November 28: Daily Contrarian Reads

When They Came For The Cash: An Update On India’s “Black Money” Chaos

Over two weeks after India’s abrupt demonetization of high denomination banknotes on November 8, the cash-driven economy still remains largely in a state of standstill, particularly the rural parts of the nation, where the government’s attempts to restock banks with “new” cash (even with the use of army helicopters) have failed to re-normalize commerce. As a result, the local population of business owners, unable to spend or deposit their “sackfuls of large bank notes amid India’s crackdown on hoarding cash”, is taking matters into its own hands, and as the WSJ explains, has started paying employees months of salary in advance, ringing up bogus sales and even buying gold they can smuggle overseas to get rid of stashed money or conceal its source.

When Words Don’t Matter—-The Fed Is Stranded High and Dry

Prior to the financial crisis, monetary policy was “unnaturally easy” and after the crisis broke, “ultra-easy.” Put differently, the failure of lower for longer was not recognized as a failure and taken as an opportunity from which to learn and grow into a new paradigm. Rather, monetary policymakers dug the hole deeper, insisting that failure be not acknowledged, but instead institutionalized. And so policy has been lower for even longer, exit delayed time and again.

Amen! A List Of 25 Things President Trump Shouldn’t Do

I would love to see Trump do whatever he can to drain the swamp and scale back the welfare/warfare/surveillance/police state, but I am not holding my breath. I tried that for years and almost died waiting for the Republicans in Congress to actually for once eliminate a regulation, a tax, an agency, or a program instead of trying to change it, improve it, reform it, or replace it with something else….So, instead of a list of suggestions of things for Trump to do, here is a list of things that Trump shouldn’t do.

Another Trump Arises In South Korea—-Lee Jae-myung Wants to Break-up The Conglomerates And Seek Peace With North Korea 

What A Real Housecleaning of Keynesian And Statists At The Fed Would Mean

If monetary policy is misunderstood in the West, it is in some part because financial journalist have let us down. The world needs a new kind of financial reporting, one that dispenses with political agendas (Krugman, Sorkin) and resists hosting glorified infomercials for financial markets (Kudlow, Cramer). One that requires journalists to wear out shoe leather and actually talk to people in the financial world. One that hires journalists with actual knowledge of the areas they cover (especially when it comes to money and banking), not just a journalism degree.In fact, the greatest economics journalist of the 20th century– Henry Hazlitt– had no college degree at all.

Global Malinvestment Report: New Orders Crash—Leaving Asia’s Shipbuilders to Flounder in a Glutted Market

Asian shipbuilders are struggling to stay afloat as orders decline to the lowest level in two decades. Analysts see no end to the pain in sight.New orders received by builders in Japan declined almost 90% in the first 10 months of 2016 from a year earlier, according to data from BIMCO, a global shipping industry data provider. South Korean competitors similarly saw an 84.2% drop in orders by compensated gross tonnage, an industry measure of shipbuilding output that takes into account ship size and work difficulty. Their Chinese rivals counted a 58.5% decline.

TPP Is Dead—-What Comes Next And Where Goes The SCO?

A half-hearted near handshake between US President Barack Obama and Russian President Vladimir Putin before and after they spoke «for about four minutes», standing up, on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Lima, Peru, captured to perfection the melancholic dwindling of the Obama era. A whirlwind flashback of the fractious relationship between Obama and «existential threats» Russia and China would include everything from the Washington-sponsored Maidan in Kiev to Obama’s «Assad must go» in Syria, with special mentions to the oil price war, sanctions, the raid on the ruble, extreme demonization of Putin and all things Russian, provocations in the South China Sea – all down to a finishing flourish; the death of the much vaunted Trans-Pacific Partnership (TPP) treaty, which was reconfirmed at APEC right after the election of Donald Trump……..In parallel, almost out of blue, and with a single stroke, Turkey President Tayyip Erdogan, on the way back from a visit to Pakistan and Uzbekistan, confirmed what had been all but evident for the past few months; «Why shouldn’t Turkey be in the Shanghai Five? I said this to Mr. Putin, to (Kazakh President) Nazarbayev, to those who are in the Shanghai Five now… I think if Turkey were to join the Shanghai Five, it will enable it to act with much greater ease».

Perpetual Black Friday—Why Not?

The notion of Black Friday no longer makes much sense. Now, there are “Black Friday doorbusters happening all week long” More and more stores will be open Thanksgiving. Wal-Mart and Target will open stores a 6:00 PM. Next year it will likely be noon. Amazon has Black Friday deals on a variety of toys, electronics, and home goods starting on Wednesday…Why not start in September? Why not Perpetual Black Friday? I just did a website search. The name PerpetualBlackFriday.Com was not taken. I snagged it for $15 on GoDaddy. Why not?

Mega-Housing Bubbles Everywhere—An Update On Major Cities

Both easy mortgage credit (Bush: Bubble 1.0) and the manufactured crushing of interest rates (Obama: Bubble 2.0) do the exact same thing to real estate (and other debt-backed assets). They promote house price inflation. In other words, they allow somebody to pay more for a house using the same amount of income. Both the Bush and Obama administrations oversaw manufactured housing bubbles. And for numerous reasons I have argued for two-years I believe this bubble is far more dangerous that the last one.

Red Ponzi Update: Why China’s Is Living On Borrowed Time

Scrambling to prop up the country’s growth and protect its near-universal employment, China’s leaders have embraced monetary and fiscal stimulus measures, causing the country’s outstanding debt to balloon to almost 250% of gross domestic product. Corporate debt, by far the largest share of China’s total debt, has likewise surged by more than 60% to top 165% of GDP. Now, a nationwide debt crisis looms at Beijing’s doorstep amid business defaults and bankruptcies, low industrial profits, winnowing returns on investment and the very real prospect of yet another slowdown in the real estate sector.