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2023-02-08 18:33 by Karl Denninger
in Foreign Policy , 263 references
[Comments enabled]  

Oh this isn't good.

At all.

Specialized U.S. Navy diving teams carried out the bombing attack against the underwater Nord Stream pipelines which supply Russian gas to western Europe during a top secret mission overseen by President Joe Biden, a bombshell report claims.

Divers planted C4 explosives on three Nord Stream pipelines in June 2022 which were detonated three months later using a sonar buoy which broadcast a signal that triggered the bombs, according to the report.

I read the substack on this; the guy in question is not a random hack; he's a well-respected journalist with a Pulitzer to his name.  With that said he might be full of it and/or have been deliberately misled, but I'd rate that as low probability.

The White House of course denied it.

But what was fingered was not just the United States but specifically the Panama City based diving experts -- a well-known part of the Navy's operations for deep-sea diving.  The depth at which the blasts occurred are well within the operational range of the Navy's rebreather systems.

If you remember Biden infamously "sort of" said we "threatened" to do it, but then of course said no, we didn't do it.

Well, perhaps we did do it, and if we did, then that was wild-eyed international terrorism against two sovereign nations -- Russia and Germany, where the other end of the lines went.  Not state-funded terrorism ala 9/11 either -- actual terrorism, and an Act of War.

I have a bad feeling about this one, assuming its true.

Would you like some beer with your polonium cocktail this evening, sir?

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2023-02-08 07:00 by Karl Denninger
in Musings , 220 references
[Comments enabled]  
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Fact: Labor productivity has roughly doubled since 1970.  However, real wages have not moved materially at all.

Yes, in nominal dollars they have, but not in real dollars.

Now you might say "but in 50 years 2% inflation is more than a double."  You'd be right but that's immaterial.

The question is this: Who is supposed to get the fruits of productivity improvement?

The answer is this: You.


Because you're the one who produced it.

It is for this reason that I have always argued that the the 2% "inflation target" is blindingly abusive.  As I pointed out in Leverage the natural state of all economies is in fact a mild deflation, typically about that same 2% or so.  Why?  Because as productivity increases, which is simply defined as doing more with less the average person should see their standard of living denoted in invariant metrics increase.  That is, not denoted in "dollars", but rather in such metrics as "hours worked to buy lunch" or "hours worked to travel 100 miles by personal conveyance."

In this regard if you look at the data exactly zero of said productivity has gone to Joe over the last fifty years.


Well, one way is due to offshoring to China and elsewhere.  If something would otherwise go to Joe send it overseas where Joe can't force you to give it to him and then he either takes the zero or loses his job entirely.

Neither of the political parties will address this and the tropes around "global supply chains" and "free trade is good" are legendary -- and, as demonstrated by the data, false.

Simply put if any of them were true it would almost-immediately result in those other workers in other lands demanding and getting the compensation you'd otherwise get.  That in turn would prevent the offshoring unless there were compelling supply reasons to do it since it is always more expensive to ship something than produce it locally.  Yes, some of the offshoring would have still happened -- but not nearly as much.

So what went wrong?  Simply put: Slavery.

In other words the governments there do not care about what we consider reasonable labor laws.  Not on safety, not on working conditions, not on protecting the workers from abusive employers and absolutely not on wages.  As a result the natural pushback never happened and never will either, which means, since we either can't or won't compel other nations to impose said conditions, our only choice is to bring the labor back home.

Oh, you say we can't?

Of course we can, but if we do then we expose all the hidden inflation and also force that which was extracted from the American people by corporations through the exploitation of said slave labor back into the American market -- and American worker.

Thus while wages will rise in real terms (by a lot; roughly a double is due you) corporate profits will go down.

Now you know how to fix it; the question is will you force the politicians to do it.

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2023-02-06 07:20 by Karl Denninger
in Editorial , 1178 references
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An interesting data point: A stunning percentage of those young people without children now never intend to have them.  In fact one relatively recent survey found the number was as high as one third.

The most-common reason cited?  Its too expensive.

Now you can try to point to this as some sort of selfishness but that's a dodge on the real issue: You, that is us older people, made it too expensive.

Specifically homes and medical care are two places where all the "older people" cheer; we get the "best" but the next can't buy it at all.  Our federal government tries to interfere in both markets and allows blatantly illegal activity when it comes to medical care, specifically as relates to price fixing, which has been a felony for over 100 years.  Nobody cares and nobody will prosecute.  Since all criminal offenses in the United States are "the people .v. whoever" -- that is, there's no right of private prosecution as there is with a lawsuit, it never ends since nobody goes to jail and in fact there is a formal government policy not to indict large corporations for felony criminal acts (which could debar them permanently from government and some private activity) after Arthur Anderson.

Health care has gone from about 4% to 20% of our domestic output; that is, it has multiplied in price by five.  Just having a child is expensive, never mind the near-inevitable little thing here and there.  Your kid breaking a leg playing a sport could bankrupt you in this country, and God forbid said child contracts a serious childhood disease such as Leukemia.

Then there's the always-required housing.  One or more kids means more bedrooms, of course; at least one more.  When a one-bedroom apartment runs $12,000 a year exactly how am I supposed to pay for that if I don't make at least $40,000 annually?  Oh, we'll just "subsidize" that you say?  Uh, no you won't because all that does is force the price even higher by throwing printed government credit at it, since the government refuses to tax what it spends first.

The last two years have made clear what all the credit emission does: Food, anyone?  And kids are hungry, especially teens.  I had one; she was a vacuum cleaner in the fridge and pantry and boys are worse.  That's normal.  How are you going to pay for it?

Of course nobody seems to think this is a problem, not even Jerome Powell at The Fed, who is saying that he has "the tools" to make inflation come down to 2%.  Eventually.  Note that what he didn't say is that he will tighten credit until the price of houses returns to what it was before the 2006-2007 bubble, which was in fact still ridiculously expensive in terms of average wages which is why the bubble happened in the first place -- people running up the price by using hinky financial engineering.

No, importing millions of people from other lands, most with no skills, will not fix this.  They come here with no skills but a willingness to pop out some kids -- which makes it worse.  That's basic economics: No skills means low or no wages but demand for goods and services which of course makes the price go up even more.

Down this road lies social and economic collapse folks.  Oh, you may think the Nasdaq at 12,000 is good, or the DOW at 34,000, or your so-called "middle-class house" at $500,000.

You're wrong.

Two people earning $30,000 a year can't afford to buy said house; that middle-class house has to cost about $150,000-180,000, not $500k, and it can't come with a $5,000 property tax bill every year either -- that has to be $1,000!

Or..... you can have a third of the current generation of those of child-bearing and siring age decide to give you the finger, and when you get older and wish to retire you will get a surprise in another five or ten years: There's nobody to wipe your butt and take care of you because the only young people are those with no skills, no contribution to the goods and services output of the nation but they have been told they're entitled to shelter, food and medical care without having to pay for any of it by going to work first.

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2023-02-04 07:00 by Karl Denninger
in Foreign Policy , 1629 references
[Comments enabled]  

Nobody launches a "balloon" of that sort of size and mass without a means of "de-orbiting" it should it veer out of its expected flight envelope or on command.

I don't care if China intended it to enter our airspace or not (although I will assume they did); they most certainly had the ability to prevent it from doing so by sending it a command to come down before it did so.  They didn't do that, on purpose.

Period, end of discussion, full stop.

The United States has full authority under both US and International law to shoot it down and did from the point at which it entered our EEZ's airspace.  We did not have to wait and there is utterly no excuse for our failure to destroy it before it crossed over into the United States.

Nobody has the right to enter the airspace of a nation without permission.  If you do it as a manned aircraft you can be forced down and, if you refuse to land, destroyed.  An unmanned device, which this clearly is, can be destroyed without warning.

Something of that size and lifting capacity could easily have a thermonuclear warhead on board.  Detonation of such at that height would produce minimal direct damage however nothing prevents the device from rapidly descending first and then exploding at, for example, 2 miles of altitude.

Oh, they'd never do that?

Sorry, that's not how it works.  An unannounced and uncleared incursion by a heavy-lift air vehicle capable of carrying such a device must be presumed to have one on board with intent to use it.  There are no "do overs" if you get this wrong.

Our military is derelict in permitting this craft into our airspace and our so-called "civilian leadership" is either incompetent or deliberately in league with the Chinese.  Either way both must be removed and destroyed, replacing same with functional entities.  The Pentagon appears to be more-concerned with what pronouns some "soldier" wants to use than whether a potential nuclear device is floating over several of our major cities and a decent part of our nuclear missile silos inventory.

We are a sovereign nation and its damn time we started acting like one.

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2023-02-03 09:21 by Karl Denninger
in POTD , 167 references


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