May 25: Daily Contrarian Reads

Hey, Dr. Larry Summers—The “Error” Is  All Yours

Yet, the Obama administration through its Council of Economic Advisors, chaired by orthodox economist Christina Romer, modeled growth of 3.2% in the second fiscal year of the Obama’s term, followed by 4.0% and then 4.6%; all due to deficit spending (and monetary policy). There were no mainstream charges of Easter Bunny-type hysterics. In fact, those estimates along with those of the Federal Reserve under QE1 were largely swallowed as if already written on the economy’s ledger, in ink.

Why The ‘War On Terrorism’ Isn’t Working

If insanity is doing the same thing over and over in the expectation of a different result, then our foreign policy surely qualifies as madness. Since 2001, in response to the September 11 terrorist attacks, the United States has been in a state of constant warfare: the Afghan conflict has been ongoing since that time, the longest sustained combat in our history. From Iraq to Syria to Somalia and beyond, US forces and their proxies are engaged in a “war on terrorism” that shows no signs of slowing down, only expanding. And where has it gotten us?

Beware of Central Bankers Bearing Gifts

In what can only be characterized as Mission Creep raised to the power of infinity, the Federal Reserve’s last Federal Open Market Committee Minutes warned that “equity prices are quite high relative to standard valuation measures.” Let’s see. Where does the stock market fit into Congress’ statutory requirements that the Fed’s objectives be: “maximum employment, stable prices and moderate long-term interest rates”? You neither, huh?…….More to the point, in the event Trump hasn’t been apprised, the Fed has the economy by the short hairs. And, yes, it was, is, and will be about the economy, at least among those who voted him into office, many of whom remain angry and anxious, but not stupid.

The Manchester Bombing: Blowback From Syria/Libya Regime Change Folly

There is no definite proof yet but it is fairly obvious that the Manchester attack is a blowback of the British wars on the independent Libya under Ghaddafi and on the independent Syria under Bashar Assad. In both cases the British government supports radical Islamist takfiris to fight against the secular governments it wants to overthrow. But such extremists can never be controlled by the “west”. They hate the “west” on ideological grounds and they hate what “we” do to their home countries. Any use of such forces abroad will blow back home.

Enron 2.0? Asia’s Largest Commodity Trader Halted After Crashing To 16 Year Lows On S&P Downgrade

Once Asia’s largest commodity trader, Noble Group has been halted after crashing almost 30% this morning following S&P lowering its corporate credit rist rating to CCC+, citing continuing weak cash flows and profitability…“We downgraded Noble because we believe the company’s capital structure is not sustainable……The negative outlook on Noble reflects the potential that the company will face distress and a non-payment of its debt obligations over the next 12 months…..

Investors Just Pulled the Most Cash From Small Caps in a Decade

The small-cap trade got a lot less crowded. Investors pulled $3.5 billion from the biggest exchange-traded fund that tracks the Russell 2000 Index last week, spooked by the steepest selloff in the domestically focused stocks since before Donald Trump’s surprise election win.

Red Ponzi Update—–China Downgraded For First Time Since 1989

Moody’s Investors Service cut its rating on China’s debt for the first time since 1989, challenging the view that the nation’s leadership will be able to rein in leverage while maintaining the pace of economic growth. Stocks and the yuan slipped in early trading after Moody’s reduced the rating to A1 from Aa3 on Wednesday, with markets paring losses in the afternoon. Moody’s cited the likelihood of a “material rise” in economy-wide debt and the burden that will place on the state’s finances, while also changing the outlook to stable from negative.

The Real Impact of The War On Drugs—An Undercover Agent Speaks Out

Yet another police officer is speaking out against the drug war, this time in the United Kingdom. Former officer Neil Woods worked as an undercover drug cop for 14 years, infiltrating some of the most violent gangs in Britain only to learn his tactics were worsening the drug epidemic. Now, he advocates ending the drug war and decriminalizing drugs as he admits his own role in fueling violence and the proliferation of narcotics.

The Keynesian Cult Has Failed: “Emergency” Stimulus Is Now Permanent

What do we call a status quo in which “emergency measures” have become permanent props? A failure. The “emergency” responses to the Global Financial Meltdown of 2008-09 are, eight years on, permanent fixtures. Everyone knows what would happen if the deficit spending, money-printing, zero interest rates, shadow banking, asset purchases by central banks and all the rest of the Keynesian Cult’s program stopped: the status quo falls apart.

Two Birds With One Stone: Reform Taxes And Health Care At The Same Time

The problem for competitiveness is that businesses are saddled with a huge and rising cost that they cannot pass on to consumers because they must compete with foreign businesses that do not bear this cost. In most other countries, health insurance is provided by the government and financed with a value-added tax that is rebated at the border. (With a V.A.T., the tax applies at the border on imports and is rebated on exports so that exports are free of tax.) Thus, none of the cost of providing health insurance is borne by businesses or embedded in the cost of internationally traded goods.