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The Truth About President Trump And N. Korea- By NEIL SISKIND

President Trump has been concerned about China’s policies and economic activities and their affects on our economic interests for many years. Since being inaugurated as President, President Trump has had a target on China due to its growing economic, political, and technological powers, and its trade and currency activities, all to the detriment, or possible detriment, or potential detriment, of the United States. China is a major competitor to the United States, and, for the Trump administration, a major long-term threat to the United States’ position as the world’s foremost superpower.

The interaction and negotiations with North Korea is all about China. Just like Iraq in the Middle East, North Korea is a location where the United States wants a foothold (if not a stronghold) that provides us the proximity with which to monitor a threat to our security; in this case, China. Location, location, location. If Korea was in the Caribean, do you think the President

People are wondering why President Trump is being lenient, and amicable, with and towards North Korea. It’s because the Trump administration, in my own estimation, has decided that we need influence in and over North Korea, as leverage over China. President Trump’s showdown with Kim Jong-un has never been, primarily, about nuclear weapons. I think that for the President and his administration, this has always been about China, first and foremost, (just a few days after the Summit with North Korea in Singapore, with the confidence of what President Trump claimed was a success in developing a relationship and a soft agreement with North Korea, and, with the confidence of such, the President signed-off on billions of dollars in tariffs on China’s exports to the U.S.).  I don’t think that President Trump is up all night fretting about North Korea’s nuclear program. But, I do think that he is up all night worried about China’s growing power in the world and it challenge to U.S. dominance and security and stability.

The urgency and willingness with North Korea is all about proximity and location. Can you imagine the U.S. having a major threat to its economic and military ambitions right on our own border? We have Mexico on our border, and look how that drives the President up the wall (or, to build a wall, as it were). This is about valuable real estate.

If you’re not thinking that President Trump’s ambitions in North Korea are all about his ambitions in China … then you’re not thinking. The moment the Singapore Summit ended, Trump went right to work on China.

President Trump has been using U.S. strength and the demand for “denuclearization”, or else”, as leverage to get control over North Korea because of its strategic location from where the United States can better monitor China (and Russia), without an intervening unfriendly nuclear threat (such as having N. Korea as an intervening power between our friend, South Korea, and China). To the degree that it is about nuclear weapons, it is as much about keeping those weapons, and North Korea, out of China’s reach and control. North Korea offers the United States prime real estate due to its shared border and direct geographic link with China. Location, location, location. Likewise, Kim Jong-un’s use of nuclear weapons is a red herring to get something he wants from the United States- money.

Yes, folks … as shocking as it is- this is all about money and power.

President Trump has succeeded in getting a mad dictator into a dialogue with an enemy nation across the world (us)- as opposed to with its own neighbors. How could the U.S. have done this without the threat of war? It could not have. President Trump found the leverage to handle an impossible scenario and get an enemy to the bargaining table without really giving him anything that can’t be reversed.

For some reason, many in the press think that President Trump achieved and accomplished nothing in his meeting with Kim Jong-un. For the press, everything should happen in public so they can write a story, or else there is some sort of failure. The press wants a headline: “President Trump Signs Historic Deal In a Day” or “President Trump Fails In Singapore”. But, you can’t have a business deal or a political deal without a relationship on which such is predicated.

If I can play armchair psychologist for a moment, I think that President Trump is able to relate to Kim Jong-Un because he identifies with him. First, they are both rebels who operate outside of “the system”, outside of acceptable norms, and value great individual power through charisma and force of will. It is the same reason that Trump identifies with Vladimir Putin. He respects that modus operandi. But, with Jong-un, it goes even deeper. Trump identifies with a young man, who, like Trump, inherited a great empire from his father and grandfather, and commenced on a propaganda and marketing program to establish his own individual career and brand and identity, and to establish himself as a power separate from, and perhaps, greater than, his father. Further, Kim Jong-un, Like Trump, has engaged in building beautiful buildings throughout Pyongyang to establish and prove his strength and power; and, he’s gone into a lot of debt and financial turmoil doing that, and is now reaching-out for financial help … just like Trump did with his father when Trump Taj Majal was crumbling, and his debt burden was growing. Trump and Jong-un may have had similar, privileged childhoods, with constant demands and/or challenges to be their own men. They both lob bombs and take risky actions first, and ask questions later, which is typical of highly-privileged children with senses of entitlement. They use their inherited resources to control things. Trump and Jong-un would not be the first people to bond over the pressures of difficult and controlling and highly accomplished fathers. So, Trump’s implied message to Jong-un may be, “Trust me. I get it. I understand”.

But, maybe the news media doesn’t understand.

Perhaps the news media wanted the President to meet with Jong-un and lead the dialogue with a Godfather-like “offer he couldn’t refuse” so that the press could further its characterization of the President as a global antagonist and practicing isolationist.

President Trump negotiated and executed the meeting in Singapore with excellence. He can hardly explain his negotiation strategy or ultimate plan to the press, while, or before, executing upon it. He literally explained to the world during his Presidential campaign that he would not be warning his enemies that, and how, he was coming at them. So, what’s the surprise? President Trump has succeeded in his clear and vital objective of commencing a potentially productive dialogue with a mortal enemy that can provide us with a way to help keep China in check with U.S. access to North Korea’s strategically located real estate adjacent to China. Location, location, location.

Ultimately, we may likely have an Iran nuclear deal type of agreement, where we, the United States, pay North Korea a great deal of money for nuclear disarmament- and access to the closed-off nation. I, frankly, wouldn’t be shocked if North Korea gets to keep some of its nukes or nuclear development capabilities in exchange for a U.S. military base on the land or just off the coast of North Korea so that we can be in arms reach (proverbially and militarily) of China and Russia. Location, location, location. The more money we give to North Korea, the more access and control we will have over China’s next-door neighbor.

I’m confident that North Korea’s commercial potential as a location for real estate, hotel, and casino development so close to China and Russia, and all that Chinese and Russian money, with the United States getting the first-crack at such development opportunities (with debt or equity) has not been lost on Donald Trump- if not for his own benefit, then for future Trump generations, or, at least, for American developers and operators, in general. Trump knows that China and emerging Asia are the fastest growth markets in the world. He wants to fight … and he wants to join it.

For Donald, Trump, it’s a real estate deal, and it goes like this:

“We want access to and use of your land, with a restrictive covenant that you can’t build or maintain nuclear weapons. How much will this cost?”.

Successfully achieving access, and, possibly, someday, use and development of land directly connected to China, in exchange for payments to North Korea- a permanent land use or development option, if you will- would certainly be Donald Trump’s best real estate deal, yet.

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

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Capex- The Elephant In The Room- By NEIL SISKIND

By Neil S. Siskind

As a way to stimulate jobs and the economy, in December of 2017, Congress passed The Tax Cuts and Jobs Act (herein, the “Act”). But, since we are “allegedly” already at or near full employment[1], the Act is, mostly, needed to be a “wage growth” stimulus, rather than a “jobs” stimulus.

Despite pockets of good news in some retail spaces and cloud computing, the economy appears to be slowing, with the present economic cycle coming to an end. Even with the benefits of the Act, the latest GDP print was down (quarter over quarter), consumer spending has moderated (with monthly fluctuations), wages are, largely, stagnant, we have reached nearly full employment, stock indices are mixed for the year to date, jobless claims were up in April (with monthly fluctuations), and the yield curve, while steepening of late, has been flattening.[2]

As the economy is nearing, or at the end of a long economic cycle, and, is, otherwise, set to slow, the Act will, potentially, prolong the present economic cycle. While tax cuts (on both the supply and demand sides) may provide a short-term, or one-time shot to the economy, it is the new capital expenditures (“capex”) bonus depreciation rules that could give the economy a more protracted and sustainable economic boost[3].

The new bonus depreciation provision of the Act is intended to encourage businesses to invest in buildings, equipment, and machinery (i.e. capex) as a way to stimulate the supply side of the economy through business spending, that, may, or could, lead to jobs- particularly in the manufacturing and raw materials production and supply sectors, and economy-wide wage growth. To further explain this intention by Congress, and the potential results of spending by businesses en masse, requires a brief discussion of “supply side” and “demand side” tax philosophies and strategies.

Tax cuts can be used to stimulate demand by consumers, or by businesses- or by both[4].

“Demand side” tax cuts are intended to encourage or empower consumers across the entire income scale, to spend. Such tax cuts are intended to put money into consumers’ pockets that they will spend, and, in turn, help businesses grow their sales, and, thus, encourage businesses, as a consequence, to invest in their businesses by hiring more people, and buying more equipment and machinery, and making other growth-oriented investments in their businesses to feed the growing demand. This, in turn, may lead to more jobs, and then even more and more demand.

Tax cuts designed to encourage business spending are known as “supply side” tax cuts[5]- also referred to as “trickle down” economics (a term used by some- generally, Republicans- to describe how stimulating the supply side of the economy to spend has a multiplier effect for the economy, while used by others- generally Democrats- as a pejorative to indict tax cuts they allege are designed to only benefit the rich).

Supply side tax cuts (or “trickle-down economics”) work as follows to stimulate economic growth:

Businesses receive a reduction of the corporate tax rate, and invest the greater corporate earnings in their businesses in ways that lead to job growth and wage growth in their own businesses (i.e. trickle-down) through capex, and new sales and marketing programs, and product development, and other growth initiatives- while increasing salaries of their principals, and income to their shareholders- as well as growth in their supporting businesses, such as those of their vendors, materials suppliers, and support services they use. Reductions in the corporate tax rate may be coupled with cuts to the individual or personal tax rates for upper-income Americans, which, in addition to benefits they’ve received from corporate tax cuts as principals and shareholders, encourage spending at the upper-end of the economy in ways that stimulate the entire economy, such as by their buying of homes, cars, and boats, or taking vacations, going to ballgames, and eating at restaurants. This spending, theoretically, creates jobs in other industries to support the growing spending on these luxuries, discretionary items, and necessities. (Tax cuts that encourage spending by higher income earners is actually demand side stimulus that is intended to “trickle down” into wider demand side spending.)

While supply side tax cuts are intended to spur business demand and spending, that, eventually, lead to growing consumer demand, they are also intended (at least, this time) to encourage companies to “directly” share their higher earnings with employees in the form of wage increases, putting more money in employees’/consumers’ pockets and spurring consumer demand. But, to be sure, it is expected, and hoped, that businesses will not only give raises and salaries and all of their respective tax cut benefits to the demand side, but, rather also invest in internal growth initiatives to give the multiplicative benefit that supply side tax cuts should provide. Otherwise, lawmakers would give the tax cut only to the demand side.

It is hardly a fear that businesses will share all of their additional profits with employees.

The new capex bonus depreciation rule is intended as a “supply-side” stimulus.

To evaluate the potential protracted economic benefit to the U.S. economy from the new bonus depreciation provision in the Act, there’s a two-part query:

Whether capex will happen by businesses en masse; and, if so, would it be a net positive or a net negative for the economy?

Will we get capex by businesses en masse?

We are in the late stage of a typical economic cycle. We’ve had low interest rates for multiple years during which time businesses have had numerous opportunities to invest in capital equipment using low-cost capital. Businesses may be concerned about rising commodities costs, rising interest rates, and a stretched consumer, which may disincentivize investments in new capital equipment. Without a consumer at the end of the capex rainbow, even with a tax benefit, an investment could be a true loss[6]. Businesses need a positive ROI, regardless of capital investment expensing. Available capital must flow to its best and most productive and most profitable use, or else it’s just money spent to offset other income in an overall loss.

If we do get capex by businesses en masse, what would it mean for the larger economy?

If businesses en masse engage in capex, it could mean more jobs, and, since unemployment is so low, higher wages which result in demand side stimulus, and a circle of more business spending, more jobs, higher wages, and more demand growth.

But- capex by businesses en masse could also mean higher interest rates and higher commodities prices for commodities used to build machinery and equipment, and even buildings. Rising raw materials prices can push businesses’ normal input costs higher. So, while businesses en masse make capex investments, and take tax write-offs, they will also be increasing the input costs for raw materials used in their respective normal courses of business. Companies could have trouble passing-through these costs to consumers in this Amazon era, unless wages rise.

Perhaps, Congress should have made it a condition that purchases related to capex be made from U.S. manufacturers, only, so as to ensure that the U.S. economy gets the benefits of capex (job and wage growth) along with any increased commodities prices that businesses and consumers may suffer; otherwise overseas companies may get the orders, while U.S. consumers get higher commodities and consumer product prices- without higher wages[7].

There is a concern that companies will use their capex-spends to buy technologies that make their respective businesses more efficient and productive, causing a lesser need for employees, shrinking the national employment base, and causing nation-wide wage deflation. On the other hand, if such technologies are acquired by businesses en masse, it would create new jobs for companies that develop, manufacture, sell, and maintain such technologies. Whether these types of technologies hinder the long-term outlook for human capital in this nation, I will leave to economists to debate[8].

Will capex by businesses en masse lead to higher wages and stimulate demand, increasing GDP and business profits, creating more business investment and even more jobs and even higher wages, providing rocket fuel for the economy?

Will capex by businesses en masse lead to higher energy costs for consumers?

Will capex by businesses en masse cause higher input costs for businesses?

Will capex by businesses en masse cause higher commodities prices and higher wages- causing higher interest rates?

Will the inflationary effects of capex by businesses en masse (rising commodities and rising interest rates) be offset by higher wages and a stronger consumer?

Will capex by businesses en masse occur without job and/or wage growth- causing higher commodities prices and declines in consumer spending?

Will capex by businesses en masse occur, or at any significant level at all?

These are the known unknowns; and, for investors and business owners- a dilemma. Should businesses avoid investing in capex if the consumer is weakening, while interest rates and gas prices are rising- or will capex by businesses en masse, and the (hopefully) resulting wage increases, be a panacea for weakening consumer spending? If you track global stock and bond and currency markets, investors seem as confused as anyone as to the direction of the economy when weighing a late stage cycle, rising interest rates, and stagnant wages, against a good earnings season, tax cuts, and capex incentives.

It’s also a dilemma for the Fed. Will capex spending by businesses en masse cause commodities and/or wages to rise, justifying the Fed raising its target rate to normalize interest rates and continue quantitative tightening to normalize its balance sheet, and manage a real estate bubble and a growing national debt, while also fighting inflation; or, will the Fed have to try to continue to make its case for higher interest rates without underlying evidence of significant growth in wages, while commodities prices, especially oil, rise, due to economy-wide capex stimulus? Does the the Fed have a different Fed funds target rate if capex fails to materialize as expected?

What about the national debt and the deficit if tax receipts from “capex trickle-down” fall very short of expectations? That could present quite a dilemma, too.

It’s hard to know how capex by businesses en masse will affect the economy, if it happens. If it doesn’t, it’s hard to see from where further job growth, and any significant wage growth, and any protracted and sustainable economic growth will come.

The way that capex plays-out will determine the way that the economy goes … and, as of now, it appears to be anybody’s guess.

_____________________________

  1. When President Trump took office, the unemployment rate was 4.7%. As of April, 2018, the unemployment rate is 3.9%.The unemployment rate at the time that the Act was passed by Congress was 4.1%.
  2. The US Dollar has been stronger. The reasons for such are various, and not entirely known. A complete discussion of this goes beyond the scope of this article. In short, while a strong Dollar can indicate investor confidence in the economy, as the U.K, Europe, Japan, and China appear to be slowing, and their respective rates expected to remain muted (save for China, which is raising rates to “target” rampant real estate speculation in its country), our rising rates, may, simply, be making our currency more attractive on a relative basis. That said, the Dollar, may, in fact, be indicating the expectation of future economic strength, especially if significant capex is expected.
  3. As with any Tax Code benefit, there are requirements and limitations on what types of businesses can take advantage of a tax benefit, and on what kinds of capital assets qualify.
  4. Supply side and demand side economics are both intended to ultimately stimulate consumer demand; there are different methods to best accomplish this, which are grounded in different ideologies.
  5. I’m not sure I agree with the exact common definition of supply-side economics (coined by French economist, Jean-Baptiste Say), which states that the supply of goods creates the demand. More specifically, it’s the supply of capital that get invested into businesses by way of capex, and marketing, and product development, and manufacturing of goods, and other growth initiatives that create jobs and wage growth, that stimulate consumer demand (i.e. it trickles down in the forms of more jobs and higher wages), or it’s the supply of money in the hands of higher income consumers through greater earnings that leads to spending on homes, and cars, and vacations, etc., thus, stimulating demand by creating jobs throughout the economy (i.e. trickling down) to service this spending. (This latter type of stimulus, is, actually, a sort of demand side stimulus, as it stimulates consumer spending to get more consumer spending. It’s a bit of a hybrid of supply side stimulus and demand side stimulus.)
  6. There are, of course, a variety of other factors that businesses consider when deciding to make investments (including decisions on new capital expenditures) that go beyond the perceived and expected strength of domestic consumers, including: strength and expected strength of foreign markets and foreign consumers; strength of a company’s own industry; tariffs and taxes (other than income taxes) related to the business; and internal business issues, such as capital position and best use of available capital.
  7. Certainly, I recognize the cost pressures for companies that must order machinery and equipment from domestic suppliers. But, it might be worthwhile if it creates more jobs, higher wages, and stronger consumers.
  8. This opens-up the whole conversation of whether business efficiencies and greater productivity and cost reductions gained through technologies are, overall, good or bad for an economy if the need for human capital is diminished- or if the need for human capital would even be diminished by such technologies. This also brings up the conversation about “creative destruction”, which goes beyond the scope of this article.

 

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

Sponsored Advertisements

Inventors, IP Owners, Manufacturers
Learn How To Bring Products To Market And To Expand Your Distribution Channels
The Complete Guide To The Ways To Manufacture & Sell Your Products