May You Live In Interesting Times

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The latest drastic step by Beijing is a six-month ban on stock sales by controlling shareholders and executives who own more than 5% of a company’s shares. Any violation of the rule, announced Wednesday night, would be ‘treated seriously’

Shen Hong and Lingling Wei report: Since the last week of June, the Chinese government has intervened in the country’s stock markets nearly every day to stop their steep slide. But the harder NON-STOP-PANIC-EXChinese authorities try, the more it looks like they are losing control.

The Shanghai Composite Index fell 5.9% on Wednesday and is down nearly one-third from its peak on June 12. Since then, $3.5 trillion in value has been erased from companies in the benchmark index—or nearly five times the size of Apple Inc.

China’s bond market and currency also began to get hit Wednesday as worries deepened that a contagion from stock-market losses could further trammel the country’s slowing economy. It felt even more ominous because Chinese officials had rushed out another raft of emergency measures earlier Wednesday to reassure the market.

An investor at a brokerage firm in the Chinese city of Heifi on Wednesday. Individual investors who began selling in mid-June helped unleash a downward spiral of more selling. Photo: Reuters

An investor at a brokerage firm in the Chinese city of Heifi on Wednesday. Individual investors who began selling in mid-June helped unleash a downward spiral of more selling. Photo: Reuters

The moves only heightened what is turning into an epidemic of anxiety among Chinese investors and a crisis of confidence in their leaders. Stocks were volatile early Thursday.

“The more the government intervenes, the more scared I am,” said Li Jun, who runs a fishing and restaurant business in the eastern city of Nanjing. He has spent about 3 million yuan, roughly wsj-chart$500,000, on stocks, using borrowed money for about one-third of the total.

Mr. Li has sold some of his investments every time the market “popped up a little” following a rescue announcement by the Chinese government. “I have no faith” in its ability to halt the losses, he says. Wednesday’s drop left the Shanghai index down 32% from its peak and at its lowest level since March.

The latest drastic step by Beijing is a six-month ban on stock sales by controlling shareholders and executives who own more than 5% of a company’s shares. Any violation of the rule, announced Wednesday night, would be “treated seriously,” China’s securities regulator said.

Early Thursday, China’s central bank said it has provided “ample liquidity” to a company owned by the country’s top securities regulator. The company is lending the funds to securities firms, which then will use the money to buy stocks.

The Chinese government has been praised for driving decades of economic growth and keeping the economy strong during the global financial crisis. In recent years, Chinese authorities have struggled with rising debt levels and the need to reform the economy away from government-driven infrastructure programs and toward consumer spending.

As it fought slower growth and a weakening real-estate market, the government turned its attention to the country’s languishing stock markets.

But Beijing’s inability to stop the recent decline has rattled investors who have long been used to seeing the government use its power to control markets.

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“Beijing’s latest bid to calm the market has had the opposite effect,” said Bernard Aw, market analyst at IG Group. “The panic is spreading, and authorities appear to be grasping at straws to hold back the tide.”

[Read the full text here, at WSJ]

U.S. Treasury Secretary Jacob Lew played down the possible world-wide impact of China’s stock-market mess, though he expressed worry that it could restrain the country’s longer-term growth if Beijing slows its promised economic overhauls. Read the rest of this entry »


Slighting Alexander Hamilton: A Democratic Party Tradition

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Stephen F. Knott Secretary of the Treasury Jacob Lew announced Thursday that Alexander Hamilton would be joined on the ten-dollar-bill by a woman to be named later, or perhaps relegated to appearing on some bills but not on others. Lew cited bureaucratic imperatives in choosing to ignore calls to remove the anti-51PA1F97HWL._SL250_paper money, bank-hating, Indian-killer Andrew Jackson from the twenty-dollar-bill, while adding that symbols on currency are a “way for us to honor our past and express our values.”

[Check out Stephen F. Knott’s book Alexander Hamilton and the Persistence of Myth” at Amazon.com]

By downgrading the founder of his own cabinet department, Lew, perhaps with the best of intentions, continued a tradition that has deep roots in his own political party. From the moment Hamilton was mortally wounded by Vice President Aaron Burr, the Democratic Party has done its best to relegate Hamilton to the ash heap of history. Jackson warmly welcomed Burr to his home as Hamilton’s killer escaped to the west, while Thomas Jefferson’s lieutenants scurried to contain the emotional impact of Hamilton’s death from damaging their party’s political prospects. Jefferson spent considerable time portraying Hamilton as an un-American, pro-British agent intent on importing monarchy and corruption.

[Read the full text here, at  TheHill]

Part of the Jeffersonian-Jacksonian contempt for Hamilton stemmed from the fact that Hamilton was an immigrant from the Caribbean, and thus his “Americanism” was constantly questioned. This sense that Hamilton was not “one of us” animates the writings of Jeffersonians and of Jefferson himself, who was 51WhWm6YhyL._SL250_appalled that Hamilton did not see eye to eye with him despite having been “received” by Americans and “given . . . bread” and having honors “heaped . . . on his head.”

[Also see the book Knott co-authored with Tony Williams – “Washington and Hamilton: The Alliance That Forged America at Amazon.com]

In the twentieth century, Franklin D. Roosevelt led the effort to elevate Jefferson into the American Pantheon and downgrade Hamilton’s status. Roosevelt saw himself as a Jefferson for the new century, battling forces similar to those that confronted the Sage of Monticello over a century earlier. Roosevelt led the drive for a Jefferson Memorial in Washington and selected the truncated quotes that adorn its walls. Hamilton’s “monument” in Washington consisted of an undersized statue on the back side of the Treasury building in Washington, and to make matters worse, that statue had been erected during the corrupt Harding administration by its privileged Secretary of the Treasury Andrew Mellon. Read the rest of this entry »


Despite Judge’s Orders Obama Administration Refuses to Hand Over IRS Abuse Documents

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John Hayward reports: Hey, remember how a watchdog group called Cause of Action filed a Freedom of Information Act request for documents pertaining to the investigation of taxpayer information handed over to the White House by the IRS, and the request went nowhere, so they sued, and a judge told the Treasury Department they had to cough up the documents, and then the Treasury Inspector General was all like, “Oh, wow, we’ve got 2,500 pages of documents on this deal, so we need a little more time to finish going through them before we hand them over?”O-SMDGE-CONDENSED

If it wasn’t so bad – if there wasn’t a ‘smidgen of corruption’ – why try so hard to keep these records silent?”

Never mind about seeing those documents, peons.  The Administration has decided not to hand them over after all, citing a statute that basically says the privacy of the people whose privacy the White House violated would be violated by revealing details of the White House violation to the public.  It all sounds pretty fishy to Cause of Action, as quoted in the Washington Examiner:smdg-tv2

Dan Epstein, executive director of Cause of Action, said Treasury was using “sophisticated” lawyering to weasel out of providing the documents. And he noted that their letter said that Treasury Secretary Jack Lew is now looking into “potential liability” that his tax aides broke laws in sharing taxpayer information with the White House. Read the rest of this entry »


Government default? It’s already happened, twice

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Tim Cavanaugh writes:  Although President Barack Obama and the establishment media routinely describe a potential federal default as “unprecedented,” the United States government has flaked on its debt service several times, and one expert says the current default has already begun.

The historical default precedents should be of limited comfort to Obama, however. One of the deadbeat presidents was the commander in chief during a disastrous war that saw Washington, D.C. occupied and the White House burned to the ground. The other was Jimmy Carter.

According to Connie Cass of Associated Press, the U.S. government “briefly stiffed some of its creditors on at least two occasions.” The first default took place in November 1814, during the administration of James Madison, America’s tiniest chief executive. Just a few months after the British conquest of Washington, D.C. during the War of 1812, the Treasury was unable to move enough precious metal to service its debt, and missed interest payments on bonds. Boston bondholders, according to Wayne State College history professor Don Hickey, were paid off in short-term interest-bearing treasury notes or more bonds. These debt service troubles, and the war, were resolved within a few months.

Read the rest of this entry »


The Late, Great Middle Class

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Victor Davis Hanson writes: The American middle class, like the American economy in general, is ailing. Labor-force participation has hit a 35-year low.

Median household income is lower than it was five years ago. Only the top 5 percent of households have seen their incomes rise under President Obama.

Commuters are paying more than twice as much for gas as they were in 2008. Federal payouts for food stamps, unemployment insurance, and disability insurance have reached unprecedented levels.

Meanwhile, the country is still running near-record budget deficits and is burdened by $17 trillion in aggregate debt. Yet the stock market is soaring.

How can we make sense of all this contradictory nonsense? Irony.

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A Slo-Mo IRS Cover-Up

When Obama condemns “phony scandals,” we can assume investigators are getting warm.

By  John Fund

Back on May 13, President Obama reacted heatedly to news that the IRS had delayed and harassed conservative groups applying for nonprofit status. “I have got no patience with it, I will not tolerate it, and we will make sure that we find out exactly what happened on this,” he told reporters

How is the president living up to that pledge? At best, meh. At worst, we are seeing a slow-motion cover-up. In a speech he made last week, he railed against an “endless parade” of “phony scandals” that are slowing down the nation’s business. In other words, nothing to see here, it’s time to “move on.”

Last Sunday, Treasury Secretary Jack Lew appeared on Fox News Sunday and backed up the president. He did damage control on recent congressional testimony by IRS lawyer Carter Hull that implicated the office of William Wilkins, the IRS’s chief counsel and an Obama political appointee — Wilkins is by no means the “rogue” low-level bureaucrat the administration first blamed for the scandal. Also, consider this timeline of IRS activity in the spring of 2010, as midterm elections loomed and the tea-party groups targeted by the IRS began seeing their applications for nonprofit status slow-walked or put into deep freeze.April 23, 2010: Wilkins visits President Obama in the Roosevelt Room at the White House. That room is traditionally the only part of the White House where a president discusses political matters.

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