Random Bits of News

(1) NBC Nightly News, 6/26/08, 6:40 pm, view the story here.

NBC ran a story about North Korea's recent compliance with international demands that they make their nuclear program transparent. Pres. Bush has announced that he will remove North Korea from the official "State Sponsors of Terror" list in light of North Korea's recent actions. Sen. Sam Brownback responded: "We're legitimizing a genocidal regime." Ok, I'm not a North Korea apologist. People have legitimate and justifiable worries about North Korea's treatment of its own citizens. But what does nuclear transparency have to do with state sponsorship of terrorism? We haven't proven that North Korea did, or attempted to provide nuclear technology to terrorist groups. The closest anybody's has come is suspicion that a POSSIBLE nuclear site in Syria was erected using information and technology from North Korea. But the fact that North Korea found Jesus in regard to their nuclear program doesn't necessarily mean they've quit sponsoring terrorism. And further, in regard to Sen. Brownback's comments, can people please stop misusing the term "genocide"...please. "Genocide", according to the United Nations, means "any of the following acts committed with intent to destroy, in whole or in part, a national, ethnical, racial or religious group, as such: killing members of the group; causing serious bodily or mental harm to members of the group; deliberately inflicting on the group conditions of life, calculated to bring about its physical destruction in whole or in part; imposing measures intended to prevent births within the group; [and] forcibly transferring children of the group to another group." Source. There is no proof that North Korea's government has engaged in such practices, despite their despicable treatment of their own people. Like I said, I'm not apologizing for North Korea, I only want my government officials to accurately characterize world events.

(2) US Supreme Court hands down a couple of interesting rulings:

(A) Exxon Shipping Co. v. Baker - the Court ruled that, at least in the context of maritime cases, punitive damages are limited to a 1:1 ratio to compensatory damages. While the ruling was not a constitutional ruling and therefore not mandatory outside of the maritime context, the Court made clear that the problem of unpredictability of punitive damages (in this case, $5 billion against Exxon) extends into all civil cases and left the door open for similar challenges to other punitive damages awards. Source.

(B) District of Columbia v. Heller - the Court ruled that the Second Amendment protects an individual right to own firearms unconnected with any service in the militia. Justice Scalia, writing for the majority, expressly overruled my April post on the issue (here), holding that the prefatory clause (e.g. the one about the militia) does not limit or expand the scope of the operative clause (e.g. the one that says citizens can own guns). I'm honored that the Supreme Court saw fit to rule on one of my posts, even if they did get it wrong. Source.

Raw Data: Come to Your Own Conclusions

(1) Top 2 Oil Consumers in the World (Source):

U.S.: 20,730,000 bbl/day
China : 6,534,000 bbl/day

(2) The Dollar to the Chinese Yuan (Source):

March, 2003: 1 Yuan = 0.120192 USD
March, 2008: 1 USD = 0.141401 Yuan

(3) Of the $9T (that's $9,000,000,000,000) US debt, $5T is financed through treasury securities (as of 2007) (Source)

(4) The Dept. of Defense spent $666B in 2007 (Source)

(5) Top 5 Foreign Holders of US Treasury Bonds (Apr. 2008) (Source):

Japan: $592.2B
China: $502B
UK: $251.4B
Oil Exporters: $153.9B
Brazil: $149.5B

McCain is Going to Lose Unless...

He runs against this guy:

McCain's people haven't figured this out yet. He is unelectable on Iraq and the economy and those are going to be the decisive issues this time around.

It's a pretty well-accepted phenomenon that candidates pander to the far right/left during the primaries and tend to move more toward the middle in the general. That's why I wasn't surprised to hear McCain's bad Iraq policy and bad economic policy up until he sealed the nomination. But he's been the Republican candidate for a while now and I don't see him moving toward the middle.

But moving toward the middle is not going to be enough of a winning strategy for McCain. He needs to move away from Bush's policies. Far, far, away. Miles away. If the world is a playground and Bush is in the sand box, McCain needs to be headed toward the jungle gym, pronto. This is his only real chance of winning in November.

Over the next month or so you'll see Obama begin to solidify his base and stake his claim to the Clinton voters. Even the ones that said they wouldn't support him will see McCain as an unacceptable alternative. Obama's already been playing the "Bush's third term" card against McCain. McCain deftly countered that Obama would be a second Jimmy Carter term, but the problem with that is that Carter's blunders are not fresh in the minds of every American.

If McCain truly wants to be the president, and not just a lame duck candidate in a year that his party doesn't think they have a chance (a la John Kerry, maybe?), then he's going to have to run against W. He needs to forget about Barack Obama, because this election is about George Bush.

Update: Some Speculate that Speculating is the Problem

WaPo Article Here

According to some lawmakers and some deep-pocketed investors, speculating on the futures markets is at least contributing to the higher prices. Apparently the regulations restricting futures trading to those who actually have a stake in the market (e.g. airlines, farmers, etc.) were lifted at the behest of companies (including Enron) in 2000. So, let's see, if we account for the policy lag, let's give it about, oh, 7 to 8 years, and here we are. Look's like the neo-cons' economic policies are about as useful as their foreign policies.

Basic law of economics: if it's cheap, demand goes up; demand goes up, price goes up; price goes up, supply goes up, price goes down. Ah, but what happens when the supply doesn't go up, or actually goes down? What happens when some players think they can manipulate the market to their own ends? A bubble, that's what.

If you read the article linked above, you'll see that the main concern of a commodities bubble is the effect it might have on financial institutions. So, what does this mean to the average consumer? Did it hurt your wallet when Bear Stearns collapsed? Is Wachovia's struggling margin really making it hard to put food on the table? No.

The real fear is that there will be a run on the banks like the one that happened during the Great Depression. If people don't have confidence in their banks, those people will take their money out of the banks. However, we have the FDIC that is supposed to insure runs on banks (or at least assure those who make deposits).

No, what is going to happen, and is already happening in the mortgage markets, is that credit will become more and more difficult to obtain. This is because we have become accustomed to living beyond our means and the financial institutions that have supported our habits are running out of suckers who will buy our debt.

Ultimately, when all is said and done, I expect to see a moderate adjustment in the standard of living for the average American, the poor will suffer the most (as they always do), and the concentration of wealth that has been building over the past decade will recede a bit. Then the banks will feel a little more comfortable lending us money, and the cycle will start all over again. Welcome to the bubble-bust economy. Without fundamental changes in the way we see money and credit, it will be a self-perpetuating phenomenon.