Thursday, August 10, 2017

Observations and Sample of Recent Trades: AHY:AU, OMER, TCRZ, VGK

Economic Reports:

A. Productivity:

U.S. productivity rose at an annual rate of .9% in the 2017 second quarter, up from .1% in the first quarter. The consensus estimate was for a .7% gain. From the second quarter of 2016 through the second quarter of 2017, productivity increased by 1.2%. Productivity and Costs, Second Quarter 2017, PreliminaryU.S. productivity picks up a bit in second quarter - MarketWatch  

Productivity Growth by Major Sector, 1947-2016. Bar Chart

Why is US productivity growth so slow? Possible explanations and policy responses

B. Consumer Debt: 

Americans now have the highest credit-card debt in U.S. history - MarketWatchThe Fed - Consumer Credit - G.19

C. Producer Price Inflation for Final Demand: 

Y-O-Y and unadjusted for seasonal factors, producer prices rose 1.9% through July. Producer Price Index News Release text

U.S. producer prices post biggest drop in 11 months: Reuters

D. Debt Limit Increase: 

Calculated Risk: Goldman on the "Debt Limit"

Debt ceiling drama could soon weigh on stocks, strategists warn: CNBC 

Market Commentary:

Buffett has built his stockpile of cash to almost $100 billion. Buffett’s Berkshire Has $100 Billion and a Bright Future - Barron's

These 7 billionaires are worried about a stock-market correction - MarketWatch

Our Broken Economy, in One Simple Chart - The New York TimesWhat that viral New York Times inequality chart really shows - MarketWatch

If this red flag is any indication, a 1929-style market crash isn’t so ‘unimaginable’ - MarketWatch

Stock market correction indicators amid new highs - Business Insider

The Stock Market May Be Poised for a Replay of the 1987 Crash - TheStreet

There are only two other times in history when stocks were more expensive than today - MarketWatch

There’s a 'supervolcano' waiting to erupt beneath a seemingly 'beautiful' market: CNBC (Barry James-Mutual Fund President James Investment Research).

Market 'melt-up' could push stocks to new records, Yardeni says: CNBC


Trump and North Korea:

Trump Vows ‘Fire and Fury’ If North Korea Keeps Threatening U.S. - BloombergTrump threatens North Korea after US assesses they have miniaturized a nuclear warhead - CNN

"North Korea best not make any more threats to the United States. As I said, they will be met with fire, fury and frankly power the likes of which this world has never seen before."

Donald is the first U.S. President to match the using militaristic and bombastic rhetoric that flows from N.K. daily. Trump's dire rhetoric echoes language of North Korean propaganda | World news | The Guardian; Trump’s Harsh Language on North Korea Has Little Precedent, Experts Say (Truman used similar language directed at Japan near the end of WWII, soon after the U.S. dropped a nuclear bomb on Hiroshima: "Sixteen hours ago an American airplane dropped one bomb on Hiroshima and destroyed its usefulness to the enemy. ….  If they do not now accept our terms they may expect a rain of ruin from the air, the like of which has never been seen on this earth.” Japan surrendered shortly after a second bomb was dropped on Nagasaki ending WWII)

Trump's comments are yet another red line drawn by him relating to NK. 

What does Donald mean by fire and fury? He was referring to a nuclear attack IMO based on the following tweets and his use of Truman's words in his warning to Japan (see above previous quote)

Trump on Twitter boasts about US nuclear arsenal after 'fire and fury' threat: CNBC  

Wow, that was one fast renovation and modernization but that was actually started under the Obama administration in 2014. Trump makes false claims about U.S. nuclear arsenal - LA TimesHas the U.S. Improved Its Nuclear Arsenal Under Trump? Fact-checking His Twitter Claims: NewsweekTrump’s scary tweets about nuclear weapons, explained - VoxTrump’s Nuclear Weapons Arsenal Isn’t Any Different Than Obama’s - Bloomberg 

What's more, it was Donald that drafted the Declaration of Independence and crossed the Delaware (he is the one standing in the boat and looking majestical)

Of course, and this goes without saying, facts do not matter to Trump and his followers.

Is that the official U.S. position in the event NK threatens the U.S. again, which is does regularly? 

NK did not wait 24 hours after Donald's statement to threaten the U.S. again: 

North Korea threatens missile strike on U.S. base on Guam - MarketWatchNorth Korea Mulling Plan to Strike Guam, State Media Announces - NBC NewsGuam: Tiny Island Thrust into the Center of North Korea Dispute - NBC NewsTrump just set his own, uncrossable 'red line' — and North Korea crossed it instantly: CNBC

North Korea details plan to fire missiles toward Guam, says ‘only absolute force’ will work with Trump - MarketWatch  NK is certainly aware of what one Ohio class nuclear submarine can do: Why Russia and China Fear America's Ohio-Class Submarines | The National Interest BlogThe Navy's New Doomsday Submarine (it would only take the launch of all missiles from one U.S. submarine to turn NK into toast habitable by only a few unusually sturdy cockroaches) 

North Korea 'seriously examining' a strike directed near Guam - CNN 

And, importantly, there are inconsistent messages being sent almost daily out of the Trump administration regarding North Korea. The Trump Team’s Dangerous Mixed Messages on North Korea | National News | US News and World ReportTrump could disrupt diplomatic messaging on North Korea - CNN 

Mattis to North Korea: Stand down or risk end of regime - CBS News (Secretary of State took a different tone).  

Trump was of course shooting from the hip when talking about nuclear war which I find unsettling. 

General Kelly was surprised, though not shocked, by his remarks. Who could be shocked by anything coming out of Donald's mouth? Not me. 

Trump had a paper in front of him, relating to the opioid crisis, that he was supposed to discuss when he went off on the NK problem with whatever came out of his mouth. Trump’s Threat to North Korea Was Improvised - The New York Times ("The piece of paper, as it turned out, was a fact sheet on the opioid crisis he had come to talk about, and his ominous warning to Pyongyang was entirely improvised, according to several people with direct knowledge of what unfolded.") 

Jimmy Kimmel on Donald Trump's 'Fire and Fury' Threat to North Korea - YouTube

Stephen Colbert Monologue | Aug 8, 2017 Donald Trump - North korea Clash - YouTube

North Korea certainly understands that the use of a nuclear weapon against the U.S. or its allies will result in its annihilation. That point has been made over and over again in unmistakable, though diplomatic terms, by prior administrations. It is not a point that is arguable. 

Stating that the U.S. will level "fire and fury" on North Korea for a threat against the U.S. only serves to draw red lines that will certainly be crossed (and have already been crossed for Trump's latest red line) and will consequently needlessly increase tensions, volatility and the potential for unintended consequences. 

I do believe that the U.S. will launch a first strike against NK within Trump's first term. The rhetoric coming from Trump, Tillerson, McMaster, and Mattis leave no other options, unless of course NK buckles under pressure or the U.S. is simply bluffing.

The U.S. has made it crystal clear that it will not tolerate NK developing ICBM's carrying nuclear payloads. The Stock Jocks assign a zero percent chance of a nuclear war occurring in East Asia. They have no concerns about that kind of event whatsoever which is just delusional IMO.  


One Recurring Category of Trump's Demonstrably False Statements:

Donald enjoys lying. He also enjoys manipulating people. 

One of Trump's recurring and obvious lies is claiming that the "Fake News" media does not cover a particular event. This is a typical example from last Monday:

I understand that the True Believers, who are now completely inoculated from even considering accurate information, do not actually read the NYT or the WP or listen to any news broadcast station that presents information inconsistent with Trump's reality creations.

Trump can consequently make whatever claim that the wants to about their coverage, and the True Believers will accept whatever he has stated about it.

There was of course abundant news coverage of the U.N. sanctions resolution by responsible and professional news organization or what Trump calls the Fake News media.


Trump and Senator Blumenthal:

Trump is a jerk, probably the biggest jerk ever to hold public office in the U.S.

He has no redeeming human qualities that I am able to detect.

Senator Blumenthal (D-Conn.) is not going to lose his senate seat to a republican. So it is difficult to understand why Donald keeps throwing red meat to the True Believers about Blumenthal lying about serving in Vietnam.

Blumenthal was in the Marine Reserves, but was never stationed in Vietnam. He did state on several occasions that he served in Vietnam, a point revealed in a NYT article many years ago. Apparently, that article by the failing NYT is not Fake News: Candidate’s Words on Vietnam Service Differ From History -

Donald has repeatedly pointed that lie on one subject,  but then adds an assortment of lies of his own creation.

Attacking Blumenthal was part of Trump's Tweet Storm last Monday:

There is no evidence, and Trump cites none, that Blumenthal told stories about participating in battles and conquests, his bravery in combat, and cried when confronted by that fact that he did not serve in Vietnam. Trump Says Blumenthal Lied About Vietnam (He Did) and Cried (He Didn't) - NBC News ("There’s no evidence that Blumenthal bragged — as Trump claimed in the tweets — about "battles" or "conquests" or cried when the scandal erupted during his Senate bid.") Trump could care less whether he is telling the public the truth about anything. 

While the True Believers enjoy reading these ad hominem attacks  they are just disgusting, serve no purpose other than to manipulate the easily manipulated TBs, and are beneath the dignity of the Presidency. They are simply what an adult would expect to hear from a five year brat and bully, who has not been potty trained yet in civilized manners and discourse.

Richard Blumenthal responds to Trump's tweets about Russian collusion and Vietnam - CBS News


FBI searched Manafort home - CNN;  
FBI raid on ex-Trump aide's home shows Russia probe intensifies: Reuters

Nearly Half of Donald Trump's Twitter Followers Are Fake Accounts and Bots

Trump retweets Fox News story containing classified info leaked by unnamed sources - CNN

GOP Sen. Ron Johnson (WIS): McCain's brain tumor might have been factor in no vote on health care - CNNGOP Senator Backtracks on Linking McCain's Tumor to Health Vote - Bloomberg  Wisconsin re-elected Johnson in 2016.  

U.S. destroyer challenges China's claims in South China Sea: Reuters 


1. Short Term Bond/CD Ladder Basket Strategy

A. Bought 2 Citizens Bank 1.35% CDs Maturing on 2/2/18 (6 month CD)

I have two 1% Old National Bank CDs maturing on 2/9/18 that have a one year term.

Citizens Bank is one of the operating banks owned by the bank holding company Citizens Financial Group Inc.  (CFG)

B. Bought 2 Bank of Hapoalim 1.4% 2/7/18 (6 month CD):

This CD was issued by the New York branch of Israel's Bank of Hapoalim which refers to itself as Israel's leading financial institution: Bank Hapoalim Group : BHI

C. Bought 3 Bank of India 1% CDs Maturing on 9/6/17 (one month CD):

I have 3 one month Bank of India 1% CDs that mature on 8/24/17 so I basically decided to rollover that amount through the purchase of this CD.

D. Bought 3 Merrick Bank 1.35% CDs (monthly interest) Maturing on 2/12/18 (6 month CDs):

I have two JPM 1.05% CDs maturing on 2/15/2018 that have a one year term. As older CDs mature, I am continuing to pick up marginally better coupons that have shorter maturities. Both the Merrick Bank and JPM CDs pay monthly interest.

E. Bought 3 Merrick Bank 1.2% CDs (Monthly Interest) Maturing on 11/10/17 (3 Month CDs):

$13K into Short Term CDs

2. Bought Back 1000 AHY:AU at A$1.35:

Quote: AHY Stock Price - Asaleo Care Ltd. Stock Quote (Australia: Sydney)

The stock dipped some on my day of purchase: AHY.AX A$1.34 -A$0.07 -4.98%

Asaleo is an Australian based personal care products company.

ASALEO CARE LIMITED (AHY) Share Price & Information - ASX

I became acquainted with this company when researching  Svenska Cellulosa AB ADR, which had a large ownership stake: Bought Svenska Cellulosa (SVCBY)-A Swedish Personal Care And Tissue Company - South Gent | Seeking Alpha

A few weeks ago, Svenska Cellulosa ("SC") spun off its personal care business into a new entity called Essity Aktiebolog, with the old SC keeping the timber and related assets. "All shares in the wholly owned subsidiary Essity will be distributed, according to which one share of Class A in SCA carries entitlement to one share of Class A in Essity and one share of Class B in SCA carries entitlement to one share of Class B in Essity." Distribution and listing of Essity Aktiebolag (publ) on Nasdaq Stockholm

It is Essity that now owns a 35.9% stake in Asaleo as of 12/31/16. EssitySCA_Hygiene Annual Report at page 73.pdf A recent filing indicates that this stake has increased to 37.161% (Form 604) as Asaleo buys back stock and Essity keeping the same number of shares.

I have had two prior 1000 share round trip transactions and received one semi-annual dividend to date.

In my IB Account, I bought 1000 at A$ 1.355 and sold those shares at A$1.505, incurring a A$6 commission on both transactions.

AUD Profit = A$148

IB Account: 2016 AHY:AU 100 Shares +A$148
Reportable USD Profit = $94.13

My first trade was in my Fidelity account where I had to pay a A$32 commission on both the buy and sell transactions plus a USD 1% currency conversion from USDs to AUDs which wiped out most of my profit:

Item # 3 Bought 1000 Asaleo Care at AUD$1.86 (2/28/15 Post)

I sold that lot at A$2.28 and incurred a 1% currency conversion fee that was built into the rate shown below:

Profit USD $191.65

Transitioning International Trading to Lower Cost Broker:1. Sold 1000 Asaleo Care Limited at AUD$2.28 and Immediately Converted Proceeds into USDsUpdate For Portfolio Positioning And Management As Of 7/24/16 - South Gent | Seeking Alpha
Total Trading Profit to Date = $285.78

Currency Conversion at AUD/USD .754:

So Fidelity was paid four times for two transactions: C$64 in brokerage commissions and 1% twice on the value of the currency exchange. Just another reason among others to fire that broker and to use IB for these trades.

The dividends are paid semi-annually at a variable rate. The total for the last two dividends was A$.1 per share which were 50% "franked":

Assuming a A$.1 annual dividend per share going forward, the yield would be about 7.41% based on a total cost per share of $1.35.

That part of a dividend which is franked is not subject to Australian withholding tax. The fact that 50% of the dividend would be subject to a withholding tax simply means that this company did not pay enough in taxes to Australia to qualify the dividend as fully franked.

The financial reports can not be linked here but are available for download here. Of the reports listed on that page, the link titled 2016 Full Year Results Presentation" is the most informative.

The company had some problems in the first half of its fiscal 2016 year which since the shares plummeting. The details are summarized in the first snapshot and more information is available in the Full Year Results Presentation. Many of the negative events are what one would expect given the nature of the business, including competition and the variations in input costs.

Closing Price 8/10/17: AHY.AX A$1.425 -A$0.025 -1.72%: ASALEO

Semi-annual results are generally released in late August. 

3. Intermediate Term Bond/CD Ladder Basket Strategy:

A. Sold 2 Precision Castparts 2.5% SU Bonds Maturing on 1/15/23:

Profit Snapshot: $30.84

Finra Page: Bond Detail

Sold at 100.7

YTM Then at 2.356%
Current Yield at 2.48%
Net at 100.6 (after $2 Commission)

Bought at a Total Cost of 99.058

Stocks, Bonds & Politics: Item # 1.E.
YTM Then at 2.676%
Current Yield at 99.058 = 2.52%

B. Bought 1 National Rural Utilities Finance Corp. 3% (monthly interest) Bond Maturing on 12/15/2027:

Finra Page: Bond Detail

Credit Ratings
Moody's at A2
Moody's affirms National Rural Utilities ratings; outlook is stable
S & P at A

Bought at a Total Cost of 97.850

YTM at Total Cost = 3.244%

C. Sold 50 TCRZ at $25.92 and another 50 at $25.93:

THL Credit Inc. 6.75% SU Notes Due 12/30/22 (TCRZ)

I sold what I consider to be high priced shares. I owned 100 shares in two fifty share lots held in separate accounts with each of those two lots bought at a price exceeding this bond's $25 par value.

Vanguard Taxable $ 7 Commission:

Profit Snapshot: +$14.97

IB Taxable $1 Commission:

Profit Snapshot:  +$34.96

Issuer: The BDC  THL Credit Inc.  (TCRD)

Earnings Report for the Q/E 3/31/17

The issuer cut its quarterly common share dividend from $.34 to $.27 effective for the 2016 4th quarter.

Net asset value per share has been trending down:

3/31/17 $11.71

6/30/16 $11.88  Page 3 SEC Form 10-Q
6/30/15 $13.29  Page 2 SEC Form 10-Q
6/30/13 $13.58  Page 2 Form 10-Q

D. Sold 2 WFC 2.15% SU Bonds Maturing on 1/30/2020:

FINRA Page: Bond  Detail

I owned 1 bond in two accounts:

Vanguard Roth IRA Account ( $2 Commission)

Profit Snapshot: +5.16

Sold at 100.522

YTM Then at 1.934%
Current Yield at 2.14%

Net at 100.322

YTM Then at 2.017%

Fidelity Account: ($1 Commission)

Sold at 100.515

Profit Snapshot: +$5.61

E. Sold 2 BBT 2.05% SU Bonds Maturing On 5/10/21:

FINRA Page: Bond Detail

Profit Snapshot: +$28.73

Sold at 99.761

YTM Then at 2.116%
Current Yield at 2.05%

Bought at a Total Cost of 98.187

Stocks, Bonds & Politics: ITEM # 1.B.
YTM Then at 2.514%

$8.593K Outflow from Intermediate Term Bond Basket

4. Continued to Pare Stock Allocation on a Net Basis:

A. Sold 109+ VGK (commission free for Vanguard Customers):

Profit Snapshot: +$747.31

Vanguard FTSE Europe ETF (VGK)

Vanguard VGK Page (expense ratio at .1%)

The $747.32 gain is my largest dollar trading gain for this ETF.

VGK has benefited in recent weeks from USD weakness against major European currencies.

My gut told me that the USD has fallen too far, too fast and was due for a rebound. The primary motives for selling VGK is to harvest a profit and to reduce my stock allocation. 

B. Sold Remaining 30 Shares of OMER at $21.88:


QUOTE:  Omeros Corp. (OMER)

My other 30 share lot was sold at $20.61 and bought at $9.35 on 1/19/17:  Stocks, Bonds & Politics: Item # 2.E.

Total Profit 60 Shares: +$721.41 

Total Investment = $606.65

Sold to Soon: 

Closing Price 8/9/2017: OMER $24.90 3.18 +14.64% : Omeros Corporation 

OMER reported results on 8/9/17. The company had better than expected sales for its only approved drug and claimed to making progress advancing OMS721 in Phase 3 trials. 

Omeros' (OMER) CEO Greg Demopulos on Q2 2017 Results - Earnings Call Transcript | Seeking Alpha

Disclaimer: I am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members.


  1. The Stock Jocks took notice today when Trump started talking about North Korea again. This time he emphasized that his fire and fury remarks made yesterday may not have been strong enough. He was critical of prior Presidents, particularly Clinton and Obama, saying they were weak. Trump let it be known that he was Macho Man that was going to solve the NK problem. And he gave a warning to China about trade with the U.S.

    Donald thinks he is a skilled negotiator and that others will tremble in response to his threats.

    Donald may even want NK to fire those missiles at Guam so that he can in his own mind justify turning NK into radioactive dust. The problem with radioactive fallout caused by nuclear blasts is that its circulation path does not recognize borders.

    I seriously doubt that NK will buckle under Trump's bombast, nor will they bend from their current course of developing nuclear tip ICBMs capable of hitting the U.S.

    So then what?

    Donald has already gone cowboy and will not like the North Koreans giving him the finger which they have already done and will IMO continue to do.

    Personally, I blame China and Russia for creating the NK problem even though both publicly state now that NK is a U.S. problem.

    I am not talking about recent history here, but their involvement in the creation of NK and China's decision to intervene militarily in the Korean War which it had promised to do before conflict started, if NK was about to go down in defeat which was happening in late 1950.

    Korea could have been reunified in late 1950 or 1951 but for China's intervention and to a lesser extent Russia in that war.

    Wiki on Division of Korea after WWII

    Wiki on Korean War

    Gold and high quality bonds rose in price today:

    iShares 20+ Year Treasury Bond ETF $126.37 +1.07 +0.85%

    SPDR Gold Shares (GLD)
    $122.21 +0.90 +0.74%

    The S & P 500 closed at 2,438.21 -35.81 or -1.45%.

    The Stock Jocks may start to see nothing but blue skies again soon enough. The stock market is assigning zero possibilities to a variety of events that Trump may cause that would have severe and adverse economic repercussions.

  2. Based on pre-market activity, it looks like the Stock Jocks have stopped worrying about a war erupting.

    E-Mini S&P 500 Future Sep 2017
    2,440.00 2.50 0.10%
    Last Updated: Aug 11, 2017 at 7:57 a.m. CDT

    I do not expect that NK will launch any missiles aimed at Guam and perhaps that will provide an opportunity for conditions to simmer down.

    However, I do not anticipate that NK will stop launching ICBMs.

    They will simply aim them to the middle of nowhere in the Pacific Ocean.

    This will likely continue until one is launched that would have hit NYC and Washington if the trajectory was changed. Given the rapid progress being made by NK, this may occur within a year or two.

    Then NK may be open to discussing issues with the Donald, but NK's nuclear capability will not be open to negotiation.

    Implicit in this scenario is that the U.S. will not launch a first strike unless NK starts a war.

  3. South Gent,

    China pledges neutrality - unless US strikes North Korea first. It would defend NK if the U.S. strikes first and tries to overthrow NK regime.

    Russia has not made a statement yet. The NK situation is getting more complicated.

  4. Y: That link is to a product being sold on Amazon, a hands free crutch.

    I would anticipate that China would intervene militarily in the event the U.S. strikes first. The response would likely be proportionate to the U.S. strike.

    You are referring to a claim made in a newspaper called the Global Times controlled by the Chinese Communist Party. When the statements are in an editorial in that publication, which is the case with this warning to both NK and the U.S., it probably reflects government policy.

    This is the statement:

    “when their actions jeopardize China's interests, China will respond with a firm hand.

    “China should also make clear that if North Korea launches missiles that threaten U.S. soil first and the U.S. retaliates, China will stay neutral. If the U.S. and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so.”

    I do not see a limited first strike, where the U.S. takes out some missile launchers after a missile launch for example, as likely to stop with that attack. There is probably a plan to do precisely that when NK launches its next missile. NK may for example respond with an artillery barrage on Seoul and then the U.S. responds by knocking out that capability using bombers stationed in Guam. Then NK attacks with a nuclear weapon aimed just at that air base in Guam, and so on.

    If the U.S. attempts to unite Korea by force, any territorial gains will be temporary since China would likely intervene. Becoming involved in a land war with China again would only serve to destroy both NK and SK with several million casualties.

    While NK has gotten the U.S. message that a missile launch directed at Guam would start a war that it could not win, I don't see them backing down from continuing to develop nuclear ICBM's capable of hitting anywhere in the U.S.

    They probably view those weapons as necessary for the regime's preservation and to prevent a regime change undertaken by the U.S. as in IRAQ. And, what happened in Iraq is certainly on their minds.

    So Trump's increasingly incendiary rhetoric may cause NK to accelerate its nuclear program. And, all of this is occurring just after sanctions vote and before those sanctions even start to bite.

    Trump's rhetoric includes a military response to both a NK attack and importantly to continued threats of an attack as well, which increases the possibility IMO of a miscalculation being made that starts a war.

    Trump: "This man will not get away with what he is doing. If he utters one threat in the form of an overt threat ... or if he does anything with respect to Guam, or any place else that is an American territory or an America ally, he will truly regret it and he will regret it fast."

    What is an "overt threat"? NK does that routinely.

    Both China and the Soviet Union gave the green light to North Korea to invade South Korea in 1950. So China then tried unification by force. If the shoe is on the other foot, however, China will militarily resist an effort by the U.S. and its allies to do the same which is what they did in late 1950 when it looked like NK was going down to defeat after starting the war.

  5. I appreciate your perspectives on the Korea situation. Naturally all this saber rattling and the "loose cannon" nature of Trump are unsettling to those who were around during the Cold War and the Cuban Missile crisis.

    Where is NK getting the money to develop these missiles? Will economic sanctions work? They haven't apparently worked too well in the Middle East. Are we running out of diplomatic options? We seem to be headed toward another military buildup and calls for increased defense budgets to deal with this latest crisis, fueled by our Tweeter in Chief in his infinite folly.

    1. C: Hard currency to fund its military comes from several sources:

      The economic system in Korea is set up to exploit labor by the state. China imported about $650M in NK made apparel last year. About 100K North Koreans are employed in China and send hard currency back that supports the economy. It also sells weapons to earn hard currency:

      The U.N. sanctions will cut off some of that flow, but the impact will likely be felt more by those who are already exploited by the regime. When food became scarce back in the 1990s, the regime allowed almost a million North Koreans to starve to death as money was directed to its military which consumes about 25% of GDP which is by far the most of any nation. The country is facing a possible famine in the making now:

      I do not foresee that the U.N. sanctions, even if implemented, will stop NK's development of nuclear weapons.

      If there is going to be a solution, it will have to include a U.S. and SK recognition of N.K. as a nation and a treaty to respect its territorial integrity. In exchange, NK would have to get rid of its nuclear program. Trade could also be opened more directly between the Koreas. Since that would be a sensible framework for resolving the problem, I doubt that it will happen.

      There has never been much of anything sensible about the two Koreas. The problem started with FDR and Stalin's agreement at the Tehran conference in November 1943 and later confirmed at the Yalta conference, where FDR wanted Stalin's help to defeat Japan after the war with Germany ended. FDR did not know then that the atomic bomb would work. The SU declared war on Japan two days after the bomb was dropped on Hiroshima and promptly occupied Manchuria and North Korea with the U.S. convincing them to stop at the 38th parallel.

      Kim will have to accept the risk that an increased integration into the world may threatened his one man rule in the long run.

      WP Article:
      "A December 2016 assessment by the Congressional Research Service stated that the president “does not need the concurrence of either his military advisors or the U.S. Congress to order the launch of nuclear weapons.” Additionally, the assessment said, “neither the military nor Congress can overrule these orders.”
      "If Trump wants a nuclear attack against North Korea, his military advisers have few other options"

      The option available is for the generals to resign rather than carry out the order.

      So Trump's thumb is on the nuclear trigger.

  6. South Gent,

    Thanks for getting the original source of the statement. I have gotten too many "Windows" open and too many things on my mind lately.

    If Trump does not want to start a messy war, he will be making fewer and fewer comments regarding NK and eventually start embracing the same positions of his predecessors.

  7. I have published a new post: