A Maritime Strategy for Ukraine

 Russian President Vladimir Putin did the unthinkable: There’s a shooting war in Europe. Fear of isolation from the “international community”, whatever that means to liberal democracies, the Geneva Convention, lessons from the Nuremburg Trials, and economic sanctions, failed to stop total war in Ukraine. NATO and the US was afraid of “poking the bear”, but Putin escalated his war nevertheless.

The news has covered the stories of Ukrainian-American expatriates and mercenaries fighting in the ground war; and I have had peers ask “how do I join the fight?”. To those with maritime experience, I advise staying at sea, with a focus on delivering food and supplies. Odessa, accessed through Istanbul’s Bosporus Strait and through the Black Sea, offers the most daring route. Russian harassment and occasional attacks on vessels today harken back to World War Two’s Murmansk Run. A successful convoy of merchant ships can deliver more goods than airplanes and trucks, the current vehicles of logistics. The merchant marine is a business, however, and in wartime conditions, governments must provide assurance to vessels flying their flag. In the United States, various tools can be activated by the Maritime Administration, under the DOT. These include activation of Second Seaman’s War Risk Insurance, to guarantee life insurance benefits for mariners, and vessel insurance for shipowners. Declaring a Sealift Emergency would allow retired and former mariners to crew ships, with the ability to return to their shore-based jobs after completing a voyage (similar to the USERRA benefit provided to military reservists and draftees).          

Dependency on Oil and Gas is the Achille’s heel of the West. During the first week of Putin’s war in Ukraine, which began on February 22^nd, countries such as Germany and the United Kingdom had no plans to curtail fuel purchases from Russia’s war machine. Given that fuel prices at the gas pump had already increased, I was afraid that the politicians in Washington, DC would be afraid of acting decisively. Initially, I felt that some form of rationing or subsidy (such as government-issued fuel cards to consumers) would be required to ease off Russian fuel imports. This would go hand-in-hand with fuel conservation posters asking motorists “if this trip is necessary”. Citizens would be asked to turn down the thermostat in cold-weather environments, and raise it in warm-weather environments, to save fuel.

The transition was easier than expected. Existing domestic production, the price/demand curve for fuel consumption, and cooperation from other OPEC nations allowed the US to adapt to the cut in Russian fuel imports. Idle offshore oil rigs were already being restored to service, as the price of oil had increased over the key threshold of $80 per barrel. In oil rig layup, the drilling rig roughnecks and brown-water mariners bear the brunt of fluctuations: working on a drillship or supply vessel is high-paying work when it is available.  

In World War Two, construction of the Big Inch Pipeline from Texas to New Jersey was prioritized in order to free oil tankers from the dangerous duty of navigating the Atlantic Coast, infested with Nazi U-Boats. Energy security today demands construction of the Keystone XL Pipeline, while respecting the rights of the Lakota People. This pipeline alone is reported to have the carrying capacity equivalent to fuel imports from Russia. While the conflict in Ukraine will hopefully be resolved before completion of the pipeline, its existence should change Russia’s geopolitical calculations in the longer term. On the greener side, conservatives and war hawks will find clean energy investments, such as solar and wind farms, to be part of a national security strategy.

President Eisenhower correctly assessed the importance of logistics in wartime. This is evident in reports of frontline Russian soldiers begging for MREs, or pre-packaged meals.  Food, Supplies, and Fuel- both how we use them at home, and how we deliver them to Ukraine, are essential parts for victory.

Mama Lenders and Mortgage Lenders

 As it is today, the housing sector is a provider of equal opportunity. People in their respective economic milieus live in somewhat-integrated neighborhoods. Taking Fairfax County, Virginia as an example, Working-Class Whites and Latinos may share one neighborhood; and Upper-Middle Class Whites and Asians may share another neighborhood.

There is one group that is left behind, studies show: middle-class African-Americans, who miss out on the opportunity to purchase in the same neighborhoods that White Americans of similar economic status do. Merely calling it “systemic racism” won’t solve the discrepancy; but dissecting it will.  

Qualification for a traditional mortgage is based on the ability to repay; in addition to making a down payment. Many prospective homebuyers must budget carefully to build the down payment, by cutting out some discretionary spending.  African-American purchasing habits are similar to other Americans, although the community spends slightly more on haircare and barbeque supplies, slightly less on home appliances. Contrary to pervasive stereotypes, spending on discretionary goods (such as shoes and handbags) does not differ from other groups.

How “consumer debt” is handled, does differ culturally. In the African-American community, it is common for family members in middle-class jobs to gift, or loan on flexible terms, significant sums of money to less-fortunate relatives. This could be cash for a nephew to buy a used car for his new job, medical expenses for a parent, or college textbooks for a cousin.

In previous decades, this arrangement was highly beneficial, and even necessary to ensure a family’s security in light of the peonage, or debt-bondage, system common in the Jim Crow South. In the Agricultural South and Industrial North, young and middle-aged men had a short period of time in their prime-earning years. This relative excess would be used to support family members in more vulnerable financial situations, such as grandparents. Today, this informal system of family assurance is much better for the recipient economically than a payday loan, and better than a high-interest credit card. It, however, does not enhance the donor’s credit score; nor is the possibility of receiving mutual assurance counted towards “ability to pay” a mortgage.  

Asian-American families often have a similar practice of family assurance, but with one notable difference among the American-born: bank checks are passed instead of large bills. When financial transfers within a family are significant, traceability makes a large impact on perceived creditworthiness. When cash “disappears” from a bank account, it is assumed by mortgage lenders to have been spent. A check, written out to a relative, carries intrinsic proof as an intra-family gift.

Indeed, many members of the Black Middle Class may fall through the cracks of mortgage lenders; resulting in smaller loan approvals and higher interest rates; and consequently, less choice of neighborhood. What mortgage originators need to do, then, is to recognize this form of family assurance as a legitimate form of insurance and financial security. Community leaders should encourage the use of traceable instruments, such as bank checks or mobile apps, to ‘mainstream’ this mutually-beneficial practice in the eyes of institutional lenders.