Much Ado about Nothing

Many traders reported difficulty buying and selling exchange-traded funds, a popular investment in which baskets of stocks and other assets are packaged to facilitate easy trading. Dozens of ETFs traded at sharp discounts to their net asset value—or their components’ worth—leading to outsize losses for investors who entered sell orders at the depth of the panic.

Products built to provide insurance for investors came up short. As a result of trading halts in futures tied to the S&P 500 index, it was difficult for investors to get consistent prices on contracts linked to them that offer insurance against S&P 500 declines.

EPA’s Orwellian Transparency

Congressman Lamar Smith (R, TX), Chairman of the House Science, Space, and Technology Committee, is unhappy with the EPA’s decision to be unresponsive to Committee requests for information regarding the EPA-caused disaster in and downriver from a Colorado mine.

It is disappointing, but not surprising, that the EPA failed to meet the House Science Committee’s reasonable deadline in turning over documents pertaining to the Gold King Mine spill. These documents are essential to the Committee’s ongoing investigation and our upcoming hearing on Sept 9. But more importantly, this information matters to the many Americans directly affected in western states, who are still waiting for answers from the EPA.

Panicky Central Planners

…and maybe pundits, too.

For the Federal Reserve, the aftershocks threaten to set back its path to interest-rate normality yet again….

That’s how Alex Frangos and Justin Lahart opened their Wall Street Journal piece Monday, writing of the People’s Republic of China’s (second in a month) “market” meltdown last week and with it the demonstration by the PRC’s economic central planners and their panicky twitchings with interest rates, bank reserve requirements, market interventions, and the like that, once again, central planning cannot seriously impact economies for longer than the moment.

Market Timing

Gerald Driscoll, Senior Fellow at the Cato Institute and former vice president at the Federal Reserve Bank of Dallas, thinks the Fed should engage in market timing regarding its planned short-term interest rate hike in September—a planned move that he actually calls a course change.

The world markets are in turmoil, he worries, and the Fed should delay its planned hike. Why raise rates now, he asks.

Why not now? Well, the inflation rate doesn’t justify a monetary tightening, he says.

There’s a Hint Here

Boeing Co is scrambling to renegotiate an about $85 million satellite contract that became the first big casualty of the US Export-Import Bank’s loss of its operating charter due to congressional opposition.

Asia Broadcast Satellite last month terminated its order for a Boeing 702SP satellite, although the two say they are continuing to discuss the deal.

On the other hand,

SpaceX played down the threat, and said only two of the 50 launches in its current manifest were due to be backed by the bank.


Government Intervention

The Shanghai Composite Index closed [Wednesday] 1.2% higher, having earlier fallen as much as 5%. The turnaround came after a number of companies disclosed that state-backed companies were among their top shareholders….

Of course.

Still want to “invest” in the PRC?

The Fed’s Error

Many observers have called for the FOMC to tighten monetary policy by raising interest rates in the near term. But such a course would create profound economic risks for the US economy. Why would a near-term tightening of monetary policy be so problematic? Because given the prevailing economic conditions, higher interest rates would push the economy away from the FOMC’s economic goals, not toward them.

A Hot Hand

As economic managers, Chinese leaders have been in a league of their own for the past quarter century.

They’re the product of a bureaucratic system that, at its best, weeds out underperformers, rewards achievement and prizes experience. By the time they reach the very top, most leaders have run provinces the size of whole countries. Their image of competence has been reassuring at home—and acknowledged abroad—at times of crisis. And they’ve delivered success: China’s economy grew faster, and for longer, than any in history.

That’s how Andrew Browne opened his recent piece in The Wall Street Journal. Then he added,

Trump and Immigration

Republican Presidential candidate Donald Trump wants to deport all illegal aliens and sharply restrict legal immigration. I’ll leave the foolishness of the first for another post; I’m more interested in the restriction on legal immigration Trump is proposing here.

He also calls for “a pause” in all immigration, for an unspecified period.

That was buried in the WSJ op-ed at the link. I’ve not seen anything even remotely definitive on Trump’s plans for Social Security, so I have to ask: how does he plan to fund that program?

Democrat Disingenuosity

An example is provided by a Wall Street Journal op-ed.

President Obama says that critics of his plan to decarbonize the economy are “the special interests and their allies in Congress” repeating “the same stale arguments” about “killing jobs and businesses and freedom.” He adds that “even more cynical, we’ve got critics of this plan who are actually claiming that this will harm minority and low-income communities.”

His EPA, though, has let the cat out of the bag in its Clean Power Plot Plan: