Monday, June 29, 2015



Putin’s World: Why Russia’s Showdown with the West Will Worsen

By Vitaliy Katsenelson
I grew up hating America. I lived in the Soviet Union and was a child of the cold war. That hate went away in 1989, though, when the Berlin Wall fell and the cold war ended. By the time I left Russia in 1991, the year the Soviet Union collapsed, America was a country that Russians looked up to and wanted to emulate.
Twenty-three years later, a new version of cold war is back, though we Americans haven't realized it yet. But I am getting ahead of myself.
After Russia invaded Crimea and staged its referendum, I thought Vladimir Putin's foreign excursions were over. Taking back Crimea violated plenty of international laws, but let's be honest. Though major powers like the U.S. and Russia write the international laws, they are not really expected to abide by those laws if they find them not to be in their best interests. Those laws are for everyone else. I am not condoning such behavior, but I can clearly see how Russians could justify taking Crimea back - after all, it used to belong to Russia.
I was perplexed by how the Russian people could possibly support and not be outraged by Russia's invasion of Ukraine. But I live in Denver, and I read mostly U.S. and European newspapers. I wanted to see what was going on in Russia and Ukraine from the Russian perspective, so I went on a seven-day news diet: I watched only Russian TV - Channel One Russia, the state-owned broadcaster, which I hadn't seen in more than 20 years - and read Pravda, the Russian newspaper whose name means "Truth." Here is what I learned:
  • If Russia did not reclaim Crimea, once the new, illegitimate government came to power in Ukraine, the Russian navy would have been kicked out and the U.S. navy would have started using Crimean ports as navy bases. 
  • There are no Russian troops in Ukraine, nor were there ever any there. If any Russian soldiers were found there (and there were), those soldiers were on leave. They went to Ukraine to support their Russian brothers and sisters who are being abused by Ukrainian nationalists. (They may have borrowed a tank or two, or a highly specialized Russian-made missile system that is capable of shooting down planes, but for some reason those details are not mentioned much in the Russian media.) On November 12, NATO reported that Russian tanks had entered Ukraine. The Russian government vehemently denied it, blaming NATO for being anti-Russian.
  • Malaysia Airlines Flight MH17 was not downed by Russia or separatists. It was shot down by an air-to-air missile fired by Ukraine or a NATO plane engaged in military exercises in Ukraine at the time. The U.S. has the satellite imagery but is afraid of the truth and chooses not to share it with the world.
  • Ukraine was destabilized by the U.S., which spent $5 billion on this project. As proof, TV news showed a video of Senator John McCain giving a speech to antigovernment protesters in Kiev's Maidan Square. It was followed by a video of Vice President Joe Biden visiting Ukraine during the tumult. I wasn't sure what his role was, but it was implied that he had something to do with the unrest.
  • Speaking of Joe Biden, I learned that his son just joined the board of Ukraine's largest natural gas company, which will benefit significantly from a destabilized Ukraine.
  • Ukraine is a zoo of a country, deeply corrupt and overrun by Russian-haters and neo-Nazis (Banderovtsi - Ukrainian nationalists who were responsible for killing Russians and Jews during World War II).
  • Candidates for the recent parliamentary election in Ukraine included Darth Vader (not kidding), as well as a gay ex-prostitute who claims to be a working man's man but lives in a multimillion-dollar mansion.
I have to confess, it is hard not to develop a lot of self-doubt about your previously held views when you watch Russian TV for a week. But then you have to remind yourself that Putin's Russia doesn't have a free press. The free press that briefly existed after the Soviet Union collapsed is gone - Putin killed it. The government controls most TV channels, radio and newspapers. What Russians see on TV, read in print and listen to on the radio is direct propaganda from the Kremlin.
Before I go further, let's visit the definition of propaganda with the help of the Oxford English Dictionary: "The systematic dissemination of information, especially in a biased or misleading way, in order to promote a political cause or point of view."
I always thought of the Internet as an unstoppable democratic force that would always let the truth slip out through the cracks in even the most determined wall of propaganda. I was wrong. After watching Russian TV, you would not want to read the Western press, because you'd be convinced it was lying. More important, Russian TV is so potent that you would not even want to watch anything else, because you would be convinced that you were in possession of indisputable facts.
Russian's propaganda works by forcing your right brain (the emotional one) to overpower your left brain (the logical one), while clogging all your logical filters. Here is an example: Russian TV shows footage of schools in eastern Ukraine bombed by the Ukrainian army. Anyone's heart would bleed, seeing these gruesome images. It is impossible not to feel hatred toward people who would perpetrate such an atrocity on their own population. It was explained to viewers that the Ukrainian army continued its offensive despite a cease-fire agreement.
Of course if you watched Ukrainian TV, you would have seen similar images of death and despair on the other side. In fact, if you read Ukrainian newspapers, you will learn that the Ukrainian army is fighting a well-armed army, not rebels with Molotovs and handguns, but an organized force fully armed by the Russian army.
What viewers were not shown was that the cease-fire had been broken before the fighting resumed. The fact that Putin helped to instigate this war was never mentioned. Facts are not something Russian TV is concerned about. As emotional images and a lot of disinformation pump up your right brain, it overpowers the left, which capitulates and stops questioning the information presented.
What I also learned is that you don't have to lie to lie. Let me give you an example. I could not figure out how the Russian media came up with the $5 billion that "America spent destabilizing Ukraine." But then I found a video of a U.S. undersecretary of State giving an 8.5-minute speech; at the 7.5-minute mark, she said, "Since Ukrainian independence in 1991 … [the U.S. has] invested more than $5 billion to help Ukraine." The $5 billion figure was correct. However, it was not given to Ukraine in three months to destabilize a democratically elected, corrupt pro-Russian government but over the course of 23 years. Yes, you don't have to lie to lie; you just have to omit important facts - something Russian TV is very good at.
Another example of a right-brain attack on the left brain is "the rise of neo-Nazism in Ukraine." Most lies are built around kernels of truth, and this one is no different. Ukraine was home to the Banderovtsi, Ukrainian nationalists who were responsible for killing tens of thousands of Jews and Russians during World War II.
Putin justified the invasion of Crimea by claiming that he was protecting the Russian population from neo-Nazis. Russian TV creates the impression that the whole of Ukraine is overrun by Nazis. As my father puts it, "Ukrainians who lived side by side with Russians did not just become Nazis overnight."
Though there may be some neo-Nazis in Ukraine, the current government is liberal and pro-Western. Svoboda - the party whose members are known for their neo-Nazi and anti-Semitic rhetoric - did not get even 5 percent of the votes in the October election, the minimum needed to gain a significant presence in parliament. Meanwhile the TV goes on showing images of Nazis killing Russians and Jews during World War II and drawing parallels between Nazi Germany and Ukraine today.
What also makes things more difficult in Russia is that, unlike Americans, who by default don't trust their politicians - yes, even their presidents - Russians still have the czarist mentality that idolizes its leaders. Stalin was able to cultivate this to an enormous degree - most Russians thought of him as a father figure. My father was 20 when Stalin died in 1953, and he told me that he, like everyone around him, cried.
I keep thinking about what Lord Acton said: "Power corrupts, and absolute power corrupts absolutely." The Putin we scorn today was not always like this; he did a lot of good things during his first term. The two that stand out the most are getting rid of the organized crime that was killing Russia and instituting a pro-business flat tax system. The amount of power Russians give their presidents, however, will, with time, change the blood flow to anyone's head. Come to think of it, even Mother Teresa would not have stood a chance in Russia.
A few weeks ago Putin turned 62, and thousands of people took to the streets to celebrate his birthday. (Most Americans, including this one, don't even know the month of Barack Obama's birthday.)
In my misspent youth, I took a marketing class at the University of Colorado. I remember very little from that class except this: For your message to be remembered, a consumer has to hear it at least six times. Putin's propaganda folks must have taken the same class, because Russian citizens get to hear how great their president is at least six times a day.
We Americans look at Putin and see an evil KGB guy who roams around the country without a shirt on. Russians are shown a very different picture. They see a hard-working president who cares deeply about them. Every news program dedicates at least one fifth of its airtime to showcasing Putin's greatness, not in your face but in subtle ways. A typical clip would have him meeting with a cabinet minister. The minister would give his report, and Putin, looking very serious indeed, would lecture the minister on what needed to be done. Putin is always candid, direct and tough with his ministers.
I've listened to a few of Putin's speeches, and I have to admit that his oratory skills are excellent, of a J.F.K. or Reagan caliber. He doesn't give a speech; he talks. His language is accessible and full of zingers. He is very calm and logical.
Russians look at the Putin presidency and ask themselves a very pragmatic question: Am I better off now, with him, than I was before he came into power? For most the answer is yes. What most Russians don't see is that oil prices over the past 14 years went from $14 to more than $100 a barrel. They are completely responsible for the revival of Russia's one-trick petrochemical economy. In other words, they should consider why their economy has done better the past decade, and why it may not do as well going forward. Unless Putin was the one who jump-started China's insatiable demand for oil and other commodities that drove prices higher, he has had very little to do with Russia's recent "prosperity."
I place prosperity in quotes because if you take oil and gas riches away from Russia (lower prices can do that with ease), it is in a worse place today than it was 14 years ago. High oil prices have ruined Russia. They have driven its currency up, making its other products less competitive in international markets. Also, capital gravitates toward higher returns; thus oil has sucked capital from other industries, hollowing out the economy. After the Soviet Union collapsed, Russia had a chance to broaden its economy; it had one of the most educated workforces in the world. Sadly, it squandered that opportunity. Name one noncommodity product that is exported from Russia. There aren't many; I can think only of vodka and military equipment.
But most Russians don't look at things that way. For most of them, their lives are better now: No more lines for toilet paper, and the stores are full of food. Their personal liberties (such as freedom of speech and freedom of the press) have been taken away from them, but many have so much trust in their president that they don't mind, whereas others are simply complacent.
Today we see three factors that influence oil prices and are working against Russia: Supply is going up with U.S. shale drilling; demand growth will likely decline if the Chinese economy continues to cool; and the dollar is getting stronger, not because the U.S. doing great but just because the rest of the world is doing worse. If oil prices continue to decline, this will expose the true state of the Russian economy.
When I visited Russia in 2008, I sensed an anti-American sentiment. NATO - which in Russia is perceived as a predominantly American entity - had expanded too close to Russian borders. Georgia tried to join NATO, but Russia put a quick end to that. Russians felt they extended a friendly hand to the U.S. after 9/11, but in response America was arraying missiles around its borders. (The U.S. says they are defensive, not offensive; Russians don't see the distinction. They are probably right.)
The true colors of this new cold war came to light recently. In August 2008, according to Henry Paulson, the U.S. Treasury secretary at the time, "top level" Russian officials approached the Chinese during the Olympics in Beijing and proposed "that together they might sell big chunks of their GSE [Fannie Mae and Freddie Mac] holdings to force the U.S. to use its emergency authorities to prop up these companies."
This incident took place just weeks before the collapse of Lehman Brothers. The U.S. economy was inches from revisiting the Stone Age. The proposed Russian-Chinese maneuver could have made such an outcome more likely. The Federal Reserve would have had to step in and buy Fannie's and Freddie's debt, and the dollar would have taken a dive, worsening the plunge in the U.S. economy. Our friend Putin wanted to bring the U.S. economy down without firing a single shot, just as he annexed Crimea from Ukraine.
Today anti-American sentiment is much greater in Russia. European sanctions are seen as entirely unjustified. Here is why: Crimea had a "democratic referendum," and the Ukrainian conflict is believed to be not of Russia's doing but rather an American attempt to destabilize Russia and bring Ukraine into NATO. In his annual speech at the Valdai conference last month, Putin said America had pushed an unwilling Europe into imposing sanctions on Russia. America is perceived as an imperialistic bully that, because of its economic and military power, puts its own self-interest above everyone else's, and international law.
Putin uses anti-Americanism as a shiny object to detract attention from the weak Russian economy and other internal problems. In the short run, sanctions provide a convenient excuse for the weakening Russian economy and declining ruble. They have boosted Putin's popularity (at least so far). As the Russian economy gets worse, anti-American sentiment will only rise.
This new version of the cold war has little in common with the one I grew up in. There are no ideological differences, and there is no arms race (at least not yet, and let's be honest: Today neither country can afford one, especially Russia). At the core of it, we don't like what Russia is doing to its neighbors, and Russia doesn't like what we do to the rest of the (non-EU) world.
The criticisms of U.S. foreign policy voiced by Putin in his latest Valdai speech are shared by many Americans: The U.S. is culpable in the unresolved, open-ended Afghanistan adventure; the Iraq War; the almost-bombing of Syria, which may have destabilized the region further; and the creation of the Islamic State, which is in large part a by-product of all of the above. Yet Putin's abominable Ukrainian excursion and the thousands of lives lost were never mentioned.
But there is also something less tangible that is influencing Russia's behavior: a bruised ego. During the good old Soviet Union days, Russia was a superpower. It mattered. When it spoke, the world listened. The Russian people had a great sense of pride in their Rodina (Mother Russia). Today, if Russia did not have nuclear weapons, we'd pay much less attention to it than we do. Pick a developing country without oil whose president you can name. (Okay, we Americans can't name the president of almost any other country, but you get the point.)
Anti-Americanism and Putin's popularity will both rise as the Russian economy weakens. For instance, Putin took his own people hostage when he imposed sanctions on imports of European food. The impact on Europe will not be significant (the Russian economy is not very large in comparison to the European Union), but Russia is very dependent on these imports. In the U.S. consumers spend about 13 percent of their earnings on food, but in Russia that number is almost three times larger. Therefore, food inflation hurts Russians much more. Yet as food inflation spiked, so did Putin's popularity and anti-Americanism. Even declining oil prices will be explained as a anti-Russian manipulation by the U.S.
Unfortunately, the only thing Russia has going for it today is its nuclear weapons. Russia has started to remind us of its military recently. According to NATO, the alliance "has conducted over 100 intercepts of Russian aircraft in 2014 to date, which is about three times more than were conducted in 2013."
Every article needs a conclusion, but this one doesn't have one. I am not sure what this new cold war means for the world. Will Russia start invading other neighboring countries? Will it test NATO resolve by invading Baltic countries that are part of NATO? I don't know. Economic instability will eventually lead to political crises. We have plenty of economic instability going on around the world.
I'll leave you with this thought: On March 7, 1936, the German army violated the Treaty of Versailles and entered into the Rhineland. Here is what Hitler later said:
"The forty-eight hours after the march into the Rhineland were the most nerve-racking in my life. If the French had then marched into the Rhineland, we would have had to withdraw with our tails between our legs, for the military resources at our disposal would have been wholly inadequate for even a moderate resistance."
Those two days determined what Germany would do next - build out its army and start World War II.
Comparing Putin with Hitler, as one of my Russian friends put it, is "absolutely abominable" because it diminishes Hitler's atrocities and overstates by a mile what Putin has accomplished to date. Yet it feels as if we are at a Putin-of-1936 moment. Will he turn into a Putin of 1939 and invade other countries? I don't know. But the events of the past nine months have shown Putin's willingness to defy international law and seize the advantage on the ground, betting - correctly so far - that the West won't call his bluff.
As Garry Kasparov put it, while the West is playing chess, responding tactically to each turn of events, Putin is playing high-stakes poker. We ignore Putin at our own peril.
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Vitaliy N. Katsenelson, CFA, is Chief Investment Officer at Investment Management Associates in Denver, Colo. He is the author of The Little Book of Sideways Markets (Wiley, December 2010). To receive Vitaliy’s future articles by email or read his articles click here.
Investment Management Associates Inc. is a value investing firm based in Denver, Colorado. Its main focus is on growing and preserving wealth for private investors and institutions while adhering to a disciplined value investment process, as detailed in Vitaliy’s book Active Value Investing (Wiley, 2007).

Tuesday, June 23, 2015




The Transom
23 June 15

The media’s response to a crazed, disturbed racist who murdered peaceful God-fearing people in a church was not to embark on a conversation about the need for mental health reform. It was another national level pressure campaign to frame Republican politicians as racists depending on their attitude toward the Confederate battle flag flying over a memorial. Thankfully, Nikki Haley was up to the challenge of this moment. Her remarks yesterday about the people of South Carolina and about the flag itself were heartfelt and came from exactly the right place – I urge you to watch them here.  She says a great deal here, managing to defend both the flag and those who are offended by it, in the process reminding us what this really is about: how a free people govern themselves.

South Carolina is a lovely state, and Charleston a wonderful port city, full of beautiful people. I grew up there and still consider it my home town. It is a town full of the history of war and revolution, Sumter low-slung on the horizon, cobblestone streets made from the ballast of ships that brought “Saxon steel and iron to her hands/and summer to her courts.” And the way I have heard this town and its people smeared in the past few months is astonishing to me. The reality is that the American South has tangled more openly and more seriously with the issue of race than any other part of the country. It has had its conversation, and has the blood and the symbols and the graves to show for it.

When national commentators with no connection to this place put themselves forward as self-made arbiters of when it can be considered civilized – they are already moving on to the question of how many boulevards may be named after Confederates – it reminds me that it is a good thing to know the history of where you came from and why you are here, and a terrible thing to forget it. Knowing where you came from helps you understand who you are. This is not always an easy thing. Often it is easier to pretend history never happened. But in the long run, forgetting is more dangerous to a free people.

Mollie Hemingway has more.  “A lot of the outrage over the flag seems somewhat cold, given the horror of what last week brought. We had nine black people brutally murdered because they were black and sitting in a church with a history of fighting white supremacy. With all due deference to hatred for a Confederate flag on a pole at the statehouse, this seems like an almost childlike attempt to miss the seriousness of the situation. It’s as if they expect us to say, “Congratulations! You oppose the flag of an army that was defeated 150 years ago. We’re all very proud of you, journalists!” This generation seems to excel at inventing controversies, weighing in on those invented controversies, and then patting itself on the back for being so courageous and open-minded…

“[H]ow we manage these processes of disapproval truly is important for civil society. To quote Heinrich Heine, a man who definitely knew of what he spoke, “Where they have burned books, they will end in burning men.” Mobs aren’t actually the best judges of such processes, no matter how righteous they feel or certain of their cause. Listen, it’s great that we’re aiming to be an anti-racist society. That’s very, very good! But it’s bad that we are slowly forgetting how to dislike something without seeking its utter destruction. Somehow we’ve abandoned the aesthetic of Abraham Lincoln for that of Mao Tse-Tung.”

- Benjamin Domenech


Congratulations! You Oppose The Confederate Flag. Now What?

We are slowly forgetting how to oppose something without seeking its utter destruction.
Mollie Hemingway

The U.S. Civil War was a war that never should have been fought. Some 620,000 men died because slavery, an inhumane and evil practice, was permitted in many portions of this country. The South gets most of the blame for that, but the north benefited from the regime as well, even though it didn’t directly practice enslavement at the time of the war.
I used to think the war was a bit more complicated than I do now, having had my mind changed thanks to some relatively recent guided readings of President Abraham Lincoln. But long story short, the Confederacy was wrong. For whatever it’s worth, I have no nostalgia for the Confederacy and zero positive feelings for flags that reference the Confederacy, save the one painted on the General Lee or, perhaps, the one painted on RuPaul.
For some reason, 100% of media types (give or take) dealt with their feelings of anger and powerlessness in the aftermath of the racist murders of 9 black members of Emanuel AME Church in Charleston, South Carolina, by calling in unison for a removal of a Confederate flag from South Carolina’s capitol grounds. The flag was only put up during the centenary of the Civil War and a modified version was moved to a less conspicuous place about 15 years ago. Republican Gov. Nikki Haley called for its removal on Monday, as have many other politicians. Russell Moore of the Southern Baptist Convention called for its removal earlier. Sure, sounds good. Go for it. Even acknowledging that the relationship of the flag to the people of South Carolina is a bit more complicated than outsiders can understand, I think it’s fair to argue the negative outweighs any positive there.
A lot of the surrounding media-led outrage over the flag seems somewhat cold, given the horror of what last week brought. We had nine black people brutally murdered because they were black and sitting in a church with a history of fighting white supremacy. With all due deference to hatred for a Confederate flag on a pole at the statehouse, this seems like an almost childlike attempt to miss the seriousness of the situation. It’s as if they expect us to say, “Congratulations! You oppose the flag of an army that was defeated 150 years ago. We’re all very proud of you, journalists!” This generation seems to excel at inventing controversies, weighing in on those invented controversies, and then patting itself on the back for being so courageous and open-minded.
The far more frightening reality that such invented controversies avoid is that mankind is full of sin, and that some of us show that sinfulness in racism and murder. Or as Aleksandr Solzhenitsyn wrote in The Gulag Archipelago:
“If only it were all so simple! If only there were evil people somewhere insidiously committing evil deeds, and it were necessary only to separate them from the rest of us and destroy them. But the line dividing good and evil cuts through the heart of every human being. And who is willing to destroy a piece of his own heart?”
The murderer of the Emanuel nine has done something particularly bad, but he isn’t the only person capable of evil out there. And getting rid of a flag is hardly the remedy for the racism and violence that infects our culture. How juvenile to think otherwise.
Still, it’s routine now for the media to respond to tragic events with a call for more government control. It’s not just shown by responding to mass shootings with calls for gun control. Remember how, until all the facts got in the way, the media blamed a fatal Amtrak derailment on a lack of federal funding, of all things?
CNN actually went “heretic hunting” to call on businesses to ban any goods sold that in any way reference a Confederate symbol (which, of course, includes many state flags). Check out this piece headlined “First on CNN: Walmart to stop selling Confederate flag merchandise.” See, it’s first on CNN because CNN decided to trade journalism-ing for activism-ing:
Screen Shot 2015-06-22 at 10.10.20 PM
I mean, OK? Even this type of “Look! Squirrel!” avoidance of the actual tragedy of the Charleston terrorism was better than the naked political point scoring that was hard to distinguish from this fundraising email sent out by the Democratic Congressional Committee:


Sunday, June 14, 2015



The Dannemora Dilemma

NOT many small American towns stick in your memory 10 years after you last drove through them. But New York’s Dannemora, site of last weekend’s remarkable prison break, is a vivid exception.
Dannemora is way up north — north of Albany, north of the Saratoga races, north of Lake George and Lake Placid, barely inside the northern border of the Adirondack Park. You drive through emptiness to get there, and what you find when you arrive is schizophrenic. Coming down the main street, to your left is a normal upstate town — the car dealer, the post office, the Stewart’s market, a lot of shingled storefronts in the shadow of mountains.
But to your right, block after block, there’s just a prison wall — looming, pressing, dominating, like a glacier inching down from Canada, or something out of “Game of Thrones.”
I was there in high summer, and my first thought was “Siberia.” And “Little Siberia” turned out to be the prison’s nickname.
The Clinton Correctional Facility in Dannemora, N.Y. Credit Nancie Battaglia for The New York Times
We’ve been debating criminal justice reform in earnest ever since Ferguson exploded last summer, with policing as the focal point. But our archipelago of prisons, the Dannemora-like places spread around the country, are as much the issue as any abuses by the police.
All told, our prisons house around 2.2 million Americans, leaving the land of the free with the world’s highest incarceration rate. And they house them, often, in conditions that make a mockery of our supposed ban on “cruel and unusual” punishment: gang-dominated, rife with rape, ruled by disciplinary measures (particularly the use of solitary confinement) that meet a reasonable definition of torture.
When Americans debate which feature of our contemporary life will look most morally scandalous in hindsight, the answers usually break down along left-right lines. But there’s increasing agreement across ideological lines — uniting conservative evangelicals and civil rights leaders, the Koch brothers and Eric Holder — that our prison system has become a particularly obvious moral stain.
This agreement has borne fruit: Amid a bipartisan, multistate push, the incarceration rate has fallen since 2007. And the crime rate has stayed low, at least till now, which has both helped the trend along (low crime rates mean fewer new prisoners) and sustained political space for pushing further.
The as-yet-unanswered question, though, is how far the push can go. And if the Siberian strangeness of Dannemora makes the case for reform, the escape there last week is a reminder of the dilemma for reformers.
Richard Matt and David Sweat, the escapees, may have imitated Andy Dufresne in “The Shawshank Redemption.” But no sane person would root for them — both murderers, Matt a charismatic psychopath — to end up free and clear in Zihuatanejo.

Thursday, June 11, 2015






What is it about Marco Rubio that so inflames the left? If you go by the measure of how much the ire rises around a candidate’s fairly conventional defects, Rubio is the leader by far among the 2016 candidates. For the other Republicans, the flaws alleged by the left are more significant and meaningful, at least in the “raises questions about whether they should be president” way – indictments or pending indictments, allegations of corruption and donor favoritism, questions about how they have governed or voted. These are  meaningful questions for any politician in either party. But this week’s potshots at Rubio have been so overblown, so ludicrous, not even Jon Stewart can pretend they matter.  “Suddenly the man who paid off his student loans and got a boat is printing counterfeit hundreds in his basement!” Give me a break.

It’s not even the initial reporting that bothers me. At some point you ought to report things like this, obviously – if only we had such a lens pointed toward the purchasing decisions of the Clintons, I think we can guarantee they’ve spent eighty grand (or, as they refer to it, “not quite half a speech”) on things that are a lot more interesting than a boat.  But it’s pretending that these items indicate some sort of troubling aspect that render the candidate unfit for office. My gosh, he paid off his law school debts and bought a house with “oversized windows”, can you believe? He got upside down on a house – heavens! He bought a fishing boat that looks like the type designed to house shirtless dadbods propping cold beers on their tummies – unthinkable! Careful, it’ll be your third monocle this week.

Thankfully, some corners are recognizing what this is for Rubio – not a mark of questions about his judgment, but something that’s a lot more politically advantageous than Democrats might like.  “While the Clintons' personal wealth has drawn heavy scrutiny, and Republicans see it as a major weakness in Hillary Clinton's campaign, it could be tougher to exploit with a Republican millionaire landing the shots. But a candidate like Rubio could both be a credible messenger for attacks on the Clinton's earnings and an appealing figure for average Americans looking for a candidate who understands their financial and legal struggles. Diaz joked that, in particular, the idea that Rubio's four traffic tickets over 18 years could be damaging for him was laughable. "In Florida, that makes you a very good driver," he said.”

Senator Rubio is not my favorite 2016 candidate by far. But he’s quick on his feet, charming and relatable. He can absolutely turn this little kerfuffle to his benefit if he ends up standing across the stage from Hillary Clinton. And the fact that this is being rolled out against him so early indicates that both Democrats and his Republican opponents recognize how formidable he could be as a candidate of a new generation, one that has not turned celebrity and power into wealth, but has struggled through the past decade of financial challenge, just as most Americans have.

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Left and right line up against fast tracking trade agreements.  “The Stop Fast Track coalition, backed by unions and groups such as the Sierra Club and the American Civil Liberties Union, is asking the public to call members of Congress and tell them the legislation is “undemocratic”—a message that appeals to voters on both sides of the aisle. “There are some areas where the guys on the left—unions and others—get it right, and this is one of those issues,” said Judson Phillips, head of Tea Party Nation, one of the main tea party organizations… Leaders of left-leaning and conservative groups aren’t working hand in hand—an approach that would likely backfire in today’s polarized Washington—but their combined message is forcing Mr. Obama and Republican leaders who back the fast-track bill to fight a war on two fronts as they seek to corral the final votes.”

How the next financial crisis will happen.  “After the financial crisis, a focus on safety and soundness was good medicine for the financial system. New bank liquidity and capital policies, among other initiatives, strengthened a debilitated patient. The banking system is now stronger, with more liquid assets and better underwriting standards. Despite good intentions, however, politicians and regulators constructed an expansive and untested regulatory framework that will have unintended consequences for liquidity in our financial system. Taken together, these regulatory changes may well fuel the next financial crisis as well as slow U.S. economic growth.”

Growth concentrated in most suburbanized cities.  “More than 50% of the growth between 2010 and 2014 has been in core municipalities that are more than 90% post World War II suburban or exurban (0 to 10% urban core). This growth share is nearly one-half higher than their population share of 35%... These most suburban of core cities grew the fastest, up 6.8% from 2010 to 2014. These municipalities had less than 10% of their population in urban core neighborhods, and include core cities that annexed substantial suburban or rural territory, such as Phoenix, San Jose, Charlotte, Tampa, Orlando and San Antonio.”

Rules for regulators.  “CMS has a history of pushing out massive regulations with only the slightest wisp of thoughtful analysis. A recent Mercatus Center analysis found the agency routinely fails to conduct thorough cost-benefit analyses. One of the more outrageous recent examples of poor rulemaking on the part of the agency is last year's Medicare Part D rule. CMS grossly underestimated the regulatory costs, completely ignored major provisions in the proposal that would have driven up Part D spending, and focused its estimates almost exclusively on provisions it claimed would save money. Though the rule was ultimately withdrawn, a rarity and an embarrassment in the regulatory world, the damage to the agency's credibility was done, and that's where our proposal fits. Regulated entities operate under the penalty of fines, or in some cases jail time, for failure to follow federal regulations. Regulators, on the other hand, play by a different set of rules. They can ignore or willfully disregard guidance from the White House on conducting thorough cost-benefit analyses. Agencies also routinely violate the Paperwork Reduction Act, the Unfunded Mandates Reform Act, and the Congressional Review Act. The penalties for agencies are normally non-existent, aside from an occasional call before Congress to account for these mistakes and violations.”

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John Davidson.  “The details of Burwell reveal the degree to which the Obama administration’s handling of the ACA is ultimately at odds with ideals and aspirations that really are woven into the fabric of America: the rule of law and the separation of powers under the U.S. Constitution.

“The ACA says plainly that subsidies may only be administered “through an Exchange established by the State.” But when it became clear that dozens of states were not going to create exchanges, the Internal Revenue Service (IRS), at the behest of the White House, simply issued a rule saying that subsidies could flow through exchanges created and operated by the federal government.

“In other words, the challengers in King v. Burwell contend that the White House illegally authorized billions of dollars of taxes and spending, circumventing Congress and flouting the statutory text of the ACA by administrative decree. The accusation isn’t a stretch. After all, governing by decree has become commonplace in the Obama era—from the ACA’s many unauthorized delays, to the president’s executive order on immigration last year, to the State Department’s recent gun speech gag order.”


Reason Magazine subpoena stomps on free speech.  “Whatever you think of Ulbricht or Silk Road, you can see why libertarians might be upset. A federal judge has just made the belief that it’s good for people to have “the freedom to make their own choices, to pursue their own happiness, however they individually saw fit” part of her justification for the most punitive sentence short of the death penalty. Her rationale offends libertarians on two grounds: It punishes political views and it punishes their particular political views…

“Puerile they undoubtedly are, but Reason commenters are also harmless (unless you care about reasoned political discourse or the image of libertarians). In this case, they were furious and, in their fury, some of them got nasty. “Its judges like these that should be taken out back and shot,” wrote Agammamon. “Why waste ammunition? Wood chippers get the message across clearly. Especially if you feed them in feet first,” responded croaker. “I hope there is a special place in hell reserved for that horrible woman,” commented Rhywun. “I'd prefer a hellish place on Earth be reserved for her as well,” chimed in ProductPlacement. (Reason has since removed the offending comments.)

“No one in their right mind would take this hyperbolic venting seriously as threatening Judge Forrest, who back in the fall had personal information published on an underground site, along with talk of stealing her identity or calling in tips to send SWAT teams to her house. The Reason commenters, by contrast, included nothing so specific.

“As White notes in his post, which offers a detailed legal analysis of the situation, the comments “do not specify who is going to use violence, or when.  They do not offer a plan, other than juvenile mouth-breathing about ‘wood chippers’ and revolutionary firing squads. They do not contain any indication that any of the mouthy commenters has the ability to carry out a threat. Nobody in the thread reacts to them as if they are serious.” Nobody even assumes the judge will see their comments. Why would she?

“Venting anger about injustice is not a crime. Neither is being obnoxious on the Internet. The chances of one of these commenters being convicted of threatening the judge are essentially nil. Conviction isn’t the point. Crying “threats” just makes a handy pretext for harassing Reason and its commenters.”


Mollie Hemingway critiques Marlow Stern’s review.  “Stern’s real problem, though, is what we might call “serious mommy issues.” As in, he seems to think being maternal is some kind of negative. He’s not the only one with fecundophobia — the fear of children and mothers. I guess it’s because feminism means valuing yourself in terms of how much money you make and how many hours you put in at the office instead of, you know, the quality of your relationships with people in your care… Yes, there’s nothing women hate more than being sweet-talked by ridiculously hot guys who teach us to laugh and enjoy the higher things in life. NAILED IT, Stern.”

“[D]espite the media’s rush (particularly pronounced in recent weeks) to believe that think-feelings are more definitive than biological reality, femininity is not, in fact, a social construct. The phrase “social construct” is a social construct, but femininity is not. Femininity, the qualities of womanliness, is inextricably tied to our chromosomes and the fact that we have wombs and breasts. The reality of these things mean that women — in general, not always, and not in a “have to” way but more like a “get to” way — are very good at nurturing other humans and being responsible for a lot of those social bonds that help societies thrive, including conceiving, gestating, birthing and breastfeeding babies. But even women who aren’t directly engaged in such maternal activities also can participate in the nurturing of humans. This is a feature, not a bug. It’s awesome. I love being a woman and so do many of the women I know who don’t identify as feminists. And while feminism may wish to devolve away from that, it’s completely untrue that Stern has a good handle on whether women even want to trade meaningful human relationships and the propagation of humanity for lots of time at the office.”

The Transom recommends Ledbury shirts. Receive a credit for your first purchase here.


Uber: An oral history.


Run rabbit run!


VP for Public Affairs, Food and Beverage firm.



Obama’s new plan against ISIS signals that U.S. still in for a long war in Iraq.

ISIS has enough material to make a dirty bomb.

Senators Flake, Kaine push for debate on anti-ISIL war.  Islamic State war authorization goes nowhere, again.

Iran spends billions to prop up Assad.

Data-collecting spyware reportedly found at Iran nuclear talk venues.

Iran abandons past promises on nukes.

The Chinese have all your numbers.

Hackers may have obtained names of Chinese with ties to U.S.

British government to exit the Royal Mail.

Why Argentina’s so excited about a dead cow.

Upset over op-ed, GOP lawmakers seek to curb privacy board.


Jon Ward: The Koch brothers vs. the RNC.

GOP candidates take aim at Obama on ISIS.

In Florida, Marco Rubio gains on Jeb.

Rick Perry switches positions on TPP.

Can Kasich avoid McCain, Huntsman mistakes in 2016?

Clinton building vast network of campaign staff, volunteers.


Gallup: Americans value liberty in terrorism fight.

Brian Sandoval rejects Washington.

GOP fights back in Virginia.

After the government takes his life savings, this 22-year-old fights for justice.

American Millennials rethink abortion, for good reasons.

Georgia woman charged with murder after self-administering abortion pill.

Climate scientists criticize government paper that erases ‘pause’ in warming.

Pernicious political activities.

Free speech again at center of court case involving man's arrest at selectmen's meeting.

Software engineer’s political writing gets him booted from conference.

For the New York Times, a headache called the Washington Free Beacon.

Diane Rehm’s list of troublesome Jews.

Anthony Cumia hires Gavin McInnes for his radio network.

Rob Tracinski: When the insane are normal, the normal are insane.

The closing of the liberal mind.

What 'Seinfeld' can teach college students.

Health Care:

House, Senate closing in on Obamacare backup, senator says.

Why everything we ‘know’ about diet and nutrition is wrong.

Common heartburn medications linked to greater risk of heart attack.


Dan McLaughlin: Can gays and Christians coexist in America? Part IV.

Ross Douthat: Caitlyn Jenner and the American religion.


Bethany Mandel: Four ways to make your kids completely safe.

Six days in North Korea.

How the NCAA cheats athletes out of a future.

Amazon: Your one-stop shop for niche, long-lasting books.

A review of The Getaway Car: A Donald Westlake Nonfiction Miscellany.

The great national destiny: Lessons from Andrew Jackson’s Navy.

Bonnie Greer resigns from floundering Brontë Society after months of infighting.

Why human resources is dead.

Michelle Beadle: ESPN’s female rebel, raw and uncensored.

Hugh Hefner is an old, old man.

Brad Pitt’s next star vehicle: War Machine, a “dark comedy” about Gen. McChrystal.

Why Brad Pitt is joining the Netflix bandwagon.

Chris Hemsworth cast as secretary in Ghostbusters reboot.

Han shot first.

Riding dirty: The science of cars and rap lyrics.

The Fresh Prince of Bel-Air cover.


Robby Soave and Jonathan Last.


“To darkness and fire.”


“Mental pain is less dramatic than physical pain, but it is more common and also more hard to bear. The frequent attempt to conceal mental pain increases the burden: it is easier to say “My tooth is aching” than to say “My heart is broken.” ― C.S. Lewis