Balancing the debt ceiling debate and North Korea fears
As we kick off a busier time of the year for investors we again have money moving into safe havens. Chris Temple and I discuss the ongoing debt ceiling debate (see stat below regarding how silly this debate is) and the recent North Korea H bomb test. Depending on your investing strategy these news events are typically very short lived.
Debt ceiling stat – Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents.
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Thanks – very interesting.
One of the biggest failings of us Westerners – especially the Brits, Aussies, Canucks, Yanks and Kiwis – is that we have got into the habit of projecting our own values on to other peoples.
We basically are good, decent people with a common set of values of decency, equality, fair play. The vast majority of the above people can easily go and live in any of the other countries and feel perfectly at home and welcome.
But that is one of our biggest weaknesses – we think that everyone else on the planet is just like us. That they share the same values, the same belief about equality, justice, free speech, etc, and some of us stupidly think that if we only ingratiate to other cultures that the other peoples will be just like us.
Well, they aren’t and they won’t be.
They just see such views as a weakness. They see it as an opportunity. Predators only see prey as something to consume or destroy.
Now that, Bob UK, is something that no one should ever forget.
Excellent – thanks for sharing. As with most things, the coverage in the Establishment / Fake News media (which interestingly is all on the same page when it comes to WAR) is superficial at best.
Off topic: DIA:GLD is perched on the 50 week MA and not looking healthy…
http://stockcharts.com/h-sc/ui?s=DIA%3AGLD&p=W&yr=7&mn=0&dy=0&id=p08169783238
I think Chris gives a very valid warning about some of these base metal commodities.
If the US is thwarted by China in getting NK to stop developing nukes and military action is ruled out then what – does the US enforce massive trading tariffs on China or completely embargo trade with China?
I think it would be forced to do so as, at best, a way of trying to divert attention from a humiliating military climb-down in the face of Chinese strength. It would be a clear signal of the growing dominance of China and the waning power of the US.
So what happens to copper, coal, zinc, etc, demand then? How would the FCX’s, Rio’s, Teck’s, etc, etc, sell their assets when they are no longer allowed to do so to their biggest customer?
You would surely see the price of those assets drop through the flow.
But not only those – what happens to the price of all those Chinese stocks – the Alibaba’s and the JD.Com’s, etc – listed on the NYSE? Isn’t it still illegal to own Chinese shares as a foreigner so most people in the West merely own shares in an asset holding company in the Cayman Islands?
Surely those shares would become worthless overnight?
Or am I completely wrong about all of this?
I will throw some dates in here:
This coming Saturday is NK independence day – their biggest national holiday.
September 19th/20th is the New Moon – dark of night whe air forces prefer the darkness to attack. What is it that the US Air Force likes to say “We own the night!”.
Hi Bob UK,
I personally think that we are at a bit of a temporary standstill here. I will say that I am not 100% sure on that simply because of the players involved.
I just hope that Kim Jung and our President are more level headed than people give them credit for.
Obama gave the Iranians $150 billion to stop making their nukes. I guess Kim wants at least the same if not more.
The US has used hard cash in the past – the Louisiana Purchase for one, Alaska for another. You could try offering money… but I suspect the money will only be taken and then the US will be laughed at behind closed doors.
The Oriental mindset is not like the Western mindset – for a start, outright lying to get what you want is considered perfectly acceptable in large parts of Asia. You say whatever you need to in order to get what you want.
The other thing is that Western leaders are total idiots unable to see beyond the next opinion poll and certainly no further than the next election. The Chinese, and I have no doubt that they are pulling Kim’s strings always, are looking 100 years ahead. They are looking for the day when the US, and the West, submits to them economically and military… and to their concept of what you can and cannot do.
There is no free speech or true democracy in China – never has been and never will be.
I recall when Bush the Younger got into power and China was bigged up as the potential never Soviet Union – anyone remember that US spy plane that was forced to land in China during Bush’s first year in office?
But then 911 happened and everything got diverted to Al Qaeda and Wall Street wanted to make money out of cheap Chinese goods and outsourcing well-paid Western jobs to cheaply paid sweatshop workers in China.
Well, whilst Wall Street was looking no further than the next quarterly financial results the Chinese were looking at building up their country, building up their infrastructure, building up their wealth and building up their military.
The Chinese have century long plans and NK being a thorn in the side of the US is but a small part of it IMPO.
Bob UK:
You are trying to distort reality. Obama didn’t give Iran anything to stop making nukes. First of all they weren’t making nukes, all 17 US intelligence agencies agree that Iran had no nuclear weapons program and the money was their own that the US seized. We gave them what we stole.
I believe that you are correct regarding the $150 billion figure contrary to Bob’s comment.
But Bob UK I believe that the deal involved more than a simple payment and also included sanction relief.
Sorry guys but you need to do some basic research. The US did not pay a cent of US money to Iran. All they did is return what was Iranian in the first place.
The major issue between the two governments was a $400 million payment for military equipment made by the government of the Shah of Iran, prior to the 1979 uprising that topped him. The U.S. banned delivery of the jets and other weapons amid the hostage crisis, but froze the $400 million advance payment. “The Pentagon handled arms purchases from foreign countries,” says Gary Sick, a former National Security Council official who served as the principal White House aide for Iran during the Iranian Revolution and the hostage crisis. “Defense took care of the details. So the $400 million scheduled purchase was a government-to-government transaction. The U.S. government was holding the money. That’s why it was so difficult to resolve.”
By 2015, the issue stood before a panel of nine judges, including three independent jurists, who were reportedly near a decision on binding arbitration. According to Obama administration officials, the U.S. was concerned that the tribunal would mandate an award in the multiple billions of dollars. “The Iranians wanted $10 billion,” says Sick.”I estimate that the tribunal would have awarded them $4 billion. That’s what the lawyers were saying. It’s not as much as they wanted, but a lot more than we paid.”
So instead, the U.S. negotiators convinced Iran to move the dispute from arbitration to a private settlement. The two sides reached an agreement in mid-2015, at the same time as the U.S. and Iran reached a comprehensive pact on curtailing Iran’s development of nuclear weapons. The financial deal called for the U.S. to refund $1.7 billion to Tehran, consisting of the original $400 million contract for military equipment, plus $1.3 billion in interest.
http://fortune.com/2016/08/05/money-america-iran/
As it was making the January cash delivery, the US also imposed new sanctions on Iran over its ballistic missile testing. At the same time, the White House unfroze a larger pool of Iranian assets, estimated at $100 to $150 billion, as part of the nuclear deal, though administration officials cautioned that Iran would only pocket about $50 billion after legal claims.
If you guys insist on being water carriers for the Mossad, you should at least mention the one country in the Middle East that is nuclear armed and a threat to the whole region. There is no way a country of 8 million people can attack a country of 80 million people successfully without using Nuclear weapons. So Israel is threatening to attack Iran with nuclear weapons in order to prevent Iran from using a nuclear weapons program that 17 US intelligence agencies all agree doesn’t exist.
And you guys can’t even figure out that all the US government did is give Iran their own money back.
Iran is not the enemy of either the US or Israel. But the US does have an enemy in the Middle East determined to destroy the US and succeeding.
+1 Robert
It seems cloudy heads will continue to prevail!
Bob UK;
I never heard that. I think you made that up. I was a pilot.
I think it was the VC who owned the night.
I wonder about the depth of trump’s knowledge of war history and how many times America’s leaders have been led into the trap that if we just drop enough explosives on our enemies, we’ll bring them to the table. It didn’t work with Germany during WWII or Korea. It certainly didn’t work with N. Vietnam. Lemay tried to get Kennedy to let him bomb Cuba and thankfully Kennedy went another direction. I’m fearful that trump will be enticed into a bombing campaign that we will forever be sorry we attempted. If nothing else, a few hundred thousand S. Koreans will die and possibly the Japanese mainland will be the target of some rockets. The navy could suffer some losses from submarines and nobody talks about that. From what I know of the cult that is N. Korea, unless we literally kill every single one of them, the problem will still be with us. I don’t have the answers but I guess I’m not real confident in the present leadership of this nation having any either. Just worry that the cheap blustering by all will end up costing many others their futures………
The plan for air power in WW2 was not to bring Germany to the negotiation table but to destroy German factories, infrastructure and cities.
I don’t think you can liken the WW2 bombing campaign with either that of the Korean War or the Vietnam War because, in both those cases, there was food, fuel and weapons coming in from a third unaffected party – China. What a coincidence.
Regarding the cult of the people of North Korean – they simply know nothing else and have been brainwashed from birth to the present day. Yes, at first they will fight passionately but then so did the Japanese in WW2 at first.
The bottom line with NK is that oneday they will use their nukes on the UK and Asian allies – either as atomic blasts or as EMPs. That would leave China as the dominant power economically, and probably militarily, in the world. No wonder they are so keen to do nothing, and have nothing done, about North Korea – their puppet state.
Some Westerners understand this already. Others will eventually come around to it. But, sadly, plenty will never be able to comprehend the stakes being played for here. They are in denial.
That is assuming that North Korea could take out the U.S. If that were a possibility, I would bet my money that the U.S would take them out.
You have to admit, Silverdollar, that at least so far the leadership has done a credible job given the reality of the situation.
Bob UK:
OK Bob, if your thoughts are correct, there’s really only one alternative……..the quicker the better. A massive, thermo-nuclear bombing campaign starting yesterday.
I don’t consider myself in denial. But I did participate in the Vietnam debacle and for that reason will always try to find another out. Thanks for your comments.
I don’t consider myself in denial.
I think the best solution is to try and take out Kim and the NK leadership by targetting them with a precision strike.
But it is a high risk one shot chance – they have to be taken out on the first attempt.
Bob UK, one other thing we could do is to let China know that if Kim nukes us we will nuke Peking and Shanghai, so they had better get off their ass and take Kim out.
Well, let us pray that it never gets that far as that would be the end of us all.
Anyhow, will Apple let that happen – isn’t that a device in the new Apple iphone’s that can shoot down US nuke missiles within 5 miles of an iphone? 🙂
BB:
One EMP weapon put 300 miles over Kansas would kill 90% of Americans in less than a year. Do you really think we need to be threatening people who could push a button and do that? Have you heard the quaint thought “people in glass houses shouldn’t throw rocks?”
Do you seriously have a death wish?
Americans always think it is about them, let me tell you Bob M, that EMP bomb would take out most of the productive parts of Canada and Mexico. America invaded Korea in the early 1950’s, since The Second World War American hubris has now brought us to the brink, that is the foolishness brought about by a country that thinks they won The Second World War and can do no wrong. They have lost many wars since then but the Americans have not had an invading army in their country. If they had, the politicians and your country would know better. Most countries like people need to experience the pain of losing at home to be able to understand humanity. DT
DT:
To the best of my knowledge, no one in Canada or Mexico is suggesting that starting WW III is a good idea. They know better. Americans will get what they are begging for, Canada and Mexico will be collateral damage as it were.
And it is perfectly factual that 80% of the Germans killed in WW II were killed by the Russians. If anyone won WW II it would be the USSR even though Stalin was a far bigger monster than Hitler.
Yes, Bob the EMP would ruin us and Kim will be able to do that before long. China is using N.Korea as a cat’s paw. I’m not saying we should attack them unless Kim attacks us. China needs to understand they will go down with us. That’s called MAD which worked with the Soviet Union for 40 years. China can stop Kim if they wish.
I believe that you are correct Bonzo!
Robert,
Please explain the 90% in one year number to me.
Thanks
Al:
How North Korea could kill 90 percent of Americans
What the piece doesn’t bother mentioning but if you just think about it for a few seconds, you would realize that if NK could do it, so could China, Russia and probably Pakistan. The US is in the bizarre position of treatening countries that could destroy us with one weapon.
A little dramatic, bonzo!
Bob UK:
As a guy who has been there and done that, I can assure you that war should be the very last possible alternative. Everything else is better. Given that the US has started 82% of the wars since WW II and lost every single one of them, only a twit would suggest starting one more. The US killed 20% of the population of NK during the Korean war, it took three years and technically we are still at war after what was at best a stalemate.
For the US and SK to be holding war games right now is as close to total insanity as you can get. Trump is being advised by three fools who have lost every war they fought. Starting another is not all that good an idea.
http://www.tomdispatch.com/post/176322/tomgram%3A_engelhardt%2C_the_last_men_standing/
Anything is certainly possible Bob UK. I am sure that a lot of very knowledgeable people are now on this very issue. I am not really sure that, at this point in time, nobody needs to take anybody out.
The issue here, Silverdollar, is who wants to have the death of literally millions and millions of people on their hands when there is still the possibility of a different solution?
Bannon pointed out that if the US or SK attacks NK, that ten million people die in in the first 30 minutes of a counter attack from NK against Seoul.
There is no rational military solution, only discussion.
I think Bannon spoke with more credibility on this issue than any other statement on the subject. If fact, it probably had much to do with his being pushed out.
Agreed. That is the issue. I believe S. Korea stands to lose far more initially than the north because of long range artillery. This is before anyone begins slinging around their nukes. As soon as someone pulls the first trigger, the situation can expand exponentially. After we have made that part of the world unlivable for a few thousand years, what then?? Wonder how long it takes for those contaminated clouds to hit the West Coast? There just has to b e a better solution, even if we haven’t found it yet.
Now call it Harvey and Irma recovery fund. Should have temp or perminate increase in gasoline tax to pay for this plus we could build the wall as well . ; This CAN be called emergency spending, or get some dedicaded tax revenue to pay for all this mess. AGAIN WHY NOT USE GASOLINE TAX INCREASE to pay for this ?? S
Not surprisingly, the dollar continues to act very bearishly. To fail so quickly at the current level after such a protracted decline and oversold condition is not positive in any way.
http://stockcharts.com/h-sc/ui?s=%24USD&p=W&yr=5&mn=9&dy=0&id=p32139790396
On Korea, there’s amplification of some of Chris’ points in this article, especially comments about 1945-1950 era that Americans know little about:
https://theintercept.com/2017/09/04/undercover-in-north-korea-all-paths-lead-to-catastrophe/