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Generational Dynamics Web Log for 13-Apr-2013
13-Apr-13 World View -- John Kerry says that North Korea's rhetoric is 'unacceptable'

Web Log - April, 2013

13-Apr-13 World View -- John Kerry says that North Korea's rhetoric is 'unacceptable'

Cyprus residents in shock over new bailout terms

This morning's key headlines from GenerationalDynamics.com

John Kerry says that North Korea's rhetoric is 'unacceptable'


South Korean President Park Geun-Hye shakes hands with John Kerry on Friday (Reuters)
South Korean President Park Geun-Hye shakes hands with John Kerry on Friday (Reuters)

Here's what American Secretary of State John Kerry said on Friday during a visit to Seoul, Korea:

"We are all united in the fact that North Korea will not be accepted as a nuclear power. The rhetoric that we're hearing from North Korea is simply unacceptable."

What is this supposed to mean? North Korea is already a nuclear power, and has been for several years. So if that's not going to "be accepted," does that mean that we're going to bomb North Korea's nuclear facilities? What else could it possibly mean?

And what does it mean that the rhetoric "is simply unacceptable"? Does that mean that we're going to bomb North Korea's child dictator Kim Jong-un, the next time he opens his mouth? What else could it mean?

The U.S. has been calling North Korea's actions and rhetoric "unacceptable" for years, so much so that saying it again is just a joke. It's the same thing as in Syria -- the U.S. has said over and over again for two years that president Bashar al-Assad's bloody slaughter of innocent Syrian women and child is "unacceptable," but he just keeps going on slaughtering innocent women and children. Once again, these statements are silly jokes.

Kerry added the following:

"If Kim Jong-un decides to launch a missile, whether it's across the Sea of Japan or some other direction, he will be choosing willfully to ignore the entire international community. And it will be a provocation and unwanted act that will raise people's temperatures.

I would say ahead of time that it is a huge mistake for him to choose to do that because it will further isolate his country and further isolate his people, who frankly are desperate for food, not missile launches."

So, why would a missile test be a "huge mistake"? Does anyone really believe that the North Koreans give a shit if they're "further isolated"?

It's thought to be likely that the North Koreans will conduct a missile test on Monday, April 15, the birthday of North Korea's founder, Kim Il-sung. The assumption is further that the missile test will not target Japan, South Korea or the U.S., but will land in the ocean.

Question: In that scenario, should the U.S. try to shoot it down, given that Kerry is saying that a missile test would be a "huge mistake"?

So, the next few days ought to be fun. CBS News

Cyprus residents in shock over new bailout terms

Residents of Cyprus are wondering how things could possibly get any worse, now that the size of the bailout has risen from 17.5 billion euros to 23 billion, requiring Cyprus itself to contribute 13 billion euros, rather than 7.5 billion. The government of Cyprus is blaming the increase on the number of people who withdrew billions of euros in advance of the bailout agreement, because they foresaw what might happen (or, as some have said, because they were warned). Of course, those people are thanking their lucky stars that they got their money out before the 60% confiscation was imposed. But now the Cypriots are trying to figure out where they're going to get the addition 5.5 billion euro contribution that they have to make to the bailout. Supposedly it will be done by raising taxes and selling off state assets, but things are still up in the air.

Meanwhile the Germans are showing no sympathy at all, and are certainly not willing to increase their own contribution to the Cyprus bailout. In fact, just the opposite is true -- some German politicians are saying that the 5.5 billion euro increase proves that there's no point in bailing out Cyprus at all, since the money would just go to waste. Germany's parliament, the Bundestag, will vote next week whether to approve the terms of the Cyprus bailout, and the proposal is expected to pass, provided that Cyprus can prove that it will be able to come up with the extra 5.5 billion. Cyprus Mail and Spiegel

Morgan Stanley's Mary Deatherage lies on CNBC


Mary Deatherage on Friday (CNBC)
Mary Deatherage on Friday (CNBC)

I never cease to be absolutely astonished at how "experts" come on to CNBC and tell open-mouthed lies to support their sales pitch, with no corrections from the anchors. They simply make up any numbers they want, and nobody says a word.

On Friday morning, I listened to Morgan Stanley's Mary Deatherage, head of The Deatherage Group, described as a Wealth Advisor and Senior Investment Management Consultant.

Deatherage was asked whether the stock market would go up from here. She said:

"Well look, under no circumstances could we ever say that the market's frothy. The trailing price/earnings for the S&P are 14.9 with a 2% yield. ... So nobody could say that it's overvalued. So the question is: Does it go strong from here?"

No, the trailing S&P 500 price/earnings ratio is not 14.9. She simply made that number up out of thin air. The S&P 500 P/E ratio is 18.28 as of April 12, according to the Wall Street Journal. (See the figure at the bottom of the tables, on the left.) And 18.28 is astronomically "frothy."

So Deatherage simply lied, because she wants you to buy stocks through her, so she can make a lot of your money from commissions. So she's defrauding her clients. Or maybe you'd prefer to believe that she didn't know. In that case, she's a total moron, since knowing the S&P 500 P/E ratio is the most basic part of her job. Either way, you're the total moron if you trust even a penny of your money to Deatherage or to Morgan Stanley.

As was reported in January, a recent court case has caused the release of hundreds of pages of internal Morgan Stanley documents that show that, during the mid-2000s decade, Morgan Stanley employees knowingly lied to clients by selling them worthless securities, and saying they were rated "AAA." As I've said many times, the same people are in the same jobs in the financial industry, still looking for new ways to defraud people, which is what Deatherage appears to be doing.

As I wrote in my 2013 Forecast, the S&P 500 price/earnings ratio has been way above average since 1995, and by the Law of Mean Reversion, this bubble will burst, and a major panic will push stock prices below the Dow 3000 level. If you don't believe that, then ask yourself why one stock broker after another goes onto CNBC and lies about stock valuations.

(Comments: For reader comments, questions and discussion, see the 13-Apr-13 World View -- John Kerry says that North Korea's rhetoric is 'unacceptable' thread of the Generational Dynamics forum. Comments may be posted anonymously.) (13-Apr-2013) Permanent Link
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