Tag Archives: markets

Errant Satrap

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That’s how the European Union views Great Britain as the EU continues to demand that Great Britain accede to demands they wish to impose on a sovereign nation—solely to bring that subordinate polity to heel. Examples of the EU’s demands:

  • post-Brexit sovereignty to make Britain more competitive via deregulation, environmental rules or tax reform—these must not occur
  • UK’s ability to subsidize industries in line with EU state-aid regulations—this must be curtailed

The first must not be allowed explicitly because of that competition. The second may be bad business overall, but it’s a domestic matter.

And this, regarding tariffs:

new tariff schedule London published last month eliminated levies on some 2,000 goods, or 17% of goods in the schedule, and simplified tariffs on another 40%. Measured by value, 70% of Britain’s imports from other World Trade Organization members will now be tariff-free, compared to 52% under the EU-wide tariff schedule.

Here is the EU’s attempt to prevent British competition.

And the EU’s demands regarding fishing:

bind the UK permanently in EU fisheries rules governing where British and other fishermen can cast their nets. The UK instead wants the same level of sovereignty other coastal countries enjoy to negotiate fishing rights annually.

And that’s the rub: the EU continues to demand to reach into—deep into—British national sovereignty to impose EU governance imperatives on British domestic matters. The EU does not accept Great Britain’s sovereignty.

Every one of those demands individually are deal breakers, and their aggregate demonstrate the EU’s (continued) bad faith in its “negotiations.”

The Brits should walk away from Brussels today and stop wasting their time and effort on the EU’s sham. They have better and more pressing things to do with their resources than negotiating with those who will not.

Another VA Failure

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…in a too-long string of failures.

A body found in a stairwell at the Bedford Veterans Affairs Medical Center in Massachusetts is a veteran who lived at the facility and disappeared more than a month ago.

He was missing, too, for five days before anyone cared enough to notice and report him missing.

It’s long past time to stop throwing taxpayer money into this hole. Disband the Veterans Administration entirely and use its budget and putative future budgets as vouchers for our veterans so they can get decent health care and shelter at quality facilities of their choice.

Veteranos Administratio delende est.

It’s Time

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The People’s Republic of China has begun welching on its trade agreement with the US. Government-controlled companies buying American farm products have begun canceling their orders to American farmers, orders made under that agreement. So far, the canceled orders amount to chump change.

However.

“A handful of shipments of livestock feed, corn, pork, cotton and some meat imports are pushed back,” said a senior Chinese shipping executive involved in China farm imports who asked not to be identified and who has been briefed on Beijing’s move.
“Private Chinese exporters are not part of this, but it could escalate, depending on how the relationship between the US and China goes forward,” this executive said.

The threat is clear.

It’s time to find, and redirect our farm products to, other markets and stop selling them to the PRC. The PRC is simply too unreliable a trading partner—which should be expected, given that the nation has placed itself as an enemy of us rather than as a competitor.

Works for Me

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The baby sister and de facto chief of staff to northern Korea’s MFWIC, Baby Kim, Kim Yo Jong doesn’t like that citizens of the Republic of Korea keep sending anti-northern Korea missives into the DMZ and on across into the gangland.

[Kim Yo Jong] warned that it would end a 2018 inter-Korean military agreement if the South fails to stop defectors and activists from sending anti-Pyongyang leaflets into the demilitarized zone (DMZ) separating the two countries.
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Kim Yo Jong also said the North could permanently shut a liaison office with the South and an inter-Korean industrial park in the border town of Kaesong….

She also says that the agreement was hardly of any value.

She’s right on that last. It is a useless, virtue-signaling setup that the RoK, in retrospect mistakenly, agreed.

The dissolution of the agreement would create no loss at all for the people of the RoK; Baby Kim’s Baby Sister ought not let the door hit her in the fannie on the way out.

Chasing Yield

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Chasing yield is the tactic of going for the highest-yielding investment available at the expense of other considerations. One of those considerations that gets disregarded in the chase is whether the yield being…offered…is radically higher than that of other investment vehicles on the market. If it’s much higher, that yield likely is too good to be true.

Another consideration that gets lost in the chase is the underlying soundness of the issuer. Checking the level of soundness is hard work, often tedious and boring. It’s necessary, though, and it’s equally necessary to avoid the flip side of that: the laziness of just jumping onto a handy get-rich-quick scheme, which is what so much of yield-chasing is.

Hence a cautionary tale offered by The Wall Street Journal.

Exchange Traded Notes are “fund” instruments that pedal other people’s debts aggregated into exchange traded fund-like instruments. They’re centered on

options-based strategies and certificates of deposits whose returns are tied to stocks or currencies.

That last is important. When the stock—or stock indexes—or the currency—or currency indexes—fall, the ETN’s instruments fall in value. And whey those instruments fall below a threshold, the issuer can take them off the market.

The issuer is not the ETN—that’s the bit about not owning the asset. However, when the issuer takes its instrument off the market, the ETN is still stuck, and its value falls, and it falls catastrophically if it’s a leveraged ETN.

And that’s what happened during the current sharp market drop. Before the nascent—and still fragile because it’s built on future expectations, not current economy performance—recovery began, one bank alone was forced to take 15 of its ETNs off the market entirely, wiping those investors’ investments. Folks old enough to know better—retirees—but who were trying to double up to catch up from the Panic of 2008 losses, lost hundreds of thousands of dollars in hard cash money and money they could have had had they been willing to collect profits along the way instead of letting it all right on their roulette/faro/baccarat bets.

Don’t understand what I’ve written above regarding ETN structure (I’ve been deliberately very high level in my description)? That’s a hint. If you’re not clear on the nature of the investment you’re contemplating, walk away from it.

 

RTWT.