Covid risk factors and the collateral damage from NPI

Some of you might know of the directives of the Mayor of the New York City on the closure of public schools. Then, the Governor of the NY State said that those Sheriffs who did not follow his dictatorial directives were dictators themselves! He even wanted an extra approval process for the administration of Covid vaccines (over and above FDA approval) in New York State. Quite what he has in mind for his state is hard to guess.

That said, re-opening schools, despite the overwhelming scientific evidence that children are quite safe, it is the teachers who are not yet ready to come to the schools. See this story in WSJ. It makes for sad reading. Partly, it is due to the fear & hysteria that the American media has built up. See below.

On the collateral damage of the panic and fright, Blue Cross reports on missed vaccinations for children. Via James Freeman in WSJ:

Millions of children have missed routine vaccinations this year, causing a precipitous drop in immunizations that threatens to leave communities throughout the U.S. at risk of losing protection against highly contagious diseases, including measles, whooping cough and polio…

As the COVID-19 pandemic prompted Americans to postpone or avoid receiving routine medical care, children are on track to miss an estimated 9 million vaccination doses in 2020, a decrease of up to 26% in childhood vaccination doses compared to 2019…

“The U.S. is on the precipice of a severe immunization crisis among children,” said Dr. Vincent Nelson, chief medical officer at BCBSA… According to the new BCBSA data, 40% of parents and legal guardians say their children missed vaccinations due to the pandemic. [Link]

Then, there is the NBER paper on how the media created a huge scare. Its effects are going to be felt for a few more years:

We analyze the tone of COVID-19 related English-language news articles written since January 1, 2020. Ninety one percent of stories by U.S. major media outlets are negative in tone versus fifty four percent for non-U.S. major sources and sixty five percent for scientific journals.

The negativity of the U.S. major media is notable even in areas with positive scientific developments including school re-openings and vaccine trials.

Media negativity is unresponsive to changing trends in new COVID-19 cases or the political leanings of the audience.

U.S. major media readers strongly prefer negative stories about COVID-19, and negative stories in general.

Stories of increasing COVID-19 cases outnumber stories of decreasing cases by a factor of 5.5 even during periods when new cases are declining.

Among U.S. major media outlets, stories discussing President Donald Trump and hydroxychloroquine are more numerous than all stories combined that cover companies and individual researchers working on COVID-19 vaccines. [Link]

You can download the paper from the above link. All emphases mine. It is not hard to guess the motives of the mainstream media here.

In spite of this paper being covered by WSJ, WSJ could not resist giving a major play to a largely speculative study at this stage. It really serves no public purpose other than to frighten and make people nervous.

Similarly, there was a report about how Sweden’s herd immunity strategy had gone to pieces. But when I checked the data at, the numbers did not back up the extravagant claims made in the article. At least, not yet.

Dr. Kulvinder Kaur is a doctor practising in Canada. I don’t know her personally. I stumbled upon her twitter handle through other twitter handles I track.

She has tweeted on the first peer-reviewed study linking obesity to covid-related morbidity:

First peer-reviewed meta-analysis capturing 399,461 Covid-19 pts globally found: people with obesity contracting SARSCoV2 were 113% more likely to be hospitalized than ppl of healthy weight, 74% more likely to be admitted to ICU & 48% more likely to die. [Link]

The study itself is here and the abstract extract:

Pooled analysis show individuals with obesity were more at risk for COVID‐19 positive, >46.0% higher (OR = 1.46; 95% CI, 1.30–1.65; p < 0.0001); for hospitalization, 113% higher (OR = 2.13; 95% CI, 1.74–2.60; p < 0.0001); for ICU admission, 74% higher (OR = 1.74; 95% CI, 1.46–2.08); and for mortality, 48% increase in deaths (OR = 1.48; 95% CI, 1.22–1.80; p < 0.001).

Mechanistic pathways for individuals with obesity are presented in depth for factors linked with COVID‐19 risk, severity and their potential for diminished therapeutic and prophylactic treatments among these individuals. Individuals with obesity are linked with large significant increases in morbidity and mortality from COVID‐19.

There are many mechanisms that jointly explain this impact. A major concern is that vaccines will be less effective for the individuals with obesity.

She has also tweeted on another peer-reviewed study:

French peer-reviewed study of 160 countries: no association between stringency of govt lockdowns/restrictions & Covid-19 mortality “Inherent factors predetermined mortality: improve prevention strategies by increasing population resilience—better physical fitness & immunity. [Link]

From the abstract of the paper:

Context: The human development territories have been severely constrained under the Covid-19 pandemic. A common dynamics has been observed, but its propagation has not been homogeneous over each continent. We aimed at characterizing the non-viral parameters that were most associated with death rate.

Methods: We tested major indices from five domains (demography, public health, economy, politics, environment) and their potential associations with Covid-19 mortality during the first 8 months of 2020, through a Principal Component Analysis and a correlation matrix with a Pearson correlation test. Data of all countries, or states in federal countries, showing at least 10 fatality cases, were retrieved from official public sites. For countries that have not yet finished the first epidemic phase, a prospective model has been computed to provide options of death rates evolution.

Results: Higher Covid death rates are observed in the [25/65°] latitude and in the [−35/−125°] longitude ranges. The national criteria most associated with death rate are life expectancy and its slowdown, public health context (metabolic and non-communicable diseases (NCD) burden vs. infectious diseases prevalence), economy (growth national product, financial support), and environment (temperature, ultra-violet index). Stringency of the measures settled to fight pandemia, including lockdown, did not appear to be linked with death rate.

Conclusion: Countries that already experienced a stagnation or regression of life expectancy, with high income and NCD rates, had the highest price to pay. This burden was not alleviated by more stringent public decisions. Inherent factors have predetermined the Covid-19 mortality: understanding them may improve prevention strategies by increasing population resilience through better physical fitness and immunity. [Link]

Lockdown policies adversely affect obesity levels and immunity levels and make the public more and not less vulnerable to the virus.

That is why it is important and good that the Indian government has ruled against any local lockdowns by states.

Finally, I am more than half way through ‘The Price of Panic’ published in July this year. From that book, I learnt that the World Health Organisation itself had published guidelines in October 2019 on dealing with epidemic and pandemic influenza. The report is titled, ‘Non-pharmaceutical public health measures for mitigating the risk and impact of epidemic and pandemic influenza.’ It is available here.

The conclusions appear very similar to the ones reached by the Center for Health Security at the Johns Hopkins University in their report published a month earlier in September 2019. I had blogged on it here. A reader rather helpfully commented on that blog post and called the authors (doctors and scientists) ‘mediocre’!

The authors of ‘The price of panic’ ask the right question:

Why didn’t this bombshell of a report make headlines around the world? It came out just a few months before the coronavirus panic. It was sober and thorough, containing references to over 240 scientific papers and other works.

But few people wanted calm reasoning when the panic set in. Once the pandemic escalated from a medical thing to a political and social thing, the report seemed dull. Instead, WHO, the CDC,10 and everyone else urged us to be the guinea pigs in a multi-trillion-dollar social experiment that had never been run before, and with precious little evidence in its favor.

My personal view is that the authors do have their educated guesses but did not want to go down that path, for some reason.

First of all, it is rather odd that the Center for Biosecurity at JHU and the WHO should both discuss the merits and demerits of non-pharmaceutical interventions in September and October 2019 respectively and publish their reports, barely a month or two before the virus started circulating in China. I am discounting (nay, dismissing) recent stories that the virus was circulating in Italy well before that. That seems rather fishy to me.

Then, after the pandemic is declared, they proceed to disregard their own recommendations. The authors of ‘The Price of Panic’ attribute it to panic and do not ask further questions. That is rather lame.

USD Index and Gold – strange correlations

It struck me that in the last few weeks, USD and Gold have moved in tandem – lower. That is rare. It has now happened last Fall and now. I decided to examine a simple correlation coefficient. It is indeed true. Using the FRED database, I downloaded the USD Board Effective Exchange Rate and spot gold price (London afternoon fixing). It was daily data. I reduced them to weekly frequency (Friday prices).

In the last four months of 2019, the USD index and Gold spot price correlation coefficient was 0.20. Not big. Then, funnily, between January and February 2020, the dollar strengthened marginally and gold strengthened too. In this 9-week period, the correlation was 0.89! Of course, that window is too short to be taken seriously.

Of course, between March and August, the correlation reverted to form. US dollar index weakened and gold strengthened. The correlation was significant at -0.72 as one would expect.

I have always held the view that Gold was the quintessential anti-dollar. So, a negative correlation of significant magnitude would be expected. I think it still is the anti-dollar. But, central banks’ induced euphoria has so distorted financial markets that it has made investing so hazardous. This is just an example.

I thought I had blogged on the shutdown of value fund manager AJO. Looks like I have not. At least, I could not locate any blog post to that effect in the last two months. They were a value fund and were a victim of the low-interest rate environment that celebrates garbage stocks.

Incidentally, check out the story in Bloomberg on the struggles at GMO to retain investor faith. So typical of the late-cycle phenomenon. Well, how late is late and when the ‘late’ is ‘finished’ is anyone’s guess. That is why all these things are clearer in hindsight. For me, of course, the signs are unmistakable. The euphoria boggles the mind and appears unsustainable to me.

Let us get back to gold and the dollar. Between August and November, the correlation between the two is a strong 0.53! That is quite something. Something has to give. Let us see if the dollar strengthens. It is quite oversold. But, then it was quite oversold for one and half years in 94-95 before it reversed course for the next (nearly) seven years.

Are conditions in place for it to happen now, as it did then? I don’t think so. A combination of Janet Yellen and Jerome Powell could well be a case of stimulus-fest. Of course, a word of caution is in order. I do not know if Ms. Yellen is a votary of Modern Monetary Theory (MMT). A quick search on the internet takes us to a story in March 2019 in Bloomberg that says that she is not a fan.

Interestingly, a story in says that her nomination is a victory for the ‘Establishment’ and a defeat for the ‘Progressives’. More on the political dimensions of it in my next post. But, the interpretation of her appointment is correct. It is another box checked for the Establishment. If earlier reports were to be believed, Ms. Elizabeth Warren wanted that job. But, it is not that the establishment favours a strong dollar. I doubt. But, surely, they would not want a massively haemorrhaging dollar. That risk was real with an embrace of MMT. So, at the margin, it should be good for the dollar. At least temporarily. In the two days since Ms. Yellen’s name has been floated as the Treasury Secretary, the dollar has not really reacted positively. It has weakened a bit.

Beyond the very short-term, the Yellen-Powell combination is not a dollar positive. She was a monetary policy dove and so he is now. She would support an activist fiscal policy in any case. So, all told, there will be plenty of dollars floating around even if MMT is a bridge too far.

In the 2002-08 period, when there was global euphoria, the dollar weakened stocks boomed and so did gold. I am not sure if the ‘euphoria’ is sustainable. Even if it does and in combination with an easy fiscal-monetary stance in America likely, it should be dollar negative and gold positive as well, like it was during that period. Let us see how this plays out.

The on-off correlation between the US dollar and gold is, however, both unsettling and interesting. In conclusion, I still see gold as the quintessential anti-dollar and that role should survive the transient deviations from that basic ‘antagonistic’ relationship.

Solar (energy) eclipse

On the 14th December, there is total solar eclipse. Last year, there was a total solar eclipse on Dec. 26. We know what came after that. So, let us hope there is no repeat.

In the meantime, this morning, a story came to my attention on gross metering and net metering and how a Ministry of Power draft proposal shifting to gross metering will come in the way of roof top solar installations. Check it out here.

On top of it, I read in the ‘Financial Express’ that renewable (solar) energy producers are finding no takers for the power generated as discoms are not signing power supply agreements (PSA). The article said:

While a section of the industry has blamed discoms for not signing PSAs in the hope of better deals in the future, experts have also pointed that SECI has conducted many auctions without assessing the states’ appetite for such unreliable and intermittent sources of power. [Link]

SECI stands for Solar Energy Corporation of India.

I shared the first story (not the news story in FE) with a friend who is a policy wonk who knows something about this field and another one who actually does rooftop solar installations.

The policy wonk said this:

Net metering is not an unvarnished good as is being depicted here. It adversely affected grid management in the pioneering California area utilities. At small sizes of inflows from households into the grid, it is easily managed. But, as household and other installations on net metering increases (we are talking of giga watt level capacities), the utility will struggle to manage the grid. As to the inherent uncertainty of the rooftop generation, we have to account for quality of installations, consumer demand variations etc. All these add layers of costs to the utility to maintain redundancies etc. Who pays for all these, even as net metering consumers benefit at larger public cost.

The roof-top solar panel installation man had this to say:

Even if they limit net metering to 5kw and follow the policy correctly we can forecast the residential business.

But it is not the case. In TN totally they have removed net metering for all residential systems even if it is 1kw.

I understand that there is a problem with discoms and their hands are tied, so it is better for the govt to be honest and say the truth rather than building castles in the sky.

I shared one man’s perspective with the other. Here is what the policy wonk came up with:

If I were to make a policy on this, I’ll use a mix of both. I think this exercise will have to be informed heavily by existing data and some calculated assumptions. So, it will be a technical exercise. Even fixing the tariffs for net and gross metering are critical decisions. De-centralised renewables generation of reasonable scale has not reached any scale anywhere in the world.

The businessman had this to say:

In all forums I had spoken against Net Metering as it was originally laid out. I said that a handling fee be paid to the discom for the convenience of banking service that they provide. A reasonable fee of 0.5/kwh is fine. In addition they can limit the banking to no more than 2 days, i.e., what is generated today and exported to the grid shall be consumed within 2 subsequent days.

This will be fair to both sides. However, the pendulum has swung totally to the other side. No sense at all. Net Metering was good policy when solar power was expensive.

This exchange has been a rather educative experience for me. You can quickly see how sound policymaking is not that easy and it is quite a ‘wicked problem’.

Imagine headlines:

Renewable energy push; government to encourage households to install roof-top solar panels; incentivise by enabling selling surplus power to the grid!

Those who read the headlines will only have positive reactions superficially. But, to make it actually work is far from easy. That is what their exchange tells us.

Moral of the story: Critiquing policymaking is as hard as, if not harder than, actual policymaking. Most of us do it rather flippantly or carelessly. I can think of at least two reasons. One is that careful critique requires preparation and work. We do not have the time (i.e., inclination) to put in the effort. Two, most critiques are based on who makes the policy and not what the policy is about.

Regulations under Presidents

In January 2017, I wrote this post, ‘Regulations under Obama’. I had to write that post after a news-story from WSJ that I circulated received unexpected pushback from three friends. Now, the ‘Regulatory Studies Center’ at the Columbian College of Arts and Sciences at the George Washington University has updated the charts to include the Trump years up to 2019. The charts are revealing and, in a way, they foretell what lies in store for America, especially if Lee Smith is right that the 44th President would be pulling the strings from behind.

(1) ‘Economically significant’ final rules published by Presidential year:

This chart shows the economically significant final rules published by presidential year from 1981 through 2017. Years 1981 through 1992, 2001 through 2008, and 2017 were under Republican administrations. Years 1993 through 2000 and years 2009 through 2016 were under Democratic administrations. The number of economically significant final rules published in the following years are as follows. 1981, 1, 1982, 12, 1983, 27, 1984, 18, 1985, 23, 1986, 24, 1987, 25, 1988, 29, 1989, 26, 1990, 34, 1991, 55, 1992, 66, 1993, 45, 1994, 61, 1995, 34, 1996, 39, 1997, 37, 1998, 38, 1999, 35, 2000, 72, 2001, 36, 2002, 39, 2003, 47, 2004, 45, 2005, 41, 2006, 33, 2007, 44, 2008, 73, 2009, 51, 2010, 70, 2011, 54, 2012, 49, 2013, 54, 2014, 57, 2015, 61, 2016, 94, 2017, 19.

(2) This is the cumulative chart:

This chart shows a series of lines depicting the publication of economically signifcant rules published by presidential administration from Reagan through Trump.

Clearly, Reagan was the best in not imposing regulatory burdens on the country. Trump comes second. Obama was, by far, the activist President.

(3) Number of ‘final major rules’ published, by Presidential year:

This chart shows the final major rules published by presidential year from 1996 through 2018. Years 1996 through 2000 and years 2009 through 2016 were under Democratic administrations. Years 2001 through 2008, and 2017 and 2018 were under Republican administrations. The number of final major rules published in the following years are as follows: 1996, 52, 1997, 62, 1998, 71, 1999, 52, 2000, 97, 2001, 52, 2002, 49, 2003, 55, 2004, 64, 2005, 53, 2006, 57, 2007, 64, 2008, 105, 2009, 77, 2010, 96, 2011, 80, 2012, 72, 2013, 80, 2014, 78, 2015, 81, 2016, 127, 2017, 36, 2018, 52.

(4) Significant final rules published by Presidential year:

This chart shows the significant final rules published by presidential year from 1994 through 2017. Years 1994 through 2000 and years 2009 through 2016 were under Democratic administrations. Years 2001 through 2008, and 2017 were under Republican administrations. The number of significant final rules published in the following years are as follows. 1994, 360, 1995, 297, 1996, 277, 1997, 224, 1998, 241, 1999, 273, 2000, 343, 2001, 253, 2002, 322, 2003, 356, 2004, 280, 2005, 284, 2006, 302, 2007, 283, 2008, 348, 2009, 243, 2010, 311, 2011, 304, 2012, 218, 2013, 189, 2014, 180, 2015, 189, 2016, 303, 2017, 63.

If an interested reader wants to check out the definition of ‘final rules’, ‘economically significant’ and ‘significant’ rules, pl. visit the site.

Where Michael Lind meets Peter Turchin

Professor Michael Lind (he is at the LBJ School of Public Affairs at the University of Texas at Austin)’s article on the ‘Revenge of the Yankees’ is an interesting read.

Interesting extracts:

The New Deal revolution of the 1930s is badly misunderstood, both politically and culturally, when it is treated as a left-wing rebellion against right-wing capitalism. Fundamentally it represented the partial overthrow of Yankee Protestant hegemony in American society by a coalition of outsiders, chiefly provincial Southern and Western whites and European-American immigrants in the North, many of them Catholic.

The Democratic Party that dominated the United States between the 1930s and the 1980s had a few Yankee progressive members, but it was essentially the old Jacksonian alliance of white Southerners and non-British “white ethnics” in the North. If Harry Truman is understood correctly as a cultural Southerner from Missouri, then with one exception every Democratic president between Roosevelt and Obama was a white Southerner—Truman, Johnson, Carter, and Clinton….

…. Driven from the White House for half a century after 1932, marginalized in Congress and circumvented by federal state capitalism, the Northern mainline Protestant elite managed to preserve its dominance in three areas: The “Deep State,” the major nonprofit foundations, and elite prep schools and universities. In the movie The Good Shepherd (2007), Joe Pesci’s Mafioso says to Matt Damon’s WASP CIA agent: “You know, we Italians have our families and the church, the Irish have the homeland, the Jews their tradition, the [Blacks] their music. What do you guys have?” Damon’s character replies: “We have the United States of America. The rest of you are just visiting.”

In addition to the “Deep State,” other national institutions that the neo-Jacksonians of the New Deal coalition never conquered in their revolution against Yankeedom include the major nonprofit foundations like Ford and Rockefeller and the Ivy League universities. The culture of what might be called the NGO-academic-spook complex remained deeply rooted in the Social Gospel wing of Northern mainline Protestantism of the early 1900s.

…. The Social Gospel progressivism these institutions have long embraced is a Janus-faced tradition. One face is technocratic, holding that social and global conflicts, rather than reflecting the tragic nature of human existence, are “problems” which can be “solved” by nonpartisan experts guided by something called “social science.” The other face of Social Gospelism is irrational, and rooted in post-millennial Protestant theology convinced that we are on the verge of a world of peace and prosperity, if only wicked people at home and wicked regimes abroad can be crushed once and for all…

…. The increasingly powerful and intolerant woke national overclass justifies its cultural iconoclasm in the name of oppressed minorities. But this is just an excuse for a top-down program of cultural imperialism by mostly white, affluent, college-educated managers and professionals and rentiers. Woke attitudes are much less common among Black Americans and Hispanic Americans than among the white college-educated elite.

What we are witnessing is a power grab carried out chiefly by some white Americans against other white Americans. The goal of the new woke national establishment, the successor to the old Northeastern mainline Protestant establishment that was temporarily displaced by the neo-Jacksonian New Deal Democratic coalition, is to stigmatize, humiliate and disempower recalcitrant Southern, Catholic, and Jewish whites, along with members of ethnic and racial minorities who refuse to be assimilated into the new national orthodoxy disseminated from New York, San Francisco, Washington, D.C., and the prestigious private universities of New England. Properly understood, the Great Awokening is the revenge of the Yankees. [Link]

The emphasis on the last paragraph is mine. It seems to echo (not quite the same) the elites vs. elites framework of Peter Turchin that characterises the ‘Age of Discord’.

Readers should connect this blog post to my post from January.

The 44th on the 45th

From James Freeman of WSJ:

The former President (Obama) told Mr. Pelley:

I do think that a new president can set a new tone. That’s not going to solve all the gridlock in Washington. I think we’re going to have to work with the media and with the tech companies to find ways to inform the public better about the issues and to bolster the standards that ensure we can separate truth from fiction. [Link]

The highlight in blue is my emphasis. Well, Indeed!

As for the insinuation that the current American President is a dictator (see the WSJ link given above that quotes from President Obama’s interview to the CBS News’ ’60 minutes’ programme) that the former President made, Glenn Greenwald’s article offers an alternative perspective.

Prof. Victor Davis Hanson at the Hoover Institution wrote an article titled, ‘Trump, the counter-revolutionary’, on 1st November. The first few paragraphs are interesting, regardless of one’s interest or disinterest in the elections and President Trump himself:

China would inherit the world in 20 or 30 years. The self-appointed task of American elites—many of whom had already been enriched and compromised by Chinese partners and joint ventures—was to facilitate this all-in-the-family transition in the manner of the imperial British hand-off of hegemony to the United States in the late 1940s.

Our best and brightest…. would enlighten us about the “real” China, so we yokels would not fall into Neanderthal bitterness as they managed our foreordained decline….

….So our revolutionary role would be to play stuffy and snooty Athenian philosophers to the new muscular Roman legions of China.

Given our elites’ superior morality, genius, and sense of self, we would gently chide and cajole our Chinese masters into becoming enlightened world overseers and democrats—all the easier, the richer and more affluent Chinese became. [Link]

If one were interested in Trump – for better or worse – Victor Davis Hanson calls him a ‘tragic hero’ here. In a podcast, he has described this in greater detail. I have not listened to the podcast. Apparently, he has made that case in his book, ‘The case for Trump’. John Judis reviews the book in NYT here. Pl. remember that it is an article from March 2019.

Gerard Baker’s comment, where he pulls no punches on the 45th President of America, written on the eve of the election on the 3rd November, is also a very good read:

You don’t have to believe a single word of the media’s hysterical hyperbole about Donald Trump these last four years to think that this president is seriously lacking in the character of the men and women who have made this country the greatest nation on earth.

You don’t have to think he’s Hitler’s heir to be alarmed by his evidently cavalier disregard for small matters like the independence of the judiciary, the proper use of executive power, or the truth.

You don’t have to think he takes personal joy in incarcerating children in cages to worry that his underdeveloped capacity for human empathy has made him especially unfit for the crises of the past year.

You don’t have to believe he’s Bull Connor to worry that his rhetoric and manner have done harm to the nation’s fragile social contract.

Yet for all his faults, for all the legitimate fears stoked by the last four years, it’s not immoral or irrational to think that the incumbent still represents a better alternative to what’s on offer….

…..It’s about above all recognizing the alternative. Voters after all are not being asked to choose between Donald Trump and Abraham Lincoln….

….So admit it. It’s not a rich choice. On the one hand, a flawed man who may yet do more damage to the nation’s frayed fabric. On the other, a party that seems committed to tearing it up. [Link]

All this is either moot or academic now. The 45th President appears to have decided to make way for the 46th President.

Peace breaks out in West Asia

Saudi Arabia has denied it but Israel said that a meeting took place between Israeli Prime Minister and crown prince of Saudi Arabia. As they say, never believe something until it is officially denied. Now that there is a denial, we can believe it.

This story from is a very good read. The outgoing American Special Envoy to Syria who signed a letter in 2016 that Trump was a danger to America had some very positive things to say about how the President’s approach played out well in the Gulf:

The career ambassador’s 2018 decision to serve in the Trump administration despite his political opposition to the president — and to champion his policies on the way out the door — is on-brand for an official described by colleagues as the consummate apolitical public servant. Jeffrey offers no polemics on the president’s character, even as he says he stands by his decision to sign the 2016 open letter that said Trump was “erratic” and “acts impetuously.” 

“I know what I did in 2016, I do not disagree with that,” said Jeffrey, a former U.S. ambassador to Iraq. “I was following closely the situation with Iran, Iraq and Syria, and I was appalled that we didn’t have a more coherent policy. This wasn’t a political decision.”

Jeffrey now says that Trump’s “modest” and transactional approach to the Middle East has yielded a more stable region than either of his predecessors’ more transformational policies. President George W. Bush’s 2003 State of the Union speech heralding the seismic U.S. intervention into Iraq and President Barack Obama’s 2009 speech in Cairo proclaiming a “new beginning” with the Muslim world represent an approach to the Middle East that “made things worse” and “weakened us,” Jeffrey said. Trump’s administration, he said, has looked at the Middle East through a geostrategic lens and kept its focus on Iran, Russia, and China, while keeping the metastatic “disease” of Islamist terror in check. 

Jeffrey believes Trump has achieved a kind of political and military “stalemate” in a number of different cold and hot conflicts, producing a situation that is about the best any administration could hope for in such a messy, volatile region. 

In much of Syria, the remaining U.S. troops maintain a fragile stability. Although U.S. diplomats are still painstakingly working to resettle thousands of ISIS families and relocate foreign fighters still held by the Kurdish-led SDF, Jeffrey said the humanitarian situation is slowly improving and he has no concerns that the remaining detained ISIS fighters will escape. 

In Iraq, Jeffrey credits the Trump administration with maintaining relations with the central government and constraining Iranian influence in Baghdad. 

“Stalemale and blocking advances and containing is not a bad thing,” Jeffrey said. “That’s what powerful countries — France, Britain, the United States — failed to do in the 1930s, and then they discovered they had to fight for their lives in really important places like Paris and the South China Sea and North Africa.”

“That’s the nature of realpolitik and great power foreign policy.”

Jeffrey’s is an unorthodox view of Trump’s foreign policy, to be sure. It comes at a moment when most mainstream national security professionals of both parties — including some former members of Trump’s own administration — are openly condemning the president’s handling of America’s military and diplomatic affairs. In particular, critics say the 45th president has damaged American alliances, perhaps irreversibly, with his combative Twitter account and occasionally punitive foreign policy. In one key example, Trump announced a troop withdrawal from Germany because Berlin wasn’t meeting defense spending benchmarks. 

Jeffrey said there’s no question that Trump has demanded a lot of U.S. allies, both in Europe and the Middle East. But he rolls his eyes at the notion that U.S. alliances will crumble under the pressure from the United States to do things like pay more for their own national defense or do more to push back on Iran. 

Far from undermining Middle East allies, Jeffrey said, Trump has sought “to build up our alliance system and basically stop nagging at them, show that Washington has their back including their domestic situations — they can do pretty much what they want, but they’re going to have to step up and do things.”

In the Middle East, he said, that approach has won him friends, not enemies. He points to the historic political tightening between Israel and some of the Gulf monarchies. 

“Nobody really wants to see President Trump go, among all our allies [in the Middle East],” he said. “The truth is President Trump and his policies are quite popular among all of our popular states in the region. Name me one that’s not happy.”

In Iraq, he said, relations with Baghdad have remained healthy, even as he confirmed the State Department threat to shutter the embassy if Iraq didn’t do more to curtail Iranian militia activity. 

“That’s an ongoing issue,” he said. “It was not a bogus threat, it’s very serious.”

The Syria withdrawal announcement was roundly condemned even by members of Trump’s own administration as an abandonment of the SDF, which did the bulk of the on-the-ground fighting against ISIS. It is often held up by critics as the ultimate object lesson of the chaos — and even cruelty — of the Trump administration.

Jeffrey disputes the charge that the United States “abandoned” its Kurdish allies to a Turkish onslaught. Although the United States gave the Kurds a military guarantee against Russian mercenaries operating in Syria, the Syrian government and ISIS, “nobody in Washington ever gave the Kurds a military guarantee against Turkey,” Jeffrey said. “I cannot put my finger on it, [but] every Kurdish leader I know thinks that he or she was given such a guarantee by people in the field, and that had an impact on how they behaved including how they behaved vis-a-vis the Turks. So it was a very complicated political mess.”

Jeffrey doesn’t dispute that there was some chaos to the decision-making process. But he compared it to troop level fluctuations in Iraq under Bush, or Obama’s surge into and simultaneous withdrawal deadline in Afghanistan. 

“Look, there’s a surface chaos to every administration,” he said. “I’m not defending this gang, I’m just saying chaos is what I’ve experienced.”

If Jeffrey is complimentary of the Trump administration’s overall approach to the Middle East, he is equally sanguine about the incoming Biden administration. 

“If [U.S. allies in the Middle East] had to pick somebody else to come, it would be Joe Biden,” Jeffrey said. “I can’t predict how Joe Biden would act [but] of all of his decisions that I was involved in, and there were many, he is more of a transactional guy by his nature. 

“I can’t see him giving either the Bush speech or the Cairo speech. And that’s a good thing.”

Asked how he would advise the Biden administration when it takes over his portfolio, Jeffrey said he would urge the President-elect to stay the course laid out by Trump’s team. Some things the Biden team may want to undo — like the dismantling of the Iran nuclear deal — he suggests may now be impossible. But above all, don’t attempt “transformation.” Don’t try to “turn Syria into Denmark.” Stalemate is stability. 

“I think the stalemate we’ve put together is a step forward and I would advocate it,” Jeffrey said.

“I’m just telling you the reality as I saw it. I’m not trying to do favors to anybody. Because it’s very important when the new team comes in, they don’t say, if it was made by Trump it has to be bad.” [Link]

Nicholas Lardy’s question answers itself

Nicholas Lardy wrote this book in September 2014:

I have not read the book. I doubt if I would. The book carried the following description:

This book offers powerfully persuasive evidence that the major sources of China’s growth in the future will be similarly market rather than state-driven, with private firms providing the major source of economic growth, the sole source of job creation, and the major contributor to China’s still growing role as a global trader. [Link]

In 2019, he released this book:

The book description is as follows:

In The State Strikes Back: The End of Economic Reform in China?, renowned China scholar Nicholas R. Lardy argues that China’s future growth prospects could be equally bright but are shadowed by the specter of resurgent state dominance, which has begun to diminish the vital role of the market and private firms in China’s economy….. This book mobilizes new data to trace how President Xi Jinping has consistently championed state-owned or controlled enterprises, encouraging local political leaders and financial institutions to prop up ailing, underperforming companies that are a drag on China’s potential. [Link]

The fact that he had to write a book like this five years after ‘Markets over Mao’ should answer his question of whether economic reforms were ending in China. They ended long ago. There is no need for a discussion.

Is it ‘bye, bye’ for Indo-Pacific?

Barely had the ink dried on news reports of the Malabar naval exercises with all the four Quad countries participating, we get an inkling of the shape of things to come from a possible Democratic administration in America. Oh, well.

Brahma Chellaney, writing for Nikkei Asia, makes an important observations that Indians, rooting for a possible Biden administration should not miss:

…the momentum toward deeper collaboration could slow if Biden’s foreign policy downgrades India’s importance in regional strategy and returns — as Biden has signaled….

…. In calls last week with the leaders of Japan, South Korea and Australia (but not India), Biden emphasized a “secure and prosperous Indo-Pacific” instead of a free and open Indo-Pacific. And, in apparent deference to Beijing, the Biden office readout left out the assurance Japanese Prime Minister Yoshihide Suga said he received from the president-elect that U.S. security guarantees apply to Japan’s administration of the disputed Senkaku Islands…..

… The loss of the expression “free and open Indo-Pacific” will likely be seen in India as a diminution of its future role in American strategy. [Link]

But, then, the best insurance against China’s aggressive tendencies is China’s aggressive tendencies, as I have argued here. That will make it difficult for a possible Biden administration to pursue any appeasement (soft or light) policy with China without suffering embarrassment. That is the best hope for other nations.

Those who are in doubt can read these two stories here and here, from Australia.

Sovereign bond issue with negative yield from China and other links

The article in FT on China issuing bonds with negative yield in Euro at 5-year tenor is very interesting for readers’ comments. Pl. scroll down and read the comments. In any case, the rush to invest is scarcely believable.

Stories of defaults from Chinese public sector enterprises are hogging the news in the last few days. That is why investors’ welcome for China’s negative yielding sovereign debt boggles the mind. See here and here.

The inability of the Public Companies Accounts Oversight Board (PCAOB) in America to be able to audit the accounts of Chinese companies listed in the US because China does not permit it is a compelling reason for the SEC to seek to delist them. If SEC pushes for a proposal before the new administration takes over, it is a reasonable thing to do.

This FT/Lex comment on fake subscriptions and accounts in China companies is quite well written. The sarcasm is hard to miss.

China regulators go hunting for scapegoats, it appears, for the bond defaults of state-owned entities. A broking house is now being pursued for helping a state-owned miner’s bond issue. Quite what happens in China with government’s knowledge and so, why failures have to lie elsewhere?