On Energy Production and US Intelligence Failures
John Mauldin's Outside the Box

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I send you Outside the Box each week not to make you comfortable but to make you think. Usually it is on some financial topic, but life is more than investments. Economics is not an isolated discipline (more like an art form I think) so we have to have a real understanding of the world around us. This week I offer two essays which made me both think and reflect. We live in a world which wants easy solutions to complex problems, and wish as we may, will not get easy solutions which will work.

The first essay is by Pewter Huber on the reality of energy production. We all want to be able to "go green." How realistic is that? The second is by my friend George Friedman on torture and US intelligence failures.

Peter Huber is a Manhattan Institute senior fellow and the coauthor, most recently, of The Bottomless Well. His article develops arguments that he made in an Intelligence Squared U.S. debate in January. George is well known to OTB readers. He is president of Stratfor and was with the CIA (as was his wife Meredith) before they founded Stratfor, what I think of as the premier private intelligence agency in the world.

I suggest you put on your thinking caps and take some time to read both of these very important essays, and enjoy your week. I am off to Orlando and the CFA conference.

John Mauldin, Editor
Outside the Box

Bound to Burn

Humanity will keep spewing carbon into the atmosphere, but good policy can help sink it back into the earth.

By Peter W. Huber

Like medieval priests, today's carbon brokers will sell you an indulgence that forgives your carbon sins. It will run you about $500 for 5 tons of forgiveness -- about how much the typical American needs every year. Or about $2,000 a year for a typical four-person household. Your broker will spend the money on such things as reducing methane emissions from hog farms in Brazil.

But if you really want to make a difference, you must send a check large enough to forgive the carbon emitted by four poor Brazilian households, too -- because they're not going to do it themselves. To cover all five households, then, send $4,000. And you probably forgot to send in a check last year, and you might forget again in the future, so you'd best make it an even $40,000, to take care of a decade right now. If you decline to write your own check while insisting that to save the world we must ditch the carbon, you are just burdening your already sooty soul with another ton of self-righteous hypocrisy. And you can't possibly afford what it will cost to forgive that.

If making carbon this personal seems rude, then think globally instead. During the presidential race, Barack Obama was heard to remark that he would bankrupt the coal industry. No one can doubt Washington's power to bankrupt almost anything -- in the United States. But China is adding 100 gigawatts of coal-fired electrical capacity a year. That's another whole United States' worth of coal consumption added every three years, with no stopping point in sight. Much of the rest of the developing world is on a similar path.

Cut to the chase. We rich people can't stop the world's 5 billion poor people from burning the couple of trillion tons of cheap carbon that they have within easy reach. We can't even make any durable dent in global emissions -- because emissions from the developing world are growing too fast, because the other 80 percent of humanity desperately needs cheap energy, and because we and they are now part of the same global economy. What we can do, if we're foolish enough, is let carbon worries send our jobs and industries to their shores, making them grow even faster, and their carbon emissions faster still.

We don't control the global supply of carbon.

Ten countries ruled by nasty people control 80 percent of the planet's oil reserves -- about 1 trillion barrels, currently worth about $40 trillion. If $40 trillion worth of gold were located where most of the oil is, one could only scoff at any suggestion that we might somehow persuade the nasty people to leave the wealth buried. They can lift most of their oil at a cost well under $10 a barrel. They will drill. They will pump. And they will find buyers. Oil is all they've got.

Poor countries all around the planet are sitting on a second, even bigger source of carbon -- almost a trillion tons of cheap, easily accessible coal. They also control most of the planet's third great carbon reservoir -- the rain forests and soil. They will keep squeezing the carbon out of cheap coal, and cheap forest, and cheap soil, because that's all they've got. Unless they can find something even cheaper. But they won't -- not any time in the foreseeable future.

We no longer control the demand for carbon, either. The 5 billion poor -- the other 80 percent -- are already the main problem, not us. Collectively, they emit 20 percent more greenhouse gas than we do. We burn a lot more carbon individually, but they have a lot more children. Their fecundity has eclipsed our gluttony, and the gap is now widening fast. China, not the United States, is now the planet's largest emitter. Brazil, India, Indonesia, South Africa, and others are in hot pursuit. And these countries have all made it clear that they aren't interested in spending what money they have on low-carb diets. It is idle to argue, as some have done, that global warming can be solved -- decades hence -- at a cost of 1 to 2 percent of the global economy. Eighty percent of the global population hasn't signed on to pay more than 0 percent.

Accepting this last, self-evident fact, the Kyoto Protocol divides the world into two groups. The roughly 1.2 billion citizens of industrialized countries are expected to reduce their emissions. The other 5 billion -- including both China and India, each of which is about as populous as the entire Organisation for Economic Co-operation and Development -- aren't. These numbers alone guarantee that humanity isn't going to reduce global emissions at any point in the foreseeable future -- unless it does it the old-fashioned way, by getting poorer. But the current recession won't last forever, and the long-term trend is clear. Their populations and per-capita emissions are rising far faster than ours could fall under any remotely plausible carbon-reduction scheme.

Might we simply buy their cooperation? Various plans have circulated for having the rich pay the poor to stop burning down rain forests and to lower greenhouse-gas emissions from primitive agricultural practices. But taking control of what belongs to someone else ultimately means buying it. Over the long term, we would in effect have to buy up a large fraction of all the world's forests, soil, coal, and oil -- and then post guards to make sure that poor people didn't sneak in and grab all the carbon anyway. Buying off people just doesn't fly when they outnumber you four to one.

Might we instead manage to give the world something cheaper than carbon? The moon-shot law of economics says yes, of course we can. If we just put our minds to it, it will happen. Atom bomb, moon landing, ultracheap energy -- all it takes is a triumph of political will.

Really? For the very poorest, this would mean beating the price of the free rain forest that they burn down to clear land to plant a subsistence crop. For the slightly less poor, it would mean beating the price of coal used to generate electricity at under 3 cents per kilowatt-hour.

And with one important exception, which we will return to shortly, no carbon-free fuel or technology comes remotely close to being able to do that. Fossil fuels are extremely cheap because geological forces happen to have created large deposits of these dense forms of energy in accessible places. Find a mountain of coal, and you can just shovel gargantuan amounts of energy into the boxcars.

Shoveling wind and sun is much, much harder. Windmills are now 50-story skyscrapers. Yet one windmill generates a piddling 2 to 3 megawatts. A jumbo jet needs 100 megawatts to get off the ground; Google is building 100-megawatt server farms. Meeting New York City's total energy demand would require 13,000 of those skyscrapers spinning at top speed, which would require scattering about 50,000 of them across the state, to make sure that you always hit enough windy spots. To answer the howls of green protest that inevitably greet realistic engineering estimates like these, note that real-world systems must be able to meet peak, not average, demand; that reserve margins are essential; and that converting electric power into liquid or gaseous fuels to power the existing transportation and heating systems would entail substantial losses. What was Mayor Bloomberg thinking when he suggested that he might just tuck windmills into Manhattan? Such thoughts betray a deep ignorance about how difficult it is to get a lot of energy out of sources as thin and dilute as wind and sun.

It's often suggested that technology improvements and mass production will sharply lower the cost of wind and solar. But engineers have pursued these technologies for decades, and while costs of some components have fallen, there is no serious prospect of costs plummeting and performance soaring as they have in our laptops and cell phones. When you replace conventional with renewable energy, everything gets bigger, not smaller -- and bigger costs more, not less. Even if solar cells themselves were free, solar power would remain very expensive because of the huge structures and support systems required to extract large amounts of electricity from a source so weak that it takes hours to deliver a tan.

This is why the (few) greens ready to accept engineering and economic reality have suddenly emerged as avid proponents of nuclear power. In the aftermath of the Three Mile Island accident -- which didn't harm anyone, and wouldn't even have damaged the reactor core if the operators had simply kept their hands off the switches and let the automatic safety systems do their job -- ostensibly green antinuclear activists unwittingly boosted U.S. coal consumption by about 400 million tons per year. The United States would be in compliance with the Kyoto Protocol today if we could simply undo their handiwork and conjure back into existence the nuclear plants that were in the pipeline in nuclear power's heyday. Nuclear power is fantastically compact, and -- as America's nuclear navy, several commercial U.S. operators, France, Japan, and a handful of other countries have convincingly established -- it's both safe and cheap wherever engineers are allowed to get on with it.

But getting on with it briskly is essential, because costs hinge on the huge, up-front capital investment in the power plant. Years of delay between the capital investment and when it starts earning a return are ruinous. Most of the developed world has made nuclear power unaffordable by surrounding it with a regulatory process so sluggish and unpredictable that no one will pour a couple of billion dollars into a new plant, for the good reason that no one knows when (or even if) the investment will be allowed to start making money.

And countries that don't trust nuclear power on their own soil must hesitate to share the technology with countries where you never know who will be in charge next year, or what he might decide to do with his nuclear toys. So much for the possibility that cheap nuclear power might replace carbon-spewing sources of energy in the developing world. Moreover, even India and China, which have mastered nuclear technologies, are deploying far more new coal capacity.

Remember, finally, that most of the cost of carbon-based energy resides not in the fuels but in the gigantic infrastructure of furnaces, turbines, and engines. Those costs are sunk, which means that carbon-free alternatives -- with their own huge, attendant, front-end capital costs -- must be cheap enough to beat carbon fuels that already have their infrastructure in place. That won't happen in our lifetimes.

Another argument commonly advanced is that getting over carbon will, nevertheless, be comparatively cheap, because it will get us over oil, too -- which will impoverish our enemies and save us a bundle at the Pentagon and the Department of Homeland Security. But uranium aside, the most economical substitute for oil is, in fact, electricity generated with coal. Cheap coal-fired electricity has been, is, and will continue to be a substitute for oil, or a substitute for natural gas, which can in turn substitute for oil. By sharply boosting the cost of coal electricity, the war on carbon will make us more dependent on oil, not less.

The first place where coal displaces oil is in the electric power plant itself. When oil prices spiked in the early 1980s, U.S. utilities quickly switched to other fuels, with coal leading the pack; the coal-fired plants now being built in China, India, and other developing countries are displacing diesel generators. More power plants burning coal to produce cheap electricity can also mean less natural gas used to generate electricity. And less used for industrial, commercial, and residential heating, welding, and chemical processing, as these users switch to electrically powered alternatives. The gas that's freed up this way can then substitute for diesel fuel in heavy trucks, delivery vehicles, and buses. And coal-fired electricity will eventually begin displacing gasoline, too, as soon as plug-in hybrid cars start recharging their batteries directly from the grid.

To top it all, using electricity generated in large part by coal to power our passenger cars would lower carbon emissions -- even in Indiana, which generates 75 percent of its electricity with coal. Big power plants are so much more efficient than the gasoline engines in our cars that a plug-in hybrid car running on electricity supplied by Indiana's current grid still ends up more carbon-frugal than comparable cars burning gasoline in a conventional engine under the hood. Old-guard energy types have been saying this for decades. In a major report released last March, the World Wildlife Fund finally concluded that they were right all along.

But true carbon zealots won't settle for modest reductions in carbon emissions when fat targets beckon. They see coal-fired electricity as the dragon to slay first. Huge, stationary sources can't run or hide, and the cost of doing without them doesn't get rung up in plain view at the gas pump. California, Pennsylvania, and other greener-than-thou states have made flatlining electricity consumption the linchpin of their war on carbon. That is the one certain way to halt the displacement of foreign oil by cheap, domestic electricity.

The oil-coal economics come down to this. Per unit of energy delivered, coal costs about one-fifth as much as oil -- but contains one-third more carbon. High carbon taxes (or tradable permits, or any other economic equivalent) sharply narrow the price gap between oil and the one fuel that can displace it worldwide, here and now. The oil nasties will celebrate the green war on carbon as enthusiastically as the coal industry celebrated the green war on uranium 30 years ago.

The other 5 billion are too poor to deny these economic realities. For them, the price to beat is 3-cent coal-fired electricity. China and India won't trade 3-cent coal for 15-cent wind or 30-cent solar. As for us, if we embrace those economically frivolous alternatives on our own, we will certainly end up doing more harm than good.

By pouring money into anything-but-carbon fuels, we will lower demand for carbon, making it even cheaper for the rest of the world to buy and burn. The rest will use cheaper energy to accelerate their own economic growth. Jobs will go where energy is cheap, just as they go where labor is cheap. Manufacturing and heavy industry require a great deal of energy, and in a global economy, no competitor can survive while paying substantially more for an essential input. The carbon police acknowledge the problem and talk vaguely of using tariffs and such to address it. But carbon is far too deeply embedded in the global economy, and materials, goods, and services move and intermingle far too freely, for the customs agents to track.

Consider your next Google search. As noted in a recent article in Harper's, "Google . . . and its rivals now head abroad for cheaper, often dirtier power." Google itself (the "don't be evil" company) is looking to set up one of its electrically voracious server farms at a site in Lithuania, "disingenuously described as being near a hydroelectric dam." But Lithuania's grid is 0.5 percent hydroelectric and 78 percent nuclear. Perhaps the company's next huge farm will be "near" the Three Gorges Dam in China, built to generate over three times as much power as our own Grand Coulee Dam in Washington State. China will be happy to play along, while it quietly plugs another coal plant into its grid a few pylons down the line. All the while, of course, Google will maintain its low-energy headquarters in California, a state that often boasts of the wise regulatory policies -- centered, one is told, on efficiency and conservation -- that have made it such a frugal energy user. But in fact, sky-high prices have played the key role, curbing internal demand and propelling the flight from California of power plants, heavy industries, chip fabs, server farms, and much else (see "California's Potemkin Environmentalism," Spring 2008).

So the suggestion that we can lift ourselves out of the economic doldrums by spending lavishly on exceptionally expensive new sources of energy is absurd. "Green jobs" means Americans paying other Americans to chase carbon while the rest of the world builds new power plants and factories. And the environmental consequences of outsourcing jobs, industries, and carbon to developing countries are beyond dispute. They use energy far less efficiently than we do, and they remain almost completely oblivious to environmental impacts, just as we were in our own first century of industrialization. A massive transfer of carbon, industry, and jobs from us to them will raise carbon emissions, not lower them.

The grand theory for how the developed world can unilaterally save the planet seems to run like this. We buy time for the planet by rapidly slashing our own emissions. We do so by developing carbon-free alternatives even cheaper than carbon. The rest of the world will then quickly adopt these alternatives, leaving most of its trillion barrels of oil and trillion tons of coal safely buried, most of the rain forests standing, and most of the planet's carbon-rich soil undisturbed. From end to end, however, this vision strains credulity.

Perhaps it's the recognition of that inconvenient truth that has made the anti-carbon rhetoric increasingly apocalyptic. Coal trains have been analogized to boxcars headed for Auschwitz. There is talk of the extinction of all humanity. But then, we have heard such things before. It is indeed quite routine, in environmental discourse, to frame choices as involving potentially infinite costs on the green side of the ledger. If they really are infinite, no reasonable person can quibble about spending mere billions, or even trillions, on the dollar side, to dodge the apocalyptic bullet.

Thirty years ago, the case against nuclear power was framed as the "Zero-Infinity Dilemma." The risks of a meltdown might be vanishingly small, but if it happened, the costs would be infinitely large, so we should forget about uranium. Computer models demonstrated that meltdowns were highly unlikely and that the costs of a meltdown, should one occur, would be manageable -- but greens scoffed: huge computer models couldn't be trusted. So we ended up burning much more coal. The software shoe is on the other foot now; the machines that said nukes wouldn't melt now say that the ice caps will. Warming skeptics scoff in turn, and can quite plausibly argue that a planet is harder to model than a nuclear reactor. But that's a detail. From a rhetorical perspective, any claim that the infinite, the apocalypse, or the Almighty supports your side of the argument shuts down all further discussion.

To judge by actions rather than words, however, few people and almost no national governments actually believe in the infinite rewards of exorcising carbon from economic life. Kyoto has hurt the anti-carbon mission far more than carbon zealots seem to grasp. It has proved only that with carbon, governments will say and sign anything -- and then do less than nothing. The United States should steer well clear of such treaties because they are unenforceable, routinely ignored, and therefore worthless.

If we're truly worried about carbon, we must instead approach it as if the emissions originated in an annual eruption of Mount Krakatoa. Don't try to persuade the volcano to sign a treaty promising to stop. Focus instead on what might be done to protect and promote the planet's carbon sinks -- the systems that suck carbon back out of the air and bury it. Green plants currently pump 15 to 20 times as much carbon out of the atmosphere as humanity releases into it -- that's the pump that put all that carbon underground in the first place, millions of years ago. At present, almost all of that plant-captured carbon is released back into the atmosphere within a year or so by animal consumers. North America, however, is currently sinking almost two-thirds of its carbon emissions back into prairies and forests that were originally leveled in the 1800s but are now recovering. For the next 50 years or so, we should focus on promoting better land use and reforestation worldwide. Beyond that, weather and the oceans naturally sink about one-fifth of total fossil-fuel emissions. We should also investigate large-scale options for accelerating the process of ocean sequestration.

Carbon zealots despise carbon-sinking schemes because, they insist, nobody can be sure that the sunk carbon will stay sunk. Yet everything they propose hinges on the assumption that carbon already sunk by nature in what are now hugely valuable deposits of oil and coal can be kept sunk by treaty and imaginary cheaper-than-carbon alternatives. This, yet again, gets things backward. We certainly know how to improve agriculture to protect soil, and how to grow new trees, and how to maintain existing forests, and we can almost certainly learn how to mummify carbon and bury it back in the earth or the depths of the oceans, in ways that neither man nor nature will disturb. It's keeping nature's black gold sequestered from humanity that's impossible.

If we do need to do something serious about carbon, the sequestration of carbon after it's burned is the one approach that accepts the growth of carbon emissions as an inescapable fact of the twenty-first century. And it's the one approach that the rest of the world can embrace, too, here and now, because it begins with improving land use, which can lead directly and quickly to greater prosperity. If, on the other hand, we persist in building green bridges to nowhere, we will make things worse, not better. Good intentions aren't enough. Turned into ineffectual action, they can cost the earth and accelerate its ruin at the same time.

And now to George Friedman:

Torture and the U.S. Intelligence Failure

By George Friedman

The Obama administration published a series of memoranda on torture issued under the Bush administration. The memoranda, most of which dated from the period after 9/11, authorized measures including depriving prisoners of solid food, having them stand shackled and in uncomfortable positions, leaving them in cold cells with inadequate clothing, slapping their heads and/or abdomens, and telling them that their families might be harmed if they didn't cooperate with their interrogators.

On the scale of human cruelty, these actions do not rise anywhere near the top. At the same time, anyone who thinks that being placed without food in a freezing cell subject to random mild beatings -- all while being told that your family might be joining you -- isn't agonizing clearly lacks imagination. The treatment of detainees could have been worse. It was terrible nonetheless.

Torture and the Intelligence Gap

But torture is meant to be terrible, and we must judge the torturer in the context of his own desperation. In the wake of 9/11, anyone who wasn't terrified was not in touch with reality. We know several people who now are quite blasé about 9/11. Unfortunately for them, we knew them in the months after, and they were not nearly as composed then as they are now.

Sept. 11 was terrifying for one main reason: We had little idea about al Qaeda's capabilities. It was a very reasonable assumption that other al Qaeda cells were operating in the United States and that any day might bring follow-on attacks. (Especially given the group's reputation for one-two attacks.) We still remember our first flight after 9/11, looking at our fellow passengers, planning what we would do if one of them moved. Every time a passenger visited the lavatory, one could see the tensions soar.

And while Sept. 11 was frightening enough, there were ample fears that al Qaeda had secured a "suitcase bomb" and that a nuclear attack on a major U.S. city could come at any moment. For individuals, such an attack was simply another possibility. We remember staying at a hotel in Washington close to the White House and realizing that we were at ground zero -- and imagining what the next moment might be like. For the government, however, the problem was having scraps of intelligence indicating that al Qaeda might have a nuclear weapon, but not having any way of telling whether those scraps had any value. The president and vice president accordingly were continually kept at different locations, and not for any frivolous reason.

This lack of intelligence led directly to the most extreme fears, which in turn led to extreme measures. Washington simply did not know very much about al Qaeda and its capabilities and intentions in the United States. A lack of knowledge forces people to think of worst-case scenarios. In the absence of intelligence to the contrary after 9/11, the only reasonable assumption was that al Qaeda was planning more -- and perhaps worse -- attacks.

Collecting intelligence rapidly became the highest national priority. Given the genuine and reasonable fears, no action in pursuit of intelligence was out of the question, so long as it promised quick answers. This led to the authorization of torture, among other things. Torture offered a rapid means to accumulate intelligence, or at least -- given the time lag on other means -- it was something that had to be tried.

Torture and the Moral Question

And this raises the moral question. The United States is a moral project: its Declaration of Independence and Constitution state that. The president takes an oath to preserve, protect and defend the Constitution from all enemies foreign and domestic. The Constitution does not speak to the question of torture of non-citizens, but it implies an abhorrence of rights violations (at least for citizens). But the Declaration of Independence contains the phrase, "a decent respect for the opinions of mankind." This indicates that world opinion matters.

At the same time, the president is sworn to protect the Constitution. In practical terms, this means protecting the physical security of the United States "against all enemies, foreign and domestic." Protecting the principles of the declaration and the Constitution are meaningless without regime preservation and defending the nation.

While this all makes for an interesting seminar in political philosophy, presidents -- and others who have taken the same oath -- do not have the luxury of the contemplative life. They must act on their oaths, and inaction is an action. Former U.S. President George W. Bush knew that he did not know the threat, and that in order to carry out his oath, he needed very rapidly to find out the threat. He could not know that torture would work, but he clearly did not feel that he had the right to avoid it.

Consider this example. Assume you knew that a certain individual knew the location of a nuclear device planted in an American city. The device would kill hundreds of thousands of Americans, but he individual refused to divulge the information. Would anyone who had sworn the oath have the right not to torture the individual? Torture might or might not work, but either way, would it be moral to protect the individual's rights while allowing hundreds of thousands to die? It would seem that in this case, torture is a moral imperative; the rights of the one with the information cannot transcend the life of a city.

Torture in the Real World

But here is the problem: You would not find yourself in this situation. Knowing a bomb had been planted, knowing who knew that the bomb had been planted, and needing only to apply torture to extract this information is not how the real world works. Post-9/11, the United States knew much less about the extent of the threat from al Qaeda. This hypothetical sort of torture was not the issue.

Discrete information was not needed, but situational awareness. The United States did not know what it needed to know, it did not know who was of value and who wasn't, and it did not know how much time it had. Torture thus was not a precise solution to a specific problem: It became an intelligence-gathering technique. The nature of the problem the United States faced forced it into indiscriminate intelligence gathering. When you don't know what you need to know, you cast a wide net. And when torture is included in the mix, it is cast wide as well. In such a case, you know you will be following many false leads -- and when you carry torture with you, you will be torturing people with little to tell you. Moreover, torture applied by anyone other than well-trained, experienced personnel (who are in exceptionally short supply) will only compound these problems, and make the practice less productive.

Defenders of torture frequently seem to believe that the person in custody is known to have valuable information, and that this information must be forced out of him. His possession of the information is proof of his guilt. The problem is that unless you have excellent intelligence to begin with, you will become engaged in developing baseline intelligence, and the person you are torturing may well know nothing at all. Torture thus becomes not only a waste of time and a violation of decency, it actually undermines good intelligence. After a while, scooping up suspects in a dragnet and trying to extract intelligence becomes a substitute for competent intelligence techniques -- and can potentially blind the intelligence service. This is especially true as people will tell you what they think you want to hear to make torture stop.

Critics of torture, on the other hand, seem to assume the torture was brutality for the sake of brutality instead of a desperate attempt to get some clarity on what might well have been a catastrophic outcome. The critics also cannot know the extent to which the use of torture actually prevented follow-on attacks. They assume that to the extent that torture was useful, it was not essential; that there were other ways to find out what was needed. In the long run, they might have been correct. But neither they, nor anyone else, had the right to assume in late 2001 that there was a long run. One of the things that wasn't known was how much time there was.

The U.S. Intelligence Failure

The endless argument over torture, the posturing of both critics and defenders, misses the crucial point. The United States turned to torture because it has experienced a massive intelligence failure reaching back a decade. The U.S. intelligence community simply failed to gather sufficient information on al Qaeda's intentions, capability, organization and personnel. The use of torture was not part of a competent intelligence effort, but a response to a massive intelligence failure.

That failure was rooted in a range of miscalculations over time. There was the public belief that the end of the Cold War meant the United States didn't need a major intelligence effort, a point made by the late Sen. Daniel Moynihan. There were the intelligence people who regarded Afghanistan as old news. There was the Torricelli amendment that made recruiting people with ties to terrorist groups illegal without special approval. There were the Middle East experts who could not understand that al Qaeda was fundamentally different from anything seen before. The list of the guilty is endless, and ultimately includes the American people, who always seem to believe that the view of the world as a dangerous place is something made up by contractors and bureaucrats.

Bush was handed an impossible situation on Sept. 11, after just nine months in office. The country demanded protection, and given the intelligence shambles he inherited, he reacted about as well or badly as anyone else might have in the situation. He used the tools he had, and hoped they were good enough.

The problem with torture -- as with other exceptional measures -- is that it is useful, at best, in extraordinary situations. The problem with all such techniques in the hands of bureaucracies is that the extraordinary in due course becomes the routine, and torture as a desperate stopgap measure becomes a routine part of the intelligence interrogator's tool kit.

At a certain point, the emergency was over. U.S. intelligence had focused itself and had developed an increasingly coherent picture of al Qaeda, with the aid of allied Muslim intelligence agencies, and was able to start taking a toll on al Qaeda. The war had become routinized, and extraordinary measures were no longer essential. But the routinization of the extraordinary is the built-in danger of bureaucracy, and what began as a response to unprecedented dangers became part of the process. Bush had an opportunity to move beyond the emergency. He didn't.

If you know that an individual is loaded with information, torture can be a useful tool. But if you have so much intelligence that you already know enough to identify the individual is loaded with information, then you have come pretty close to winning the intelligence war. That's not when you use torture. That's when you simply point out to the prisoner that, "for you the war is over." You lay out all you already know and how much you know about him. That is as demoralizing as freezing in a cell -- and helps your interrogators keep their balance.

U.S. President Barack Obama has handled this issue in the style to which we have become accustomed, and which is as practical a solution as possible. He has published the memos authorizing torture to make this entirely a Bush administration problem while refusing to prosecute anyone associated with torture, keeping the issue from becoming overly divisive. Good politics perhaps, but not something that deals with the fundamental question.

The fundamental question remains unanswered, and may remain unanswered. When a president takes an oath to "preserve, protect and defend the Constitution of the United States," what are the limits on his obligation? We take the oath for granted. But it should be considered carefully by anyone entering this debate, particularly for presidents.


John Mauldin is president of Millennium Wave Advisors, LLC, a registered investment advisor. All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors before making any investment decisions.

Opinions expressed in these reports may change without prior notice. John Mauldin and/or the staffs at Millennium Wave Advisors, LLC and InvestorsInsight Publishing, Inc. (InvestorsInsight) may or may not have investments in any funds, programs or companies cited above.


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Posted 04-27-2009 12:36 PM by John Mauldin


bpeterson wrote re: On Energy Production and US Intelligence Failures
on 04-28-2009 1:10 AM


Global warming is real. There is hard evidence that the

carbon dioxide in the atmosphere is increasing, and there

is hard evidence that high atmospheric carbon dioxide

levels in the past were correlated with high global

temperature levels. We also know that carbon dioxide is a

greenhouse gas, and that mankind is releasing more and more

carbon dioxide into the atmosphere. Because the biosphere

is a very complex system, it is difficult to model and

to predict the details and the time line, but be in no

doubt, higher global temperatures, melting ice sheets, and

rising ocean levels are on the way.

Before mankind existed, there was no ice sheet covering

Antarctica, the climate was warm, carbon dioxide levels

were high, and the Earth was rich with life. If we

continue to obtain the majority of our energy from coal,

we will return to a warm Earth without any human

civilization. However, if we start on a course to obtain

our energy from nuclear fission, then we will sterilize

the Earth for at least tens of thousands years, perhaps

permanently. A single nuclear power reactor of moderate

size produces enough radioactive waste in one year of

operation to kill 15 times preset human population of the

Earth. This toxic waste must be kept out of the biosphere

for tens of thousands years. There is no possible way to

ensure this.

The lifestyle in developed countries is maintained with

cheap energy. Current usage can not be met by solar and

wind power. If we are unwilling to reduce greenhouse

gas emissions by reducing per capita energy usage, and

returning to a primitive lifestyle, then we must reduce

reduce greenhouse gas emissions by reducing our population.

Otherwise, we are doomed.

ebroth wrote re: On Energy Production and US Intelligence Failures
on 04-28-2009 3:36 AM

Peterson is missing many facts. Nuclear power is safe and clean. As far back as 1974 [34 years ago], the French Atomic Energy Agency had developed a net way of safely disposing of nuclear waste by encapsulating it in tough, high density, high temp melting glass, and neatly storing it in a played out salt mine. That is why one sees many nuclear power plants in Germany and France, which are rich in coal. They have had no Chernobyls or Three Mile Islands. The argument that enriched uranium can be used to make bombs is in the process of being made a child's bogey man by Sasol, an energy research firm in South Africa, who has developed pellets of graphite and enriched uranium that can be conveyed into a boiling water reactor and controlled to provide clean power, After ten years, these pellets are replaced and buried as low level waste, and can't be re-processed into bomb materials. If we fired the "not invented here" types and utilized and supported what is happening in the civilized world, we would have no carbon problem in 20 years, except for the few remaining cigarette and cigar smokers and trash burners.

bpeterson wrote re: On Energy Production and US Intelligence Failures
on 04-28-2009 10:45 AM

The problem of nuclear waste is intractable; a burden irresponsibly imposed on countless future generations. Not a single nation has in place a satisfactory plan to deal with the tens of tonnes of high-level radioactive waste produced by each nuclear power plant every year, or the larger quantities of low- and intermediate-level waste. No safeguards can reliably deal with radioactive wastes over their lifetimes of up to hundreds of thousands of years, well beyond the longevity of any human institution.

Yet even if it were safe, nuclear power cannot do the necessary job of slashing greenhouse gas emissions. It requires substantial fossil fuel inputs, would take decades to massively expand, and could never contribute more than the one third of human energy use which is in the form of electricity. What is more, it is not sustainable. Like fossil fuels, uranium is a non-renewable resource. Doubling global nuclear energy production by 2050 could be expected to reduce greenhouse gas emissions by just 5 per cent -- less than one 12th of the minimum reduction required to stabilize climate. According to World Nuclear Association data updated in March 2005, if all current electricity generation were nuclear, known recoverable uranium reserves would be exhausted in about nine years. At best nuclear power could provide only a stop-gap measure, while leaving a lasting legacy of unacceptable risk.

Enriched uranium fuel pellets used in boiling water reactors contain significant amounts of plutonium 239 and uranium 235 when they are replaced. Plutonium has a half life of 24,400 years and remains toxic for at least half a million years. These spent fuel pellets can not be safely buried as low level waste after ten years.

The amount of high level nuclear waste that can be contained in glass is not more than 10% of the volume of the glassy material. If more nuclear waste is added, radiation damage from the waste will cause the glass to disintegrate.

A 1000-megawatt reactor annually produces tens of tons of radioactive waste and about 500 pounds of plutonium, enough plutonium for 50 bombs.  One power reactor requires hundreds of tons of glassy material each year to store the nuclear waste it produces. France reprocess spent nuclear fuel and stores French vitrified high-level reprocessed waste at its La Hague reprocessing plant. High-level reprocessed waste from other counties is returned to the country of origin. Germany now stores radioactive waste in nearly 50 locations, including 18 power plants, two off-site power plant waste storage facilities, collecting depots for medicine, industry, and universities, and at its larger research centers.  Low-level radioactive wastes have been disposed of in the Asse salt mine since 1967 as a demonstration of underground disposal.

I repeat, not a single nation has in place a satisfactory plan to deal with the tens of tonnes of high-level radioactive waste produced by each nuclear power plant every year

Miroslav Durmov wrote re: On Energy Production and US Intelligence Failures
on 04-30-2009 4:55 PM

On Torture and US Intelligence Failure

It would not be a surprise if particular political party has tried to use as common denominator for its propagandistic presentation the patriotism, the opponent to shift the discussion to the field of morality. The political realm could present an abundance of issues suitable for illustration of the dilemma and the balance between national security and human rights with its evergreen actuality and more than one right answer inspires almost an army of partisan activists to exercise in front of the public. The most resent publications of torture related memoranda leave to the previous administration the inconvenience to defend the not defendable (the morality of a torture) and with no further steps preserves for the incumbent presidency the freedom to handle extremes in an unpredictable world. Something   leaving for a not partisan observation the possibility to ignore a sequential post-electoral exotic if the issue is not related to intelligence efficiency and the multiplicity of its implication for the national security.

9/11 surprised the intelligence services all over the world with only one difference for the Americans-it was their country and they were on the spot light. An inexcusable failure became obvious-a treat has not been identified and it is self-explanatory why no information, no strategic planning and no workable methods   were available at the time. The Cold War was over but the convenience of habits to deal with easy to identify adversaries using the advantages and disadvantages of state territory and communications shifted the priorities to imagery and signal collection in the process of monitoring the enemy. But the new century introduced an unusual actor-a not state related fiend being able to secure some kind of independent financing, to take advantages for existing injustices and to create not centralized structure to challenge even the most powerful nation of the world with a new army of clandestine warriors. A presumption that behind everything is a malicious genius of a megalomaniac as being too simplistic does not appear to be very true. Numbers of participants, their diversity and regions of activities may guide a conclusion to more complex phenomenon-a new populism being in war with the civilization. Maybe the assumption that after the right and left populisms were compromised during the 20th century, there is no room left for such a political tactic was too optimistic and premature. The religious populism was unexpected for the world and for the intelligence community as part of it as well but it is not a good characteristic for an intelligence structure to be shocked by the unsuspected not because it is a sign for something missed but as source of desperation leading to ill-contemplated search of solution. The overplaying the effectiveness of torture in interrogation of suspected terrorists could be suitable illustration of the fact.

To be honest, the moment of creating inconvenience for the suspects (with the time it developed from inquisition style examination of the “facts” to more perfidious and “scientific” approaches even though there is still not precise line of demarcation) always was an ingredient of an interrogation. A realm, that determinates the necessity of Habeas Corpus and its counterpart –the possibility for suspension in case of national emergency but a centuries old discussion probably would not contribute the clarity. The real live is much more complex that a theoretical discussion and there would be always arguments that “a ticking bomb interrogation tactic”- a well-known euphemism for torture-is an emergency tool to prevent casualties, and its opponents would underscore the moral unacceptability of such a praxis.

The moment is may be suitable to rethink the discussed problem with accent on its perception in a democratic world and beyond to prevent misunderstanding, overemotional conclusion or not appropriate and not realistic expectations for something déjà vu. Related to the torture praxis it should not be omitted that:

-a civilized society is not inclined to tolerate harsh interrogation beyond an immediate state of emergency;

-torture cannot be a make up for intelligence failure and missed opportunities do not resurge trough application of unusual methods;

-traditional intelligence techniques proved to be reliable trough centuries (like human assets) could not be substituted, replaced or supplemented with torture’s tactics;

-even though some of the characteristics of the new enemy might tempt torture related responses, but the creation of a workable system of international cooperation and zero-tolerance is the mechanism able to diminish or even neutralize the treat. The most recent results of joint operations with intelligence services of Islamic nations despite the fact that they are not known as aficionados of human rights significantly improved the situation.

The discussion about torture related practices on political and analytical levels does not only develop tensions between the extremes but also indicates a necessity to reset the public opinion after the electoral division toward common sense wisdoms as:

-intelligence practices even questionable one as element related to the national security should not be taken as hostage in a partisan contend for public approval;

-a bipartisan consensus or at least conversation about priorities and critical join efforts to minimize effects of intelligence failures, is the healthiest environment for accomplishment of the national interest.

In difficult periods of time a politician faces challenges requiring consideration of multilevel complexity and no easy steps have to be made. Not always the right measure is chosen but afterward everybody is smarter. Maybe even a president can learn from his own or from his predecessor’s lack of optimal behavior in situation with insufficient information. But nobody is perfect and there is only the hope being on the right way.

dragba wrote re: On Energy Production and US Intelligence Failures
on 05-02-2009 2:41 PM


I always admired lobbyists  for their feat of turning half-truth into a strong argument.  Peter W. Huber is one of the best. He weaves obvious and false into the smooth carpet of misconception.

Here’s one: The best coal plan has efficiency no more that 33%. It is the ratio of how much of heat can be transformed into mechanical energy and then to electricity.

On the other hand efficient internal combustion engines turn about 65% (up to 80% in diesel engines) of heat into mechanical energy.

The battery in the hybrid or electrical car also has efficiency less than 100%. It means that if we charge the car batteries from the grid where the vast majority of energy comes from the coal, we release more than twice as much of CO2 compared to classic efficient car. That’s thermodynamics. Mass production can decrease the cost but does not increase the efficiency of thermodynamic cycle.

We can and must spend less energy. It is the cheapest way out. It is much easier to make homes more energy efficient than to make more energy. Energy efficiency would make the American economy more competitive than burning more coal.  The utility companies certainly don’t like the idea, so we’ll see the joint lobbying of coal, oil, and utility campuses. There is no one with economic interest to lobby the energy savvy way of living. The only thing I totally agree with Mr. Huber is that the environmentalists are complete idiots. Nobody deals more damage to the environment than them. Therefore I’ll invest in real estate inlands or on high grounds.

staplehead wrote re: On Energy Production and US Intelligence Failures
on 05-05-2009 8:46 AM

I agree – none of the “clean fuel” technologies that exist today can solve our problems.  So we really shouldn’t waste any money investing in them to try to make them work.  It is unlikely that Americans, let alone the rest of the world, can ever figure this out, so let’s not bother.  Furthermore, if the rest of the world DOES decide that maybe we can figure it out, THEN we can decide to go along and see what happens.  This is the way Americans prefer to get things done.  This is how we got to the moon, built the first atomic weapon, and created the modern financial economy.  So, let’s just wait.  See what happens.  IF there’s a problem, somebody else will figure it out.

While we’re at it, we shouldn’t be trying to solve cancer.  We’ve been trying for decades and failing. Think of the money we could save if we gave up?  Think of all the tax money that could be returned to Americans!  If they wanted to cure cancer, they could just spend their own money to cure their own cancers.  The government doesn’t need to do anything.  Capitalism!  AIDS – there’s another good example.  Why did we bother trying to reduce AIDS in the U.S. when there are so many more people with AIDS in Africa??  Furthermore, health care in general is a joke.  Health care has not saved one life, in the long run.  So we should just fire all the doctors, close all the hospitals, and we’d save a fortune!  Then the few healthy people, who were clearly better “designed” to survive, can keep all their money and be happy, and not be bothered by anyone.  Plus, we’d have more money to torture potential terrorists – and everyone knows that terrorists kill more Americans than all other sources combined!  They killed 3,000 people in the course of just a few hours!  Not much else could do that (except maybe a nuclear bomb or a whole lot of Tomahawk missiles…)

If people would just wake up and realize that we can’t really accomplish anything, then we could all just keep our money and not have to be bothered trying to collectively accomplish anything.  And really, isn’t that the point of life?