Saturday, January 21, 2012
Peace talks are delusional
Friday, January 20, 2012
Who pays more in taxes?
Friday, December 16, 2011
We. Shall. Overspend.
Wednesday, December 14, 2011
Mexican Standoff: Labor Union Style
Bankruptcy for the Company is the latest development in an ongoing struggle between the airline and its labor union to agree on adequate cost structure. It’s a familiar story: labor unions demand higher wages and more benefits, margins get compressed, profits wither, investors balk, and down goes the whole firm.
The labor unions kept their prices so high it drove costs out of control. As airline usage curtailed over the past decade (thanks DHS, keep up the good fondling… or work, or uhhh, never mind) major air carriers were forced to find ways to cut costs and preserve profitability.
In this particular case, AA management swallowed a poison pill: declare Chapter 11 bankruptcy, take the lumps, but in the end, hopefully able to negotiate new labor contracts. So instead of having “fair wages”, potential layoffs may likely mean “no wages” for the many members of the labor union. A reasonable person might ask: “why would the labor union ask for wages so high that it would force their employer—the source of said wages—into bankruptcy?” Seems counterproductive, right? Wrong. Perennial cash cow for left-wing politicians, labor unions have a lot less to lose by forcing Chapter 11 than one might think.

This Mexican standoff between corporations and labor unions has played out before (most notably in GM). It’s not a pretty picture. GM’s bondholders, contractual obligations ignored and violated, were forced to eat pennies on the dollar for what they were owed. But the labor union made out much better, shielded and defended by friends in politically influential administrative jobs.
And to all my 99% friends out there, don’t think this is a sweet deal for the 1%. Exiting CEO Gerard Aprey has no golden parachute. In fact, he has no severance. And with AMR shares trading down 95.49%, his stock is negligible at best. That’s the length the 1% guys are willing to go to get costs under control, and get the job done. If we spread his success and everyone gets their fair share, what’s OWS’s fair share of his failure? I digress.
To further exacerbate AA’s problems, fuel prices ate away at margins. Thanks to the Obama Administration and its respective Dept. of Energy for that one: stifled drilling, grossly inadequate refining capacity, threats of taxes, and burdensome regulations have driven energy costs to unmanageable prices. And this is one problem Obama’s DOE can’t solve by handing out corporate welfare to industries building fancy electric powered vehicles. With the current problems GM is facing with the Volt, I think we’re a few decades away from electric powered airliners.
On one hand, we have a President and Administration that passes favors to labor unions in return for campaign contributions. On the other, we have a DOE that stifled growth in domestic cheap energy to satiate the bloodlust of the enviro-jihad. It’s becoming more and more remarkable that airliners are able to survive much less thrive.
Tuesday, November 29, 2011
Breaking news: Holy Victory! (Source: Taliban in talks with Allah regarding transitional government)

Friday, November 18, 2011
In the graveyard of straight-shooters
US Army Major General Peter Fuller was relieved of his command in Afghanistan earlier this month because, when asked about Afghan President Hamid Karzai’s recent hand-over-heart vow that, “If there is war between Pakistan and America, we will stand by Pakistan,” he called Karzai “erratic” and asked, “Why don’t you just poke me in the eye with a needle! You’ve got to be kidding me.” But what was more surprising than MG Fuller’s reaction – which, if one considers the 1,800 Americans killed protecting Afghanistan, was restrained – was that of a “western diplomat” who, wishing to remain anonymous due to the sensitivity of his statement, observed, “The phraseology could have been better.” In other words, weeks after Joint Chiefs Chairman (Ret.) Michael Mullen’s testimony specifically confirming Pakistani intelligence’s support of the Taliban’s September attack on the US embassy in Kabul killing 25, six months after the US hunt-down of Osama Bin Laden in the Pakistani Army town of Abbottobad, and ten years into a war against a Pakistan-fueled insurgency, criticizing the grammar of a pro-Pakistan statement remains one step outside-the-shade too far for the coalition of the willing.The firing comes amid revelations about a “secret memo” delivered from Pakistani President Asif Ali Zardari to Admiral Mullen last May. The memo called for US support in convincing the ISI to axe its Taliban-training “Section S,” revealing the US’ ongoing courtship of the ISI – a courtship the US plans to continue, judging by Jeffrey Goldberg’s December Atlantic profile “The Ally from Hell,” which ominously concludes with an insider’s assurance that General David H. Petraeus, in his new role as CIA director, will make progress with the ISI because he has “a good personal relationship with these guys.”
Whatever the US position, it has not taken a “secret memo” for Afghans to conclude that Pakistan is at the root of their problems. For most Afghans in Kabul, the target of a startling trend of shopping center attacks this year despite its vaunted “Ring of Steel” security perimeter, “Pakistani” is nearly synonymous with “terrorist.” Even in Pashtun-dominated Kandahar, most Afghans consider the violence – this year has brought the assassination of the provincial police chief, the provincial shurah chief, the Kandahar City mayor, and many district officials – to be a Pakistani export. Southerners rank Pakistani support as one of the top three reasons the Taliban fight, according to an Asia Foundation survey released this month. Shurah leaders in Kandahar and surrounding provinces privately say not only that they believe the ISI is supporting Taliban operations in the south, but that Paksitan will reach further as America exits.
President Karzai’s statement of Pakistani solidarity was, then, meant for Pakistani consumption, not domestic. This reflects an instinctive bow to Pakistani power at a time when the waning US presence was unable to prevent the July assassination of Karzai’s close advisor Jan Mahmad Khan and the September assassination of his nationally-respected Peace Council chief Burhanuddin Rabbani.
But the intended audience of the US’ perennially tame statements on Karzai’s corruption and Pakistan’s subversion (Admiral Mullen’s statement came only after he retired) is less clear. The center of gravity in counterinsurgency, according to Gen Petraeus’ Army field manual, is not external actors but the domestic population. An Afghan population left guessing about US feelings towards the puppet-masters in Pakistan or the corrupt administration in Kabul is more likely to be suspicious of the promises ISAF makes with conviction, particularly regarding the “transition” buzz: as a NATO spokesman assured Afghans this week, “NATO’s combat role will be progressively reduced, but Afghanistan will need support after 2014 and that support will continue.”
Unfortunately, the US’ fixation on institution-building and politicking comes at the expense of Afghans’ trust. MG Fuller was fired for weakening ISAF’s “solid relationship” with the Afghan government, but it is unclear how Afghans, a record 56% of whom reported corruption to be a major problem in daily life in 2011, view anyone boasting affinity with such a dubious bunch. Meanwhile, those who emphasize fixing “AfPak” relations, to use the late Ambassador Richard Holbrooke’s tired phrase, overlook the second and third order effects of gaining the grassroots trust of the population: Afghans confident in US intentions, and presented with an apolitical timetable for US withdrawal would be far likelier to stop facilitating the Pakistan Taliban’s presence in Afghanistan. This, coupled with drastic cuts in the US aid given to Pakistan (and, consequently, to the Taliban and radical madrassas via the ISI), would disrupt the flow of insurgents into Afghanistan, not to mention the spill-over of the fundamentalist Deobandi teachings tightening their grip on Afghanistan’s mosques.
Indeed, the diplomats and civilian advisors are as guilty as the military in favoring politics over COIN. Too often, the most cherished metric for evaluating the over $18.8 billion the US has spent on foreign aid in Afghanistan is the “burn rate.” As the June 2011 “Evaluating U.S. Foreign Assistance to Afghanistan” Senate report put it, “Political pressures create perverse incentives to spend money even when the conditions are not right.” The result is a distorted Afghan economy (it is geo-politically taboo to even suggest deregulating Afghanistan’s poppy cash crop) and a looming depression, a preoccupation of many elders at this week’s Kabul “jirga.”

As for civilian advisors, consider the lax COIN metrics of Andrew Exum, an Afghanistan expert at the Center for a New American Strategy, “Washington’s go-to think tank on military affairs,”as the Washington Post has suggested. In July 2009 he said the “11th hour” was at hand, predicting that by August 2010 ISAF would have to be able to demonstrate progress in lowering civilian body counts and increasing security force competence. Yet the percentage of Afghans agreeing that the police force is unprofessional and poorly trained remained a constant 58% in 2010 (dropping to 56% in 2011), and civilian deaths in the first 6 months of each year have increased from 622 in 2009 to 1,167 in 2011. Undaunted, last December Mr. Exum predicted July 2011 would be a COIN “watershed,” when “the unmistakable outlines of progress or deepening evidence of problems will emerge.” Yet as 2012 approaches, any Afghanistan verdict remains murky.
There are some encouraging signs of breaking the political impasse. Last month Afghanistan signed a long-overdue strategic partnership agreement with India, the natural enemy of the Taliban and al Qaeda in the region. This came in the wake of the US’ summer decision to delay payments on hundreds of millions of dollars in military aid and reimbursements to Pakistan. As for the state department, its Afghanistan budget has passed its peak, giving hope that “burn rate” obsessions and million dollar salaries for civilian “technical advisors” will be a thing of the past. Yet with Kabul jirga attendees and an Afghan opposition figure in Washington warning this week of a post-2014 civil war, the US still has a counterinsurgency effort to win. When world leaders convene in Bonn next month to make sense of where Afghanistan goes from here, “phraseology” ought to be the least of their concerns.
