August 18: Daily Contrarian Reads

Trump hasn’t Drained the Swamp—-He’s put The Pentagon Deep End in Charge Of It

Vowing to ‘drain the swamp’, Candidate Trump gave the distinct impression that he intended to dismantle this tripartite elite. With him as their champion, the people rather than the establishment would rule. This implicit promise won votes.Yet President Trump seems to be following a different course. Rather than dismantling the power elite, he seems intent on preserving it, albeit in modified form…..So contrary to liberal fears, Trump turns out not to be a proto-fascist. He is not going to establish a police state. He evinces virtually no interest in ideology. Nor does he have any worldview beyond a concern for protecting, or better still embellishing, the Trump brand.

Of Course It Does! Study Finds Higher Min. Wages Bring Crushing Job Losses For Female And Minority Workers

Anyone who has a basic understanding of elementary-level arithmetic and some common sense can easily explain why raising the minimum wage is bad for employment levels.  In a nutshell, higher labor costs simply improve the payback profile of capital investments in technology thus accelerating job losses. We recently shared the following example regarding California’s minimum wage hike from $10 per hour to $15.  At $10 per hour and a 10-year payback, employers may be reluctant to invest in new technology.  But, at $15 per hour and a 6-years payback, that investment become a no-brainer.

Canary In In The Auto Loan Junkyard—-Credit Acceptance Corp.

Credit Acceptance Corp. has defied critics and short-sellers, but the auto lender’s luck may be about to run out. As auto-loan defaults creep up, the company’s high valuation and opaque accounting make it an especially risky investment. Credit Acceptance makes loans to borrowers with poor credit. This is a legitimate business that can be very profitable. The company’s motto is “we change lives,” and for many would-be car buyers with few options, it no doubt does. The problem is that the company’s unique accounting practices make it difficult to see how its loans are really doing. Credit Acceptance uses a form of “level yield accounting” that is normally applied to purchases of already impaired loans. This means Credit Acceptance doesn’t disclose what portion of loans are delinquent or have defaulted.

Let’s Erase Some History—–The False Narrative Behind Charlottesville

Illegally pulling down statues of Confederate soldiers and taking videos of “brave” unemployed liberal arts major social justice warriors kicking the Confederate soldier is what passes for activism in today’s warped society. Liberal mayors and city councils across the south are falling all over themselves wasting time and taxpayer money to remove statues of Confederate generals to appease the left and make a display of how anti-racist they can be. Meanwhile, their cities are bankrupt, their infrastructure is decaying, black crime is rampant and their education systems matriculate functionally illiterate deranged snowflakes into society.

Stuck In the Basement—-Millenials And The US Economy, Too

The stereotypical millennial stuck in his or her parents’ basement is not popular imagination, nor is it the fault of those young people becoming adults during the worst economy in generations. To the FOMC, recovery is now defined as 2% GDP growth being slightly better than the much reduced 1.8% “potential.” Actual recovery is where actual living standards and conditions materially change for the better for more than just a few. It’s been so long since that was even plausibly the case, most people have forgotten what growth was – and why so many young now find a welcome message in socialism in all its forms.

Year Eight Of The Great American Recovery—-More Household Debt Than Ever

Yes, debt is up again. Mortgages debt share of total household debt has shrunk (it is now at 67.7%) and unsecured debt share is up (32.3%). Unsecured debt was $3.925 trillion in 2016 Q2 and it is now $4.148 trillion. Why this matters? Because although cars can be repossessed and student loans are non-defaultable even in bankruptcy, in reality, good luck collecting many quarters on that debt….. So here’s the thing: low recovery debt is booming…..In simple terms, in this Great Recovery Year Eight, one in eight Americans are so far into debt, they are getting debt collectors visits and phone calls. And as a proportion of consumers facing debt collection action stagnates, their cumulative debts subject to collection are rising.

RussiaGate’s Fatally Flawed Logic

There was always a logical flaw in pushing Russia-gate as an excuse for Hillary Clinton’s defeat – besides the fact that it was based on a dubious “assessment” by a small team of “hand-picked” U.S. intelligence analysts. The flaw was that it poked the thin-skinned Donald Trump over one of his few inclinations toward diplomacy.We’re now seeing the results play out in a very dangerous way in Trump’s bluster about North Korea, which was included in an aggressive economic sanctions bill – along with Russia and Iran – that Congress passed nearly unanimously, without a single Democratic no vote. Democrats and Official Washington’s dominant neocons celebrated the bill as a vote of no-confidence in Trump’s presidency but it only constrained him in possible peacemaking, not war-making.

Overbought, Overvalued, Over-Bullish

At present, however, we observe not only the most obscene level of valuation in history aside from the single week of the March 24, 2000 market peak; not  only the most extreme median valuations across individual S&P 500 component stocks in history; not only the most extreme overvalued, overbought, overbullish syndromes we define; but also interest rates that are off the zero-bound, and a key feature that has historically been the hinge between overvalued markets that continue higher and overvalued markets that collapse: widening divergences in internal market action across a broad range of stocks and security types, signaling growing risk-aversion among investors, at valuation levels that provide no cushion against severe losses.

Don’t Need to Bomb N. Korea Back To The Stone Age—–Washington Already Did in 1950-1953

the early 1950s, the U.S. bombed North Korea into complete oblivion, destroying over 8,700 factories, 5,000 schools, 1,000 hospitals, 600,000 homes, and eventually killing off perhaps 20 percent of the country’s population. As noted by the Asia Pacific Journal, the U.S. dropped so many bombs that they eventually ran out of targets to hit: By the fall of 1952, there were no effective targets left for US planes to hit. Every significant town, city and industrial area in North Korea had already been bombed. In the spring of 1953, the Air Force targeted irrigation dams on the Yalu River, both to destroy the North Korean rice crop and to pressure the Chinese, who would have to supply more food aid to the North. Five reservoirs were hit, flooding thousands of acres of farmland, inundating whole towns and laying waste to the essential food source for millions of North Koreans.” [emphasis added]

Chaos in Charlottesville: No On Gave Peace A Chance

Words, no matter how distasteful or disagreeable, did not turn what should have been an exercise in free speech into a brawl. That was accomplished by militant protesters on both sides of the debate who arrived at what should have been a nonviolent protest armed with sticks and guns, bleach bottles, balloons filled with feces and urine and improvised flamethrowers, and by the law enforcement agencies who stood by and allowed it. As the New York Times reported, “Protesters began to mace one another, throwing water bottles and urine-filled balloons — some of which hit reporters — and beating each other with flagpoles, clubs and makeshift weapons. Before long, the downtown area was a melee. People were ducking and covering with a constant stream of projectiles whizzing by our faces, and the air was filled with the sounds of fists and sticks against flesh.”……The madness is spreading.