Category Archives: markets

Markets

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Zimbabwe, in attempt to protect its currency—already a close neighbor of worthless—has decided to close its stock exchange.

If there is no market for the currency, then it has little value in terms of purchasing power. If there is no convertibility of the currency into other currencies, then there is both high risk in holding the currency and reduced interest in holding it.  And so reduced purchasing power.

If the currency has little value and limited convertibility—or either alone—there is little interest in investing in the country or in simply buying its goods or selling foreign goods in—especially if the investments must be done in the domestic currency.

Without foreign trade or investment, domestic production of goods and services is strongly limited—especially when the nation is so far from self-sufficient in necessary resources—the inputs to any production.

Limited production, limited buying—the stuff of economic stagnation moving into decline.

Closing a stock exchange in such an environment is a move with no relevance to the failure of the ZWL. Aside from the fact that only the very rich Zimbabweans and foreign investors traded on that market, the failure of the currency is a failure in citizens’ belief in the government, a failure of their confidence in the nation, and a disbelief in the citizens to keep what they’ve earned, whether hard goods or money. It’s a failure in confidence in the future.

Getting the future back is more serious business than closing a stock market.

Distractions

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Much is being made of the cybersecurity threat, the national security threat, that the People’s Republic of China’s Huawei represents. For instance, Senator Ben Sasse (R, NE) has said it’s good for the British government to be removing Huawei from the core of the British Internet.

Senator Mark Warner (D, VA):

Huawei has been and will continue to be a national security threat….

Senator Tom Cotton (R, AR) on the Brits’ initial decision to allow Huawei into their Internet infrastructure:

[t]he Chinese Communist Party (CCP) will now have a foothold to conduct pervasive espionage on British society.

But a question arises in my peabrain.

Huawei and ZTE, with their backdoors and outright spyware, have been remarkably easy to identify. Suppose they were intended to be seen. What are we missing in Xi’s left hand while we focus on the glitter in his right? Or more aptly, are we missing Xi’s dagger while we let ourselves be distracted by his épée?

A Judicial Error

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The Supreme Court has ordered a restructuring of the Consumer Financial Protection Bureau: its single director, removable only for inefficiency, neglect of duty, or malfeasance in office, among other things, was an unconstitutional abridgment of Executive Branch authority.

Chief Justice John Roberts, writing for the Court, said that the

setup meant the CFPB’s director was unaccountable to the executive branch, creating an unconstitutional diminishment of presidential power.
“The CFPB’s single-director structure contravenes this carefully calibrated system by vesting significant governmental power in the hands of a single individual accountable to no one[.]”

And then,

To address the problem, the court changed the CFPB removal provision to make the director subject to presidential removal for any reason.

That’s the error. The Court’s position of the unconstitutionality of the CFPB’s structure is entirely correct. The Court’s remedy is entirely wrong.

With this ruling, the Court has unconstitutionally legislated from the bench, a thing it does far too often for far too long.

The correct remedy would have been to strike the CFPB entirely as unconstitutional and return this inherently political matter to where it belongs: the political branches of the Federal government, Congress and the Executive Branch for new legislation. And to We the People, the owner-boss of our Government, both the two political and the judicial branches.

Victory for Competitive Free Market Pricing

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So far, hospitals will be required to publish the prices they negotiate with their insurers. This will facilitate the public’s ability to comparison shop for hospital procedures and services so as to drive down costs to the public through competition.

The American Hospital Association had sued in Federal court to block a new Trump administration rule that required such publication, but the judge presiding, Carl Nichols, granted the government’s motion for summary dismissal.

Aside from withstanding the inevitable sequence of appeals, a significant part of what’s left, now, is a requirement for hospitals to publish their success rates for various types of procedure and service.

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.