Free at last! But at what cost?
Did the two reporters did not know what they were doing when they went illegally into North Korea to report for Current TV? Whatever happened to personal responsibility?
Did not Al Gore take a calculated risk in sending his reporters to North Korea? If they had succeeded in taking footage of reclusive North Korea, Gore's channel would have made a ton of money. Instead, they got caught and got imprisoned. Isn't that a "business loss"? If banks take risks and lose, we unload heaps of scorn on them. But when another business (Current TV/Al Gore) takes risk and loses, we sympathize!
Al Gore benefited because he can now boast that he can get his reporters to undertake risky ventures because he has the ability to get them freed if they run into hot waters.
President Obama was benefited because he now has one less international issue to face.
Even North Korean leadership benefited - Kim Jong Il was able to get much needed international attention and recognition for which he so desperately craves, and was able to demonstrate the "magnanimity" of North Korea's "Dear Leader" by the Presidential Pardon.
But what about the US? It lost face in the international community; it had to climb down from its strict rhetoric of "there will be consequences". Far from punishing a small, rogue state, the mighty US sent its former President to secure a "pardon" for its journalists. While it has exposed the US to ridicule, it also has reduced the effectiveness of the Office of the Secretary of State. Predictably, the Secretary of State Hillary Clinton had to go to Africa and not being around when the series of events unfolded.
If President Clinton went to North Korea in his private capacity, then it was imperative on the White House to declare that the Administration is not involved in negotiation, other than ensuring the safely of the former President. Since that did not happen, it gives a more official flavor to the entire episode.
And what about the people of North Korea? If Kim Jong Il is a dictator who has caused countless sufferings and millions of deaths in North Korea, by giving legitimacy, recognition and international attention to his regime, propping it up (and thereby helping him to stick to power longer), President Clinton has done a huge disservice to the people of North Korea and history will judge him in that context.
Oh well, nearly everyone benefited except the US. But then who was representing the US interests anyway?
Thursday, August 06, 2009
Tuesday, August 04, 2009
Cash 4 Clunkers
The debate over additional funding for Cash for Clunkers (C4C as it is sometimes called) would be amusing if it were not so tragic. Amusing because Republicans oppose it but can't articulate why. Tragic because Democrats think it is the greatest thing since sliced bread and it is not.
It is easy to understand that no one will trade his vehicle for a $4500 credit if the value of the car is more than $4500. Therefore, this will impact cars with a market value of less than $4500.
"Unintended consequences" of the C4C program that the Administration did not see (or refuses to see)
1. It will take many low priced used cars off the market and put them into the dumpsters. This will reduce the supply of old, running, for-sale cars in the market. By the law of supply and demand, this reduction in supply will increase the price of old cars, making them out of reach of poor people.
Indirectly therefore, the very poor, who're in the market for cheap cars (those costing less than $4500) will be paying for those who can pay additional thousands to buy a new car.
2. It is being touted that the model sold the most is the Ford Focus, selling for nearly $15000. That means people are still putting in nearly $10500 from their own pocket to buy the new cars. Since this is significant amount of money, most people who will spend this kind of money are the ones who anyway intended to buy the cars in the next few months. So there's a likelihood of sales dropping sharply once the program is over, because all this program will do is to move the purchase dates forward, not genuinely increase demand.
3. People buying the new cars may be buying them for business (as I'll explain) or out of irrational exuberance. In either case, a lot of these newly bought cars will be out in the market for private sale. Consider this:
I can trade-in a $1000 clunker and put in $10500 to buy a $15000 Ford Focus. My total cost is $11500. I can now immediately put this Ford Focus for sale in the market at nearly $14000 - making a cool $2500 profit.
This will increase the supply of (nearly) brand new cars in the market from private sellers, and since a brand new car from the company and from a private seller are nearly perfect substitutes, it will reduce the sales of the cars from the company.
4. It will create a black market for people who will buy a clunker for x (where x < 4500) and buy a new car using the $4500 rebate, and make ($4500 - x) in the process. There is a provision in the CARS law to prevent this: "The trade in vehicle must be continuously insured and registered to the same owner for the full year preceding the trade-in". But nothing still prevents the dealers (or anyone else) from colluding with people who're just trying to sell their old car to ask them to take the 4500 credit, sell the brand new car to the dealer back immediately and split the profits.
Economics and politics don't mix!!
It is easy to understand that no one will trade his vehicle for a $4500 credit if the value of the car is more than $4500. Therefore, this will impact cars with a market value of less than $4500.
"Unintended consequences" of the C4C program that the Administration did not see (or refuses to see)
1. It will take many low priced used cars off the market and put them into the dumpsters. This will reduce the supply of old, running, for-sale cars in the market. By the law of supply and demand, this reduction in supply will increase the price of old cars, making them out of reach of poor people.
Indirectly therefore, the very poor, who're in the market for cheap cars (those costing less than $4500) will be paying for those who can pay additional thousands to buy a new car.
2. It is being touted that the model sold the most is the Ford Focus, selling for nearly $15000. That means people are still putting in nearly $10500 from their own pocket to buy the new cars. Since this is significant amount of money, most people who will spend this kind of money are the ones who anyway intended to buy the cars in the next few months. So there's a likelihood of sales dropping sharply once the program is over, because all this program will do is to move the purchase dates forward, not genuinely increase demand.
3. People buying the new cars may be buying them for business (as I'll explain) or out of irrational exuberance. In either case, a lot of these newly bought cars will be out in the market for private sale. Consider this:
I can trade-in a $1000 clunker and put in $10500 to buy a $15000 Ford Focus. My total cost is $11500. I can now immediately put this Ford Focus for sale in the market at nearly $14000 - making a cool $2500 profit.
This will increase the supply of (nearly) brand new cars in the market from private sellers, and since a brand new car from the company and from a private seller are nearly perfect substitutes, it will reduce the sales of the cars from the company.
4. It will create a black market for people who will buy a clunker for x (where x < 4500) and buy a new car using the $4500 rebate, and make ($4500 - x) in the process. There is a provision in the CARS law to prevent this: "The trade in vehicle must be continuously insured and registered to the same owner for the full year preceding the trade-in". But nothing still prevents the dealers (or anyone else) from colluding with people who're just trying to sell their old car to ask them to take the 4500 credit, sell the brand new car to the dealer back immediately and split the profits.
Economics and politics don't mix!!
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