Thursday, November 17, 2016

Don’t Blame Trump, or Capitalism, for the Next Recession

It took Yahoo! Finance all of a couple hours after the presidential election was called in Donald Trump’s favor to run with this incredible headline: “What could prevent Donald Trump’s recession?”
The man has not even taken office yet, and people are already looking to credit him with the next financial collapse.
It marks a startlingly fast transition in the prevailing economic narrative. Before the election, the economy was doing just fine and the Fed was getting ready to hike rates; then, immediately afterwards, recession is all but inevitable and is probably Trump’s fault.
The reason this idea carries any weight at all is that global stock markets, and stock market futures in the US, rapidly plummeted when it became clear that Donald Trump was going to win the election. This behavior made sense in some respects. Equity markets hate uncertainty, and Donald Trump’s victory represented a massive injection of uncertainty that few investors anticipated. The immediate reaction was a steep sell-off in stock markets. The article cited above was penned in the early hours of November 9th (updated later), when things were at their most grim.
But the decline didn’t last. Donald Trump offered a professional and conciliatory acceptance speech that seemed to quell some of the market’s fears. Then, attention turned to Trump’s proposed economic agenda. Aside from his protectionist trade policies, most of his proposed changes are favorable for business and the economy. Some of it is actually good policy, such as reducing corporate taxes, and gutting regulatory monstrosities like the Dodd-Frank Act. Other aspects, like his proposed increase in infrastructure spending and large budget deficits will offer some short-term stimulus, with adverse effects only in longer run. Since the stock market tends to emphasize the short-run, the reaction bordered on euphoric. The Dow reached all-time highs this past week, and continued the momentum for the beginning of this week.
With all that said, this honeymoon period will not last. Given the deep-seated acrimony that attended this past election, it would be very surprising if the various Democratic and Republican lawmakers that have been denouncing Trump for weeks, all suddenly supported his agenda. The Republicans may come back into the fold, but Trump will need Democrats to cross the aisle as well if he is to overcome filibusters in the Senate. Infrastructure spending could get through in these circumstances. The rest is unlikely.
Sooner or later, the markets will realize this, and come back down to reality. When that happens, the talk of “Trump’s recession” will surely return in earnest.
I agree that the next recession is likely to commence during Trump’s tenure. But while he may prove to be an unwitting catalyst of the next crisis, his policies will not be the primary cause.
This distinction is critically important because the next financial crisis is bound to be blamed on capitalism and the alleged free market. The presence of a billionaire businessman in the White House will encourage this association for everyday people, even though Trump himself does not believe in free market principles. Thus, it’s our job to disprove this narrative in advance. Because if the next crisis is misdiagnosed, the proposed solutions will once again make the underlying problems worse.
Popping the Risk-Free Debt Myth
The most likely way that Trump could catalyze the collapse is through the bond market. Following in the footsteps of Bush and Obama, Trump is going to rack up even more debt through major deficit spending, possibly at an even higher rate than the present. Ordinarily, this would just be business as usual. Trump didn’t run on a platform of lower spending or limited government, and Democrats have no ideological reason to oppose such spending. Meanwhile, some Republicans do have  a theoretical objection to increasing the debt, but they may be reluctant to sabotage their own party-mate–even if he was an outsider. This would suggest his path forward is reasonably clear. Democrats might use the next debt ceiling debate as a chance to exert leverage, but they aren’t likely to stonewall him completely.
These general circumstances are pretty standard. However, the thing that makes Trump’s presidency unique is that he has already openly talked about defaulting on the debt, in some way or other. He retracted the comments quickly, but still, he had publicly broached a sacred myth in the US–the certainty that the massive national debt will somehow, ultimately be paid off in the future. Now that he’s going to be president, this myth might get busted for investors as well.
In reality, of course, US government bonds have never really been risk-free, and they’ve grown considerably more risky in recent years as the debt rose dramatically under Bush and then Obama. It is all but inevitable that the US government will have to default on its obligations in some form eventually–just like any other debtor that has become overextended. The major entitlement programs, combined with an aging US population, ensure this outcome. In the years to come, the US will have to make a difficult choice. Renege on the promises made to seniors about Social Security and Medicare and/or default on government debt. If I had to guess, I’d assume the outcome will probably involve some of each.
But while the math underpinning the prediction of default is straightforward, the market has been treating US debt (and the debt of many other advanced countries) as if it carries no risk at all. This explains, in part, why bond prices rose and yields plummeted earlier in 2016 when the stock market went through a negative correction, and appeared poised to plunge even further. US bonds were still viewed as a relatively safe asset, and worth stocking up on when the US economy (and the stock market) seemed to be faltering. While it makes sense to divest from stocks when the economy is shaky, it does not really make sense that government bonds will be a safe haven, at least not from a country like the US that already has a significant debt burden. Why? Because if the US economy were to indeed stumble, this reduces the tax revenue (increasing deficits/debt) and/or would likely prompt a major public stimulus in reaction, which would further exaggerate the deficit. This doesn’t prove that bonds would be more risky than stocks in such a scenario, but it does mean that, all things equal, government bonds become a greater risk when the underlying economy weakens. Again, all else equal, if the market were pricing bonds strictly based on fundamental factors then, we should expect bond yields to rise when the economic outlook falters.
Note that this is essentially the same reason why less reliable borrowers get charged a higher interest rate. If a person has more debt and/or lower than average income, there’s a greater risk they won’t repay their debts. Thus, lenders get compensated for taking on an increased risk by charging a higher interest rate.
The same principle should apply to governments–and they actually do for many developing nations. But for the US, it is thrown entirely out the window. As noted above, when the economy faltered earlier this year, the yield on US bonds actually went down as more investors tried to get their hands on them. Using the individual example, this would be  similar to charging a lower interest rate for someone who’s unemployed versus someone with a job; it does not reflect the underlying economic risks.
There are two key reasons that this counter-intuitive phenomenon occurs anyway: a) investors believe, possibly correctly, that US bonds are still less risky in the short-run than most other asset classes (corporate bonds, equity securities, foreign bonds, etc.) and b) investors assume that the government that oversees the largest economy in the world won’t actually default on its debt. On this latter point, they just happen to be wrong.
All of which is a key reason why Donald Trump’s election, after publicly casting doubt on the “risk-free” status of US, is so significant for the markets. One week on, there are some signs that investors are finally recognizing the US debt is not risk-free after all.
The day after Trump’s election, one of the US’s largest creditors, China, appeared to accelerate its ongoing divestment of US bonds. Additionally, new auctions of US bonds post-election have not been greeted with the same eagerness as before. While these indications are somewhat anecdotal, they are indicative of the overall trend that is occurring. US government bonds are being rapidly sold off by major players, resulting in a sharp rise in bond yields. In other words, it appears that bond yields may finally be correcting back to reflect fundamentals.
And the fundamentals of US government debt under a Trump administration that promises to simultaneously cut taxes and increase spending while US debt is already at record highs, well, they look atrocious. In concert with the fact that Trump himself has contemplated default, this is why the risk-free myth might finally be dying.
Catalyst for the Crisis
In the long run, it’s great news that economic reality about US debt might finally be getting priced in. However, in the short run, it could be the spark that touches off the next crisis.
Recall that, in a previous article, I discussed the meteoric rise of negative-yielding government bonds. While US Treasury bond yields do not quite have negative yields, they have been near historic lows. In both cases, investors are not being adequately compensated for the risk they take on (and in the negative-yield case, they are actually paying for the privilege of taking on risk). The reason to buy negative or extremely low-yield bonds is because you think the yield will go even lower. That is, the price of the bond may already be unrealistic, and you’re betting that it will become more unrealistic so you can make a profit. It’s what we call the greater fool theory.
Needless to say, it creates a big problem if reality ever begins to take hold, as it’s beginning to in the US bonds. The snapback is often severe, and it means large losses can accumulate quickly for any entity that was holding US bonds.  Unfortunately, global government bonds have been moving with US bonds post-election, with their yields also rising. And since US bond yields are often used as a benchmark for other assets, there’s a chance the contagion will spread to other securities like mortgage-backed securities as well.
In turn, this means that the entities holding these securities could get crushed. That means pension funds, state and local governments, mutual funds, banks, and insurance companies–in other words, many pillars of the financial system. If the spike in US yields leads to similar increases in yields of foreign government bonds and mortgage-backed securities, the extent and scope of the losses will be exacerbated.
As of Monday, the bond market had suffered an estimated $1.2 trillion in losses. If the trend continues, the next financial crisis may well be upon us, as financial institutions suddenly find themselves undercapitalized and pensions go broke sooner than they expected. In that scenario, what happens next is anyone’s guess.
The Blame Game
Above, I have outlined a possible pathway that could set off the next crisis. Trump is a catalyst in this process; his remarks about the US debt–in addition to his profligate spending plans–are likely to help expedite the collapse.
But while he may be the match that sets off the next explosion, he and his policies did not create the bomb. He just acknowledged reality, fleetingly. The underlying economic problems were created primarily by the ultra-low interest rate policies of the Federal Reserve. In the name of economic stimulus, the Federal Reserve has been working to keep all interest rates, including US bond yields, artificially low. They have succeeded.
Now some more sophisticated authors will claim that, in fact, the Fed isn’t keeping interest rates “artificially” low at all. Rather, they will argue the natural rate of interest is just incredibly low right now, and the Fed is innocently trying to match it. Part of the problem here lies in definitions. Common sense would suggest a “natural” rate is one that emerges from the unimpeded buying and selling of market participants without intervention of government actors. However, the “natural” rate of interest that economists refers to is a rate that is not directly observable in the markets and must be estimated through a complex analysis by economists.
While this distinction is interesting, it is not altogether important. For the purposes of the potential bond market collapse that I contemplated above, only the common sense definitions of natural and artificial matter. In that regard, it is undeniable that the Fed has been keeping interest rates and US bond yields artificially low. As of June 2016, the Fed held $2.5 trillion of US debt, which was purchased with money created out of thin air. This accounted for more than 17% of the $13.9 trillion in US debt held by the public at that time. Thus, effectively 17% of the demand for US debt was supplied artificially by a de facto government entity. If the Fed ever sold off its current holdings, US bond prices would quickly correct downward, driving bond yields back up to more historically normal levels.
So we see that, in the only way that matters, the Fed has succeeded in keeping interest rates and bond yields artificially low. Now the long-run consequences for that policy are about to be realized, likely contributing to the next round of financial turmoil.
When that happens, it’s important that the blame lands in the right spot. Massive deficit spending is not a feature of the free market or capitalism, and neither is the Federal Reserve. The debt and the Fed are both creations of government. And if government is correctly understood as the root cause of the coming crisis, it will be obvious that it cannot also be the solution.

Wednesday, November 9, 2016

Common Ground Between Progressives and Libertarians after Trump’s Election

The US election is finally over. And if we’re going to be honest with ourselves, some of the worst outcomes appear to have been averted. I don’t mean Hillary Clinton; I mean everything else. So first, let’s be grateful for some of the awful things that did not happen:
  • The election results are not being contested by either candidate. Clinton hasn’t given an official concession speech yet, but according to Donald Trump, she did call him personally to concede.
  • On a related note, there probably won’t be a recount. The margin of victory was large enough that the losing candidate couldn’t seriously push for a recount and extend uncertainty through the weeks to come.
  • Neither Russia nor the Democratic Party were blamed for rigging the results
  • Bonus: We didn’t further escalate tensions with Russia to distract from an unsuccessful campaign
  • No major terrorist attacks, despite ISIS’s calls for violence
  • The winning candidate didn’t rub salt in the wound with the acceptance speech. Instead of inciting further division, Trump’s acceptance speech focused on unity in the same way a conventional candidate would.
Seen in the context of some even worse scenarios, last night’s election outcome isn’t quite so bad. (Personally, I had my own bar for success set at “Just don’t nuke Russia”, so we passed with flying colors in my book.)
Now, the most important question is what comes next. For libertarians, that means emphasizing common ground with progressives.
An Olive Branch to Progressives
Progressives and libertarians are going to be natural allies against the Trump Administration. The basis for this alliance is intuitive. Principled libertarians have been opposed to the expansion of executive power all along, and Democrats and progressives are now acutely aware of the risks posed by an all-powerful President, even if they weren’t concerned previously.
Many people are about to find religion when it comes to the US Constitution, and libertarians should welcome them into the fold.
The scope of potential collaboration is extensive, but these three areas should be the top priority.
Stopping Intervention in Syria
In the general election, Donald Trump advocated a slightly less terrible approach to Syria than Hillary Clinton. Where she advocated a no-fly zone that would require bombing Syrian government troops (and the Russians that are embedded with them) and would likely lead to regime change, Trump usually* favored collaborating with Russia to defeat the terrorists and rebels. Thus, the choice voters had on Syria was, essentially, whether to intervene against the various terrorist groups (and the few remaining moderates in their midst), or intervene against the Syrian government (and de facto, on the side of said terrorist groups).
It was a depressing set of choices, to be sure. But with Donald Trump’s election, there’s an opening to push for complete nonintervention in Syria. Some folks on the left had acquiesced to Clinton’s version of Syria intervention on the grounds that they would actually be saving civilians from the Russian and Syrian bombardment. That premise was always dubious (and refuted by Clinton herself, privately). Now, it’s also irrelevant. Trump is far more likely to continue push a collaboration with Russia against the terrorist groups. And since Syria’s and Russia’s prosecution of the war is viewed understandably as brutal and inappropriate, it follows that progressives will not support it. Indeed, newly skeptical of Trump’s recklessness as commander-in-chief, progressives are likely to be much more open to opposing intervention altogether, as many did at the end of Bush’s term. This is also the correct position for libertarians.
There is no need to settle for the less awful intervention in Syria; Trump’s election creates an opening to halt the Syria intervention entirely.
*Trump occasionally paid lip-service to a no-fly zone during the campaign. But when his running mate tried to offer a Syria policy that included attacking Assad, Trump rejected it. Thus, his nominal support for a no-fly zone appears to be rooted in ignorance about what it actually entails.
The Drug War
Donald Trump made immigration a central theme of his campaign. And in making his critique of immigration, he would often emphasize drugs as one of the maladies of America’s porous southern border. This, combined with Trump’s common refrain of “law and order” are ominous signs for the Drug War under President Trump.
On the plus side, this is an issue where the Tenth Amendment has been used to great effect. This election alone, four more states voted to legalize marijuana for recreational use, bringing the total to eight states. This means eight states have restored their citizens’ rights to use marijuana, even though it is still illegal at the federal level; in essence, the states are openly defying federal rules and challenging the Feds to actually enforce them. Fortunately, the federal government has dedicated insufficient resources to do so and harassment of marijuana sellers in these legalized states has been limited.
Libertarians and progressives can continue working together to push legalization in even more states. This expands freedom directly in these states, and it is also likely to alleviate much of the drug flow across the border. After all, if it were legal to grow and produce in the US, there would be no incentive to try to smuggle marijuana across the US border, with all the risk that entails. In turn, this could reduce the perceived harm caused by illegal immigration and encourage Trump to pursue less draconian measures to address it.
Additionally, pushing marijuana legalization has the ancillary benefit of further normalizing the use of the Tenth Amendment to effectively fight an unconstitutional federal law. Since Trump is likely to pursue many more such laws, this may prove to be an invaluable tactic.
Immigration and Deportation
Deporting all or most illegal immigrants is a signature campaign issue for Trump. He has dithered on exactly who is on his list for deportations, but it is likely to be an increase over the present.
Whatever level of deportations Trump ultimately decides to push for, libertarians should be opposing the policy at each step. And this is another issue where the Tenth Amendment strategy is likely to be essential.
Here, it’s unlikely that there will be a legislative solution on a federal level that blocks widespread deportations. That would require some form of compromise and a Republican Party that controls both the legislative and executive branches probably won’t be terribly interested in making deals.
State-level legislation probably cannot directly challenge the legality of any deportation plan. But it can make the policy nearly impossible to carry out by prohibiting state-level law enforcement from assisting the federal government with deportations. The reason is that the federal government’s own resources are woefully inadequate for the task. Immigration and Customs Enforcement, for example, has around 20,000 employees total, who would be potentially be charged with rounding up and processing 11 million people in the most extreme case. That can’t really be done, which is why states can sabotage a deportation policy by simply refusing to help. In the process, they would be following in the honorable tradition of northern US states that refused to comply to the Fugitive Slave Acts in the 1800s prior to the abolition of slavery.
The outcome of the US election is not ideal. If you’ve been following the election cycle at all, you knew that was a foregone conclusion, regardless of who won on Tuesday.
Today, many progressives are understandably horrified by the prospect of President Trump, and libertarians will be their natural allies in the effort to finally rein in executive power. As a result, Trump’s election is not a tragedy; it’s an opportunity.

Monday, November 7, 2016

Correcting the Record: No, Obama Is not Fiscally Responsible

When it comes to dishonest political shilling, one of my favorite examples is the argument that President Obama is fiscally responsible.
We haven’t heard this theme much lately, mostly because neither major party candidate expresses much concern about the debt or the deficit. But back during the primaries, MSNBC was overjoyed to run with the theme that President Obama reduced the deficit by $1 trillion. And naturally, this was framed in a partisan light–look how much more responsible President Obama has been compared to the reckless Republicans!
This is the chart they used to illustrate the point.
Not surprisingly, this same chart is likely to be thrown at any libertarian who criticizes excessive government spending. Because obviously, if one is criticizing Obama, they must have loved Bush? I don’t get it, but that’s how most people assume it works.
Anyway, although the original article made a silly mistake elsewhere, the central claim about Obama reducing the deficit was correct, as long as one granted some rounding.
But of course, we should always be skeptical when a dataset is restricted to an arbitrarily small time period. Why 8 years and not 10? Or maybe back to the beginning of the Bush Administration?
The answer is that, when viewed in larger time frame, President Obama doesn’t quite come off as a responsible and prudent steward of the budget. Here’s the full time line of annual deficits, for as long as the data has been recorded:
As you can see, every year of the Obama Presidency has produced a higher deficit than any prior year, except for the two years impacted directly by the Great Recession, 2008 and 2009.
Admittedly, the above chart isn’t entirely fair since it doesn’t account for inflation or the growth in the US economy. Thus, it is worth also considering this chart which shows deficits over time as a percentage of that year’s gross domestic product (GDP).
Here, President Obama comes out looking slightly better. His share of the graph (to the right of the final shaded recession) has deficits far smaller than those inspired by World War II, for example, and Obama’s record is also better than Reagan’s in some years. But incredibly, he’s still managing to spend more than the US did during the height of the Cold War in the 50s and 60s.
That said, perhaps the most authoritative argument against the “Obama is fiscally responsible” line is provided by simply completing the original chart from MSNBC, with the updated deficit for 2016.
In other words, President Obama’s progress on reducing the historically large annual deficits is now in reverse, registering at an unaudited $587 billion in 2016. And this latest deficit occurred at a time of record low interest rates (and thus low interest payments on the debt), in the absence of any major US ground war, and during a period when the US economy is allegedly doing fine.
One of these things doesn’t add up. But whatever else is true, the point is that President Obama certainly does not deserve praise for fiscal restraint.

Wednesday, November 2, 2016

The 2016 Election Is Destroying the Facade of Objectivity

The FBI’s controversial about-face on the Clinton email scandal shines a bright light on one of the most interesting features of the present election: the destruction of objectivity. Or rather, the destruction of perceived objectivity.

Background on Objectivity

When it comes to politics and government, objectivity doesn’t really exist. This isn’t the fault of corrupt politicians; it’s just the nature of the business. Indeed, the Founding Fathers even took this notion for granted. That’s why they endeavored to design a system of government where ambition was made to check ambition. They understood that government would not always and everywhere be populated by saintly individuals acting dutifully in the public interest.

But while our government is predicated on this idea–that government actors will not always be impartial and objective–we do not always remember it. Many Americans are inclined to believe that US governing institutions really are objective.

This is one way to understand, for example, why a larger segment of the population isn’t outraged by the lack of accountability for police brutality. What ought to be a straightforward question of justice and the rule of law falls along strange tribal lines. On one side, what we might call the Blue Lives Matter side, we have people that are essentially saying, “Trust the process”. These people buy into the idea of government objectivity in this area, and generally believe both that a) cops would not kill someone unless they had a good reason and b) the justice system is generally fair and would hold cops accountable if they deserved it. On the other side of the issue, we find people who no longer buy into the objectivity myth, either because a) they have a personal experience that disproved it or else b) they have just encountered too many stories of senseless injustice being perpetrated to still think the system is working fairly.

While actual progress on the police brutality has been slow in coming, libertarians and progressives are certainly making strides in the realm of public opinion. Of course, issues don’t figure prominently in this election cycle. But among the few issues that do get discussed, police brutality is near the top of the list. The reason this is even on the table is because the myth of objectivity has been substantially dismantled, and it now cries out for a solution.

Back to the Election

What horrifying YouTube videos did for police brutality, the 2016 election is doing for many other aspects of the US government and politics generally. Let’s run down the list:


When FBI Director James Comey announced the findings of the investigation into Hillary Clinton’s private emails, the response was predictable. Republicans were outraged that such an alleged miscarriage of justice was done, and some even called attention to a questionable meeting Bill Clinton and Attorney General Loretta Lynch, shortly before the decision, to cast further doubt on its legitimacy. The Republicans were openly suggesting that the FBI made a deal with the Democrats. Meanwhile, the Democrats were delighted to find their standard-bearer free and clear of any investigations, and hailed the FBI for its professionalism. Of course, they would. Even if they truly believed that, it was also in their partisan interest to do so.

Fast forward to Friday, and the narrative is completely reversed. This time, Comey wrote a letter to Congress to alert them that the Clinton email probe had been reopened in a way, as a result of additional emails being identified as part of an unrelated investigation.

Now it was the Democrats turn to accuse Comey of being a partisan hack.

So wait, the FBI Director’s decisions are only impartial when they agree with you? I don’t think that’s how impartiality works…

The reason this matters is that the FBI isn’t usually called into question quite like this. Depending on your perspective, it marks either a new low or a new high.

Too Big to Jail?

The FBI’s political leanings weren’t the only aspect of significance in the Clinton email case. One of the central questions in the scandal was whether politically powerful people will be held to the same rules and laws as everyone else. Comey’s memorable answer, was a resounding, if reluctant, no. Readers may recall these illuminating lines:
Although we did not find clear evidence that Secretary Clinton or her colleagues intended to violate laws governing the handling of classified information, there is evidence that they were extremely careless in their handling of very sensitive, highly classified information.

Although there is evidence of potential violations of the statutes regarding the handling of classified information, our judgment is that no reasonable prosecutor would bring such a case.
He could have scarcely said it any more plainly. Yes, there’s evidence that laws may have been broken, but it doesn’t matter anyway, because no reasonable prosecutor would bring the case. Translation: Hillary Clinton is too powerful for the laws to be applied to her.

This is not without precedent either of course. Not prosecuting the politically-connected is a time-honored American tradition. It’s why Ford pardoned Nixon; it’s why Bush officials didn’t get prosecuted for the torture program, and it’s why Director of National Intelligence James Clapper suffered no repercussions for lying to Congress about the activities of the NSA. That said, it’s still rare that the episode garners this much attention.

The Fed
The usually obscure Federal Reserve hasn’t escaped accusations of partisanship or corruption this time around either. Though his own preferences on monetary policy are unclear, Donald Trump has made this a recurring talking point, once suggesting the Fed is being “more political than Secretary Clinton”.

The Elections

Even the elections themselves are being cast in a suspicious light in this election cycle, to a degree not seen in recent memory. Donald Trump’s narrative here focuses on media bias or alleged voting fraud schemes to distort the election outcome. Meanwhile, Clinton’s narrative is that Trump is a pawn of the Russian government, and thus she has alleged the Russian hacking apparatus has been trying to throw the election in his favor. The Obama Administration has also come out to offer a degree of legitimacy to the Clinton narrative by making direct, if oddly tentative, accusations of hacking.

Indeed, we face the very real possibility that, in one week’s time, the official election results will be contested. And either candidate might be willing to try this strategy based on the rhetoric we’ve heard to date.

Consequences for Liberty

What all of this means is that the 2016 election has offered a systematic assault on faith in government and the idea that the government is an objective, impartial actor.

For lovers of liberty, this circumstance represents an incredible opportunity. We already know that the proper attitude towards government is one of deep skepticism. Come November 9th, nearly half of the American electorate is going to agree.

Tuesday, November 1, 2016

US Calls for End to Saudi Strikes on Yemen, Sort Of

It appears the volume and magnitude of Saudi atrocities in the Yemen have finally reached a point where the US Administration feels compelled to speak out. This week, the US finally called for an end to the airstrikes in Yemen.
But there is a bit of a problem here. As’s Jason Ditz notes in his write-up:
A top Human Rights Watch director noted that the call would’ve carried a lot more weight if the US wasn’t providing the bombs the Saudis are dropping on Yemen in the first place, though former US officials say its almost certain this won’t include any dial back in US arms sales.
In Yemen as with other countries, the US government finds itself in a familiar untenable position. On the one hand, it would like to perceived as caring about defending human rights, and many officials probably really do want to protect human rights. But on the other hand, that same US government is actually enabling, if not directly causing, a vast array of human rights abuses at the same time.
And while it is good that the US may finally be backing away from the PR / diplomatic cover it provides for the War in Yemen, the rest of its support for Saudi Arabia is unlikely to change.
Here, one of the absurdities of the US alliances in the Middle East is laid to bare. Of course, one of the reasons provided to justify the US allying with a repressive theocracy like Saudi Arabia, or other unsavory states, is that we can use our leverage to induce behavior that is less destructive than it otherwise would be. But when we have a clear situation where this theory would appear to apply, the US does less than nothing.
Behind the latest tepid criticism, the spigot of aid and arms for the Saudi regime will continue flowing unabated. So the US condemns a policy and supports it simultaneously. In the logic of US foreign policy establishment, this makes sense. To the rest of us, it is and ought to seem crazy.