Interesting Items 05/17

Howdy All, a few Interesting Items for your information.  Enjoy –

In this issue:

1.  Gaza
2.  Inflation
3.  Pipelines
4.  Lumber
5.  Zuck Bucks

1.  Gaza.  War has once again returned to the Middle East, where Hamas celebrated breaking up of a squatter’s riot in Israel with a barrage of Iranian supplied missiles, over 3,150 at this writing.  Of this number, some 15% failed on launch or shortly afterwards, 90% were intercepted mostly by the Israeli anti-missile Iron Dome system, with the rest getting through.  Note that these are all poorly guided missiles, whose guidance systems are improving with every batch supplied out of Russia and China thru Iran.  And for planning purposes, Hezbollah has a lot more of these across the border in Lebanon.  Appears Israeli intelligence is pretty good this time around, as are their advanced weapons, which have been targeting command and control sites in Gaza, launch and munitions storage and marshaling locations, one of which was the AP building in Gaza.  For all the good they have been doing, Israeli persuasion is even better, as they have played international media masterfully in several ways.  First, like the war against ISIS, almost all of this is being done out of the public eye, allowing the IDF to go after Hamas leadership with near impunity, even though Hamas is up to their usual tricks of hiding weapons, command & control, logistics, and firing positions among the civilian populace.  One of the reasons the Trump administration was able to make ISIS disappear was because the action was almost entirely out of the public eye.  In their attack on the AP building in Gaza, the IDF had good intel that Hamas was using the building as a military location.  The IDF gave a warning for civilians to leave, and then destroyed the building.  This gave the AP and the rest of the international media something to talk about that they love more than anything else in the world – themselves.  And when they are dedicating a substantial amount of time talking about themselves, they aren’t covering any of the carefully orchestrated and staged victim mongering by Hamas.  There are only 24 hours in any day, and when you fill that airtime with the media talking about itself, there is simply none available to cover what Hamas would rather them talk about.  Final persuasion piece was an attack on a tunnel complex.  This one, if accurate, was a bit of a sneaky head fake, with the IDF announcing a ground assault into Gaza.  There was no ground assault ready to roll.  But there were a whole bunch of fully loaded IDF jets with weapons airborne on a near-instant attack.  Once the IDF announced the ground assault, Hamas flushed their fighters into a tunnel complex so as to come up behind the ground assault and defeat it.  Their munitions were also located in the tunnels.  Within minutes of the tweet announcing the ground assault, after Hamas flushed their fighters into the tunnel complex, the IDF jets attacked the tunnels with a variety of delayed fuzing and fuel air explosive weapons, collapsing some 9 miles of tunnels.  Nobody knows how many Hamas were buried alive or killed with secondary explosions, but I expect it was a non-zero number.  You don’t commit that much manpower, time and energy to a warfighting structure without intending to use it in combat, at least in that part of the world.  Happily, for the IDF, those tunnels ended up being as useful to Hamas as the Maginot Line was to the French.  There are several notable things about the conflict to me.  First, it looks like Israeli intel is excellent.  Second, none of their support in the Middle East appears to be fraying.  Perhaps their neighbors are sick and tired of Hamas and their buddies the Iranians too.  Finally, both the US and Iran look worse than useless.  The US part of this I blame entirely on Trump, who did everything he was able to do to remove the US State Department from any effective influence in the region, a really positive diplomatic outcome.  Next proxy war?  Israel and the Abraham Accord signatories v Iran who is now China’s proxy, which won’t end well for either Iran or the ChiComs. 

2.  Inflation.  My (however meager) economics education started with the PBS Free to Choose series by Milton Friedman in the late 1970s.  It was clear, concise, and described everything that was going on at the time.  I was blown away.  Over the years, I have gotten slightly less dumb on the topic, but always used Friedman’s writings as the foundation.  In recent years, I have been interested in something called the Singularity, where technical advances accelerate over time to the point where they become asymptotic somewhere around the middle of this century.  One of the fallouts of this is the notion that technology penetration into the overall economy is profoundly deflationary.  Like the rest of the technological trends, it accelerates over time.  In order to fend off deflation and maintain a healthy 2% or so inflation rate, governments will need to print money and distribute it to the general population in a likewise increasing rate.  Take a look at Kartik Gada’s ATOM for an explanation.  His The Futurist site is a good place to start, though no longer active as he has moved his new stuff to YouTube.  One of the things that pointed me in this direction was the complete lack of inflation following the 2008 crash where the O’Bama stimulus injected nearly a trillion into the economy in 2009 followed with another trillion or two over the next 8 years via quantitative easing.  If Freidman’s theories were still correct, we should have seen inflation.  We didn’t.  However, over the last 12 months, we have injected some $6 trillion into the economy via various COVID responses.  And it looks like inflation is off the mat.  Does this mean that the Singularity guys are wrong, or does this mean that we have simply printed too much money?  As of this writing, I don’t know, though we most certainly have defined a top level for printing money as something less that $6 trillion over 12 months.  Perhaps half or a third of that is a good place to start.  Solution?  As usual, quit printing money and the inflation will stop instantly.  But if that flow is reduced to zero rather than a more reasonable amount, we will replace the specter of inflation with deflation and needlessly lurch from one to the other.  One of the other arguments against giving the general public free money is that they won’t want to work once the paychecks start dropping.  We may be seeing some of this with the extended unemployment compensation tied to COVID relief, and an appreciable percentage (not yet accurately counted) of people who used to work opting to remain on extended unemployment.  16 states so far have rescinded the extended compensation to encourage people to return to work.  It is not often that you learn unexpected but really important things from a major disruption in the economy.  From this one, we learned the amount of money printed that will cause an inflation rate, and we are learning the amount of free money that discourages people from returning (or going) to work. 

3.  Pipelines.  Two pipeline stories this week.  One from the SE US and the other from Michigan.

  • Hackers, likely connected to the hacker group Darkside shut down one of the larger pipelines feeding gasoline, diesel and aviation fuel from Texas to NJ.  This led to an immediate gasoline and diesel shortage, panic buying, gas lines, service stations being out of fuel, and the typical panicked response from media.  The hack was a ransomware attack demanding at least $5 million to turn the system on again.  A week later, the Darkside servers went down and as of this writing, it is unclear why.  As of this writing, the pipeline has been restarted, though it will take a week or so to get the flow back to normal.  Cryptocurrency funds were also withdrawn from the group’s payment server.  So much for pipelines being Bad.  As of this writing, it is unclear what happened.  Speculation ranges all the way from a payment by the Colonial operators to Darkside, to a military or other third-party attack on Darkside which may or may not have included actual kinetic actions taken directly at individuals.  From here, this sort of hacking ought to be a death act by the hackers, and the US ought to respond in kind. 
  • The second story comes out of Michigan where democrat Gretchen Whitmer having no more ability to muck around with her citizens daily lives, is now embarking on an environmental crusade aimed at a Canadian pipeline that crosses part of northern Michigan.  Citing environmental concerns from a potential spill, she ordered the pipeline shut down.  As of now, the Canadians have refused to do so.  Nothing like an international incident between friends.  Here’s where it’s going to get fun.  Whitmer is a close ally of the Harris – Xiden regime.  Election fraud in Michigan helped elect them.  And she is putting them directly nose to nose with what should be a friendly Canadian government led by Justin Trudeau, a lefty fellow traveler like Harris – Xiden.  The Canadian government is backing the pipeline operators.  The operation of the pipeline is protected by a 1977 treaty that the US and Canada agree not to block oil and gas through either country. 

4.  Lumber.  One of the other examples of out-of-control price increases comes from lumber.  At first blush, this appears to be connected to supply chain disruption due to the COVID lockdown insanity, though it might go a bit deeper than that.  An interesting Slate article by Henry Grabar last week took an extended look at the issue.  He writes that on the supply side, business is good, with no shortage of logs to sawmills.  It is the demand side that appears to be going gangbusters, with most suppliers reporting half to a quarter of their normal inventory.  He blames this on buyers being flush with cash buying homes.  I would also suggest that this is a side effect from flushing people out of the cities. 

5.  Zuck Bucks.  Mark Zuckerberg’s charity Center for Technology and Civic Life (CTCL) flooded many jurisdictions with free money in an attempt to turn out inner city democrats to defeat President Trump.  It worked in several states.  Thankfully, it did not work in all of them.  And state legislatures are busily passing laws to make private funding of state and local election officials and infrastructure illegal.  What we didn’t know until last week was the sheer amount of money he spent in Texas, mainly in the larger cities of DFW, Houston, San Antonio and Austin, in an attempt to flip Texas.  The good news is that he was unsuccessful.  The bad news is that he got a lot closer than he should have.  The American Conservative ran an article on this attempt last week entitled How Mark Zuckerberg Almost Handed Texas to the Democrats.  The vehicle for this attempt was CTCL, which saw its revenue climb by a factor of 250 with an injection of $350 million.  So far, they have uncovered nearly $33.5 million in CTCL grants to Texas.  Historically, Texas goes strongly Republican.  In 2016, Trump won by 814,000, an increase of 126,000 over what Romney did in 2012.  In the same election, Hillary increased her vote some 573,000 over what O’Bama got in 2012.  In 2020, Trump turned out 1.2 million more votes than he got in 2016 while Biden turned out a whopping 1.4 million more than Hilly did in 2016.  This is a 50% increase in what O’Bama got in 2008.  Investigators have uncovered 21 of 118 grants totaling $33.5 million.  My guess is they uncover a lot more spent than $33.5 million as they uncover the recipients of the remaining 97 grants.  Other data includes:

  • CTCL funded 8 of the 10 most populous counties in Texas.  The two that did not receive Zuck Bucks were the only two of these that Trump won.
  • Biden won just 22 of 254 Texas counties.  CTCL funded elections in 17 of them. 
  • Trump won 231 counties, 101 of which received CTCL grants.  Those 101 counties gave Trump less than 25% of his statewide total.
  • In contrast, Biden’s 17 CTCL funded counties gave him 69% of his statewide total.
  • Biden flipped 3 counties that Trump won in 2016, all of which received CTCL grants – Tarrant (Ft Worth), Williamson (near Austin) and Hays (near Austin).  The counties contain 1.6 million.  Trump got 597,000 and Biden 615,000 from these three counties.
  • In contrast, Trump flipped 8 mostly small counties Clinton won in 2016.  Of the 200,000 total in these counties, Trump got 30,000 and Biden 19,000 votes.  Only one of these received a CTCL grant.
  • Bidens biggest gains were in Harris County (Houston), Dallas County, Travis County (Austin), Bexar County (San Antonio) and Tarrant County (Ft Worth).  These counties received $28 million, 83% of the total known so far.  Dallas was by far the largest grant recipient at $15 million.  Houston got nearly $10 million. 

Basically, Biden won more votes in fewer places than his predecessors in past elections.  If state and local government don’t prohibit this sort of private election funding, Zuckerberg or someone like him will do it next year and in 2024.

More later –

  • AG

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