Wednesday, March 7, 2018

Korea 2018





On our annual February visit to Alameda, California we attended an informal talk on North Korea by a retired U.S. Army colonel who had spent most of his career in Army intelligence. Although born in San Francisco, the colonel was of Chinese descent, a factor he claimed led to his being stationed in Asia for most of his career.

His talk on Korea was a real eye-opener. For example, he pointed out that there had never been a peace treaty between North and South Korea. The Korean War came to an end in 1954 with an armistice or cease fire agreement that established a border between the two parties along the 38th parallel.  The armistice is still in existence 64 years later but the lack of a peace treaty has created what amounts to two armed camps along the demilitarized zone stretching the entire width of the Korean peninsula.

On one side of the border the North Koreans have placed a huge array of non-nuclear missiles all pointed at the South. Seoul, the capitol of South Korea, is in easy striking distance of these missiles. The colonel pointed out that nuclear weapons could not be used in such close proximity. Still, the 20,000,000 million residents of Seoul could easily be more than decimated within minutes.

On the other hand, South Koreans could put up a devastating response. Its army contains around 600000 men, and its air force is equipped with the latest and most sophisticated fighters and bombers. Unlike North Korea, South Korea has become a modern industrial giant definitely able to take care of itself. Nevertheless, since the armistice the United States has maintained a military presence in South Korea. 

There are approximately 40000 U. S. soldiers and their dependents mainly located in a camp only 40 miles south of Seoul. They are also within striking distance of the North Korean missiles. It would seem to me that the presence of this force is more symbolic than military. American troops are a sign that we will have to retaliate if South Korea is attacked. In effect, the American forces are like hostages guaranteeing American commitment.   

A peace treaty between North and South Korea could go a long way to reducing tension in the peninsula. It is hard to know what form the treaty would take but it seems to me that it should be primarily a matter for Koreans to determine. It would be beneficial for both North and South Korea to recognize the right of each other to exist. I also believe that the treaty should call for the gradual removal of all American troops from the peninsula. This move could go hand in hand with de-nuclearization in the North.

In his talk, the colonel also believed that the treaty could include trade relations between North and South Korea as a basic step in reducing the tremendous military arsenal along the de-militarized zone. The DMZ is a powder keg that if ignited, would not only destroy millions of Koreans but also involve super-powers in a terrible confrontation.

Perhaps the Winter Olympic games recently concluded in the mountains of South Korea can give an impetus to a peace treaty. Practically all of the Olympic athletes were symbols of the best in humanity. It was wonderful to see them compete, as well as to see their smiling, healthy faces when interviewed. The Korean athletes were particularly charming. To me the high point of the games was the South Korean Women’s Curling Squad. It will be hard to forget their spirited performances. It is sad to think that the small, garlic producing village they come from is in easy reach of destructive missiles just above the DMZ.

Curling: Silver Medal Winners

Recent news stories have detailed talks between North Korea and South Korea as well as an apparent willingness on the part of the North Koreans to give up their nuclear arms program in exchange for a reduction in the American military presence. The United States has been involved in Korea since 1950. We have helped the South Koreans to become a wealthy nation independent of their former masters in China and Japan. It is time for us to get out, and leave Korea to the Koreans.


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Tuesday, January 30, 2018

The Weekly Bystander Top 10

On Vacation
The Weekly Bystander will be on vacation for the month of February but hopefully will reappear in March. To tide readers and fans over, I post below a list of the top ten viewed posts since the blog first appeared on 12/16/2011 with an obituary of the deceased atheist Christopher Hitchens. Just click on the link provided to view a post. I will list them in reverse order.

Number 10. Florida Vacation. This 2013 post is about a winter vacation in the Sarasota, Florida area that includes a description of a visit to Sarasota's lovely Ringling Museum of Art.

Number 9. Roberto Benign's Pinocchio. This post is a review of Benigni's charming version of the Italian classic story of a puppet boy who won't be tamed. It is in the Masterpiece section of the WB.

Number 8. Year End Top Films. This post briefly reviews eight excellent foreign films. If you missed any, they are well worth viewing. I suspect it gained a number of hits because of the image of the beautiful Fanny Ardant as opera diva Maria Callas.

Number 7. Nobody Expects the Spanish Inquisition. This 2015 post was a review of Benzion Netanyahu's magnum opus on the Spanish Inquisition. Netanyahu, the father of Israel's current Prime Minister, overthrew all of the traditional notions of the dreaded Inquisition.

Number 6. Pedophile Priests. This 2017 post examined this controversial subject and tried to put it into perspective.

Number 5. The Leopard. This post is a review of Luchino Visconti's epic telling of the Italian Risorgimento as it impacted the lives of a Sicilian aristocratic family. The film starred Burt Lancaster in his greatest role, and the young and beautiful Claudia Cardinale.

Number 4.  U.S. Health Care System. This post examined the effectiveness of the health care system in the United States back in 2013. I don't think much has changed since then.

Number 3. Scientific Consensus. This 2017 post questioned the consensus among scientists about the subject of global warming, as well as the validity of consensus in general.

Number 2. The Filibuster. This 2017 post examined the controversy over President Trump's nomination of Judge Neil Gorsuch to the Supreme Court, and included a discussion of the very concept of filibuster.

Number 1. Titian, "Sacred and Profane Love". This post is far and away the most viewed on The Weekly Bystander. It is a concise version of my own interpretation of Titian's famous masterpiece. Is it #1 because of my expertise, or because of the beautiful woman in the painting?

Titian: Sacred and Profane Love



Wednesday, January 24, 2018

Home Expenses 2017


Since I retired from my financial planning practice in 2007, I have continued to monitor the finances of one retired couple. They live in a modest ranch home in a nice neighborhood in Fairfield, Connecticut. They provide a good case study for the millions of Americans in similar circumstances. Let’s just focus on their expenses related to the maintenance of their home. The total annual housing cost in 2017 was $37482.
Principal and interest payments on a mortgage came to $20750, 55% of the total. This figure also included home insurance. Payments on a home equity credit line, used for home improvements, came to $1075. Real estate taxes came to $8650, 23% of the total. The real estate tax has been deductible from Federal income for tax purposes, but that deduction will go away in 2018 due to the tax reform bill.
Electricity costs $1499 for the year or only 4% of the total. People complain about electric bills but they seem like an incredible bargain to me given the importance of reliable electricity in every aspect of our lives. Just remember how everything shuts down in a blackout. No heat, no light, no refrigerator. You can’t even open your garage door, much less charge up your electric car or your indispensable mobile phone or device. 
The water bill was even more of a bargain. It was only $486, about 1% of the total. Not only is it clean and reliable—we only have to turn on the tap and there it is-- but it is also a vital necessity. We cannot live more than 4 days without water to drink. Moreover, we use it to wash, clean, flush our toilets, and water our lawns.
The total phone and cable bill includes TV, Internet, Mobile phone service, and a landline. It was a little under $2900 and represented 8% of the total. Yes, a landline is included for old time’s sake. In today’s world these services seem almost as indispensable as electricity and water.
The home is heated with oil and last year’s bill was $2130, or about $5.80 per day. The burner is new and very efficient but the weather and the price of oil can vary each year. Frigid weather after Christmas will probably drive up next year’s bill unless the rest of the winter is mild.  
So, for a little over $3000 per month this couple can live in a modest ranch home in a lovely neighborhood in Fairfield, one of Connecticut’s nicest towns. Of course, this figure does not include food, clothing, transportation, medical, or entertainment expenses. It also does not include Federal, and State income taxes.
Speaking of taxes, starting in 2018, the loss of the deductions for State and Local income taxes, as well as the limited deductibility of home mortgage interest, will increase the cost of housing for this couple. However, the increase in the standard deduction, and lower rates will limit the damage somewhat.
What are the housing prospects for this elderly couple going forward? Like many people over the past few years, they have refinanced their home mortgage to lock in a lower interest rate for what likely be the rest of their lives. That is a big plus to owning with a fixed rate mortgage. The lowering of mortgage rates has resulted in more savings for homeowners than any tax deduction.
Property taxes are beyond their control as they will likely continue to increase every year. At first glance it might seem that this is an advantage for renters, but increased property taxes are inevitably passed along by landlords to renters in the form of increased rent.
Their utility bills are subject to increases despite the fact that public utilities are regulated. However, looking at the past it would appear that competition is a more effective way to keep prices down than government regulation. Just look at the way the phone companies are battling one another for customers. Or look at the way the cable companies are being hard pressed to maintain their monopolies.
Other factors like old age, sickness, and medical costs might drive them and others in the same boat out of their homes. Until then, they will probably be able to maintain a comfortable, if not extravagant lifestyle. I believe that millions of other Americans are in similar circumstances. They live on a combination of Social Security, pensions, and income from savings and investments.
They will be little effected by the tax reform law. However, if the promise of tax reform comes true, the prospects for their children and grandchildren will be better. More than just keeping their jobs, they might find that higher employment will increase their income and provide them with greater job freedom and mobility. 

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