Oct.31 — Nassim Nicholas Taleb, scientific advisor at Universa Investments, discusses the factors causing global fragility, hidden liabilities in global markets, and what he sees as safe trades in the current market. He speaks with Bloomberg’s Erik Schatzker on “Bloomberg Markets.”
Washington (CNN)A vehicle accident that killed one cadet from the US Military Academy and injured 21 others Thursday is refocusing attention on a startling statistic — more American service members are dying during training exercises than in combat operations.Between 2006 and 2018, 31.9% of active-duty military deaths were the result of accidents, according to a congressional report updated last month. By comparison, 16.3% of service members who died during that time were killed in action.And a large majority of those accidents occurred in circumstances unrelated to combat deployments.“Since 2006 … a total of 16,652 active-duty personnel and mobilized reservists have died while serving in the US armed forces. Seventy-three percent of these casualties occurred under circumstances unrelated to war,” the report states.It is a trend that has only seemed to pick up momentum of late, as noncombat deaths have exceeded the number of military members killed in action every year since 2015.In 2017, nearly four times as many service members died in training accidents as were killed in combat, according to a House Armed Services Committee report related to the National Defense Authorization Act for fiscal year 2019 — a key point highlighted by many lawmakers and military officials who argued for additional defense spending to help offset readiness issues that have compounded for years.“In all, 21 servicemembers died in combat that year while 80 died as a result of noncombat training-related accidents,” the report said.The military endured a high rate of training-related deaths again in 2018 and a spate of deadly noncombat military aircraft crashes prompted then-House Armed Services Chairman Mac Thornberry, R-Texas, to say the “readiness of the military is at a crisis point.”“This crisis is not limited to military aviation,” Thornberry wrote in a 2018 report. “This past summer, the Navy lost 17 Sailors in separate collisions involving the USS McCain and the USS Fitzgerald. Navy investigators later found that both accidents were related to ongoing Navy readiness problems.”One of the most recent accidents occurred in March, when two Marine pilots died in a helicopter crash near Yuma, Arizona, during a routine training exercise.While details on the cause of Thursday’s deadly accident remain unclear, the incident serves as yet another reminder of broader safety issues related to military training.Lt. Gen. Darryl A. Williams, the superintendent of the US Military Academy at West Point, was unable to immediately provide details about the cause of the rollover vehicle accident, citing the ongoing investigation. He said the name of the deceased cadet would not be released until the family was notified.“Today was a tragic day for the West Point community and our United States Army,” Williams said.
Barring Representatives Ilhan Omar and Rashida Tlaib shows weakness and intolerance, not strength.
There are not many traditions of decorum that President Trump has not trampled on since entering the White House. But to put at risk, so cynically, America’s special relationship with Israel solely to titillate the bigots in his base, to lean so crassly on a foreign leader to punish his own political adversaries, to demonstrate so foul a lack of respect for the most elemental democratic principles, is new territory even for him.
Though facing a difficult election next month for which he sorely needs the support of his fractured right-wing base, Prime Minister Benjamin Netanyahu was said to be leaning toward allowing Representatives Ilhan Omar of Minnesota and Rashida Tlaib of Michigan to travel through Israel “out of respect for the U.S. Congress and the great alliance between Israel and America,” as his ambassador to Washington, Ron Dermer, wisely said last month. But, on Thursday, Mr. Netanyahu cravenly bowed before the pressure from Mr. Trump.
“It would show great weakness if Israel allowed Rep. Omar and Rep. Tlaib to visit,” Mr. Trump tweeted on Thursday morning. “They hate Israel & all Jewish people, & there is nothing that can be said or done to change their minds.”Sad, to borrow one of Mr. Trump’s favorite words. How sad that two leaders — each desperate to look tough to his own base — are risking a bipartisan relationship built between these two nations over generations. Only weak leaders would risk so much for a reward so negligible. To what end?
- To win a few political points against two of the newest members of Congress?
- To capture a few news cycles?
- To dial up the outrage machine just one more notch?
Confident leaders would never have risked so much for so little.
Though many American presidents have sought to influence Israeli decisions throughout the history of the Arab-Israeli conflict, they usually did so diplomatically — and to advance America’s interests. Mr. Trump, by contrast, leaned on Mr. Netanyahu as he would on one of his own appointees, in broad view, and in direct violation of what the president of the United States should be doing when democratically elected lawmakers are threatened with a blockade by an allied leader.
There can be, and has been, considerable debate over what the two congresswomen, the first two Muslim women elected to Congress and both sharp critics of the Israeli government, have said and done. They have supported the controversial Boycott, Divestment and Sanctions (B.D.S.) movement aimed at pressuring Israel into ending its occupation of the West Bank, a movement that some Jews have deemed to be anti-Semitic.
Yet, from the outset, Mr. Trump has pounced on the religion and background of the two congresswomen to fan racial divisions. Ms. Omar and Ms. Tlaib were two of the four congresswomen of color, along with Alexandria Ocasio-Cortez of New York and Ayanna Pressley of Massachusetts, who Mr. Trump said should “go back” to the countries they came from, giving rise to chants of “send her back” at a subsequent Trump political rally.
The visit Ms. Omar and Ms. Tlaib were contemplating was not to Israel proper, but to the West Bank, where they were to visit Hebron, Ramallah and Bethlehem, as well as Israeli-occupied East Jerusalem, on a trip co-sponsored by a Palestinian organization, Miftah, that promotes “global awareness and knowledge of Palestinian realities.” A visit was planned to the Al Aqsa Mosque, on what Israelis call the Temple Mount, an especially volatile site in the Israeli-Palestinian conflict. There is little question that their visit would have focused on Palestinian grievances over the Israeli occupation.
All that was clearly troublesome for Mr. Netanyahu, especially the support of the congresswomen for the B.D.S. movement. A relatively recent law allows the Israeli government to deny entry to supporters of the movement; it was this law that the government used to deny entry to the representatives.
In April the United States barred Omar Barghouti, one of the co-founders of the B.D.S. movement, from entering the country when he was scheduled to deliver a series of talks and attend his daughter’s wedding. Other American public figures have been detained by Israeli authorities, ostensibly because of their political views, including the
- IfNotNow founder, Simone Zimmerman, who was held at the border; a B.D.S. advocate,
- Ariel Gold, who was denied entry to the country; and the
- journalist Peter Beinart, who was held at the airport. Mr. Netanyahu later called Mr. Beinart’s detention a “mistake.”
Yet contrary to Mr. Trump’s tweet, it is blocking entry by two American legislators who are critics of Israel that shows great weakness, especially after Israel hosted visits by delegations of 31 Republican and 41 Democratic lawmakers this month.
It has long been Israel’s mantra that critics of its policies should come see for themselves, and the country is certainly strong enough to handle any criticism from two members of Congress. Mr. Trump has done Israel no favor.
For decades, the freedom of monetary policymakers to make difficult decisions without having to worry about political blowback has proven indispensable to macroeconomic stability. But now, central bankers must ease monetary policies in response to populist mistakes for which they themselves will be blamed.CHICAGO – Central-bank independence is back in the news. In the United States, President Donald Trump has been berating the Federal Reserve for keeping interest rates too high, and has reportedly explored the possibility of forcing out Fed Chair Jerome Powell. In Turkey, President Recep Tayyip Erdoğan has fired the central-bank governor. The new governor is now pursuing sharp rate cuts. And these are hardly the only examples of populist governments setting their sights on central banks in recent months.
In theory, central-bank independence means that monetary policymakers have the freedom to make unpopular but necessary decisions, particularly when it comes to combating inflation and financial excesses, because they do not have to stand for election. When faced with such decisions, elected officials will always be tempted to adopt a softer response, regardless of the longer-term costs. To avoid this, they have handed over the task of intervening directly in monetary and financial matters to central bankers, who have the discretion to meet goals set by the political establishment however they choose.
This arrangement gives investors more confidence in a country’s monetary and financial stability, and they will reward it (and its political establishment) by accepting lower interest rates for its debt. In theory, the country thus will live happily ever after, with low inflation and financial-sector stability.
Having proved effective in many countries starting in the 1980s, central-bank independence became a mantra for policymakers in the 1990s. Central bankers were held in high esteem, and their utterances, though often elliptical or even incomprehensible, were treated with deep reverence. Fearing a recurrence of the high inflation of the early 1980s, politicians gave monetary policymakers wide leeway, and scarcely ever talked about their actions publicly.
But now, three developments seem to have shattered this entente in developed countries. The first development was the 2008 global financial crisis, which suggested that central banks had been asleep at the wheel. Although central bankers managed to create an even more powerful aura around themselves by marshaling a forceful response to the crisis, politicians have since come to resent sharing the stage with these unelected saviors.
Second, since the crisis, central banks have repeatedly fallen short of their inflation targets. While this may suggest that they could have done more to boost growth, in reality they don’t have the means to pursue much additional monetary easing, even using unconventional tools. Any hint of further easing seems to encourage financial risk-taking more than real investment. Central bankers have thus become hostages of the aura they helped to conjure. When the public believes that monetary policymakers have superpowers, politicians will ask why those powers aren’t being used to fulfill their mandates.
Third, in recent years many central banks changed their communication approach, shifting from Delphic utterances to a policy of full transparency. But since the crisis, many of their public forecasts of growth and inflation have missed the mark. That these might have been the best estimates at the time convinces no one. That they were wrong is all that matters. This has left them triply damned in the eyes of politicians: they
- failed to prevent the financial crisis and paid no price; they are
- failing now to meet their mandate; and they
- seem to know no more than the rest of us about the economy.
It is no surprise that populist leaders would be among the most incensed at central banks. Populists believe they have a mandate from “the people” to wrest control of institutions from the “elites,” and there is nothing more elite than pointy-headed PhD economists speaking in jargon and meeting periodically behind closed doors in places like Basel, Switzerland. For a populist leader who fears that a recession might derail his agenda and tarnish his own image of infallibility, the central bank is the perfect scapegoat.
Markets seem curiously benign in the face of these attacks. In the past, they would have reacted by pushing up interest rates. But investors seem to have concluded that the deflationary consequences of the policy uncertainty created by the unorthodox and unpredictable actions of populist administrations far outweigh any damage done to central bank independence. So they want central banks to respond as the populist leader desires, not to support their “awesome” policies, but to offset their adverse consequences.
A central bank’s mandate requires it to ease monetary policy when growth is flagging, even when the government’s own policies are the problem. Though the central bank is still autonomous, it effectively becomes a dependent follower. In such cases, it may even encourage the government to undertake riskier policies on the assumption that the central bank will bail out the economy as needed. Worse, populist leaders may mistakenly believe the central bank can do more to rescue the economy from their policy mistakes than it actually can deliver. Such misunderstandings could be deeply problematic for the economy.
Furthermore, central bankers are not immune to public attack. They know that an adverse image hurts central bank credibility as well as its ability to recruit and act in the future. Knowing that they are being set up to take the fall in case the economy falters, it would be only human for central bankers to buy extra insurance against that eventuality. In the past, the cost would have been higher inflation over the medium term; today, it is more likely that the cost will be more future financial instability. This possibility, of course, will tend to depress market interest rates further rather than elevating them.
What can central bankers do? Above all, they need to explain their role to the public and why it is about more than simply moving interest rates up or down on a whim. Powell has been transparent in his press conferences and speeches, as well as honest about central bankers’ own uncertainties regarding the economy. Shattering the mystique surrounding central banking could open it to attack in the short run, but will pay off in the long run. The sooner the public understands that central bankers are ordinary people doing a difficult job with limited tools under trying circumstances, the less it will expect monetary policy magically to correct elected politicians’ errors. Under current conditions, that may be the best form of independence central bankers can hope for.