The Green Submarine (North Korea)

Is this serious, or political humor?  You decide.

The Beatles sang about a “Yellow Submarine.”  North Korea has a green one.

GreenSub
[US Government Photo]

And guess what?  It can launch a missile!

NK sub missile launch
[North Korean Government Photo (obviously)]

It has tried several times to launch a missile, and while some have failed, at least some have succeeded: http://www.bbc.com/news/world-asia-32671101 .  The most recent test was this weekend:  http://www.reuters.com/article/us-northkorea-missile-idUSKCN0XK08U .  Question … how close could NK get to Washington, NY, San Francisco or LA without being detected?  Or more likely, how close would each presidential candidate allow them to get before destroying the sub and probably starting a [nuclear] war?

  • Hillary – Can’t be awakened at 3 AM.
  • Sanders – Where is North Korea?  Don’t they have a Workers’ Party?
  • Cruz – It is illegal for NK to launch missiles under UN resolutions.  Subs are OK.
  • Trump – Clint Eastwood is my new Secretary of Defense.
  • Kaisch – North Korea is less dangerous than Trump.

Unemployment claims deceptive

We have the lowest new filings for unemployment benefits since 1973.  See article.

  1. We already had a trend toward people working multiple jobs to make ends meet in an era of lower wages and reduced benefits.  If a person loses ONE of those jobs, technically they still have “a job” and aren’t eligible for unemployment benefits.
    – If you work one hour a week and are paid at least $20, you are not eligible.
    – There are currently enough full-time jobs for only 44% of the adult population.
    (it should be at least 50%)
    See article for both stats.
  2. Household income (adjusted for inflation) has been declining since 2000 – that’s a whopping 17 years, nearly a generation!  For the bottom fifth of us, it’s declined about 25%.  See 3rd chart here.
  3. If people take a severance package they may not be eligible for unemployment, and for sure if they take any kind of early retirement they aren’t eligible.  Recently two of my friends in their early 50s took such a deal.  They happen to have no children and can afford it, but are not “happy” about it and most of us can’t afford such a move.
  4. Since 2007 all the other quin-tiles (20% brackets) and even the top 5% have taken losses.  (same 3rd chart as in #2 above)  These losses were precipitous, then nearly recovered, and have recently started down again.  So, a large cross section of people are quite anxious that they are about to lose big time what they have.
  5. 51% of Americans make less than $30,000 a year.  But of course this is more than $20 a week, so they aren’t eligible for unemployment.

No wonder we have such a strange set of presidential candidates with voters in both parties disaffected from the establishment.

He said it!

Not Trump.  Not Sanders.  Not Cruz.  Certainly not Hillary.  And not even me.  Who?  Obama said it.  I was astonished at the CLARITY of the statement, considering most economists and all establishmentarians believe something entirely different.

(You know, my computer is underlining “establishmentarian,” but I clearly remember being required in school to learn to spell “antidisestablishmentarianism,” which is basically the same word with two prefixes.  If I can remember it, surely a mufti-gigabyte computer can!)

From Yahoo Finance, “Obama articulates why Americans are so unhappy“:

There are a lot of reasons [why wages and incomes haven’t gone up as quickly as people had been accustomed to in previous generations]. (1) Global competition. (2) Technology. You know, (3) corporate practices have changed. In some cases (4) tax policies that I’d like to see changed, and I’ve tried to push Congress to change have made a difference.

#1 is just another way of criticizing “free trade.”  You’d think Trump or Sanders would have said it.

#2 is almost anti-American, but I’ve been saying it for a few years now, since discovering the role of productivity in causing deflation (see The Equity Premium Puzzle…).

#3 touches on the purpose and function of corporations, vs. what we have come to assume.  Corporations exist for the greater public good, and the grant of incorporation is a privilege (not a right) granted in exchange for amassing capital and creating employment beyond what we might otherwise have.  If corporate “practices” are slowing the growth of our prosperity, the privilege of incorporation should be revoked.  “Profits” are tied to incorporation, and are only a privilege granted as long as the corporation serves the public good.

#4 I imagine Obama thinks the rich are not taxed enough, he doesn’t say.  But I have a slightly different slant.  Our tax code prevents people from becoming rich and keeps them dependent on employment by over-taxing income, especially in the transition region between upper income working class and minimal self-sufficient investor class.  In Money, Wealth & War I argue that if the upper 10% of income earners would make the transition to capitalists instead of workers, that would make the top 10% most attractive jobs available, and everyone would move up in employment and wealth.  This would provide the salary recovery that has been missing since 2009.  While it is not the intent of this article to make a political recommendation, I note that while Sanders and Trump both appeal to those who have not done well since 2009, Sanders would impose great tax obstacles to becoming wealthy and keep everyone trapped in a job, whereas Trump has devoted a great part of his life to writing books and producing TV shows to try to get people to be more successful and entrepreneurial.

Death of democracy by extortion

It is not my intent to invoke fear or panic, merely to observe an ongoing trend and comment on it.  There are benefits and risks of either staying on the trend or departing from it, probably manageable in most cases.

And THAT is the point of disagreement.  It is the CLAIM of politicians and bureaucrats from Putin to Paul Ryan, from Christine Lagarde to John Kaisch, that “the world WILL FALL APART, catastrophically” if voters have their way from Brexit to the leading TWO candidates in the Congressional majority US party, and the not-far-behind 2nd candidate in the party that controls the White House.

Describing the now-seemingly-likely exit of Britain from the EU, the head of the IMF says it could “derail Europe’s shaky recovery … and lead to years of financial uncertainty.”

Really?  For most of my life there was no EU and the world economy was growing and doing a lot better than it is now, almost everywhere, but especially in the US, Japan, and the Middle East (which is about trashed now except for the few remaining totalitarian oil kingdoms).  So, yeah, there is precedent for democracy leading to catastrophic consequences.  But let’s be clear about the context.  There was previously NO democracy in those regions of the Middle East, whereas democracy has been doing fine in England at least since the Knights of the Round Table (round so that no one not even the king sat at the “head” and was elevated over anyone else).

It seems to me Lagarde has a similar fear mongering message to corral voters into line as did Kaisch and Romney, whom we discussed in a previous post.

Even if our worst nightmares came to pass and Cruz was elected and attempted to implement his anti-Fed gold standard, it seems unlikely that he would succeed, or if he did, that the policy would not be shortly rolled back when the consequences began to be felt.  The only thing that would keep the policies from being rolled back is if you keep people from voting!  Which seems to be the point of all this fear mongering.

And how is that different than Putin’s disdain for the democratic will of the people of Ukraine to join the EU?  Not everyone wants to leave it, just the countries which are doing well, and can you blame them if they have to support all comers?  It’s like having an open border policy in the US.

Yes, well, it seems to me that Lagarde, Kaisch, Romney and Putin have something in common.  And it is not a burning desire to see the will of the voters prevail.

They have something else in common too.  They are not merely fear mongering.  They are extorting.  That is, they are making threats they intend to back up.  Just as Putin made sure Ukraine fell into calamity by financing and arming an invasion of “green men” in unmarked tanks, it seems to me Lagarde (a banker, they are always extortionists) and Kaisch and Romney are all prepared to make sure the consequences are felt, whether it is EU uncertainty or the suicide of the Republican Party.

There is in my view only one way to deal with extortionists.  You have to make your own well considered decision while carefully ignoring them.  And if they act badly afterward, like Putin, you have to fully confront them.  If you cave to them, you take a bold step right out onto the world’s most slippery slope.  So slippery that it amounts to free fall, complete with the splat at the bottom.

Addendum 4/22/2016 – Obama’s critique of Brexit & Mayor of London’s response:

See BBC article on Obama’s speech about Britain going to the back of the queue on trade deals with the US if it exits the EU.  If you read Money, Wealth & War, you already know I consider the EU to be “illegal” under the WTO rules of no preferential trade deals, as well as all other localized deals.  In his response, London mayor Boris Johnson points out most of Britain’s trade (73%) is not part of any preferential trade deals and he cites the WTO as making such deals unnecessary.  He then points out the US defends its own borders (well, depends on who you ask) and does not cede its sovereignty to any sucking federations.  (Well, the states did 2.5 centuries ago.)

Slightly heavy, energetic, with blonde hair, Johnson looks like a younger Trump.  Would be interesting to see how trade policy and international entanglements would come untangled if each became head of his own country.

Kaisch’s path of darkness – politics of the “dark side”

With Star Wars Episode VII out on DVD, accusations that one or another of the candidates is “like Hitler,” and politicians like Kaisch throwing out accusations of a “path of darkness” (see article), it is interesting to see if we can draw any comparisons – either historical or literary.

Fear mongering, which Kaisch is engaging in, is in fact a strategy of the Dark Side.  Caryl Rivers analyzes the comparisons of Trump to Hitler and finds them lacking.  Even if we take the out of context quotes the press gives, which are different than the impression gets listening to whole Trump speeches, the comparison is at best similar to ineffectual mongers such as George Wallace.  In the 2003 lead up to the Iraq war, there were articles accusing the Bush administration of fear mongering, and comparing Bush to Hitler.  Let’s be fair.  The Iraq war was a terrible mistake, at least in the way it was carried out, and did lead eventually to ISIS which is certifiably Nazi-like in its genocidal zeal, but no one thinks Bush actually had genocide in mind.  Revenge, perhaps, but that is a common enough flaw.

Fear mongering is not new or even particularly resurgent in American politics.  You can watch 10 of the most famous historical fear monger attack ads here, including Hillary’s famous “Who do you want to get the 3am call?” ad from 2008.  Hillary is of course not re-running that ad because she got the 3am call as Secretary of State regarding Benghazi, and was unprepared to deal with it.  (In spite of that, Hillary is my 2nd choice, as potentially less economically damaging than Sanders or Cruz, see comments about Cruz and the Fed.)

But what is more dangerous than the occasional politician trying a little fear mongering to get ahead in the polls?  Think about this.  It is obvious, if you step back . . .

A group of politicians saying it, acting unfairly on it, and a large group of the citizenry believing and endorsing the fear mongering, is what is more dangerous, and is in fact more like the Nazi phenomenon.  If no one had believed or acted on Hitler’s fear mongering, it would just have been talk.  Now we have the press labeling Kaisch and Mitt Romney as respectable and safe, and apparently a fair number of citizens following their fear mongering about the leading Republican candidate.

It doesn’t matter whether that candidate is Trump or Cruz.  There is plenty of ammunition to use against both, and while they are very different from each other (Cruz, an ex prosecutor, is highly ideological, whereas Trump is a negotiator who often says things as negotiating bluster, not ideological principle), the “establishment” likes neither.  They haven’t rallied behind Cruz to block Trump, and are in fact considering drafting Paul Ryan (there was a fund raising meeting this week) if Kaisch doesn’t make it.

As to the fairness of their actions, well, if no one shows up with a majority at the convention, then that’s tough for Trump and Cruz.  They will probably both get dumped.  But if either of them shows up with a majority, and does NOT become the nominee, then whoever the nominee is, he or she is not fair and doesn’t believe in democracy, and I would instead vote for the Democrat candidate, no matter how much I might disagree on specific policy.

Preserve democracy first.  Then you still have some chance to adjust the policy.

 

 

The world’s most dangerous person is . . .

It’s not Kim Jong-un or Vladimir Putin, Ali Kamenei or even Abu Bakr al-Baghdadi.  And certainly not Hillary, Bernie or Donald, all of whom are pretty flexible and negotiable when it comes right down to it. It has just come to my attention that Ted Cruz wants to restore the gold standard, abolished to end the spiraling deflation of the Great Depression in 1933.

Ted_Cruz,_official_portrait,_113th_Congress

The gold standard in the US was only adopted fully in 1900 by then president McKinley.  It was part of a movement to ease world trade.  By 1913 countries all over the world were having trouble with it.  After only 33 years the US was forced off it, and Roosevelt confiscated all gold except for jewelry to prevent a de facto standard.

What’s wrong with a gold standard?  Nothing if you live in Lydia where a river flowing down from the mountains coats everything with gold.  That’s where in 600-something BCE King Croesus first popularized the gold standard.  It was basically a scam Lydia perpetrated on the world, because they had plenty of it.  Before that, grain had been money for 2000 years, and in fact you could and did eat it.

If you have a technologically progressing society, it will produce more and more each year.  If prices are determined by a fixed amount of gold, prices will get less and less every year.  That may seem fine until you realize also the value of your house or business investments will get less as well, and pretty soon your banker will inform you that all your loans are due and you are underwater on them.  You would know this if you had read Money, Wealth & War.

A Reuters story by Johnathan Spicer on April 7, 2016, discusses the Fed and the election, and calls from the likes of Bernie Sanders and Donald Trump for review of the Fed’s actions.  I’m a bit critical of this, because I think a politically independent Fed is important.  But at least it is only a review, not a call for disastrous policy.

It’s true the likes of Rand Paul, and before that his dad Ron Paul, have wanted to abolish the Fed and go on a gold standard.  These men were not particularly dangerous because they stood no chance of accomplishing their desires.

The people I listed at the beginning all “might” start a war, and one or two of them might even use a nuke or two.  Terrible as that is, we would mostly survive.  I am not at all sure we would survive a gold standard implemented by an ideologue who would not quickly realize his mistake and retreat.  Trump if pretty quick to retrench and recant when he realizes a boo-boo.  Bernie I don’t know about, but what chance does he have of becoming president?  Clinton would surely leave the Fed alone.  Cruz, though, is all about ideology, and since the Wisconsin primary, appears to have a plausible chance of becoming president.

If so, and if he gets a majority in Congress to implement his gold standard, or even by virtue of his future appointments to the Fed board of governors makes it overly conservative, then your house price will crash and you will be laid off – along with pretty much everyone else – and you won’t really care whether you had been in a bubble or not, you’ll just regret that everything you had is unnecessarily gone.

That makes Ted Cruz currently the most dangerous person on planet Earth.