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Sunday, April 17, 2016

Another strike against free trade

You may note that among my four points against free trade, I note that free trade is incompatible with democracy and national sovereignty. One argument I failed to note in this regard is the way in which free trade permits extortion by holding the national economy hostage:

Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks.

The Obama administration has lobbied Congress to block the bill’s passage, according to administration officials and congressional aides from both parties, and the Saudi threats have been the subject of intense discussions in recent weeks between lawmakers and officials from the State Department and the Pentagon. The officials have warned senators of diplomatic and economic fallout from the legislation.

Adel al-Jubeir, the Saudi foreign minister, delivered the kingdom’s message personally last month during a trip to Washington, telling lawmakers that Saudi Arabia would be forced to sell up to $750 billion in treasury securities and other assets in the United States before they could be in danger of being frozen by American courts.
Dr. Miller mentioned that he couldn't think of any way that foreigners buying up American assets could be a bad thing. But, once more, we have an object lesson in letting reason be silent when experience gainsays its conclusions. Free trade not only imperils democracy, but also endangers the rule of law.

Notice again that free trade theory fails due to the limited imaginations of its advocates and their inability to even conceive of potential problems that are actually occurring in the real world.

But speaking of Dr. Miller, I emailed him to broach the possibility of a second debate addressing a topic that more than a few readers observed we failed to discuss, namely, whether free trade necessarily requires the free movement of people or not. He agreed at once, although we both need to do a bit of research before we're prepared to debate it. When we're ready, I'll let you know and we'll hold another open Brainstorm event.

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130 Comments:

Blogger Dexter April 17, 2016 11:02 AM  

Saudis sell.
Americans and foreigners who (perhaps) don't hate us buy.
Saudis lose leverage over the US govt.

What's the downside, again?

Go ahead and sell, towelheads.

Anonymous #1037 April 17, 2016 11:09 AM  

Dr. Miller, how about Chinese money launderers buying houses for millions of dollars sight unseen and letting them rot? I thought that's been fairly well publicized, but maybe only on the West coast where it is more common.

Blogger VD April 17, 2016 11:11 AM  

What's the downside, again?

Saudis sell.
Increase in supply reduces prices.
Highly-indebted properties go underwater.
Owners default.
Defaulted debts need to be written off.
Banks go under.

It's a legitimate threat.

Blogger pyrrhus April 17, 2016 11:11 AM  

Not much of a threat, just a temporary halt in the bubble machine operated out of DC....But apparently that's enough for our fearless leaders.

Blogger Nick S April 17, 2016 11:12 AM  

The good doctor should tell his students attendance is mandatory and there will be a test.

Anonymous paradox April 17, 2016 11:16 AM  

Dexter, you're missing the point. You have a sitting US President acting on the behalf of a foreign country's benefit. At any moment any US representative could become a traitor, due to free trade.

Anonymous John M April 17, 2016 11:24 AM  

In that case we should deprive ourselves medical care since doctors have the power to withhold care and take away the very extended life they gave us.
We should avoid all good things because they might be taken away.

Blogger Michael Maier April 17, 2016 11:25 AM  

These ragheads would probably lose more in the selloff than any award by a jury.

Anonymous BigGayKoranBurner April 17, 2016 11:39 AM  

These ragheads would probably lose more in the selloff than any award by a jury.

They should never have been allowed out of the country when all other flights got locked down. Bush's family owes its wealth to the Saudis & he let them fly out. I posted when a US college gave moslems warnings let Saudi's fly out before rape charges could be brought against them I will have to look it up.

Blogger Young Heaving Bosoms of Liberty April 17, 2016 11:47 AM  

Here's an excellent example of why we should never let foreigners buy land (especially high time-preference ones who hate us)

http://www.latimes.com/business/la-fi-saudi-arabia-alfalfa-20160329-story.html

Saudi Arabia's largest dairy company will soon be unable to farm alfalfa in its own parched country to feed its 170,000 cows. So it's turning to an unlikely place to grow the water-chugging crop — the drought-stricken American Southwest.

...

The purchases totaling about 14,000 acres enable the Saudis to take advantage of farm-friendly U.S. water laws. The acquisitions have also rekindled debate over whether a patchwork of regulations and court rulings in the West favors farmers too heavily, especially those who grow thirsty, low-profit crops such as alfalfa at a time when cities are urging people to take shorter showers, skip car washes and tear out grass lawns.

Blogger James Miller April 17, 2016 11:48 AM  

The primary result of the Saudis selling off "hundreds of billions of dollars’ worth of American assets" would be a transfer of wealth from the Saudis to western investment banks and hedge funds. It would not negatively effect the U.S. economy.

I look forward to debating you again.

Anonymous BGKB April 17, 2016 11:50 AM  

I know there was a small group (I think 3-5)of Saudis that flew out before facing rape charges but trying to search for (Saudi Rape) I might as well be typing in (Sex pics).

Here are 33 Saudis warned by college officials to flee before being arrested for grade bribery.
https://creepingsharia.wordpress.com/2015/07/02/montana-college-officials-let-30-saudi-students-caught-cheating-fly-home-to-avoid-deportation-charges/
The Saudi memos reveal that, on Jan. 4, several days before the scandal became public knowledge, Abbott and Blackketter went to the Saudi Embassy in Washington to brief officials there about the cheating allegations.

Abbott told AP that the college had been advised by legal counsel that the Saudi Embassy – which together with Saudi Aramco was sponsoring 33 of the suspected cheaters at Montana Tech – should be told of the issue.

Blogger Young Heaving Bosoms of Liberty April 17, 2016 11:50 AM  

Libertarians already have difficulty handling the problem of externalities in their ideal atomized society.

Anonymous Garrulus April 17, 2016 11:59 AM  

Downside of being the global trade currency. About time after all the upside bullying.

Anonymous Jill April 17, 2016 12:01 PM  

Call it a character default or too much imagination, but I'm always looking for the way in which one party can manipulate a situation in order to extort another party. The manipulation of markets for political reasons is the first thought I would have about free trade--"How does this give another nation control over mine?"--the first question. It does not take a great intellect to be self-portectionary.

Blogger VD April 17, 2016 12:04 PM  

The primary result of the Saudis selling off "hundreds of billions of dollars’ worth of American assets" would be a transfer of wealth from the Saudis to western investment banks and hedge funds. It would not negatively effect the U.S. economy.

Both the Saudis and the Obama administration appear to believe otherwise. What is your explanation for that?

I look forward to debating you again.

Likewise.

Blogger Shimshon April 17, 2016 12:04 PM  

@8 "These ragheads would probably lose more in the selloff than any award by a jury."

You are giving too much credence to the rationality of the Arab mind (as we in the West see things).

Anonymous JustMakingItUp April 17, 2016 12:08 PM  

VD wrote:What's the downside, again?

Saudis sell.

Increase in supply reduces prices.

Highly-indebted properties go underwater.

Owners default.

Defaulted debts need to be written off.

Banks go under.

It's a legitimate threat.


I think the sequence is actually:

- Saudis put properties on the market.
- Increased supply reduces prices.
- Saudis sell at deeply depressed prices.
- Saudis lose a significant portion of their wealth.

No one who buys from them necessarily loses money, unless they purchase the assets at the current price. A smart buyer just waits a month or so while the Saudi asset is on the market, and buys it at a steeply discounted price.

The only defaulted debts written off would be early buyers and the Saudis -- if anyone has been so foolish as to lend them money.

Now, if the Saudis really wanted to hurt the US, they could stop loaning money to us, and stop buying our stuff.

Blogger Shimshon April 17, 2016 12:09 PM  

By the way, Robert Wenzel pointed out a perfectly rational reason for the Saudis to bring on a fire sale of US assets in the event such a law passes.

Blogger Shimshon April 17, 2016 12:10 PM  

This comment has been removed by the author.

Blogger Cecil Henry April 17, 2016 12:10 PM  

Ask the obvious question:

Why is this coming up now??
Who is actually doing this provocation???

Why has Israel, with clear connection to 9-11, not being asked the same question???

Another distraction this is. Ignore the man behind the mirror folks. Nothing to see there!!

Blogger James Miller April 17, 2016 12:19 PM  

Me "The primary result of the Saudis selling off "hundreds of billions of dollars’ worth of American assets" would be a transfer of wealth from the Saudis to western investment banks and hedge funds. It would not negatively effect the U.S. economy."

Vox "Both the Saudis and the Obama administration appear to believe otherwise. What is your explanation for that?"

Me: It's not clear that they do believe otherwise. All we know from their actions is that they think that the threat will help convince congress to not pass that bill you mentioned. It's possible that they believe the threat isn't credible, but also believe that others will falsely believe the threat to be credible and so the threat is politically useful. Even if I'm wrong and selling off the assets would significantly harm the U.S. economy, the House of Saud is dependent on the support of the U.S. military for its survival, and it's almost inconceivable that they would carry out this threat especially given the possibility of a Trump presidency.

Anonymous VFM #6306 April 17, 2016 12:20 PM  

Huzzah! You and Dr. Miller make for riveting debates.

After the "movement of people" debate, how about a "movement of people into the gaping vortex of the inevitable humankind-destroying AI singularity" debate?

The okapi sex trade findings alone would be a major contribution to the field.

Anonymous Eduardo April 17, 2016 12:29 PM  

Welllll, waste no time Miller and Teddy! HAVE AT IT. It was pretty fun the last time... If only I knew english I guess it would have been even more fun!

Blogger Young Heaving Bosoms of Liberty April 17, 2016 12:44 PM  

Eduardo, you're not contributing much to the discourse with your inane comments.

Blogger VD April 17, 2016 12:46 PM  

Eduardo, you're not contributing much to the discourse with your inane comments.

He's working on his Sanity as a Second Language program.

Blogger Servant of the Chief April 17, 2016 12:50 PM  

"I note that free trade is incompatible with democracy and national sovereignty."

As a monarchist I fail to see how unrestricted free trade is compatible with any form of government that isn't a kleptocracy. I am all for free markets in allowing Joe Bloggs to set up shop and take a chance on life, or allowing Jimmy Bob Joe tustle with other CEOs for turf and customer bases, but by the point your country allows corporations to swallow up their competition, carve up your country between whoever's left to ensure monopolies and then export all the jobs elsewhere to make their shit for cheap and dodge taxes owed to the state and screwing the average man on the street, then what good is it really doing the country?

Anonymous User April 17, 2016 12:51 PM  

I'm also unconcerned by the Saudi threat of a treasuries to USD asset swap. If anything it would be great because the bond markets are still hungry for treasuries. I think Dr. Miller's assessment of political motives is the best available explanation.

Blogger Michael Maier April 17, 2016 12:52 PM  

16. VD April 17, 2016 12:04 PM
The primary result of the Saudis selling off "hundreds of billions of dollars’ worth of American assets" would be a transfer of wealth from the Saudis to western investment banks and hedge funds. It would not negatively effect the U.S. economy.

Both the Saudis and the Obama administration appear to believe otherwise. What is your explanation for that?


Mr. Miller here made my jaw drop.

Blogger APL April 17, 2016 12:52 PM  

"Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if .. "

So the US government pre-empts the Saudi move by confiscating those assets, on the grounds that the Saudi threat is a gross interference in the internal affairs of the US government and actually, an attempt at financial terrorism.

None of the US assets held by the Saudi government have the backing of the US government anyway.

Go ahead and bankrupt yourselves stupid Saudi's.

Anonymous Ezekiel Cassandros April 17, 2016 12:53 PM  

I ship Eduardo/LP999.

Anonymous User April 17, 2016 1:01 PM  

Could Trump's plan of charging for US military protection significantly drive international demand for US dollars? Like many things Trump, it might be rather more clever than it appears at first glance.

Anonymous Eduardo will settle down April 17, 2016 1:15 PM  

Bosoms

Sorry... I can't hold the joke inside hahahah. You know ... I don't you to feel rejected from the discourse so I will settle down.... *holds joke*

VD

Wow you understand me like no other out here *snif*

Blogger Ron April 17, 2016 1:21 PM  

That doesn't follow. If all doctors could be compelled to act against the national interest then you would have a point. But doctors living in America cannot be compelled by foreign interest to act against the nation. Foreign nationals however can be compelled to do so.

Anonymous Spartacus xxxxx April 17, 2016 1:24 PM  

VD wrote:What's the downside, again?

Saudis sell.

Increase in supply reduces prices.

Highly-indebted properties go underwater.

Owners default.

Defaulted debts need to be written off.

Banks go under.

It's a legitimate threat.



The deal is, since at least the Plaza Accords: we guard their oil, they eat our paper.

Saudis sell.

US Treasuries drop.

The rest of Oilstan, China, Russia either sell into that or threaten to.

*rush for chairs as music stops*

End of Oil-standard dollar.

Still leaves the post-WWII Plutonium-standard intact.

Anonymous SixtusVIth April 17, 2016 1:30 PM  

Pls no bully if this is foolish: I had thought about confiscation as well, and I am not following why it wouldn't be a strong option for the US to employ. All property that is substantive - real estate, bullion, etc - will be a dead loss to the Saudis and a gain to FedGov, at an effective cost of $0.00 (technically they would lose the cost of the legal procedures used to seize the assets, but it can't be that expensive). Securities, such as bonds and the like, will probably decline in market value, since investors will become nervous over the likelihood of losing their wealth; but since 1.) FedGov is paying nothing for them, even a deflated asset is still a gain and 2.) the bonds are in this case now owned by the same entity that issued them, which means they don't have to be paid off - creditor and debtor are the same entity.

Perhaps it is the ripple effect in the larger market that would prove harmful?

Anonymous Roundtine April 17, 2016 1:33 PM  

This is a suicidal threat. Assuming other countries don't join the Saudis (the Russians expressed a desire to do this in 2008, but China refused) the net result might be a major U.S. dollar rally. The Saudis need their dollar reserves to back their currency, which is pegged to the U.S. dollar. No dollars, no peg. They could swap assets, buying for instance gold, but then they have to peg to that new asset. Furthermore, there's already bets the Saudis cannot maintain the peg due to low oil prices bleeding their national finances. If they lose money on the treasury sale, then we have an EM financial crisis.

Treasuries already yield more than bunds and JGBs, so if treasury yields rise, it will suck in dollars from around the globe. The pressure on China to devalue will rise, which feeds into more U.S. dollar strength and more Chinese devaluation.

Long-term it would accelerate the end of USD reserve currency status, but the destruction of this status proceeds via deflation because it is mainly a result of global dollar credit, aka eurodollars. Saudi abandoning U.S. dollars is massively bullish in the short-term because it is a major supplier to the global banking system which leverages it into dollar credits.

Anonymous mature-Craig April 17, 2016 1:35 PM  

charging for US military protection

sounds good to me.

Anonymous notbob April 17, 2016 1:35 PM  

Attempting to influence US policy by threatening to sell off bonds should result in those bonds being cancelled.

This would drop the US government's debt by $750B, and make it clear to all other governments that it isn't an option.

Anonymous Mohammed April 17, 2016 1:36 PM  

1. Declare us securities held by SA null and void, ie defaulted. Now!

2. Nuke Mecca for their perfidy.

This might be what's needed to end fiat and the Fed.

Blogger Cecil Henry April 17, 2016 1:47 PM  

The treasury market is actually quite liquid.... as long as everyone doesnt rush to the door at once.

The Saudis could easily selloff QUIETLY 500 billion dollars over a few months. Would just be a blip on a screen.



http://www.ft.com/cms/s/0/73d3dff4-359f-11e5-bdbb-35e55cbae175.html

Anonymous mature-Craig April 17, 2016 2:01 PM  

another broad stroke.

George Washington warned against entangling alliances

It seems to me free trade is a breeding ground for entangling alliances

Blogger Salt April 17, 2016 2:06 PM  

500 billion, if dumped, would equal the trading volume of Treasuries for the entire year 2014.

Anonymous Soga April 17, 2016 2:08 PM  

We've invaded ME shithole countries for far less than this.

I mean, if we're gonna have chickenhawk leaders, this would be the time for the chickenhawks to actually be chickenhawks instead of just chickenshits.

Blogger Cecil Henry April 17, 2016 2:13 PM  

@41

US treasury bonds DAILY trading volume is $500 billion dollars

So 500 billion could be dumped quietly over a few months without problem.

Blogger Salt April 17, 2016 2:15 PM  

@43 You're right. My mistake.

Anonymous Jack Amok April 17, 2016 2:25 PM  

It's a legitimate threat.

Perhaps, but in the long-run, if it triggered a crisis before we'd finished squandering the last of our wealth, it might be a good thing.

I listened to a talk by Chuck Marohn, a transportation/planning engineer (from Brainerd, MN even). He had a great quote:

"We don't want to spend the last of our wealth propping up failure. We want to spend it seeding and transitioning to something viable."

He was talking about an unsustainable transportation/civic infrastructure, but the quote applies to the rest of our civilization too.

Blogger RobertT April 17, 2016 2:29 PM  

So I never heard who the consensus thought won the debate. Assuming VD.

Anonymous BGKB April 17, 2016 2:29 PM  

Both the Saudis and the Obama administration appear to believe otherwise. What is your explanation for that?

Neither has the US best interests at heart? All of their assets hitting the market at once would cause fire sale prices. We held Kaddafi's assets for far less than 9-11

Anonymous mature-Craig April 17, 2016 2:32 PM  

so it seems there is such a thing as economic warfare

Blogger Stg58/Animal Mother April 17, 2016 2:35 PM  

My gut response to the Saudis is go fuck yourself and the horse you rode in on, but that isn't very polite.

Blogger JACIII April 17, 2016 2:39 PM  

Where's that drunk Aussie when we need him?

Anonymous Eduardo April 17, 2016 3:15 PM  

If I am not mistaken, China does economic war as part of the political doctrine, is just part of how the Maoist started to behave after the revolution.

Doesn't China and chinese people have possesions in the USA?

Blogger Paul Widdecombe April 17, 2016 3:23 PM  

Please don't let him get away with equivocating innovation and trade again! When innovation kills an industry by lowering the price to zero, it is usually permanent. When a Marxist foreign entity does the undercutting by use of slave labor and trade the same is likely not true.

I did some long posts on the last thread giving some thoughts on why your assumptions may not be aligned. Would be happy to email thoughts over if useful.

Salient points are:

1) Successful trade relations rely on three main elements:

- innovation (a nations ability to out-innovate opponents, which can render traditional attempts at domination ineffective. (Examples USSR, Ottoman Caliphate))

- Freedom of trade. (Extent to which a nation chooses to apply import tariffs, etc. Can end up as a subsidy arms race. Advantage can be taken from accepting cheap imported goods.)

- Mutual respect for I.P. rights. (This needs to be to the advantage of both parties, ideally, or one side will feel exploited.)

Dependent on the balance of these three elements, trade can be beneficial to one or both sides. There is always a gamble...

2) comparative data velocities of expressions of market preferences through the international trade system (microseconds to place an order for Chinese goods) and expressions of trade preferences through the Democratic system (elect a representative once every four years - horse & cart speed)

3) This discrepancy / time-lag is a political power conduit, requiring thousands of politicians to constantly bridge the gaps & tinker with the balances.

4) Under the current system, Free Traders have some justification in believing that free trade can offer some efficiencies over the current system of connected interests and lobbyists horse-trading.

5) Therefore, probably worth stating clearly that your preference is for a form of direct democracy to allow the expression of trade preferences to be both efficient and in line with popular preferences. (Hard to argue against...)

6) Free trade never happens in practice, anyway. Politicians always find a way to extend guarantees, tax breaks, stealth subsidy, cheap loans, etc.

Anonymous mature-Craig April 17, 2016 3:28 PM  

equivocating.

1.to use ambiguous or unclear expressions, usually to avoid commitment or in order to mislead; prevaricate or hedge:

usage: I have no patience with those who quibble and equivocate in regard to their having been seasick.

Blogger Salt April 17, 2016 3:33 PM  

The Saudis reminds me of what the Soviets tried to do. Mid 1980s, iirc. For many years they, KGB, had clandestinely bought up stocks using hard currencies they acquired. They thought they could help bring down America by trashing the market(s) with a dump. By the time they thought they'd acquired enough (hundred million?), they struck. Unfortunately they hadn't paid attention, and as the markets were trading in multiples of that, daily, it only registered for a day or two then business was back to normal. I remember that event, and it was later when it came to light... Oh, that's what that was.

Anonymous mature-Craig April 17, 2016 3:36 PM  

just another tangential observation:

(I myself was the most aggregious violator of this, supreme dark lord of evil in this regard.)

(Vox handles this problem like an experienced genius, I am sure he is fully aware of this, and I would begin to try to lecture him on anything.)

debating ongoing current fluid events on the blog.


Because its just so easy to go on to the internet and type its important to give political leaders TIME to react, lug themselves on to planes, press conferences,

essentially giving the news cycle a chance to -catch-up- to what comes out on the internet, and adjust and co-exist in harmony with it ideally

just a though to put out there

Blogger Cinco April 17, 2016 3:37 PM  

Does anyone else here seem to think that the Saudi's are being pressured by the USG to raise the price of crude? Everyone knows that the U.S. Oil industry is getting crushed with crude below $70. The Saudi's seem to be attempting to crush Iran's profit from crude sales and bankrupt the U.S. Shake oil industry while keeping their billions.

Blogger Cinco April 17, 2016 3:41 PM  

Doesn't China and chinese people have possesions in the USA?

If you are strong act weak, if you are weak act strong. This could easily translate to: if you want an enemy to think you will never hurt them, but their shit. If you want an enemy to think you will hurt them don't buy their shit.

Deception friends, deception.

Blogger Nick S April 17, 2016 3:55 PM  

The exclusivity of the US petrodollar is what's at stake.

Blogger LES April 17, 2016 4:10 PM  

This comment has been removed by the author.

Blogger LES April 17, 2016 4:11 PM  

I want the 28 pages declassified so we can find out how the hijackers brought down WTC 7.

Anonymous User April 17, 2016 4:22 PM  

The weakness of the United States is greatly overstated here. I sense a lot of wishful thinking, probably motivated by frustration with our retarded ruling elites. There are serious long term (decades or more) demographic and morale related threats to the real welfare of the country that Vox correctly and eruditely describes, but in real terms the United States is still, for now, the wealthiest entity in the world. The real estate, mineral rights, intellectual property (what's the NSA worth?), military, and so on that are legally owned by the federal government are incalculable, and then there is the ability to tax dollar denominated activity worldwide. Getting all worked up over accounting fictions that the federal government writes the rules for strikes me as pretty silly. There is, for example, nothing other than self-imposed restrictions stopping the US from funding itself with US Notes again as it has in the past, and those require neither tax increases nor interest service. End the Fed, right?

The United States could close its borders to all immigration and all trade today, and its citizens' standard of living and its ability to defend itself would be just fine. The problems it faces are fundamentally domestic and self-inflicted, and nothing the Saudis, Chinese, or anyone else does can change that without American politicians betraying the people and enabling them.

Anonymous johnc April 17, 2016 4:24 PM  

Does anyone else here seem to think that the Saudi's are being pressured by the USG to raise the price of crude?

I assumed they were being pressured by the USG to lower the price just to crush Russia.

Blogger Stg58/Animal Mother April 17, 2016 4:29 PM  

The Saudis increased production to drive US producers out of the market. It's not working.

Anonymous Mr. Rational April 17, 2016 4:39 PM  

Not only is it not working, North America is poised for a wholesale conversion of medium and heavy trucks from diesel fuel to CNG/LNG.  That is the better part of 4 million bbl/day of distillate demand which is at risk of being destroyed.

A US administration which was serious about payback would nuclearize the US electric sector, freeing much of the natural gas currently used in it (as well as some of the NG used for heat, displaced by off-peak electricity) for export.  LNG is a direct and much cleaner competitor with oil in small thermal power plants.

Of course, hurting the world price of NG injures Russia too.

Blogger Stg58/Animal Mother April 17, 2016 4:42 PM  

That conversion has been happening for several years. In 2014, Pioneer Natural Resources switched its entire fleet of work trucks from diesel and gasoline to CNG.

Anonymous Emmanuel April 17, 2016 4:44 PM  

Free trade
Democracy
National sovereignty

Pick two .. at most

That's a very interesting point, economists call thes ekind of things a trilemma.

Blogger praetorian April 17, 2016 4:49 PM  

The Saudis increased production to drive US producers out of the market. It's not working.

And, awesome, it looks like we've settled into a new equilibrium where the amount of cash these shit show countries needs demands that they liquidate the only thing keeping the lights on and the peasants fed as fast as possible.

The best-laid schemes o' tuscan raiders gang aft agley.

The tenth crusade will be a humanitarian mission.

Anonymous private joker April 17, 2016 4:50 PM  

The evidence is increasingly clear that we bombed the wrong people after 911.

Blogger Elder Son April 17, 2016 5:00 PM  

Whether or not the Saudi's threats should be taken seriously as a legitimate threat that will do harm, remains to be seen, but it does give leverage to the neocons and bankers, whether real, or imagined, in the form of psychological black-mail. Perceptions matter, and get played to the hilt.

Dial Emergency 9-1-1 goes deeper than the Saudi's. And you can bet TP'sTB behind 9-1-1 have a hand in the Saudi threats.

Anyhow, the world is not going to love America forever, so just keep buying its ropes, and use it to hang them later.

Blogger Austin Ballast April 17, 2016 5:06 PM  

How is this a free trade issue? Restricting trade keeps goods from being pumped into a country. I have not heard many arguments made about outgoing trade.

Are you arguing we should not have sold these Treasuries to them in the first place? Or that we should arbitrarily not allow them to sell them at some point?

This is more of an issue of spending past our income so much. They would not have these to buy if we didn't have such ongoing massive government spending deficits to fund.

We would spend ourselves into the ground if all the purchases were solely in the US given current mindsets.

Anonymous Rolf April 17, 2016 5:10 PM  

In a free market: Saudis sell bonds -> increase in supply leads to depressed prices, which means interest rates go up and the US taxpayer has to pay more to roll over bonds, so we have less tax revenue to pay government workers to provide services, etc., so the US goes in debt faster.

In what we have: Saudis sell bonds -> increase in supply SHOULD lead to depressed prices, but the Fed cranks up the presses and buys the “excess supply” in order to “stabilize prices,” resulting in more tax revenues going to pay shareholders in the Fed, which is privately held. Interest rates stay low, but more cash flows to the uber-wealthy banking class. The elderly that have most of their saving in “ultra safe” US bonds continue to suffer, and because interest rates are “low” and there is “no inflation” the CPI adjustment continues to ding SS and medicare COLAs. Meanwhile, US liberals in the university system will continue to court wealthy middle-easterners because they pay full-price out of state tuition.

How it should work: there is a real cost to the Saudi government for threatening to dump bonds.

Blogger Elder Son April 17, 2016 5:13 PM  

On the other hand, "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance."

Anonymous economics professor April 17, 2016 5:13 PM  

Vox's ideas smack of mercantilism.

Blogger CM April 17, 2016 5:17 PM  

The tone-deafness of this type of "reason" that ignores evidence of experience from history just boggles my mind.

It isn't reasonable to expect every other nation/state on earth to operate under the same abandonment of self-interest just because WE somehow manage to do it.

It is the worst sort of projection.

Blogger Elder Son April 17, 2016 5:24 PM  

Of course, the bankers could care less how many millions of US jobs are lost to "free trade". They still get their cut from debt and usury.

Blogger Stg58/Animal Mother April 17, 2016 5:29 PM  

Economics professor,

Define mercantilism. If we start debating whether or not that is true, let's start on the same page first.

Blogger Elder Son April 17, 2016 5:37 PM  

What does the IMF and WTO have in common?

Anonymous economics professor April 17, 2016 5:38 PM  

"Mercantilism is the main economic system used during the sixteenth to eighteenth centuries. The main goal was to increase a nation's wealth by imposing government regulation concerning all of the nation's commercial interests. It was believed that national strength could be maximized by limiting imports via tariffs and maximizing exports."

Anonymous rubberducky April 17, 2016 5:42 PM  

The point about how free trade holds national economies hostage is true, *even* given the absence of nefarious actors, such as Saudi Arabia here.

Consider:

The effects of the Smoot-Hawley Tariffs have achieved infamous status as a cautionary tale against protectionism. These tariffs are always cited as a major contributing factor to the Great Depression. We are always reminded that in the US, foreign trade collapsed by 60% in the years following the passage of these tariffs.

What they forget to tell you: foreign trade as a component of the US GDP was only 4% in 1929. Even if Smoot-Hawley had completely wiped out foreign trade, which it did not, this would not explain the economic collapse across the entire economy.

Furthermore, thanks to the free trade policies our dependence on foreign trade is at all time high. The ironic thing is that the argument they are trying to make using Smoot-Hawley doesn't really jibe with the data from the 1930's. The foreign trade decline was not as significant a factor as they'd have you believe. However, a foreign trade collapse on a similar scale today would be orders of magnitude more severe, because we have become orders of magnitude more dependent on it.

We have in effect achieved "free trade for free trade's sake". Gotta keep taking the medicine that is killing us, or we'll die.

Ain't it grand?

Blogger Krul April 17, 2016 5:43 PM  

economics professor wrote:It was believed that national strength could be maximized by limiting imports via tariffs and maximizing exports."

Vox hasn't called for that. As far as I'm aware, he hasn't offered a fully articulated position yet. Only a criticism of free trade in the form of 1) criticizing its theoretical justification, and 2) pointing out its real world negative consequences.

Blogger tz April 17, 2016 5:49 PM  

@3
... Banks go under

Not from their exposure to domestic energy or whatever else considering the EU negative interest rates?

But I don't see how this answers the question.

What's the downside again?

Maybe the Hutus will start machete-ing the Tutsi again in Rawanda, and maybe people in NYC will shatter windows (and hurt innocent pedestrians) so as to jump out. And maybe the coastal cities on both ends will burn.

But as I repeated, what's the downside?

Blogger Elder Son April 17, 2016 5:58 PM  

Versus monopoly: https://en.wikipedia.org/wiki/East_India_Company

And: "Mischief springs from the power which the monied interest derives from paper currency which they are able to control, and from the multitude of corporations with exclusive priviledges, which are employed for their benefit."

Anonymous Spartacus xxxxx April 17, 2016 6:02 PM  

LES wrote:I want the 28 pages declassified so we can find out how the hijackers brought down WTC 7.


Simple- there was no WTC-7. What part of TWIN Towers did you not understand?

Blogger tz April 17, 2016 6:19 PM  

Let Iran blow up the oil terminal Saudi Arabia uses, and everything will be OK

Blogger Escoffier April 17, 2016 6:36 PM  

User wrote:Could Trump's plan of charging for US military protection significantly drive international demand for US dollars? Like many things Trump, it might be rather more clever than it appears at first glance.

Would turning the U.S. military into Hammers' Slammers actually be a good idea?

I say no, how am I wrong?

And related question for fans of the series: would Milo be first choice for Joachim Steuben?

Anonymous Satan's Hamster April 17, 2016 6:50 PM  

"Would turning the U.S. military into Hammers' Slammers actually be a good idea?"

Why not? They'd be doing the same job, protecting oil producers and big corporate interests, but the pay would be better.

Not to mention that their customers probably wouldn't be too impressed when the Marines turned up wearing high heels, so you'd soon see the back of many of the SJWs that now infest the military.

Blogger VFM #7634 April 17, 2016 7:11 PM  

But speaking of Dr. Miller, I emailed him to broach the possibility of a second debate addressing a topic that more than a few readers observed we failed to discuss, namely, whether free trade necessarily requires the free movement of people or not. He agreed at once, although we both need to do a bit of research before we're prepared to debate it. When we're ready, I'll let you know and we'll hold another open Brainstorm event.

Might want to point out how free movement of people is depopulating countries like Puerto Rico and several countries in Eastern Europe. And kept Ireland moribund for well over a century.

Blogger tz April 17, 2016 7:22 PM  

The Psalmist writes the cattle on a thousand hills is the Lord's. The steaks are high.

Some have a bad altitude.

Especially for those who don't have a local food supply. As I noted, what's the downside.

Blogger Aeoli Pera April 17, 2016 7:25 PM  

Dr. Miller asserted that despite lowering wages, free trade makes each dollar go further in quality and quantity. But in the last five years, we've observed the prices at McDonald's going up while the quality of the product remains constant and production costs go down. Ten years ago, a double cheeseburger was $1. This turned out to be untenable even as a loss-leader.

This is simply another example of how we are becoming less wealthy as a nation despite massive debt-financed spending, free trade, rising GDP, higher average education (supposedly), a glut of STEM workers, and artificially low oil prices (which I think is the only thing keeping us going). There are probably other things I'm forgetting that are also propping us up.

All free trade has done is to siphon away manufacturing capital to fund a giant, predatory financial sector.

Blogger Aeoli Pera April 17, 2016 7:33 PM  

What's really interesting about this threat is that it confirms what the banks were saying about the bailouts: if enough banks close, they truly believe that will be the end of the dollar as we know it. Otherwise, they'd let the Saudis sell and just type in a few numbers to replenish the money/debt supply.

So it wasn't just greed.

Blogger 1337kestrel April 17, 2016 7:37 PM  

Mercantilism as a sort of corporatist, fascist philosophy is fine- it simply states that our foreign policy should be aimed at enriching ourselves via US-based corporations. Obviously that's ripe for abuse, but as a principle it's fine.

On the other hand, the idea of increasing exports and increasing imports is deeply flawed. If you look at it another way, the US is the world's largest exporter. We export more currency than anyone else. We should be ecstatic.

The fact that we don't look at it that way goes to the core dilemma of what constitutes value, of course, but despite the subjective nature of value, most of the Right could come to an agreement in principle since we share similar subjective values.

It comes down to, what is the measure of successful trade? I would posit that it doesn't matter if worthless plastic junk flows West while worthless paper flows East, or vise versa; what is important is whether the net result is to increase the productive capacity under the control of the US, or to decrease it. If we import from China, but the profits allow us to acquire China-based assets and expand our domestic manufacturing, then good. Obviously that is not happening. But it doesn't follow that we need to cut off the flow of Chinese imports entirely. We simply need to cut out the sub-marginal trade by taxing it (tariffs).

Blogger dc.sunsets April 17, 2016 7:43 PM  

@3 "Saudis sell."

Indeed. Marginal rate changes due to a large block hitting the bid would ripple through the Bond Ocean destroying vast wealth, and could easily be the nudge needed to topple the dollar hegemony house of cards.

I'm betting Congress blinks.

Blogger jova April 17, 2016 7:44 PM  

The bigger problem we face is the Federal reserves Balance sheet of over $4 Trillion in Bonds. The Fed continues buying about $50 billion each and every month to maintain their balance sheet above $4 trillion. When the bonds mature each month the Fed buys more bonds with the money to maintain their $4 trillion balance sheet...thus the fed has purchased $200 billion in Treasuries since the "end" of QE 3 in December 2014.

Blogger dc.sunsets April 17, 2016 7:56 PM  

Dr. Miller, if (emphasized if) a large block of debt hits the market, can it result in a next-sale lower price for that bond class?

If it could, then does not that new set point for rates ripple out through all similar or semi-similar bonds?

How is this not the same as a large shareholder dumping a large block of the float, driving down prices, hitting the entire market cap of the firm?

Now that a vast ocean of IOU-dollars (bonds) exists, small marginal changes to rates have vast, highly leveraged effects, and that even small increases in rates result in vast wealth destruction in the capital value of all those bonds.

How is this incorrect?

Blogger dc.sunsets April 17, 2016 8:03 PM  

Forgotten here is that in complex systems the same input doesn't always produce the same output.

One time a $500b sale has no effect. The next time it begins an avalanche.

Positing the same effect time after time is laughable. If that worked we'd still be speaking Latin.

Blogger Gilbert Ratchet April 17, 2016 8:27 PM  

Mark Steyn, at the Corner on NRO back in 2011:

"In my book, I discuss the post-Second World War transfer of global dominance from Britain to America. As these things go, that went relatively smoothly — except for Suez in 1956, when Eisenhower decided to scuttle the Anglo-French-Israeli operation against Egypt. Like China vis a vis America today, Washington had London’s bonds (the World War Two debt) — and Ike ordered the Treasury to sell them:

"In London, the Chancellor of the Exchequer, Harold Macmillan, reported to the Prime Minister, Anthony Eden, that Britain could not survive such an action by Washington. The sell-off would prompt a run on the pound, and economic collapse, very quickly. Britain, humiliated, withdrew from Suez, and from global power.

"It starts with the money. But it won’t end there. It never does."

Blogger Ingot9455 April 17, 2016 8:40 PM  

Some better schooled than I in how the current 'mark to market' evaluation rules work could tell us just how fast this kind of snowball effect works.

If the price bounces down sufficiently, the computers say you are bankrupt and can't pay and that cascades like a stock market 'flash crash.'

Whether or not it's 'real' or could all be worked out in a few days on paper, the flash crash and the thrashing actions of people and computers selling desperately can snowball if I have it right.

Blogger dc.sunsets April 17, 2016 8:49 PM  

Is the demand for t-bonds unlimited?

Anonymous Rolf April 17, 2016 9:06 PM  

The problem with most of the economic system models is that they deal very poorly with externalities. And the problem with externalities is that if you have enough of them ignored for long enough, they have a nasty way of working their way back home again and become, well, I guess you could call them internalities. Yeah, cheap plastic widgets imported from China are great, but we are effectively exporting the pollution associated with the manufacturing process right along with them, but when they make enough pollution it all flows "downhill" back to us. Exporting cash is great... until the ripple-effect of dying economies causes a problem. Deficit spending is great... until the bill comes due. Having the (global) low-cost producer make all your stuff is great... until you realize they are the sole supplier making things you depend on, and they are no longer making them to a standard you can use...

@98 - is the market for T-bill unlimited? In a real market, no. But the Fed can print as much funny-money as it wants to "calm the markets;" in THAT world, demand is virtually unlimited.

Blogger Technomad April 17, 2016 9:42 PM  

The thing is, I've been told that Saudi accounting is often so slipshod that the Saudis themselves don't know where money goes. Proving Saudi government complicity in 9-11 in an impartial court is probably going to be a nightmare.

Blogger bob k. mando April 17, 2016 10:09 PM  

3. VD April 17, 2016 11:11 AM
Banks go under.
It's a legitimate threat.



Bankstas being sent to jail for malfeasance and fraud is a legitimate threat?


baw-hahahahahahahaha

i crack me up.



8. Michael Maier April 17, 2016 11:25 AM
These ragheads would probably lose more in the selloff than any award by a jury.



i saw a story on PBS ( yes, i know ) about life inside Saudi Arabia. apparently, between domestic unrest + the Saudis trying to fight proxy wars against Iran on several fronts + massive over pumping in order to drive oil prices down and crush the shale suppliers, Saudi is projected to burn their entire cash on hand within 10 years.


in the near term, there is actually a significant Saudi domestic incentive to liquidate.

in the further term, such an action would amount to a financial MAD play ... and can the Saudi royal family actually afford to have their domesticated American president lapdogs turn feral?



11. James Miller April 17, 2016 11:48 AM
The primary result of the Saudis selling off "hundreds of billions of dollars’ worth of American assets" would be a transfer of wealth from the Saudis to western investment banks and hedge funds. It would not negatively effect the U.S. economy.


a - you seem to be saying that the US dollar is pretty much worthless
b - crashing asset prices will have no negative effect on the US economy? NONE? you can't even plausibly assert that about open immigration or free trade. perhaps you've gotten more imaginative.
c - there's more to life than economics. there are external realities to the world that you do not consider in your little theoretical economic sandboxes. 'Economics' doesn't do you much good when somebody walks up to you, shoves a shotgun in your mouth and blows the back of your head off.


15. Jill April 17, 2016 12:01 PM
It does not take a great intellect to be self-portectionary



this word, i do not think it means what you think it means.

*elbow in ribs*


17. Shimshon April 17, 2016 12:04 PM
You are giving too much credence to the rationality of the Arab mind



fuck the "Arab mind", that has nothing to do with the problem.

there are not insignificant minorities in EVERY population who will gladly cut off their own noses to spite your face ( in Econ terms, wholly irrational actors ).

look up Cluster B personalities. observe how many different diagnosable neuro-deviancies are in that Cluster. now, look at the incidence rates. note that Bipolar is NOT included in that list ...

many of the non-specified disorders are likewise self harming.

when easily +10% of the population walking around can be diagnosable ...


35. Spartacus xxxxx April 17, 2016 1:24 PM
End of Oil-standard dollar.



this is the real threat.

without the enforcement of the petro-US dollar regime, the US could no longer run these ridiculous trade deficits.

and, once again, the Obama admin is leading the way in providing the pretext for foreign actors to challenge US hegemony ...



64. Mr. Rational April 17, 2016 4:39 PM
North America is poised for a wholesale conversion of medium and heavy trucks from diesel fuel to CNG/LNG.



not so fast.

experimental long haul trucks are being found to be far, FAR less durable than diesel powered.

you've got to save a shitload of money on fuel in order to justify halving the life of a $30,000 engine.


70. Austin Ballast April 17, 2016 5:06 PM
I have not heard many arguments made about outgoing trade.


it's typically quite difficult to get a 'free trade' regime for your exports if you are slapping that country's imports around with tariffs of your own.

look up the term 'reciprocity'.

Anonymous Jack Amok April 17, 2016 10:16 PM  

experimental long haul trucks are being found to be far, FAR less durable than diesel powered.

you've got to save a shitload of money on fuel in order to justify halving the life of a $30,000 engine.


Maybe some day we'll get smart and start using railroads for long-haul freight again. I look forward to the "trails to rails" movement.

Anonymous Jack Amok April 17, 2016 10:20 PM  

Yeah, cheap plastic widgets imported from China are great, but we are effectively exporting the pollution associated with the manufacturing process right along with them,

Another argument to be made against Free Trade is that it lets us - temporarily - ignore the tradeoffs inherent in our regulation. The town I grew up in had two pulp mills. It has zero now, they've relocated to Chile. I suspect a lot of other paper factories have relocated overseas too, because it's less risky (!!!) to deal with Chilean or Chinese factories than with the EPA, EEOC, OSHA, and the local L&I goons in the US.

If we weren't able to off-shore the manufacturing we've regulated out of business, we'd have to confront the consequences of our regulation and either deal with it, or go without toilet paper.

Blogger praetorian April 17, 2016 10:21 PM  

"economics professor"?

Who is this Mercan-tilist?

Blogger Samuel Nock April 17, 2016 11:01 PM  

Note the definitions of "free trade" by the debaters (transcribed from the Soundcloud file starting at 1:36:05) :

Miller: "Free trade is where you, as a consumer, you have the right to buy a good made anywhere in the world if you are willing to pay whatever price that maker charges for it."

Vox: "I don't disagree with that. I would also further add that it is the free ability to engage in any economic transaction of any kind without interference from any third party. That's why I include the free movement of people and the free movement of labor."

It will make sense to clarify which definition will form the starting point of the debate. Dr. Miller's definition leaves open the possibility of restricting movement of labor. Vox's (the first sentence of his addition to the definition) almost requires the inference Vox draws in his second sentence. A tautological case can be made for either definition, but I sense that Vox's position is more in comportment with what most people would think of as free trade in the contemporary world.

Anonymous Rolf April 17, 2016 11:07 PM  

@103 - yes, exactly. Economics deals badly with externalities and side effects. And because people often can ignore things that are not in their own back yard (NIMBY!) for a while, they end up getting blindsided by the eventual blow-back. Retirement schemes, SS, offshoring, lots of examples.

Anonymous Mr. Rational April 17, 2016 11:24 PM  

bob k. mando wrote:experimental long haul trucks are being found to be far, FAR less durable than diesel powered.
First I've heard this.  Big stationary NG engines have been used for years, they are known quantities.  Westport has dual-fuel injectors which run either or both fuels on the same engine.  NG burns cleaner than diesel and doesn't have the premixed ignition shock issues, so I will ask you to provide documentation.

you've got to save a shitload of money on fuel in order to justify halving the life of a $30,000 engine.
At $4/million BTU, the NG equivalent of a gallon of diesel costs about 56 cents.

@102 That makes too much sense, our elites will never go for it.

Anonymous rubberducky April 17, 2016 11:25 PM  

I'd be interested to hear a robust free trader defense of patents. They are a mercantilist relic, seemingly out of place in the pure free trade space. With patents you have statist protection, enforced privilege, monopolistic opportunities, the list goes on if you think about it.

Yet every free trader I've ever heard from become quite protectionist when it comes to patents, intellectual property and technological advantage.

Is it necessary or not to preserve these things? To have patents and sequestered technologies? What is the justification?

Why do any such justifications apply or not apply to production and manufacture?

Anonymous Jack Amok April 17, 2016 11:51 PM  

That makes too much sense, our elites will never go for it.

Might inconvenience their spandex-wearing cyclenazi constituents.

So, I used to be pissed off when I saw some former industrial land next to a river or bay (e.g. excellent water transportation link) being coverted to a big-box Walmart or Home Despot or such. I'm not unhappy any more, I'm actually really glad.

Not because I think the big box will be economically viable. Specifically because I know it's not. In twenty years, that store will be bankrupt and vacant, and the cheap-ass tilt-up construction with the giant parking lot will be really inexpensive to knock down and replace with something sensible, like a port facility or a factory or something similar.

Of course it would be even better to build something like that today, but we're too stupid to build factories right now. In twenty years, maybe we'll be smart enough, and if we put an easily recycled Walmart on the land, we'll be better off than if we put a condo complex there that in twenty years will still have some residents eeking out an existence.

Blogger 1337kestrel April 18, 2016 12:02 AM  

Patents are foolish. They primarily benefit hangers-on like corporations, not actual creators. However we don't have 200 posts left to debate it.

Anonymous Satan's Hamster April 18, 2016 12:08 AM  

"I'd be interested to hear a robust free trader defense of patents."

Patents seem to be a religious belief among many 'free traders'. Maybe they made sense at some point in the past, when new technologies were hard to develop and a patented product could be useful for many decades, but today they serve no purpose other than to keep more innovative competitors out of the market to preserve inefficient, bloated big business. If your patented product is so simple that a Chinese manufacturer can copy it before it's obsolete in two years, there's no justification whatsoever for giving it a patent in the first place.

They're another piece of big government garbage that has to be tossed in the Great Dustbin Of History.

Anonymous Jack Amok April 18, 2016 12:19 AM  

Patents, in theory, are fine, but the problem is we have idiots at the patent office that let people patent "multimedia."

Giving someone a limited exclusive right to build an exact design is fine, but our idiot legal system encourages making megalomaniacal "claims" (claims being an explicit term in patent law).

A great deal of our problems would be mitigated by imposing penalties on people who make irresponsible - ahem - claims via our legal system.

Patent claims, injury claims, etc. The degeneracy in the system stems from the fact that making outrageous claims is encouraged because it's heads I win, tails we flip again.

Anonymous Satan's Hamster April 18, 2016 12:24 AM  

"Of course it would be even better to build something like that today, but we're too stupid to build factories right now. In twenty years, maybe we'll be smart enough"

No-one in their right mind will be building factories in twenty years. Mass production is going, and it won't be coming back.

The whole 'free trade' thing is something of a red herring, because trade is going to collapse over the next few decades. As 3D printers improve, manufacturing is going to become more and more localised, and the only kinds of long-distance trade we'll see are raw materials, designs, and the few products that are too complex to make locally; I can't see anyone producing a complex CPU in a 3D printer any time soon, for example. We'll probably need a few 3D Printer Shacks to produce things too large to print at home, but factories producing millions of the same thing every day... nope.

(And that's before you consider the huge costs of shipping anything whatsoever once we move out into space, which will make most kinds of trade prohibitively expensive)

Anonymous Jack Amok April 18, 2016 12:54 AM  

No-one in their right mind will be building factories in twenty years. Mass production is going, and it won't be coming back.

Why do you think "factory" and "mass production" are synonymous?

As far as 3D printers... have you used one? Have you built one? I've done both. If you think they will replace all manufacturing, you're... I'm making an effort to be nicer these days, let me know how I'm doing... you're misinformed.

3D printers have their place. It's not as a replacement for manufacturing facilities. A portable MIG welder does not eliminate the value of a tractor factory.

Blogger frenchy April 18, 2016 1:09 AM  

Vox,

An other argument against "Free Trade"--What do companies get access to when they buy American companies? (article from the folks over at Fabius Maximus.

Something else to consider is media outlets. Do you really want a foreign company, or foreign govt, owning a stake in your media outlets?

Anonymous map April 18, 2016 2:01 AM  

The patent system is broken anyway. Before, if your patent was rejected, the patent office will give back all of your plans. Now, if the patent is rejected, it will be published anyway 18 months after rejection.

Blogger Lobo Util April 18, 2016 6:01 AM  

What is wrong with the Saudis selling US assets at bargain basement prices? We can buy them back cheap. Like when the Japanese were buying US real estate at twice the real value, then sold it back at market. No problem.

Blogger dc.sunsets April 18, 2016 8:50 AM  

NG powered trucks less useful? Better idea to switch to rail?

Hmm. Don't believe everything you read. My son the mechanical engineer is being well-paid to help design systems that allow ever more conversion of diesel to NG, and that's at one of the world's largest manufacturers of such engines. (BTW, that firm considers OTR trucking to be at the level of "consumer products," i.e., a commodity market, and considers things like skid-steer loaders to be in the "lawnmower division."

Blogger dc.sunsets April 18, 2016 9:00 AM  

No-one in their right mind will be building factories in twenty years. Mass production is going, and it won't be coming back.

Sort of. Human touch is being eliminated from manufacturing (b/c it's the major source of variation/error/qc rejects) but if you think large or complex items will be 3D printed, I've a bridge to sell you. Anyone who thinks everything in the future will be a one-off doesn't understand QA/QC, prototyping and production, and after-sale service.

Robotics. Robotics. Robotics...the software to guide them, the materials to input, and the minds to imagine them.

We face a future where a few people with IQ's >135 will have their output amplified massively by technology while the rest have nothing useful to do but entertain each other (which actually should almost satisfy the Equality Cultists, given that Jews can make us laugh, blacks can make us dance, Asians can take us to the symphony and whites can do a bit of it all, plus be the engineers.)

How this will play out is unclear; those who suggest a minimum income (tax-based redistribution) are too f-ing stupid for words, for the simple reason that such a system would be just as incompatible with "democracy" as are open borders.

Blogger bob k. mando April 18, 2016 9:52 AM  

107. Mr. Rational April 17, 2016 11:24 PM
so I will ask you to provide documentation.



the major article i read on this was from 2012 ( so there has hopefully been mitigation on some of these issues ) ... and also appears to be protected for the article itself:
http://fleetowner.com/blue-fleets/blue-fleet-practical-guide-natural-gas



however, news from this year that $2 / gal diesel is enough to crush year-over-year sales on NG trucks is enough to draw inference that externality costs on non-diesel rigs are very significant.
http://fleetowner.com/running-green/act-natural-gas-truck-sales-remain-sluggish


i actually happen to have a delivery to SC this week, if my middle management UPS buddy is in town i'll ask him about how their alt-fuel fleet is doing.

that would, of course, be merely hearsay for online debate purposes.

Anonymous Eric the Red April 18, 2016 10:48 AM  

@7 John M:
Most common fallacies used incessantly by leftists:
1) overgeneralization (inability to make useful distinctions)
2) ASNEPO (absence of something is not equivalent to the presence of its opposite)
DingDingDing !!! You just attempted #1... care to try for #2 ???
....
Regarding this thread, here's a question...
Which foreign country has the most undue influence over Washington, Israel with J-street, or Saudi Arabia with the petrodollar?
Selective free trade has allowed the latter to occur, so the next question is: What's the optimal way to reduce SA influence with the least possible deleterious consequences to the US? Assuming their can be economic countermeasures, this Saudi threat may actually be a good thing.

Blogger justaguy April 18, 2016 1:06 PM  

The bill will allow the American civil tort system to bring the Saudi Government into its jurisdiction. No one wants to be subject to the American legal system, especially its civil side. The tort-hell locations and absurdities of the American courts as they decide liability based more of deep pockets and riled up jury sympathy is a world-wide farce that forces most world courts to ignore US judgments.
Businesses use arbitration because the treaties allows recognition of the neutral, arbitration panels for commercial decisions. Adding to the farce is the way the US Government has kicked to the side most appearances of rule of law and now there are many many examples of the Government (DOJ and state AGs) extorting fines and fees for the privilege of continued doing business in the country. To many, these are more byzantine than the bribes expected in other countries, but business by bribery just the same.
Bringing in a sovereign nation into the court system is a step outside of the normal US corruption and idiocy. Sovereign nations are normally immune to other nation’s citizens and its own (unless allowed by law) and relations between sovereigns is handled by international relations, not maddened civil juries seeking “justice” for causes. With AGs and perhaps DOJ seeking causes of justice for multi-nationals for the horrific crime of denying that climate change will kill the earth and peddling fossil fuels that allow our advanced society and wealth, I submit that adding countries to the jurisdiction of our civil system is madness.
We allowed Iran to go before our civil system only after they left the bounds of normal international relations with the Iran hostage crisis. This was seen as a move against their going outside of international norms but short of war. Has Saudi Arabia left the normal international relations?
Whether or not some minor functionaries in the Saudi Government wittingly or unwittingly helped the 9-11 hijackers does not mean that the Government of Saudi Arabia committed an act of war against the US. If they did, then there are actions that nations take against one another. However, anything that we allow our courts to do, it is the US Government doing the action and that is how it will be viewed internationally.
Of course the Saudi’s will divest themselves of anything that could be attached or seized by our courts once they are subject to its whims. They will invest those funds in other countries. As most other advanced countries do not automatically recognize US civil court judgements, that money could likely flow to Europe and our economic competitors. Other nations will be more reluctant to invest on our shores as the likelihood that their assets are seized unreasonably will have dramatically increased.
This is a large step to becoming a banana republic and we should not do it. Just as we should not allow the state AGs and the DOJ to punish large multi-nationals for the crime of not believing in the fraud called climate change.
Finally, this will help destroy the USD as the petro currency and the world reserve currency. Why this would be a disaster is a larger essay, but it is not something the US wants as the US gets quite a subsidy for being the world currency.

Blogger James Dixon April 18, 2016 1:12 PM  

> Maybe some day we'll get smart and start using railroads for long-haul freight again. I look forward to the "trails to rails" movement.

It would be nice. At one time every small town in the middle of nowhere had a rail line running to it.

> ...but if you think large or complex items will be 3D printed,...

Depends on how you define large and complex. People are working on 3D printing buildings. Now buildings, while the inserted materials can be complex (water line, gas line, electric lines, etc.), are fairly simple as far as materials required go. They can definitely be large though.

> that would, of course, be merely hearsay for online debate purposes.

While true, it'd be first hand hearsay, so I'd be interested. :)

Anonymous Ominous Cowherd April 18, 2016 2:34 PM  

``"Mercantilism is ... It was believed that national strength could be maximized by limiting imports via tariffs and maximizing exports."''

De-emphasize exports, and there is little room to argue that those policies maximize strength.

We must ensure that we can produce the food, energy and weapons to defend ourselves. Buying the electronics that control our weapons systems from our main competitor and enemy, for example, would be a suicidally bad idea.

We must provide jobs, actual, productive jobs, for the left half of our bell curve. Otherwise we get a dispossessed underclass who cause crime and social unrest and who are useful tools for SJWs and other 5th columnists.

Your mercantilism seems to provide for those two absolute essentials, and your free trade does not. I'll be a mercantilist, by that definition.

Blogger James D. Miller April 18, 2016 3:38 PM  

Good Forbes article on this. "while the sums seem unimaginably large in comparison to an economy the size of the United States they’re simply not threatening numbers. We could cope with this quite easily. In terms of this being a threat it just isn’t much of one."

http://www.forbes.com/sites/timworstall/2016/04/17/saudi-arabias-threat-to-sell-off-750-billion-of-us-assets-over-911-bill-is-pretty-empty-really/#4a8fd96112b4

Anonymous Mr. Rational April 18, 2016 8:29 PM  

bob k. mando wrote:the major article i read on this was from 2012 ( so there has hopefully been mitigation on some of these issues ) ... and also appears to be protected for the article itself
Yup, absolutely nothing of substance.  OTOH I did find a link claiming that the increased maintenance was 2-3¢/mile and the fuel cost differential can be multiples of that, so it comes down to how fast you amortize it.  The engine proper appears to run cleaner and longer on NG, so the difficulties are probably with the fuel system.

however, news from this year that $2 / gal diesel is enough to crush year-over-year sales on NG trucks is enough to draw inference that externality costs on non-diesel rigs are very significant.
It also drove a surge in SUV sales despite past experience with oil prices, so what this really says is that people have very short time horizons.

Pre-orders for the Tesla Model 3 number around a third of a million.  I think there are people with longer time horizons.

Blogger bob k. mando April 19, 2016 12:50 AM  

128. Mr. Rational April 18, 2016 8:29 PM
It also drove a surge in SUV sales despite past experience with oil prices, so what this really says is that people have very short time horizons.



right, purchasers for large shipping companies have short time horizons.

got it.

like i say, i'll have to ask my UPS contact how their short haul fleet is working out.

last i heard, it wasn't so hot.

this will not, of course, stop large companies from looking into the alternatives. there's a lot of pressure coming down from the Feds. primarily in the form of harsher particulate and emissions regs for diesels. ( you'll note that that has nothing to do with comparative fuel cost or amortization of the power plant )

and, of course, everyone expects oil prices to go back up eventually.

you know, the same everyone in fleet purchasing with "very short time horizons".



128. Mr. Rational April 18, 2016 8:29 PM
and the fuel cost differential can be multiples of that



you know, you keep asserting this NG price advantage as if it were static.

like moving a significant portion of the internal combustion market to it's use is never going to have any impact on that ... in much the same way that the Green Lunatics pretend that moving a significant portion of the passenger car market to electric will have no significant impact on electricity costs.

prior to 1900, Texas considered their oil reserves an annoyance. because it interfered with attempts to drill for water.

then oil got valuable.

because demand went through the roof.


the obvious answer is that you should be investing a significant portion of your portfolio in NG.

if you believe everything you're saying.

Anonymous Mr. Rational April 19, 2016 2:37 PM  

bob k. mando wrote:right, purchasers for large shipping companies have short time horizons.
Publicly-traded corporations have quarterly targets to meet, and limited capital budgets.  This doesn't favor conversion efforts until the current glut of crude oil abates.

you keep asserting this NG price advantage as if it were static.
When NG prices peaked at close to $15/mmBTU in 2008, the energy-equivalent price of crude oil was about 70% higher.  Right now Henry Hub prices are $1.73/mmBTU, equivalent to about $10/bbl crude.

like moving a significant portion of the internal combustion market to it's use is never going to have any impact on that ...
The oilco's aren't all that hot on it, because in NA they'd be replacing a high-markup product with their own lower-markup product.  Or didn't you know that XOM became the biggest NG company in the USA when it bought XTO?

the Green Lunatics pretend that moving a significant portion of the passenger car market to electric will have no significant impact on electricity costs.
It might well.  Widespread overnight car charging would tend to bring up off-peak rates and prevent negative pricing, which would probably be a good thing.  It would also affect the demand for generating fuels, depress demand for oil, and improve the economics of nuclear power.

the obvious answer is that you should be investing a significant portion of your portfolio in NG.
I have thought about getting into the energy futures markets but I don't have the stomach for it.

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