Well, I am still not sure what happened in Ukraine on Friday morning. The stock market sold-off early on conflicting reports, only to recover a lot of ground in the afternoon, but then, unfortunately, finish in the red, (save for NASDAQ). On one hand, the action points to growing jitters in the market that is probably the result of the age of the rally, and worries about future catalysts. If there was a serious incident in which Russia (officially) entered Ukraine, the Dow could give up 500 to 1,000 points in a heartbeat. However, I still think cooler heads will prevail.
Speaking of Military Action
A lot is being said about the militarization of local police departments. I think it is the kind of debate that can only happen in a nation where crime has come down dramatically within the past several decades. Similar to freedom, I think Americans take it for granted. Nevertheless, the issue is becoming a lightning rod with economic ramifications.
In 1991, the National Defense Authorization Act which allows the transfer of surplus military gear to local police departments, was passed. Initially, it included things used in both the Cold War and the first Iraq War. In 1997, it expanded to include the anti-terrorism mission. Some of the high-profile equipment includes the following:
- 435 Ambush- protected armored vehicles (M-RAPs)
- 435 Armored vehicles
- 533 Aircraft, planes and helicopters
Local police have also received:
- 93,763 Machine guns or rifles
- 180,000 Magazines (no ammo)
However, only 5% of the reassigned items are weapons…. other tools included items such as 44,900 night-vision equipment.
In the wake of the botched deployment of tear gas and armored vehicles in Ferguson, Missouri, the militarization of the police will be used for political fundraisers and campaign ads. I think it has been mischaracterized, along with various headlines that tanks were pointed at the crowds, especially as there were no tanks. Moreover, I think it is part of an orchestrated war on police, but it has touched a nerve and it makes one question, “What’s the money angle?” So far, the program has $5.0 billion worth of stuff.
The Real Issue
We are in the last days of summer, which means we start to think about the fall, going back to school, and contemplate a better second half for the economy. By now, teenagers are antsy from being restless for so long, that in some cases, it can become a powder keg. However, do not get it twisted, the biggest problem with teenagers and young adults is a lack of opportunity. This is a combination of jobs and a lack of skills.
Right now, the employment-to-population ratio (which measures the percentage of working-age Americans actually working) for 15 to 24 years of age, is near its lowest reading ever. In fact, the number is not far from where it was in the Middle East, when the Arab Spring swept the area. I have always said that I think there would have been more summer riots, if those in the worse economic conditions were not giving President Obama a free pass. Over the weekend, there was a lot of criticism of "government,” but none about the Commander in Chief.
At some point, there will have to be opportunities for everyone, including young Americans. These jobs cannot be artificial, although we need a more robust summer jobs program, but the real solution is an economy that is so great, that it lifts all ships and all spirits.