Let us start a Ukraine War, to really free Ukraine

 

Economics Without The B.S.**: 

[**  Double entendre intended.]

Concerning Trump's meeting with Zelenskyy today:

Just a hypothetical here: “This aggression will not stand!”

Those were the words of President Bush in 1990 when Saddam Hussein, the dictatorial Iraqi leader, invaded his neighbor, an oil-rich nation, Kuwait.  In Operation Desert Storm we injected the U.S. Military into the Middle East to extract the Iraqi invasion of Kuwait which started the Persian Gulf War in 1990. The U.S. had no defense treaty with Kuwait in 1990 or prior to that. President Bush did go to the United Nations to get a resolution to support the U.S. military effort with a coalition of over thirty countries. The resolution was to kick the Iraqi troops out of Kuwait, and not to invade Iraq; which is what we did.

Let’s do the same thing for Ukraine. Except we will never be able to get a UN resolution. But we should be able to get a European coalition, if not more. Kick Russia out of Ukraine, include Crimea; but do not invade Russia. Quietly dare China to enter in the conflict on the side of Putin.

And if Putin wants to use nuclear weapons, even though we would not be in Russian territory; well, we have nuclear weapons also.

What do you think would happen? And how long would this clean-up operation last?

Blood, Sweat, and Tears versus Appeasement -- The War in Ukraine

 

Economics Without The B.S.**: 

[**  Double entendre intended.]

AP article out today:

Trump warns Zelenskyy to quickly negotiate war’s end with Russia or risk not having a nation to lead

There is a war going on in Ukraine, with Ukrainians, not Americans, dying.  And Trump is negotiating an end to the war in Saudi Arabia, but will not have the Ukrainians present at the negotiations.  What is the analogy here?

Some would make a comparison to Kissinger negotiating with the North Vietnamese to end the American forces involvement in the Vietnamese War.  President Nixon looked at the American involvement in the Vietnamese War as a distraction from pursuing our national security objectives vis-à-vis Russia/Soviet Union.  

The Paris Peace Accords were finally signed in January 1975, which allowed the U.S. to withdraw troops from South Vietnam; and the North Vietnamese agreed to withdraw their involvement in South Vietnam and leave the fighting between the South Vietnamese and Vietcong.  That latter part was violated by North Vietnam after the American withdrawal, and South Vietnam fell quickly right after that.

But that did allow Nixon to negotiate the Anti-Ballistic Missile Treaty (ABM) with Russia just before that.  And just after that was the Helsinki Accords which ushered in a period of détente between the Western Alliance and Russia.  Nixon’s détente replaced the prior policy of containment against the growing influence of communist aggression after World War II. 

But is that what we have here in Ukraine?  What is to be gained with Putin’s Russia in ending this war in the manner Trump is pursuing?  Russia is not the power she was in the Cold War.  Putin has shown his own ineptitude in combat.  By being tied down in Ukraine, Putin has  been unable to pursue larger goals elsewhere – in the Middle East, Syria in particular, being disruptive to European democratic movements, although the Right Wing populist movements have had a life of their own,  thwarting NATO expansion along his border, keeping the state of Georgia in check along his southern border, let alone the reordering of the Russian economy to a military posture to prosecute the war in Ukraine while the Russian people lost part of their consumer economy and have experienced shortage of goods, higher inflation, and higher interest rates.  In effect, the Ukraine War has neutered Putin’s ability to misbehave elsewhere.

I think the proper analogy of Trump’s attempt to settle the Ukraine War is the Munich Agreement of 1938 which came to be known as appeasing the dictatorial ambitions of Hitler.  Hitler invaded part of Czechoslovakia and annexed it to Germany.  The principals at the negotiations were Britain and France vis-à-vis Hitler’s Germany and not the Czechs; and Britain’s Chamberlain caved in to Hitler’s  aggression.  Chamberlain’s “Peace For Our Time” appeasement turned into Churchill’s “blood, toil, tears, and sweat” to prepare Britan for battle.

Are we going to let Putin nuclear blackmail us?  Ask Estonians, who have a border approximately 40-miles from the suburbs of Saint Peterburg; they have provided military support to Ukraine before the 2022 invasion.  Ask Finlanders who petitioned to join NATO after the 2022 invasion, but said nothing of NATO membership when Putin first invaded Ukraine in 2014.  Why was the Russian aggression of 2022 more threatening to Finland than the aggression in 2014?  Who is the real nuclear power?

With some Americans saying that Trump is a threat to democracy, but their opposition to him has been ineffective, could it be that a little man in Ukraine would be the unravelling of Trumpism?  Like Churchill, Ukrainian President Volodymyr Zelenskyy, fighting for his country's very existence, saying that the American president is trapped in a “disinformation bubble”, has put Ukrainian blood, sweat, and tears to stand in opposition to another aggression in Europe, an aggression that should be recognized for what it is, a threat to world order and not just to Ukraine or Europe.  Whatever problems we have can be reversed for the better.  The American  Experience has shown us to be resilient and able to recover from past mistakes and to renew our strength based on universal values.

 

Economics Without The B.S.**: 

[**  Double entendre intended.]

Article out today with the BBC: '

What key players want from Ukraine war talks

What key players want from Ukraine war talks

1. Not at the talks: Ukraine

1.a. Not at the talks when Trump's Secy of State "negotiated" with the Taliban (whose representative was released from jail in Pakistan so the Americans had somebody to "negotiate" with) -- the legitimate Afghan government, and Trump agreed with the Taliban request to force the Afghan government release 4,000 Taliban prisoners when Biden was president.

1.b. Not at the talks when Secy Kissinger negotiated with the North Vietnamese to end "The American War" -- the legitimate South Vietnamese government, which would collapse after the American military withdrawal.

2. So is there are lesson here? 

2.a. Vietnam would "recover" decades later. 

2.b. I don't know what you want to say about Afghanistan, except leave it up to them to settle their own problems. 

2.c What is the lesson for Ukraine, which may have been democratic before the Russian invasion in 2014, but was dysfunctional before the election of Zelensky in 2019?

3. If it is a European problem, and not an American problem, what is the lesson for Europe? They have been on a free ride to their own security guaranteed by the American military presence for decades. When do they step up, when you have an ambiguous Trump Administration representing what are supposed to be American/NATO national security interests? Is that the way Trump carries out national security strategy? Those are called negotiating skills?

4. Either way, I will go back to what I said a couple of years earlier:

4.a. I don't think the American military ever thought Ukraine could defeat Russian, and that the war would end with a negotiated settlement.

4.b. Whatever remains from Ukraine will get membership in the EU, and will lean toward Europe for its culture and not Russia.

4.c. And if Ukraine does not get NATO membership, it will get a security guarantee. This I am not so sure about. They need an American security guarantee, and better yet American troops stationed in Ukraine, just like we have troops in Estonia which is right on the Russian border.

4.d. So if Trump is unwilling to make an American security guarantee and with American troops, will Europe step up?

4.d.(1). Germany is the problem here. They are ambivalent (some Germans, not all, having mixed feelings in dealing with Putin/Russian since there is business they would give up; whereas Trump is ambiguous, you don't know what he will do with Putin/Russia.

4.d.(2). And China is watching all of this play out. What about Taiwan?

5. I thought Biden's unstated strategy in Ukraine was pretty good. He didn't think Ukraine could defeat Russia, but if they want to continue to fight, support them. 

5.a. That kept Putin tied down in Ukraine, so he couldn't operate elsewhere -- like Syria, or anywhere else. Ukraine was Putin's Vietnam.

5.b. And that put China at a disadvantage. They were supporting Putin. This antagonized the Europeans. Prior to the Russian invasion in 2022, China was trying to make strategic inroads in Europe; the Europeans put that on "hold" while the war in Ukraine continues.

5.c. If Trump is such a genius negotiator, how is he going to remake the map? Are we likely to have the world security arrangements split into three of four alignments rather than two? And is spreading democratic values, which has not been working now (in my opinion) since the 1990s, still part of our national security strategy? -- which was established under Truman after WWII and carried out successfully up till Reagan.

How smart is AI?

Economics Without The B.S.**: 

[**  Double entendre intended.]

How smart is AI?

If AI existed in the 1840s and you asked it a question about the electromagnetic spectrum, what kind of answer would it have given you?

There was very little recorded information by the 1840s on the electromagnetic spectrum. You see it was not discovered until the 1860s, and at that point the "discovery" was only a theory put forth by James Clerk Maxwell. And his theory was not proved until the 1880s by the German physicist Heinrich Hertz.

Even Isaac Newton, considered a polymath, who lived into the 18th century knew very little about the electromagnetic spectrum. Today an undergraduate student with a degree in electrical engineering knows more about the electromagnetic spectrum than Isaac Newton.

Knowledge is about discovery, discovery of what appears unkown. AI is about the gathering of information; and it can be "trained" to use that information. Guess who trains it?

Humans are not about to be replaced by machines, no matter how "smart" the machines are.

The Difference Between Efficiency and Productivity

 

Economics Without The B.S.**: 

[**  Double entendre intended.]

Jevin's Paradox explained:

From NPR's 'Planet Money;: "Why the AI world is suddenly obsessed with a 160-year-old economics paradox"

https://www.npr.org/sections/planet-money/2025/02/04/g-s1-46018/ai-deepseek-economics-jevons-paradox?fbclid=IwY2xjawIVO0hleHRuA2FlbQIxMQABHcAt_O96kC5n2fD5OuUubjz6ehUN-dlQmn--Gy4ShXPUCM6G4BkGbAayLg_aem_tgMjzB9ZZ3kOBDb75zYYCQ

I will explain that differently.

The paradox is the difference between efficiency and productivity, and at a macro-economic level confusing efficiency for productivity.

If I made something last year and it took me so many hours and I used so many resources to get that output, that is productivity. If this year I took less hours and used less resources to get the same output, that is being more efficient and I am being more productive. But for the overall economy of the nation if the output is the same as last year, the nation did not become more productive. The nation may be more efficient, but it is not more productive.

And the reason is, for the nation as a whole, when you are more efficient you produce a savings -- the nation expended less man-hours and used less resources -- so...What did you do with that savings? Since you have more man-hours to expend and more idle resources available to you, you should be able to deploy them for newer projects/production. That's what makes a nation productive; and by being efficient you are also more productive.

Economics is the deployment of scarce resources, so there are always opportunities to accomplish more we just don't have enough time or resources to do all the things we want to satisfy our wants and needs, which are unlimited. By being efficient the living standards of our society improve, but by being more productive our society advances, what we call "progress".

There is a link between productivity and progress. There is not a link between a society being more efficient and progress. If a society is just more efficient but its output remains the same, there should be deflation.

When the economist Jevons came up with this paradox -- and he did not express it the way I just did -- it was during the late 19th century. From 1866, right after our Civil War, to 1896 the United States went through a thirty year deflationary period. There were new inventions -- this was the industrialization of America -- and there was more and newer production. But most Americans did not experience it during this time period -- we were still rural, but urbanizing; most people did not work in factories; and there was still a great deal of inequality; and labor strife which sometimes resulted in violence. Many of the inventions of this time would get broader societal applications during WWI and especially during the 1920s -- that's when the nation really became more productive and the benefits were more widely spread among the people. I think most economist and many historians do not get this, what I just explained.

Trump and his tariffs

 

Economics Without The B.S.**: 

[**  Double entendre intended.]

Tariffs can do all kinds of things -- a source of revenue, protect domestic industry, use as leverage in negotiations. In the manner Trump is using them, they create instability in the economic sphere; not good for business, internationally or domestically. And a questionable strategy for pursuing our national security objectives. It doesn't say much for your negotiating skills, nor your skills in leadership; after all we are perceived as the leader in international relations. A skill we seemed to have forgotten.

If you think Trump is a business mogul, like the make-believe act on the television show ‘The Apprentice’, I will remind you that he had six business bankruptcies, and that was his main business – construction and casino/hotel operations – not including side ventures like Trump Champagne, Trump Steaks, Trump Airline, and Trump University. His last business bankruptcy was in 2009, when he refused to make a $50 million loan payment and wanted it renegotiated, which the lender rejected. His board of directors held a meeting in which Trump, as the CEO, argued with them. They demoted him and reduced his share in the company; firing him as the CEO – and you can look that up. That is quite an irony because in 2009 he was still doing ‘The Apprentice’ show where he was showing his make-believe business acumen and firing people.

Inequality due to Wealth (Assets) versus Productivity

Economics Without The B.S.**: 

[**  Double entendre intended.]

There was a time when wealth accumulation – net asset value –  was tied to our nation’s productivity – the things we made or services we provided.  That was true after WWII and through the 1960s.  But things changed after that.

The inflationary ‘70s coupled with the currency challenges to the Dollar System from the Deutsche Mark and Japanese Yen in the 1970s and 1980s, which was trying to enforce discipline on the international market system and capital markets, and establish some type of stability to markets so commerce could flourish, would have the effect of instituting economic and financial policies which would moderate economic growth in the advanced economies while promoting investment in the less developed world.

These policies developed as communism was collapsing in Europe in the 1990s and private wealth pools were arising that could challenge the monetary policy of the G-5/G-7 central banks and had great opportunities for profit in a world where investment was just about boundless.  When globalization  policies were formed in the mid-1990s it encouraged the free flow of capital internationally.

The disparity in incomes and wealth (net assets equals assets minus liabilities) is due to the change in economic policies that place a greater emphasis on asset appreciation rather than productivity, productivity being the income derived from making things or providing a service. This change becomes evident after the 1980s, where wealth is starting to outpace nominal GDP, and becomes very apparent by the 2000s, which is coincident with the rise of globalization.

And just frankly, the wealthy are in a better position to take advantage of the free flow of capital that was concomitant with the rise of globalization by the mid-1990s. The wealthy have more assets, are better diversified, and in a better position to use advisors.  We are in a world awash with wealth; but it is concentrated in a few small hands.

 

https://www.federalreserve.gov/releases/z1/dataviz/dfa/compare/chart/#quarter:139;series:Assets;demographic:networth;population:all;units:levels

In 2008 the value of credit default swaps (CDS) stood at $45 trillion compared to $22 trillion invested in the stock market, $7.1 trillion in mortgages and $4.4 trillion in U.S. Treasuries. By mid-2010, after the reorganization of the financial markets, the value of outstanding CDS was $26.3 trillion.

The excesses of the financial system which came out of Wall Street and were reported by the Financial Crisis Inquiry Commission for the 2008 diabolical collapse noted that the derivative market had a notional value (the value of the transactions for the underlying assets, not the market value of the assets) of around $600 trillion.

Much of this derivative activity was tied to the mortgage market in the United States and involved a variety of derivatives to set up the positions.  What was the total value of the actual mortgage market in the U.S.?  Considerably less than $20 trillion.  McKinsey reported that the total world’s financial assets – includes stocks, bonds, bank deposits, and real estate – totaled $167 trillion.  So, why a $600 trillion casino for the wealthy playground?

This is all to summarize and give indication for the amount of wealth in the world, where and how it is deployed, and for what purpose.  It is no wonder we have inequality in the world.  I find it amazing when I read an editorial or academic paper that is to the contrary.  And the unfairness of the system.  And the public and political backlash.  And what can we say about the furtherance of democratic governance internationally and right here at home?  What public interest is being served with this playground?