Carl Bernstein spent six months looking at the CIA and the Media

Thursday, December 28th, 2023

After leaving The Washington Post in 1977, Carl Bernstein spent six months looking at the CIA and the Media:

The tasks they performed sometimes consisted of little more than serving as “eyes and ears” for the CIA; reporting on what they had seen or overheard in an Eastern European factory, at a diplomatic reception in Bonn, on the perimeter of a military base in Portugal. On other occasions, their assignments were more complex: planting subtly concocted pieces of misinformation; hosting parties or receptions designed to bring together American agents and foreign spies; serving up “black” propaganda to leading foreign journalists at lunch or dinner; providing their hotel rooms or bureau offices as “drops” for highly sensitive information moving to and from foreign agents; conveying instructions and dollars to CIA controlled members of foreign governments.

Often the CIA’s relationship with a journalist might begin informally with a lunch, a drink, a casual exchange of information. An Agency official might then offer a favor—for example, a trip to a country difficult to reach; in return, he would seek nothing more than the opportunity to debrief the reporter afterward. A few more lunches, a few more favors, and only then might there be a mention of a formal arrangement — “That came later,” said a CIA official, “after you had the journalist on a string.”

Another official described a typical example of the way accredited journalists (either paid or unpaid by the CIA) might be used by the Agency: “In return for our giving them information, we’d ask them to do things that fit their roles as journalists but that they wouldn’t have thought of unless we put it in their minds. For instance, a reporter in Vienna would say to our man, ‘I met an interesting second secretary at the Czech Embassy.’ We’d say, ‘Can you get to know him? And after you get to know him, can you assess him? And then, can you put him in touch with us—would you mind us using your apartment?”‘

The remains were put on display, but there was no media interest

Monday, December 18th, 2023

Swarm Troopers by David HamblingIf the Pentagon hates drones, David Hambling notes (in Swarm Troopers), the CIA seems to love them:

Drones have a unique capability to carry out deniable operations, which are important to the CIA. The Agency learned the hard way just how disastrous it can be when a spy plane mission goes wrong.

[…]

Four years after the U-2 incident, the Chinese shot down a number of Fire Fly drones in their airspace. The remains were put on display and, like the Russians before them, the Chinese denounced American imperialist aggression. But there was no media interest. The Chinese might well claim that the peculiar wreckage was from American unmanned spy planes, but where was the proof? There was none of the international outcry that had accompanied the Gary Powers incident and no embarrassment for the politicians or the CIA. Equally, there was no risk that the pilot would be interrogated and give away information. (The main long-term consequence was that the Chinese reverse-engineered the drones. They ended up with a clone called WuZhen, which kick-started their own unmanned aircraft effort).

When drones did eventually find a place in the US military, thanks to the success of the Predator, it was only with considerable assistance from the CIA.

Three men more than any others determined the outcome of the American Civil War

Saturday, December 16th, 2023

After I finished Bevin Alexander’s How Hitler Could Have Won World War II, I naturally moved on to How the South Could Have Won the Civil War: The Fatal Errors That Led to Confederate Defeat:

Given that the Confederacy had a third of the population and an eleventh of the industry of the North, the South’s defeat was, according to this view, unavoidable.

But that view is wrong. This book contends that the South most definitely could have won the war, and shows in a number of cases how a Confederate victory could have come about.

Beyond the actual opportunities presented to the Confederacy, we should remember a broader fact — there is nothing inevitable about military victory, even for a state with apparently overwhelming strength. The Greeks beat the Persians at Marathon, Alexander destroyed the Persian Empire, the Americans defeated the British in the Revolution, Napoléon Bonaparte hobbled huge alliances in his early wars. In all of these cases the victor was puny and weak by comparison with his opponent.

[…]

Three men more than any others determined the outcome of the American Civil War — the Confederacy’s president, Jefferson Davis, and two generals, Robert E. Lee and Thomas “Stonewall” Jackson. Jackson figured out almost from the outset how to win the war, but neither Davis nor Lee was willing to follow his recommendations.

[…]

Davis was opposed to offensive action against the North. He wanted to remain on the defensive in the belief that the major European powers would intervene on the Confederacy’s side to guarantee cotton for their mills, or that the North would tire of the war and give up.

[…]

Lee, on the other hand, was focused on conducting an offensive war against the armies of the North. He did not see the war as a collision between the Northern people and the Southern people. He saw it as a struggle between the governments and the official armies of the two regions.

[…]

Recognizing the need to adapt to the new kind of war in which they were immersed, Jackson developed a polar opposite approach. He proposed moving against the Northern people’s industries and other means of livelihood. He wanted to avoid Northern strength, its field armies, and strike at Northern weakness, its undefended factories, farms, and railroads. His strategy, in short, was to bypass the Union armies and to win indirectly by assaulting the Northern people’s will to pursue the war. He proposed making “unrelenting war” amid the homes of the Northern people in the conviction that this would force them “to understand what it will cost them to hold the South in the Union at the bayonet’s point.”

[…]

Significantly, William Tecumseh Sherman won the war for the North by employing precisely the strategy that Stonewall Jackson had tried but failed to get the South to follow: he conducted “unrelenting war” on the people and the property of Georgia in his march from Chattanooga to Atlanta, and from Atlanta to the sea, in 1864. This campaign broke the back of Southern resistance.

[…]

But wars are not won by heavy losses heroically sustained. Wars are won by ingenious plans correctly implemented.

[…]

Three decades before the Civil War, the great Prussian strategist Karl von Clausewitz (1780–1831) argued that in a country involved in an insurrection or torn by internal dissension, the capital, the chief leader, and public opinion constitute the Schwerpunkt, or center of gravity, where collapse has the greatest chance of occurring.

Following this theory, the Confederacy’s most glittering opportunity lay not in defeating the Northern field army in Virginia but in isolating or capturing Washington, evicting Lincoln and his government, and damaging Northern industry and railroads in order to turn public opinion against the war.

British Colonel G. F. R. Henderson, the famed biographer of Jackson, made this point graphically in 1898: “A nation endures with comparative equanimity defeat beyond its own borders. Pride and prestige may suffer, but a high-spirited people will seldom be brought to the point of making terms unless its army is annihilated in the heart of its own country, unless the capital is occupied and the hideous sufferings of war are brought directly home to the mass of the population. A single victory on Northern soil, within easy reach of Washington, was far more likely to bring about the independence of the South than even a succession of victories in Virginia.”

[…]

Lee, who was named commander of the Army of Northern Virginia on June 1, 1862, after Johnston was wounded, sought from first to last to fight an offensive war—that is, a war of battles and marches against the armies of the North. After Davis’s rejection of invasion, Jackson turned to a new approach to warfare. Lee resisted this approach, which called for luring the Union army to attack against a strong Confederate defensive position, repelling that attack and thereby weakening enemy strength, morale, and resolve, and then going on the offensive by swinging around the flank or rear to destroy the Union army. Lee expressed his fundamental attitude about battle most cogently to his corps commander Longstreet on the first day of the battle of Gettysburg, on July 1, 1863. When Longstreet implored Lee not to assault the Union army forming up in great strength on Cemetery Ridge directly in front of him, Lee replied, “No, the enemy is there, and I am going to attack him there.”

[…]

Stonewall Jackson urged Lee to move the Confederate army north of Washington, where it would threaten Baltimore, Philadelphia, and the capital’s food supply and communications. If the Confederate army held such a dangerous position, Jackson said, the enemy would have no other option except to assault it. Lee rejected Jackson’s advice once again, deciding to move west into the Cumberland Valley, far away from the center of Northern power. There he expected to fall on the Union army, not wait for it to fall on his army.

[…]

Although Jackson’s death handed the South a devastating blow, the Confederacy could still have won if Lee had accepted Jackson’s defend-then-attack plan when he invaded Maryland and Pennsylvania a month later. James Longstreet believed he had extracted a promise from Lee to do just that. But at the very first challenge Lee faced in Pennsylvania, he reverted to direct confrontation. This led to head-on attacks on all three days of Gettysburg, July 1–3, 1863, ending with General George Pickett’s disastrous charge on the third day, which wiped out the last offensive power of the Confederacy.

[…]

My purpose is to show that, despite the odds, wars are won by human beings. When superior military leaders come along and political leaders pay attention to them, they can overcome great power and great strength. That is a lesson we need to remember today.

The eastern front is like a house of cards

Saturday, December 9th, 2023

The Red Army’s astonishing advances during the summer of 1944 had come to a standstill, Bevin Alexander explains (in How Hitler Could Have Won World War II), because the vastly overextended Russian supply line finally snapped:

Red Army commanders held up the final assault on Nazi Germany until the railways behind the front could be repaired and converted to the Russian wider-gauge track.

[…]

Soviet superiority was eleven to one in infantry, seven to one in tanks, and twenty to one in artillery and aircraft. Most important was the great quantity of American trucks delivered to the Russians by Lend-Lease. Trucks transformed a large part of the Red Army into motorized divisions able to move quickly around the Germans, whose mobility was shrinking by the day due to extreme shortages of fuel.

When Heinz Guderian, army chief of staff, presented the figures of Soviet strength, Hitler exclaimed, “It’s the greatest imposture since Genghis Khan! Who is responsible for producing all this rubbish?”

[…]

Hitler had not used the long stalemate in the east to build a powerful defensive line of minefields and antitank traps—such as Erwin Rommel had urged immediately after the battle of Kursk in 1943. His defensive system remained what it had been all along: each soldier was to stand in place and fight to the last round.

[…]

“The eastern front is like a house of cards,” Guderian told Hitler on January 9. “If the front is broken through at one point all the rest will collapse.” But Hitler merely responded: “The eastern front must help itself and make do with what it’s got.”

[…]

Hitler also turned down requests of field commanders that German civilians be evacuated from East Prussia and other regions likely to be overrun by the Russians. He said evacuation would have a bad effect on public opinion.

[…]

On January 25 Guderian tried to get Foreign Minister Joachim von Ribbentrop to convince Hitler to seek an armistice on the western front, while continuing to fight the Russians in the east. Ribbentrop replied that he did not dare approach the Fuehrer on the subject. As Guderian departed, Ribbentrop said, “We will keep this conversation to ourselves, won’t we?” Guderian assured him he would do so. But Ribbentrop tattled to Hitler, and that evening the Fuehrer accused Guderian of treason.

[…]

Speer requested a private interview to explain Germany’s desperate straits. But the Fuehrer declined, telling Guderian: “I refuse to see anyone alone anymore. Any man who asks to talk to me alone always does so because he has something unpleasant to say to me. I can’t bear that.”

[…]

Hitler now turned on his own people. On March 19 he issued an order that the entire German economy was to be destroyed—industrial plants, electric-generating plants, waterworks, gas works, bridges, ships, locomotives, food, clothing stores. His aim was to produce a “desert” in the Allies’ path.

Albert Speer, Nazi armaments chief, immediately petitioned Hitler. “We have no right at this stage of the war to carry out demolitions which might affect the life of the people,” he said. But Hitler, his own fate sealed, was not interested in the continued existence of the German people.

“If the war is lost,” he told Speer, “the nation will also perish…. It will be better to destroy these things ourselves because this nation will have proved to be the weaker one.”

Faked, finger-on-the-button rage could bring the Soviets to heel

Thursday, November 30th, 2023

Henry Kissinger just passed away — at the age of 100. His name has shown up here in a few dozen posts. The earliest substantive post discusses The Nukes of October:

Codenamed Giant Lance, Nixon’s plan was the culmination of a strategy of premeditated madness he had developed with national security adviser Henry Kissinger. The details of this episode remained secret for 35 years and have never been fully told. Now, thanks to documents released through the Freedom of Information Act, it’s clear that Giant Lance was the leading example of what historians came to call the “madman theory”: Nixon’s notion that faked, finger-on-the-button rage could bring the Soviets to heel.

Volume one of Kissinger is the best thing Niall Ferguson has done, in his own opinion.

Napoleon represented the Enlightenment on horseback

Thursday, November 23rd, 2023

Napoleon by Andrew RobertsWhen I saw that Ridley Scott was directing a biopic of Napoleon, that nudged me to finally read a biography of the Emperor of the French, which I’d been meaning to do for…decades?

Dwarkesh Patel recently interviewed Andrew Roberts, the author of the biography I just read, and noted that there’s a “cult of Napoleon” in Silicon Valley:

Roberts’ introduction summarizes Napoleon’s accomplishments:

He came to power through a military coup only six years after entering the country as a penniless political refugee.

[…]

Although his conquests ended in defeat and ignominious imprisonment, over the course of his short but eventful life he fought sixty battles and lost only seven.

[…]

Yet his greatest and most lasting victories were those of his institutions, which put an end to the chaos of the French Revolution and cemented its guiding principle of equality before the law.

[…]

Napoleon’s bridges, reservoirs, canals and sewers remain in use throughout France. The French foreign ministry sits above the stone quays he built along the Seine, and the Cour des Comptes still checks public spending accounts more than two centuries after he founded it. The Légion d’Honneur, an honor he introduced to take the place of feudal privilege, is highly coveted; France’s top secondary schools, many of them founded by Napoleon, provide excellent education and his Conseil d’État still meets every Wednesday to vet laws.

[…]

The leadership skills he employed to inspire his men have been adopted by other leaders over the centuries, yet never equaled except perhaps by his great devotee Winston Churchill.

[…]

The fact that his army was willing to follow him even after the retreat from Moscow, the battle of Leipzig and the fall of Paris testifies to his capacity to make ordinary people feel that they were capable of doing extraordinary, history-making deeds.

[…]

Napoleon’s love affair with Josephine has been presented all too often in plays, novels and movies as a Romeo and Juliet story: in fact, it was anything but. He had an overwhelming crush on her, but she didn’t love him, at least in the beginning, and was unfaithful from the very start of their marriage. When he learned of her infidelities two years later while on campaign in the middle of the Egyptian desert, he was devastated. He took a mistress in Cairo in part to protect himself from accusations of cuckoldry, which were far more dangerous for a French general of the era than those of adultery. Yet he forgave Josephine when he returned to France, and they started off on a decade of harmonious marital and sexual contentment, despite his taking a series of mistresses. Josephine remained faithful and even fell in love with him. When he decided to divorce for dynastic and geostrategic reasons, Josephine was desolate but they remained friendly.

[…]

He could entirely close off one part of his mind to what was going on in the rest of it; he himself likened it to being able to open and close drawers in a cupboard. On the eve of battle, as aides-de-camp were arriving and departing with orders to his marshals and reports from his generals, he could dictate his thoughts on the establishment of a girls’ school for the orphans of members of the Légion d’Honneur, and shortly after having captured Moscow he set down the regulations governing the Comédie-Française. No detail about his empire was too minute for his restless, questing energy. The prefect of a department would be instructed to stop taking his young mistress to the opera; an obscure country priest would be reprimanded for giving a bad sermon on his birthday; a corporal told he was drinking too much; a demi-brigade that it could stitch the words ‘Les Incomparables’ in gold onto its standard. He was one of the most unrelenting micromanagers in history, but this obsession with details did not prevent him from radically transforming the physical, legal, political and cultural landscape of Europe.

[…]

Napoleon represented the Enlightenment on horseback.

[…]

‘They seek to destroy the Revolution by attacking my person,’ he said after the failure of the royalist assassination plot of 1804. ‘I will defend it, for I am the Revolution.’ His characteristic egotism aside, Napoleon was right. He personified the best parts of the French Revolution, the ones that have survived and infused European life ever since.

[…]

The ideas that underpin our modern world—meritocracy, equality before the law, property rights, religious toleration, modern secular education, sound finances and so on—were championed, consolidated, codified and geographically extended by Napoleon. To them he added rational and efficient local administration, an end to rural banditry, the encouragement of science and the arts, the abolition of feudalism and the greatest codification of laws since the fall of the Roman Empire. At the same time he dispensed with the absurd revolutionary calendar of ten-day weeks, the theology of the Cult of the Supreme Being, the corruption and cronyism of the Directory and the hyper-inflation that had characterized the dying days of the Republic.

Stalin still had the power to sign a cease-fire with Hitler

Saturday, November 11th, 2023

Whether the landing on Normandy (Operation Overlord) was actually going to take place was the call of the three Allied leaders, Bevin Alexander explains (in How Hitler Could Have Won World War II), not the generals:

They did so at the Teheran conference in late November 1943.

Roosevelt was not as set on Overlord as Marshall, but if Stalin wanted it, he would demand it. Stalin still had the power to sign a cease-fire with Hitler. This was increasingly unlikely with the German retreat after Operation Citadel, but Roosevelt sought to avoid a separate peace at all costs. Beyond that, he was seeking a “constructive relationship” with Stalin after the war — a Soviet Union as a responsible member of the world community, not an agent of further disorder and war.

Consequently, at Teheran, when Stalin contested diversions in the Mediterranean that Churchill was seeking, Roosevelt announced he opposed any delay in the cross-Channel invasion. With that, the die was cast for Overlord.

When unwise people are influential, bad things happen

Tuesday, November 7th, 2023

Arnold Kling presents a simple theory of history:

When wise people are influential, good things happen. When unwise people are influential, bad things happen.

I will just offer two data points. During the era of the American founding, influential people included George Washington, Thomas Jefferson, Benjamin Franklin, James Madison, and other men who had great wisdom. Today, we have social media “influencers” who are idiots.

In politics, the Democratic Party is drifting way to the left, influenced by Bernie Sanders, Elizabeth Warren, the Squad, and a cadre of young activists. None of them has any wisdom.

The Republican Party looks worse. The new Speaker of the House does not strike me as wise. Nor does the prospective Republican Presidential nominee.

Contemporary journalism is a disaster. The influential writers are partisan hacks. No wise person could trust Paul Krugman or Tucker Carlson.

Most galling of all is the disconnect between influence and wisdom in higher education. The dominant influence at universities used to be faculty. And they were faculty in real disciplines, not grievance studies. Professors can be petty and juvenile, but there was enough wisdom to maintain a decent atmosphere for seeking truth and reasoning with rigor.

Today, the influence comes from administrators. Most notorious are the DEI administrators. They are not at all wise. The critical theorists and the grievance studies professors cause harm both psychologically and intellectually.

I suspect that the rise of foolish influencers reflects the new information environment. The Internet rewards tribalism, not wisdom.

Time After Time

Friday, November 3rd, 2023

When I recently revisited H.G. Wells’ The Time Machine and the 1960 movie, I noticed that Max also had Time After Time, a 1979 movie I enjoyed watching on TV as a kid, in which Wells builds a working time machine, which his surgeon friend uses to escape to the future, because he is, in fact, Jack the Ripper. It’s an excellent premise for a Hollywood movie, and Malcolm McDowell does an excellent job playing a Victorian proto-nerd, even though he doesn’t look at all like the real Wells — or sound like him:

While preparing to portray Wells, McDowell obtained a copy of a 78 rpm recording of Wells speaking. McDowell was “absolutely horrified” to hear that Wells spoke in a high-pitched, squeaky voice with a pronounced Southeast London accent, which McDowell felt would have resulted in unintentional humor if he tried to mimic it for the film. McDowell abandoned any attempt to recreate Wells’s authentic speaking style and preferred a more “dignified” style.

Wells is expecting to find a socialist Utopia in 1979, but his nemesis shows him the news:

Palestine terrorists carried out their threat and began shooting the first five of 106 Israeli schoolchildren held hostage…

We’ve just received word that Mayor Margolin of Columbus was shot…

Jack also shows him football and a war movie, before commenting that, in this future world, you can just walk into a shop and buy a rifle or revolver — which pulled me right out of the film, because, of course, that was perfectly legal in England in 1893, when they left. Sherlock Holmes routinely shoves a revolver in his pocket, after all. U.K. firearms laws came about in the 20th Century:

The Pistols Act 1903 was the first to place restrictions on the sale of firearms. Titled “An Act to regulate the sale and use of Pistols or other Firearms”, it was short, with just nine sections, and applied solely to pistols. It defined a pistol as a firearm whose barrel did not exceed 9 in (230 mm) in length and made it illegal to sell or rent a pistol to anyone who could not produce a current gun licence or game licence, unless they were exempt from the Gun Licence Act, could prove that they planned to use the pistol on their own property, or had a statement signed by a police officer of inspector rank or above or a Justice of the Peace to the effect that they were about to go abroad for six months or more. The Act was more or less ineffective, as anyone wishing to buy a pistol commercially merely had to purchase a licence on demand over the counter from a Post Office before doing so. In addition, it did not regulate private sales of such firearms.

The legislators laid some emphasis on the dangers of pistols in the hands of children and drunkards and made specific provisions regarding sales to these two groups: persons under 18 could be fined 40 shillings if they bought, hired, or carried a pistol, while anyone who sold a pistol to such a person could be fined £5. Anyone who sold a pistol to someone who was “intoxicated or of unsound mind” was liable to a fine of £25 or 3 months’ imprisonment with hard labour. However, it was not an offence under the Act to give or lend a pistol to anyone belonging to the two groups.

Oddly, when they travel to the future, they don’t end up in 1979 London, but 1979 San Francisco, and, despite the premise that Wells expects Utopopia and finds something quite different, the 1979 San Francisco they show is clean and beautiful, at least until Wells goes into a hospital emergency department to check on Jack, who had been hit by a car. This is not the San Francisco of Dirty Harry — or of today.

I also found it odd that Wells goes to exchange his 15 pounds sixpence for $25.50 and only seems mildly surprised that the exchange rate was nowhere near the five-to-one ratio that held for a century, outside of major wars, and he never comments on prices being 100 times what he might expect, especially since he lived in an era with no inflation.

The longstanding U.S. base is a radar facility

Friday, October 27th, 2023

Two months before Hamas attacked Israel, the Pentagon awarded a multimillion-dollar contract to build U.S. troop facilities for a secret base it maintains deep within Israel’s Negev desert, just 20 miles from Gaza:

Codenamed “Site 512,” the longstanding U.S. base is a radar facility that monitors the skies for missile attacks on Israel.

On October 7, however, when thousands of Hamas rockets were launched, Site 512 saw nothing — because it is focused on Iran, more than 700 miles away.

[…]

The $35.8 million U.S. troop facility, not publicly announced or previously reported, was obliquely referenced in an August 2 contract announcement by the Pentagon.

[…]

“Sometimes something is treated as an official secret not in the hope that an adversary would never find out about it but rather [because] the U.S. government, for diplomatic or political reasons, does not want to officially acknowledge it,” Paul Pillar, a former chief analyst at the CIA’s counterterrorism center who said he had no specific knowledge of the base, told The Intercept. “In this case, perhaps the base will be used to support operations elsewhere in the Middle East in which any acknowledgment that they were staged from Israel, or involved any cooperation with Israel, would be inconvenient and likely to elicit more negative reactions than the operations otherwise would elicit.”

Since I recently read The Puzzle Palace, I can’t help but notice that this sounds like a SIGINT collection facility.

From a monetary perspective, World War I never really ended

Thursday, October 26th, 2023

From a monetary perspective, World War I never really ended once it began in 1914, Lyn Alden notes:

In prior wars throughout history, wars had to be funded with savings or taxes or very slow debasement of coinage. Physical coinage held by citizens could usually only be debased by their government gradually rather than diluted instantaneously, because a government couldn’t just magically change the properties of the coins that were held by households; it could only debase them over time by taxing purer coins, issuing various decrees to try to pull some of those purer coins in, and spending debased coins back out into the economy (and convincing initial recipients to accept them at the same prior value, despite the lesser precious metal content, which would only work for a time and might not even be noticed at first). However, with the widespread holding of centrally issued banknotes and bank deposits that were redeemable for specific amounts of gold, governments could change the redemptive value with the stroke of a pen or eliminate redemption all together.

This gave governments the power to instantaneously devalue a substantial part of their citizens’ savings, literally overnight, and funnel that purchasing power toward war or other government expenditures whenever they determine that the situation calls for it.

Borrowers are “locked-in” by the golden handcuffs of their cheap mortgages

Wednesday, October 25th, 2023

Construction and sales of new homes have soared, even as sales of existing homes have entered a deep freeze:

Between mid-2022 and earlier this year, existing home sales fell from an annualized rate of almost 7 million sales per month to just 4 million, a record pace of contraction and an overall drop in magnitude only slightly shy of the 2008 financial crisis. There are currently only about 600,000 homes on the market, compared to 1.5 million before the pandemic. Prices remain close to record highs, but given such thin liquidity, are virtually meaningless.

The freeze in transactions is a function of interest rates.

Homeowners borrowed and repriced about $3trn worth of mortgage debt (half of the entire outstanding amount) in 2002-22—either through purchases or refinancings—at emergency-level low interest rates. Today, one third of mortgage debt carries an interest rate below 3%.

Contrast that with the going rate on a 30-year fixed rate mortgage: at the time of writing, above 7%. Since existing homeowners can’t ‘port’ their mortgage to a new home, or sell it to the would-be buyers of their home (except in rare circumstances), moving houses entails losing a cheap mortgage and resetting at a much higher rate. Borrowers are “locked-in” by the golden handcuffs of their cheap mortgages.

This dynamic has always existed in the US housing market, but—given the swing from rock bottom rates to the highest borrowing costs in a generation, and in such a short amount of time—this mortgage lock-in effect has never been so strong.

A mortgage originated at a lower rate than prevailing rates is worth less than par—this is an unrealized loss to the lender and an unrealized gain to the borrower. Unsurprisingly, pandemic-era borrowers are unwilling to lose their collective $700 billion worth of these gains.

[…]

Mortgage lock-in prevents home prices from adjusting to the shock of higher financing costs. This is, in particular, a burden for the ~2 million Americans who are first time home buyers every year. Millennials are the biggest cohort of buyers these days, and in 2022, 70% of them were first time buyers.

The sprawling edifice of American intervention in the mortgage market—from the Federal Housing Administration (FHA), to the government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae, to Federal Home Loan Banks (FHLBs)—are premised on the goal of making home ownership more widely available. But amidst rising rates, mortgage lock-in is an impediment to achieving that goal.

If the stickiness of the asset is a problem for prospective first time buyers, the inflexibility of the liability is a problem for existing owners. Aside from locking owners into their current homes, the rigidity of mortgages in the face of rising interest rates means that an increasing number of borrowers are ‘underwater’ or very close to it—they hold a mortgage that is close to, or exceeds, the value of their equity in their home.

[…]

Mortgage lock-in also has less obvious but more harmful, widespread, and long-lived effects. Not least: it exacerbates declining levels of geographic mobility. Americans are staying in their homes longer. They are evincing a declining willingness to move neighborhoods, cities, or states in order to find work that better matches their skills. By giving Americans a powerful incentive not to move, mortgage lock-in contributes to a handful of modern-day macroeconomic problems, including anemic productivity growth and neo-feudal levels of income inequality.

[…]

Mortgage lock-in doesn’t exist in Denmark because borrowers can buy back their loans at market prices in the secondary market.

[…]

In the US, banks originate mortgages but then sell them onwards to GSEs for bundling into mortgage backed securities. But Danish mortgage finance operates on the ‘balance principle’: bank lending is funded by the issuance of bonds which precisely match the cash flows of the underlying mortgages. Danish banks retain ownership of mortgages, including their credit risk. These remain on their balance sheets within ring-fenced ‘cover pools’.

Securitization of these assets is not via mortgage backed securities but instead via ‘covered bonds’. Cash flows pass directly from borrowers to covered bond investors, with the mortgage bank acting as servicer.

Covered bond investors are highly secured: they have exclusive recourse to the segregated cover pool of assets on the issuing bank’s balance sheet, and (nonexclusive) recourse to the overall assets of the issuer.

Danish mortgage banks are specialized institutions that only issue and distribute mortgages without maturity transformation (a form of narrow banking). They are barred by law from taking deposits.

The balance principle and generally tight regulation ensure a very stable market—since its creation in 1797, the Danish covered bond market has not experienced a single default in a bond series.

The allowance for repurchases below par is facilitated by the fact that Danish mortgage-backed bonds are pure pass-through securities: each specific mortgage can be traced directly to a bond that is traded in the secondary market. This means that when a mortgagor wants to terminate the loan, it is possible to identify the bond it was financed through and buy back an equivalent portion at the prevailing market price.

The emphasis was more on secure communications and tradecraft

Tuesday, October 24th, 2023

Since 2015, the Washington Post reports, the CIA has spent tens of millions of dollars to transform Ukraine’s Soviet-formed intelligence services:

The Post vetted key details with multiple sources including Western officials with access to independent streams of intelligence. The CIA declined to comment.

[…]

“We never involved our international partners in covert operations, especially behind the front lines,” a former senior Ukrainian security official said. SBU and GUR operatives were not accompanied by CIA counterparts. Ukraine avoided using weapons or equipment that could be traced to U.S. sources, and even covert funding streams were segregated.

“We had a lot of restrictions about working with the Ukrainians operationally,” said a former U.S. intelligence official. The emphasis was “more on secure communications and tradecraft,” and pursuing new streams of intelligence inside Russia “rather than ‘here’s how you blow up a mayor.’ I never got the sense that we were that involved in designing their ops.”

[…]

Ukraine’s spies developed their own lines about which operations to discuss and which to keep under wraps. “There were some things that maybe we wouldn’t talk about” with CIA counterparts, said a second Ukraine security official involved in such missions. He said crossing those boundaries would lead to a terse reply from Americans: “We don’t want any part of that.”

[…]

The initial phases of cooperation were tentative, officials said, given concerns on both sides that Ukraine’s services were still heavily penetrated by the FSB — the Russian agency that is the main successor to the KGB. To manage that security risk, the CIA worked with the SBU to create an entirely new directorate, officials said, one that would focus on so-called “active measures” operations against Russia and be insulated from other SBU departments.

The new unit was prosaically dubbed the “Fifth Directorate” to distinguish it from the four long-standing units of the SBU. A sixth directorate has since been added, officials said, to work with Britain’s MI6 spy agency.

Training sites were located outside Kyiv where handpicked recruits were instructed by CIA personnel, officials said. The plan was to form units “capable of operating behind front lines and working as covert groups,” said a Ukrainian official involved in the effort.

The agency provided secure communications gear, eavesdropping equipment that allowed Ukraine to intercept Russian phone calls and emails, and even furnished disguises and separatist uniforms enabling operatives to more easily slip into occupied towns.

The early missions focused on recruiting informants among Russia’s proxy forces as well as cyber and electronic eavesdropping measures, officials said. The SBU also began mounting sabotage operations and missions to capture separatist leaders and Ukrainian collaborators, some of whom were taken to secret detention sites.

But the operations soon took a lethal turn. Over one three-year stretch, at least half a dozen Russian operatives, high-ranking separatist commanders or collaborators were killed in violence that was often attributed to internal score-settling but in reality was the work of the SBU, Ukraine officials said.

[…]

Even while helping to build the SBU’s new directorate, the CIA embarked on a far more ambitious project with Ukraine’s military intelligence service.

With fewer than 5,000 employees, the GUR was a fraction of the size of the SBU and had a narrower focus on espionage and active measures operations against Russia. It also had a younger workforce with fewer holdovers from Soviet times, while the SBU was still perceived as penetrated by Russian intelligence.

“We calculated that GUR was a smaller and more nimble organization where we could have more impact,” said a former U.S. intelligence official who worked in Ukraine. “GUR was our little baby. We gave them all new equipment and training.” GUR officers “were young guys not Soviet-era KGB generals,” the official said, “while the SBU was too big to reform.”

Even recent developments have seemed to validate such concerns. Former SBU director Ivan Bakanov was forced out of the job last year amid criticism that the agency wasn’t moving aggressively enough against internal traitors. The SBU also discovered last year that Russian-made modems were still being used in the agency’s networks, prompting a scramble to unplug them.

From 2015 on, the CIA embarked on such an extensive transformation of the GUR that within several years “we had kind of rebuilt it from scratch,” the former U.S. intelligence official said. One of the main architects of the effort, who served as CIA station chief in Kyiv, now runs the Ukraine Task Force at CIA headquarters.

The GUR began recruiting operatives for its own new active measures department, officials said. At sites in Ukraine and, later, the United States, GUR operatives were trained on skills ranging from clandestine maneuvers behind enemy lines to weapons platforms and explosives. U.S. officials said the training was aimed at helping Ukrainian operatives protect themselves in dangerous Russian-controlled environments rather than inflicting harm on Russian targets.

Some of the GUR’s newest recruits were transfers from the SBU, officials said, drawn to a rival service flush with new authorities and resources. Among them was Vasyl Burba, who had managed SBU Fifth Directorate operations before joining the GUR and serving as agency director from 2016 to 2020. Burba became such a close ally of the CIA — and perceived Moscow target — that when he was forced from his job after President Volodymyr Zelensky’s election the agency provided him an armored vehicle, officials said. Burba declined to comment for this article.
The CIA helped the GUR acquire state-of-the-art surveillance and electronic eavesdropping systems, officials said. They included mobile equipment that could be placed along Russian-controlled lines in eastern Ukraine, but also software tools used to exploit the cellphones of Kremlin officials visiting occupied territory from Moscow. Ukrainian officers operated the systems, officials said, but everything gleaned was shared with the Americans.

Concerned that the GUR’s aging facilities were likely compromised by Russian intelligence, the CIA paid for new headquarters buildings for the GUR’s “spetsnaz” paramilitary division and a separate directorate responsible for electronic espionage.
The new capabilities were transformative, officials said.

“In one day we could intercept 250,000 to 300,000 separate communications” from Russian military and FSB units, said a former senior GUR official. “There was so much information that we couldn’t manage it ourselves.”

Troves of data were relayed through the new CIA-built facility back to Washington, where they were scrutinized by CIA and NSA analysts, officials said.

“We were giving them the ability — through us — to collect on” Russian targets, the former GUR official said. Asked about the magnitude of the CIA investments, the official said: “It was millions of dollars.”

In time, the GUR had also developed networks of sources in Russia’s security apparatus, including the FSB unit responsible for operations in Ukraine. In a measure of U.S.-Ukraine trust, officials said, the CIA was permitted to have direct contact with agents recruited and run by Ukrainian intelligence.

The resulting intelligence windfall was largely hidden from public view, with intermittent exceptions. The SBU began posting incriminating or embarrassing communications intercepts, including one in which Russian commanders were captured discussing their country’s culpability in the 2014 shoot-down of a Malaysian Airlines passenger jet.

Even so, officials said the intelligence obtained through the U.S.-Ukraine cooperation had its limits. The Biden administration’s prescient warnings about Russian President Vladimir Putin’s determination to topple the Kyiv government, for example, were based primarily on separate streams of intelligence Ukraine wasn’t privy to initially.

In some ways, officials said, Ukraine’s own collection efforts fed the skepticism that Zelensky and others had about Putin’s plans because they were eavesdropping on military and FSB units that themselves were not informed until the eve of the war. “They were getting an accurate picture from people who were also in the dark,” one U.S. official said.

To expose the Chinese Communist Party and to save the world in a supernatural war against communism

Friday, October 20th, 2023

The Epoch Times — launched by Falun Gong as a free propaganda newsletter more than two decades ago to oppose the Chinese Communist Party — now boasts to be the US’s fourth-largest newspaper by subscriber count:

The nonprofit has amassed a fortune, growing its revenue by a staggering 685% in two years, to $122 million in 2021, according to the group’s most recent tax records.

[…]

Epoch Times representatives also deny an affiliation with Falun Gong, despite the two groups’ clear financial and organizational ties: The Epoch Times board members and most staff are Falun Gong practitioners. The nonprofits behind The Epoch Times and Friends of Falun Gong, the movement’s advocacy organization, share executives and provide grants and services to each other, according to tax filings. And the newspaper, along with a digital production company and the heavily advertised dance troupe Shen Yun, make up a nonprofit network that the leader of the religious movement calls “our media.”

[…]

Started in Georgia in 2000 by John Tang, a Falun Gong practitioner who remains its CEO, in essence it was a Chinese-language public relations newsletter. The group’s long-term goals were ambitious: to expose the Chinese Communist Party and to save the world in a supernatural war against communism.

Through the early aughts, The Epoch Times grew from an online effort to a weekly physical newspaper, with a home base in New York and a TV production company, New Tang Dynasty Television. It raised money from followers and was staffed by unpaid volunteers. It ran aggregated articles on international issues from Voice of America next to Thanksgiving Day explainers, dispatches from Falun Gong parades, and exposés on atrocities alleged to have been committed by the Chinese Communist Party.

By 2019, it had gone mostly digital and was spending millions of dollars on creating a network of Facebook pages and groups and running aggressive pro-Trump ad campaigns. The move toward explicit support of Republicans, despite Li’s teachings to stay away from U.S. politics, was foreshadowed by Li’s comments at a Falun Gong conference a year before.

Li said that Falun Gong’s media ought to put a “constructive” spin on the news, to advance the group’s aims. It wasn’t wrong, he said, to favorably cover a politician who shared Falun Gong’s conservative values and whose goals aligned with their own.

“If someone comes along now who can help to halt the downward spiral that the world is in, then he is truly someone extraordinary!” Li said. “He would in effect be helping us! Wouldn’t he be helping us to save people?”

The majority of people on a trauma call just stare at the dying

Tuesday, October 17th, 2023

On X (formerly Twitter), Eric Hoel commented, most of the timeline consisted of short videos of war crimes. I find comments about X (formerly Twitter) interesting, because “the timeline” isn’t a thing. My timeline wasn’t full of gruesome imagery — and I didn’t have to play any videos that suggested sadistic violence.

But I will admit to getting drawn into a few violent videos, after seeing them referenced repeatedly:

In the past few days, it’s been clips from the incursion into Israel, but it is now common to see what is effectively a short snuff film every day online, even when there is no war, no invasion, and without looking for them.

Call them “snuff clips.” Someone stabbed on the street in New York. Or shot in the back of the head at a crosswalk in Chicago. Or a soldier pleading with a hovering drone in the Ukrainian war. If you log on, you will be shown. And consequently many of the political debates that have dominated our culture over the past years have been based on graphic videos, even just domestically.

So my question is: Just how familiar should a polity be with death?

That is an interesting question, because we don’t want a polity that’s naive about how violence works, demanding that police stop violent criminals without hurting them, etc., but we also don’t want a polity demanding immediate, thoughtless action, in response to the latest outrage.

Anyway, Hoel starts with the problematic and uncomfortable truth that bloodsport is the most entertaining of all sports:

We humans, we apes, are most interested in violence, in its drama and potential and stakes. Now-a-days it is common to think, because of our screens and our phones and our technology, that we have beaten boredom, and that we are the most entertained any civilization has ever been. Wrong. Imagine the setting sun over the colosseum as two men fight to the death in the sand. You and your friends are drinking wine and eating bread, candies, nuts. Every thrust, every exhausted recovery, is so filled with meaning you cannot look away. Spectating a football game is incomparable. It turns out sitting in the stands drunk watching people die was popular, and has always been popular, because it really is titillating, thrilling, dramatic, an infinite jest, to watch other people in life and death situations. Left to our own devices, bloodsport is a global minimum we humans fall into unless some specific ideology or religion acts as a barrier for our fall.

Regardless of what exactly the barrier was — maybe it was our liberal order, maybe the greater cultural relevancy of religion, maybe just the idea of America as representing historical progress — in the world I grew up in, by which I mean America in the 1990s and early 2000s, watching death openly was frowned upon. It was beneath us as a culture.

Make-believe violence has been big business for a long, long time, and the 1980s were the heyday of violent action movies.

Perhaps, he suggests, one could argue that the rise of the snuff clip genre is a visual corrective:

Maybe we shouldn’t think that violence unfolds like the movies where one guys beats up three, or where women regularly throw some big dude using judo, or whatever. Where you can do something, anything, against someone with a gun. The truth is none of that happens in real life. It all occurs really fast. The people most likely to react in such situations are usually aggressive young men, often to their own demise. But most people just stand there, and then they’re dead.

One time in college I shadowed on an ambulance, and the EMTs told me that the majority of people on a trauma call just stare at the dying. They don’t even call 911. “The stare of life” was their gallows humor term for it.

The stare of life.

He’s not comfortable with this informative facet of violent videos and sees them as more like the Roman gladiatorial games — but the problem with gladiatorial games is putting people to death for your own amusement, not being curious about violence.