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2018-07-14 07:00 by Karl Denninger
in Corruption , 251 references
[Comments enabled]  

Mueller indicted a bunch of GRU dudes?

For violating the US Computer Fraud and Abuse Act?

Are you kidding me?

Actually, no.

He really did.

Under exactly what rubric is the GRU (Russian Nationals, in Russia) subject to US jurisdiction?

I'm sure that Putin and the alleged parties involved are all telling Mueller the same thing: Go **** yourself.

As well they should.

Does anyone really think our meddling in the Ukraine, or for that matter the dozens of other nations in which we've done equally bad or worse over the last 20, 30 or 40 years, is a lesser offense?

Oh please.

Never mind the myriad times that US firms and individuals were violated -- or attempted to be -- by Russians, Chinese and every other manner of hacker, and there has been exactly ZERO interest within the FBI to indict ANY of them.  Ever.  I can document dozens of such attempts daily against my own personal equipment alone.

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2018-07-13 17:06 by Karl Denninger
in Musings , 89 references
[Comments enabled]  

Three pieces down by at least $20 each for the next three days.....

Come and get 'em while the getting is good!  Email kairia.rocks@gmail.com now to buy one or all; see her link here.

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2018-07-13 11:25 by Karl Denninger
in Editorial , 481 references
[Comments enabled]  

Let me preface this by saying that the way Trump is going about this trade issue is wrong.  He's getting a better result than doing nothing, but the fact of the matter is that he's approaching it incorrectly, and it's by mere accident that the outcomes are working out.

Specifically, on outcomes, import prices are down and export prices are up.  How's that bad, exactly?

As I pointed out in Leverage in my section in recommending Wage and Environmental parity tariffs the problem with "free trade" policies is that they're anything but because you cannot control the legal environment in other nations.  As a sovereign said nation is free to set whatever internal legal environment it desires.  Short of an embargo or outright war you cannot compel another nation to adopt your view of human rights, workers rights or property rights, to name three obvious things.

Now couple this with two additional facts: Technology has shortened the effective distance and delay between a point of control and a point of action which lowers the imputed cost that comes with distance, and that corporations always exist for one purpose above all others: To make a profit.

Corporations operate in the legal framework permitted by the nations in which they have facilities and people.  If you wish to constrain a corporation's underlying purpose, which is to maximize profit, you must constrain the legal environment in which they operate.

There is no other way to do it.

It is a fact that throughout human history humans have attempted to enslave one another.  So long as one can compel someone to work in some fashion that does not reflect economic pressures you can profit from this, and some percentage of people will.  That person or organization will succeed on a profit basis where others who do not adopt that policy will fail.  This inevitably encourages such behavior until only those who engage in it remain in business!

As such the only constraint on such behavior is laws that are actually enforced so that the cost of such behavior is higher than the benefit.

GM is going to make the Blazer in Mexico because they can employ what amounts to legal slave labor in Mexico that carries an "all-in" cost of under $4/hour.  They will not sell any such trucks to the Mexicans building them because on a $4/hour wage nobody can afford to buy a $40,000 product.  GM incurs the shipping expense of the finished product back to America because it is lower than the labor differential expense were they to build that same truck for our market here.

Apple sources labor for the iPhone in China because it's cheaper than sourcing the same labor in the United States.  China has a huge number of people who live in abject poverty -- they're peasants.  China allows factories to come into those towns and literally destroy the means of survival (rice paddies and similar) that said people were formerly relying on -- either by paving them over and erecting a factory or by emitting pollution into the ground and water supply to the point that you can't grow a crop there anymore that won't poison you.  Those employees are not "at will"; they are factual slaves.

Apple (and others) source the screws for the frame of their device from slave labor factories in places like Malaysia.  Malaysia, and other Asian nations, have a thriving illegal immigration problem which they actively exploit.  Much like the "coyotes" who run Guatemalans to the United States as indentured servants, since no such person has the $6,000 average "fee" for such a service in advance, these nations allow the same practice.   We in fact do it here too; we "allow" employers to hire someone on an H1b visa but they are captives to that employer since their visa is bound to the entity that employs them.

Multiple large, "luxury" brands in America source tanned leather from similar third-world crapholes for the same reason.  Tanning leather requires the use of toxic chemicals and properly disposing of them is expensive.  It's (much) cheaper to dump them in the water (but that's illegal in the US) and, if you can obtain effective slave labor while destroying the environment there as well that tends to destroy the option of local people to subsistence farm at the same time then so much the better.  Ditto for all the clothes that come from places like Vietnam and Bangladesh.

Is this a "free market"?  Of course not.  But it does produce cheap screws -- both for Apple and up the ass of the people making them.

Now contemplate this: The average IQ in this nation is approximately 100.  Fully one half of the people are on the left side of the bell curve.  Those who are "business successes" as entrepreneurs, CEOs and similar are statistically all on the right side, and most of them are 2 standard deviations or better to the right -- that is, in the top 2% of all persons.

That's six million people, more or less, in the US.

What do you do with the 150 million-odd people who are on the left side of the curve?

Business and politicians alike ignore them in recent years, but had better not.  They're fully half the population and were there to be a civil war you might want to compute the odds of six million people surviving when 150 million decide to eat them.

If you're in that top 2% you're what's for dinner, irrespective of whatever sort of technological prowess or equipment you may deploy.  Oh sure, you'd slaughter a lot of those 150 million in the process, but you still die and so does your entire family.

Every.

Single.

Time.

But what happens if Trump lays tariffs that erase the benefit of employing slavery in other lands?  Let's say for example that Trump was to figure out the difference in labor cost in a Blazer between one built here and one built in Mexico.  It's not hard -- $4/hour there, $20/hour here times however many hours of labor are in the truck and all parts not made in America, plus the avoided environmental expense.  That's the tariff.

Now take Apple's iPhone.  How much would the screws and assembly cost here .vs. over there for all parts not made in America, plus the avoided expense in the non-US components made where environmental damage is not prevented?  That's the tariff.

Go down the list one at a time of everything we import and look at what costs are evaded by firms soliciting labor through other lands where the legal environment does not protect the right of free movement, the environment and similar.  That, by the way, is essentially everything this nation imports.  Set the tariff as equal to that evaded cost.

Now lay the same via taxes on any firm that employs H1b -- or the so-called "Seasonal worker" visas (H2a and H2b) .  Take the full imputed cost including salary and benefits of said person and, if lower than a US individual of the same skill set employed in the same job that's the tax due.

What happens if you do this?

Those manufacturers no longer have an economic reason to put labor there.  They will bring it here instead, by and large.  Further, watch how fast all those H2 jobs who people claim "can't be filled by Americans" suddenly can find all the employees they need!

The result is that all those people on the left side of the curve will have jobs that are sufficient to support themselves and their families.

But what if the manufacturers don't bring the labor back?  Then Treasury has hundreds of billions of dollars in surplus funds to cover the welfare costs of everyone on the left side of the curve.

Either way the outcome is the same -- we have a stable, thriving society.

No, your iPhone will not cost an extra $200 nor will your GM truck. If either company could charge another $200 or $6,000 for their products and still sell them here in the United States they would do it right now.  What prevents them from doing it is that they've determined that demand is insufficient to support that price.  That does not change if there is a tariff imposed.

So what will happen is that Apple's margin on said iPhone will go from 40% to 25% and their stock price will reflect that.  Likewise GM's margin on that truck (remember, they make more on trucks than any other vehicle) will come in and so will their stock price.

Neither company will admit this because if they do there is a very real risk that those 150 million on the left side of the curve will decide to eat the executives of said firms and the politicians that screwed them out of a job on purpose so the top 2% of the nation can make money through a rapidly advancing stock price!  See above for the survival odds of that ~6 million should the other 150 million take that decision.

That is why they lie repeatedly on this subject and in fact will never admit the truth.

Now the usual argument is that these other nations will "retaliate."  Let 'em.  If you think about it what's there to retaliate upon?  GM is a global company.  So is Apple.  Apple will build iPhones for the US inside the US.  They'll build the ones to sell in China in China.  GM will build trucks for Mexico in Mexico (if anyone can pay for them there.)  And so on.

That outcome isn't bad, it's good!  It's always more efficient to build something closer to the point of consumption.  Shipping is not free, never mind all the screaming about carbon emissions which are inevitably tied to moving crap around the world!

Trump is getting a good result even though he isn't doing it the right way.  Both he and Navarro are trying to look at this as a function of "trade balance" in dollars, which is the wrong approach.  It happens to be working (although the stock market has yet to recognize the loss of imputed valuation due to ending slave labor) essentially by accident.

We ought to turn it into "on purpose."

Now are there places we can have "free trade" with?  Sure -- we could, for example, have zero tariffs on cars between the US and EU.  Why?  Because the slave labor and environmental issues are mostly-absent in both nations when it comes to building cars up and down the supply chain.  But even with zero tariffs VW would be insane to build their cars in Germany for export to the US when they can build them here, as they're doing today.  Ditto for US automakers selling in Europe; why would you build a car here in the United States and then incur anywhere from $750 to over $2,000 in freight costs to move it across the ocean?  Do you really think these firms intentionally undertake $2,000 in loss to ship an SUV across the Atlantic?  If so you're nuts.

Wake up America.

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2018-07-13 07:00 by Karl Denninger
in 2ndAmendment , 216 references
[Comments enabled]  

What happens when you actually read the Constitution and then decide you're going to actually find your balls?

You win.

Instead, Wilson has spent the last years on an unlikely project for an anarchist: Not simply defying or skirting the law but taking it to court and changing it. In doing so, he has now not only defeated a legal threat to his own highly controversial gunsmithing project. He may have also unlocked a new era of digital DIY gunmaking that further undermines gun control across the United States and the world—another step toward Wilson's imagined future where anyone can make a deadly weapon at home with no government oversight.

Two months ago, the Department of Justice quietly offered Wilson a settlement to end a lawsuit he and a group of co-plaintiffs have pursued since 2015 against the United States government. Wilson and his team of lawyers focused their legal argument on a free speech claim: They pointed out that by forbidding Wilson from posting his 3-D-printable data, the State Department was not only violating his right to bear arms but his right to freely share information. By blurring the line between a gun and a digital file, Wilson had also successfully blurred the lines between the Second Amendment and the First.

There is no line to blur.

Wired is notoriously left and, like most Leftists, only likes certain parts of the Constitution.  Abortion is a sacrament while self-defense is a privilege.

Never mind that without recognizing and protecting the right to self-defense all the other so-called rights are worthless.

Just ask any of the economic slaves in Malaysia, China or elsewhere where there is neither a First or Second Amendment.

There is always some jackwad that claims the "reason" we need "common sense" gun control is so that some nutjob doesn't get their hands on one and do an evil thing with it.  This a bald-faced lie; every single one of those people is either brainwashed or an entitled child demanding the ability to screw others with impunity.

They want you disarmed because they intend to do you economic or physical harm and are very interested in making damn sure you can't shoot back -- not shoot first.

Witness the recent "Antifa" jackwad who tried to use a tire iron on a marcher who had a different viewpoint.  Unfortunately for him his intended victim was rather skilled in in the use of his hands; after he swung said tire iron at his intended victim and missed he was decked and out cold with one punch.

Do you think said Antifa dude is pro-gun control?  Of course he is; he sure as hell didn't want to swing that tire iron and get shot in response.

He chose his intended victim poorly but what if his intended target had been a 5'-nothing 90lb woman?  She would have been seriously injured or killed -- unless she had a gun, of course, in which case the odds would be even.

The facts are that the majority of all "gun deaths" are suicides.  A person who intends suicide has myriad means to accomplish their goal; even if you were able to eliminate all guns you would not prevent more than a tiny fraction of those suicides from being completed.  They would just change in method.

The majority of the rest of the gun deaths are gang-related shootings, nearly all black-on-black, in our inner cities.  Nobody wants to talk about that or the root cause of same.  Our trade policies are largely responsible for this; it is a fact that the destruction of both the nuclear family unit intentionally caused by those playing "free trade" and exporting of jobs, along with replacing those jobs with welfare, particularly aimed at single women with kids, is a huge and direct causative factor.  What do you expect all of those who are on the left side of the intelligence bell curve to do for a living when you destroy all the jobs they formerly held?  Is it a big shock that many of them will decide that rather than starve they'd prefer to deal drugs or become a pimp?  Since both are illegal exactly how do you expect them to settle disputes as you can't exactly sue your competitor in the street drug marketplace!

We could address part of this by decriminalizing all drugs, much as they did in Portugal.  Not only did they halt the spread of HIV by doing so they also wound up with fewer (but not zero, of course) addicts.  Literally all of the "horrifying" predictions made for an allegedly "explosive" increase in drug use didn't occur.  What did happen was a major decrease in crime associated with drug use along with their primary goal in same -- a massive reversal in drug-driven disease transmission.  But in the US we're far more concerned with "full employment" for cops and prison company employees instead of public health, say much less violent crime.

The rest of the issue is addressable through tariffs, shockingly enough to the left and right.  If you make it uneconomic to employ slave labor in Malaysia to make screws for iPhone frames the jobs will come back here.  Ditto if you make uneconomic to employ people at $4/hour to make cars in Mexico which none of the people making them can afford to buy.  In both cases (along with millions of others) those jobs, nearly all filled by people on the left side of the intelligence bell curve, can be performed in the United States and are certainly preferable to anyone with any brainpower whatsoever to risking being shot dealing drugs on a street corner -- if you can get that job and make a living at it.

Both require shutting down the lies on both the left and right related to so-called "free trade" which are in fact nothing more than a legal system to encourage and permit modern-day slavery.

The problem with both the left and right is that they don't want to honor the entire Constitution -- just the parts they agree with.  The Second Amendment is integral to protection of all the other Constitutional components, in that if you are the intended victim of an aggression in violation of your Constitutional and basic human rights you may choose to employ the only effective means of self-defense irrespective of your sex, age, size or disability.

This does not mean you will triumph in such a confrontation, of course, but it substantially evens the odds.

I remind you that all regulation of firearms, components and ammunition, save that of the actual sale of firearms across a state line, that is actual interstate commerce, is prohibited by the Constitution.  This does not mean that the government may not punish those who commit some other offense while using a firearm -- such as robbery, assault, murder,******and similar.  On the contrary; such offenses are just as punishable as is an arson in which someone uses a match or a butane lighter; both are arsons and the implement used to cause the arson is not at issue.

We have here one man who has a pair of balls.

Now where are the other 150 million-odd alleged men in the United States, and where are their balls?

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