Stephen W. Browne

I am currently watching one of the most enthralling dramas in recent memory, the meltdown of the cryptocurrency empire of 30-year-old Samuel Bankman-Fried.

This comes on the heels of the sentencing of Elizabeth Holmes, the con artist who sold a lot of people on technology that didn’t exist.
Some are drawing parallels with Holmes’ Theranos, Bernie Madoff, and the energy company Enron which collapsed after systematic accounting fraud was revealed.

But there’s something different about this. Theranos sold investment in blood analysis technology that turned out to be beyond the reach of current medical science.

Madoff lured investors by promising unrealistic returns on their investments, which turned out to be a gigantic Ponzi scheme.

Enron dealt in energy commodities and used creative accounting to hide the fact they were broke, enabling its top executives to line their pockets before bailing out.

These were like Bankman-Fried’s FTX-Alameda Research, all variations of the “Get rich quick” con. Theranos was a subset called the “sure-fire invention” con.

But what Bankman-Fried and his buds sold was crypto-currency, a computer age innovation whereby people suspicious of the long-term viability of government-issued money attempted to create a store of value immune to inflation.

Fear of inflation is entirely rational. Anybody with even minimal knowledge of economics must be concerned about the fact something like 40% of all US currency ever issued has been created out of thin air within the past couple years.

And as much as court economists such as Robert Reich try to throw the blame on those evil profiteering corporations, the only source of new money is the government. Corporations with government contracts and contacts may benefit from inflation, but they don’t create it.

I worry about inflation. When I first lived in Poland I was getting paid in millions of zloty, and a government devaluation once wiped out 12% of my savings while it was sitting in my closet.

While I was living in Bulgaria I starved thin when the inflation rate was an estimated 10% per DAY.

And in Serbia a dissident friend once gave me a crisp, like-new, one trillion dinar note as a souvenir. I gave it to a friend who teaches business and economics to use in his classes.

Once upon a time people worried about inflation and currency collapse sunk their money into precious metals, so-called “gold bugs.” Or if they were really worried, did like the old stock brokers joke and invested in “canned goods and ammunition.”

But cryptocurrency? It seems to me to have all the disadvantages of government money plus one. It’s based on literally nothing, but it’s not subject to legal tender laws, i.e. nobody can force you to use it as a medium of exchange.

Yes I know people who have profited in the cryptocurrency markets. But though I am better than average literate in economics I don’t understand it, so I stay away from it.

Theranos sold investors on tech that seemed achieveable. Madoff actually dealt in real stocks, and Enron in real commodities.
Holmes was a savvy woman with a brilliantly created façade. Madoff was an investor who’d been chairman of NASDAQ stock exchange at one time. Enron executives all had histories in real businesses.

But Bankman-Fried and his pals were kids with no accomplishments beyond expensive educations, dressed like slobs, and lived high in the Bahamas in some kind of polyamory I’m sure we’re all going to hear more about.

And I want to ask his celebrity investors, if you’re so rich why ain’t you smart?

Well it didn’t take long for Russia to avenge the bombing of the Kerch Strait road-and-rail bridge on Saturday. Overnight Sunday Russian air strikes hit the city of Zaporizhzhia destroyed houses and high-rise apartments in the southeast Ukrainian city.

A correspondent in Ukraine told me right after the attack on the bridge linking the Russian-occupied Crimean peninsula with the mainland that she feared it would escalate into nuclear war and everything around her would be destroyed.

She’s trying to escape into Poland right now. I told her I didn’t think it would go nuclear, but in truth I’m not sure. I actually don’t know what to think, but what do you say to a noncombatant in a war zone?

“Don’t worry but get out of there as soon as you can,” maybe?

That bridge was Putin’s pride and joy and he personally opened it himself in 2018 by driving the first truck to officially cross the 12-mile span.

While the bridge does have considerable strategic importance the bombing is personally a slap in the face for Putin. Now everybody is on edge about how he’s going to react to this insult and fear Zaporizhzhia may only be the beginning.

Little is known for sure right now, but the bomb was delivered by truck in what must have been a suicide mission – and apparently the truck registration was recovered. It appears to be registered to someone living in the Krasnodar region near the Russian side of the bridge.

Which adds to the mystery surrounding the sabotage of the Nord Stream pipeline.

Are these Ukrainian special operations missions? That would make more sense for the bridge bombing. Are there third parties covertly running operations against Russia? Or is there an internal Russian resistance?

And what’s going to happen now? Is Putin going to follow through on his broad hints he’ll use tactical nuclear weapons if he feels that’s the only way to win?

And what would he win? A huge expanse of territory reduced to poverty and ruin even by Russian standards. Territory full of people who hate his guts.

Worse, his army’s supplies are seriously depleted and personnel are demoralized. Even if he takes Ukraine, Russia will be in no shape to take on Poland next, as seems to have been his plan.

And why would he risk escalation to the point of destroying civilization – including Russia? And how seriously should we take that possibility?

Great questions, wish I had some answers. All the experts have had to revise their answers regularly in the face of changing circumstances.

I will venture a guess. Russia is dying. It is currently suffering what appears to be irreversible population decline, the result of moving huge numbers from the rural areas to the cities under Stalin’s forced industrialization.

The territory Russia controls was seriously reduced during the collapse of the Soviet Union when their former satellite states effectively turned their guns around and pointed them toward their former master. Control of all the nine strategic “gates” (natural invasion corridors) into the Russian heartland has slipped out of their control.

Putin’s modern version of pan-Slavicism, the romantic imperialism of a union of all Slavic peoples under Russian domination, is gone along with the Third Reich and the Greater East Asia Co-Prosperity Sphere.

When such dreams die, megalomaniac leaders often want their country to die gloriously with them, as Hitler and the Japanese warlords tried to accomplish.

They failed, but they didn’t have nukes.

Well we are now a month into what was supposed to be a 48 hour walkover by Russia into Ukraine and we have no idea what to do next.

A walkover would have been so simple to deal with. The world would have wailed and gnashed their teeth, called Putin nasty names, and imposed some sanctions. The sanctions would have hurt ordinary Russians and made the “Siloviki” – the Powerful even richer.

Instead the Russian army is suffering heavy losses of equipment and personnel and facing even heavier losses when they try to capture Kiev and other cities.

Military experts with experience in city fighting say you need a ten-to-one advantage to capture cities, and you’ll lose a lot of your armor doing so should you be so foolish as to use tanks against apartment buildings.

The Russians could of course simply stand off and shell it into piles of rubble. That I’m told is also problematic. Years ago an old Polish gentleman who’d flown Lancaster bombers for the RAF told me they’d learned rubble is actually easier to defend than intact cities, after they’d destroyed the ancient monastery of Monte Casino.

The obvious problems are:

We can help Ukraine with small arms such as Javelin anti-tank missiles and Stinger missiles which make life difficult for low-flying aircraft and helicopters. It’s a little late but I’d have suggested doing this more discretely with face-saving deniability.

Putin (outraged): “Where’d those arms come from?”

Biden (shrugs): “Dunno man, must have been the stuff we left behind in Afghanistan.”

Ukraine asked for an air force and Poland was more than willing to give them one, if we’d replace the old Migs they donated with shiny new US airplanes. That, pardon the expression, is not going to fly.

This runs into the problem of Putin’s nukes and the question of where is that “bridge too far”?

At what point might Putin use nukes, and against whom? In this game of nuclear chicken, who blinks first and when?

At this point I’d like to introduce you to Peyton’s Rules for dealing with stand-up aggression, on the theory that aggression between nations is much the same as aggression by street thugs writ large.
(Peyton Quinn is an acquaintance of mine, a former bouncer, teacher, and technical advisor on the movie Roadhouse. Also the inspiration for Sam Eliot’s character.)

Because Putin is a thug with a very large gang. A gang he has increasingly tenuous control over, ready to turn on him at the least sign of weakness.

The rules are: 1) Don’t insult him, 2) Don’t challenge him or accept his challenge, 3) Leave him a face-saving exit.

Number one, that ship has sailed. Maybe we can get past that. Maybe.

Number two, we aren’t going to put boots on the ground in Ukraine, period. The question is, at what point does materiel aid count as accepting that challenge?

Number three, so how do we leave Putin a face-saving exit?

After the Finnish-Soviet War, “The Winter War,” the Soviets gained a small amount of Finnish territory. “Enough to bury the men we lost taking it” as one Russian general described it, and some concessions that did no real harm to Finland.

What is the situation in the ethnic Russian territories in eastern Ukraine? Are they more trouble to keep than to lose, and would Putin be content with a slice of them?

Ukraine could rebuild with massive Western aid, and every city park could have a Russian tank for kids to play on for generations to come.