The Senate voted to extend sanctions on Iran for another 10 years. Because it had bipartisan support, Obama may have no choice but to sign it. Iran has threatened retaliation if it becomes law. Gee – I wonder what kind of retaliation they have in mind? I’m confident they expect the US to withdraw from the agreement. The rest of the countries probably won’t. But as I mentioned in a previous post, Iran will now feel justified in unleashing some kind of cyber attack on us. Will it be the banks? Nah – they already did that. Infrastructure? Probably aren’t ready for that. I suspect that with their buddy Putin’s help, they’ll hack some more sensitive documents out of D.C. Or maybe the RNC. Sort of akin to having a pet rattlesnake. Russia will pretend they had nothing to do with it, and Iran will take credit. Gonna get interesting…hugely.

OK, back to economics. The stock market reached a new high of over 19,000, with emphasis on small cap stocks and the Dow, versus the Nasdaq. This indicates a business expectation that infrastructure spending will lift small companies and heavy industry, but not so much on the tech side. That’s all well and good, and not totally unexpected. But what is noteworthy is what is happening to the bond market. This will take some ‘splainin’, so I’ll go slow and break this down a piece at a time.

Within days of DtheT being declared the winner in the race for the worst job in the world, the interest paid on a ten year government bond jumped a full percent. This is fairly extraordinary, and surprised some people. What made it jump? Because people are selling off their bonds. Why? Because when people sell bonds, the price goes down. Lots of sellers means the price goes down a lot. When the price goes down, what happens to the interest rate for the bond, referred to as the yield? It goes up. So yields going up in the bond market means lots of folks are selling these treasuries off. Why? In normal times, a sell off is an indicator of confidence in the market. People buy government bonds as a safe haven in times of trouble – at least you keep your principal, even if you don’t earn much interest. So is that what’s happening here? Well, as I indicated above, enthusiasm for DtheT’s policies is driving the stock market up. But the rationale for selling bonds may be another indicator.

It is a fact that since 2008 and the Great Recession, interest rates have been extraordinarily low. As a result, people all over the world have been borrowing money. In dollars. Lots and lots of dollars. In the trillions. A lot of that money is in cash, but a lot of it bought stuff. And when a lot of dollars buy a lot of stuff, the price of that stuff goes up. Feeling wealthier, folks borrow more. Is this starting to sound familiar? It should: it was a major reason for the big crash in ’08. But that’s not what I’m here to talk about.

All those borrowed dollars have to be repaid. And with DtheT threatening sanctions on China, higher tariffs on imports and a trillion dollar infrastructure plan, what are those three things likely to produce? Inflation. What happens when we have inflation above a reasonable level? Interest rates go up. Interest rates going up means more investors coming to America for those higher yields. That leads to even higher inflation (say it with me: inflation is too many dollars chasing too few goods. Thank you!) Inflation means the Fed will raise interest rates more. Gets to be a bit of a habit, eh?

But what about all those foreigners with debts denominated in dollars? They get paid in zlotys, euros, Turkish lira and Hyvrnias (Ukraine’s currency). A stronger dollar means weaker zlotys, euros, Turkish lira and Hyvrnias. That means those foreigners’ lending costs go up, even if they don’t borrow another dime. So maybe that bond selloff isn’t a sign of confidence – it’s a sign of preparing for bigger bills coming due in the not-too-distant future, and they want to have dollars available to repay those loans.

So what’s my conclusion? People around the world are taking DtheT at his word that he is going to do what he said he was going to do during the campaign. Apparently, folks think Congress will just roll over and play along, unconcerned about increasing the deficit. Won’t that be a big fat kick in the ass? So much for those cuts from “sequestration”. They were never really serious, were they? Time will tell.

More on the topic I introduced yesterday. I’ve been reading about the Stuxnet attack on the centrifuges at the Natanz nuclear facility in Iran. There’s also Alex Gibney’s documentary Zero Days – available on Showtime. Now that I more fully understand what David Sanger of The New York Times has been talking with Charlie Rose about over the past few years, it gives me pause to wonder. Why would Iran, essentially attacked cybernetically by the US, agree to the Nuclear Deal with the Obama Administration?

Some think Iran gave up its nuclear ambitions early in the new millennial decade, and the to-do over nuclear development was more for home grown consumption – to enrich members of The Revolutionary Guard and keep nationalist fervor at a peak. I suppose that’s possible. But when Ahmadinejad went too far in provoking the Israelis, is it possible they were convinced Israel would attack and destroy the nuclear sites that may or may not have been operating? Or did the deal with Obama just buy them time? Or maybe some or all of the above is true?

One thing of which I’m sure: there will be consequences for Stuxnet. Think Libya’s Lockerbee bombing in retaliation for Reagan’s attack on Gaddafi’s home that killed his stepchild. The Reagan attack was retaliation for a Berlin discotheque bombing carried out by Libyan nationals. Osama and Al Qaeda were responsible for various bombings in retaliation for US troops’ presence in Saudi Arabia. These bombings included the embassies in Kenya and Tanzania, the Khobar Towers in Saudi Arabia (although Iran and Hezbollah were blamed as cover for our relationship with the Saudis) and, of course, the Twin Towers. So the bottom line here is that revenge is baked into the DNA of the residents of the Middle East. I’m highly dubious they will turn the other cheek after what we and Israel have done to them – and likely continue to do to them – with cyberwarfare.

I expect they now have turned their attention and resources from nuclear to cyber. I fully expect to see them retaliate in an oh so big way – within this decade. And when they do, you’d best be prepared…you know, the chickens – the garden…but also a full house generator run by a separate LP gas tank. Yes, as soon as we have the resources, I intend to invest in such an outfit.

And what will our new administration do about all this? First, they will likely withdraw from the agreement with Iran, and Congress will vote to re-introduce sanctions. But what about the rest of the countries party to the agreement – UK, France, Russia and China – where will they be on this? My best guess is they’ll want to leave it alone. There’s nothing in it for them to revisit the agreement. This is particularly true in light of the fact that Iran – possibly allied with Russia and/or China – will go after us. And with the trade sanctions imposed by DtheT on China, and Putin having a new, best buddy in the White House – China will have justification and Russia will be emboldened to do so. The eyes of the rest of the world will be averted. We will get our comeuppance. Bigly. Ouch.

Looking back over several hundred years’ of so-called civilized existence – both in the United States and the world at large – I’m beginning to wonder if the oft-quoted Clinton campaign line about the economy is really true. I’d argue that, contrary to times past and because of globalization, economics is no longer a zero sum game, where if America wins, by definition China must lose, or vice versa. We appear to all be in this soup together. I’d further argue, based on that same review of time, there is an inverse correlation between economics and warfare, at least on a large scale and maybe even on a small scale. So rather than advocate for things to do (or not), to improve the US economy, I’m tempted to stick to my previous thesis. And what is that? That within the next decade or so, the world will – once again – be engulfed in a war of global proportion. And the very act of going to war will be the creator of an economic boom during the war, and afterward for the victor(s) – and depending on which side wins, maybe for the losers too.

But, you argue, how can that be? It is settled dogma that with the advent of nuclear weapons, global war is impossible. Maybe it’s difficult, if not impossible to visualize, but that doesn’t make it impossible to happen. So let’s talk about these two points separately. First: my point that we’re in the soup together. Second: that some or all of us will forget that reality, and try to take from others to enhance ‘us’.

We’re in the soup together. In 1985, the balance of trade (imports minus exports) between the US and China was nearly zero. In every year since then, Chinese imports to the US have exceeded our exports. Our exports have grown arithmetically; imports have grown, if not exponentially then definitely logarithmically. In 2015, we imported $4 worth of Chinese goods for every $1 worth of goods we sold them. So the US is a critical trading partner for China. How critical? The US is China’s number 1 trading partner. It’s number 2 partner is Hong Kong, which is a little bit like trading with itself, geographically speaking. Number 3 is Japan, but the total amount exported is one quarter of its exports to the US. What do we buy from China? Electical equipment and power generation equipment are #1 and 2, respectively. Then it’s stuff you’d expect: toys & games, furniture, clothing and shoes.

So, you say? What’s your point? Let’s say DtheT follows through with his campaign promises regarding China. And what were those promises? Oh, OK – force me to repeat them. He said he’d label China a currency manipulator, and place sanctions on them. Yes, he can do that unilaterally as a result of the Trade Act of 1974. That would undoubtedly trigger retaliation from China, at a time when it’s already more difficult to do business there. Why is that? Because China wants to sell stuff to itself, virtually eliminating the imports they require now. The government is heaviy subsidizing Chinese industries that will manufacture most of what they import from the US. DtheT will aid and abet them in this pursuit. In addition, by putting tariffs on Chinese goods and making them more expensive, consumers in the US will pay more. And the effect? There will be a hit on the cost of living in the US. Who will be most affected? Those same people that voted for him…farmers that export agricultural products to China, the Boeing company’s workers that make airplanes that China will instead buy from Airbus. So effectively, we are in this soup together. DtheT can’t hurt them without sacrificing us. Awesome. Breaking for lunch – be back in a few.

So now on to this war thing.

That was a longer-than-expected break – the internet was down all afternoon. Comcast just can’t seem to keep things running out here.

So this war thing. The number one cause of modern warfare is ideological change. Really – look it up. And you certainly have to admit we’re about to have a sea change in ideology in this country. Oh, and when people around the globe were polled and asked, “What is the greatest threat to world peace?” The majority of people answered The United States of America. How ’bout them apples? So we have an ideological change and a man in charge who’s thin skinned and ready to make radical change. Does that not sow the seeds of potential conflict with some of the major players around the globe? You betcha…but whose side will we be on? Will we be the “good” guys? Doubtful..not with friends like Vlad the Impaler and Bashar Al Assad. We will continue to frighten the bejesus out of most of the occupants of the civilized – and not so civilized world.

So how will this thing start? Geez, you really want more specifics, eh? My best guess continues to be the Middle East, primarily because most of the misery in the world seems to live there. Aleppo is about to fall back into the hands of the ‘government’ of Syria, such as it is. So what then? Assad will preside over a country at least half of which has been destroyed by war. Who’s going to help him pay to rebuild it? Will the nearly 4 million refugees return, or will they continue to try to make new lives elsewhere? And which elsewhere? Those opportunities are quickly drying up with nationalism and anti-Muslim sentiment spreading like wildfire across the globe. These facts all look to me like a repeat of the 1930’s, with major upheavals caused by nationalism and ideology. The US will soon be exporting these instead of wheat, corn and airplanes. Time to hunker down. Pay off debts, plant a garden and get some chickens. It’s my strategy, and I’m stickin’ to it.

Let’s start with what I do not intend to discuss: trying to figure out what DtheT will do. As he doesn’t know, how should I? So let’s dispense with all the second-guessing right now. Besides, he is, frankly, irrelevant.

So what I intend to discuss over the next few weeks are what policies should be: economically, domestically and with respect to foreign affairs. Then maybe DtheT will channel that info like Barry did relative to Cuba and other, key topics which he riffed on – right after I did. Coincidence? Hmm…

So the next post will concern itself with things economic. Prepare yourselves!

This is what I said over a year ago – okay, so I got part right and part not so right. But sheesh! Who’d a thunk it?

Well, gentle readers, I’m back, talkin’ about next year’s Presidential election, which is 445 days away. A lot can happen in 445 days, but I’m still clear about a couple of things.

HILLARY CLINTON CANNOT WIN AND SHOULD NOT RUN

I have previously stated that Hillary Chillary cannot win the Presidency in 2016, and that Joe Biden should be the Democrat to lose the White House. It’s fitting and proper, and makes sense. Why suffer? In the latest Quinnipiac polls in Florida, Ohio and Pennsylvania – three key states in the presidential election – Joe Biden does well – particularly since he isn’t even a declared candidate in the race. Biden does very well in matchups against the Republican knucklehead du jour, Hairball Trump. But against Jeb in those three states, neither Joe nor Hillary beats Jeb. So unless Donald Trump runs as a third party candidate – which the Republican Party will pay him not to do – Jeb wins, as predicted.

TRUMP TOWERS TODAY BUT TANKS TOMORROW

It’s just a question of time before he’s a distant memory. I’ll give him another 60 days, maybe even 90, but then voters will begin to be a bit more serious. The interesting question will be: how much will it cost the Republican partyRepublican party to be rid of El Donaldo the Trumpeter? Gotta cost at least a cool mill – maybe two. It’ll be fun watching how they try to hide it. His ‘candidacy’ has been performance art all along, and he’ll expect to be paid for the performance. Eh?

THE MOST IMPORTANT FACTOR IN THE RACE WON’T BE WHAT YOU EXPECT

Yesterday’s issues: Obamacare, Bengazi and the IRS – won’t resurface since people have such short attention spans. Today’s issues: opening trade with embassy in Cuba, the nuclear deal with Iran and immigration – won’t be the key issues that will sway voters as we get closer to election time. What will be the key issue in the election? That varies according to the candidate. If it’s Hillary vs Jeb, for Hill there will be a plethora of issues regarding integrity, the Clinton Foundation and whether or not she’s a good grandmother. For Jeb it will be getting past his brother’s mission accomplished missteps and having to pledge not to repeat them. That shouldn’t be hard for Jeb. The Jeb as Satan devil will promise anything to get his way. And if I get my wish and it’s Joe Biden? Who cares? He’ll just be Biden the mouthfun to watch.

You heard it here first.

The only thing I’m sure of at this moment is that NOBODY knows what is going to happen next with this new government – I don’t even think they know. So there’ll be lots of ‘stay tuned’ messages for the next, oh say six to twelve months? Oh my Gawd…

Well, fodder for the mill..fodder for the mill.,.

Here’s what’s cookin’ at our house for Thanksgiving:

Roast Pig 11 am
Small Turkey brine at 11
Smoked Brisket 11 am
Pickled Beets
Mashed Potatoes & Gravy 2:15
Green Been Casserole 3:00
Collards 2:15
Cornbread/Biscuits/Popovers 3:00
Pumpkin Tart
Pecan Pie
Cheesecake
Homemade Vanilla Ice Cream
Creme Fraiche or Whipped Cream for the pies

Al Fresco Dining on the Porch

Sound good? I’ll say!

Here’s my next commentary on DtheT from Facebook:

Donald Trump is really a Progressive who used the Republicans to win. His agenda will look very much like Bernie’s: preserve Medicare and Social Security, a health plan for all Americans with HSA as the cornerstone, vastly increased federal spending on infrastructure projects – can you see the Republicans going nuts yet? The market is currently going way up since they see what’s happening. Trump will replace Paul Ryan with someone he can manage: maybe Jim Jordan of Ohio. When he does, McConnell will read the tea leaves and get in line..Dems would be wise to quietly step back and watch Trump destroy the Republican Party as it currently exists. Taxes will go down and spending up…the deficit will go from $19 trillion to $30 trillion by the end of his first term. And what gives me leave to say all this? I just listened to what he had to say. And have we seen this all before? You betcha: his name was Ronald Reagan. But where Reagan had to kill inflation (which he and Paul Volcker did), Trump has to get the economy going again, and I agree with his plan to do it! So Dems, let’s all unite, and for once in our lives, let’s be smart and find ways to work with DtheT to get something done. That’s all: now you can question my sanity or throw rocks..your choice

So the question on the table, now that Priebus in the Chief of Staff: will Trump be wise enough to use little Paul’s buddy Rence to persuade Ryan to step down? Or will Ryan continue to be the Speaker of the House, and spend two years doing everything in his power to thwart DtheT’s agenda? Wait and see…wait and see.

This is what I wrote on Facebook on July 31st of this year about DtheT.

Donald Trump will end up being a great disappointment to all Christians in this country. He is not a conservative. He is, more than likely, a Progressive cloaked in rhetoric that will get him this “deal” called the presidency. When he gets it – and surely he will succeed and become the president – it won’t take very long for the “real” Donald to come out. The problem with that is he will be the same erratic and unstable individual you have seen for the past year. Mike Pence will have no choice but to serve as the surrogate president, a job he was not elected to perform. Why? Because Trump will have finally made a deal he cannot bleed dry and then throw away through bankruptcy. The pressure will eventually push him over the edge into a breakdown that will incapacitate him. But his outsized ego will not allow him to admit it, resulting in a Constitutional crisis that will make Richard Nixon’s impeachment proceedings look tame by comparison. This will put Republicans in Congress in a position that will force them to finally do what they should have done all along: admit his candidacy is a terrible mistake and impeach and convict him. Meanwhile, Russia will be looking at their old friends in Latvia and Slovenia for a reunification that NATO cannot prevent, because we won’t be there. The government will be in a state of paralysis, resulting in a default on our debt. The impact will be felt world-wide. But we will survive. The difference between us and Germany in 1933 is that the Founders of the country put mechanisms in place to allow us to fix our folly. But the impact on the GOP will last for at least a generation for having created this disaster. So, to my thinking, the GOP can admit now they made a mistake and take a one term Hillary, electing Paul Ryan in 2020. Or they can let this go on and have a devastating impact on the party, the nation and the world. Their choice.

Well, DtheT is the president-elect, and it appears he is going to focus on spending for infrastructure as a first priority. There’s also a fair amount of chatter about Mike Pence being delegated the bulk of ‘presidenting’ to free DtheT up to concentrate on more important matters. What those matters are nobody is quite sure. So there you have it.

I find myself in the strange position of defending DtheT on Facebook. Well, maybe not exactly defending: more explaining. Telling folk he really isn’t a Republican or a Conservative – that his policies look more like Bernie Sanders than the Tea Party. But how is this possible, they ask? How do you know that? Because I listened to what he said.

Building infrastructure is a good thing. Yes, he’ll add to the deficit – some estimates are $10 trillion over ten years – but what the hell: austerity did nothing for the economy, but the deficit goes up anyway. So that’s a good thing, right? Well, yeah, but then there’s that temperament thing.

My position is that folk that voted for DtheT were willing to roll the dice and take the risk that he could kill us all in order to change Washington. That’s how desperately we want change. Well, be careful what you wish for, ’cause you’re gonna see change like you haven’t seen since 1980 when Reagan took over. Some of it may very well be good; some of it problematic. But cancelling the Iran nuclear deal is a big deal. And the cost associated with it may, in the end, have made it not a very good gamble to put him in charge of the nuclear codes.
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