I’m not a fan of professional athletics or the Super Bowl more generally. I can’t remember when I last watched a Super Bowl halftime show but I’ve been surprised at the kerfuffle over this year’s show.

I think it will be interesting to learn whether the NFL attracted the audience they apparently are pursuing with its halftime show selection. I’m guessing they won’t but not for the reasons some might suggest. I suspect that selection reflects a strategic mismatch. The audience in question is far more likely to watch the halftime show later, via streaming, than to watch the entire game, halftime, and, vitally, the commercials in real time.

I wanted to call attention to some remarks by former Chicago Mayor Rahm Emanuel at the Cornell Club in New York, reported by Jonathan Alter in the Washington Monthly. Here’s a sample:

If Democrats win the House, which I believe they will, what they do between 2026 and 2028 will determine not just whether we win the White House, but whether our relationship with the public becomes transformational rather than transactional.

Ken Martin and the DNC should be living in Nevada, Arizona, Georgia, North Carolina, Pennsylvania, and Wisconsin. There shouldn’t be a single empty spot on the ballot, from school board to governor. If there isn’t a Democrat on every line, riding the wave of 2026, the whole operation deserves to be whupped. This election is a wave election. You build school boards, you build a farm team, and you organize early in the places that will decide 2028.

Remember this: We’ve had three elections in a row where just 600,000 Americans in seven states decided who runs the country. We should have started a year ago, but at a minimum, before filing deadlines close, every office should be contested. All you’re going to hear about is US senators. I want to hear about school boards. Look at the attention paid to a public utility commissioner race in Georgia. Most people didn’t even know the job existed, but it told you more about Georgia’s governor and Senate races than any national chatter.

I think you’ll find his remarks interesting.

I’ve ridden in the elevator in the Thompson Center with Mayor Emanuel on more than one occasion, chatting casually with him on our ride. I think he’s a personable guy. I think he wants to be president but I do not believe he will be the Democratic candidate in 2028.

I don’t think he realizes that the Democratic Party which he led to victory in Congressional elections as chairman of the DCCC twenty years ago no longer exists. It has passed him and center-left Democrats like him by. I think what he is expressing is nostalgia.

I also think that the Democrats could do much worse than heeding his advice for the midterm elections or picking him as their 2028 presidential candidate. Emanuel’s advice is sound, but the Democratic Party no longer values the kind of politics that would implement it.

At Time in an article about the boos and jeers that Vice President J. D. Vance received at the Olympics opening ceremonies Rebecca Schneid writes:

A new YouGov poll released Feb. 6 found that favorable views of the U.S. among Western European nations have fallen sharply since Trump’s return to office, following the President’s aggressive attempts to annex Greenland, his Administration’s ongoing trade war with most of its European allies, and a years-long divide over the future of NATO and European security.

Perhaps predictably, the biggest impact was seen in Denmark. Some 84% of Danes now hold an unfavourable view of the U.S., compared with an average of 36% during former President Joe Biden’s term. Only 26% of Danes view the U.S. as an ally or friendly nation, compared with 80% in July 2023.

The same trend is seen across Western Europe, in countries that were once considered U.S. allies. In Spain, only 39% of people see the U.S. as a friend or ally today, down from 73% in 2023. In Germany, the number is 41%, down from 70%; in Britain, 46%, down from 69%; in France, 53%, down from 64%; and in Italy, 52%, down from 61%.

I have travelled in Europe for more than fifty years, mostly for work. I have never experienced a time when Americans were liked or admired. I have never understood why so many Americans assumed that was the case. I don’t even think I know any American who has lived abroad who thought people overseas liked or admired Americans.

This isn’t new. The play that Abraham Lincoln attended that fateful night at Ford’s Theater was Our American Cousin, a satire of the disdain that Americans experienced abroad.

Even after World War II, gratitude did not translate into affection. The British, French, and Dutch were relieved that the war had ended but there is extensive contemporary and postwar commentary expressing disdain for American soldiers, particularly among elites, for their informality, their money, their lack of deference to class, and their cultural self-confidence.

Americans were welcomed as liberators and resented as disruptors. That tension is not new, and it did not begin with Vietnam, Iraq, or Donald Trump. Donald Trump has aggravated a situation that was already bad. It has been present since the moment the United States first arrived in Europe as a decisive power.

I’m grateful that MSN repeated this Bloomberg Business article so I could read it. In it the author, Swiss journalist Fabienne Kinzelmann, decries the policy changes put in place by the Trump Administration:

(Bloomberg Businessweek) — For the past few years, Swiss oncologist Christoph Renner has treated blood cancer patients with Lunsumio, a new drug that helps the immune system recognize and destroy malignant cells. Then, last summer, Renner got an email from Roche Holding AG, Lunsumio’s manufacturer, informing him the treatment would no longer be available in Switzerland because health insurers there wouldn’t pay for the infusions. “You see what’s possible,” says Renner, a professor at the University of Basel, “and then you’re told you can’t use it.”

The move was a response to rules President Donald Trump introduced that force drugmakers to reduce their prices in the US to the lowest level paid in other developed countries. In Switzerland, new medications typically cost far less than in the US, so in theory Americans should benefit from the change. The problem is, instead of bringing prices down in the US, pharmaceutical companies are raising them elsewhere.

Yet Switzerland has shown little political willingness to pay more—threatening both the availability of medications in the country and its role as a global leader in developing therapies. Drug prices are the primary driver of the increasing cost of mandatory health coverage, and the topic generates heated debate during the annual reappraisal of insurance rates. “The Swiss cannot and must not pay for price reductions in the USA with their health insurance premiums,” says Elisabeth Baume-Schneider, Switzerland’s home affairs minister.

The global pharma industry sees an existential threat in amped-up efforts to rein in drug costs. That’s particularly true in Switzerland, where operating costs are already among the highest in the world. As pressure to cut prices spreads from the US around the globe, pharma companies say they may be forced to scale back operations in the Alpine country. Trump’s pricing scheme is “a direct attack on Switzerland as a pharma hub,” says René Buholzer, chief executive officer of Interpharma, a Swiss industry group. “Doing nothing and carrying on isn’t an option anymore.”

I’m not entirely sure what conclusion we are to draw from this. Should the U. S. continue to subsidize overseas pharmaceutical manufacturing? That’s the most obvious inference. I can see how the Swiss may have become accustomed to our paying higher prices than they do but I’m not sure why we should continue to do so.

Is it that overseas drug manufactures should make more prudent choices? Why are the costs of Swiss pharmaceutical companies high? The article is mute on that subject. I don’t know much about Swiss pharmaceutical companies but, unless they’re a lot different from U. S. companies, I don’t take her gesturing towards high research costs seriously. In one of my earliest posts here I demonstrated, conclusively I think, that U. S. pharmaceutical companies treated research as overhead (like telephone expenses) rather than production costs.

Using a comparative advantage approach, wouldn’t that suggest that Swiss companies shouldn’t be in the pharmaceutical business at all?

I know what my hypothesis would be: U. S. healthcare policy skews the cost of healthcare everywhere. But exploring that is beyond the scope of this post.

I disagreed with this Washington Post editorial so much I had to comment on it. Here are the opening paragraphs:

The resilience of the American worker is one of the most underreported stories of the 2020s. From red tape to import taxes, successive governments have erected barriers to success. Yet America’s workers have persevered and figured out ways to prosper.

A new American Abundance Index illustrates this. The project from Human Progress, an arm of the Cato Institute, reveals the steady rise of the average worker’s purchasing power. The premise of the index is simple: how many hours do you need to work, compared to the month or year before, to be able to afford the “basket of goods,” which is a standard set of household items and services that comprise the Consumer Price Index used to calculate inflation.

The “time price” is how many hours of work it takes to purchase the basket of goods. The “abundance” is how much of the basket one hour of work can buy. The story told by the index is a very good one: since recordkeeping began, “abundance” for average private sector workers comes out to a net increase of 13.8 percent.

Why, oh why, do people who do not understand statistics rely so heavily on it? Let me offer a hint: whenever you read “average”, ask yourself whether whatever is being measured occurs in a normal distribution. If it does not, the average will be grossly misleading. In this case “abundance” is propaganda not analysis. The index quietly assumes that gains anywhere in the income distribution count equally as ‘abundance’ for everyone.

In the United States incomes do not occur in a normal distribution; they are heavily loaded to the right of the distribution, i.e. a relatively small percentage of people earn a considerable proportion of income. You may argue over whether that is good, bad, or indifferent. I see it as merely a fact. Because income growth in the top percentile is orders of magnitude larger than the rest, even small changes there dominate mean-based measures.

I took the trouble of recalculating the Abundance Index using the same sources as the original source used but omitting the top 1% of income earners. Some interesting things became apparent.

The topmost graph illustrates the change in abundance from March 2006 to the present. As you can see for the lower 99% of Americans abundance was materially flat; it wasn’t until 2020 that it began to increase for us. The original index showed a 14% increase over the period; the revised one reflect a 5% increase over the period. In other words, yes, we have become better off but not a lot better off.

The graph on the bottom right illustrates why that may be so. The top 1% of income earners captured 17.6% of income in 2006; now they capture 20.9% of income. That fact alone discredits the index as a measure of general worker well-being. The moral of the story is don’t use unadjusted means for skewed distributions when making welfare claims.

But the topmost graphic also illustrates something even more interesting. What happened in 2020 that improved the measured abundance of those in the lower 99%? The answer, obviously, is COVID-19 or, more correctly, the pandemic and the federal government response to it. Three things happened:

• There was $4.6 trillion in government spending which prevented collapse and gave workers leverage.
• There was a labor shortage caused by 1.2 million deaths from COVID, retirements, and workforce exits.
• Workers, enabled by enhanced unemployment benefits, refused wages they deemed exploitative.

None of these conditions were desirable; they were merely revealing.

That was anomalous; those conditions were not sustainable. In other words it took a crisis to produce abundance for most Americans.

If your Inbox is anything like mine, you are being absolutely deluged with notifications of articles. Yesterday one such article I did find interesting was in Quartz and was written by Chris Morris. The article describes the monthly layoffs in January 2026:

Employers laid off 108,435 people last month, the highest January number since 2009, according to a new report from Challenger, Gray & Christmas. At the same time, hiring intentions haven’t been lower since then.

The number reflects a 118% increase over January 2025 and more than doubles the total layoffs of last December. New hires came in at just 5,306, the lowest number since Challenger began tracking that data point in 2009.

What struck me about the article was how little actual insight it offered. I’m going to attempt to correct that.

I’m not sure whether it will make you feel better or worse but just about half of the announced layoffs were in just two companies, Amazon and United Parcel Services (UPS), and UPS’s layoffs can be attributed to the loss of its Amazon contracts.

That naturally leads to the follow-up question: what’s going on with Amazon? The short answer is AI just not in the way most people think of it.

The longer answer is that Amazon is in a fight for survival of its current margin structure and strategic dominance. Contrary to what you may believe, Amazon isn’t just a big retailer. For the first ten years of its corporate history it was an IPO in search of a business model. In 2006 it finally happened on one and it wasn’t as an online retail bookseller (its origins). That was when Amazon Web Services (AWS) was born. Since then it’s been clear: Amazon is a web services provider that dabbles a bit in online retail sales. Sometimes it makes money in online retail sales, sometimes it loses money but it always makes money providing web services.

AI summaries in web searches are already cutting “click through rates” by more than 50%. Fewer click throughs changes the economics of web sites. That in turn will inevitably result in fewer web sites. A similar thing is happening to online APIs. There are fewer discrete service requests, fewer API calls, and lower marginal revenue per workload.

AWS’s main business is providing online infrastructure for web sites and online API service providers. Couple that with an enormous expansion in capex for training and inference and AWS clearly has a major problem.

What about LLM AI service providers? Don’t they use online infrastructure?

Ignore the names you might have heard of in LLM AI, ChatGPT (OpenAI) and Claude (Anthropic). There are only four actual prospective leading suppliers of LLM AI services:

Google
Microsoft
IBM (via enterprise integration rather than consumer scale)
Amazon

By “leading supplier” I mean vertically integrated, capital-scale LLM providers who can survive margin compression, not just model builders. Everyone else is either a tenant, a feature, or a future acquisition target.

Amazon’s recent actions (internalization of logistics, contract shedding, headcount discipline, and ruthless focus on the margin) are best explained as preemptive capital reallocation to defend its position in an online infrastructure market that is increasingly AI-driven. It doesn’t need AWS to grow; it needs AWS not to shrink while its AI capex explodes.

The other three candidates are much less exposed than Amazon, each for different reasons.

These layoffs are not cyclical weakness. They are the visible surface of a capital war.

As peace talks between Russia and Ukraine drag on, a recent wargame reported in the Wall Street Journal by Yaroslav Trofimov highlights a more immediate concern. The wargame was a simulation of an invasion of Lithuania by Russia. I’m going to extract a few telling quotes.

“Our assessment is that Russia will be able to move large amounts of troops within one year,” the Netherlands Defense Minister Ruben Brekelmans said in an interview. “We see that they are already increasing their strategic inventories, and are expanding their presence and assets along the NATO borders.”

Based on the wargame’s result, Russia need only move 15,000 troops to seize and occupy a corridor within Lithuania.

The exercise simulating a Russian incursion into Lithuania, organized in December by Germany’s Die Welt newspaper together with the German Wargaming Center of the Helmut-Schmidt University of the German Armed Forces, became an object of heated conversation within Europe’s security establishment even before the newspaper published its results on Thursday. The exercise involved 16 former senior German and NATO officials, lawmakers and prominent security experts role-playing a scenario set in October 2026.

In the exercise, Russia used the pretext of a humanitarian crisis in the Russian exclave of Kaliningrad to seize the Lithuanian city of Marijampole, a key crossroads in the narrow gap between Russia and Belarus. Russian portrayals of the invasion as a humanitarian mission were sufficient for the U.S. to decline invoking NATO’s Article 5 that calls for allied assistance. Germany proved indecisive, and Poland, while mobilizing, didn’t send troops across the border into Lithuania. The German brigade already deployed to Lithuania failed to intervene, in part because Russia used drones to lay mines on roads leading out of its base.

“Deterrence depends not only on capabilities, but on what the enemy believes about our will, and in the wargame my ‘Russian colleagues’ and I knew: Germany will hesitate. And this was enough to win,” said Franz-Stefan Gady, a Vienna-based military analyst who played the Russian chief of general staff.

That is the article’s most important insight.

In real life, Lithuania and other allies would have had enough intelligence warnings to avoid this scenario, said Rear Adm. Giedrius Premeneckas, Lithuania’s chief of defense staff. Even without allies, Lithuania’s own armed forces—17,000 in peacetime and 58,000 after an immediate mobilization—would have been able to deal with a limited threat to Marijampole, he said. Russia itself would have to consider the high stakes involved, he added: “It would be a dilemma for Russia to sustain Kaliningrad, and if Russia starts something, it must be said very clearly by NATO that if you do, you will lose Kaliningrad.”

That is the prescription the article ultimately arrives at.

One caution is in order. Mr. Trofimov asserts that Vladimir Putin has stated an intention to restore Russia’s tsarist glory. That is not accurate. Putin has expressed nostalgia and grievance about Russia’s lost status and the dissolution of the Soviet Union but he has never articulated a program to recreate a tsarist empire. Claims to the contrary are not evidence-based analysis but psychoanalysis and they distract from the far more important issue: not what Putin wants, but what he believes he can do without triggering an effective response.

Russia’s experience in Ukraine also illustrates the limits of its military capabilities. Despite substantial investment and mass mobilization, Russia has struggled to achieve decisive results against a single opponent operating on its own territory with Western support. Those limitations are not speculative; they are now well understood inside the Russian military and political leadership. If anything, they should be more apparent to Mr. Putin than to outside observers. This further undercuts arguments that Russian actions are driven by expansive ideological ambitions rather than by calculations of opportunity, risk, and allied hesitation.

In my opinion our course of action should be

1. We should abandon discussions of percent of GDP in military expenditure and talk about capabilities.

Previous wargame exercises have shown that we need at least one week to field a counter-force. The implications of that are clear. The focus of Lithuania, Estonia, and Latvia, which have been on post-occupation resistance, are inadequate. If a credible counter-force cannot be fielded in under a week, then deterrence exists only on paper.

2. We should produce objective evaluations of the capabilities of our European allies.

I presume we already have. Nonetheless, it bears mentioning. I also presume it’s not the sort of thing that should be announced publicly. All of our European allies should be evaluated in this way. I find the assumption that Germany cannot be depended on very troubling. If Germany cannot be relied upon in the opening phase of a European defense crisis, NATO’s collective defense model collapses into improvisation.

3. A date certain by which our European allies must have the necessary capabilities should be established and communicated with them.

Along with the consequences of failing to meet the “drop dead” date. This would not be coercion, it would be clarity: allies would retain full sovereignty over their choices but not insulation from their consequences.

It may be that NATO has exceeded its sell-by date. If so, that judgment will ultimately be made by events, not declarations.

The picture above is of the Westminster Kennel Club Dog Show’s banner when entering the Javits Center which is where the breed competitions are held.

I haven’t posted in the last few days and regular readers may be wondering what’s been going on. You may also be curious about why I haven’t posted much about our Samoyed, Jack, recently.

The short version is that Jack has been very busy for the last few months competing in conformation shows. “Conformation shows” are what most people mean when they say “dog shows”. Technically, dog shows are a strategy for identifying breeding stock in dogs and bitches.

I should mention at this point that in the dog fancy “dog” means specifically a male dog and “bitch” means a female dog. We’re pretty casual about throwing around the “b” word. We just mean a female dog. Jack is, of course, a dog and has been competing with other Samoyeds around the country since May of last year. At this point Jack’s American Kennel Club official registered name is Grand Champion Silver (GCHS) Champion (CH) Vanderbilt’s Lucky Day. “Vanderbilt” is his breeders’ kennel name.

Without getting too much into the weeds “GCHS” means that Jack has competed in a heckuva lot of dog shows, winning “Best of Breed” and group placements in many of them.

This week Jack competed with other Samoyeds and about 2,500 other dogs and bitches in New York City in the Westminster Kennel Club Dog Show, frequently called the “most prestigious dog show in the United States”. Jack received an Award of Merit.

I’ll be posting more about the show and where we stayed over the next few days but I wanted to provide a “heads up” on our excellent adventure.

There is an American idiom “talk like a Dutch uncle” meaning “give a severe reproof”. For decades, American presidents have done the opposite with Europe: flattering, subsidizing, and indulging strategic dependency. This week NATO Secretary General Mark Rutte, formerly the prime minister of the Netherlands, talked like a Dutch uncle to the European parliament foreign affairs and security committees:

On my relationship with the President, hey, listen, if somebody is doing good stuff, and President Trump is doing a lot of good stuff, I believe. I know I’m irritating a lot of you again, but I think so, because as I said, also in Davos, the 2% reached by all NATO countries now at the end of 2025 would never, ever, ever have happened without Trump. Do you really think that Spain and Italy and Belgium and Canada would have decided to move from 1.5 to 2%? Italy spending 10 billion more now on defence at the beginning of the year without President Trump? No way. It would not have happened. And do you really think that in The Hague we would have come to the 5% commitment without President Trump? No way. So, I think he is very important to NATO.

[…]

And if anyone thinks here, again, that the European Union, or Europe as a whole, can defend itself without the US, keep on dreaming. You can’t. We can’t. We need each other. And why do we need each other? I tell you, first of all, because also the US needs NATO. And the US is not only in NATO to prevent a mistake after the First World War, not to re-engage with Europe, and then again, the long arm of history reaching out to the US again in the Second World War — as Churchill famously said in his speech in 1941 in the US Congress. They are also in NATO because for the US to stay safe, and by the way, Arctic region is evidence here, they need a secure Arctic. They need a secure Euro-Atlantic, and they also need a secure Europe. So, the US has every interest in NATO, as much as Canada and the European NATO Allies. But for Europe, if you really want to go it alone, and those who you are pleading for that, forget that you can never get there with 5%. It will be 10%. You have to build up your own nuclear capability. That costs billions and billions of euros. You will lose then in that scenario, you would lose the ultimate guarantor of our freedom, which is the US nuclear umbrella. So hey, good luck.

Rutte’s remarks about Trump are mostly a distraction. The real issue is not which American president deserves credit for browbeating Europe, but whether Europe is structurally capable of defending itself at all. As I have said before the question is not whether the U. S. needs Europe. The question is how much does the United States need a Europe that is disinterested in defending itself? There is a deeper problem I won’t rehearse here: for at least fifty years, U.S. policy has implicitly preferred weak allies. That is a policy I strongly disagree with, but it explains much of what we are now seeing.

Multiple U. S. war game exercises have shown that our allies need to be able to sustain themselves for at least a week without U. S. assistance. Are they actually capable of doing that now? That question cannot be answered based on what percents of their GDPs they spend on defense but only on a dispassionate analysis of their defense capabilities.

Sec. Gen. Rutte has given them the address they need. The open question is whether Europe still has the political culture required to hear it.