Wednesday, June 02, 2010

The Wave Of The Future


From The Economist:

The country’s crushing poverty is on parade. The biggest block of flats opposite the Chinese border town of Tumen, where the rent-a-binoculars trade flourishes, has no lights on in the fading daylight and its inhabitants can be seen drawing water in buckets from a well. The North Korean farms that run down to the river are so dilapidated they make the regimented red-and blue-roofed housing blocks on the Chinese side look cosy by comparison. Farmers work close enough to the river to see you waving. They do not wave back. [read more]
In the ivy-covered towers of our eastern universities, no one asks the question about why North Koreans put up with their government. Most of the focus seems to be on why Israel has a harsh approach to anything regarding the Palestinians.  Yet one could make the case that there is a great similarity between the so-called leaders of the Palestinians and the rogue government of North Korea... both leading to misery of the people living under the rule of those "leaders."

North Koreans have given up hope.  The iron fist of the government-military siphons all of the resources within that geography or going into it.  The people survive on bare subsistence... if they survive at all.

In the areas where the Palestinians live, people are subject to the whims of Hezbollah or Hamas or both.  Before that Yassar Arafat become wealthy on the backs of the refugees.  These leaders and organizations rely on the misery of the Palestinians.  It is part of the grand scheme of power.  By making Israel the bogeyman and provoking military responses from Israel, these organization solidify their importance and power.

The fact is that had the Palestinians been led by peacemakers instead of those intent on the destruction of Israel, the "Ivy Towerers" would not have taken notice.  They need suffering and a cause.  So why the focus on the Palestinians and not the North Koreans?  Good question.

For one thing, the Ivy Towerers see what is happening in North Korea as an "internal matter."  They see Israel's reaction toward the hostile Palestinian organizations as evidence of the "Zionist problem."  The Ivy Towerers have bought into the notion that the only impediment to Middle East peace is the existence of Israel... in direct alignment with Hezbollah.  Oh, maybe not in so many words, but in the condemnation of everything that Israel does to defend itself against the aggression from Iran, Syria, Lebanon [and now Turkey?] and their Palestinian proxies.

How many more countries need leaders like North Korea's, Iran's, and the Palestinian's... where power based on misery is the goal... before the Ivy Towerers notice that no one is waving back?



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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)