Why two question marks in the title?  Because the quick answer is “damned if I know”.  I do have a few semi-formed conclusions, however, see if you agree with them:

  • Their leader isn’t rational.  So the fact that the flea is waging an attack on the big dog, while illogical, makes sense to you-know-who.

  • Thus, when you are dealing with an illogical person, don’t expect logical negotiation to work.  Indeed, we’ve tried to, and to apparently no avail.  We don’t think so, anyway.

  • This is a high-stakes game of poker.  Whether either side is bluffing or not is insignificant when you consider the consequences at stake.

So, here’s my recommendation.  When you are dealing with a 3 year old and they throw the toy you tell them not to.  When the 3 year old then throws it again you tell him that he’s going to be punished if he throws it again.  When he throws it the 3rd time, you pick him up off his feet, put him in bed, and despite all the whining, wailing and complaining, that’s it.  That’s what you do.

In other words, we say that we won’t tolerate nuclear missile tests.  Done.  Did that.  Next we draw the line…or more exactly the president and his staff draw the line on what constitutes over-the-line.  An attack on a US possession, plan or ship would probably be considered over the line.  Then, you let the generals recommend a course of action for taking military action.  What is best I leave to them, not me.  But at that point they’ve been forewarned, the world agrees something must be done (whether they say so publicly or not), and we do it.

Yes?  No?

Michael Emerald, CFA

Owner and Wall Street Analyst

Performance Business Design 

Categories: Current Issues

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