Free Markets, Free People

Daily Archives: July 20, 2012


Is Iran preparing to close the Straits of Hormuz?

That’s what our intel guys are saying:

U.S. government officials, citing new intelligence, said Iran has developed plans to disrupt international oil trade, including through attacks on oil platforms and tankers.

Officials said the information suggests that Iran could take action against facilities both inside and outside the Persian Gulf, even absent an overt military conflict.

The findings come as American officials closely watch Iran for its reaction to punishing international sanctions and to a drumbeat of Israeli threats to bomb Tehran’s nuclear sites, while talks aimed at preventing Iran from developing nuclear weapons have slowed.

Now, of course, “developing plans” and actually executing them are entirely different things.  But, as irrational as Iran can be sometimes, the development of such plans has to be taken seriously.

If you’ve been paying attention over the past few months, we’ve been creeping any number of assets closer to Iran.  So obviously we believe where there is smoke we may see fire.

"Iran is very unpredictable," said a senior defense official. "We have been very clear what we as well as the international community find unacceptable."

The latest findings underscore why many military officials continue to focus on Iran as potentially the most serious U.S. national-security concern in the region, even as the crisis in Syria has deepened and other conflicts, as in Libya, have raged.

Defense officials cautioned there is no evidence that Tehran has moved assets in position to disrupt tankers or attack other sites, but stressed that Iran’s intent appears clear.

Iran has a number of proxies, as we all know, none of whom have much use for the US or the rest of the Western world.   What would possibly cause Iran to attempt to strike at outside targets?  The belief that they could get away with it:

But U.S. officials said some Iranians believe they could escape a direct counterattack by striking at other oil facilities, including those outside the Persian Gulf, perhaps by using its elite forces or external proxies.

I’m not sure how one thinks they can escape retribution by such tactics, but it is enough to believe you can.  And apparently there are some in Iran who do.  That’s dangerous, depending on where they sit in the decision making hierarchy.

The officials wouldn’t describe the intelligence or its sources, but analysts said statements in the Iranian press and by lawmakers in Tehran suggest the possibility of more-aggressive action in the Persian Gulf as a response to the new sanctions. Iranian oil sales have dropped and prices have remained low, pinching the government.

So, we wait.  And creep more assets into the area.  And wait.

As an aside to all the arm-chair defense experts who claim we shouldn’t be developing advanced weaponry because all our future wars are likely to be “just like Afghanistan”.

Really?

~McQ

Twitter: @McQandO


Speculation: Aurora shooter an OWS guy? (Update)

At this point, I see it as mostly rumor, but I wonder how the left will react if this is true:

As speculation mounts about the motive behind the mass shooting, one private investigator has claimed that Holmes may have been part of Occupy Wall Street’s most violent faction Occupy Black Bloc.

Bill Warner told how the Batman movie portrays the OWS crowd in a negative vein, leading him to believe that may have been a cause behind the shooting.

Again, note the word “speculation”.  We’ll learn more as the investigation continues.  Interesting that I read this first in the foreign press.

I have to wonder, then, if this indeed turns out to be true, whether authorities will continue to state that he had no ties to known terrorist groups.

That said, my profound sympathies to the families of the victims of this kook’s madness.

UPDATE:  Interesting little back and forth on Twitter about this post among friends and colleagues essentially trying to convince me that I shouldn’t “go there”. 

I disagree.  The possibility exists and this being a news source which clearly identifies the point as “speculation” based on what it gathered from one “private investigator”, I see nothing wrong with posting it.  They obviously found something credible in what the investigator said, credible enough to include it in the story (but obviously not willing to cast it beyond “speculation” until they can find a corroborating source).  I present it as they have.

Never said or directly implied in the back and forth was the “sensitivity” of the recent massacre or the apparent assumed time one must let pass before “speculating”.  We speculate about motive all the time on really fresh crimes (see recent bus bombing in Bulgaria).  The size of this one is the only real difference.   It was a heinous act – agreed.  Got it.  So are green-on-blue murders in Afghanistan, be we don’t assume a waiting period on those.  We discuss them.  We speculate on motive, etc.  Talking about it or what may have motivated the crime won’t make it any less heinous.

Should the source choose to retract, I’ll note that.  Other than that, this is something to be considered in the mass murders this yahoo perpetrated.  Call it what you will, I see it as news.   And if you don’t believe this should be “politicized”, that ship sailed hours ago.

~McQ

Twitter: @McQandO


Crop cronyism’s destructive results

We talk about it.  Politicians condemn it.  Nothing ever happens to change it though.

This year’s agriculture bill again redistributes your money to rent seekers:

Combine a Midwestern drought with pointless ethanol mandates, and the supplies of corn inevitably dwindle, driving prices sky high. Politicians like Sen. Claire McCaskill, Missouri Democrat, are citing the crop crisis as an excuse to ram through a near-$1 trillion farm bill. While a bit of that cash might find its way to a small farmer, the bulk of the loot will be transferred to individuals who are anything but poor. Like the bank bailouts and TARP, the farm bill illustrates the capture of the legislative process by special interests.

The last farm bill in 2008 was the focus of $173.5 million in lobbying expenditure, according to a report released Tuesday by Food & Water Watch. This is all money spent on what the Mercatus Center’s Matthew Mitchell calls “unproductive entrepreneurship” where people are organizing and expending their talent to become rent seekers, and the end result is wealth redistribution, not wealth creation. Real entrepreneurship innovates in ways that are socially useful. Cronyism diverts resources — both money and talent — into a system that rewards privileges to favored groups. In the case of the 2008 farm bill, recipients of subsidies of $30,000 or more had an average household income of $210,000.

Mr. Mitchell argues that “government-granted privilege is an extraordinarily destructive force” because it not only results in a misallocation of resources and slower growth, it undermines civil society and the legitimacy of government by providing a rich soil for corruption.”

She’s absolutely right.  And, of course, when you mess with markets, like has been done with the corn market and mandated ethanol, the expected results occur when something unanticipated, like a drought, happens:

Corn and soybeans soared to record highs on Thursday as the worsening drought in the U.S. farm belt stirred fears of a food crisis, with prices coming off peaks after investors cashed out of the biggest grains rally since 2008.

Corn prices crossed into uncharted territory above $8 per bushel — about three-and-a-half times the average price 10 years ago of $2.28. Soybeans punched past $17 for the first time — also three-and-a-half times the 2002 average.

Analysts said that while forecasts for continued dry weather are expected to sustain the rally, corn prices could be vulnerable to any move by the government to lower the amount of corn-based ethanol blenders are required to mix with gasoline.

Notice what entity is mentioned in the last paragraph?  Yes, government. A key player in the increase in corn prices (yes, understood, they’d be higher with the drought alone, but government’s ethanol mandate has driven them even higher yet).

Meanwhile, as mentioned above, we’re subsidizing agriculture to the tune of $1 trillion dollars of your money (in cash or in debt to be paid back in the future).  Meanwhile, you’ll be paying more for corn based products at the grocery store as well.

Nita Ghei lays out the bottom line problem with this sort of cronyism and rent seeking:

Government privileges come in many forms, direct and indirect. It might be a monopoly, such as the one granted to utilities like Pepco. Regulations such as licensing can be used to limit entry to a particular field to the benefit of existing businesses. Lobbying and the revolving door in Washington create what economists call “regulatory capture,” which is what happens when existing firms use regulatory agencies to benefit themselves. Tax breaks, loan guarantees and subsidies are the most direct signs of a government’s favor. Bailouts of big banks under TARP, and Fannie Mae and Freddie Mac when the housing bubble burst, are the most recent examples of direct action.

Extending each of these privileges reduces America’s economic competitiveness. A monopoly protected by the government has little incentive to provide good service. The greater the availability of privileges, the greater is the incentive to indulge in rent seeking, which diverts resources from truly productive activities. In the long run, the result of anti-competitive policies is less innovation, lower growth and a smaller pie to share.

The greatest scourge to the honest Midwest farmer is not unfavorable weather, pestilence or disease. Far worse for them is the plague of politicians who create an artificial market in which only those with influence can truly compete. Defeating the budget-busting 2012 farm bill is the best chance at a good harvest.

The chances of that happening, however, are slim to none.  Regulatory capture is as common now as government debt and unemployment.  It is a systemic problem that rewards rent seekers and the well connected to the detriment of innovators and competition.  It is the antithesis of capitalism.

Unless we have the will to stop this sort of cronyism, we’re on a short road to failure.  This is another, in a long line of government programs, that are unsustainable, destructive and just flat something government shouldn’t be involved in.

But my guess is, this time next year, we’ll still be talking about it, politicians will still be condemning it and nothing will change except the higher national debt number.

~McQ

Twitter: @McQandO

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