Thursday, February 18, 2016

Emptying the Inbox

I have several recent items rolling around in my head.  I don’t believe any of these is worthy of a post on its own, yet they are clogging my mind from focusing on much else.  As I have done in the past when I have come to such a situation, they all come to you as one.

Us or Them

According to Ambrose Evans-Pritchard, This is a global stock market rout worth celebrating: Cheap oil is a tax cut for consumers, a healthy haircut for sovereign wealth funds, and a shot in the arm for the world economy.

He suggests that the real economy is doing reasonably well:

World growth has been drearily stable for years, shuffling along at 3.4pc in 2012, 3.3pc in 2013, and 3.4pc in 2014, and 3.1pc in 2015. The International Monetary Fund expects 3.4pc this year.

The latest "GDPNow" tracker from the Atlanta Federal Reserve suggests that US growth is running at 2.5pc in the first quarter, smack in line with a typical late-cycle expansion in a mature economy.

I will take him at his word, and not interject personal opinion in this.  After all, if the Fed didn’t think the economy was doing reasonably well, why all the jabber-jabber regarding a rate hike over the last year or more, ultimately culminating with a 0.25% increase?

The Fed’s actions have only done damage to the markets:

The MSCI index of world equities has fallen almost 20pc since its all-time high in May of 2015, implying a $14 trillion loss of paper wealth.

Saudi Arabia's net holdings of overseas securities fell by $23bn in the single month of December. Fitch Ratings expects Abu Dhabi to drain its fund (ADIA) by $27bn this year. The Norwegians began dipping into their $820bn fund in October.

A clutch of distressed sellers are having to liquidate stocks, bonds, and property for month after month on a grand scale.

So, us it us or them?  Will the Fed continue to (attempt to) slowly move rates toward something approaching normal, or will they go back and provide liquidity to the markets?

Shave and a Haircut…

A new German plan to impose "haircuts" on holders of eurozone sovereign debt risks igniting an unstoppable European bond crisis and could force Italy and Spain to restore their own currencies, a top adviser to the German government has warned.

“It is the fastest way to break up the eurozone,” said Professor Peter Bofinger, one of the five "Wise Men" on the German Council of Economic Advisers.

Under the scheme, bondholders would suffer losses in any future sovereign debt crisis before there can be any rescue by the eurozone bail-out fund (ESM).

"A speculative attack could come very fast.”

As bondholders know that many governments are bankrupt except for central bank backing, I suspect a speculative attack would come immediately.

…the new plan empowers private investors to act as judge and jury on the solvency of states. "We can't allow a regime where markets are masters of governments,” [Bofinger] said.

Markets will win.  They have been winning the war from time immemorial.  This has been especially visible in the last eight years.  It is obvious to all – even the most die-hard Keynesian central planner – that central planning of money, like central planning everywhere, is a failure.

And if the Euro isn’t Enough Reason to Tear Europe Apart

Turkey apparently isn’t playing nice when it comes to dealing with the refugee crisis:

One thing, though, that [António Rocha of the Portuguese coast guard] and his shipmates haven't yet seen is a boat being turned back by the Turkish coast guard. "Sometimes they motor around the refugee rafts and tell them they should turn around," says the Greek liaison officer onboard the Tejo. "But when nothing happens, the Turkish boats just leave."

Merkel is not finding a willing partner in Turkey:

Since October, she has negotiated with the Turkish government six times, most recently on Monday. But there is little indicating that success is imminent.

"Forget it," Turkish EU Ambassador Selim Yenel told the Guardian this week when asked about Merkel's refugee plan. "It's unacceptable and it's not feasible."

She doesn’t even have support through much of Europe (to say nothing of within Germany):

Macedonia is not a member of the EU, but Hungary and other countries have already sent 80 officials to the country to assist with closing the border. At a meeting of the Visegrád Group -- which includes Eastern European EU members -- planned for next Monday, Poland, the Czech Republic, Hungary and Slovakia are to discuss ways in which the Balkan route can be closed off for good.

This doesn’t sound “open.”

That Didn’t Take Long

This post was original published two days ago, February 15 (HT LRC).  The title says enough: “Turkey is about to launch a false flag operation so they can invade Syria.”

A car bomb went off in the Turkish capital Wednesday near vehicles carrying military personnel, killing at least 28 people and wounding 61 others, officials said.

Things are likely to get worse before they get better.


  1. About the Norwegian Sovereign Wealth Fund. I hear that at current rates of refugee intake the entirety of the wealth fund will be used on maintaining refugees in Norway. That is all of that money, not a part of it.

    But open borders is a libertarian principle, right? The government doesn't really own the money in the sovereign wealth fund so the money should be given to the people that are homesteading the fund's money - the refugees!

    Makes so much sense. In other news, consistent libertarians never call the cops after being mugged and beaten by criminals because that would be a state intervention.

    Question: how can I dissociate myself with these libertarians? I need a new label to describe someone that believes in true freedom.

  2. If you (could) think in terms of private property rather than national borders perhaps the issue would not be as troubling. And as long as the state exists you pretty much have to live with it –including calling the cops.

  3. I never call the cops. Ever. I've had thieves call the cops on me when I caught them in the act of theft(they stole one of my pickups, and appearently didn't want to get shot), but I refuse to call them. After I had 3,000 gallons of fuel stolen, I didn't call them. An "investigator" came to my office because the cops heard I was a victim of theft, ( these fuel thieves had stolen a lot of stuff in town and word got around that I had been stolen from too) I would not talk to them or cooperate in the least. My brother and I were kidnapped a few years ago. We got released when they realized they had the wrong 2 dudes, how we were ever thought to be crooks is still beyond me. They threatened me to keep quiet. I found out where they lived and threatened them back, and made sure they knew I was serious. I didn't call the cops. We are all alive still. But the 2 perps who did this are both in prison for trying to kill each other. Hahaha
    Have the FBI raid your home sometime. Without a warrant. To arrest a "witness" whose home was destroyed by the FBI in the middle of a Fairbanks winter, and his family needed a place to stay, I reference to the "241" incident in Fairbanks. Yeah they send swat teams to arrest witnesses. You will never call the cops after that.
    So, no you don't have to call the cops. I won't, will not ever call the cops.
    Stop calling the cops.

  4. Matt, it has everything, and nothing to do with "State intervention". It's a matter of calling criminals in costumes who kill and steal to help and whether you will get shot in the face by the crooks with badges in the process of turning the other thugs in who kill and steal.
    Never call the cops. Never.