Like squeezing a balloon:

Pakistan has complained to the United States that the strategy in Afghanistan is allowing militants to cross the border more easily, hampering its army’s campaign against Islamists…

…The US wants Pakistan to target militants in South and North Waziristan who cross the border to attack Nato forces in Afghanistan.

If you look past the breathless headline of this WaTimes article, there is an important point:

Defense budget writers have been held largely exempt from having to make long-term strategic decisions since the terrorist attacks of Sept. 11 because of a combination of political good will and the use of supplemental spending bills to pay for programs, said David Berteau, analyst at the Center for Strategic and International Studies.

“I think one of the saddest things is they’ve quit keeping score. There is no longer a rigorous process inside the Pentagon,” Mr. Berteau said. “The Pentagon has not been disciplined since before September 11.”

Expect to read alot more about the need to restore strategic solvency to the DoD. Budget pressures will be the forcing function for more discipline. It will be met with wailing and gnashing of teeth. That doesn’t mean it isn’t necessary.

An excellent post from naked capitalism:

Now even though China is correct in accusing the US of stoking a global carry trade, they are not exactly free of blame either. China’s past and continued currency pegs helped enable US reckless borrowing.

…And low dollar interest rates pose a particular problem for China. Its dollar purchases had been, and may still be, running at levels so high as to make it impossible to sterilize the purchases. The net effect is that they wind up importing our loose money policy to the degree that they cannot fully sterilize the dollar purchases they make to suppress the value of their currency. Some recent reports (admittedly anecdotal) suggest inflation in China is running at 15%, which is the upper limits of what the population will tolerate. So the Fed’s policy is of even more immediate interest to China.

Conclusion: drop the supplicant/new great power narrative. It’s more complicated.

I have zero sympathy for the Chinese officialdom on this issue. The government bought Treasuries as a result of an explicit, concerted strategy to pursue mercantilist aims to help their manufacturers at the expense of ours. This was not an “investment”; this was a by-product of currency manipulation. Now the US bears a lot of blame for not taking that practice on a long time ago. But we need to quit indulging this crap. Buying foreign assets at a time when you are keeping your currency low by design is almost certain to produce foreign exchange losses. So the US is to blame for the inevitable result of Chinese currency manipulation? I don’t think so.

That’s the tricky part of a structural re-alignment. Both sides need to do something that is contrary to their past behavior.

Tom Mahnken on the Chinese military:

If we are in danger of underestimating Chinese military power, China’s leaders are in danger of overestimating it.

…The United States needs to do more to understand the Chinese military. The PLA intently studies the U.S. military; the U.S. military lacks a similar curiosity about them. That needs to change. It would be worthwhile, for example, to translate and make available to scholars a broader array of Chinese writings about military affairs. In addition, the U.S. military needs to devote greater attention to understanding the Chinese military, as well as the strategic and operational challenges it poses. Doing so will not, as some assert, preordain conflict with China. To the contrary, a better understanding of the Chinese military should help us avoid misperception and bolster deterrence. Such an effort should include our allies and friends in the region, who have their own perspectives and their own concerns with China’s military expansion.

Crisis stability requires a deep understanding of the other side. The confluence of an overconfident rising power and a complacent status quo power can be explosive in a crisis situation. Attempting to redress this problem does not mean that such a crisis is inevitable or desirable. Think of it like insurance - a prudent investment that you hope to never need to test but that will pay for itself many times over in an emergency.

Bill Lind predictably argues that the Ft. Hood shootings represent 4GW on American soil. His list of policy recommendations:

The Establishment will attempt to label the massacre at Ft. Hood an “isolated incident.” On the contrary, it is just a foretaste of many more such actions to come. How might states reverse that trend? Three things might help:

1. Stay out of Fourth Generation wars overseas. Intervening in areas of stateless disorder imports their disorder.

2. Be prepared to outlaw violent alternative primary loyalties, including some religions (which in the case of the U. S. would require Constitutional amendments). To those who argue that religious tolerance must be unlimited, I ask, would we tolerate the re-establishment of the Aztec religion, with its demand for ceaseless human sacrifices, on American soil? Of course not.

3. Strengthen the legitimacy of the state, which in Western societies usually means reducing, not augmenting, the power and intrusiveness of the central government. Nothing undermines the legitimacy of a state more effectively than attempts to “re-make” a society according to some ideology’s demands, as is now happening in the West in the name of cultural Marxism, aka “multiculturalism.” A legitimate government defends its society’s traditional culture, it does not assault that culture.

I am amazed that Lind contradicts himself so quickly. In one breath he recommends preparing to outlaw some religions and in the next he recommends reducing the intrusiveness of the state. Of course he would counter that he only recommends outlawing religions that challenge American traditional culture, but therein lies the rub.

Which leaves me asking: what is the difference between Lind and this guy?

The Earth Cools, and Fight Over Warming Heats Up:

The researchers behind those studies strenuously reject that description. But they disagree among themselves on how long the cooling will last. The British paper says warming will resume as early as this year. The German paper says warming won’t resume for perhaps a decade.

Such disagreements aren’t unusual in a nascent science. “I don’t think anybody is surprised that we’re going to get one model that suggests it’s going to cool and another that suggests it’s going to warm,” says Vicky Pope, a scientist at the Hadley Center, the U.K. institute where the research for the British paper was done. “That’s consistent with where we are with the science.”

The center of gravity of this argument is why we should base policy on the long-term predictions of models that nobody expects to be able to predict short-term weather. Put another way, what is the climate science equivalent of the short-term/long-term/very-long-term framework that macroeconomics has? In economics, there are clearly stated different assumptions for what variables are exogenous and why over these three different time horizons. It is entirely possible for a model to be valid in the very long term and be useless in the short term, but the argument still needs to be made.

Barnett notes the same WSJ piece I cited last week.

One nit to pick with his post, though. Ex post facto, demand equals production, so the global demand peak is equal to the global oil peak. What “global oil demand will peak before global oil production” really means that Barnett predicts that oil runs out of buyers before we run out of oil. Put another way, he predicts that cost and pollution will reduce oil demand before geologic constraints force reduced consumption.

The IAEA thinks that Iran has tested advanced nuclear warhead designs:

Iran has rejected most of the IAEA material on weaponisation as forgeries, but has admitted carrying out tests on multiple high-explosive detonations synchronised to within a microsecond. Tehran has told the agency that there is a civilian application for such tests, but has so far not provided any evidence for them.

LOL. You gotta love the understated British commentary:

Western weapons experts say there are no such civilian applications…

A politer way of saying “liar, liar, pants on fire.”

China starts trying to figure out how to manage piracy off Somalia:

The prospect of each country being given responsibility for a certain area of ocean, instead of having navies take part in extensive joint patrols or follow their own ships, is being welcomed by the shipping industry.

A chief captain with China Shipping Group surnamed Zhang said more extensive coverage of the waters off Africa would be especially welcome now, at a time when pirates are starting to venture far beyond the 60th meridian line, which had once seemed to be the limit of the pirates’ range.

The Chinese vessel De Xin Hai was hijacked on Oct 19 east of the Seychelles, far from Chinese navy vessels that were escorting ships. It was carrying 76,000 tons of coal, from South Africa to India.

A small step for China towards being a more responsible member of the international community. Why do they care?

“…because Chinese vessels account for about 40 percent of the vessels crossing the Indian Ocean, China is keen to secure these vital water routes,” Yin said.

The IEA will reportedly substantial reduce its long-term forecast for global oil demand. This on top of their previous forecast that all demand growth between 2008 and 2030 would come from non-OECD countries.

The Saudi Arabia of oil demand has decreased its consumption by over 6% from a year ago, dwarfing the growth in Chinese and European consumption.