Cyreenik Says

July 2016 issues

Turkey: It's classic: coup Panic followed by purge Blunder

The attempted military coup in Turkey this week was a deeply scary event for President Erdogan and his followers. However it was a clumsy attempt and in just two days it was clear it had failed.

But that quick failure has not kept Erdogan and the winners from feeling they must take action, and they are. And, these being scary and novel times for them, they are calling for quick, instinct-based action, and that will make the actions taken a Blunder.

The Blunder in this case is massive purges that are transforming into witch hunts. The winners have rounded up thousands of military, and added to that tens of thousands of civilians, including most of the country's judges and educators. Brrr... this is now sounding like a quick mix version of Stalin's and Mao's Communist and Cultural Revolution purges, with some Khomeini Iranian revolution mixed in.

Yes, It's Blunder Time in Turkey, folks! Duck and Cover! Whatever the outcome, it's going to be expensive, the expense is going to last a long time, and it will not solve the scary problem that started the action in the first place.

Specifically, what to watch for over the coming weeks is "old score settling" by Erdogan's close advisors. The famous US example of this is Bush Jr. invading Iraq after 9-11. Iraq was chosen because Bush Jr.'s close advisors were Bush Sr.'s close advisors during the First Gulf War and they were deeply disappointed when Hussein didn't get "regime changed" as that war ended -- this left them with a score to settle, and the 9-11 panic offered them the opportunity to settle it.

I don't know Erdogan's advisors well enough to know what grudges they are holding, but two have revealed themselves so far: a grudge against Fethullah Gülen a former Erdogan advisor who is now self-exiled in the US, and grudges against the Turkish judiciary and education establishments. From the Wikipedia article, "Mass arrests followed, with at least 6,000 detained, including at least 2,839 soldiers and, for reasons that remain unclear, 2,745 judges. 15,000 education staff were also suspended and the licenses of 21,000 teachers working at private institutions were revoked as well, after the government alleged they were loyal to Gülen."

This 21 Jul 16 WSJ article, Turkish Crackdown Puts Spotlight on Education Sector Suspensions and firings after failed coup reflect how a once-lauded corner of society has turned into a security threat by Thomas Grove, describes some of the score settling. From the article,

"The ties between the two Islamist allies collapsed in December 2013, when prosecutors linked to Mr. Gulen’s movement filed corruption charges against close political and business associates of Mr. Erdogan.

In retribution, Turkish authorities brought pressure on the Gulenist networks inside Turkey and abroad—throughout the former Soviet Union, Europe, North America and Africa. A Turkish court threw out a government attempt to close the chain of schools affiliated with the religious leader.

Since then, Mr. Erdogan has followed a more confrontational approach with the country’s secular tradition."

It seems life moved on after 2013, but the grudge was not forgotten, and now in 2016 has come an opportunity for some score settling.

And some similar thoughts in this 23 Jul 16 Economist article, Erdogan’s revenge Turkey’s president is destroying the democracy that Turks risked their lives to defend.

This 28 Jul 16 Xinhua article, Turkey's prosecutor includes CIA, FBI in coup allegations, is an example of instinctive thinking in action: blame the CIA to help in our score settling.

From the article, "Two top U.S. intelligence bodies are being accused in an indictment of providing training to followers of the alleged mastermind behind the failed coup in Turkey, state-run Anadolu Agency said Thursday.

"The Central Intelligence Agency (CIA) and Federal Bureau of Investigation (FBI) provided training in several subjects to the cadre belonging to the Gulen movement," the indictment was quoted as saying."

Challenge of the decade: Fixing the world's disenfranchisement with new styles of Big Vision

Times are changing.

One of the big changes is in employment. Conventional jobs are not growing in numbers. This means many more people are frustrated because they can't get the deeply felt and deeply important satisfaction of "having a job" in the traditional meaning of that phrase. They feel disenfranchised.

One of the big social challenges that will come with creating the Total Entitlement State (TES) -- what we are headed into as automation gets more pervasive -- is finding a satisfying replacement for "get a job" as a social enfranchiser. (read more about TES in my book Visions of 2050)

We need to find Big Visions that don't depend on putting a lot of people into traditional jobs to have them feel enfranchised.

This is going to be one of the chronic big challenges around the world over the next few decades.

This 14 Jul 16 WSJ article, Low Unemployment, High Dissatisfaction
The sunny jobs reports don’t count people who have given up looking for work. No wonder the national mood is sour. by Bob Funk, talks about the high rate of people who flat-out aren't looking for work these days.

From the article, "With the latest jobs report pegging unemployment at 4.9%, Americans should be similarly satisfied, yet an astounding 69% tell Gallup that they’re dissatisfied with the way things are going.

One big reason the official statistics show a low unemployment rate is because so many people have quit looking for work. A recent Harris Poll conducted for my company, which places people in jobs, showed that 43% of the unemployed have given up looking. The labor-force participation rate today stands at 62.7%, stuck at levels not seen since the late 1970s, before women fully entered the workforce."

Brexit -- something novel, scary and surprising, but not panic inducing

Brexit is turning into an interesting Panic and Blunder lesson... because it has not created a panic or blunder.

Why not?

Brexit has a lot of elements needed for a panic and blunder situation to come about, but not all of them. It has novelty and surprise -- no one expected this to happen. It's big and scary, it means big changes in global business and government dealings.

What's missing?

The sense of scary urgency is missing. This is not happening quickly and no one is going to get hurt or die if quick action is not taken. This is why no panicking or blundering has happened.

But it has definitely raised uncertainty and stress levels in business and government relations around the world. It has not caused a panic, but it has made it easier for some subsequent scary and surprising event to cause one.

Requiring urgency is the Lesson of Brexit in the realm of Panic and Blunder.

This season's terror surge -- sign of the ISIS break up?

Last month I wrote about the news articles saying that ISIS foreign soldiers were complaining more. I forecast that this could be a sign that ISIS popularity has now peaked, and that one consequence of that would be a split in the organization.

This season's surge in suicide bombings and shootings at soft targets around the world could be a sign of that split. Nation ruling is a lot more expensive and complicated than suicide attacking. And the nation ruling has proved tougher and tougher to sustain over the last few months. That frustration could be leading to two things: disenchantment on the part of some, and moving to simpler activities on the part of those who desperately want to stay enthusiastic and support the cause -- supporting the suicide activities.

Scary as all this high profile bombing and shooting is to experience, it could be a sign that the ISIS end is beginning.

Update: This 9 Jul 16 Economist article, Islamic stateless? The jihadists are losing their caliphate, but they remain deadly, is talking about the transformation IS is undergoing as the nation ruling side of it falters.

From the article, "In many ways IS is becoming more like a conventional, stateless, terrorist organisation. In an abrupt and remarkable shift, Abu Muhammad al-Adnani, the group’s spokesman, said in May that IS does not fight for territory. It would defend Raqqa and Mosul, of course, but it is also preparing to revert to guerrilla tactics. And Mr Adnani repeated an appeal for followers to hit the group’s enemies abroad. “The smallest action you do in their heartland is better and more enduring to us than what you would [do] if you were with us,” he said."

"Want to scare me? Suspend my trading!" -- Today's version of good old bank panic

Fascinating... this conflict between investment advising and investor concern over who is in control comes up time and again every half century or so. The issue: who gets to decide trading choices when the market is in deep, scary turmoil: the investor, or the person the investor is trusting in?

This 1 Jul 16 WSJ article, Robo Adviser Betterment Stokes Concern Over Brexit Trading Halt ‘These customers were put at a great disadvantage,’ regulator says. by Anne Tergesen and Michael Wursthorn, talks about investors and regulators getting scared by a trading suspension enacted by a trading advisor.

From the article, "A decision by robo-advisory pioneer Betterment LLC to halt trading during the post-Brexit rout has stoked questions about the broad control some automated investment advisers maintain over clients’ ability to get in and out of markets during volatile periods.

The New York-based robo adviser, which halted trading for about 2.5 hours during the market selloff June 24 in the aftermath of the U.K.’s June 23 vote to exit the European Union, says this power allows it to shield clients from poor trade execution and higher transaction costs. The eight-year-old firm also notes that its rights to suspend trading are spelled out in its client agreement.

But some users—both individual investors and financial advisers who use the platform—and a state securities regulator have raised concerns about the liquidity of these investment portfolios during market declines and potential lapses in the way the firm communicated the suspension to its clients."

Prior to the 1930's this kind of trading suspension was called a bank panic. In normal times investors would give money to a bank, and trust it to both keep the money safe and give them interest on it.

Then something scary happens in the business world, and many of the bank's customers come to the bank in a rush (a "run") saying, "I want my money back, NOW!" Prior to the 1930's in the US the bankers tried to calm the customers and pointed out to them that in the fine print of their savings account agreement was the stipulation that the banker could take up to 30 days to pay them back.

The customers were often very unhappy to have this pointed out to them. So unhappy that it would often permanently scar the bank's reputation, and it would go out of business.

In the 1930's things changed in the US with the implementation of the FDIC insurance. The FDIC made it possible for banks to hand out lots of money real quickly when lots of customers got nervous at the same time. That was the good good side, but along with that came many other regulations that limited how banks could handle customer money. And the result of that was... new kinds of companies were invented to experiment with new ways of being an investment advisor.

Inventing new ways of handling investment money is a steady and ongoing process. And, like all kinds of inventing, there is a lot of experimenting to be done, and some of those won't work. When that happens it becomes Lesson Learned time for those inventing and those investing in the inventing.

Since investment money suffers deeply from The Curse of Being Important, there is a lot of incentive for the community government to come up with laws that become part of the Lesson Learned after a crash. Sadly, about half the time these new laws are blunders, not good solutions, and even the good ones don't change with changing times, so the further experimenting must be done by creating yet more new investing institutions rather than letting the old ones learn better ways to use these finance tools.

And this article is describing such an example: How to use the "I'm suspending your ability to trade for a while."-tool in a way that isn't terribly scary to some investors is a tough lesson to learn.



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