May 17: Daily Contrarian Reads

Carmageddon Now: Ford to Slash 10% of its Workforce

Ford’s shares have gotten hammered as it struggles with plunging car sales, and in April even with weak truck sales, mired as automakers are in the US “car recession.” At $10.94 at the close on Monday, shares are down 37% from their high in July 2014, when Mark Fields became CEO….. After announcing in March that Ford would create 700 jobs in Michigan, more or less an optical illusion as a nod to Trump, it is now time to throw Wall Street a bone. A huge bone. Ford is considering cutting 10% of its global workforce of around 200,000 employees (about half of them in the US), “according to people briefed on the plan,” cited by the Wall Street Journal. That’s about 20,000 people, globally. If these cuts, or some of these cuts, hit US workers, there’s going to be some wild tweeting from the White House……

The VIX and the Scheme

There were a number of articles discussing the VIX’s “lowest closing price since 1993.” There was the typical focus on a stable U.S. and global growth backdrop and buoyant corporate profits. What’s missing from the discussion is the reality that global markets have developed into a sophisticated financial Scheme. Going back to early-CBBs, I’ve devoted a significant amount of analysis to contemporary finance and the proliferation of complex risk intermediation, derivatives and market “insurance.” It seems rather clear to me that the interplay between contemporary finance and New Age central banking has over years nurtured history’s greatest market distortions and asset Bubbles.

A Real News Bombshell—–Murdered DNC Staffer Seth Rich Shared 44,053 Democrat Emails With Wikileaks, Not Russian Hackers

For the past several months, Democrats have based their “Resist 45” movement on unsubstantiated assertions that the Trump campaign coordinated with Russian intelligence officials to undermine the 2016 Presidential Election thereby ‘stealing’ the White House from Hillary Clinton.  Day after day we’ve all suffered through one anonymously sourced, “shock” story after another from the New York Times and/or The Washington Post with new allegations of the ‘wrongdoing’. But, new evidence surfacing in the Seth Rich murder investigation may just quash the “Russian hacking” conspiracy theory.  According to a new report from Fox News, it was former DNC staffer Seth Rich who supplied 44,000 DNC emails to WikiLeaks and not some random Russian cyber terrorist, as we’ve all been led to believe.

Less Than Nothing—-Why They Never See It Coming

…..we still talk about 2008 because we aren’t yet done with 2008. It doesn’t seem possible to be stuck in a time warp of such immense proportions, but such are the mistakes of the last decade carrying with them just these kinds of enormous costs…… The Great Financial Crisis has no official start date, but we know that it was February 2007 when it became mainstream news. Before then, the bursting of the housing bubble was itself no sure thing, so neither was any economic fallout that might come from it. Some of the deeper financial elements, like ABX indices, derived from the most liquid traded of mortgage bond CDS products, were, however, screaming grave disorder from the get go. By and large, in late 2006, there wasn’t a great volume of distress signals but the quality of them should have been sufficient. Outside of the ABX world, eurodollar futures were making similar noises. Because they were/are tied so directly to both real financial conditions as well as monetary policy, the Federal Reserve should have been fully prepared for all that came next. Instead, the FOMC’s persistent tendency throughout early 2007 was to respond with pure arrogance, just to ignore it all as if they knew better.

Peak China”: Chinese Data Misses Across The Board As Housing Bubble Returns

Following months of warnings that China’s economy is slowing down as a result of not only a collapse in China’s credit impulse but also tighter monetary conditions, as well as rolling over loan growth which has pressured both CPI and PPI – i.e., the global “reflation trade” – as the following chart from Bloomberg’s David Ingels shows…

Comey And The Saturday Night Massacre….Way Back Then

On publication day of my memoir of Richard Nixon’s White House, President Trump fired FBI Director James Comey. Instantly, the media cried “Nixonian,” comparing it to the 1973 Saturday Night Massacre. Yet, the differences are stark. The resignations of Attorney General Elliot Richardson and Deputy Attorney General Bill Ruckelshaus and the firing of Special Prosecutor Archibald Cox came in the middle of an East-West crisis…..

A Murderous History of Korea

North Korea celebrated the 85th anniversary of the foundation of the Korean People’s Army on 25 April, amid round-the-clock television coverage of parades in Pyongyang and enormous global tension. No journalist seemed interested in asking why it was the 85th anniversary when the Democratic People’s Republic of Korea was only founded in 1948. What was really being celebrated was the beginning of the Korean guerrilla struggle against the Japanese in north-east China, officially dated to 25 April 1932. After Japan annexed Korea in 1910, many Koreans fled across the border, among them the parents of Kim Il-sung, but it wasn’t until Japan established its puppet state of Manchukuo in March 1932 that the independence movement turned to armed resistance. Kim and his comrades launched a campaign that lasted 13 difficult years, until Japan finally relinquished control of Korea as part of the 1945 terms of surrender. This is the source of the North Korean leadership’s legitimacy in the eyes of its people: they are revolutionary nationalists who resisted their country’s colonizer…….

The ‘Soft Coup’ of Russia-Gate

Where is Stanley Kubrick when we need him? If he hadn’t died in 1999, he would be the perfect director to transform today’s hysteria over Russia into a theater-of-the-absurd movie reprising his Cold War classic, “Dr. Strangelove,” which savagely satirized the madness of nuclear brinksmanship and the crazed ideology behind it.

Behind China’s Silk Road Vision: Cheap Funds, Heavy Debt, Growing Risk

Behind China’s trillion-dollar effort to build a modern Silk Road is a lending program of unprecedented breadth, one that will help build ports, roads and rail links, but could also leave some banks and many countries with quite a hangover. At the heart of that splurge are China’s two policy lenders, China Development Bank (CDB) and Export-Import Bank of China (EXIM), which have between them already provided $200 billion in loans throughout Asia, the Middle East and even Africa. They are due to extend at least $55 billion more, according to announcements made during a lavish two-day Belt and Road summit in Beijing, which ends on Monday.

Voodoo Economics Redux

Mnuchin said the tax cut will largely pay for itself by boosting U.S. economic growth, “back to 3 percent or higher.” That’s about double the growth rate in the economy last year. David Stockman, the budget director in the Reagan White House in the 1980s, is highly skeptical. “The idea that some combination of loophole closing plus added growth would pay for this 7 1/2-trillion-dollar revenue loss that they’re talking about, I think is just completely fanciful and irresponsible,” he says. But, Stockman says, the argument does have a familiar ring: “It’s the same story they told back in 1980s when I was there and I never believed it.” Stockman said he believed tax cuts would produce “some additional economic growth.” But, he told colleagues in the Reagan administration, “most of the revenue loss has to be paid for with spending cuts. You have to earn it. You can’t, you know, wave a magic wand.”