Category Archives: Strategy

Robert D. Kaplan’s Clairvoyance on Emerging Anarchy

2/6/2014 Portland, Oregon – Pop in your mints…

Robert D. Kaplan, Stratfor’s Chief Geopolitical Analyst, published in interesting report yesterday recounting his clairvoyance in predicting the rise of anarchic rule in certain African states (predictions that came to pass) and the general erosion of state governance throughout the world.

Anarchy as an Ultimate GivenKaplan’s observations are of particular interest to us, as we hold the belief that Anarchy is an Ultimate Given, meaning that groups of people tend to search for a coordinated approach to their inherently anarchic surroundings, the most recent of which has been the democratic nation state.

While Kaplan’s analysis appears to paint a picture of chaos and lawlessness, which indeed are the hallmarks of regime change, we see democratic nation states and their attendant monetary regimes as things that the world is currently shedding for its ultimate betterment, as they now serve to restrict trade instead of facilitating it as once was their chief contribution to the livelihood of the governed.

The continued adoption of communication via the internet is moving toward a state of maturity from which the natural progression towards internet facilitated trade amongst parties is causing the world to eschew the label of their respective nation state and replace it with one of religion or other shared affinities which are readily accessible given the pace of mobile communication expansion.

Kaplan also makes a clear distinction between the need for strong governance of urban societies whereas rural/agrarian societies tend to govern themselves, a point that is lost on most observers, not the least of which are the political classes in the current nation state, which tend to focus on national borders as the only limitations to their sphere of influence.

While Kaplan’s analysis is interesting and serves to explain what is likely to continue to occur for the next 5 to 20 years in terms of the erosion of central governments, he appears unable to speculate as to what form the governing body of a large geographical area would take.

As such, we will speculate for him.  The world is in the process of segregating itself into phyles, or groups of people aligned in terms of ideologies, be they religious or otherwise, independent of geographic location.  These phyles will tend to unite, geographically where possible, but primarily through trade relationships.  Once these trade relationships are established, the increased division of labor will resume within the phyles, giving rise to a true increase in the Monetary premium of items that up until now have not been identified as money.

Bitcoin is one example of what is essentially a pure monetary premium transmitter.  As the nation states continue to crumble, the foundations for new societies united by ideology and/or trade relations are already being laid, and we hope and pray for a peaceful transition onto them for all, as the failed model of the democratic nation state based on mere borders must be laid to rest peacefully for humankind to truly prosper.

Without further ado, Robert D. Kaplan…

Why So Much Anarchy?

By Robert D. Kaplan

Twenty years ago, in February 1994, I published a lengthy cover story in The Atlantic Monthly, “The Coming Anarchy: How Scarcity, Crime, Overpopulation, Tribalism, and Disease are Rapidly Destroying the Social Fabric of Our Planet.” I argued that the combination of resource depletion (like water), demographic youth bulges and the proliferation of shanty towns throughout the developing world would enflame ethnic and sectarian divides, creating the conditions for domestic political breakdown and the transformation of war into increasingly irregular forms — making it often indistinguishable from terrorism. I wrote about the erosion of national borders and the rise of the environment as the principal security issues of the 21st century. I accurately predicted the collapse of certain African states in the late 1990s and the rise of political Islam in Turkey and other places. Islam, I wrote, was a religion ideally suited for the badly urbanized poor who were willing to fight. I also got things wrong, such as the probable intensification of racial divisions in the United States; in fact, such divisions have been impressively ameliorated.

However, what is not in dispute is that significant portions of the earth, rather than follow the dictates of Progress and Rationalism, are simply harder and harder to govern, even as there is insufficient evidence of an emerging and widespread civil society. Civil society in significant swaths of the earth is still the province of a relatively elite few in capital cities — the very people Western journalists feel most comfortable befriending and interviewing, so that the size and influence of such a class is exaggerated by the media.

The anarchy unleashed in the Arab world, in particular, has other roots, though — roots not adequately dealt with in my original article:

The End of Imperialism. That’s right. Imperialism provided much of Africa, Asia and Latin America with security and administrative order. The Europeans divided the planet into a gridwork of entities — both artificial and not — and governed. It may not have been fair, and it may not have been altogether civil, but it provided order. Imperialism, the mainstay of stability for human populations for thousands of years, is now gone.

The End of Post-Colonial Strongmen. Colonialism did not end completely with the departure of European colonialists. It continued for decades in the guise of strong dictators, who had inherited state systems from the colonialists. Because these strongmen often saw themselves as anti-Western freedom fighters, they believed that they now had the moral justification to govern as they pleased. The Europeans had not been democratic in the Middle East, and neither was this new class of rulers. Hafez al Assad, Saddam Hussein, Ali Abdullah Saleh, Moammar Gadhafi and the Nasserite pharaohs in Egypt right up through Hosni Mubarak all belonged to this category, which, like that of the imperialists, has been quickly retreating from the scene (despite a comeback in Egypt).

No Institutions. Here we come to the key element. The post-colonial Arab dictators ran moukhabarat states: states whose order depended on the secret police and the other, related security services. But beyond that, institutional and bureaucratic development was weak and unresponsive to the needs of the population — a population that, because it was increasingly urbanized, required social services and complex infrastructure. (Alas, urban societies are more demanding on central governments than agricultural ones, and the world is rapidly urbanizing.) It is institutions that fill the gap between the ruler at the top and the extended family or tribe at the bottom. Thus, with insufficient institutional development, the chances for either dictatorship or anarchy proliferate. Civil society occupies the middle ground between those extremes, but it cannot prosper without the requisite institutions and bureaucracies.

Feeble Identities. With feeble institutions, such post-colonial states have feeble identities. If the state only means oppression, then its population consists of subjects, not citizens. Subjects of despotisms know only fear, not loyalty. If the state has only fear to offer, then, if the pillars of the dictatorship crumble or are brought low, it is non-state identities that fill the subsequent void. And in a state configured by long-standing legal borders, however artificially drawn they may have been, the triumph of non-state identities can mean anarchy.

Doctrinal Battles. Religion occupies a place in daily life in the Islamic world that the West has not known since the days — a millennium ago — when the West was called “Christendom.” Thus, non-state identity in the 21st-century Middle East generally means religious identity. And because there are variations of belief even within a great world religion like Islam, the rise of religious identity and the consequent decline of state identity means the inflammation of doctrinal disputes, which can take on an irregular, military form. In the early medieval era, the Byzantine Empire — whose whole identity was infused with Christianity — had violent, doctrinal disputes between iconoclasts (those opposed to graven images like icons) and iconodules (those who venerated them). As the Roman Empire collapsed and Christianity rose as a replacement identity, the upshot was not tranquility but violent, doctrinal disputes between Donatists, Monotheletes and other Christian sects and heresies. So, too, in the Muslim world today, as state identities weaken and sectarian and other differences within Islam come to the fore, often violently.

Information Technology. Various forms of electronic communication, often transmitted by smartphones, can empower the crowd against a hated regime, as protesters who do not know each other personally can find each other through Facebook, Twitter, and other social media. But while such technology can help topple governments, it cannot provide a coherent and organized replacement pole of bureaucratic power to maintain political stability afterwards. This is how technology encourages anarchy. The Industrial Age was about bigness: big tanks, aircraft carriers, railway networks and so forth, which magnified the power of big centralized states. But the post-industrial age is about smallness, which can empower small and oppressed groups, allowing them to challenge the state — with anarchy sometimes the result.

Because we are talking here about long-term processes rather than specific events, anarchy in one form or another will be with us for some time, until new political formations arise that provide for the requisite order. And these new political formations need not be necessarily democratic.

When the Soviet Union collapsed, societies in Central and Eastern Europe that had sizable middle classes and reasonable bureaucratic traditions prior to World War II were able to transform themselves into relatively stable democracies. But the Middle East and much of Africa lack such bourgeoisie traditions, and so the fall of strongmen has left a void. West African countries that fell into anarchy in the late 1990s — a few years after my article was published — like Sierra Leone, Liberia and Ivory Coast, still have not really recovered, but are wards of the international community through foreign peacekeeping forces or advisers, even as they struggle to develop a middle class and a manufacturing base. For, the development of efficient and responsive bureaucracies requires literate functionaries, which, in turn, requires a middle class.

The real question marks are Russia and China. The possible weakening of authoritarian rule in those sprawling states may usher in less democracy than chronic instability and ethnic separatism that would dwarf in scale the current instability in the Middle East. Indeed, what follows Vladimir Putin could be worse, not better. The same holds true for a weakening of autocracy in China.

The future of world politics will be about which societies can develop responsive institutions to govern vast geographical space and which cannot. That is the question toward which the present season of anarchy leads.

Why So Much Anarchy? is republished with permission of Stratfor.

Read more: Why So Much Anarchy? | Stratfor

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Planning and Execution of Business Strategy

11/21/2013 Portland, Oregon – Pop in your mints…

The gift of time we have been given here at The Mint has not been wasted.  In a way, it has given us a chance to reevaluate what we are doing and how we can best serve humankind.  Now that we have discovered the key to reversing the effects of climate change without limiting human reproduction or dooming large swaths of land to “conservation,” we wish to encourage others to embrace these ideals and employ them to their benefit.

How can we accomplish this?  By assisting them not only with strategy planning, but execution of said strategy.  It is perhaps a little known fact that there is very little, if any, bad strategy that makes it past any form of group debate (bad strategy is almost always born in a vacuum and dictated).  What tends to go badly is the execution of said strategy.  It is then commonplace to pin the blame of what was really a failure to execute on the only one without a voice and a job to save, the strategy itself.  Voila!  Bad strategy.

Strategy is generally good because it does not just guide action, it demands action.  It may come as a further shock that, while there are a great deal of tasks that are associated under the umbrella of the English word “work,” it is almost at the point that one acquires a job and is remunerated for it when they stop what we call action, or striving forward to improve conditions so that less work must be done to achieve the same or superior results.

Sadly much of the work done today is aimed at maintaining and increasing efforts to justify why the “work” must be done.

Action is progress, work is, well, work.  This is not to say that all work is like this, but it is a nasty tendency that is the byproduct of the insane “debt is money” currency system that we trade and save in, a system that, in just over 40 years of widespread operation, has distorted incentives to the point to where GDP is increased by increasing debt, which by definition is consumption, not “Product.”

But we digress, as we are excited to help you personally and your organization stop working and start progressing.  How can we do this?  Read on…

The Mint Strategy Planning and Execution Services for Individuals and Businesses

The local and national economy is undergoing a large scale reset which will impact nearly every business model.  This is creating both challenges and opportunities that may be a once in a generation event.  Are you an individual, business owner or division head in need of fresh ideas from an outside perspective?  If so, we invite you to have a Mint.

Here at The Mint, we offer both group and one on one strategy sessions for small to mid-sized companies who wish to grab hold of the opportunities that await them as their larger counterparts go the way of the dinosaur.  Initial consultations will generally last one hour and can be done via email, over the phone, or in person if located in the Portland area.

The purpose of the strategy session is to brainstorm with you about your business and the challenges and opportunities you face.  It is often best done outside of one’s normal office environment, as being surrounded by day to day tasks (we call them distractions) often stifles creativity and blinds one to what is occurring outside one’s own four walls.

Battle of Borodino 1812 by Louis Francios, Baron Lejeune
Napoleon at Borodino, poor execution, and plan B was even worse!

While strategy is important, what is even more important is the execution of a strategy.  Strategies, from the battlefield to the boardroom, are well thought out, detailed plans.  Plans that can be utterly useless and counterproductive if there are persistent errors in executing it.

At The Mint, we do not want to see that happen to any of our clients, and our hope is that we will find something practical that we can assist with in aiding you with said execution of your shiny new strategy, such as seeking funding or streamlining processes.

That said, we consider the strategy session to be sacred and confidential, and it will never be reduced to a petty sales pitch.

We are carrying out this exercise chiefly because we want to play a small part, if possible, in invigorating our local and national economy.  We have an international MBA, hold the designation of Certified Treasury Professional, and 18 years of experience in finance and accounting in various industries and would love to hear from you!

If you are interested, please send and email to davidminteconomics@gmail.com with your industry, approximate annual revenues and assets, and the biggest challenge you see on the horizon as well as your preferred method of contact (phone, email, in person) and, of course, a way to contact you.

Let The Mint help you avoid approaching Waterloo or Gettysburg unprepared or, should you find yourself at Borodino, let us help you plan your retreat.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for November 21, 2013

Copper Price per Lb: $3.18
Oil Price per Barrel:  $95.09

Corn Price per Bushel:  $4.23
10 Yr US Treasury Bond:  2.78%
Mt Gox Bitcoin price in US:  $736.79
FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,242

MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.3%
Inflation Rate (CPI):  -0.1%
Dow Jones Industrial Average:  16,010
M1 Monetary Base:  $2,662,000,000,000

M2 Monetary Base:  $10,895,800,000,000

Did Syria call Obama’s Bluff?

Did al Assad call Obama’s bluff or are the Syrian rebels trying to coax foreign intervention to tip the scales in their favor?  Either way, Barrack Obama finds himself in a lose/lose situation, and with Russia and China waiting in the wings, the stakes could not be higher.

What is currently occurring in Syria has serious implications for all of humanity.  As we do with all Geopolitical conflict, we turn to Stratfor for insight beyond the headlines.  What we find in the following report on the situation, written by George Friedman, is indeed disturbing.  Friedman’s report, Obama’s Bluff, is republished here with the permission of Stratfor and is a must read for anyone trying to understand what is at stake.

Obama’s Bluff

Images of multiple dead bodies emerged from Syria last week. It was asserted that poison gas killed the victims, who according to some numbered in the hundreds. Others claimed the photos were faked while others said the rebels were at fault. The dominant view, however, maintains that the al Assad regime carried out the attack.

The United States has so far avoided involvement in Syria’s civil war. This is not to say Washington has any love for the al Assad regime. Damascus’ close ties to Iran and Russia give the United States reason to be hostile toward Syria, and Washington participated in the campaign to force Syrian troops out of Lebanon. Still, the United States has learned to be concerned not just with unfriendly regimes, but also with what could follow such regimes. Afghanistan, Iraq and Libya have driven home the principle that deposing one regime means living with an imperfect successor. In those cases, changing the regime wound up rapidly entangling the United States in civil wars, the outcomes of which have not been worth the price. In the case of Syria, the insurgents are Sunni Muslims whose best-organized factions have ties to al Qaeda.

Still, as frequently happens, many in the United States and Europe are appalled at the horrors of the civil war, some of whom have called on the United States to do something. The United States has been reluctant to heed these calls. As mentioned, Washington does not have a direct interest in the outcome, since all possible outcomes are bad from its perspective. Moreover, the people who are most emphatic that something be done to stop the killings will be the first to condemn the United States when its starts killing people to stop the killings. People would die in any such intervention, since there are simply no clean ways to end a civil war.

Obama’s Red Lines

U.S. President Barack Obama therefore adopted an extremely cautious strategy. He said that the United States would not get directly involved in Syria unless the al Assad regime used chemical weapons, stating with a high degree of confidence that he would not have to intervene. After all, Syrian President Bashar al Assad has now survived two years of civil war, and he is far from defeated. The one thing that could defeat him is foreign intervention, particularly by the United States. It was therefore assumed he wouldn’t do the one thing Obama said would trigger U.S. action.

Al Assad is a ruthless man: He would not hesitate to use chemical weapons if he had to. He is also a very rational man: He would use chemical weapons only if that were his sole option. At the moment, it is difficult to see what desperate situation would have caused him to use chemical weapons and risk the worst. His opponents are equally ruthless, and we can imagine them using chemical weapons to force the United States to intervene and depose al Assad. But their ability to access chemical weapons is unclear, and if found out, the maneuver could cost them all Western support. It is possible that lower-ranking officers in al Assad’s military used chemical weapons without his knowledge and perhaps against his wishes. It is possible that the casualties were far less than claimed. And it is possible that some of the pictures were faked.

All of these things are possible, but we simply don’t know which is true. More important is that major governments, including the British and French, are claiming knowledge that al Assad carried out the attack. U.S. Secretary of State John Kerry made a speech Aug. 26 clearly building the case for a military response, and referring to the regime attack as “undeniable” and the U.S. assessment so far as “grounded in facts.” Al Assad meanwhile has agreed to allow U.N. inspectors to examine the evidence onsite. In the end, those who oppose al Assad will claim his supporters concealed his guilt, and the insurgents will say the same thing if they are blamed or if the inspectors determine there is no conclusive evidence of attacks.

The truth here has been politicized, and whoever claims to have found the truth, whatever it actually is, will be charged with lying. Nevertheless, the dominant emerging story is that al Assad carried out the attack, killing hundreds of men, women and children and crossing the red line Obama set with impunity. The U.S. president is backed into a corner.

The United States has chosen to take the matter to the United Nations. Obama will make an effort to show he is acting with U.N. support. But he knows he won’t get U.N. support. The Russians, allies of al Assad and opponents of U.N.-based military interventions, will veto any proposed intervention. The Chinese — who are not close to al Assad, but also oppose the U.N.-sanctioned interventions — will probably join them. Regardless of whether the charges against al Assad are true, the Russians will dispute them and veto any action. Going to the United Nations therefore only buys time. Interestingly, the United States declared on Sunday that it is too late for Syria to authorize inspections. Dismissing that possibility makes the United States look tough, and actually creates a situation where it has to be tough.

Consequences in Syria and Beyond

This is no longer simply about Syria. The United States has stated a condition that commits it to an intervention. If it does not act when there is a clear violation of the condition, Obama increases the chance of war with other countries like North Korea and Iran. One of the tools the United States can use to shape the behavior of countries like these without going to war is stating conditions that will cause intervention, allowing the other side to avoid crossing the line. If these countries come to believe that the United States is actually bluffing, then the possibility of miscalculation soars. Washington could issue a red line whose violation it could not tolerate, like a North Korean nuclear-armed missile, but the other side could decide this was just another Syria and cross that line. Washington would have to attack, an attack that might not have been necessary had it not had its Syria bluff called.

There are also the Russian and Iranian questions. Both have invested a great deal in supporting al Assad. They might both retaliate were someone to attack the Syrian regime. There are already rumors in Beirut that Iran has told Hezbollah to begin taking Americans hostage if the United States attacks Syria. Russia meanwhile has shown in the Snowden affair what Obama clearly regards as a hostile intent. If he strikes, he thus must prepare for Russian counters. If he doesn’t strike, he must assume the Russians and Iranians will read this as weakness.

Syria was not an issue that affected the U.S. national interest until Obama declared a red line. It escalated in importance at that point not because Syria is critical to the United States, but because the credibility of its stated limits are of vital importance. Obama’s problem is that the majority of the American people oppose military intervention, Congress is not fully behind an intervention and those now rooting the United States on are not bearing the bulk of the military burden — nor will they bear the criticism that will follow the inevitable civilian casualties, accidents and misdeeds that are part of war regardless of the purity of the intent.

The question therefore becomes what the United States and the new coalition of the willing will do if the red line has been crossed. The fantasy is that a series of airstrikes, destroying only chemical weapons, will be so perfectly executed that no one will be killed except those who deserve to die. But it is hard to distinguish a man’s soul from 10,000 feet. There will be deaths, and the United States will be blamed for them.

The military dimension is hard to define because the mission is unclear. Logically, the goal should be the destruction of the chemical weapons and their deployment systems. This is reasonable, but the problem is determining the locations where all of the chemicals are stored. I would assume that most are underground, which poses a huge intelligence problem. If we assume that perfect intelligence is available and that decision-makers trust this intelligence, hitting buried targets is quite difficult. There is talk of a clean cruise missile strike. But it is not clear whether these carry enough explosives to penetrate even minimally hardened targets. Aircraft carry more substantial munitions, and it is possible for strategic bombers to stand off and strike the targets.

Even so, battle damage assessments are hard. How do you know that you have destroyed the chemicals — that they were actually there and you destroyed the facility containing them? Moreover, there are lots of facilities and many will be close to civilian targets and many munitions will go astray. The attacks could prove deadlier than the chemicals did. And finally, attacking means al Assad loses all incentive to hold back on using chemical weapons. If he is paying the price of using them, he may as well use them. The gloves will come off on both sides as al Assad seeks to use his chemical weapons before they are destroyed.

A war on chemical weapons has a built-in insanity to it. The problem is not chemical weapons, which probably can’t be eradicated from the air. The problem under the definition of this war would be the existence of a regime that uses chemical weapons. It is hard to imagine how an attack on chemical weapons can avoid an attack on the regime — and regimes are not destroyed from the air. Doing so requires troops. Moreover, regimes that are destroyed must be replaced, and one cannot assume that the regime that succeeds al Assad will be grateful to those who deposed him. One must only recall the Shia in Iraq who celebrated Saddam’s fall and then armed to fight the Americans.

Arming the insurgents would keep an air campaign off the table, and so appears to be lower risk. The problem is that Obama has already said he would arm the rebels, so announcing this as his response would still allow al Assad to avoid the consequences of crossing the red line. Arming the rebels also increases the chances of empowering the jihadists in Syria.

When Obama proclaimed his red line on Syria and chemical weapons, he assumed the issue would not come up. He made a gesture to those in his administration who believe that the United States has a moral obligation to put an end to brutality. He also made a gesture to those who don’t want to go to war again. It was one of those smart moves that can blow up in a president’s face when it turns out his assumption was wrong. Whether al Assad did launch the attacks, whether the insurgents did, or whether someone faked them doesn’t matter. Unless Obama can get overwhelming, indisputable proof that al Assad did not — and that isn’t going to happen — Obama will either have to act on the red line principle or be shown to be one who bluffs. The incredible complexity of intervening in a civil war without becoming bogged down makes the process even more baffling.

Obama now faces the second time in his presidency when war was an option. The first was Libya. The tyrant is now dead, and what followed is not pretty. And Libya was easy compared to Syria. Now, the president must intervene to maintain his credibility. But there is no political support in the United States for intervention. He must take military action, but not one that would cause the United States to appear brutish. He must depose al Assad, but not replace him with his opponents. He never thought al Assad would be so reckless. Despite whether al Assad actually was, the consensus is that he was. That’s the hand the president has to play, so it’s hard to see how he avoids military action and retains credibility. It is also hard to see how he takes military action without a political revolt against him if it goes wrong, which it usually does.

You can read more updates on what is unfolding in Syria by following Stratfor at the links below:

Read more: Obama’s Bluff | Stratfor
Follow us: @stratfor on Twitter | Stratfor on Facebook

The Snowden Revelations: Keeping the NSA in Perspective via Stratfor

While the world continues to watch and wait for Eric Snowden’s next move, we have watched with bewilderment from afar.  We has baffled us is how Mr. Snowden’s revelations about the NSA’s programs qualify as shocking.

To anyone who has stopped to ponder the phenomenon of the Internet, it should have been abundantly clear long ago that the structure of Internet itself is, among other things, a giant information gathering tool.  To assume that those in power would not make use of this tool towards their ends is to deny the power of self interest.

However, while programs such as PRISM and many others which surely exist are disturbing, they are not without precedent in the American Imperial experience.  In many respects, the Internet, while greatly facilitating the gathering of information, has likely served to make the mission of the NSA with respect to evaluating such data infinitely more difficult.

The following essay, Keeping the NSA in Perspective by George Friedman, is republished here with permission of Stratfor.

As always, Mr. Friedman does a fine job of providing the historical context for the current NSA/Snowden fiasco as well as presenting both the operational and constitutional difficulties not only of surveillance programs such as PRISM, but also of waging a war with such vague objectives as the current War on Terror seems to have.

Without further ado, Mr. Friedman…

By George Friedman

In June 1942, the bulk of the Japanese fleet sailed to seize the Island of Midway. Had Midway fallen, Pearl Harbor would have been at risk and U.S. submarines, unable to refuel at Midway, would have been much less effective. Most of all, the Japanese wanted to surprise the Americans and draw them into a naval battle they couldn’t win.

The Japanese fleet was vast. The Americans had two carriers intact in addition to one that was badly damaged. The United States had only one advantage: It had broken Japan’s naval code and thus knew a great deal of the country’s battle plan. In large part because of this cryptologic advantage, a handful of American ships devastated the Japanese fleet and changed the balance of power in the Pacific permanently.

This — and the advantage given to the allies by penetrating German codes — taught the Americans about the centrality of communications code breaking. It is reasonable to argue that World War II would have ended much less satisfactorily for the United States had its military not broken German and Japanese codes. Where the Americans had previously been guided to a great extent by Henry Stimson’s famous principle that “gentlemen do not read each other’s mail,” by the end of World War II they were obsessed with stealing and reading all relevant communications.

The National Security Agency evolved out of various post-war organizations charged with this task. In 1951, all of these disparate efforts were organized under the NSA to capture and decrypt communications of other governments around the world — particularly those of the Soviet Union, which was ruled by Josef Stalin, and of China, which the United States was fighting in 1951. How far the NSA could go in pursuing this was governed only by the extent to which such communications were electronic and the extent to which the NSA could intercept and decrypt them.

The amount of communications other countries sent electronically surged after World War II yet represented only a fraction of their communications. Resources were limited, and given that the primary threat to the United States was posed by nation-states, the NSA focused on state communications. But the principle on which the NSA was founded has remained, and as the world has come to rely more heavily on electronic and digital communication, the scope of the NSA’s commission has expanded.

What drove all of this was Pearl Harbor. The United States knew that the Japanese were going to attack. They did not know where or when. The result was disaster. All American strategic thinking during the Cold War was built around Pearl Harbor — the deep fear that the Soviets would launch a first strike that the United States did not know about. The fear of an unforeseen nuclear attack gave the NSA leave to be as aggressive as possible in penetrating not only Soviet codes but also the codes of other nations. You don’t know what you don’t know, and given the stakes, the United States became obsessed with knowing everything it possibly could.

In order to collect data about nuclear attacks, you must also collect vast amounts of data that have nothing to do with nuclear attacks. The Cold War with the Soviet Union had to do with more than just nuclear exchanges, and the information on what the Soviets were doing — what governments they had penetrated, who was working for them — was a global issue. But you couldn’t judge what was important and what was unimportant until after you read it. Thus the mechanics of assuaging fears about a “nuclear Pearl Harbor” rapidly devolved into a global collection system, whereby vast amounts of information were collected regardless of their pertinence to the Cold War.

There was nothing that was not potentially important, and a highly focused collection strategy could miss vital things. So the focus grew, the technology advanced and the penetration of private communications logically followed. This was not confined to the United States. The Soviet Union, China, the United Kingdom, France, Israel, India and any country with foreign policy interests spent a great deal on collecting electronic information. Much of what was collected on all sides was not read because far more was collected than could possibly be absorbed by the staff. Still, it was collected. It became a vast intrusion mitigated only by inherent inefficiency or the strength of the target’s encryption.

Justified Fear

The Pearl Harbor dread declined with the end of the Cold War — until Sept. 11, 2001. In order to understand 9/11’s impact, a clear memory of our own fears must be recalled. As individuals, Americans were stunned by 9/11 not only because of its size and daring but also because it was unexpected. Terrorist attacks were not uncommon, but this one raised another question: What comes next? Unlike Timothy McVeigh, it appeared that al Qaeda was capable of other, perhaps greater acts of terrorism. Fear gripped the land. It was a justified fear, and while it resonated across the world, it struck the United States particularly hard.

Part of the fear was that U.S. intelligence had failed again to predict the attack.  The public did not know what would come next, nor did it believe that U.S. intelligence had any idea. A federal commission on 9/11 was created to study the defense failure. It charged that the president had ignored warnings. The focus in those days was on intelligence failure. The CIA admitted it lacked the human sources inside al Qaeda. By default the only way to track al Qaeda was via their communications. It was to be the NSA’s job.

As we have written, al Qaeda was a global, sparse and dispersed network. It appeared to be tied together by burying itself in a vast new communications network: the Internet. At one point, al Qaeda had communicated by embedding messages in pictures transmitted via the Internet. They appeared to be using free and anonymous Hotmail accounts. To find Japanese communications, you looked in the electronic ether. To find al Qaeda’s message, you looked on the Internet.

But with a global, sparse and dispersed network you are looking for at most a few hundred men in the midst of billions of people, and a few dozen messages among hundreds of billions. And given the architecture of the Internet, the messages did not have to originate where the sender was located or be read where the reader was located. It was like looking for a needle in a haystack. The needle can be found only if you are willing to sift the entire haystack. That led to PRISM and other NSA programs.

The mission was to stop any further al Qaeda attacks. The means was to break into their communications and read their plans and orders. To find their plans and orders, it was necessary to examine all communications. The anonymity of the Internet and the uncertainties built into its system meant that any message could be one of a tiny handful of messages. Nothing could be ruled out. Everything was suspect. This was reality, not paranoia.

It also meant that the NSA could not exclude the communications of American citizens because some al Qaeda members were citizens. This was an attack on the civil rights of Americans, but it was not an unprecedented attack. During World War II, the United States imposed postal censorship on military personnel, and the FBI intercepted selected letters sent in the United States and from overseas. The government created a system of voluntary media censorship that was less than voluntary in many ways. Most famously, the United States abrogated the civil rights of citizens of Japanese origin by seizing property and transporting them to other locations. Members of pro-German organizations were harassed and arrested even prior to Pearl Harbor. Decades earlier, Abraham Lincoln suspended the writ of habeas corpus during the Civil War, effectively allowing the arrest and isolation of citizens without due process.

There are two major differences between the war on terror and the aforementioned wars. First, there was a declaration of war in World War II. Second, there is a provision in the Constitution that allows the president to suspend habeas corpus in the event of a rebellion. The declaration of war imbues the president with certain powers as commander in chief — as does rebellion. Neither of these conditions was put in place to justify NSA programs such as PRISM.

Moreover, partly because of the constitutional basis of the actions and partly because of the nature of the conflicts, World War II and the Civil War had a clear end, a point at which civil rights had to be restored or a process had to be created for their restoration. No such terminal point exists for the war on terror. As was witnessed at the Boston Marathon — and in many instances over the past several centuries — the ease with which improvised explosive devices can be assembled makes it possible for simple terrorist acts to be carried out cheaply and effectively. Some plots might be detectable by intercepting all communications, but obviously the Boston Marathon attack could not be predicted.

The problem with the war on terror is that it has no criteria of success that is potentially obtainable. It defines no level of terrorism that is tolerable but has as its goal the elimination of all terrorism, not just from Islamic sources but from all sources. That is simply never going to happen and therefore, PRISM and its attendant programs will never end. These intrusions, unlike all prior ones, have set a condition for success that is unattainable, and therefore the suspension of civil rights is permanent. Without a constitutional amendment, formal declaration of war or declaration of a state of emergency, the executive branch has overridden fundamental limits on its powers and protections for citizens.

Since World War II, the constitutional requirements for waging war have fallen by the wayside. President Harry S. Truman used a U.N resolution to justify the Korean War. President Lyndon Johnson justified an extended large-scale war with the Gulf of Tonkin Resolution, equating it to a declaration of war. The conceptual chaos of the war on terror left out any declaration, and it also included North Korea in the axis of evil the United States was fighting against. Former NSA contractor Edward Snowden is charged with aiding an enemy that has never been legally designated. Anyone who might contemplate terrorism is therefore an enemy. The enemy in this case was clear. It was the organization of al Qaeda but since that was not a rigid nation but an evolving group, the definition spread well beyond them to include any person contemplating an infinite number of actions. After all, how do you define terrorism, and how do you distinguish it from crime?

Three thousand people died in the 9/11 attacks, and we know that al Qaeda wished to kill more because it has said that it intended to do so. Al Qaeda and other jihadist movements — and indeed those unaffiliated with Islamic movements — pose threats. Some of their members are American citizens, others are citizens of foreign nations. Preventing these attacks, rather than prosecuting in the aftermath, is important. I do not know enough about PRISM to even try to guess how useful it is.

At the same time, the threat that PRISM is fighting must be kept in perspective. Some terrorist threats are dangerous, but you simply cannot stop every nut who wants to pop off a pipe bomb for a political cause. So the critical question is whether the danger posed by terrorism is sufficient to justify indifference to the spirit of the Constitution, despite the current state of the law. If it is, then formally declare war or declare a state of emergency. The danger of PRISM and other programs is that the decision to build it was not made after the Congress and the president were required to make a clear finding on war and peace. That was the point where they undermined the Constitution, and the American public is responsible for allowing them to do so.

Defensible Origins, Dangerous Futures

The emergence of programs such as PRISM was not the result of despots seeking to control the world. It had a much more clear, logical and defensible origin in our experiences of war and in legitimate fears of real dangers. The NSA was charged with stopping terrorism, and it devised a plan that was not nearly as secret as some claim. Obviously it was not as effective as hoped, or the Boston Marathon attack wouldn’t have happened. If the program was meant to suppress dissent it has certainly failed, as the polls and the media of the past weeks show.

The revelations about PRISM are far from new or interesting in themselves. The NSA was created with a charter to do these things, and given the state of technology it was inevitable that the NSA would be capturing communications around the world. Many leaks prior to Snowden’s showed that the NSA was doing this. It would have been more newsworthy if the leak revealed the NSA had not been capturing all communications. But this does give us an opportunity to consider what has happened and to consider whether it is tolerable.

The threat posed by PRISM and other programs is not what has been done with them but rather what could happen if they are permitted to survive. But this is not simply about the United States ending this program. The United States certainly is not the only country with such a program. But a reasonable start is for the country that claims to be most dedicated to its Constitution to adhere to it meticulously above and beyond the narrowest interpretation. This is not a path without danger. As Benjamin Franklin said, “They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.”

U.S. Naval Update Map: June 6, 2013 | Stratfor

The private intelligence firm Stratfor publishes a weekly report on the positioning of US Naval assets using non-classified, open source information available to the public.  While this week’s report does not appear to contain any surprises, they can provide valuable insight into the movements of the primary means by which the United States projects its military power across the globe.

The complete report and graphic are republished here with permission of Stratfor:

U.S. Naval Update Map: June 6, 2013

U.S. Naval Update Map: June 6, 2013
U.S. Naval Update Map: June 6, 2013 is republished with permission of Stratfor

The Naval Update Map shows the approximate current locations of U.S. Carrier Strike Groups and Amphibious Ready Groups, based on available open-source information. No classified or operationally sensitive information is included in this weekly update. CSGs and ARGs are the keys to U.S. dominance of the world’s oceans. A CSG is centered on an aircraft carrier, which projects U.S. naval and air power and supports a Carrier Air Wing, or CVW. The CSG includes significant offensive strike capability. An ARG is centered on three amphibious warfare ships, with a Marine Expeditionary Unit embarked. An MEU is built around a heavily reinforced and mobile battalion of Marines.

Carrier Strike Groups

  • The USS Dwight D. Eisenhower CSG with CVW 7 embarked is conducting missions supporting Operation Enduring Freedom, maritime security operations and theater security cooperation efforts in the U.S. 5th Fleet AOR.
  • The USS Nimitz CSG with CVW 11 embarked is conducting maritime security operations and theater security cooperation efforts in the U.S. 7th Fleet AOR.
  • The USS Carl Vinson is underway in the Pacific Ocean for routine training.
  • The USS Harry S. Truman CSG with CVW 3 embarked is conducting a sustainment exercise in the Atlantic Ocean in preparation for an upcoming deployment.

Amphibious Ready Groups/Marine Expeditionary Units

  • The USS Kearsarge ARG with the 26th MEU embarked is underway in the U.S. 5th Fleet AOR supporting maritime security operations and conducting theater security cooperation efforts.
  • The USS Wasp is underway in the Atlantic Ocean for routine training.

U.S. Naval Update Map: June 6, 2013 is republished with permission of Stratfor

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Twitter: @stratfor on Twitter

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Egypt and the Strategic Balance via Stratfor

More insight into what is happening in Egypt and what it means for the balance of power in the Middle East. Will the Egyptian military intervene? Enjoy another insightful report by Stratfor on the events unfolding now and what it all means:

Egypt and the Strategic Balance via Stratfor

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What is a Virtual CFO?

12/3/2012 Portland, Oregon – Pop in your mints…

What is a Virtual CFO?  At The Mint, we like to sum it up in the words of one of John Travolta’s greatest characters, Chili Palmer from the classic Get Shorty:

Bo Catlett: Harry called you his associate.  What exactly does that mean? I mean, I never heard your name, or read it in Variety, or The Star, or anyplace.

Chili Palmer: It’s what he said, I’m his associate.

Bo Catlett: You must bring something heavy to the deal.

Chili Palmer: I do: me.”

To help readers to fully grasp this captivating analogy, we have prepared the following legend to accompany the above movie quote:

Harry:  You, our client

Bo Catlett – Any banker, vendor, potential investor, potential partner, government regulator, tax collector, client, CPA, attorney, or loan shark.

Chili Palmer:  The Mint (us) as your Virtual CFO.

Associate:  The Virtual CFO.

If you need a CFO, but don’t want or need to pay one full time, we’re here to help.

As your Virtual CFO, we take care of your high level number problems, plain and simple.  As an entrepreneur, you know your business like the back of your hand, and you can tell by feel when things are going well, and when they are not.

However, there comes a time when every Entrepreneur begins to panic.  They understand that they have generated a flurry of activity in which money changes hands.  They may even have a vague understanding of which of their actions are profitable and which ones cost them money, on net, to perform.

The entrepreneur is also painfully aware that their time is limited.  In order to take their vision to the next level, they need to know, with absolute certainty, that what they are doing is scalable, meaning that it will continue to be profitable as it expands.

What many entrepreneurs do at this point, in the midst of this all to common panic attack, is to engage a CPA to help with their company’s financial management.  The CPA, in turn, begins to bill on the order of $150 per hour as the entrepreneur passes along problems to the CPA that most well trained bookkeepers can handle, or worse, the entrepreneur begins to spend their priceless time mired in the details of the accounting of their organization.  Again, a task generally best left to the well-trained bookkeeper.

As the CPA fees begin to mount, the entrepreneur then relents and decides that they need a CFO.  They are not certain why, but they believe that this magical individual can help to reassure them that the numbers are working in their favor as well as eliminate their CPA bill.

What the unhappy entrepreneur finds, once the CFO is hired, is that not only has their CPA bill not gone away, but they now have a staff person who, all in, represents between $100,000 to $200,000 USD of direct annual costs and any number of indirect costs as they begin to hire their friends, recommend large investments in accounting software, and create incessant demands on the already overworked and underpaid, above mentioned, well-trained book keeper, the non-key position that it seems always needs to be filled by an expensive recruiting agency by someone who sees it as a stepping stone to their next gig.

As a result, the unhappy entrepreneur is left rolling the dice with the integrity of their financial data and often must resort to hiring an expensive consultant to piece together the rubble of his or her precious financial data, from which they had hoped, before the nightmare of the full time CFO began, to glean useful information from by which to guide their entrepreneurial activities.

There must be a better way.

Enter The Mint’s Virtual CFO service, where we offer all of the benefits of having a CFO, without the high direct and indirect costs, which are often associated with the creation of a position that all too often morphs into a sinecure.

Our value proposition is simple:  For $1,000 each month that you engage our services, you and your company receive 10 ours of our undivided attention, with no strings or golden parachutes attached.

What will we do for you in those 10 hours each month?  Depending upon your needs, we will take the financial statements produced by your happy, well-trained bookkeeper on a monthly basis and perform one or all of the following:

– Create a detailed ratio analysis in the form of a dashboard containing ratios and other financial metrics specifically tailored to gauge your company’s financial health and forward looking prospects.

– Benchmark your dashboard data against that of your competitors to the extent possible.

– Participate in on-going Strategic Planning.

– Make specific recommendations for improving profitability.

– Perform risk assessments for proposed transactions.

– Perform information systems assessments and oversight for finance, operations, and administrative systems.

– Provide a framework for and assistance in the enterprise budgeting process and create related forecasting activities.

– Create projections of results, cash flow and cash positioning.

– Assess organizational structure and create recommendations for optimization.

– Assess our company’s capital structure and make recommendations for optimization.

– Perform business valuations and financial due diligence for potential acquisitions.

– Review of contracts.

– Create requests for proposals to engage banking, credit, audit, tax, accounting software, payroll software, and treasury management services to ensure you get the best value and a product that works for your company when engaging these services.

– Act as a true, independent advisor.

– Much more.

In short, as an Entrepreneur, we’ve got your back so that you can do what you do best.

What we don’t do:

– Sign contracts on your behalf or act as a direct agent for your company (unless you explicitly request us to and then, only under parameters which you set and are comfortable with.)

– Day to day accounting entry, accounts payable, bank reconciliations, and data entry.  This is what you pay your well-trained, happy bookkeeping staff to do at a fraction of the hourly cost of our services.

– Tell you how to run your business.  You are still the boss and the one with the most skin in the game, after all!

– Take an equity stake in your company in exchange for services.  We work on a fee basis, which helps us to better help you with the objectivity required to act in your best interests.  Granting equity stakes, while ultimately being an incredibly expensive way to finance expansion, often comes with the nasty side effect of unnecessary hard feelings and, or, the destruction of your precious enterprise.  Tempting as it may be to be to get in on the ground of the next IBM, we generally advise against granting equity stakes unless it is part of a well structured and documented equity financing plan which is crystal clear to all involved.

What if I require more than 10 hours of your time?

We generally work very efficiently and strive to over deliver to every client.  At a minimum, you will receive a financial dashboard, benchmarking and ratio analysis, and a brief state of the financial union memo with recommendations and relevant forecasts.

However, if you are contemplating a large acquisition, negotiating a merger, senior debt sale, bond issuance, or restructuring existing debt, converting a software system, etc, we will do whatever humanly possible with whatever time remains.  Anything over the allotted 10 hours we bill out at $150 per hour.

We are efficiency freaks, which is good when it comes to numbers and finance, and many production processes (save wine, cheese, and the like).  With the proper data, equipment, and communications devices, we can generally accomplish in 10 hours what many CFOs accomplish in a month.

Finally, if you need us to bring something heavy to the deal, we will help you to make sure that the deal is valuable enough to you that our $150/hr fee will be a pittance compared to what is gained by our involvement.

 

What industries do we serve?

Over the course of our professional career, we have had the good fortune to gain a wide variety of experience in the areas of Accounting, Finance, Information Systems, business valuation, Auditing, and Tax matters for a wide variety of companies, both for profit and non profit, in industries as varied as translation and writing to Health Services, Real Estate Development, Property Management, Social services, and packaging.  We have even done a stint in the barricade business.

Intrigued?  Contact us today for a free consultation to see if your company would be a good fit for our services.  Our joy is in your success.

After all, $1,000 a month is a small price to pay for piece of mind as your business grows.  It looks even better when you run the numbers on hiring a full time CFO.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for December 3 2012

Copper Price per Lb: $3.63
Oil Price per Barrel:  $88.92
Corn Price per Bushel:  $7.49
10 Yr US Treasury Bond:  1.63%
FED Target Rate:  0.16%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,719 THE GOLD RUSH IS ON!
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  7.9%
Inflation Rate (CPI):  0.1%
Dow Jones Industrial Average:  12,966
M1 Monetary Base:  $2,377,300,000,000 LOTS OF DOUGH ON THE STREET!
M2 Monetary Base:  $10,302,300,000,000