Gary North's REALITY CHECK
Issue 393 November 5, 2004
ROPE-A-DOPE POLITICS
I want to talk about politics -- not just American politics,
but international politics, and how it's likely to affect our
income.
On matters political, I am so far out of the loop that I
don't have an agenda. I don't get excited about "our"
victories, and I don't get despondent about "our" defeats. I
occasionally get a kick out of "their" defeats, but only because
I like to see professional politicians knocked flat. The
political system, however, remains unchanged.
I see politics as one long boxing event. When most middle-
aged Americans think of boxing, they think of Muhammad Ali vs.
Joe Frazier. Those were the days! They may even remember Ali's
tactic, which he called rope-a-dope. He would allow himself to
get "trapped" against the ropes. His opponent would keep
punching him. But every punch had its force distributed over the
ropes by way of Ali. Eventually, the puncher got tired. Then
Ali would finish him off. Of course, for the tactic to work, Ali
had to survive the pounding.
Many years ago, I figured out how the American political
system really works. It's a variation of rope-a-dope. The
voters are like two prize fighters. Every four years, they beat
the stuffings out of one another. Bloodied, they vow to win the
next round. Each one does his best to get his opponent on the
ropes. The dopes never learn.
After watching this take place every four years for about 20
years, I finally figured out how the political fight game really
works. In boxing, the only one who makes guaranteed money, year
after year, is the promoter. He also doesn't get a glove laid on
him. So, when I think of American politics, I don't think
"Muhammad Ali vs. Joe Frazier." I think "Don King." Well, not
quite. I think "Don King with a haircut." The only reason why
the public remembers King is his hair, which can be described as
neo-Tesla.
Here, my friends, is the secret of American politics:
"Nobody pays attention to the promoters."
I am not saying that one or another fighter is paid by a
promoter to take a dive. I am saying the sport is rigged. It's
not rigged as blatantly as wrestling is rigged, but it's rigged.
Then who is the dope? The electorate.
CLOSE, BUT NO CIGAR
The popular vote for the Presidential race was close: 51% to
48%.
The Senate remains tilted toward the Republicans, but the
Democrats can still gum up the works through filibustering -- a
concept never dreamed of by the Constitution's Framers. They
can talk the Senate to a halt if they can muster 41 votes. But
no political party's Senators can do this very often without
incurring the wrath of the voters.
Frankly, I like filibustering. It shuts down the Senate.
Senators can't do any harm when there is a filibuster going on.
Anything that shuts down politicians can't be all bad. When it's
"shut up" vs. "shut down," I prefer "shut down."
The House is now a Republican stronghold, even though the
margin is thin: well under 10%. This is sufficient. That's
because the good old boys who are in office have a bi-partisan
agreement with state legislatures: "You make me vote-proof back
home, and I'll keep quiet when you make my opponents vote-proof
up here." Congress refuses to change the laws governing state
legislatures' gerrymandering -- another concept undreamed of by
the Framers but developed in the early nineteenth century by one
of the signers of the Declaration of Independence, Elbridge
Gerry, the Governor of Massachusetts, who was soon voted out of
office because of public outrage over his plan, but who was
immediately picked for Vice President under Madison.
Every ten years (usually), after the latest census figures
are released by the Department of Commerce, state legislators re-
draw the state's Congressional districts, so as to favor the
majority party of the legislators at the time of the redrawing.
But they also do their best to benefit existing Congressmen's
districts, even those in the opposing party. This keeps Congress
happy. The districts sometimes wind up with weird shapes.
Democrats are squeezed into large, irregular districts that vote
overwhelmingly for Democrats (60+%), and so are Republicans.
This skims off the rival party's voters from most Congressmen's
districts, so that most incumbents are safe from a challenge.
The sacrificial lambs are the ones whose districts disappear
because of shrinking state populations, or who wind up with 51-49
party registration. These few Congressmen then have to fight for
re-election.
The incumbents are self-interested. They want to retain
their jobs. They don't care much about what happens in some
other district. So, only about 30 seats out of 435 are up for
grabs in any election, and even here, the incumbent usually has
the advantage. Isn't democracy grand?
An old friend of mine finally lost his election this time:
Phil Crane. He represents the 8th District in Illinois. He
began serving in the year that Neil Armstrong walked on the moon.
There are some people, I am told, who think of that event as
ancient history, even though it happened almost yesterday.
Congress's retirement program being what it is -- based on years
of membership -- Dr. Crane will not be greeting people at Wal-
Mart next year. (I hope he will write a book. His 1964 book,
"The Democrats' Dilemma," is still worth reading. It's not about
the Democrats as much as it's about the British Fabian
socialists' American wing, which captured the Democratic Party).
The closeness of the popular vote has nevertheless produced
what I never would have imagined possible: a shut-out of the
Democrats. The defeat of Tom Daschle has removed the most
visible critic of the Bush Administration. It is not clear who
will become the Minority Leader in the Senate. The only
nationally known Democratic Senator is the hero of
Chappaquiddick. If he gets to go on TV every time the networks
need a spokesman to say something about what's happening, the
Democrats will wind up looking like relics from the late 1960s --
which, if we are to judge by John Kerry's rhetoric, they really
are.
The 1960s are gone. So are the 1950s. The rules governing
Presidential losers have changed. Nixon got a second shot at the
office, with Goldwater in between. Adlai Stevenson also had two
shots at it, and was a contender for a third. A decade before
him, Tom Dewey got two shots. That was then; this is now. Al
Gore won the popular vote in 2000, but he was wise enough to know
that he would not have received the nomination in 2004. When you
lose the race for President these days, you're branded as a sure
loser by your party. It's like leaving a 35-year-old woman at
the altar: you don't get a second chance.
The titular head of the Democratic Party is now Bill
Clinton. Hard to believe, but true. He still has a good press.
Crowds go out to hear him and get a book signed. He is still a
celebrity. But there is a price to pay for the Democrats: ex-
Presidents must be extremely judicious in saying anything
negative about the current President. It's a form of insurance.
It's the way a President emeritus keeps from having bad things
happen, such as the opening of closed files by the incumbent
President. As you may recall, one of Bush's first acts was to
seal off the Clinton files from reporters and historians.
Clinton is more vocal than other ex-Presidents. Truman was
feisty to the end, but he rarely said anything public about
Eisenhower -- not that I recall, anyway. Stevenson, as a
potential candidate, did speak out. That's because he had
another shot at the office. After Nixon lost the race for
governor in 1962, he uttered his famous line, "This is my last
press conference. You won't have Dick Nixon to kick around any
more." After Goldwater's statistically devastating loss in 1964,
Eisenhower became the titular head of the Republican Party until
Nixon decided to run for President again. Ike had been a winner.
Clinton was a winner.
The Democrats are today in disarray, despite the narrowness
of their loss. They are in shell-shock. They had gone after
Bush, hammer and tong. They got a higher turnout than expected.
They lost anyway.
What now?
Hillary. All roads lead to Hillary. Nobody in the
Democratic Party knows how to put up a "Detour -- Road Closed"
sign. Hillary's the one.
If you think Republicans turned out in large numbers to
defeat Kerry, wait until they get to vote against Hillary. Even
I look forward to it. Maybe Jeb Bush will run against her.
Clinton vs. Bush: what fun it would be!
The dopes would truly be roped. I might get into the ring
to throw a few punches myself.
THE PROMOTERS
Never lose sight of the promoters: the Council on Foreign
Relations and the old money families that dominate it.
Take seriously the words of a member of the Gore family dynasty,
which in 1795 owned much of what is now called Washington, D.C.,
and which sent three of its members to the U.S. Senate in the
twentieth century, and very nearly won the Presidency with the
third and least impressive member of the trio. This member is
famous today for his literary efforts: Gore Vidal. He made the
following observation in 1991 regarding the lives of senior
American politicians.
But as the American oligarchy selects, at what often
looks to be absentminded random, its office managers,
the private lives of these public functionaries arouse
no particular interest unless there is comedy in it.
Little did he know of the amusement that awaited the nation
with the arrival of the Clintons from Arkansas less than two
years later. Their years at Yale did not polish them much.
Contrast the attention shown to the hirelings, Vidal said,
with the attention shown to those who do the hiring.
On the other hand, the private lives of the actual
rulers of the country are as out of bounds to American
historians as they are to all of the other paid-for
supporters of that oligarchy which controls the sources
of information and instruction, that is, the "media"
and Academe.
Do not imagine that "the Democrats are finished." Do not
imagine that "things will be different now." The editor of
"Foreign Affairs," the quarterly outlet of the Council on Foreign
Relations, was asked in late summer what it would mean to foreign
policy if George Bush were re-elected. His answer was published
in the September issue of "The Washington Monthly."
Many people seem to think the upcoming presidential
election will inevitably send American foreign policy
down one of two radically different paths. Writing in
the Atlantic, for example, the political commentator
Michael Barone argues that this year's balloting may be
the "most important in generations" since the Bush team
would see reelection as a vindication of its aggressive
course while a Kerry administration would end up
kowtowing to Europe and the United Nations. Similar
views echo from The Nation to the National Review.
Pish posh. Sure, there would be some differences
between what the two camps would do, both in style (a
lot) and substance (a little). But the similarities
would be far more pronounced because Bush and Kerry's
current positions on major issues just aren't that far
apart--and because whoever is elected will have
relatively little room for maneuver.
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SUNBURNS THAT KILL
Colin Powell warned Bush against invading Iraq. "You'll own
it," he said. And so he does.
Speaking of ownership, the central banks of Japan and China
together own about 20% of U.S. government on-budget debt. They
own enough of it so that American foreign policy in Asia is now
hedged in by the threat of dumping by those banks. Of course,
these are rival banks in rival nations. But debt-dumping by
either one would put the other in a bind: the falling value of
the dollar, rising U.S. interest rates, and capital losses on all
long-term bonds held in the vault.
The Chinese government eventually is going to bring Taiwan
back under the formal sovereignty of mainland China. It is basic
to China's domestic policy that Taiwan be brought back officially
under mainland control, just as Hong Kong was in 1997. Whether
the Chinese government will risk an invasion -- assuming an
invasion will be necessary -- before the 2008 Olympics is an open
question. My guess is no. But after 2008, the risk goes way up.
By then, China's central bank will hold so much U.S. debt that
the Administration will not challenge the loss of Taiwan's
existing sovereignty.
China has economic leverage supplied by mountains of
Treasury debt. It also has military leverage. Some of you may
have read about the Russian anti-ship missile, SS-N-22, called
the Sunburn. It has been around for a decade. The Sunburn flies
at mach 2, meaning 2 times the speed of sound, at an altitude of
about 10 feet. It then rises, turns downward, and hits a
carrier's deck. It can carry a 750-lb warhead. There is no
known defense against it.
A startling article on its capabilities was published on the
Internet on October 26: "Iran: A Bridge Too Far?" The title
refers back to a 1977 movie on the disastrous World War II battle
at Remagen Bridge in Holland. (http://snipurl.com/aez2) On
November 2, the essay was posted on Rense's site with a different
title: "The Sunburn." (http://snipurl.com/ae0f) It is a
shocker.
The author begins with a description of U.S. Navy maneuvers
held in July, 2004, called Summer Pulse.
Never in the history of the US Navy had so many carrier
battle groups been involved in a single operation. Even
the US fleet massed in the Gulf and eastern
Mediterranean during operation Desert Storm in 1991,
and in the recent invasion of Iraq, never exceeded six
battle groups. But last July and August there were
seven of them on the move, each battle group consisting
of a Nimitz-class aircraft carrier with its full
complement of 7-8 supporting ships, and 70 or more
assorted aircraft. Most of the activity, according to
various reports, was in the Pacific, where the fleet
participated in joint exercises with the Taiwanese
navy.
Taiwan was significant. China's government has been making
statements regarding Taiwan as being part of China. This has
always been China's position, but the rhetoric is escalating. A
joint operation sounds ominous.
. . . Summer Pulse amounted to a tacit acknowledgement,
obvious to anyone paying attention, that the United
States has been eclipsed in an important area of
military technology, and that this qualitative edge is
now being wielded by others, including the Chinese;
because those otherwise very ordinary destroyers were,
in fact, launching platforms for Russian-made 3M-82
Moskit anti-ship cruise missiles (NATO designation:
SS-N-22 Sunburn), a weapon for which the US Navy
currently has no defense. Here I am not suggesting that
the US status of lone world Superpower has been
surpassed. I am simply saying that a new global balance
of power is emerging, in which other individual states
may, on occasion, achieve "an asymmetric advantage"
over the US. . . .
The author points out the after the collapse of the Soviet
Union, the surviving Russian government was short of Western
currencies. The military fell into a state of disrepair.
But in the late 1990s Moscow awakened to the
under-utilized potential of its missile technology to
generate desperately needed foreign exchange. A
decision was made to resuscitate selected programs,
and, very soon, Russian missile technology became a hot
export commodity. Today, Russian missiles are a growth
industry generating much-needed cash for Russia, with
many billions in combined sales to India, China, Viet
Nam, Cuba, and also Iran.
He says that the only defense against this weapon is to take
out the missile on the ground or on board a ship before it is
fired. This raises a tactical problem: Iran's topography.
But US naval commanders operating in the Persian Gulf
face serious challenges that are unique to the
littoral, i.e., coastal, environment. A glance at a map
shows why: The Gulf is nothing but a large lake, with
one narrow outlet, and most of its northern shore,
i.e., Iran, consists of mountainous terrain that
affords a commanding tactical advantage over ships
operating in Gulf waters. The rugged northern shore
makes for easy concealment of coastal defenses, such as
mobile missile launchers, and also makes their
detection problematic. Although it was not widely
reported, the US actually lost the battle of the Scuds
in the first Gulf War termed "the great Scud hunt" and
for similar reasons.
Saddam Hussein's mobile Scud launchers proved so
difficult to detect and destroy over and over again the
Iraqis fooled allied reconnaissance with decoys that
during the course of Desert Storm the US was unable to
confirm even a single kill. This proved such an
embarrassment to the Pentagon, afterwards, that the
unpleasant stats were buried in official reports. But
the blunt fact is that the US failed to stop the Scud
attacks. The launches continued until the last few days
of the conflict. Luckily, the Scud's inaccuracy made it
an almost useless weapon.
The Sunburn is no Scud. It is not only fast, it is
accurate.
The Sunburn's amazing accuracy was demonstrated not
long ago in a live test staged at sea by the Chinese
and observed by US spy planes. Not only did the Sunburn
missile destroy the dummy target ship, it scored a
perfect bull's eye, hitting the crosshairs of a large
"X" mounted on the ship's bridge.
The strategic problem facing military strategists is two-
fold: Iran and China. China has the Sunburn, and Iran may have
it.
In 2001, Jane's Defense Weekly reported that Iran was
attempting to acquire anti-ship missiles from Russia.
Ominously, the same report also mentioned that the more
advanced Yakhonts missile was "optimized for attacks
against carrier task forces." Apparently its guidance
system is "able to distinguish an aircraft carrier from
its escorts." The numbers were not disclosed.
The author is concerned about the possibility of an air
strike on Iran by the Israelis. The U.S. would get blamed
because, in order to get to Iran, Israeli planes would have to
fly over Iraq.
He does not mention this fact: neo-conservatives, especially
the American Enterprise Institute's Michael Ledeen, have
recommended an American invasion of Iran to take out terrorists,
just as American troops invaded Iraq. Ledeen wrote this on
October 6: "Use military force where necessary against both the
terrorists and the sponsoring regimes, and support democratic
revolution." This, in an article called, "Iran, when?" His
answer: "Faster, dammit." (http://snipurl.com/ae6c)
The threat of the Sunburn against U.S. aircraft carriers is
no idle threat. If the missiles work as expected, the U.S. would
not be able to keep open the Straights of Hormuz.
With enough anti-ship missiles, the Iranians can halt
tanker traffic through Hormuz for weeks, even months.
With the flow of oil from the Gulf curtailed, the price
of a barrel of crude will skyrocket on the world
market. Within days the global economy will begin to
grind to a halt.
Furthermore, if the Israelis attack Iran, there will be a
flow of weapons to Shi'as in Iraq from the Iranian government
that will dwarf anything we have seen so far. The Iranians will
let their confessional brethren take the brunt of U.S. attacks in
Iraq, while supplying the weapons free of charge. They will let
the Iraqis serve as their surrogates because of their assumption
that we are the Iraelis' surrogates.
Bush is where the editor of "Foreign Affairs" said he would
be: "Whoever is elected will have relatively little room for
maneuver."
BULLISH ON THE BEAR
Technology keeps getting cheaper. This expands the market.
While the kind of high technology weaponry that the U.S.
possesses for attacking centralized command posts is unstoppable,
this does not solve the problem of 4th-generation warfare:
insurgency, which has no central command posts. It also does not
solve the tactical problem of decentralized technologies like the
Sunburn missile, which treats an aircraft carrier as a central
command post, which it in fact is.
The clock is ticking. Moore's law -- chip capacity doubles
every 12 months -- is still in operation. Both the price and
capacity of high tech weaponry keep falling. The ability of
rogue states to buy innovative weapons from states too big to be
labeled rogue states is working against the United States.
Russia is still very much in the game. Russia is not using
client states, as it did for decades. Instead, it is using
"customer states." It is selling weapons that can be used to
undermine U. S. foreign policy, yet without suffering any
military consequences. Meanwhile, Russia earns much-needed
foreign currency. Putin could say to Bush, "It's Keynesian
economics in action: the mixed economy. After all, we're all
Keynesians now." It's the "government-business partnership," as
it is fondly called: an international free market in weapons.
Russia never could sell anything of value besides raw materials
and weapons. Russia would be the big winner in a Sunburn-
produced oil crisis. Get Iran to close the Straits of Hormuz,
and Russia reaps oil profits by the billions of dollars' worth.
Is an attack on Iran plausible? Yes. Ledeen's voice is not
necessarily that of John the Baptist, crying in the wilderness.
He is an influence within the neo-conservative circles that
surround the President. Here is his advice.
Months before the liberation of Iraq I wrote that we
were about to have our great national debate on the war
against the terror masters, and it was going to be the
wrong debate. Wrong because it was going to focus
obsessively on Iraq, thereby making it impossible to
raise the fundamental strategic issues. Alas, that
forecast was correct, and we're still stuck in the
strategic quagmire we created. Up to our throats. So
let's try again to get it right.
Like Afghanistan before it, Iraq is only one theater in
a regional war. We were attacked by a network of
terrorist organizations supported by several countries,
of whom the most important were Iran, Iraq, Syria, and
Saudi Arabia. President Bush's original analysis was
correct, as was his strategy: We must not distinguish
between the terrorists and their national supporters.
Hence we need different strategies for different
enemies, but we need to defeat all of them.
The strongest voice against this is Colin Powell's. Whether
Powell will choose to remain as Secretary of State is a big
question at this point. "Four more years" may not be his career
slogan. He is made a laughing stock every time a TV news show
runs a segment of his United Nations speech about Iraq's weapons
of mass destruction. He looks like a shill. He knows he looks
like a shill. There are better ways for him to make a living. A
new term for the Administration is a way for him to bow out
gracefully. If he does, Iran will go to the top of the
President's to-do list.
The official enemy resides in every regime contiguous to
Iraq, but he has no borders to defend.
Osama bin Laden is not only following Saul Alinsky's tactic,
"the action is the reaction," he is following Muhammad Ali's. He
is roping the dope. There are many available ropes: Afghanistan,
Iraq, Iran, Syria, and ultimately Saudi Arabia.
Meanwhile, mainland China bides its time. Four more years.
CONCLUSION
President Bush is in charge of selecting which rope to use
to punch Osama and his followers into submission. The Democrats
are whipped. For the moment, that dope on a rope has been
flattened. They have little say in the matter. Osama is still
taunting him: "Bring it on!"
What he is really telling Bush and the Iranians is this:
"Let's you and him fight."
Ledeen calls Iraq a strategic quagmire. On this point, I
agree with him. As the quagmire nature of Iraq becomes more
obvious to the President, he will face a choice: retreat or
expand the theater of operations. Flee or fight. Ledeen and the
neocons are recommending the latter.
I don't think the President will risk initiating an invasion
of Iran. I do think he will be sorely tempted to allow Israeli
planes to fly over Iraq to launch an attack on Iran comparable to
the one the Israelis launched against Iraq's nuclear power plant
in 1981. I think this scenario is increasingly likely. The
longer that Ariel Sharon waits, the more likely the United States
will pull out of Iraq, leaving him to deal with Iran alone.
Sharon presumably agrees with Ledeen:
Had we seen the war for what it was, we would not have
started with Iraq, but with Iran, the mother of modern
Islamic terrorism, the creator of Hezbollah, the ally
of al Qaeda, the sponsor of Zarqawi, the longtime
sponsor of Fatah, and the backbone of Hamas.
Where Israeli planes are concerned, there are no permanent
"no-fly zones" in Iraq. I hope I'm wrong, but I don't think I
am. Sharon understands "four more years." It may be even fewer
for him politically.
Bush wants out of the quagmire. Ledeen and the neocons are
telling him that the way out is by way of Iran.
I see a correlation of forces fusing. I also see ropes.
On the day that Colin Powell resigns, you had better not be
short oil futures.
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