November 29: Daily Contrarian Reads

Why This Central Bank Wind Down Is Different

One unknown is how the market will react when the supply/demand dynamics shift. Remember, part and parcel of the entire post-crisis policy response is the distortion of supply and demand. Central banks have engineered a scarcity and that scarcity drives up prices, creates an insatiable hunt for yield, and pushes investors out the risk curve. One wonders what happens when that scarcity becomes less acute.

Markets Get Wake-Up Call—19th Congress Is Over, Deleveraging Gets Going

The pace at which Beijing is announcing deleveraging reforms following last month’s Communist Party Congress is a wake-up call for investors in Chinese markets: risk just got real. Sweeping new rules for the asset management industry, a crackdown on micro loans and losses imposed on the creditors of the state-owned Chongqing Iron & Steel (601005.SS) are not yet a “Big Bang” of reforms.

The Withheld JFK Files—-Still Hiding The CIA’s “Murder, Inc.” Operations

To get a good sense of how the mainstream media reacts to such things, consider how the Washington Post reported on the discovery of Operation Bounty: “But the truly novel revelation are fairly minor. One such example is Operation BOUNTY, which targeted Cuban communists.” Minor? How can it possibly be minor when innocent people are being murdered by the U.S. government? Because that is precisely what assassination is: murder. In fact, even Lyndon Johnson, who wasn’t exactly the paragon or moral values, pointedly noted that the CIA was running a “damned Murder, Inc.” in the Caribbean.

Bitcoin Bubble Makes Dotcom Look Rational

…….Scarcity is what bitcoin believers think they have going for them. The supply of bitcoins is supposed to max out at just 21 million, though in reality it’s likely to effectively grow much larger than that. But while the supply of bitcoins may be fixed, the supply of ways to invest in them and other cryptocurrencies is certainly not. Earlier this year, a fork in the bitcoin blockchain, similar to what happens in a stock split, created bitcoin cash, which now has  a market value of nearly $28 billion. Bitcoin gold, another fork created spinoff, has a market cap of about $6 billion. That’s not quite the $44 billion in dot-com IPOs, but it’s getting close. On top of that, Ethereum, a bitcoin rival, has a market cap of $46 billion.

Uber Suddenly Worth $20 Billion Less

….. Now comes a real buyer with a real offer, and some potential sellers said they’ll accept it. SoftBank Group Corp., an acquisitive junk-rated Japanese holding company, along with investment firms Dragoneer Investment Group and General Atlantic are offering to buy at least $6 billion of the shares of Uber held by employees and early investors. At $33 a share, the price values the scandal-plagued company at $48 billion. This would mark a 30% discount from the last “valuation……The $14 billion of shares that actually sold for 30% less just disappears from sight, and the “valuation” propaganda remains intact.

Black Friday: Whatever It Was—-Don’t Call It Robust

Economists talk (incessantly) about full employment and what that supposedly means, or should, but the economy itself has been seeing it much differently. It has taken several years of learning the hard way, but retailers are, it seems, finally zeroing in on the real baseline. Whatever spending happened this past weekend, it will be a record high for whatever category. What it won’t be is robust, though the word will surely find its way into heavy usage anyway.

How The Amateurish Plan of Kushner and MBS to Destabilize Lebanon Backfired

Hariri was suddenly Lebanon’s poster boy, a martyr-in-the-making. Which is to say that, within days of his resignation, it was clear that Saudi Arabia’s attempt to paint Hezbollah as “destabilizing Lebanon” had backfired: Mohammad bin Salman’s insistence that Hariri take a tougher stance against Iran and Hezbollah had made unlikely allies of Lebanon’s squabbling factions. Those plotting against Lebanon weren’t in Tehran, the Lebanese public decided, they were in Riyadh. But the Lebanese weren’t the only ones who weren’t buying the Saudi line. Neither was the U.S. State Department.

A Glimmer of Hope—-Trump Is Backing Out of Syria

But, we can see the outcome of that phone call in today’s headline that Trump has pledged to Turkey that we would stop arming Kurdish forces in eastern Syria………This may be the best news I’ve heard in quite a long time.  Because with this one statement the idea of a prolonged occupation of eastern Syria by U.S. forces fades considerably.  With talks occurring in Sochi on Syria’s political future, the Kurds have already come to the table, as the Zerohedge article goes on to state, sharing oil revenue with the Syrian government……I’ve been saying for weeks that as the neoconservative push for Middle East chaos via atomizing Syria unravels Putin will be working the situation to allow Trump the opportunity to save face, declare victory over ISIS and leave.

Cantillon for Laymen

Richard Cantillon’s Essay on the Nature of Commerce in General, or Essai sur la Nature du Commerce en General, was penned in French in the early 1730s, or thereabouts, but was not published until 1755 (Rothbard 1995, p. 347). It did, however, became a celebrated text for its systematic treatment of political economy and methodology, especially among those associated with the French Liberal School. Cantillon’s book was written during an era of mercantilist ascendancy in France. He diverged from that set, mostly because he didn’t arrive at his analysis via an unstructured amalgamation of judgments geared toward specific political ends. Rather, he was the first theorist to maintain an “independent area of investigation — economics — and to write a general treatise on all its aspects.” (Rothbard 1995, p. 347) This set Cantillon apart from his politically influential mercantilist counterparts, and has led many scholars, to label him — not Adam Smith — the father of modern economics (Thornton 1999, pp. 13-15).

The Good American—-Whistleblower William Binney’s Battle With The Deep State

In my view, one could not find a better title for Friedrich Moser’s film about former National Security Agency technical expert William Binney than the one decided upon, A Good American. His life illustrates the cost some people pay when a person’s morality and professional ethics clash with a governmental bureaucracy that values neither. Friedrich Moser’s film captures the man and his dilemma on a personal level, in historical terms, and in a memorable aesthetic form.