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otherwise "foreign governments will expand their regulatory and confiscatory powers against their domestic economies in order to fund their own military expansions."

In a more natural organization of the marketplace, the owners are entirely responsible for the debts and liabilities of the entity they own. That, of course, would create excessive risk, suppressing economic activity.

this is why classical economists never spoke of “economics” but always of “political economy.”

Emerging out of this complexity — and justifying it — is a moral regime. Protection from liability comes with a burden: Poor decisions will be penalized by losses, while wise decisions are rewarded by greater wealth.

problem lies not with the market but with the political system that invented and presides over the limited liability corporation.

The political elite is responsible for the corporate elite in a unique fashion: The corporation was a political invention, so by definition, its behavior depends on the political system.

The goal is not so much to achieve something as to create the impression that it is achieving something, in other words, to demonstrate that the political system is prepared to control the entities it created.

Europe thus has a double crisis. As in the United States, there is a crisis between the financial and political systems. This crisis is not as intense as in the United States because of a deeper tradition of integration between the two systems in Europe. But the tension between masses and elites is every bit as intense. The second part of the crisis is the crisis of the European Union and growing sense that the European Union is the problem and not the solution. As in the United States, there is a growing movement to distrust not only national arrangements but also multinational arrangements.

Beijing has an eye on the Jasmine protests for their potentiality rather than their weak manifestations. It is wary of the Tiananmen model.

China is far more integrated in the global economy now, and is in a far more delicate position economically. It maintains the current status quo as long as foreign states tolerate it and do not block its trade.

If it seems that the frequency and size of calamities have been picking up in recent years, it’s only because they probably have.

Although we observe that calamities happen, we assume that they won’t happen to us, or they won’t happen again.

Part of the problem is that we don’t know what we don’t know. The other part is that small miscalculations of probabilities can have large effects on outcomes when dealing with long periods of time.

To be fair, I don't think that most students were as enamored of the book as he was, but still there was an air of fawning about the sessions. The professors helped guide the discussions but otherwise generally stayed out of the way. Interesting to note that the handful of times I criticized Objectivism or Atlas, they were sure to 'correct' me. Not brusquely or rudely, but nonetheless the message was that we were supposed to believe what Rand said (in the group think model, they would be the "mind guards").

Unfortunately, his topics were pretty standard fare for those well versed in libertarianism: communism is evil, the welfare state is pretty darn bad too, we need to go back to a commodity standard, and the Fed was the prime mover behind America's Great Recession.

So what is the net sum of this potpourri of ideas, quackery, and economics? Some good, I'm sure, but a dangerous potential for evil. I had been a libertarian and Objectivist fanatic for long enough to be familiar with most of the ideas presented in Clemson, but my roommate, who is new to the movement, said he learned a lot, so there's a good chance that many students picked up on a lot of radical right ideas. And there's nothing inherently wrong with that.

GURGAON, India

In Gurgaon, economic growth is often the product of a private sector improvising to overcome the inadequacies of the government. To compensate for electricity blackouts, Gurgaon’s companies and real estate developers operate massive diesel generators capable of powering small towns. No water? Drill private borewells. No public transportation? Companies employ hundreds of private buses and taxis. Worried about crime? Gurgaon has almost four times as many private security guards as police officers.

Gurgaon was widely regarded as an economic wasteland. In 1979, the state of Haryana created Gurgaon by dividing a longstanding political district on the outskirts of New Delhi. One half would revolve around the city of Faridabad, which had an active municipal government, direct rail access to the capital, fertile farmland and a strong industrial base. The other half, Gurgaon, had rocky soil, no local government, no railway link and almost no industrial base. As an economic competition, it seemed an unfair fight. And it has been: Gurgaon has won, easily. Faridabad has struggled to catch India’s modernization wave, while Gurgaon’s disadvantages turned out to be advantages, none more important, initially, than the absence of a districtwide government, which meant less red tape capable of choking development. By 1979, Mr. Singh had taken control of his father-in-law’s real estate company, now known as DLF, at a moment when urban development in India was largely overseen by government agencies. In most states, private developers had little space to operate, but Haryana was an exception. Slowly, Mr. Singh began accumulating 3,500 acres in Gurgaon that he divided into plots and began selling to people unable to afford prices in New Delhi.

Mr. Singh had become the company’s India representative after befriending Jack Welch, then the G.E. chairman. When Mr. Welch decided to outsource some business operations to India, he eventually opened a G.E. office inside a corporate park in Gurgaon in 1997. “When G.E. came in,” Mr. Singh said, “others followed.”

Ordinarily, such a wild building boom would have had to hew to a local government master plan. But Gurgaon did not yet have such a plan, nor did it yet have a districtwide municipal government. Instead, Gurgaon was mostly under state control. Developers built the infrastructure inside their projects, while a state agency, the Haryana Urban Development Authority, or HUDA, was supposed to build the infrastructure binding together the city.

From computerized control rooms, Genpact employees manage 350 private drivers, who travel roughly 60,000 miles every day transporting 10,000 employees.

The city’s residential compounds, especially the luxury developments along golf courses, exist as similarly self-contained entities.

“We pretty much carry the entire weight of what you would expect many states to do,” said Pramod Bhasin, who this spring stepped down as Genpact’s chief executive. “The problem — a very big problem — is our public services are always lagging a few years behind, but sometimes a decade behind. Our planning processes sometimes exist only on paper.”

Not all of the city’s islands are affluent, either. Gurgaon has an estimated 200,000 migrant workers, the so-called floating population, who work on construction sites or as domestic help.

Meanwhile, with Gurgaon’s understaffed police force outmatched by such a rapidly growing population, some law-and-order responsibilities have been delegated to the private sector. Nearly 12,000 private security guards work in Gurgaon, and many are pressed into directing traffic on major streets.

Sudhir Rajpal, the wiry, mustachioed commissioner of the new Municipal Corporation of Gurgaon, has a long to-do list: fix the roads, the sewers, the electrical grid, the drainage, the lack of public buses, the lack of water and the lack of planning. The Municipal Corporation was formed in 2008, and Mr. Rajpal, having assumed the city’s top administrative position a few months ago, has been conducting a listening tour to convince people that government can solve their problems. It is not an easy sell.

“The drains are broken and accidents are happening,” shouted one man. “Yet no one is answerable! There are problems and problems. Whatever water we get is dirty, but we have nowhere to complain.”

“Every day some agitation is taking place,” he said, shouting above the din of traffic. “People are not satisfied.” If people should be satisfied anywhere in India, Gurgaon should be the place. Average incomes rank among the highest in the country. Property values have jumped sharply since the 1990s. Gurgaon’s malls offer many of the country’s best shops and restaurants, while the city’s most exclusive housing enclaves are among the finest in India. Yet the economic power that growth has delivered to Gurgaon has not been matched by political power. The celebrated middle class created by India’s boom has far less clout at the ballot box than the hundreds of millions of rural peasants struggling to live on $2 a day, given the far larger rural vote, and thus are courted far less by Indian politicians.

In effect, this stratagem would be a return of the status quo ante during the PRI administrations

no matter who wins the 2012 election, the new president will have little choice but to maintain the campaign against the Mexican cartels.

over the past decade there have been changes in the flow of narcotics into the United States.

much of the U.S. supply came into Florida via Caribbean routes.

Over the past decade, the tables turned. Now, the Mexican cartels control most of the cocaine flow and the Colombian gangs are the junior partners in the relationship.

they are also involved in the smuggling of South American cocaine to Europe and Australia. This expanded cocaine supply chain means that the Mexican cartels have assumed a greater risk of loss along the extended supply routes

These changes in the flow of narcotics into the United States mean that the Mexican narcotics-smuggling corridors into the United States are now more lucrative than ever for the Mexican cartels, and the increasing value of these corridors has heightened the competition — and the violence — to control them.

Most of the violence in Mexico today is cartel-on-cartel, and the cartels have not chosen to explicitly target civilians or the government. Even the violence we do see directed against Mexican police officers or government figures is usually not due to their positions but to the perception that they are on the payroll of a competing cartel.

Consider this: Three and a half years ago, the Beltran Leyva Organization (BLO) was a part of the Sinaloa Federation. Following the arrest of Alfredo Beltran Leyva in January 2008, Alfredo’s brothers blamed Sinaloa chief Joaquin “El Chapo” Guzman Loera, declared war on El Chapo and split from the Sinaloa Federation to form their own organization.

not only did the BLO leave the Sinaloa Federation, it also split twice to form three new cartels.

Another problem is the change that has occurred in the nature of the crimes the cartels commit. The Mexican cartels are no longer just drug cartels, and they no longer just sell narcotics to the U.S. market.

Up until a few months ago, it was common to hear U.S. government officials refer to the Mexican cartels using the acronym “DTOs,” or drug trafficking organizations. Today, that acronym is rarely, if ever, heard. It has been replaced by “TCO,” which stands for transnational criminal organization. This acronym recognizes that the Mexican cartels engage in many criminal enterprises, not just narcotics smuggling.

Mexican cartels have become involved in kidnapping, extortion, cargo theft, oil theft and diversion, arms smuggling, human smuggling, carjacking, prostitution and music and video piracy.

Another way the cartels have sought to generate revenue through alternative means is to increase drug sales inside Mexico. While drugs sell for less on the street in Mexico than they do in the United States, they require less overhead, since they don’t have to cross the U.S. border.

There has been a view among some in Mexico that the flow of narcotics through Mexico is something that might be harmful for the United States but doesn’t really harm Mexico. Indeed, as the argument goes, the money the drug trade generates for the Mexican economy is quite beneficial. The increase in narcotics sales in Mexico belies this, and in many places, such as the greater Mexico City region, much of the violence we’ve seen involves fighting over turf for local drug sales and not necessarily fighting among the larger cartel groups

STRATFOR has said that one of the reasons China appears bent on expanding its naval capabilities relates to its shifting economic structure.

China’s economic supply lines now cross the globe.

China’s naval expansion, in that case, is not part of a strategy to engage in a naval arms race with the United States or challenge U.S. dominance of the seas. Rather, Beijing intends to build a defensive buffer around China’s maritime periphery.

the attention to China’s new aircraft carrier, deep-diving submarine, its space exploration, and similar activities also helps Beijing distract audiences domestic and global from real problems inside the country

Overseas, they somehow reinforce the perception of a rising China — and a rising China cannot be on the verge of a major economic and social crisis.

Like the Three Gorges Dam, this show of China’s capabilities is impressive for a moment, but it does not really address the country’s core needs.

What happens if China’s economic miracle faces what all economic miracles eventually face — the reality that there is no such thing as unlimited, linear, multidigit growth.

The Rocky Mountains dominate the Western third of the northern and central parts of North America

Farther east of this semiarid region are the well-watered plains of the prairie provinces of Canada and the American Midwest

East of this premier arable zone lies a second mountain chain known as the Appalachians.

North of the Great Lakes region lies the Canadian Shield, an area where repeated glaciation has scraped off most of the topsoil.

The continent’s final geographic piece is an isthmus of varying width, known as Central America, that is too wet and rugged to develop into anything more than a series of isolated city-states, much less a single country that would have an impact on continental affairs. Due to a series of swamps and mountains where the two American continents join, there still is no road network linking them, and the two Americas only indirectly affect each other’s development.

Very few of its tributaries begin at high elevations, making vast tracts of these rivers easily navigable. In the case of the Mississippi, the head of navigation — just north of Minneapolis — is 3,000 kilometers inland.

The unified nature of this system greatly enhances the region’s usefulness and potential economic and political power.

This factor is the primary reason why the major economic powers of the past half-millennia have been Japan, Germany, France, the United Kingdom and the United States.

The vast bulk of the prime agricultural lands are within 200 kilometers of a stretch of navigable river.

First, navigable rivers by definition service twice the land area of a coastline (rivers have two banks, coasts only one).

Second, rivers are not subject to tidal forces, greatly easing the construction and maintenance of supporting infrastructure.

Third, storm surges often accompany oceanic storms, which force the evacuation of oceanic ports.

First are the severe indentations of North America’s coastline, granting the region a wealth of sheltered bays and natural, deep-water ports.

Second, there are the Great Lakes.

Third and most important are the lines of barrier islands that parallel the continent’s East and Gulf coasts.

There are many secondary stretches of agricultural land as well

The rivers of the American Atlantic coastal plain — flowing down the eastern side of the Appalachians — are neither particularly long nor interconnected. This makes them much more like the rivers of Northern Europe in that their separation localizes economic existence and fosters distinct political identities, dividing the region rather than uniting it. The formation of such local — as opposed to national — identities in many ways contributed to the American Civil War.

What is now Mexico lacks even a single navigable river of any size. Its agricultural zones are disconnected and it boasts few good natural ports.

Canada’s maritime transport zones

Its first, the Great Lakes, not only requires engineering but is shared with the United States.

The second, the St. Lawrence Seaway, is a solid option (again with sufficient engineering), but it services a region too cold to develop many dense population centers.

The eastern end of the border could be anywhere within 300 kilometers north or south of its current location (at present the border region’s southernmost ports — Brownsville and Corpus Christi — lie on the U.S. side of the border). As one moves westward to the barren lands of New Mexico, Arizona, Chihuahua and Sonora, the possible variance increases considerably. Even controlling the mouth of the Colorado River where it empties into the Gulf of California is not a critical issue, since hydroelectric development in the United States prevents the river from reaching the Gulf in most years, making it useless for transport.

In the north, the Great Lakes are obviously an ideal break point in the middle of the border region, but the specific location of the line along the rest of the border is largely irrelevant. East of the lakes, low mountains and thick forests dominate the landscape — not the sort of terrain to generate a power that could challenge the U.S. East Coast.

So long as the border lies north of the bulk of the Missouri River’s expansive watershed, the border’s specific location is somewhat academic, and it becomes even more so when one reaches the Rockies.

On the far western end of the U.S.-Canada border is the only location where there could be some border friction. The entrance to Puget Sound — one of the world’s best natural harbors — is commanded by Vancouver Island.

It is common knowledge that the United States began as 13 rebellious colonies along the east coast of the center third of the North American continent. But the United States as an entity was not a sure thing in the beginning

Most of the original 13 colonies were lightly populated by European standards — only Philadelphia could be considered a true city in the European sense — and were linked by only the most basic of physical infrastructure. Additionally, rivers flowed west to east across the coastal plain, tending to sequester regional identities rather than unify them.

With European attentions diverted elsewhere, the young United States had an opportunity to carve out a future for itself relatively free of European entanglements.

This was not England, an island that forced the early state into the expense of a navy. This was not France, a country with three coasts and two land borders that forced Paris to constantly deal with threats from multiple directions. This was not Russia, a massive country suffering from short growing seasons that was forced to expend inordinate sums of capital on infrastructure simply to attempt to feed itself.

The early nation was particularly vulnerable to its former colonial master.

There are only two ways to protect a coastal community from sea power. The first is to counter with another navy.

The second method of protecting a coastal community is to develop territories that are not utterly dependent upon the sea.

Achieving such strategic depth was both an economic and a military imperative.

The United States was entirely dependent upon the English imperial system not just for finished goods and markets but also for the bulk of its non-agricultural raw materials, in particular coal and iron ore.

The Appalachians may not be the Swiss Alps, but they were sufficiently rugged to put a check on any deep and rapid inland expansion.

The Ohio River faced the additional problem of draining into the Mississippi, the western shore of which was the French territory of Louisiana

At the time, Napoleon was girding for a major series of wars that would bear his name. France not only needed cash but also to be relieved of the security burden of defending a large but lightly populated territory in a different hemisphere.

This single road (known in modern times as Interstate 40 or Interstate 70 for most of its length) allowed American pioneers to directly settle Ohio, Indiana, Illinois and Missouri and granted them initial access to Michigan, Wisconsin, Iowa and Minnesota.

The trail was directly responsible for the initial settling of Kansas, Nebraska, Wyoming, Idaho and Oregon. A wealth of secondary trails branched off from the main artery — the Mormon, Bozeman, California and Denver trails — and extended the settlement efforts to Montana, Colorado, Utah, Nevada and California.

From beginning to end, the entire process required less than 70 years.

The Columbia River Valley and California’s Central Valley are not critical American territories.

among other things, they grant the United States full access to the Pacific trading basin — only that control of them is not imperative to American security.

The first land threat to the young United States was in essence the second phase of the Revolutionary War

the British navy could outmatch anything the Americans could float

Geopolitically, the most critical part of the war was the participation of semi-independent British Canada.

Canadian forces, unlike the British, did not have a supply line that stretched across the Atlantic.

Canada is far enough north that its climate is far harsher than that of the United States, with all of the negative complications one would expect for population, agriculture and infrastructure.

What few rivers Canada has neither interconnect nor remain usable year round.

Most of these river connections also have rapids and falls, greatly limiting their utility as a transport network.

the St. Lawrence Seaway — a series of locks that link the St. Lawrence River to the Great Lakes and allow full ocean access — was not completed until 1959.

Newfoundland and Prince Edward Island — are disconnected from the Canadian landmass and unable to capitalize on what geographic blessings the rest of the country enjoys

what population centers Canada does have are geographically sequestered from one another by the Canadian Shield and the Rocky Mountains.

All four provinces have been forced by geography and necessity to be more economically integrated with their southern neighbors than with their fellow Canadian provinces.

The British were exhausted from the Napoleonic Wars in Europe and, with the French Empire having essentially imploded, were more interested in reshaping the European balance of power than re-engaging the Americans in distant North America.

the Americans were mobilized, angry and — remembering vividly the Canadian/British sacking of Washington — mulling revenge.

Using a combination of illegal settlements, military pressure and diplomacy, the United States was able to gain control of east and west Florida from Madrid in 1819 in exchange for recognizing Spanish claims to what is now known as Texas

the United States’ efforts to secure its southwestern borders shifted to a blatant attempt to undermine and ultimately carve up the one remaining Western Hemispheric entity that could potentially challenge the United States: Mexico.

the United States quickly transformed itself from a poor coastal nation to a massively capital-rich commodities exporter.

the biggest potential security threat to the United States was newly independent Mexico, the border with which was only 150 kilometers from New Orleans. In fact, New Orleans’ security was even more precarious than such a small distance suggested.

In the United States, the cheap transport system allowed early settlers to quickly obtain their own small tracts of land.

in time the wealth accumulated to the point that portions of the United States had the capital necessary to industrialize.

Mexico, in contrast, suffered from a complete lack of navigable rivers and had only a single good port (Veracruz).

First and most obviously, the lack of navigable waterways and the non-abundance of ports drastically reduced Mexico’s ability to move goods and thereby generate its own capital. Second, the disassociated nature of Mexico’s agricultural regions forced the construction of separate, non-integrated infrastructures for each individual sub-region, drastically raising the costs of even basic development.

Third, the highland nature of the Mexico City core required an even more expensive infrastructure, since everything had to be transported up the mountains from Veracruz.

very different economic and social structure

Instead of small landholdings, Mexican agriculture was dominated by a small number of rich Spaniards

The Mexican landowners had, in essence, created their own company towns and saw little benefit in pooling their efforts to industrialize. Doing so would have undermined their control of their economic and political fiefdoms.

In just two generations — by 1870 — the American population had ballooned to 38.6 million while Mexico’s was only 8.8 million.

The first was Texas, and the primary means was settlement as enabled by the Austin family.

Despite the U.S. re-engagement throughout the region, some East Asian states suspect that weakness and a long-term lack of commitment lie at the base of its prolonged distance from regional affairs.

They have agreed to hold drills on humanitarian assistance and disaster relief, as well as counter-piracy, and to work toward holding more traditional military exercises in the future.

The recent warming in U.S.-China relations has drawn inevitable comparisons to the Kissinger-style detente. However, the contrast between these events is more striking. When Kissinger traveled to China, relations between the two countries could hardly have been worse and because the countries shared a common enemy, relations had ample opportunity to improve.

the warming of relations continues apace because China is not yet the great power it aspires to be.

I am not calling for a magical political “center”

Nor am I pleading for consensus

And I’m not pushing for harmony

Because activists who demand loyalty and see compromising as selling out dominate party primaries and conventions, candidates who seek their permission to be on the November ballot find themselves under great pressure to take hard-line positions. This tendency toward rigidity—and the party system that enables it—is at the root of today’s political dysfunction.

As a result, members of Congress would have greater freedom to base their legislative decisions on their constituents’ concerns and on their own independent evaluations of a proposal’s merits. They would be our representatives, not representatives of their political clubs.

Although legislative majorities continue to draw district lines in most states, 13 states (most recently, California) have established nonpartisan or bipartisan redistricting commissions, and two additional states have created merely “advisory” commissions. The systems vary—some use commissions to propose plans that legislatures must approve; others strip the legislature of all redistricting authority—but each of the 13 recognizes that the partisan drawing of congressional-district boundaries has hurt the democratic process, leaving elected officials dependent on, and beholden to, the party bosses who draw their districts.

“closed” rules, preventing members from offering amendments, simply tell citizens their preferences don’t matter.

Speaker John Boehner deserves credit for promising greater opportunities for the minority party to have its amendments considered. Under his speakership, the Republican-dominated House has actually accepted some Democratic amendments.

The House should adopt rules guaranteeing that any proposal receiving a significant level of support—say, 100 co-sponsors—would automatically be allowed a committee hearing, an up-or-down vote in committee, and then, even if it fails in committee, a vote on the House floor.

We should change congressional rules to provide for a chairman from the majority party and a vice chairman from the minority (no such position exists in today’s Congress, except on certain special non-legislating committees); the vice chairman need not ascend to the chairmanship in the chairman’s absence, but each would have the authority to bring a bill forward and to invite expert witnesses to offer testimony. The process might be slower, but consideration of alternatives would be more thorough.

The derivation of leadership in Congress from an internal version of the party primary or convention is an artificial construct. In every informal congressional subgroup—the Human Rights Caucus, the Rust Belt Caucus, the Flat Tax Caucus—leaders are chosen without regard to party affiliation.

They would be freer to vote as they saw fit.

But if the goal is to legislate for the country, not for a party, then committee staff members should be selected by a nonpartisan House or Senate administrator and obligated to serve all members equally without regard to party agenda.

The Constitution grants Congress most of the federal government’s real powers—to spend, tax, create federal programs, declare war, approve treaties, confirm federal court appointments.

George Washington and James Madison both warned of the dangers posed by political parties. Defenders of the party system argue that parties—including Madison’s own—arose almost immediately after the nation was founded. But those were not parties in the modern sense: they were factions uniting on a few major issues, not marching in lockstep on every issue, large and small.

What we have today is not a legacy of 1789 but an outdated relic of the late 1800s and early 1900s, when Progressives pushed for the adoption of primary elections.

many of the most important steps forward in our history have not come from the center at all, including women’s suffrage and the civil-rights movement, and even our founding rebellion against the British crown.

At last count, there were 245 millionaires in congress, including 66 in the Senate.

All weekend I was thinking about this “jealousy” question, and I just kept coming back to all the different ways the game is rigged. People aren't jealous and they don’t want privileges. They just want a level playing field, and they want Wall Street to give up its cheat codes, things like:

Ordinary people have to borrow their money at market rates. Lloyd Blankfein and Jamie Dimon get billions of dollars for free, from the Federal Reserve.

Or the banks borrow billions at zero and lend mortgages to us at four percent, or credit cards at twenty or twenty-five percent. This is essentially an official government license to be rich, handed out at the expense of prudent ordinary citizens, who now no longer receive much interest on their CDs or other saved income.

This is equivalent to a trust fund teenager who trashes six consecutive off-campus apartments and gets rewarded by having Daddy co-sign his next lease. The banks needed programs like TLGP because without them, the market rightly would have started charging more to lend to these idiots. Apparently, though, we can’t trust the free market when it comes to Bank of America, Goldman, Sachs, Citigroup, etc.

Defenders of the banks like to talk a lot about how we shouldn't feel sorry for people who've been foreclosed upon, because it's they're own fault for borrowing more than they can pay back

Time after time, when big banks screw up and make irresponsible bets that blow up in their faces, they've scored bailouts.

When was the last time the government stepped into help you "avoid losses you might otherwise suffer?" But that's the reality we live in. When Joe Homeowner bought too much house, essentially betting that home prices would go up, and losing his bet when they dropped, he was an irresponsible putz who shouldn’t whine about being put on the street.

I've already gone off on this more than once, but it bears repeating. Bankers on Wall Street pay lower tax rates than most car mechanics.

Bank of America last year paid not a single dollar in taxes -- in fact, it received a "tax credit" of $1 billion.

Thank God our government decided to pledge $50 billion of your tax dollars to a rescue of General Motors! You just paid for one of the world's biggest tax breaks.

One thing we can still be proud of is that America hasn't yet managed to achieve the highest incarceration rate in history -- that honor still goes to the Soviets in the Stalin/Gulag era. But we do still have about 2.3 million people in jail in America.

Virtually all 2.3 million of those prisoners come from "the 99%." Here is the number of bankers who have gone to jail for crimes related to the financial crisis: 0.

That means that every single time a bank kicked someone out of his home, a local police department got a cut. Local sheriff's offices also get cuts of almost all credit card judgments, and other bank settlements. If you're wondering how it is that so many regional police departments have the money for fancy new vehicles and SWAT teams and other accoutrements, this is one of your answers.

The point being: if you miss a few home payments, you have a very high likelihood of colliding with a police officer in the near future. But if you defraud a pair of European banks out of a billion dollars  -- that's a billion, with a b -- you will never be arrested, never see a policeman, never see the inside of a jail cell.

Some of the countries on Russia's periphery do not want to be dominated by her. Russia, in spite of some strengths, is inherently weak and does not require U.S. exertion

Putin is now in a position where, in order to retain with confidence his domestic authority, he must act decisively to reverse the outcome. The problem is there is no single decisive action that would reverse events.

One is simply to accept the reversal, which I would argue that he cannot do. The second is to take action in places where he might achieve rapid diplomatic and political victories against the West -- the Baltics, Moldova or the Caucasus -- while encouraging Ukraine's government to collapse into gridlock and developing bilateral relations along the Estonia-Azerbaijan line.

The United States has been developing, almost by default, a strategy not of disengagement but of indirect engagement. Between 1989 and 2008, the U.S. strategy has been the use of U.S. troops as the default for dealing with foreign issues. From Panama to Somalia, Kosovo, Afghanistan and Iraq, the United States followed a policy of direct and early involvement of U.S. military forces.

Because the current Russian Federation is much weaker than the Soviet Union was at its height and because the general geographic principle in the region remains the same, a somewhat analogous balance of power strategy is likely to emerge after the events in Ukraine.

The coalescence of this strategy is a development I forecast in two books, The Next Decade and The Next 100 Years, as a concept I called the Intermarium. The Intermarium was a plan pursued after World War I by Polish leader Jozef Pilsudski for a federation, under Poland's aegis, of Central and Eastern European countries. What is now emerging is not the Intermarium, but it is close. And it is now transforming from an abstract forecast to a concrete, if still emergent, reality.

First, Ukraine is a large country, and the force required to protect it would outstrip U.S. capabilities.

Second, supplying such a force would require a logistics system that does not exist and would take a long time to build.

Finally, such an intervention would be inconceivable without a strong alliance system extending to the West and around the Black Sea.

If the United States chooses to confront Russia with a military component, it must be on a stable perimeter and on as broad a front as possible to extend Russian resources and decrease the probability of Russian attack at any one point out of fear of retaliation elsewhere.

The problem is that NATO is not a functional alliance. It was designed to fight the Cold War on a line far to the west of the current line. More important, there was unity on the principle that the Soviet Union represented an existential threat to Western Europe. 

That consensus is no longer there. Different countries have different perceptions of Russia and different concerns. For many, a replay of the Cold War, even in the face of Russian actions in Ukraine, is worse than accommodation.

The countries that were at risk from 1945 to 1989 are not the same as those at risk today. Many of these countries were part of the Soviet Union then, and the rest were Soviet satellites.

The rest of Europe is not in jeopardy, and these countries are not prepared to commit financial and military efforts to a problem they believe can be managed with little risk to them.

the Baltics, Moldova and the Caucasus are areas where the Russians could seek to compensate for their defeat. Because of this, and also because of their intrinsic importance, Poland, Romania and Azerbaijan must be the posts around which this alliance is built.

. Poland is eager for a closer military relationship with the United States, as its national strategy has long been based on third-power guarantees against aggressors.

In Western hands, Moldova threatens Odessa, Ukraine's major port also used by Russia on the Black Sea. In Russian hands, Moldova threatens Bucharest.

Should Dagestan and Chechnya destabilize, Azerbaijan -- which is Islamic and majority Shiite but secular -- would become critical for limiting the regional spread of jihadists.

Azerbaijan also would support the alliance's position in the Black Sea by supporting Georgia

To the southwest, the very pro-Russian Armenia -- which has a Russian troop presence and a long-term treaty with Moscow -- could escalate tensions with Azerbaijan in Nagorno-Karabakh.

Azerbaijan serves a more strategic purpose. Most of the countries in the alliance are heavy importers of Russian energy

The key to the pipeline will be Turkey's willingness to permit transit. I have not included Turkey as a member of this alliance.

I view Turkey in this alliance structure as France in the Cold War. It was aligned yet independent, militarily self-sufficient yet dependent on the effective functioning of others.