Quote of the Day

If nothing else comes of it, the West's response to the rape of Georgia should end that delusion. Georgia did almost everything right. And for its actions Georgia was celebrated in the West with platitudes of enduring friendship and empty promises of alliances that were discarded the moment Russia invaded.
 
Georgia only made one mistake, and for that mistake it will pay an enormous price. As it steadily built alliances, it forgot to build an army. Israel has an army. It has just forgotten why its survival depends on our willingness to use it.
 
If we are unwilling to use our military to defeat our enemies, we will lose everything. This is the basic, enduring truth of international affairs that we have ignored at our peril. No matter what we do, it will always be the case. For this is the nature of world affairs, and the nature of man.

Caroline Glick

Communal Memory and Financial Markets

Via Instapundit, an interesting NYT column about how quickly, after a natural disaster, people start to over-discount the risks of future disasters, especially in advanced societies:

Communal memory of rare disasters is worse in more developed societies because knowledge now is passed on in schools, movies or the internet leaving no time for oral history or reliance on the elders to learn about the world.

Something similar to the quick-forgetting phenomenon happens in financial markets. In every market, some players prosper for a while by following trading strategies that tend to be highly profitable from day to day but that are almost guaranteed to be big long-term losers: martingales, naked out-of-the-money option writing and other short-gamma strategies. Every time there is a big market event, a lot of these players suffer large losses and go out of business. They move on to other businesses (I assume) and are no longer around to warn market newcomers to avoid the kind of risky, short-term-profitable strategies that they themselves once followed. So there is a constant stream of new traders who enter the markets and rediscover risk.

This is an oversimplification, since the better traders, by definition, somehow learn how to stay in the game for the long term. But the behavioral parallels between market traders and people who rebuild villages in flood zones — and countries that seek to appease their enemies — seem clear. The common element is lack of an adequate inter-generational feedback mechanism. I doubt that there is a remedy for this pattern of human behavior (I wouldn’t characterize it as a “problem” any more than I would say that rain is a weather problem) other than for people to study history more.

Georgia tries to regain South-Ossetia, risks war with Russia

Earlier today, Georgia attacked South-Ossetia in order to regain this separatist province. This will probably lead to war between Russia and Georgia, and Georgia is already claiming that Russian jets have bombed Georgian targets. Meanwhile, Vladimir Putin has vowed to retaliate against Georgia, for some Russian soldiers have allegedly been killed, and besides, most South-Ossetians have Russian citizenship.

The independence of South-Ossetia from Georgia is not internationally recognized, and neither are the referenda in which the overwhelming majority of South-Ossetians voted for said independence. Btw, North-Ossetia is a part of Russia.

We’ll have to see how this develops, but this might become very bad, if very recent history is anything to go by. Another separatist Georgian province is Abkhasia. In 1993, the Abkhasians won their own war against Georgia with some outside help. The non-Abkhasian population fled or was ethnically cleansed. Up to 10,000 people died, and up to 300,000 were forced into exile. There also is no telling how far Putin might go; the Second Chechen War also has been very bloody.

Meanwhile, some historical background (and very convoluted background at that):

The history of Georgia

The history of South-Ossetia

Also, don’t miss the Georgian Affair from 1922, it shows just how complicated things are in the Caucasus region, and no, nobody there thinks that there should be some kind of statute of limitations on revenge, claims to independence or respectively the reconstitution of former statehood as it had been in centuries past.

Update: Russian troops have entered South-Ossetia, two Russian jets have reportedly been shot down.

Update II: Now Abkhasia (or Abkhazia) is threatening to open a second front against Georgia
Their foreign minister points out that Abkhasia was forcibly integrated into the Georgian Soviet Republic when Stalin, a Georgian, led the Soviet Union.

Skagway and Project Management

THE WHITE PASS AND YUKON RAILROAD

Recently I was in Alaska for a vacation. The trip was great. In the town of Skagway, which is a big destination for cruise ships, is a narrow gauge railway called “The White Pass and Yukon Railroad”. This railway was built in 1898 for the Klondike gold rush.

The railway carried freight for many years and was a significant component of the effort to fortify Alaska in the 1940s when it was under threat from the Japanese in WW2. After the war it was used for civilian purposes.

The rail way shut down in 1982 and was re-opened in 1989 as a tourist railway, taking passengers from Skagway (at sea level) up over the mountains and into Canada. We took the railway up and over into Canada and had a great time. The railway has restored cars that were purchased from other (now defunct) railway lines, some almost 100 years ago. They even have an original steam engine that they keep running and take out on Saturdays (I was told, didn’t see it) so the true “train buffs” can actually ride behind a narrow gauge steam engine (it is number 69 and they sell T shirts for it, probably a big seller due to the double entendre).

WPYR Train

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