August 16: Daily Contrarian Reads

Mind The Red Ponzi—-Another Beijing Ordered Reflation Is Petering Out

Private FAI in China has not only failed to hasten in recovery, it has actually slowed somewhat from early in the year. The latest estimates from China’s National Bureau of Statistics show an accumulated growth rate of just 6.9% in July 2017, meaning that Private FAI in just July was only 5.2% more than in July 2016 at the trough. State-owned FAI has stabilized the past few months at around a 10% rate of expansion. That means Total FAI, Private plus State-owned plus a few remainders, continues in 2017 at a growth rate less than a third of what it was and was likely expected as late as 2012. “Reflation” can pick up no further upside because the one part most tangible in all of it has like everything else only disappointed this year.

How Trump vs. Kim can Wreck the World Economy Without A Shot Being Fired

But the financial markets – and the broader global economy – could still turn nasty in an repeat of what happened 10 years ago even without a shooting war. Over the past decade, markets have shrugged off geo-political risk but have proved much more vulnerable to economic and financial risk. And there’s plenty to worry about in that respect.For a start, the world has never really recovered from the last crisis. Growth rates have been weak and have only been possible because years of low interest rates and quantitative easing have encouraged consumers and businesses to rack up large amounts of debt. As the economist Steve Keen notes in his new book Can we avoid another financial crisis (Polity), many countries have become what he calls debt junkies.

There Was No DNC Hack—The Definitive Evidence

There was no hack of the Democratic National Committee’s system on July 5 last year—not by the Russians, not by anyone else. Hard science now demonstrates it was a leak—a download executed locally with a memory key or a similarly portable data-storage device. In short, it was an inside job by someone with access to the DNC’s system. This casts serious doubt on the initial “hack,” as alleged, that led to the very consequential publication of a large store of documents on WikiLeaks last summer. Forensic investigations of documents made public two weeks prior to the July 5 leak by the person or entity known as Guccifer 2.0 show that they were fraudulent: Before Guccifer posted them they were adulterated by cutting and pasting them into a blank template that had Russian as its default language. Guccifer took responsibility on June 15 for an intrusion the DNC reported on June 14 and professed to be a WikiLeaks source—claims essential to the official narrative implicating Russia in what was soon cast as an extensive hacking operation. To put the point simply, forensic science now devastates this narrative.

Smoke And Fire—-The Ominous Meaning Of Charlottesville

Cue the corn pone Nazis. Enter, stage left. Well, what did you expect?  With the various authorities in this culture incessantly applying “white privilege” noogies to the public’s skull, sooner or later they were sure to provoke a lizard-brain response from the more limbic-oriented low orders of honkeydom. Of course, you couldn’t stage-manage a more stupidly arrant provocative act in the State of Virginia, guaranteed to bring out the raging yahoos, than threatening to remove a statue of Robert E. Lee.

Why Some Pharmaceuticals Are So Expensive—-The Dead Hand Of The State

Enter “outrageous drug prices” into Google and you will receive plenty of examples. As reported here, Marathon Pharmaceuticals planned to charge $89,000 per year for its Emflaza brand of the corticosteroid deflazacort. Deflazacort was introduced in 1969 and is available outside the U.S. for less than $2 per tablet. US patients with muscular dystrophy have been obtaining the drug for around $1,500 per year from foreign sources. This pricing behavior cannot occur in a free market. In a free or unhampered market, if Marathon tried to charge $89,000 for a year’s supply of deflazacort, they would realize zero sales. There are at least 169 generic manufacturers of at least 300 brands of deflazacort.

Social Security requires a bailout that’s 60x greater than the 2008 emergency bank bailout

A few weeks ago the Board of Trustees of Social Security sent a formal letter to the United States Senate and House of Representatives to issue a dire warning: Social Security is running out of money.

Washington At War In Iraq—–27 Years And Counting

Twenty-seven years of war in Iraq, or preparation for war, in one permutation or another. I sometimes wonder if that recruiter remembers what he said to me about how long it all would last. I’d bet he remembers; I was certainly not the only young man he ran that number on as the push toward war swelled like a blister over the following months. Nearly three decades later, how many graves at Arlington and elsewhere have been filled with the remains of those who were told it would be over before they got there, and believed it? I’m sure he remembers. Wouldn’t you? For the historical record: There was the initial build-up of Desert Shield, followed by Desert Storm and its lethal cloud of depleted uranium. There were the sanctions/bombing Clinton years when we blew up sewage treatment plants and denied children vaccines in an ongoing act of biological warfare. Then, there was the second Bush invasion based on unprosecuted criminal lies, the long massacre of occupation and torture, the Obama occupation and drone war, the drawdown, the draw-back-up because of ISIS. Now, there is the current trembling mayhem of air strikes, car bombs, militias, factions, confusion and an overwhelming ocean of refugees.

Look Out Manhattan – Chinese Foreign Real-Estate Spending Plunges 82%

Earlier this month, Morgan Stanley warned that commercial real estate prices in New York City, Sydney and London would likely take a hit over the next two years as Chinese investors pull out of foreign property markets. The pullback, they said, would be driven by China’s latest crackdown on capital outflows and corporate leverage, which they argued would lead to an 84% drop in overseas property investment by Chinese corporations during 2017, and another 18% in 2018. Sure enough, official data released by China’s Ministry of Commerce have proven the first part of Morgan Stanley’s thesis correct. Data showed that outbound investment in real estate was particularly hard hit during the first half of the year, plunging 82%.

America First—How To Escape The Korean Quagmire

Why not move U.S. forces off the peninsula, let South Korean troops replace them, sell Seoul all the modern weapons it needs, and let Seoul build its own nuclear arsenal to deter the North? Remove any incentive for Kim to attack us, except to invite his own suicide. And tell China: Halt Kim’s ICBM program, or we will help South Korea and Japan become nuclear powers like Britain and France.

David Frum—The Neocon’s Own Axis Of Evil

The warhawks who drove the Republicans rightward in the early 2000s likely bear more responsibility for Donald Trump’s ascendancy than all the Russian hackers and “fake news” websites put together, but liberals are more than willing to let them off the hook if they provide limp critiques of their own party as penance. Naturally, many of them are doing just that. The neocons’ strategic retreat from the smoldering wreckage they created was a clever gambit, in many ways reminiscent of a classic insurance scam. Like an insurance scam, it can be wildly successful when carried out with adequate skill and commitment — and no one is more committed than David Frum, the George W. Bush speechwriter who introduced America to the “axis of evil.”