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In an interview with Rolling Stone magazine, the commander in Afghanistan, General McChrystal, responds to a question about Vice President Biden, and says, "who is that?" An aide jumps in saying, is that "Bite Me?" These and other words of disdain for the Vice President and other policy advisors, are seen as the kind of frustration facing commanders from the slow progress in the enlarged effort in Afghanistan. It also brings to the fore the serious questions that have always remained, some raised by Biden, Reidel and others, of how any kind of success could be achieved without a reliable partner in the Afghan government, with the complicated situation in Pakistan where the Intelligence Services pursued a different agenda from that of the government, and with little interest from the people in the rural areas in a vast rural mountainous country, Kabul a little urban dot in a huge landscape of deserts and mountains. See the groups and links for Afghanistan and Pakistan for background.

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Montes and Cordoba of the WSJ provide this exceptional account of corruption at the state level in Mexico. Ironically the very effort to reduce the power of centralized administration with PRI winning repeated elections and having a monopoly in power for many years, led to the decentralization and passing on power and money to the state governments in Mexico after the 1990's. But this was done without putting in the checks and balances required. Instead too much power was now concentrated in the hands of the state governments which appointed even the judges and officials at all levels including election bodies. Federal transfers of tax money to states increased 20 fold to $88 billion in 2016, according to this report.  The result 41 state governors faced corruption charges between 2000 and 2013, according to the Mexican Competitiveness Institute. This includes the state of Veracruz where state coffers are almost empty and there is no money to pay municipal bodies. The PRI governor of Veracruz Mr. Duarte supported president Pena Nieto, and was at 43 years age cited as the new face of the young PRI. This report  says he is nowhere to be found now that $2.5 billion in state funds cannot be verified. Other states are Tamaulipas, Quintana Roo, Coahuila, Sonora, where corruption charges remain. The Veracruz scandal is among the worst and is the focus of attention for the public in Mexico. At this point president Pena Nieto of PRI has about 12% popularity rating, lowest of any modern Mexican president.   ...

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Ben Van Heuvelen documents in the Washington Post what Ali Nabhan and Bradley pointed out in the WSJ in May 2009, that the officers in the Iraqi army lacked the training and discipline to act as an effective fighting force. These early indications proved correct and were ignored by the Iraqi government and the Obama administration till it was too late with the fall of Mosul and the ensuing chaos in Iraq.

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This WSJ editorial points out that the lack of action from the Obama administration has led to the current situation in the Middle East with Russian intervention, the wave of refugees from Syria, and the increasing sectarian conflict. It cites from president Obama's address to the UN General Assembly that "the nations of the world cannot return to the old ways of conflict and coercion," yet failing to take action in the Middle East to prevent this from happening.

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Fareed Zakaria points out that the primary elections of the Republican and Democratic parties can pose a danger to democracy because of demagogic politicians who can appeal to popular passions to bring a fringe group or individual to the presidency. Primaries for both parties became important after 1968. Eisenhower and Lincoln won the nomination after the person nominated on the first ballot failed to win the necessary votes. Another serious problem is that the turnout in the primaries is low, so low that a 15% turnout is considered high turnout. The media attention is so great that it creates the impression that a real election has taken place when in reality about 85% of the people have not voted- as the Economist magazine points out a representative turnout would change the outcome significantly so it is not clear how much this promotes democratic process.

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One military expert says even if half of the Iraqi army can be put in shape it could turn the tide against the ISIS. Advice from U.S. military experts is for the Iraqi army to focus only on the ISIS and avoid hurting relations with the Sunni population. Advisers are seen as making a difference and needed also for the tribal forces. A major difficulty is that Shiite militias and advisors from Iran play a role in the forces loyal to prime minister Maliki. Following the U.S. training of the Iraqi Army at a cost of over $25 billion there was a period under prime minister Maliki when he appointed officers more for loyalty than for military skills and training. With the U.S. withdrawal the Iraqi Army languished in this situation. Reporters from NYT and WSJ have documented extensively the weakness of the Iraqi Army in commanding officers, in training and in equipment.

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Nour Malas and Joe Parkinson report from the town of Makhmour, retaken by Kurdish Peshmerga forces following airstrikes on ISIS militant positions. The crisis situation 20 miles from Erbil, capital of the Iraqi Kurdistan region and the coordination between Iranian advisors, U.S. military advisors, and the Peshmerga to push back the ISIS. Peshmerga say young Sunnis in the town joined the ISIS in droves, something never seen before. It also reveals the situation after the failure of the Maliki administration to build a state with support from all parts of the Iraqi population- Shiite, Sunni, Kurds and tribes- leading to the radical alienation of Sunnis. The late awakening of Iran, the U.S., and moderate Iraqis both Sunni and Shiite, to the dangers of the Maliki policies. The unraveling of the decade of Iraq rebuilding by the U.S. in such rapid manner leads to the stepping down of Maliki and beginning of a new non-sectarian approach and policies. The vacillating in the Obama adminstration's policies towards Syria and Iraq leads to a lack of direction in the region. ...

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Gen. Martin Dempsey took a cautious approach to U.S. involvement in Afghanistan and Syria. He did not approve of the way Gen. McChrystal expanded U.S. involvement in Afghanistan, and the hasty manner in which the Iraqi army was trained under his predecessors leading to some commanders being appointed who later became members of sectarian death squads. Under his command the U.S. limited its role in Afghanistan and Iraq and handed more responsibility to local forces. Gen. Dunford who succeeded Dempsey as chairman Joint Chiefs of Staff for the U.S. follows the cautious approach set by Dempsey. Dempsey's approach extends to what he believes is an Heisenberg effect in physics where when you you observe or touch something it changes the way it functions and operates. For critics such as Senator McCain, who served in Vietnam as a pilot, if Dempsey did not want to intervene in some country, he could invent the reasons not to get involved. President Obama exceeded the caution exercized by Dempsey, leading to a situation where the U.S. after hasty action under a Republican president seemed to lurch in the opposite direction under his Democratic successor by not taking action where U.S. presence was needed, followed by a corrective course to make up for this....

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Two thirds of Americans are becoming pessimistic about the economy. This is one of the results of a Wall Street Journal/NBC poll. This is up from 53% in January. Voters are losing confidence in the idea that the Democrats can come up with better solutions than the Republicans. Only 24% of those polled have positive feelings for the Republican party, with Democrats doing only slightly better. Democratic pollster, Peter Hart- who along with Republican pollster Bill McInturff conducted the survey- calls it the JetBlue election. This description is from the JetBlue flight attendent who ran from the plane after exiting through an emergency chute. There is a sense of severe discomfort and looking for the exit, he says. With 6 in 10 of those polled expressing a loss of confidence in the policies of the Obama administration to improve the economy, including 83% of independents, and a quarter of Democrats. The situation has deteriorated on the confidence level with the war in Afghanistan as well. 68% of those polled say they are less confident now that the war in Afghanistan can be brought to a successful conclusion....

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Paul Volcker before the U.S. Senate Banking Committee on May 9, 2012, before the announcement of the $2 billion trading losses by J.P. Morgan Chase. The following day Chase announced the losses from trades made by JP Morgan trader Bruno Iksil- nicknamed the "London Whale"- who made a complex hedge on a group of corporate bonds, betting $100 billion that the bonds would not default. The Volcker rule as it is currently written would not prevent such a transaction. The problem as Volcker pointed out before the Banking Committee is that under "too big to fail," "the losses would be socialized with the potential gains all private."

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Spain's central bank was lauded for macroprudential supervision before the housing bubble burst. Will China's central bank and financial authorites which have managed the housing bubble upto this point face similiar problems? Can China be the sole exception even as housing bubbles burst with wide repercussions in the U.S., UK and Spain? Nicholas Lardy, of the Peterson Institute of international Economics, says urban housing stock makes up 41% of Chinese household wealth in 2011. The same figure for the U.S. is 26%. Chinese buyers invest in homes because low interest rates on savings accounts cannot keep up with inflation. Real estate investment was 13% of GDP in 2011. Home ownership is a recent development in China, only since 1990, Chinese have never experienced large price declines. Household debt as a percentage of disposable income has increased significantly in recent years, up to 53.6% in 2011 from 31.3% in 2008, according to Lardy.

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Friedman compares the anti-corruption movements in India and the U.S., the world's two largest democracies. The Occupy Wall Street anti-corruption movement in the U.S. focusses on the excessive influence of banks on lawmakers, regulators, and the government, through the use of campaign money, revolving door for government officials and regulators to join banks, and intense lobbying. The anti-corruption movement focusses on corruption in government at higher levels, such as the handling of government licenses, and at the basic levels of needing to bribe officials for something as simple as getting a birth certificate or other government document. Both have pernicious effects, in the U.S. excesssive bank influence leads to taking excessive risk for higher bonuses, putting the entire financial system at risk and creating a crisis in housing that delays the economic recovery. And in India the corruption leads to retarded progress, as funds to invest in infrastructure and development are siphoned off, business and entrepreneurs are required to pay bribes at each step, and ordinary people face the need to pay bribes for the most routine interactions with government officials. In the process this creates more unequal societies by skewing the distribution of benefits from wealth created to groups that are better equipped to game the system. The economic system once distorted in these ways has tendencies to take talent away from productive activity and innovation which create wealth, and direct it towards speculative activities....

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J.P. Morgan Chase announces $2 billion in trading losses in May 2012. The Chief Investment Office unit made a bet with a trading strategy that CEO Jamie Dimon said had grown very complex. These losses could grow or shrink during the rest of the year.

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Barry Ritholtz lists the causes of the financial crisis, He says New York Mayor Bloomberg's exoneration of the financial industry is simply false- what he calls "the Big Lie"- even though Congress, regulators and the Greenspan Fed acted irresponsibly and created favorable conditions for the actions of the financial industry.