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New North Korea sanctions won’t end nuclear threat-commentary

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President Donald Trump on Friday announced, “the largest North Korea-related sanctions tranche” ever, which was “aimed at disrupting North Korean shipping and trading companies.” If Washington’s ultimate objective is deterring aggression and preventing war, this new set of sanctions will not help that outcome.

There are realistically only two ways to accomplish the denuclearization of the peninsula. One is through hard-nosed, challenging diplomacy and the other through the launching of a brutal and bloody preventive war. It is a virtual certainty that launching a preventive military strike will incite a major retaliatory attack by North Korean dictator Kim Jong-un.

The all-out war that would likely result could see millions die and might prompt Kim to attack U.S. interests directly. Should the United States decide to press for a full World War II-style unconditional surrender by Kim, we could eventually win by virtue of our overwhelming advantage in industrial and technological capacity. But the cost to our country would be radically out of proportion to what would be gained.

But make no mistake — there will be no war unless Washington starts one. We have an overwhelming conventional and nuclear deterrent to check any aggression by the far weaker North Korea. That provides ample time to achieve our immediate security objectives — making sure Kim never uses his weapons — while providing all the time we need to pursue diplomacy.

Although senior officials often claim the U.S. seeks a diplomatic solution, actions indicate otherwise. We are not presently conducting genuine diplomacy. We are merely taking “actions” devoid of a coherent strategy designed to attain a rational objective. “Maximum pressure” will likely result in only a hardening of North Korea’s resolve to maintain what they see as their lifeline to survival: their nuclear deterrent.

The Trump administration made commendable progress last September when it got the entire United Nations Security Council to back meaningful and severe sanctions. They were further strengthened in November.

One could argue they helped lay the groundwork that prompted Kim to seek dialogue with South Korean President Moon. It can be assumed that North Korea is attempting to use the goodwill of the Olympic games to its advantage, but the U.S. and our allies don’t have to play by North Korean rules. We must use our leverage to and our position of strength to negotiate with weak, yet brutal, North Korea to end the standoff on the peninsula.

However, if there is no discussion, if there are no established means of communication, diplomacy is, by definition, impossible; in its absence, war becomes the only outcome. Fortunately, there is a viable, rational alternative.

National Security Advisor H.R. McMaster has said many times that we are “running out of time” to find a solution. To the contrary, the United States holds all the most powerful cards. Unblinking deterrence and relentless diplomacy can achieve U.S. objectives at a justifiable cost. Powerful deterrence buys us time for diplomatic success.

Another fallacy often put forward: if we don’t hurry, Kim will threaten America with nuclear blackmail and reunite the peninsula under his command. That fear is misplaced, and in fact illogical. First, the South Korean military is far, far superior to the North Korean armed forces, and by themselves could likely repel such an attack.

What the United States should therefore do is engage in a rational, logical, and powerful two-part strategy: communicate determined deterrence through our superior fire power to ensure the safety of the United States and our allies, and engage in relentless diplomacy. It would take many years of consistent application, but this strategy would keep America safe and prevent the deaths of thousands, if not millions.

The bottom line is there will be no war on the Korean peninsula unless we light the fuse. Let us instead exploit our economic, diplomatic, and military strengths to pursue a realistic strategy that keeps America safe.

Commentary by Daniel L. Davis, a senior fellow for Defense Priorities and a former Army lieutenant colonel who retired in 2015 after 21 years, including four combat deployments. Follow him on Twitter @DanielLDavis1.

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U.S. jobs, Australia’s trade data, currencies and oil

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SINGAPORE — Shares in Asia-Pacific looked poised for a lower start on Thursday, following declines overnight on Wall Street that saw the Dow Jones Industrial Average dropping more than 300 points.

Futures pointed to a lower open for Japanese stocks. The Nikkei futures contract in Chicago was at 27,530 while its counterpart in Osaka was at 27,490. That compared against the Nikkei 225’s last close at 27,584.08.

Shares in Australia also looked set for an opening slip, with the SPI futures contract at 7,398.0, versus the S&P/ASX 200’s last close at 7,503.20.

Australia’s trade data for June is set to be out at 9:30 a.m. HK/SIN on Thursday.

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Overnight stateside, the Dow dropped 323.73 points to 34,792.67 while the S&P 500 slipped 0.46% to 4,402.66. The Nasdaq Composite outperformed as it rose 0.13% to 14,780.53.

The moves on Wall Street came after jobs data from payroll processing firm ADP came in well below expectations. The ADP private payroll survey showed a gain of 330,000 jobs for July, well below the consensus estimate of 653,000. The more closely watched Labor Department nonfarm payrolls release is set to be out on Friday.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 92.27 following a recent bounce from below 92.

The Japanese yen traded at 109.49 per dollar following a weakening yesterday from levels below 109 against the greenback. The Australian dollar changed hands at $0.7381, still higher than levels below $0.735 seen earlier in the trading week.

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GM confirms new electric truck and van for commercial customers

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General Motors plans to launch a new all-electric van called the EV600 by the end of this year. The first 500 vehicles will be sold to FedEx.

GM

General Motors on Wednesday confirmed that it will add two new electric vehicles to its commercial lineup in the coming years, outside of its recently launched BrightDrop business.

GM CEO Mary Barra said the automaker plans to add a full-size battery electric cargo van for Chevrolet as well as a medium-duty truck for service and utility vehicles such as school buses and bucket trucks.

“Both will complement BrightDrop and keep our commercial fleet market share growing,” Barra told investors Wednesday during an earnings call. “We’ll share more details about these products as we move forward.”

Barra did not disclose timing or other details about the vehicles. The company is investing in the products as part of a previously announced plan to increase spending on electric and autonomous vehicle by 30% to $35 billion through 2025. But the vehicles aren’t expected to launch until after that timeframe, according to a person familiar with the plans.

The medium-duty truck will be offered as a battery-electric vehicle with GM’s Ultium Cells as well as its Hydrotec fuel cells, Barra said. The van will “exceed the expectations” of its customers who have purchased small GM vans in recent years, she said.

The commercial market is expected to be a major growth area for EVs. Other start-up automakers like Amazon-backed Rivian as well as legacy automakers such as Ford Motor and Daimler have announced plans to enter the segment.

GM announced BrightDrop in January as a new wholistic EV commercial and logistics business, separate from its current commercial business that focuses on small vans and pickups.

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What to know about the Ethereum London hard fork EIP-1559 upgrade

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Ethereum, the blockchain that runs ether, the second-largest cryptocurrency under bitcoin, will undergo a major upgrade this week.

Slated for Thursday, the upgrade, called London, includes Ethereum Improvement Proposal (EIP) 1559, which aims to change the way transaction fees, or “gas fees,” are estimated.

Currently, users must bid for how much they’re willing to pay to have their ether transaction picked up by a miner, which can be extremely costly. Under EIP-1559, this process will be handled by an automated bidding system with a set fee amount that fluctuates based on how congested the network is.

“This is great for Ethereum casual users and makes the protocol less intimidating to use,” Eric Conner, a co-author of EIP-1559 and co-founder of EthHub, tells CNBC Make It.

Another major change under EIP-1559 is that part of every transaction fee will be burned, or removed from circulation, which will begin to reduce the supply of ether and potentially boost its price.

That’s why, in part, “EIP-1559 is one of the most significant upgrades to Ethereum since the network’s launch,” says Meltem Demirors, CoinShares chief strategy officer.

Here’s what investors should know as the upgrade rolls out.

What EIP-1559 means for investors

While EIP-1559 aims to strengthen the ecosystem of Ethereum ⁠— which is known for its smart contract capabilities that power DeFi, or decentralized finance, apps and NFTs, or nonfungible tokens, among other things ⁠— it isn’t likely that there will be much short-term impact on investors, Demirors says.

Long-term, however, the proposal’s co-authors hope to make ether deflationary by reducing the supply. This would be “extremely beneficial” for investors, Conner says, especially “with all the recent talk of inflation in the United States.” It would give crypto investors an option to hold a deflationary asset.

Read more about cryptocurrencies from CNBC Pro

But the EIP-1559 proposal alone will not make ether deflationary, Demirors says.

“Many of these expectations are likely too optimistic in the short-term, and will become more material in the long-term,” she says. That’s because “the nominal amount of gas burned won’t outpace network inflation.”

EIP-1559 also wouldn’t lower gas fee prices or the cost of transactions on the network, which can be very high.

Still, the upgrade is important since it has the potential to improve Ethereum’s user experience and may boost the price of ether.

Other innovations surrounding Ethereum are in the works as well, Demirors says. That includes the planned migration from a proof of work (PoW) model to a proof of stake (PoS) model later this year or early 2022.

Under the PoS model, a person can mine or validate transactions according to how many coins they hold. In a PoW model, miners must compete to solve complex puzzles in order to validate transactions. Supporters of the PoS model say it will use less energy and better the blockchain’s efficiency.

“Taken together, EIP-1559 and the move to PoS will have a major impact on miners and the economics of Ethereum,” Demirors says, “but at the moment, the upgrade alone does not.”

Overall, “I think the most important thing that EIP-1559 shows to investors is that Ethereum is still an actively developed project which refuses to stagnate and become obsolete,” Conner says.

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