateful history thus far in the linked article.

Worth Wray is quickly becoming one of my favorite economists.  He is a fellow "young punk, with no respect for authority" (as my mentor Charles said of me), so I suspect that we have similar philosophical underpinnings and ways of looking at the world.


The link to the original article is here: https://d21uq3hx4esec9.cloudfront.net/uploads/pdf/141130_TFTF2.pdf