Russia Today, The Country - Not The Television Network

This article is focused on giving readers a better understanding of Russia in 2018. It is the second of two articles dealing with how America and the world view Vladimir Putin and what Americans may or may not know about the country that America's "Deep State" continues to consider a major threat. To be perfectly clear it is not just neoconservative Republicans like Marco Rubio and Lindsey Graham but Democrats and liberals are also painting Trump as wrong and misguided when it comes to our policy towards Russia. Fox News, NBC and the Washington Post have been promoting the same hard-line against any notion of normalizing relations with Russia.

One of the things we often forget is that many Americans don't really know very much about Russia or the Russian people and much of what they have been told has been filtered through a national security apparatus so entrenched in a cold war mindset they appear paranoid. Those who want war or are always pounding on the drums of fear endlessly demonize Russia as a major threat to America and our way of life. Some peace-hating beltway stalwarts were so upset about the recent meeting in Helsinki between Donald Trump and Vladimir Putin which they viewed as "peace talks" that they took every opportunity to sabotage them.

It is clear the warmongering faction residing within Washington has declared Russia a major threat and sparked massive media coverage to convince us it is true. An example of what we are facing is revealed in an article published by The Intercept telling how a prominent national security reporter for the Los Angeles Times routinely submitted drafts and detailed summaries of his stories to CIA press handlers prior to publication. Apparently, Ken Dilanian enjoyed a close collaborative relationship with the agency, explicitly promising positive news coverage and sometimes sending entire drafts for review prior to publication. In at least one instance, significant changes were made before the story was published. Documents show reporters for the Associated Press, Washington Post, New York Times, Wall Street Journal, and other outlets also interacting with the agency.

The myth of Russia's strength has been amplified by journalists seeking to routinely curry favor with government sources and others by falsely hyping the official point of view. A read of The Intercept article generates a reason for concern. Another article is even bolder when it states, "The US intelligence community’s job to lie to you." It goes on to detail how two big Russia stories blasted onto the front pages loudly promoting Russia hysteria just days before the Trump-Putin summit were in effect an attempt to sabotage the meeting. The first was that Robert Mueller had issued an indictment of 12 Russians which was rapidly followed by America’s top intelligence officer Dan Coats who replaced Russophobic James Clapper declaring that the warning signs of future Russian cyber-attacks are akin to the warnings received prior to the September 11 attacks. The Washington Post bolstered this narrative with an article titled, “Trump hopes he and Putin will get along. Russia experts worry they will”.

Note Russia's Failure To Appear On List!

Now getting away from what shapes American opinion here are some real facts about Russia. For over half a century economic policy was shaped by the Communist Party and like the rest of the USSR, was centrally planned. The state-controlled virtually all investment, production, and consumption across the country. The transition towards a market economy in the 1990s was painful. The chart on the right shows even today Russia fails to place in the world's top ten largest economies.

• Russia is the 9th most populated country in the world with 144.50 million people in 2017.
• In terms of land area, Russia located across 9 time zones and is the largest country in the world. Russia shares borders with many countries, including China, Ukraine, North Korea and Norway. 
• The official language is Russian but there are 27 other languages co-official in various regions of the country. It is located in Eurasia (the combined continental landmass of Europe and Asia).
• Some sources estimate that Russia contains over 30 percent of the world's natural resources. 

Modest Skyline Downtown Moscow

If a picture tells a thousand words then people need only compare a picture of downtown Moscow's modest skyline with a picture of Beijing China which is rather overpowering. Clearly, the overwhelming mass, density, and number of sophisticated buildings in Beijing dwarf those in Russia's capital. Simply put, Russia is not the massive global power American media portrays it to be. Elevating countries like Iraq, Russia, Iran, and North Korea to "major threat" status has allowed money to pour into what President Eisenhower years ago aptly named the Military Industrial complex and lined the pockets of Washington politicians and their cronies for decades.

The fact is with all the bravado aside a person might call the military situation in Russia as a bit dire. For example, Moscow has ordered 132 T-14 Armata main battle tanks and T-15 heavy infantry fighting vehicles, with the first nine to be delivered this year but the fact is this is only a drop in the bucket considering how many they need. An article recently published details how Russia has ordered the production of a new generation of tank but because it lacks the money for a huge number it will continue to rely on older equipment much of it dating back to the cold war. In 2015 the United States and NATO received a rude shock: The Russian Army unveiled a new main battle tank, known as T-14 Armata. The new tank together with a new heavy infantry fighting vehicle using the same chassis is slated to replace older T-72 tanks and its 1980s-vintage BMP-2s, infantry fighting vehicles. It seems, for now, Moscow will probably buy small numbers of T-14s and T-15s just to keep the production line open while waiting for the economy to improve.

Russia Spends Little On Weapons (Click To Expand)

Now that we have established Russia is not an economic powerhouse it is time to examine the real "bug-a-boo" and that is its military might. Those of us that have had the awesome experience of going deep deep down under a Russia city to ride the subway will testify that it is indeed worthy of being declared as a shelter during a nuclear attack. The fact is much of our apprehension of Russia stems from its massive nuclear arsenal dating back to the cold-war. Today nine countries have a total of over 15,000 nuclear weapons the U.S. and Russia together have over 14,700 of them. Like many people, I do not find what is known as the concept of Mutual Assured Destruction, or MAD to be reassuring. Still, the truth is the nuclear deterrent we hold is a hundred times larger than needed to stop anyone sane or rational from attacking America, and for anyone else, an arsenal of any size will be insufficient. Logic dictates Russia would be insane to launch an attack on America and would have little to gain considering its military spending and the weapons Russia stands ready to deploy, America has little to fear and most of the noise is from those wanting more money to enrich those producing weapons. 

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Footnote; The first part of this series appeared a while back and this follow-up piece was lost in the shuffle of more important matters. The link to the first part is located below and under that is a link to "Russia Today" its propaganda news channel which you may find interesting..
http://brucewilds.blogspot.com/2018/06/putin-bully-and-thug-or-great-statesman.html
https://www.rt.com/

Housing In America - Part II

Housing Prices Should Not Become A Game

When it comes to real estate, low-interest rates at some point becomes a double edge sword, that affects both its value by making it easier to purchase thus driving up prices, and at the same time allowing more building to take place and increasing the supply. Often we reach or exceed demand, this eventually has a dampening effect on rents and people stop buying it as an "investment". Rents from real estate and the prices it brings when sold must appreciate more than the natural depreciation from the wear and tear from age or the main driver for owning it as an investment quickly vanishes. Oversupply is the bane of real estate and crushes the value of this hard and expensive to maintain commodity. History has generally shown homes that are paid for and unleveraged to be a better than average place to store wealth when purchased for a good price, as to whether now is a good time to buy that is difficult to say.

How does the reality of a half-empty apartment complex and a slew of empty houses gel with what we hear about soaring rents, the demand for more housing, and more affordable housing? Those declaring housing has fully recovered must admit housing prices vary greatly across the nation and this is a problem that can be difficult to get your head around. Only politicians in Washington would be silly enough to think that landlords who have to compete against subsidized housing would be eager to remain in the game or that someone working for a living enjoys paying more for an older apartment than someone on the dole who moves into a brand new unit for a fraction of the cost. By not rewarding those who do the right thing our current policies have a corrosive effect on both housing and society.

America has built a lot of housing units over the years, now we must face the fact that they need to be maintained. Instead of focusing and creating policies to rebuild our cities by encouraging homeowners to invest more in upgrading windows, adding insulation and improving the existing housing stock, Washington has doled out low-interest money to Wall Street and home builders in an effort to kick-start the economy by building new housing to generate the illusion of growth and rising prices. Currently, we are in uncharted waters and where this market is headed is anyone's guess but one thing is certain it is not straight up. Speculating on housing is dangerous and should not be encouraged through bad policy. When people leave older neighborhoods and move to a new house in the suburbs enticed by current artificially low-interest rates they in effect hollow out our cities.

Old Houses Need To Be Maintained

Adding to our housing problems is low down payments and other policies often put people in older houses that they have no interest or knowledge in how to maintain. This can cause even more people to flee the area and brings about further decay. When offered the choice many people find moving easier than repairing and maintaining their homes or neighborhoods and low-interest rates power this trend forward.  Policies should be geared toward creating jobs that maintain these units instead of making them prematurely obsolete. This is a flashing red light warning of danger ahead. By choosing the easy answers America has not faced its housing problems with long-term solutions and encouraging this bodes poorly for the future.

Get your financing in order and get the project started before the market dries up has been how developers everywhere have operated for decades. I have owned an apartment complex in the Midwest for many years and many houses in my area are empty or under leased. In 2005 and 2006 prior to the housing collapse, many people were looking at second homes, today not only have they shed the extra home many have doubled up with family or friends reducing the need for housing. This has left me busy trying to sort out and make sense of the current economy. This is no easy task, it seems we are pushing on a string and calling it demand when someone who can barely pay the rent is encouraged by the government to buy a house they can neither afford or maintain. Currently, we have a shortage of "qualified" buyers and renters.

A close look of permits and starts shows many of the future housing starts are multi-family units, these are being built with cheap "Wall Street" money for the markets of tomorrow with little regard for the realities of today. A new report by Yardi Systems Inc indicates apartment construction is far outpacing demand in many markets, this overbuilding of multi-family will have ramifications on the cost of living and the resale value of homes going forward. It is a fact that single-family housing starts have languished as the percentage of multi-unit buildings under construction has risen. Some of these may be slated as condos but another name for an unsold condo that is being leased is "apartment."  Let us call a spade a spade, much of what we see today is not a housing market, it is a place where too much money has gone to hide under the impression and hope it will pay off when inflation awakes and comes out roaring from its quiet slumber.

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Footnote; The links below are to articles that delve deeper into housing and what we are building when it comes to housing. The first link is to the first part of this two-part series'
 http://brucewilds.blogspot.com/2018/09/the-housing-picture-is-not-brightening.html

 http://brucewilds.blogspot.com/2017/10/city-boast-of-constructing-another.html
 http://brucewilds.blogspot.com/2018/02/housing-policy-feeds-and-hides-growing.html
 http://brucewilds.blogspot.com/2015/11/cookie-cutter-urban-sprawl.html

The Housing Picture Is Not Brightening - Part I

A House Should Be Earned - It Is Not A Right

The future of the housing market is a topic that has been subject to a great deal of debate and can be somewhat confusing. The intention of this post is to dispel some of the myths that have been generated and add some clarity to the discussion. One of the charts below clearly shows that new construction is still far below levels prior to 2008. It should also be noted that much of the new construction is in apartments and not single family dwellings. In much of the country, housing units are being built using cheap money flowing from the Fed and Wall Street under the idea that if it is built "they will come." While many people claim the formation of new households and pent-up demand drives this construction I beg to differ. I contend it is a combination of too much money looking for a place to hide and buyers looking for a safe place to put their money.

Consumers Adding Debt - Not Buying Homes

As I wrote this post I tried to do a bit of additional research to supplement what I know as a contractor and Apartment owner but what I found was more like a pack of lies and half-truths spun to fit an agenda. In America, the government, coupled with a slew of builder and Realtor associations control the housing narrative. Huge discrepancies exist in the cost of housing in the various markets across America and while price variations are not uncommon they should be seen as a red flag and reason for caution. Many of the messages being promoted as common knowledge do not pass serious scrutiny. Those of us in the trenches and with our boots on the ground often see things from a different perspective than the economist in their ivory towers, Washington politicians, Wall Street elite, or the media. Homeownership in America is in decline and demographics are not supportive of higher prices. If prices rise it most likely it will be a result of inflation.

Housing Has Not Recovered To 2008 Levels

Note the amount of traffic, or calls an apartment complex receives may have little to do with the strength of the market. A well qualified potential tenant only has to apply at one complex while those who are rejected continue time after time. Government subsidized housing through programs such as section 8 have cannibalized the market often taking the "best of the worse" and leaving those landlords who choose not to participate with a rather unsavory pool of potential tenants from which to choose. This often includes those denied government housing, nearly bankrupt, or chronically unemployed. The city where I live ranks 23rd in the nation for having the most "zombie foreclosures" however, markets in other parts of the nation are often not as strong as the media claims. A relative of mine who sold a home with an extra lot that was on a golf course north of Houston several years ago took a severe beating. Weak pricing in a market that was touted as very solid is more proof that what many claim is a "boom" is far from spectacular.

A Bloomberg article years ago titled "Wall Street Unlocks Profits From Distress With Rental Revolution" looked behind the curtain and pointed out that a great deal of this housing recovery that has driven the average home price up 30% since 2012 has been the result of Wall Street hedge funds buying in bulk foreclosed houses in order to turn them into rentals. Like many people, I find it totally objectionable these deals were "bundled" and offered in such a way that allowed big business to crowd the average American out of the housing market. In parts of the country, cash fleeing China and other troubled countries has flowed into the market pumping up prices. These type of situations create a questionable base for higher home prices when we consider the low end of the market is driven by Fannie, Freddie, and the FHA all insuring 3.5% down payments from borrowers that lack substantial collateral. History has shown that such special financing simply encourages people to rush out and buy homes they cannot afford. It is important to remember that low-interest rates do not necessarily bring about quality growth or prosperity, decades of slow growth in Japan has proven this.

One of the sad accomplishments of current Fed policy is that low-interest rates often do not create all that much new demand but simply moves what does exist forward. To make the situation worse the FHA is busy issuing and guaranteeing risky mortgages written by thinly capitalized non-banks. In 2012 the large Wall Street banks represented over 65% of FHA backed loans, today that number has cratered. Even they have realized loaning money to people that won't pay it back is a recipe for disaster. America is preparing for a replay of the 2008 housing crisis. Our politically motivated government has insured subprime mortgages with down payments of as little as 3.5% while using weak underwriting standards. We are even seeing restrictions raised on borrowers with past foreclosures in a housing market that may drop 20% when this Fed Wall Street bubble pops. Years ago Lee Iacocca who brought Chrysler back from the brink and made the company viable said something to the effect of when you special out all your cars on Monday you have no sales for the rest of the week. In the current situation, low-interest rates are only one of the factors distorting and skewing America's housing markets, others will be discussed in part two that will be published tomorrow.

 (Click Here To View Part II)

Online Transaction Fee Could Level Retail Playing Field

Abandoned Malls Are A Canary In The Coal Mine

This article is the second of a part-two series about the retail closings that are occurring across the country and a suggestion as to how we can blunt the damage they will leave in their wake. The fact is store closures are set to accelerate, this comes with a hidden cost to society that the average person fails to internalize. An "Online Transaction Fee" could go a long way to level the playing field between online retailers and its brick and mortar brethren. A charge on all online purchases of just a few percentage points would add a bit of competitive fairness to retailing while halting the demise of many of the brick and mortar stores that line the streets of American communities.

People often forget that the brick and mortar stores suffer several expenses not fostered upon online companies. Whether it is the cost of maintaining landscaping, ensuring safe ingress and egress or providing a parking lot for customers these costs rapidly add up. Staffing for longer hours for the convenience of customers often results in being open when foot traffic would indicate a store should be closed and even dealing with security and shoplifters is another expensive burden. Over the last few years, stores such as Target and Macy’s have even had to face a slew of dishonest shoppers trying to sneak defectives products purchased online back as exchanges and trading them for a fresh unbroken product. I have seen this costly abuse recommended by several online shoppers that see this as an "easy fix" while simply brushing aside the ethical issues it creates.

An online transaction fee is a very big proposal and while like most Americans I'm not a lover of any kind of tax, it may be just what is needed to halt the damage flowing from this shift in how consumers shop. This would also help many small businesses across America remain in operation. The revenue from such a fee would be sent to local governments in the area where the sale originated or goods are shipped. Rather than getting stuck on the details of something that will most likely never occur we should instead think about what kind of community and world we wish to live in and how best to preserve the nature and quality of the life we seek. The ugly reality that store closures are set to accelerate is a cancer on America. Large retailers as a group are collectively set to lock the doors for the last time at thousands of stores this year.

The sad fact is America has far more retail space than it needs. The country now has roughly 24 square feet of retail space per capita, more than twice that of Australia and 5 times that of the UK. Much of it has been built in recent years using low-interest money as investors rushed to build malls and shopping centers under the premise that if they built it "they would come" but the shift to buying from online retailers such as Amazon and overbuilding has broken this decade's proven formula. A number of retailer bankruptcies and the culling of unprofitable stores has been emptying storefronts and malls and exacerbated the glut of American retail space. This retail real estate carnage is continuing this year with breakneck speed and no signs of slowing up, 2018 will easily pass 2017's record of 105 million square feet emptying out.

2018 Retail Store Closings (click here to enlarge)

Sadly, most politicians have a poor grasp of business and are more interested in pandering for votes than trying to create more sustainable communities. Washington lawmakers have shown little interest in addressing the issue of how online shopping plays into the overall economy other than initially granting it some rather large advantages. This has been followed by state and local officials going over the top in competing for what they call new industries and jobs. This often results in special tax breaks, deals, or incentives for companies such as Amazon in exchange for investing or locating a facility in their area. In the long run, this hurts and weakens companies already located and competing in their market but that often gets brushed aside.

In the last few years, department stores like Kmart, Macy’s, Sears, and JCPenney, and retailers including Best Buy, Payless, BCBG, Abercrombie & Fitch, and Bebe have decided to close dozens of locations and cut back on future expansions. In earlier 2018, the fall of the once massive Toys 'R' Us name should have drawn more attention. With more than 700 U.S. stores the Toys “R” Us chain was a prime example of just how much retail real estate has changed in just the last decade. When KKR & Co., Bain Capital, and Vornado Realty Trust took over the company in 2005, the buyers justified the $7.5 billion price, in large part based on the supposedly valuable properties that came with the deal. The drop in the value of these properties has only started and in the future will have a gigantic effect on the economy.

Much of this space across American cities is located in the large shopping malls that once flourished in commercial zones of suburbia and now sit empty and abandoned. While some of the empty storefronts will be re-purposed many will not. Sadly, America has created a bureaucratic obstacle course to rehabbing buildings adding a great deal to the cost and making demolition more appealing. Between meeting new regulations and codes dealing with the Americans with Disabilities Act (ADA) and other issues building owners often choose to simply tear down the structure and rip up the parking lot which is also required as part of the demolition. This reduces the often huge tax burden while they try to recoup part of their investment while selling off the land.

A new report by real estate research firm Reis states that shopping malls had not been this empty since 2012. The vacancy rate at regional and super-regional malls in the U.S. reached 8.6 percent in the second quarter of 2018, this is a jump from 8.4 percent in the prior quarter. The increased vacancy rate is simultaneously occurring while online retailing giant Amazon continues to acquire a more significant share of the consumption pie. According to Reis, the vacancy rate of malls could significantly jump over the next several years. Even Credit Suisse believes 25 percent of shopping malls will have to shutter their doors by 2022 if shoppers continue to move online and mall traffic declines,

An online transaction fee could level the field. A charge on all online purchases of say three percent could go a long way to halt the demise of many of the brick and mortar stores that line the streets of American cities. Forgetting the massive amount of real estate taxes these stores pay which flows directly into the support of local police and fire departments as well as maintaining roads and such is a big disservice to the companies that also employ our friends and neighbors. These stores are where we go when we need something really fast or that has to fit just right. As a final argument as to why we should support local stores, it should be noted that we the people will be forced to pony up more dollars in local real estate taxes as their contributions drop and local services are cut.

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Footnote; The link below will take you to part one of this article. Below that is another link to a post about how the USPS has sold retailers and businesses out to gain a few dollars in revenue that might not even reduce the amount of money they lose.
 http://brucewilds.blogspot.com/2018/08/retail-closings-are-so-common-they-can.html
 http://brucewilds.blogspot.com/2018/07/amazom-shipping-rates-deemed-to-low-too.html

                                                                                   

War On Drugs Continues To Be A Costly Failure

Public views and attitudes continue to shift concerning the cost of America's decades-long war on drugs. The program has garnered a great deal of criticism over the years because funding for law enforcement is often based on the number of arrests made and the amount of property seized. This means the easiest way for local police to up their numbers and boost their careers is to target low-level drug offenders. To achieve this police have been accused of routinely relying on untrustworthy informants, conducting dangerous home invasions on flimsy evidence, framing suspects, and committing perjury. As the war on drugs continues each year more people have become addicted to drugs and the overdose rate continues to increase. Ironically much of this stems from an opioid epidemic fostered upon us by the big pharmaceutical companies and the very doctors we trusted to care for our health.

How much does the war on drugs cost?  Enforcing the war on drugs costs the US more than $51 billion each year, according to the Drug Policy Alliance. As of 2012, the US had spent $1 trillion on anti-drug efforts. In 2016 there were 1,572,579 arrests in the U.S. for drug law violations:

Years ago even recently deceased Sen. John McCain indicated his views towards legalizing marijuana were evolving. During a town hall meeting in Phoenix, Arizona McCain is reported to have said  "Maybe we should legalize. We're certainly moving that way as far as marijuana is concerned. I respect the will of the people". If McCain had taken a softer stance on marijuana as a Presidential candidate back in 2008 he would have drawn more of the youth vote and might well have won the election and become President. We can only hope that John McCain’s words on marijuana legalization have encouraged more Republicans to be more open-minded on social issues and follow suit.

Currently, use of marijuana for medical purposes has been legalized in 30 states and eight states and the District of Columbia have adopted expansive laws legalizing marijuana for recreational use. There are numerous reasons that Republicans should support marijuana reform. Republicans in general support state’s rights, smaller government, and want to stop wasteful spending. The war on drugs has been far too costly. We can surrender, redefine the enemy, or change our tactics, but it is clear that victory is not in sight. After the U.S. government spent over $15 billion dollars in 2010 on the War on Drugs at a rate of $500 per second victory remains elusive. To that figure, we can add at least another 25 billion dollars of spending by state and local governments. In the last decade, due almost solely to the surge in drug-related arrests, U.S. prisons are massively overcrowded and underfunded.

Rehabilitation In Prison Is Largely A Myth

It is important to remember the rehabilitation aspect of incarceration is slim to nil. Marijuana constitutes almost half of all drug arrests, between 1990–2002, marijuana accounted for 82% of the increase in the number of drug arrests. In 2004, approximately 12.7% of state prisoners and 12.4% of Federal prisoners were serving time for a marijuana-related offense. President Carter's fear voiced in 1977 that penalties for drugs are doing more damage than drugs themselves rings true.

At the time Carter put forth the following recommendations to address the abysmal failure of the War on Drugs policies:

  1. Decriminalized the possession of less than an ounce of marijuana and add a full program to treat addicts.

  2. Remove mandatory minimum sentencing and “three strikes you’re out” laws.

  3. Don’t rely on controlling drug imports from foreign countries. It doesn’t work and is responsible for a terrible escalation in drug-related violence, corruption and gross violations of human rights in a growing number of Latin American countries.        

  4.  Experiment with legal regulation of drugs and thus take away the power of organized crime.

America Puts Way Too Many People In Prison

A 2008 study by Harvard economist Jeffrey Miron has estimated that legalizing drugs would benefit  taxpayers $76.8 billion a year in the United States — $44.1 billion from law enforcement savings, and at least $32.7 billion in tax revenue ($6.7 billion from marijuana, $22.5 billion from cocaine and heroin, remainder from other drugs). It is true that many law enforcement lobby groups don’t want to end America’s war against drugs which has cost $1 trillion and counting, but that’s because they’re the reason it’s so expensive. In 2010, a full two-thirds of federal spending on the drug war, $10 billion, went toward law enforcement and interdiction.

Law enforcement rank and file know the truth about the drug war’s profligate and ineffective spending, since marijuana prohibition drives the drug war, these huge costs would end when federal cannabis law changes. Currently, the lawyers, law enforcement officers, and prison systems are the biggest beneficiaries of these laws. Sheriff Tom Allman in Mendocino County, Calif., helped permit, inspect, and protect local cannabis farmers in 2010 and 2011. When asked why, he said: “This county has problems: domestic violence, meth, poverty. Marijuana isn’t even in the top ten. I want it off the front pages so I can deal with the real issues.” All this tends to feed back into the idea that laws that are considered unfair and unevenly enforced weaken trust and faith in our legal system.

With much of the drug war centering around marijuana it has been a slap in the face of the American taxpayers that have spent a fortune on what many see as a misdirected program. The drug war has resulted in trillions of dollars being wasted and misallocated. The governments spending on this program also has devastating human costs that far outweigh the damage caused by drugs alone. Ironically drug prohibition essentially provides a monopoly and price supports for organized crime. By forcibly limiting the supply of drugs while demand remains relatively constant we have increased the profitability of drug trafficking. America needs to end wasteful government spending on the drug war and have the much needed national dialogue about ending prohibition and refocusing resources on health-centered approaches to drug use.

As for adult use and how it might change if marijuana laws are relaxed, the numbers are mixed. A 2011 University of California at Berkeley study, for example, showed a slight increase in adult use with legalization in the Netherlands, though the rate was still lower than in the United States. When the United States’ 40-year-long war on marijuana ends, the country and society are not expected to radically change, but we will see a great deal of drug cartel profits move from the criminal economy to the taxable economy. I'm not advocating marijuana and other drugs become totally unregulated only that a more realistic mature attitude towards them be adopted. Some of the taxes from drug sales should be used to educate people on how not to abuse drugs and the dangers of addiction. It is time we grow up and end this costly war that damages so many young lives.

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Footnote;  Below is a post that delves into how the 1930s propaganda film "Reefer Madness" greatly influenced a whole generation and the laws towards marijuana.
              http://brucewilds.blogspot.com/2013/12/reefer-madness.html

China Unflexible Path Forward Guarantees Conflict

This is the second part of a two-part series which explores why China is on a one-track path and blind to other options going forward. The first part, which is linked at the bottom of this article, argues China has little intention of altering its course and will concede nothing in future trade talks, as a state-run economy its business model is geared to expanding by crushing the competition. It can be argued that China's unflexible path forward guarantees conflict and this is one of several reasons they represent more of a threat to America than Russia. Understanding the core nature of China is important to comprehend the lack of flexibility ingrained in their system. This comes in the ideology that directs its actions. China is still very much a communist country, and the Chinese Communist Party (CCP) controls everything. From indoctrinating children with Party slogans to requiring companies with more than 50 employees to have Party liaisons, the military and other areas of the country have similar programs.

China Is All About Growing Stronger

Ranked high among the CCP’s many slogans is “Maintain maximum alignment with the Party’s Central Committee.” There is no doubt economic theft is a key component of the "Made in China 2025" program and others that feed into it. This was confirmed in a 2011 report by the U.S. Office of the National Counterintelligence Executive. The book “China’s Industrial Espionage” by William C. Hannas, James Mulvenon, and Anna B. Puglisi states that “each of these programs looks to foreign collaboration and technologies to cover key gaps” and encourages Western-trained experts to serve the CCP, either by returning to China or by “serving in place.” Let me be perfectly clear, this way of thinking completely permeates the way the Chinese think and a lack of legal enforcement of intellectual property rights only adds to the problem.

While it may appear both State-owned and private firms operate within China's economic system. This is mostly an illusion because the Chinese regime allowed some market principles to be introduced in China following economic reforms in the 1980s. In reality, the communist system does not allow for true private ownership and views all "tech innovation" as essential to its national interests. Thus, private and state-owned Chinese firms act in the interest of the Chinese regime when it comes to foreign investments in the high-tech sectors. This means behind the curtain the regime directs Chinese firms on where to invest and puts a priority upon the areas that benefit China the most over the long-term by increasing their ability to compete. 

Through, “Sovereign investment funds and governmental investment management companies" China plays a large role in foreign direct investment in the tech sector. This could be seen in JAC Capital's acquiring the Dutch semiconductor firm NXP in 2016. Fifty-one percent of JAC is owned by an investment vehicle of China’s State Council, the regime’s chief administrative agency. Also, private equity firms can also be used to fund foreign acquisitions. A Reuters report revealed that partial funding for California-based private equity firm Canyon Bridge’s $1.3 billion bid to purchase American chipmaker Lattice Semiconductor originated from the State Council. This is why in September 2017, President Trump blocked the deal, citing national security concerns. Developing the semiconductor industry is high on the Made in China 2025 priority list and China currently relies heavily on imported chips which is one of its biggest imports.

Research In China Is Hampered By Corruption

Adding to China's ability to steal tech innovation is that its people excel in education. There are more than a quarter of a million university students from China in America's colleges an almost five-fold increase since 2000. The combination of understanding American culture and the lack of independent innovation within China creates a bit of a void that tends to fuel this zealous culture of tech theft. The culture of rampant corruption in China is a big factor adding to the lack of quality research and development. This has forced programs of intellectual property theft to expand. As state funds flow through numerous levels of bureaucracy, Chinese money often fails to reach where it is slated to go or accomplish what is intended. The CCP is aware of this problem and in state-run companies, where there is little prospect of rising through the ranks without engaging in corrupt dealing, it’s common for employees to not apply themselves but rather just put in their time. 

As Chinese companies have been forced to compete for their bottom line the desire to move up the manufacturing food chain has grown stronger. China’s main strength in recent history has been its ability to crank out cheap manufacturing and low-cost goods. This means Chinese companies have had to compete heavily on pricing and they are often forced to reduce costs and cut corners on quality wherever possible. This has only added to the image that Chinese products are shoddily made. All the above factors has increased the CCP’s desire to create respected local brands and added pressure to maintain and ramp-up its already unflexible path forward in its attempt to break into the luxury goods and high-tech markets. When we combine this with China's attitude towards expansion and flexing its growing military might it is easy to envision the potential for conflict ahead.

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To bring up the first part of this series click on the link below. 
http://brucewilds.blogspot.com/2018/08/china-has-no-intention-of-altering-its.html

Retail Closings Are So Common They Can Go Unnoticed

Retail stores closings have become so common they often go unnoticed. A new urgency and focus returned to the issue of the battering brick and mortar stores are undergoing with the announcement yesterday that the last Sears store in my city is going to shutter its doors. This is important and part of a much larger story. The problems that exist within what has been graphically described as "America's retail apocalypse" or the collapse of brick and mortar is that it extends past what many people see as retail and also has begun to take a toll on small business in general. Today small business is having its clock cleaned as they are forced to pay higher wages, comply with new government regulations and forced to compete with big businesses backed by Wall Street money.

Closings Will Have Huge Impact On Economy

Across America stand a sea of empty and under-leased buildings that once housed thriving businesses that provided Americans with good paying jobs. A close look at the details surrounding new job formation shows the growth is mostly in low paying part-time jobs and that many people have left the job market to retire early because their skills are no longer needed. To shed even more light on weak links in our so-called recovery we only need to take a closer look at auto sales and student loans. Today roughly a third of those buying cars are taking out sub-prime loans stretched out far longer than ever before and sadly, many young people are facing huge student debt that will affect their disposable income for years to come.

Returning to the store closings, while we are often saddened by these we are seldom surprised. An example of our reaction is how fans of Toys R Us expressed their sadness after it announced "everything must go" from its U.S. headquarters - including a life-sized statue of mascot Geoffrey the Giraffe. While the liquidation of the company's U.S. assets got underway to the despair of many on social media many people failed to notice that Toys R Us UK also announced that administrators had stepped in and all of its branches would close too. The U.S. closings resulted in lost employment for its 33,000 employees, this included 1,600 people at its New Jersey headquarters. Adding insult to injury, the state's two U.S. senators and a House colleague called on the chain's owners to "support" those workers any way they can.

Just across the street from my office sits one of the largest malls in Indiana where Sears was one of the original tenants back in the 60s. Both Toys "R" Us and a newly remodeled high-end department store, Carsons, that had only been open a few years have closed their doors in the last few months. Today few of us are shocked to hear that a store is closing even if it happens to be a mainstay of the area, however, as one by one these major stores, known as "anchor stores" close, it now appears the whole mall is in full-fledged liquidation mode as a result of being monkey hammered into submission by a wave of new reality sweeping across America. Paying employees more so they can spend the money elsewhere simply does not work.

Closures Are Set to Accelerate

Last year more than 7,000 stores closed their doors, more than twice the amount of stores that opened in the same time period. Question is, with consumer confidence at record levels and the U.S. economy showing strength, why are so many stores having trouble? There are a number of trends at work behind America's retail apocalypse such as retailers taking on too much debt and our own government giving online retailer Amazon special tax treatment as well as the United States Postal Service delivering its merchandise at a discount. State and local governments are even putting packages together with special incentives to lure Amazon to build in their areas oblivious to the damage it will cause in coming years.

The fact is a bill is being created as a result of this assault on our brick and mortar retailers and it will come in many forms including defaults on loans and bonds as well as reduced property taxes for local communities. We can also expect a slew of empty buildings blighting our landscape and driving down the value of properties across the nation. With many traditional brick-and-mortar retailers having very heavy debt loads and looking at nearly $1 trillion of debt coming due over the next 3 to 5 years if the economy turns south this might only be the tip of the iceberg. These businesses both large and small are often viewed as the bedrock of our communities and with the closing of each one, a little bit of us goes with them.

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Footnote; This is the first part of a two-part series. The second will focus on the economic issues     surrounding retail closings and a suggestion that could level the playing field with online players.    Below is a link to an article about how the money-losing United States Postal Service has added to the decline of communities for a few dollars in revenue.
http://brucewilds.blogspot.com/2018/07/amazom-shipping-rates-deemed-to-low-too.html
The second article of this series on retail closing has now been published and is located at the link below.
http://brucewilds.blogspot.com/2018/08/online-transaction-fee-could-level.html