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Putin Is Mother Russia’s Favorite Son

December 14, 2007 by White House Chronicle

There is a melancholy that pervades the Russian character which outsiders can see but cannot know. A brutal history played out against a harsh land has made the Russians fatalistic and inclined to believe things will get worse rather than better. Oh well, they sigh, there is always music, poetry and vodka. Always vodka.

Then along came Vladimir Putin. Since his arrival at the Kremlin in 2000, pride and possibility have come to Russia. To prove it, Putin’s United Russia party has swept the polls, garnering an extraordinary 64 percent of the vote. Yes, the polling was suspect. Yes, Putin has curbed the media and thugs have murdered journalists. Indeed, the pro-Putin rallies have smacked of state sponsorship. But nonetheless, Putin has restored Russian confidence and has replaced chaos with order.

The Russians love Putin. To them he is either the young Jack Kennedy or Ronald Reagan–the Reagan of “Morning in America.” Putin has meant “Morning in Russia” to most Russians. He did not have to rig an election, any more than Richard Nixon’s people had to break into the Watergate; but paranoia goes with power.

Putin’s election victory is all about Putin, although he was not on the ballot. He told the Russians to vote for his team and they did in droves. More, they did it with very little idea about the philosophy of the United Russia party. He told them there is a plan for the future, but he has not disclosed it. Presumably, it is more of Putin; although he says he will honor the constitution and step down in March, when his two terms are up. Of course, Putin could tear up constitution, and all that would be heard would be the deafening roar of an approving public.

Politics in Russia is the politics of personality. The only real opposition to Putin’s bunch is the Communist Party, a spent force. Two smaller parties vote with the Putin bloc.

With the press muzzled or intimidated, Putin was able to pull off his election coup with little analysis of how he has run the country or who wields the power in his administration. Most Russians grasp that the State Duma, the parliament’s lower house, has little real power. That rests with the “siloviki”–the former KGB men and military officers who have carved out powerful positions in the administration. They do this by controlling part of the cash flow of the state-owned gas and oil behemoths, Gazprom and Rosneft. While the siloviki understand power, they are inept managers. But thanks to record oil and gas prices, there is enough money to paper over the cracks.

The Russians know that, by and large, they are better off today than they have been in living memory—that includes the waning days of the Soviet Union and the economic chaos of the Yeltsin years. A young Russian friend of mine, who has grown up and prospered in Putin’s Russia, thinks Putin is a saint. He thinks the evidence for this is that Putin has not made himself president for life. Instead, Putin’s own future is extremely hazy. He may settle for the weak office of prime minister, or, as rumored, as head of Gazprom or Rosneft.

Russians understand the cruelty of fate, the wonder of music and literature, and the efficacy of vodka. But they are awed by a potential dictator who would walk away from power. That, Ivan, calls for another vodka.

Filed Under: King's Commentaries

Sovereign Funds: Power by Wealth and by Stealth

December 4, 2007 by White House Chronicle


A new species has invaded the financial markets of the world: sovereign wealth funds. Some see these state-run investment pools as a godsend; for example, Citigroup has just been helped over a hurdle by a $7.5 billion infusion from the Abu Dhabi Investment Authority. Others see sovereign funds, which are growing in size and influence daily, as another threat to the well-being of the United States and its Western allies.

Sovereign funds are set up when countries, often with small populations, have more money than they know what to do with. After the central banks of these countries have accumulated sufficient foreign reserves to meet any contingency, they form sovereign funds that are free to invest in financial assets such as stocks, bonds or property.

On the up side, sovereign funds are pumping a lot of cash into financial markets and are helping to offset banks’ losses from the subprime mortgage fiasco. But these are not foreign companies investing; these are foreign countries investing. Abu Dhabi now owns 4.9 percent of Citi, the nation’s largest bank. This is not the same as a wealthy foreigner buying a chunk of an American corporation. And that worries some people.

Sovereign funds are not new. What is new is that they are growing at an extraordinary pace and very small, resource-rich countries have the money to demand that they are taken seriously. Of the 10 largest sovereign funds, seven are based on oil and gas. Only China, South Korea and Singapore have funds that are based on non-oil and gas trade surpluses.

No one knows exactly how much money is being controlled by sovereign funds because there is no regulation or formal reporting mechanism. Best estimates are that $3 trillion to $7 trillion are under management by sovereign funds. It is expected that this sum will increase to $10 trillion in five years.

To understand the implications of this expansion of sovereign funds, take a look at little Qatar—a desert sand spit that protrudes 100 miles into the Arabian Sea. It has some oil and the world’s second largest reserves–after Russia–of natural gas. While Russia has more than 140 million people to take care of, Qatar has less than a million, including hundreds of thousands of guest workers.

There is nothing much in Qatar. The Gulf state has a large U.S. air base; the pristine capital city of Doha; and, well, a lot of sand. The two big activities, from what I could discern when I visited there, were racing off-road vehicles on the sand dunes and shopping. The Qataris are trying to create a great financial center in their desert home. But this will just be window-dressing for the gigantic flows of cash that their liquefied natural gas exports around the world are going to produce.

It probably does not matter if Qatar buys large chunks of U.S. companies over time, or snatches up a lot of real estate. Americans will not have a fit if the Qataris buy chunks of Manhattan. But there are countries that are a lot less attractive and have agendas that are not benign. They include China, Kazakhstan, Libya and Iran, which is free to invest in parts of the world that are not honoring the U.N. sanctions.

In short, there is an enormous amount of money sloshing around the world, and with hydrocarbons fetching record prices, there will be more money looking for a home in a stock market near you.

Like immigration, sovereign funds have grown quietly but relentlessly, to a point where the governments that control them are going to have a say—political as well as economic—in the countries that need the investment. Sadly, the United States is one of those countries. For all our power and superiority, we are a debtor nation and we cannot question the color of the money we need.

Filed Under: King's Commentaries

The Ian Smith I Knew: Hero and Fool

November 27, 2007 by White House Chronicle

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Ian Smith, who led the last settler government in what was then Rhodesia and is now Zimbabwe, was a man of great physical courage, modesty, and historical and political blindness.

Smith, a hero to conservatives in Britain and America, came to global attention in November 1965, when he declared Rhodesia to be a free-standing country, independent of Britain. But despite sympathy from conservatives around the world, Rhodesia was immediately isolated and subjected to United Nations sanctions. And the conditions that led to the bitter “bush war” of independence were set in motion.

I knew Smith and I did not like him. I thought he was wrong and was leading his Rhodesian Front Party into catastrophe. But I admired him.

Smith’s World War II record was exemplary. He learned to fly in the Royal Rhodesian Air Force and was transferred to the Royal Air Force, operating out of a base in Wales. Smith’s first test was when his plane crashed on takeoff; his face was severely burned and primitive plastic surgery left part of it rigid. But he went back to war. When a Spitfire he was piloting was shot down in Italy, he parachuted to safety, landing behind enemy lines. Partisans helped him get back to Allied forces.

But the Britain for which he had fought so boldly was a post-war disaster for the young Rhodesian. It was a land of strikes, socialism and class warfare. What a pleasure it must have been for Smith to return to his homeland: a halcyon place of hope, order, and the values that had obtained in Britain before the two world wars.

The big year in Smith’s life was 1948. That was the year that the returning war hero bought the farm that was to be his home and refuge in Selukwe, a small farming and mining community where his father, a butcher from Scotland, had settled in 1898. The early Rhodesians were soldiers, miners and farmers: working men and women looking for a place in the sun.

Nineteen forty-eight was also the year that Smith married and entered politics as a Liberal. The colony was prospering and attracting many tax refugees from Britain. These new arrivals were well-to-do, well-educated, often aristocrats, and they gave Rhodesia its upper-class British flavor. They founded and joined clubs, played polo and, using local labor, lived in a way that their families had lived until the great convulsions of two world wars.

The new Rhodesians treated their central African home as they would have treated an estate in England. They imported everything they could from London, sent their children to school in Britain, and had very little interest in the indigenous inhabitants. They also had little interest in people like Smith, who spoke with a different accent and had no aristocratic pretensions. And they had the option of returning to Britain, if the political situation changed.

In 1948, and through most of the 1950s, the idea that white dominance might be challenged seemed decades–if not hundreds of years–in the future. But forces outside of the comprehension of the 240,000 white Rhodesians were building in London, Washington, Moscow and Beijing. Why, the settlers asked themselves, would anyone interfere with the little Eden that was Rhodesia? It was more prosperous than any country in black Africa, and more egalitarian and just than South Africa. Democracy? It was there for anyone who wanted it—black or white. If you wanted to vote, you could do so by qualifying through property ownership and proficiency in English. It was the same franchise that Cecil John Rhodes had offered in Cape Colony nearly 100 years earlier. The standards were too onerous for the majority and too comforting for the minority.

As other white leaders before him, Smith saw his moral and political duty as securing total independence for the colony from Britain. The British government saw its duty as protecting the black majority and establishing back rule.

In November 1965, Smith declared unilateral independence from Britain. Over the next 15 years he negotiated–often in bad faith–with the British. He became a master of broken promises and prevarication. Smith had no intention of capitulating to black demands.

In the early 1970s, guerrilla war began to escalate with attacks on remote farms, indiscriminate murder met with brutal reprisals, until it was clear that 5 percent of the population could not hold onto power much longer. Yet, Smith was slow to sue for peace. The last two years of the bush war were the most brutal with the most casualties–and the most avoidable.

In the end, Smith was forced to negotiate with an uncompromising British government in London and an outlandishly unreasonable black coalition, led by Robert Mugabe. The result was the Lancaster House Agreement in December 1979, which gave the nationalists everything they wanted and entrenched Mugabe in power. Soon Mugabe turned on his allies in the southern part of the country, and slaughtered tens of thousands of them—something Smith ought to have known would happen.

Smith showed his extraordinary courage in continuing to live on his farm and participating in national politics until 1987, when protected white seats were abolished. The most unbecoming thing about Smith was his propensity for blaming other people for the bad outcome in Rhodesia. He blamed Richard Nixon and Henry Kissinger in the United States; Harold Macmillan and Harold Wilson in Britain; and above all, he blamed South Africa. Somehow he thought South Africa would overtly come to his aid. In fact, South Africa had gone as far as it could go in covertly breaking the sanctions, keeping Smith’s Rhodesia afloat, and trying to persuade the Rhodesian leader to settle with Britain. South African leaders could see the writing on their own wall and did not want to take on an additional race-based fight.

Those who opposed Smith also got it wrong: I was among them. I wrote against him in newspapers in America and Britain. But the school of thought that liberal Rhodesians subscribed to was flawed: We simply believed that a multi-racial democracy had a chance.

In the 1980s and early1990s, it looked as though we were right. Then Mugabe began his march into insanity; destroying everything that he had inherited, making life impossible for the remaining whites and most blacks, and sanctioning lawlessness on a grand scale.

The question that will always hang over Smith’s legacy is whether his intransigence created Mugabe.

 

Filed Under: King's Commentaries

Long-Term Oil Gloom Spreads in Houston

November 20, 2007 by White House Chronicle


HOUSTON — Saudi Arabia has more oil, Rotterdam has more tankers, New York has more money, but Houston has the heart of the global oil industry. These days, it is not beating well. Study after study, executive after executive, and analyst after analyst is warning that there are rough times ahead for oil supply.

Here oil news is analyzed, sorted and shelved. But in 37 years of writing about energy, in boom and bust, I have never found the kind of fatalism that now grips the oil patch.

The cause of the furrowed brows is simple: the global production and supply of oil, at between 85 and 86 million barrels a day, is straining the system. At those rates, supply and demand are in rough equilibrium which, according to many experts, should put the price at about $80 a barrel. The difference between that price and what we are paying (as much as $98 a barrel on some contracts) is a market premium extracted because of future fear–fear of war with Iran, fear that big oil producers will demand payment in euros, and simple fear that demand in Asia is outstripping the world’s ability to produce much more oil.

The gloomiest predictions come from a loose agglomeration of economists and geologists who believe in the theory of “peak” oil. This is a view that holds that Saudi Arabia, and other high-producing areas, have peaked and will begin to go into decline without enormous new discoveries and tremendous new investment that is not being made.

The most persuasive voice of this gloom is Mathew Simmons, a Houston-based geologist and banker. Given the production realities, he believes that $100-a-barrel oil would be a bargain, and that the world should brace for $300-a-barrel oil.

In pessimism, Simmons is closely followed by Chris Skebrowski of the Petroleum Review in London. Skebrowski, who used to work for British Petroleum and the Saudis, believes that the world will be in oil chaos within five years. In that time, he believes demand will grow by 7 million barrels, which will be in deficit.

A third voiced of gloom comes from Christophe de Margerie, head of the French oil giant Total SA. He says the world will be hard put to produce the 118 million barrels the Energy Information Administration of the U.S. Department of Energy has predicted for 2030.

If you think the negatives are coming only from oil patch radicals, try Rex Tillerson, chairman of ExxonMobil. He told the World Energy Conference in Rome that if the world oil-dominating, state-owned oil companies are not freed from political control and allowed to bring in Western technology and capital, then a crisis is inevitable.

There is evidence that the oil majors themselves are hurting. When oil passed $60 a barrel, their profits shot up. But they are not up commensurately with oil at $90 a barrel. The big guys are getting squeezed.

State-owned oil companies have been criticized for not spending enough on new exploration and technology. The big American companies have been accused of preening themselves for Wall Street, with stock buybacks and other beauty treatments, instead of finding and exploiting new oil reserves.

All of this makes Houston, well, a different place. It has not totally recovered from the collapse of Enron. Amid the prosperity, some of the old bombast has gone. Oil people used to love to ridicule Washington and pour scorn on New York. Now I find a more subdued, tolerant, and even chastised Houston.

I liked the old Houston with its larger-than-life wildcatters, even if they thought I was an effete, Eastern, big government-loving liberal. I liked the guy who told me I could ride with him to Morgan City, where the oil rigs are made, so that we could drink in the roughest bar in Texas. “If you don’t have a gun, they’ll issue one at the door,” he said matter of factly.

Filed Under: King's Commentaries

The Numbers That Changed History

November 13, 2007 by White House Chronicle


In the 19th century, numbers really did not matter. In the 20th century, they began to matter. And in this century, they matter a lot. I am talking not about mathematical abstractions but populations.
In the 18th and 19th centuries, European powers, led by Britain, captured vast swathes of the globe without regard to the territory size and population density. Hence Britain’s annexation of India, which included what is now Bangladesh and Pakistan. Numeric superiority just did not matter.What did matter was the control of the technology of war. And the colonial powers held their armaments close. So Britain was able to dominate several hundred million people worldwide with a mixture of superior armaments, moral certainty, and enlightened systems of justice. All three were required, but the control of firearms was essential.
Very few dissidents with firearms can change the balance very fast. The American Revolution would have failed if the colonists had not been well armed. In that early struggle, the British and other colonial powers realized if they were to hold territories in Asia, Africa and Latin America, small arms had to be controlled.

Where weapons were largely controlled–most of Africa, a lot of Asia, including Indochina, Malaya, Burma, Indonesia and Ceylon–liberation had to wait for the upheaval of World War II. When the colonial power was slow off the mark, the Soviet Union supplied the arms that fed the uprising, as in Algeria, Angola, Indochina, Mozambique and, eventually, Rhodesia.

America’s National Rifle Association has long held that wide gun ownership is a bulwark against oppression. In the sense that an armed populace can, in theory, rise up against an oppressor, it is right. Whether this works against a domestic usurpation of power is questionable.

The second challenge to colonial hegemony was democracy and the supremacy of population numbers. Imperialists and their strategic planners had to start counting people, which they never had to do when the Maxim machine gun could adjust for a lot.

The the opponents of colonialism embraced democracy for others, even when they themselves did not. The Soviet Union and many liberation movements used democracy as a means to an end: totalitarian control after independence. In Africa, this fake embrace of democracy affected every country north of South Africa and south of the Sahara. It also affected more sophisticated emerging countries like Burma, Indonesia, Malaya, and the Philippines.

So numbers count for nothing in assuring democracy. Big India has made it, as has little Finland; but not big China or little Belarus.

More important is how few rebels are able to create chaos if they have plenty of small arms: the story in Algeria and Northern Ireland. The Algerian uprising, which eventually drove out 1.5 million French settlers, was initiated by a few hundred rebels, who picked up numbers as the French tried to meet brutality with brutality. In Northern Ireland, the British Army has been pinned down for nearly 40 years by around 300 active IRA gunmen.

None of this suggests anything good about either “winning” in Iraq or extending the military option in the region–too many weapons and too many recruits to use them. These are the numbers that subvert high purpose.

The military option is no longer the one that existed for thousands of years: conquer and rule. Great powers like the United States can hit another country, largely with air power, but there is a limit to the extent we can influence circumstance on the group.

I watched the last throes of colonialism in my homeland, Rhodesia, now called Zimbabwe. Liberal thought the world over championed democracy—that is to say, majority rule–and the Soviet Union and its surrogates, like Cuba, provided the arms and trained the guerrillas. Nobody won, but the numbers spoke.

 

Filed Under: King's Commentaries

Putin: The West’s Problem, Russia’s Hero

November 7, 2007 by White House Chronicle


If President Bush were to ask his national security team who is the most popular elected leader in the world, they would have to tell him it is Russian President Vladimir Putin. He is Russia’s Ronald Reagan, revered in his own time.
In a country where cynicism is as deep as the winter is long, the popularity of Putin is notable. Trained as a KGB officer, Putin comes from the elite officer class in St. Petersburg, the old imperial capital and still the jewel of Russian cities, and the least typical.Putin was not a career politician. He was instead a career intelligence officer and a member of the Communist party, from which he is said not to have resigned. As a KGB officer, Putin made it no further than Dresden in communist East Germany. He made major, but he was not a great success–if he had been, he would have been posted outside of the Soviet bloc.Since tsarist times, Russian leaders have been known for their excesses. But Putin has shown the world a more modest face. He does not drink and his favorite recreation is judo. It is tempting to read Putin’s character through judo, in which he holds a black belt. In particular it is tempting to note that judo is the science of leveraging your opponent’s strength. Historians will have a field day with the role of judo in Putin’s governing style.That style is crafty, autocratic, and at times lawless. In Putin’s Kremlin, the law is a malleable thing. It is bent and circumvented to the national interest as defined by Putin and his administration. His team is far more powerful than the Duma, now a rubber-stamp parliament. The reformers of the Gorbachev and Yeltsin years have been replaced by the siloviki—veterans of the security and military ranks.

The Putin administration may be weak on economics and slough off legal norms, but it understands power and knows how to project it from Moscow across Russia’s vast and sparsely populated land. The population of 140 million is spread over 11 time zones.

Putin has his problems, including the bloody war in Chechnya, rural poverty, an aging and declining population, and the inefficient legacies of communism But he is also the luckiest Russian ruler in memory. With the world oil price heading toward $100 a barrel, Putin has money. He has a carrot as well as a stick, and he is adept at using both.

With the world’s largest natural gas reserves and second largest oil reserves, Russia is a power in Europe and in Asia. It plays rough and it plays dirty. Russia has violated the terms of nearly every oil and gas contract it has signed with the West; it has imposed gross and confiscatory taxes on Western production, and it has increased environmental restrictions in order to confiscate Western leases on Sakhalin Island, a far eastern Russian territory. Yet the energy hungry in the West have come back for more. Last month, France’s Total S.A. and Norway’s StatoilHydro ASA were both elated to get 25 percent positions in a Barents Sea project. In both cases, Putin is said only to have agreed after receiving calls from the presidents of France and Norway. Homage you might call it.

Russians applaud Putin’s toughness in standing up to the world in general, and the United States in particular. But it is his stand against Russian billionaires that most delights them.

In the breakup of the Soviet Union, immense fortunes were made in the privatization of state assets. The beneficiaries are known as the oligarchs, and they are hated. When Putin, with little legal basis, broke up Yukos Oil Company and imprisoned its founder Mikhail Khodorkovsky, the Russians cheered. When a dissident and friend of a refugee oligarch in London was murdered with polonium, Russians shrugged, secure that their leader would brook no nonsense. His popularity rating soared above 80 percent.

The Putin popularity poses some questions: Will he really step down next year as the constitution requires, or will he become prime minister and govern that way? Or will he become head of Gazprom, the Russian energy colossus, and become an oligarch himself? Your move, comrade president.

Filed Under: King's Commentaries

The Awful Choice Posed by Iran

October 28, 2007 by White House Chronicle

Winston Churchill said that a decision not taken was nonetheless a decision. The decision to bomb Iran has not been taken, and President Bush’s tightening of sanctions against Iran may be a decision not to decide.

Here in Washington, debate about Iran is dominant. Unlike the debate that preceded the invasion of Iraq, this one features a much greater emphasis on what happens after striking as many as 20 Iranian nuclear sites. Ergo, lessons have been learned.

The hawkish argument is pretty simple: If you delay Iran’s production of an indigenous weapon for decades, you will not only protect Israel from a future horror, but you will also send a categorical message to other proliferators that there will be consequences for defying the United States. It is an argument about the future.

The dovish argument is about the day after. It is an argument over what happens immediately, and how catastrophic the consequences will be in the months after a unilateral aerial assault. With the Iranian street aflame, will Iran send its conventional forces across the Iraq border to engage the U.S. forces in formal warfare, even as they are fully engaged in fighting the insurgency? Will Iraq succeed in disrupting tanker traffic through the Straits of Hormuz, pushing world oil prices to $150 a barrel? Will Iran endeavor to engage Israel directly rather than through its surrogate Hezbollah?

Then there is the unknown reaction of Russia and China, both of which are cozy with Iran. And again, will Turkey take advantage of the chaos to invade Northern Iraq to suppress Kurdish terrorists, even to commandeer Kurdish oil? Will the whole of the Middle East go up in flames, as Egypt’s Hosni Mubarack has warned?

The administration has sent every warning to Tehran that it will not abide continued uranium enrichment. While Bush talks diplomacy, Vice President Dick Cheney continues to beat the war drums with tough rhetoric. Additionally, the administration has asked for money from Congress to modify B-2 stealth bombers to carry “bunker-buster” bombs. Because Iranian air defenses are fairly good, this says two things: We’re preparing to come after your underground facilities, but not before we modify our weapons. A strong signal, but a mixed one.

Inside the administration, it is believed that Secretary of State Condoleezza Rice and Defense Secretary Robert Gates are dovish, while Cheney and those outside the government but with influence in decision-making, and who supported the Iraq invasion, are keen on striking Iran. The military is known to believe that it has its hands full, and is concerned about the safety of its forces in Iraq should conventional Iranian divisions pour across the border.

Another wild card is Saudi Arabia. Its armed forces are well-equipped with American gear, but it has no record in serious combat. The Saudis do not like the Iranian strength in the region, and Saudi Arabia is predominantly Sunni while Iran is Shia. The Saudis have told Cheney that if the United States withdraws from Iraq, Saudi Arabia will go in to bolster the Sunni minority, but they would not want to be at war with Iran. There are only about 5 million Saudis, but there are 80 million Iranians.

A small but not insignificant light on the state of play in the administration and the military comes from Gen. David Petraeus, the top U.S. commander in Iraq. When journalist Juan Williams said on “Fox News Sunday” that Petreaus was seeking permission to follow Iranian insurgents across the border into Iran, Petraeus had his spokesman call Williams to say that the general did not want that authority and had not sought it. In other words: I have got enough war to manage, I do not need to add hot pursuit.

The problem comes back to Iraq. If there were no U.S. troops on the ground in Iraq, we could probably bomb Iranian nuclear installations with little consequence. As it is, we would have to bomb the nuclear targets and if Iran reacts by invading Iraq, escalate the air war, bombing conventional military targets like missile silos. If things continued to deteriorate, we would have to go after infrastructural targets like bridges, power plants and oil installations.

There is third line of argument that says the Iran bombing could be carried out by Israel, which, after all, took out Saddam Hussein’s reactors in l981 and has just taken out a presumed nuclear target in Syria. The problem is that Israeli bombers, and fighters, do not have the range to reach Iran and get back without in-air refueling. That would require U.S. tankers flying from U.S. bases in places like Qatar, Kuwait, Iraq, etc. And that would not sit well with those countries and would Americanize the attacks anyway.

No wonder a third bird has joined the hawks and doves of old. It is the ostrich.

Filed Under: King's Commentaries

Fox’s New Broad-Brush Channel

October 23, 2007 by White House Chronicle Leave a Comment


The much-awaited Fox Business Network launched on cable television last week. It was also the week in which the stock market took its worst drubbing in years. No matter. Rupert Murdoch’s News Corp. clearly plans a channel that is relentlessly upbeat, populist and with a broader viewer base than its competitors, Bloomberg and CNBC. Call it “The Joy of Capitalism.”

Given Murdoch’s recent purchase of The Wall Street Journal, some expected Fox Business Network to be The Journal with moving pictures. But the first week suggested that the creators of the new channel want something with much broader appeal: “Business for Dummies.”

The serious, staid Journal was not in evidence in FBN’s first week. No. The first week of the new channel owed little to established business broadcasting. It is closer to its stable mate, Fox News, than to any existing business news outlet on the air or in print. It is a mixture of personal finance and discussion with occasional recognition that the world of money is also a world of big money and big players—a feature on budget dating contrasted with an interview with Warren Buffet.

Murdoch has fathered FBN, but Roger Ailes has been its midwife. Ailes, a large man who worries about his weight, even as it increases, is a television genius. He understands that television is the most powerful medium, and that it is still evolving. It was an Ailes acolyte, Larry McCarthy, who created the deadly effective “Willie Horton” ad, which George H.W. Bush used in his 1988 presidential campaign to depict Michael Dukakis as soft on crime. And it was Ailes who created CNBC.

Ailes’s special talent is pace, or what TV people call “production values.” Fox television has high energy: It is all snap, crackle and pop–and very political. Ailes and Murdoch both understand than you can bond with an audience if you play to its prejudices. Murdoch learned that when he relaunched The Sun, a liberal London newspaper, as a right-wing, jingo and bellicose conservatism-for-the-working-class title. But not too socially conservative– it features a topless girl on Page Three most days.

In the media, there are no secrets: Your formula is there for everyone to see. The trick is in a blend of vision and execution. Ailes has been the master of executing Murdoch’s vision. Can Ailes pull it off one more time? Can he take business news to a wide audience at a time of stock market volatility; and, more of a challenge, at a time when most small investors are invested not directly in blue chips, but in mutual funds, through vehicles like 401ks or pension funds?

When I met Ailes, more than a decade ago, Fox News was still struggling against CNN, the market leader, which had just overhauled its Headline News. Ailes, who is affable, despite his reputation as ogre, was seeking to unseat the king. And he was relishing the fight.

Like many journalists, I did not know that Fox politics would carry the day. Indeed, the relentless right-winged formula at Fox not only carried the day, but also vanquished CNN, leaving it a confused corps of news, personalities and viewpoints.

I do know that if Fox starts losing in the business news ratings, Murdoch will turn away and try something else. He turned away from most of his U.S. newspaper and periodical holdings when they failed to perform to his expectations. Part of Murdoch’s success has been his courage to abandon mistakes. He does not fight wars of attrition.

While old-line media companies are trying to repel the forces of the Internet, Murdoch has bought in, laying down $580 million for MySpace. Rather than watching the birth of his business news baby, the wily Murdoch attended an Internet conference.

While I abhor what Murdoch has done to journalism (the politicization, the vulgarity and the trashing of objectivity), I am also lost in admiration. In Britain, he tamed the malicious and destructive trade unions by making an end-run around them. In movies, in book publishing and, above all, in television, Murdoch has been the greatest force of his time–if a little scary. Stay tuned. I will.

Filed Under: King's Commentaries

The Dog Days of Our Lives

October 18, 2007 by White House Chronicle



A dog has died: a big, happy white dog; a dedicated pacifist; a dog with the manners and the ways of an Edwardian gentleman. He came to our house in need of a family. But, in the way of these things, my wife and I needed him. Strange how every dog fills a need we did not know we had.


Someone had appropriately named the lover boy Sunny. He did not do tricks, give a paw, or beg at the table. Although, truth be told, he had a what-about-me stare that could penetrate hardened steel.

When age and infirmity sounded their knell, Sunny had to be gurneyed into the veterinary hospital, where kind hands did the dread thing. As he lay on the table, I kissed him goodbye, and I cried for him and for myself. The mortality of our dogs–their lives and assigned span of years–is so out of step with our own pilgrimage.

Why do dogs commandeer our hearts and minds, and shatter us with their departure–each one so different from the others, and yet as dear, as precious, as intriguing and as beguiling? Do dogs live with us, or do we live with them, even through them? Do we escape into their being–so much simpler and nobler than our own? We pamper them and they fawn on us; we corrupt and transmogrify them, and they accommodate. Their sins are few, by comparison with the panoply of our own. What is a little jealousy, or a smidgen of disobedience, compared with the human capacity for evil?

Some people are much like other people, but the variety of canine personality is one of the miracles of Creation.

I have been pondering the many dogs who have favored me over the decades. There was Monty, the fox terrier, who got lost in the African bush and journeyed 200 miles home. There was Healthcliff, the Jack Russell terrier, who thought all children in swimming pools were in such mortal danger that he belly-flopped in and tried to drag them out–by the hair, if they were girls.

And there was Overset. I named him Overset, which is what newspapermen call articles for which there is no room in the paper. Overset was an ingratiating stray who was surplus to my living requirements. He showed up at the hotel where I lived in Washington, D.C., back in the late l960s. The hotel frowned on his presence, so I took him to work at the old Washington Daily News.

Overset adopted the paper and it adopted him. His day began on the editorial floor, where he would jump on the copy desk, and walk up and down while the first edition was being prepared. Then he went down to the composing room to hurry on the printers. Even the noise of the presses did not faze him. His last stop was the loading dock, where he would bark, if he thought newspaper bundles were not being loaded fast enough. Six unions claimed he had honorary membership.

In what, I think, is John Le Carre’s greatest novel, “A Perfect Spy,” the old, professional spy, Broadbent, loses his beloved dog. Broadbent takes his favorite tweed coat and wraps his dog in it before he buries him. There were many poignant moments in the book, but that one stands out.

Many poets have memorialized dogs, but none more so than Rudyard Kipling. The imperial poet went sentimental about dogs. Prolific, too.

When a dog’s last day close, and we are bereft, it is time to read again Kipling’s lament, “There is sorrow enough in the natural way/ From men and women to fill our day/ … Brothers and sisters, I bid you beware/ Of giving your heart to a dog to tear.”

Beware, indeed. Even the runt of a litter of uncertain parentage is born with the keys to human hearts.

Filed Under: King's Commentaries

Why Is the Department of Energy Celebrating?

October 8, 2007 by White House Chronicle Leave a Comment

This week, the Department of Energy (DOE) is celebrating its 30th anniversary. I hope they hold it down. There is not too much to cheer about. When creation of a department was first bruited, the United States was importing 30 percent of its oil needs. Now it imports 60 percent. Keep the champagne on ice.

Over the course of its history, DOE has spent hundreds of billions of dollars with little to show for it. If as President Jimmy Carter, who created the department, imagined its purpose was to improve energy supply, then it has failed absolutely.

I believe, but do not know, that DOE has succeeded in the stewardship and renewal of the nation’s nuclear weapons stockpile. I do know that the department has helped to improve some energy technologies, such as a better drill bit for oil extraction and better nuclear plant controls. And it has developed some wonderful materials and technologies, which were cold-shouldered by industry–ceramic exhaust ports and valves for the automobile industry come to mind.

But DOE has failed to develop a commercially viable technology for using dry hot rock in geothermal electric production. It also has failed to develop a workable model for in situ gasification of coal. Unintentionally, the department found the limits of direct solar electric generation with power towers and mirrors.

Where DOE invention did work was through a program, now phased out, of cooperative research and development agreements. These helped many manufacturers, including fiber extruders, improve their operations.

In the 1980s, it was hoped that DOE and its network of 25 major laboratories would lead a technological revolution that would take the United States to unimagined heights of creativity. That happened, but it happened in Silicon Valley. So DOE fell back on cleaning up the nuclear waste sites of earlier generations; dismantling old nuclear weapons; and pleasing politicians by accommodating their feel-good projects—think the Clinton-Gore smart car and the Bush hydrogen car.

Importantly, DOE monitors nuclear testing around the world and is a lead agency in issues of treaty verification.

In the beginning, there was the Atomic Energy Agency: a swaggering promoter and defender of all things nuclear. When environmentalists objected to its role as promoter and regulator, it was swept into a new organization of mismatched agencies called the Energy Research and Development Administration. That agency brought together such disparate things as nuclear weapons manufacture, desalination, and coal research–each with its own political constituency on Capitol Hill. It even enriched uranium: something that was later hived off to the private sector.

The core of DOE, and its predecessors, is the national laboratory system: an archipelago of gifted institutions that employ around 100,000 people. While the genius of the national labs is uncontested, so is the duplication of their effort and their own bulwarks against reform. Do we need so many of them? Is something learned by the National Renewable Energy Laboratory in Golden, Colo. studying hybrid vehicles, when they are being studied in Oak Ridge, Tenn., at the National Transportation Laboratory? And why is government investing in technologies that are established in the market?

The first secretary of the nascent department was James Schlesinger, who had already distinguished himself as chairman of the Atomic Energy Commission, director of the CIA, and secretary of defense. Had this rock-ribbed Republican been secretary of energy at a different time, he might have advanced the streamlining of the national lab system.

Like Department of Homeland Security, DOE is a political semantic creation. There are too many leaves in its portfolio for it to deliver to the full extent of its talent or the national need.

I was there at DOE’s planting. I would like to be there at its pruning. And I would like to be there when a secretary, both with the ability and the mandate, transforms the department to something that might be called “mission critical.” The current secretary, Samuel Bodman, appears to have the credentials but not the mandate.

Certainly, there are islands of excellence in the DOE archipelago. But they are set in a sea of dysfunctional bureaucracy.

 

Filed Under: King's Commentaries

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