The meat of Uri Friedman’s piece at Atlantic speculating on the incipient Trump foreign policy is this paragraph:

During Trump’s presidency, transactional thinking—the freewheeling pursuit of deals—could become the organizing principle of the administration’s foreign policy, rather than one element of it, as in past administrations. Previously unthinkable bargaining chips—including, apparently, a vulnerable island of 23 million people in the Taiwan Strait—could come into play. The question of what is negotiable, and what isn’t, will be a persistent source of uncertainty. Is America’s commitment to the most peripheral members of the NATO military alliance a tradable asset? What about U.S. security commitments to countries like Japan and South Korea? Developments that initially seem like one thing (a phone call suggesting closer U.S. relations with Taiwan) could turn out to be another (an opening gambit in complex U.S. negotiations with China). Trump and his team may prove to be masterful negotiators on behalf of U.S. interests. Or they may prove to be dangerous or incompetent ones. As Dominic Tierney points out, Trump has so far signaled that he will fulfill Putin’s desires in Syria and Ukraine in exchange for the mere possibility of improved relations with Russia—pretty weak stuff from a guy who claims to drive a hard bargain.

U. S. foreign policy has always vacillated among competing interests—mercantile interests, idealistic (some would say ideological) interests, populist interests. For most of American history mercantile interests have dominated our relations with other countries and I don’t think we should be surprised if a Trump administration puts the hands of Hamiltonians (realist pragmatic mercantilists) at the tiller for the first time in twenty-five years. At this point it’s too early to tell.

The unfolding scandal surrounding the Chinese brokerage Sealand Securities, reported here at Financial Times and widely underreported here in the States, is refocusing attention on the sheer unfathomably massive scale of China’s debt. The editors of the Wall Street Journal remark:

Government interference had pushed China’s bond market into bubble territory over the past two years. Beijing encouraged companies to issue bonds to reduce their reliance on bank lending, while prodding others to buy them. The authorities also rescued troubled companies to prevent them from defaulting, which has led to a fundamental mispricing of risk that will make the correction all the more painful.

As always, the bursting of a bubble reveals who was swimming naked. Last week, brokerage Sealand Securities defaulted on a bond-financing transaction allegedly made by a rogue employee. Rumors are also circulating that investors are pulling their money out of funds holding bonds. Firms that used high leverage to deliver promised returns now face margin calls.

The larger question is whether China’s real economy is itself a bubble. According to official figures, bank lending and social financing are growing at roughly double the rate of GDP. Total debt now stands at 260% of gross domestic product, up from 154% in 2008. That doesn’t count the trillions of dollars in loans that banks have classified as “investment receivables” and other such dodges.

I’ve seen estimates that China is borrowing $6 to get each additional $1 of GDP. It’s hard to see how that could continue indefinitely.

When you divvy Chinese debt into its component parts there’s individual debt, corporate debt, and government debt including the debt of local governments. Nominally, the preponderance of the debt is corporate debt. However, to an extent that is illusory. Many of China’s largest companies are state-owned enterprises and, unsurprisingly, they’re the largest borrowers, too. Since China’s banks are state-owned, that means that most of that debt is the government borrowing from the government. Some of that debt is resurfacing in California in the form of cash-only purchases of multi-million dollar homes but that’s a subject for another post.

So the Chinese government is borrowing from the Chinese government and an increasingly large proportion of the borrowing is going to service past loans owned to the government by the government. The PBoC then releases more money to provide liquidity. Welcome to the wonderful world of fiat currencies.

Can it go on forever? The Chinese are in the midst of a fascinating experiment. We’ll know the results soon.

As I read Tyler Cowen’s musings at Bloomberg View on President-Elect Trump’s appointments:

In addition to expertise, an appointee may be picked for some of these reasons:

• Ability to command the interest of the public in policy change
• Ability to influence Congress
• Ability to think outside the usual Washington “boxes”
• Ability to reach and motivate the president when necessary

The unusual backgrounds of many Trump appointees make more sense by these standards. For instance, Trump does not seem to be detail focused or policy oriented, as Obama has been. It’s therefore more important that he can rely on advisers to direct his attention. That means nominating candidates who have credibility with him and who can speak his language, rather than eggheads. Those same individuals might be relatively effective taking their cases to the broader public, even if they don’t have experience working the levers of Washington.

it occurred to me that it’s too bad that more people don’t know what generals and big company CEOs actually do. In addition to having substantial managerial expertise, possibly more than anything else they’re politicians accustomed to working through large, complex organizations. The image that some journalists seem to have of generals or corporate CEOs commanding legions of myrmidons into action with imperious sweeps of their hands is a figment of their imaginations.

Re-purposing Tolstoy’s remark, all large organizations are the same. Small organizations are all small in their own way.

In reference to his unsuccessful run for California governor, Upton Sinclair used to say “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” Similarly, when bureaucrats’ or politicians’ livelihoods or national prestige are on the line, do not underestimate the ability of bureaucrats to torture statistical findings to produce the desired results.

More than fifty years ago there was a best-selling book, “What Ivan Knows That Johnny Doesn’t”, a comparison of Soviet and American curricula, that engendered a furor here in the States and a push for curriculum reform, shortlived as these pushes invariably are.

That’s the context in which I see the periodic panics about how the test scores of American kids on the PISA exams compare with the scores of kids in other countries, notably China. As reported by Adam Minter at Bloomberg View, China is experiencing a little panic of its own:

In 2009, Shanghai students did so well — beating the world in math, science and reading — that President Barack Obama declared it a “Sputnik moment,” requiring immediate action. A similar panic broke out in 2012. But this year proved to be a surprise. The results from the 2015 tests, released this month, showed Chinese students ranked sixth in math, 10th in science and 27th in reading. What happened?

On one hand, the answer is simple. Instead of merely testing Shanghai’s elite, the 2015 exams included a broader selection of students across China, which dragged down scores. But the results also highlighted an important problem: China’s much-lauded education system remains riven by inequality, with far-reaching consequences for schools, students and, ultimately, the economy.

There is a well-known, widespread, cheap and easy way to improve a performance of a country’s students on international standardized tests: jigger the statistics. Limit who takes the test. Engage in fraud. Teach the test. After all, who will know?

Shenanigans in reporting educational statistics is by no means limited to China. Here in Chicago our city fathers have perfected it.

There is no global, cross-cultural definition of literacy. Each country defines it in its own way and measures it on its own. I do not know that it is still the case but China used to use different definitions of literacy depending on what was referred to as the individual’s “station in life”. A farmer could be deemed literate if he could recognize his name when he saw it. The standards were higher for a factor worker and higher yet for, say, a government worker.

That’s why when I see all of those 99% literacy rates reported by UNESCO, I take them with a grain of salt, especially when they’ve improved dramatically over a very short period of time. One possible reality check is to compare the reported literacy rate with the number of books published annually in a country. In the United States that’s about 304,192, roughly 92 per 100K population. There are more books published in Spain (population 48 million) every year than in the entire Arab world (population 366 million).

I found a number of the insights in George Friedman’s latest offering interesting and I wish that more Americans were aware of them. For example, we have a chronic inability to evaluate the actual threat posed by potential adversaries, sometimes underestimating their capabilities:

Before World War II the U.S. massively underestimated the Japanese. In Vietnam, the U.S. underestimated both the resiliency and will of North Vietnam. In Iraq, the U.S. underestimated the response to the destruction of Saddam Hussein’s regime.

sometimes overestimating them:

World War II wrecked the Soviet Union and it would take a long time to recover. The Soviet Union had numerous weapons available, but its training, command structure morale and, above all, logistical system lacked the robustness needed to fight a high-intensity war. The Soviets knew this, which is why despite our conviction of their overwhelming strength, they never attacked. Instead, they conducted psychological operations to undermine our confidence by supporting terrorist groups in Europe in the 1970s and ’80s in an attempt to create pro-Soviet opposition groups around the world. The U.S. never clearly grasped that rather than representing Soviet strength, these operations were designed to hit American confidence. The Soviets were far weaker than imagined, and the Soviets helped us overestimate their strength.

It did not help that the CIA had a vested interest in a Soviet Union more powerful than it actually was and that the CIA systematically overestimated Soviet capabilities over a period of forty years.

His assessment of China should be better understood:

China is a significant power with problems and limits. Its core problem is a significantly weakened economy due to a decline in exports and a troubled financial system. This would be manageable in most countries, but enormous inequality and poverty has made normal adjustments to its new situation difficult. The fear of social unrest has generated a dictatorship that is carrying out an aggressive purge to ensure the party remains stable. People discuss the money China has invested in U.S. government bonds and see it as a strength. In fact, it is a weakness. It represents China’s inability to utilize this money because of an undeveloped economy, and repatriating the money would have massive effects on the yuan and inflation, further undermining China’s economy. No other banking system is large enough to absorb the money and stable enough to guarantee it. There is a significant overestimation of China’s power and a failure to see its weakness.

Militarily, China is far from ready to wage war. The People’s Liberation Army is designed for internal security. China’s geography makes aggressive warfare almost impossible. The Chinese navy does not have an operational carrier battle group. It has ships. But it has never waged intense warfare at sea, and its admirals and staff are untested in battle. Most importantly, the traditions for developing doctrines and coordinating air-sea operations don’t exist.

China could destroy Taiwan but would face grave challenges in invading Taiwan for reasons further explicated by Mr. Friedman.

This is vital:

China is substantially weaker than it looks; China knows this and is doing what it can to appear stronger and more menacing than it is to set the stage for a political solution to its problems.

I don’t honestly think that tells the entire story. China is the Rodney Dangerfield of major powers. It wants respect.

Additionally, there are yardsticks other than “existential threat”. Absent its nuclear arsenal Russia poses little military threat to us. That shouldn’t be construed as meaning that Russia is impotent. It has an imposing, highly capable military—one of the few in the world at what our military experts refer to as “C-1 readiness”. In rough terms that means the ability to maintain intensive operations over a protracted period. Turkey, for example, is not at C-1 readiness. None of our NATO allies, with the possible exceptions of the United Kingdom and France, are. I consider that a bug. U. S. policy has considered it a feature.

Russia has the ability to project substantial force outside its borders in its immediate neighborhood without resorting to nuclear weapons. That makes it a regional superpower. Does China have that ability? Do we know? Do the Chinese know? I assume they do but sometimes I wonder.

Before the Kardashians there were the Gabor sisters. The middle, longest surviving, and probably most famous of the sisters, Zsa Zsa, has died. From Variety:

Zsa Zsa Gabor, whose 60-year career of playing herself helped paved the way for today’s celebrity-obsessed culture, has died. She was 99.

Publicist Ed Lozzi confirmed to Variety that Gabor died Sunday in her Bel Air mansion. She had been on life support for the last five years, and according to TMZ, which first reported the news, she died of a heart attack.

While Gabor had multiple acting credits, her greatest performance was playing herself: She was famous for her accented English (calling everyone “darling,” which came out “dah-link”), eccentric name, offscreen antics (including a 1989 incident in which she slapped a Beverly Hills cop) and one-liners about her jewels, nine marriages and ex-husbands. Despite her glamorous image, her life, especially in later years, was marred by battles between her much-younger husband Frederic Prinz von Anhalt and her daughter.

Her best screen role was probably in 1952’s Moulin Rouge and her most memorable, some would say unfortunately so, in 1958’s Queen of Outer Space.

She wasn’t really an actress. She wasn’t really a great beauty, either. She was glamorous and glamor is artifice. Her talents were self-promotion and artifice and her spiritual offspring today are many.

Update

Reuters is reporting that the shooter was an off-duty police officer:

ANKARA (Reuters) – The gunman who shot the Russian ambassador to Turkey in an attack at an art gallery on Monday was an off-duty police officer who worked in the Turkish capital, two security sources told Reuters.

Even worse.

Update 2

The assassination is starting to be blamed on the same Gülenists who were blamed for the coup attempt back in July:

Meanwhile, pro-government journalists in Turkey are beginning to suggest that the assassin was affiliated with the Islamist movement of exiled cleric Fethullah Gülen, who is widely blamed in the country for orchestrating last July’s abortive coup. (He lives in the Poconos of Pennsylvania and Turkey is seeking his extradition from the United States.)

Tens of thousands of Turkish officials and public employees have been arrested in a sweeping national dragnet following the failed putsch, although Altintas does not appear to have been one of them.

Ankara’s mayor, too, has suggested that Gülenists were ultimately behind the assassination.

You’ll also see characterizations that what happened in July wasn’t a failed coup but a successful purge.

Original post

In a dangerous turn of events the Russian Federation’s ambassador to Turkey has been assassinated in Ankara, Turkey’s capital. The Mirror reports:

Russia’s ambassador to Turkey has been assassinated in front of terrified witnesses allegedly in retaliation for the crisis in Aleppo.

The gunman reportedly shouted “Allahu Akbar” and said in Turkish “We die in Aleppo, you die here” during the shooting which left Ambassador Andrei Karlov dead.

The attacker was fatally shot by police after wounding Mr Karlov and at least three others, according to state TV.

Mr Karlov was delivering a speech at an art gallery in the capital of Ankara when the gunman fired a shot into the air and then shot the ambassador in a suspected radical Islamic attack, the Hurriyet newspaper reported.

This is potentially disastrous. I’ll follow up as more information becomes available.

Other links

Wall Street Journal
CBS News
Washington Post

All of the above tell materially the same story.

Izvestiya

Lots of quotes of reactions from Russian and foreign sources. Being updated on a minute to minute basis.

Pravda

Utro

Gazeta

Gazeta has more pictures if you’re into that sort of thing. They’re also updating on a minute by minute basis.

KP

Biographical info on Amb. Karlov in addition to the news story. Also being updated on a minute by minute basis.

I’ve mentioned this before but not in connection with President-Elect Trump’s appointments. I don’t have strong feelings one way or another about his cabinet appointments to date but one idea I’ve been noodling over is that they may be another illustration of an approach to being president quite similar to the strategy he employed in his successful campaign: get into your opponents’ heads and control the discourse. This article at Forbes suggests that the bruited appointment of CNBC’s Larry Kudlow as the chairman of his Council of Economic Advisors supports that hypothesis.

At the Washington Examiner Salena Zito, who has been offering some of the most insightful observations about Donald Trump and his successful presidential campaign, makes this remark, sure to make many Clinton supporters fume:

Here is a shocker: I’d estimate based on my reporting that this election was baked before the debates, before the “Access Hollywood” tapes, before the hacked emails and before anyone took the time to actually notice, listen and understand just how upended the American voter is.

Pollsters will likely become apoplectic over my conclusion. That’s OK, they deal with numbers and could likely argue with great big gobs of data that I’m wrong; while I am not in the business of predicting, I am in the business of listening to people.

It was there in plain sight for everyone to see if they wanted to; it is clear that they did not and that is a bias towards him and prejudice towards the people that needs to be corrected.

If that’s the case, none of the explanations that have been serially proffered for Hillary Clinton’s election loss are relevant let alone explanatory. It wasn’t just the campaign; it was the candidate—who should have been expected to run precisely the sort of campaign she ran.