China’s Weapons of Mass Consumption

China’s Weapons of Mass Consumption

 

Similar to China’s style in some other realms, they’re hitting the arms market hard with many products that don’t compare well with high tech American (or European or Russian) stuff but are “good enough” for a fraction of the price and allow other countries to get modern military equipment at bargain-bin prices.   I’m sure this is probably a nice niche considering how expensive this shit can get and how especially in today’s climate, a lot of nations want to have some of the capabilities of the big boys.

I suppose it’s kind of like buying tools.   You can spend a lot of money on Craftsman, Snap-On or what have you, but sometimes you can get the same job done with a tool you paid a fraction of that price for at Harbor Freight….and sometimes you can’t.   While some of these things are certainly inferior to the US/Russian products, there’s something to be said for quantity and anything that increases military capabilities just makes the potential cost of conflict that much higher.

Also I’m sure it’s a lot easier (and quicker and cheaper) to train someone to use China’s gear over the more complicated systems we have.

One side note that I thought was interesting was that Turkey purchased a non-NATO compatible missile system from China recently.   It sounds like there’s been some unease within Turkey about their NATO membership and/or Western orientation.  Recently they’ve been getting closer with Russia through some business deals and probably getting frustrated with the European Union’s snuffing of Turkey jumping through more or less all the membership hoops asked out of them.   Is that a sign of Turkey beginning to look eastward towards Russia and China or maybe even just trying to put some distance from the West without getting completely into bed with Russia and China?    If they did go down the Russia/China route, that would be a pretty big blow to Team West.   Turkey is about the only other military in NATO that takes fighting seriously and it’s the second largest.

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Saudi Arabia Becomes World’s Biggest Arms Exporter

Saudi Arabia Becomes World’s Biggest Arms Exporter

 

This year Saudi Arabia surpassed India as the world’s largest arms exporter.   They’ve always been good customers of the US defense industry and willing to purchase the high-dollar stuff like state of the art fighter jets and tanks.     Saudi Arabia’s military is pretty big considering the population (something like 30 million) and it’s very well equipped due to all the excess wealth they have from oil revenue.

Saudi Arabia has the money to spend on arms, but they also have surplus population to field a relatively large military.   About the only thing they do there is produce oil.    They make so much money off oil that they’re able to import low-skilled labor to do all the dirty work in that country and free up a lot of people to do other things.

Even though Saudi Arabia takes defense seriously, part of the plan is that the United States keeps Saudi Arabia free from outside interference via the petrodollar agreement (in short, they price oil in US dollars, we provide military/diplomatic assurances that their neighbors won’t attack them, they put excess profits into US government securities and buy weapons from us).    Is this a sign of that petrodollar agreement weakening?    Earlier this year the Saudis were pissed that we even entertained the idea of cooperating with Iran over ISIS and that we were considering loosening sanctions and talking with them over the nuclear program.   Some people say that the low oil prices are partly due to Saudi Arabia flooding the market to make US oil production (aka “fracking”) less viable.   Some experts have said that Saudi Arabian oil production has peaked.    Other powers are rising in the world (China, EU, Russia and a cast of second-tier players like Iran, Turkey, India, Brazil, etc) and their money is just as green as ours.

I’m not sure whether to take this rise in Saudi Arabia’s military spending as an acknowledgement of the fact that they live in a rough neighborhood and would be responsible to do some of the heavy lifting alongside the US if war broke out in the region or if this is a sign of a decline in confidence in the United States or a sign that they’re decoupling from the petrodollar arrangement and trying to be as self-sufficient as possible in the realm of national defense.   In the book Twilight’s Last Gleaming I recently reviewed, the author has a scenario where the Saudis are forced to turn to Turkey in order to gain protection against the Iranians, who in the book want to retake some holy cities in Saudi Arabia and acknowledges ominously that they might find some other interesting things (oil fields) along the way.     The idea that they have to make “deals with the devil” in order to keep the neighbors from taking over is probably pretty unpalatable to the Saudis, even though their government is about as close to the proverbial devil as it gets on this planet.

When you combine the military spending of Saudi Arabia with the United Arab Emirates it accounts for 1 in 7 of the dollars the world spends on military stuff – pretty impressive for a couple of small countries.   They spend more than all the countries of the EU on this sort of thing.   I think this is also interesting considering that oil prices and thus government revenues are down in Saudi Arabia.   You would think they would hold on to their wallet a little tighter in this climate.

Anyways, it’s hard to make heads or tails out of this development, but it sure seems like the Saudis have something on their minds.   Are they going to move away from the petrodollar system?   Maybe trying to dump dollars into something tangible?  Do they think it’s not viable to depend on us?   Are they anticipating war with Iran?   Are they anticipating an uprising within Saudi Arabia or something from ISIS or some other group?   Is it a little bit of all of the above?   We’ll see.

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Hoarding in Venezuela – Stockpiling Food Banned!

Stockpiling of Food Banned in Venezuela

I saw this article a week or two ago and have been thinking a little bit about it.   Recently Barack Obama’s administration slapped new sanctions on Venezuela and plummeting oil prices have put a hurt on Venezuela’s economy.  I forgot exactly where they rank in the world’s oil production, but they’re the fourth largest supplier to the US market.    Oil is pretty much all they have to offer, besides world-class supermodels.   I saw  one article that said that oil is 95% of Venezuela’s exports.

Venezuela has a command economy and the government kicks back a lot of oil profits to the people in the way of subsidized food, energy and health care.  Now that the oil revenues are down, they’re in the red and it’s really hard to take things away/say “hey, we can’t afford it” to the populace.   Food isn’t as plentiful as it used to be due to stable foreign currencies not coming in (their currency has tanked) and people are getting worried and grabbing up everything they can (understandably).

Nicolas Maduro, president of Venezuela, launched a rationing program involving a nationwide system of finger scanners in order to limit people from buying more than their share.   They claim that the problem stems from Colombians (the “bad guys” – the conservative US ally in Latin America) crossing the border and buying up cheap, subsidized food in Venezuela and then selling it on the black market.   I’m sure that *does* happen, but I doubt that’s what’s actually causing the problem, which is that Venezuela has their balls in a vice due to low oil prices and a lot of “unfunded liabilities”.   I heard somewhere that their system banks on oil being at least $80 a barrel, especially considering that the cost of extraction down there is a lot higher than it is in other major oil producing states.

Maduro went on state TV (in a sweet Venezuela track jacket!) and demonstrated the program in a modern, well-stocked supermarket.     He also blamed the US, the Colombians and the right-wingers in Venezuela who wish to undermine the government by hoarding food.   Fortunately for him, he really does have a lot of formidable boogeymen to choose from and made a pretty compelling case that it’s due to outside interference.   I have no idea if this is causing “national solidarity” or if the food shortages are undermining Maduro’s regime (which of course is a regime the US government would like to undermine).

This story is getting some mileage in prepper/survivalist circles as a warning that some day this could happen here in a pinch and that some day it may be illegal to buy/have more food than it’s decided that you need.   Perhaps.   I think the bigger picture is a little more about the way governments can act in a tight spot as far as rolling out new controls, blaming outsiders and fostering the “us vs. them” mentality as well as the economic turbulence low oil prices are causing in some volatile places in the world right now, like Venezuela (and Iran and Russia).   Drastic times usually get dealt with by drastic measures.   We’ll see how this all pans out…

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Secession: The Reasonable Option Everyone Resists by Tom Woods

Secession: The Reasonable Option Everyone Resists by Tom Woods

 

Tom Woods is very well-known in libertarian circles and here he is giving a speech at the Mises Institute recently about secession, where he lays out a mile-high but convincing case for secession.   Maybe more than that he talks about “going off the card” of acceptable opinion, where it seems like there’s only some issues on the table in national discourse and only two acceptable opinions on each one – anything outside of those parameters isn’t up for discussion and is crazy.   I guess the idea of secession falls in that category.   Woods makes the case that it shouldn’t be considered outlandish to discuss it.

He makes the case that large states are unresponsive to the populace, political boundaries aren’t set in stone, large doesn’t always mean prosperous (i.e. look at Singapore) and minority rights are best preserved within the smallest political unit.
I’ve heard interviews with him here and there, but I’ve never checked out his podcast.   I think I’ll give it a shot…

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Secession and Liberty: Ron Paul’s Speech at the Mises Institute

Secession and Liberty

 

I’ve been a Ron Paul fan since I first caught wind of him sometime before the 2008 election.  I’ve gone to a handful of his speeches and shook his hand a time or two.   I think he’s gotten a little more interesting since he dropped out of politics, it seems like he’s less likely to temper his speech.   He does a short podcast with Charles Goyette that I recommend, but it looks like they’ve been on hiatus for over a month and I have no idea what’s going on with it because it was coming out weekly.

Anyways, this is a speech Paul did recently at the Mises Institute where he covered his usual territory and even brought up….secession….as he has a time or two in the past few years.   It didn’t get a lot of play in the mainstream media, but it did get some mileage in the “can you believe those crazy Republicans?!?!?”second-string clickbait media.    I thought it was a pretty good one and worth sharing for fans of Dr. Paul.

 

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Apple To Buy One Third of World’s Gold Production for iWatch?

Apple Buying A Third of World’s Gold To Meet Demand for iWatch

How Much Gold Will The Apple Watch Consume

I think this one is a little misleading in the way that it makes it sound like Apple is going to grab up 1/3 of ALL the gold, instead of 1/3 of the annual production…which is still nothing to scoff at.   It’s maybe also misleading on how much gold will go into an iWatch and how many gold ones they expect to sell.

What we see in the mining.com article is that it might be around two ounces of gold per watch and they’re expecting to sell about a million of the gold iWatches.

I think this is kind of interesting…   Apple pretty much killed the wristwatch among the hoi polloi and now they’re going to bring it back with the iWatch to a generation who has largely gotten out of the wristwatch paradigm.   Most people just look at their phones these days.    Will adding some bells and whistles change things?   I don’t know, Apple knows more about these things than I do and I think most people are willing to give their products a shot, considering their track record.

I have a female relative who is in her early/mid 20’s who said something about how she likes guys with wristwatches, like it makes them look sophisticated with that “classy cool” look.   I think with men my age or maybe a little bit older, watches have been more or less a given, rather than a notable feature.     I feel naked if I’m not wearing mine, with the exception of work or the gym.

Anyways, if the gold iWatch does take off, I see it creating a larger luxury watch market rather than competing with the current (Rolex, Movado, etc) cast of characters.    Although I doubt Apple is going to grab up THAT much of the world’s gold production, it may make a notable dent in it.  The article says that they expect Asia to be the big market for these watches, and I can totally see that given their love of gold, gadgets and the prestige that something like this would carry.   What young hot-shot in Singapore, Shanghai or Taipei wouldn’t want one of these???   They’re more likely to be a hit with affluent younger people that have the money but don’t have the generational affinity for the luxury watch.

The world’s gold supply is still fairly consistent, and the bottom line is that a product like this would cause a spike in demand for gold while Apple ramps up production on these bad boys and send the price of gold up with it.   I guess we’ll wait and see if Apple makes a move into gold right now while the prices have been beat up.

As far as me, I’m curious to see the iWatch but I don’t see myself getting one.   I have a 15 year old Seiko that I’ve been wearing and that’s good enough for me.    Hell, I don’t even have a smart phone so I figure I’d jump that hurdle first before I worry about a space-age watch, gold or otherwise.

Can this have the potential to be a “black swan” if Apple really flops on this?  I don’t know.   I guess we’ll see how this all pans out…

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The Greater Implications of Bolivian Sea Access

Uruguay Signs Deal With Bolivia Granting it Access to the Sea

 

First, Jose Mujica of Uruguay is one of my favorite world leaders.  I can’t say I agree with him on everything, but I think it’s cool that he’s one of few politicians that can actually claim to be “one of the people”.   This guy cusses in public speeches, doesn’t pull punches, dresses in worn old clothes, lives on a ramshackle homestead outside Montevideo and drives an old VW bug.   Oh yeah, he also got into politics as a radical left-wing guerrilla, throwing molotov cocktails and kidnapping bankers.   It’s hard not to pull for the guy when you compare him to the cast of characters we get in the US.

In the Spanish speaking international media they bring this guy up more often than they do in the Anglosphere (makes sense) and the rumblings around South America for Chile to give Bolivia back access to the Pacific Ocean.    Mujica has been outspoken over the need for Chile to give them back a corridor to the ocean and just gave them (and Paraguay) open access to Uruguay’s ports to lessen Bolivia’s reliance on Chile.

A lot of South America’s recent growth has come from demand for agricultural and mineral products in China, so access to the Pacific or at the very least good ports has been crucial for the region.   I believe Bolivia and Paraguay are the two poorest countries in South America and I suppose more difficult foreign trade has helped put them in that situation.

I can see how this looks like an unimportant story, but to me it’s another sign of increasing solidarity among South American nations (well, ok, Chile is apparently being difficult) and increasing ties between South/Latin America and China.   Traditionally this has been our “back yard” and currently our approval ratings are about as low in South America as it is in the Middle East (which is low) and the Chinese have already put tentacles well into the continent and her resources.    Just another sign of the coming multipolar world, with increased Chinese influence abroad and Latin America clicking together as a populist-left alternative to neoliberalism with guys like Mujica, Morales, Correa and Maduro as heads of state and center-left Brazil kind of anchoring things for them.

Also, Montevideo has a nice, underused port.    I remember the main building being really cool.   Great architecture in that city.

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The Iraqi Dinar Scam Revisited

I think this subject gets brought up to me about once every six months or so.    Not too long ago I heard about an acquaintance in a financial rut who put more money than she should’ve into the Iraqi Dinar, hoping to ride the meteoric rise of the currency that should be coming any day now.   Sounds like she did it several years after the initial rumblings of this “opportunity” started making the rounds after the fall of Saddam’s government too.    Apparently she felt really stupid for putting money she didn’t really have to blow into dinars and it wasn’t panning out as they hoped.   I’m sure there’s a ton of people with similar stories out there.   I remember hearing quite a few people talk about investing in the dinar, either stating intent or that they already had purchased them.   Now I don’t hear many people talk about holding on to them, getting out of them, etc.

Looks like today it’s at 1200 or so dinars to the dollar right now.    When I was there in 2004-5, it was somewhere around 1400 and the last time I wrote about it exactly three years ago it was at 1300.   (The Iraqi Dinar Scam)   Everything is still the same with the currency though – you can’t really exchange it in any serious venue, only find some other sucker to buy them.    I think you’d be hard pressed to say that any fundamentals of the Iraqi economy have improved since then.   The Shiites ran it into the dirt again, the Kurds are about as close as they’ve ever been to jumping ship and ISIS is running around doing the things they do throughout much of the country side.     One guy I knew told me that Iraq’s ace-in-the-hole was a budding mercury industry, and to my knowledge that hasn’t panned out.    I don’t mean to talk down on the poor Iraqis, I’m just saying they haven’t become the economic miracle that was sold to potential dinar investors in the beginning.

The Iraqi Central Bank is worried about “dollarization” of the economy, a situation where the US dollar becomes the de facto or official currency of a country.   In this case, people don’t trust the dinar and would prefer the dollar or other currencies over Iraqi money.    I suppose this is probably part of the reason why you can’t exchange Iraqi dinars – because damn near everyone locally would try to GTFO and into pretty much anything else.   A bit of currency protectionism.

While looking up news on the dinar, I found this article from April Fool’s Day last year that I thought was kind of funny.    Some of the writing is a little cliche, but it’s still good:
APRIL FOOL:   Worldwide Celebrations as Iraqi Dinar Revalues

I like the snippet of the Iraqi Dinar dealer crying that he should’ve held on to his dinars instead of trading them for dollars.   Ha ha.

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Iran’s Navy Sinks Mock US Carrier

Iran’s Navy Blasts Away at Mock US Carrier

This week the Iranian Revolutionary Guard staged war games where they sank a model of a US Nimitz class aircraft carrier.    They basically swarmed it with about 50 missile-bearing patrol boats, helicopters and land-based missiles.

Some of the articles/comments I’ve read laugh off Iran’s military capabilities, but they actually have a decent navy and some fairly impressive home-grown technology.   They’re not as backwards as some people like to make them out.   Are they *on par* with the US Navy?   Definitely not…but do they have to have the same kind of numbers and technology to strike a serious blow against us?

I would imagine that in a real life scenario if the Iranians threw 50 of the fast moving patrol boats, helicopters and fired a few missiles at a single carrier, SOMETHING would get through, even if most of it was swatted down.   One Nimitz class carrier equals a couple thousand sailors and several billions of dollars at the bottom of the ocean.     So far a little over 2,000 US servicemen have been KIA in Afghanistan, so one carrier attack has the potential to trump that in terms of body count in a day.

I know the US Navy has contingency plans for lone fast-moving patrol boats, not sure if they’ve taken seriously the idea of a whole shitload of them coming at them.    We’re really bad at taking these kinds of things seriously.

Oh, and about 20% of the world’s oil gets shipped through the narrow Straits of Hormuz, where Iran always threatens to take their stand.   Impeding access means that we’re going to feel it back home and the Saudis aren’t going to be very happy, either.   Neither will the Kuwaitis or Iraq.

I was curious to see *how* they made the ship, because even if they made it out of paper mache it’s pretty big undertaking to just build it and blow it up.    Looks like it’s an old barge for the base and I’m not sure what else.   I’m sure the Iranian taxpayers are thrilled though.

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New York Towns Looking to Secede to Pennsylvania

New York Towns Are Plotting to Secede to Pennsylvania

 

This story caught my eye today.   I’ve talked before about some states and nations having political borders that don’t make sense and the state of New York is one of the first to come to mind with the divide between the rural/rust belt upstate and Long Island.    Here’s one factor I never thought of:  Fracking!   Right now 15 towns along the Pennsylvania border are talking about jumping ship and joining more conservative Pennsylvania over a recent fracking ban…and high taxes, of course.

Although I know there’s reservations about fracking, I get what they’re trying to say.  We’re talking about a rural and economically depressed area without many options and they get some dollars flowing in through fracking.   Then the wealthy liberals in NYC and the greenie-weenies in the Hudson Valley tell them they can’t.   I’m not necessarily saying fracking is a good idea, but I get the sentiments.

I’m sure nothing will come out of this in the immediate future, but I think this is the kind of social/economic divide that will end up causing big political problems in states like New York, Illinois, Michigan, Colorado and California.

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