War & Tariffs: What to do about North Korea

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If you think about geopolitics at all, you know North Korea poses many problems for its neighbors. And for the United States. And for the whole world.

If we take attack North Korea militarily, over a million South Koreans will die. Along with a lot of Americans on ships and on land over there. Nobody wants that. It might come to that, but nobody wants it.

Now, North Korea has ICBMs that can drop a nuke on Alaska. Or Hawaii. Soon they’ll be able to hit California.

Here is my two-pronged approach:

1. 500% Tariffs

Impose a 500% tariff on all imports from any country that maintains trade relations of any kind with North Korea.

Many countries, including China, continue to trade with North Korea. A blanket 500% tax on imports would hurt us, sure. But it would cripple China’s weak economy. China, and all other nations doing business with Kim, would have to sever ties immediately. And if they don’t, well, that giant sucking sound you hear will be manufacturing plants opening up all across the fruited plane.

China takes only one thing seriously: money. Threaten their money supply and Xi will finally man up and take down Li’l Kim.

But that tariff needs some spine. A spine that will put the fear of Trump into every world leader.

2. Declare War

Congress declares that a state of war exists between the Government of North Korea and the Government and the people of the United States of America.

Being in a state of declared war does not require combat. But if Congress passes a war declaration, the world knows the president can initiate combat any time the mood strikes. With a single tweet, he can order our armed forces to wipe North Korea off the face of the earth.

People will pay attention to that. Kim will know that his life is in the hands of Donald J. Trump’s next tweet. China will know. Japan will know. South Korea will know. And Russia will know.

In plain English, the declaration of war is justified as follows:

  • North Korea’s leaders have repeatedly said they intend to use nuclear weapons to blackmail or attack the people of United States.
  • North Korea’s leaders have violated every UN mandate intended to stop North Korea’s pursuit of nuclear weapons and intercontinental delivery abilities.
  • North Korea has now the means, the motive, and the opportunity to attack the people of the United States with nuclear weapons.
  • Therefore, it is our right as human beings and our duty as a government to adopt this unanimous declaration of war between North Korea and the United States.
  • This declaration will remain in effect until altered or abolished by Congress.
  • May God have mercy on their communist souls.

Get Serious

It’s time to get serious. Ever since Jimmy Carter flew to Pyongyang to bring Kim Il-sung a batch of Miss Lilly’s secret peanut brittle, the North Korea has marched relentlessly toward total war against the United States.

Through three administrations, the United States threatened, appeased, cajoled, and looked the other way.

As President Trump said, the time for strategic patience with North Korea is over. Nothing will be gained by waiting until Kim wipes out millions of Americans as they sleep in bed. Nor do we gain by giving into his terroristic blackmail.

On this Independence Day, it’s time to declare independence from the fear and intimidation that puts the entire world at risk. It’s time declare economic and military war against North Korea and her greedy enablers.

The two actions, taken in tandem, will likely prevent war. It’s a bold move, but it’s necessary. Millions of American lives depend on it.

Happy Fourth.

God bless the brave heroes of our armed forces, especially those serving with my sons in the Pacific Theater.

China Is Crashing and Greece Is Spinning Out of Control

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The world is even more fragile than it was in 2007. The big banks are bigger. Aggregate bank assets are concentrated in fewer hands. The bank derivatives books are much larger. Market liquidity is worse.

James Rickards, The Daily Reckoning

Well, ain’t that just dandy?

And it’s undeniably true. We were told that the 2008 financial meltdown was caused by entities that had grown too large: banks, insurance companies, corporations, derivitives. They’d grown too big to survive and too big to fail.

Their investors and lenders were wealthy and connected. They used their connections to nudge politicians to transfer their losses from private companies and individuals to government balance sheets. Governments, after all, can collect debts at the point of a gun while private companies are limited to annoying debt collection calls.

To cover their tracks, politicians passed ridiculous laws written by the very failed business people who caused the problem in the first place: big banks, Wall Streeters.

And the result has been predictable. As James Rickards reminds us:

  • The big banks are bigger
  • Bank assets are concentrated in fewer, more powerful hands
  • Derivitives are bigger and more opaque
  • Liquidity is worse
  • And the central banksters are out of ammunition

Obama’s State Department is busy giving away the farm to Iran in pursuit of a “legacy.” But Obama’s legacy will be this: he left the world less stable, less democratic, less equal, and less optimistic than he found it.

We have a hell of a mess to clean up. It will likely consume the rest of our lives. At least, the rest of the lives of Boomers and Gen Xers. Millinnials may enjoy a brighter future after the storm.

Left vs. right, liberal vs. conservative, Democrat vs. Republican are all false dichotomies.The real fight today is Elites vs. Us.

China is crashing.

Greece is out of control.

Buckle up. We live in a world more fragile than it’s ever been. And fragile things break.

There are so many fragile things, after all. People break so easily, and so do dreams and hearts.

― Neil Gaiman, Fragile Things: Short Fictions and Wonders

Feature image by djoe clipped from http://djoe.deviantart.com/art/Human-fragility-21891471

The Economy Is Getting Worse Thanks to Liberalism

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The horror in Aurora, Colorado, gave President Obama a little cover last Friday.  That’s because the Labor Department announced that unemployment rose in 27 states.

President Obama promised to hold unemployment under eight percent if Congress passed the stimulus package in 2009. Congress did, but Obama failed.  Remember all those green jobs?  They’re gone.

The problem isn’t Barack Obama; the problem is liberalism.  

Liberals believe that only experts can make intelligent decisions. They point out that the Beta Max was a superior video cassette technology to VHS, but idiot consumers were too stupid to notice.

Yet, for all their wisdom, the experts seem unable to manage even their affairs.

Liberals often point to China as an example of how fabulous a controlled economy can be. But China’s growth was largely cosmetic. The benefit of central control of the economy and the media was that China could hide its problems; it couldn’t fix them. As a result, we know that Bejieng’s sewer system doesn’t work, state-controlled baby formula causes cancer, Chinese banks have been playing dangerous games with collateralized debt obligations-squared, and China’s totalitarian population controls have produced a demographic cliff that could plunge the planet into a Great Depression.

Liberalism is the original good intention that paves the road to Hell.  

We can’t blame all the problems with central planning on Obama.  But we can and should hold Obama to account for shoving a failed system of misery down America’s throat.  We can point out that the man who claims government, not people, build businesses and create jobs is incapable of keeping even his softest promises of eight percent unemployment and a slowly recovering economy.  We can and should remind everyone that the man who wants to control all of the US economy struggles to manage the economics of his campaign.

Barack Obama did not invent the failed ideology of central planning, but as its leading proponent he deserves to suffer the same fate his policies have given to the US economy.

 

2009 Economic Prediction *Bumped and Updated*

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*Originally posted February 15, 2009*

I know this is a little late, but I was waiting for Congress to spend another trillion dollars or so before committing my prediction to the public.  Here goes:

GDP and unemployment will  flatten and even improve a bit in first half of 2009 for a couple of reasons:

First, people will begin to look for excuses to spend money.  This includes businesses.

Second, the hideous transfer of power from individuals to government that passed Congress on Friday will have a psychological effect on people making some believe that things will get better soon. 

Together, let’s call this mass hypnosis.

That hypnosis, though, will wear off when we begin dissecting first quarter 2009 numbers in April.  The reality will then hit home:  downward economic trends slowed or reversed because things couldn’t get much worse.  (Again, this is the psychological feeling, not economic reality.)  In other words, people will stop thinking “It’s getting better,” and start thinking, “We’re stuck on bottom.”  It’ll be like old WWII submarine movies where the disabled sub settles on the ocean floor.  The crew’s not out of the woods–oxygen will run out eventually–but they’ve stopped descending toward collapse depth. 

Then, of course, some idiot seaman rolls a bowling ball toward the bow, a rock they’re sitting on gives, and the sub starts sliding into 38,000 foot trench. 

The other economic bowling ball that will hit the pins in early summer is Treasuries.  With the uptick in private sector activity and the flood of Treasuries hitting the streets, investors–especially China–will shift their purchases away from government debt.  This will drive up yields quickly until equilibrium re-establishes.  I don’t know what the level will be, but it will be high.  

Having obligated over $65 trillion (with a “t”) in promisory notes since September, the US government must issue massive amounts of bonds.  If you’re a bond salesman with crateful of US Treasuries, a weak economy is a wonderful thing–there’s nothing else for investors to buy.  But a growing economy makes Treasuries, which are now riskier than ever before, a less attractive alternative.  Stocks and corporate bonds offer the possiblity of recovering some of the losses of the 50 percent stock market dive.  Treasuries do not.  Not until their yields hit the 12 percent range.

High interest rates will cause already skiddish companies to pull back even more, touching off a new round of layoffs and another dive in both stocks and GDP.  

Of course, I’m just a computer guy; I could be wrong.

The Other Shoe Drops

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For months I’ve been echoing the warnings of Peter Schiff and others:  when China stops buying American debt, we’re in deep, deep trouble.  The possibility for hyperflation, prices rise by double-digits on daily or weekly measures, becomes palpably high.

Even though this article from IHT failed to suprised me, I have a sick, frightened gnawing in my stomach:

China has bought more than $1 trillion in American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home – a shift that could pose some challenges to the U.S. government in the near future but eventually may even produce salutary effects on the world economy.

Thanks to Hank Paulson’s Bailoutpalooza followed by Obama’s promises to pile on more bailouts and $1 trillion or more in stimuli, the US single-year deficit for 2009 will be between $1.2 trillion and $2.5 trillion.

There are three ways to finance that deficit: tax, print, or borrow.

A tax increase, as we have been told, could push us into a deep depression.  We don’t want that.

Printing $2.5 trillion in new cash would lead to hyperinflation.  Unless you want to buy bread for $3,000 a loaf, that’s not good.

Borrowing delays the reckoning.

One way or another, we will deal with depression, hyperinflation, or–like Germany in the 1930s–both.  At least in a depression with deflation, cash will save you.  In hyperinflation, it’s every man for himself.