Category Archives: markets

Economic Contest

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It’s not yet an economic war. Russia is beginning the contest with Turkey after that nation was so impertinent as to shoot down a Russian fighter-bomber that was the latest Russian aircraft to violate Turkish airspace, this time refusing to leave despite multiple requests and warnings.

…Moscow took aim at Turkey’s economy, ordering tougher checks on its food imports.

This isn’t a contest that Russia can win, though. The Turkish economy is in sounder shape than Russia’s, and Turkey isn’t particularly dependent on exports to Russia. Russia, though, already has banned food imports from the rest of Europe over the latter’s sanctions that responded to Russia’s invasion and occupation of significant parts of Ukraine. This latest move, delicate though it is, simply makes Russia more dependent on domestic food production.

To be sure, this isn’t all the posturing Russian President Vladimir Putin is doing. He’s also shipped a number of near state-of-the-art S-400s, long-range anti-aircraft missiles, to his base in Syria, and he’s moved his guided missile cruiser, Moskva, which also is equipped with SAMs, closer to Syria. Both deployments put Turkish aircraft operating over a significant portion of Turkey in Putin’s gunsights.

This is a contest that Russia needn’t be allowed to win, either. If Putin continues to violate other nations’ airspace in his efforts to prop up his client Bashar al-Assad, those two isolated deployments can become targets themselves.

A Thought on Immigration

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Greg Ip has a piece on demographics in Sunday’s Wall Street Journal.

Next year, the world’s advanced economies will reach a critical milestone. For the first time since 1950, their combined working-age population will decline…and by 2050 it will shrink 5%. The ranks of workers will also fall in key emerging markets, such as China and Russia. At the same time the share of these countries’ population over 65 will skyrocket.

There are two competing factors that dominate those statistics: people are living longer, in particular in retirement, and women are bearing fewer children over their lifetimes. As Ip put it,

[C]ompanies are running out of workers, customers, or both. In either case, economic growth suffers.

The solution to this, of course, is immigration. Blocking immigration because—pick a reason—means we won’t have the labor force we need for, among other things, saving our retirement safety net in substantially its current form or privatizing it.

We’ll have to get our immigration kit in order promptly, though, and be prepared actively to compete for them, much as our private enterprises already have to compete for employees.

By 2050, the world’s population will have grown 32%, but the working-age population (15 to 64 years old) will expand just 26%.

The competition will sharpen:

Among advanced countries, the working-age population will shrink 26% in South Korea, 28% in Japan, and 23% in both Germany and Italy….

That competition cannot be based on how many goodies our government can hand out; our existing and unaffordable Progressive/Democrat welfare state is the outcome of that. No, our competitive advantage is, and must be, centered as it always has been, on our individual liberties and the opportunities our freedoms create.

This is a national security matter, too. Absent a growing, vibrant labor force, we won’t have the economic wherewithal to fund a capable military establishment, much less equip it with the technology required to stay globally dominant—or even strong enough to defend us.

Certainly, we need to secure our borders, and we need to do an efficient, prompt job of vetting those we let in. And those we let in do need to either be satisfied with green cards/work permits, or they need to assimilate into American culture as part of their gaining citizenship.

But we must have those immigrants, just as we’ve needed—and gained—them at critical junctures throughout our history.

American Companies Beholden to Foreign Governments?

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Now it appears that the Obama administration is taking yet another step to make us look like Europe: he’s negotiating an agreement that could end up requiring American companies, domiciled in America and operating in America, to report to European Union authorities.

Recall the European Court of Justice’s ruling last month that European citizens’ personal data that winds up being stored in the US as a result of various business deals is too exposed and the 15-yr-old, successful data-transfer Safe Harbor agreement between the US and the EU. This is the arrangement that’s being renegotiated, and potentially included in the new agreement is this:

American businesses could be required to report requests by US intelligence services for the data of European users under a trans-Atlantic data-transfer pact now being negotiated, according to the European Union’s justice commissioner.

Worse, it seems to be one-sided: EU companies in the US aren’t being required under this new deal to make similar reports to US authorities.

Hmm….

A Look at Dodd-Frank

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Banks are having trouble peddling risky loans they’ve made in conjunction with the current (and dying down?) mergers and acquisition boom. These are loans made when one company buys another for their mutual benefit, and the buyer borrows some or most of the purchase price.

Here’s the kicker:

In past decades, banks sometimes held the loans until markets stabilized, but such warehousing became prohibitively expensive because of high capital charges required under the Dodd-Frank law that was passed in response to the 2008 financial crisis.

If it becomes too difficult or expensive to borrow—or to lend—to support a merger/acquisition, those deals won’t get done.

Often, the target of the deal is a company in trouble, and the deal would save some or all of the company by merging it with a stronger company that has better management and/or more efficient processes. The deal thereby also saves a large number of jobs (not all—that’ll be part of the improved efficiency in the acquiree). The deal also winds up being beneficial to the consumer as the acquiree’s products or services both continue to be available and often at a lower price.

If the deals aren’t done, those jobs won’t get saved, and the goods and services won’t continue to be available.

Will these lost mergers/acquisitions be a big deal for our struggling economy? I don’t know. But I am very certain that those who passed Dodd-Frank didn’t give an iota of thought to the possibility.

Because, Registration

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Now the Feds want to regulate register our privately owned and operated drones.

[A] task force Thursday agreed to recommend registration for recreational drones weighing more than 250 grams, or roughly nine ounces[.]

And

Transportation Secretary Anthony Foxx proposed the regulations last month, saying they needed to be adopted quickly because drones are endangering manned aircraft.

Yeah. There actually have been a very few well-publicized (well-hyped, say I) incidents. And so because of the misbehaviors (or mistakes) of a very few, all of us must be punished with registration (which will lead, inevitably, to regulation. See the extant efforts to regulate firearms after the requirement to register).

No, this is just another example of Big Government seeing something not yet controlled by it, needing, desperately, to fill that void with a registration requirement, just like an addict needs his fix.