The Curious Case of Communist China

          The People’s Republic of China (PRC), a single-party state run by the Communist Party, was established by Mao Zedong in 1949.  Through late 1978 it sported your prototypical Soviet-style centrally planned economy.  Since then the PRC has adopted a policy dubbed “state capitalism”, privatizing farmland and creating special economic zones for private enterprise outside “pillar” sectors like energy and heavy industry, owner-managed by the Party, and the Commies have brought private operating capital in from outside China, mostly through one-sided partnerships placing the Party in majority control of those enterprises.

         Media reports claim that Western technology is stolen this way and then transferred to Chinese-owned competitors, which soon dominate the domestic market and compete effectively against the original “partner” throughout the globe.  Furthermore, China is known as 1) the world’s Number One manufacturer of counterfeit goods, 2) a predatory manipulator of foreign exchange rates, and 3) the leading provider of the kind of scab labor that destroyed the demand side of the American economy through the loss of “outsourced” blue collar jobs.

         On top of all this, good old American stupidity has made the PRC one of this nation’s largest creditors, and now, we’re recently told, mobs of Communist functionaries have been flocking to these shores snagging upscale homes at distress prices with the exchange rate-rigged money we’ve been squandering over there amidst the flat-out destruction of our own Middle Class.

         Common stock in Chinese corporations has been sold to private investors, including US citizens, who’ve been buying into whatever is going on here, as nobody owns up to the blatantly abusive nature of this relationship.  Macro statistics supplied by the PRC indicate the Chinese economy grew by 10.5% from 2001 to 2010, but exactly what was growing isn’t at all clear, nor what part of that could possibly be owned by anybody other than the Communist Party, and this claimed success story has not filtered down to the Chinese stock market at all.  Apparently there are empty cities over there, if our own media is to be taken seriously, and populations get shifted en masse for the benefit of Western photographers documenting Chinese progress.  Maybe that has something to do with the growth/stock market disconnect.

         Years ago, a savvy B-school professor convinced us that a huge part of what you’re getting when you invest American is this magnificent legal infrastructure of ours and everything it means for the protection of your financial interests.

         Play the PRC market, and, clearly, what you’re dealing with is a lawless Commie house of cards.

Errant Trade/Mini Flash Crash

         It was described by someone at Procter and Gamble (PG) as an errant trade.  The media labeled it a mini Flash Crash. Whatever, at 12:11 yesterday prices of PG common stock dipped from what looks like something a tad over 77.50 down to 73.61, and then bounced right back to the 77.50+ level within that same minute.  The New York Stock Exchange later announced that all trades would stand, including, according to one blogger, one for 65,000 shares at 75.11, indicating that multiple transactions got triggered, not just the one.

         Subscribers, as we stated immediately after the catastrophic 2010 Flash Crash, do not place market orders anytime anywhere ever again.  The humans formerly in place to prevent this kind of thing from happening to you no longer exist.

         The system we've been left with is whacked. 

Debt Ceiling Again

         The Umama White House has informed the Honorable John A. Boehner, Speaker, U.S. House of Representatives, that Treasury’s ability to pay for Government spending ends in mid-October.  Department ledgers had already reached the nation’s statutory debt limit back in May, the Secretary announcing then that his functionaries would be taking “extraordinary measures” to come up with the dough needed to keep Washington afloat temporarily, and now those financial shenanigans will be exhausted in a month and a half, at which time Federal bureaucrats will either stop writing checks or start bouncing them.

         Apparently they plan to pay expenses out of cash on hand, usually meaning first come, first served.  If your check gets to the teller's window before the money runs out, you get paid.  After that, well, think bank run, we suppose.  Photos from the 1930's show padlocked front doors and a whole lot of people standing around in the cold.

         The deadline sets up another Umama v Boehner standoff, and media coverage immediately jumped all over a rumored GOP attempt to defund Umamacare with the confrontation process.  Others were quick to point out that this strategy would seem to suggest that the timeliness of your October Social Security electronic bank deposit is now in play as well, possibly signaling the end of the Republican Party as we know it.  Okay, as Seniors know it anyway.

         Be forewarned, valued subscribers.  Whatever happens, the children are playing with the D-word again.  DEFAULT.  We may be in for yet another debt ceiling punch in the gut.

Another Death on the Job

         We read that a 21 year-old summer intern in the London office of this high-profile investment bank is thought to have died from overwork, having pulled three consecutive all-nighters, which would seem to mean he went without sleep for 72 hours straight.  Trying to cover their pathetic a$$, some unidentified hand job claimed that the Crime Family’s Human Resources Department had recently sent out a memo “saying something along the lines of don’t work your interns too hard in the final weeks”.

         Time was, our blogger landed a coveted entry-level gig in white-collar racketeering too, this junior security analyst slot over at Fallutin National, and faced the same kind of calamari himself.  Nobody in management actually told you to put in ridiculous hours, but a body couldn’t help noticing that none of the other bodies left when the little hand got to 5 and the big hand finally hit 12, and this guy, Alan in the next booth, had horror stories about what happened to previous coveted gigholders who did.

         “Don’t go until he goes,” was Alan in the next booth’s advice, referring to the group capo way in the back of the room.  Capo split at precisely 8 PM most nights, otherwise up to as late as 11.  Nobody went out the door with him – that would look like you were just hanging around because he was still %$#&ing there, which you were, but pretended you weren’t as pretending is the most important part of any investment banking job description and you need to show the boss that you're good at it – and the assistant group capo made a point of inviting everybody to join him in the elevator then so we could all be tied for last person to go home tonight.

         Alan in the next booth quit at the end of the week, and, in time, so did the rest of the underlings.  Our blogger, who turned out to be Alan in the next booth’s replacement, though nobody had told him that, got transferred to another capo fairly soon, otherwise he would’ve fled too.  New hires who had the unmitigated gall to head for the elevator when you were supposed to, got pink slipped the very next payday, and nobody other than the capo and the capo wannabe lasted more than a matter of months in that beleaguered corner of the office.

         Capo was an inhuman monster.  A sociopathic beast.  Wasn’t the only sociopath in the place either.  Monsters beget monsters, and drive actual human beings away.

         Fallutin hired thousands of overachieving young men and women every year, at least twenty-fold more than they’d be promoting any time soon, and expensing all those slots with entry-level wages meant the CEO and them could pull in that much more dough themselves.  Placing new hires in the hands of monsters raised the employee turnover rate high enough to keep that system running smoothly.

         Vicious pack of sociopathic beasts marauding in the stench of all the rotting careers they had lain to waste – and, from time to time, a forsaken young soul or two as well.

Yesterday's NASDAQ Glitch

           Yesterday, NASDAQ shut down for either two or three hours, depending on which paragraph of the story we read you want to cite.  It happened during what was supposed to be the afternoon trading session, and since we didn’t place any OTC orders then ourselves, we’re wondering what the dysfunction must’ve felt like to those who did.

         Online with a discount Crime Family, as is our lot these days, we would’ve checked “Buy” or “Sell” on the “Trade” window, added the "Number of Shares", "Symbol", "Order Type" (always “Limit” for us ever since the Flash Crash, and appropriate “Price”), and “Time-in-Force” (“Day” for us).  The “Special Instructions” and “Routing” defaults are “None” and “Smart”, respectively, and we never mess with them.

         This is where the typical investor deals with sundry typical investor issues, things like thoughts of suicide, where you're going to live when the bank takes your home, how many times you've lost money using this $#%&ing form, how much money you've lost using this $#%&ing form, and just who your testamentary heirs are this year and how much of the estate each is going to get his/her grabby little hands on.

         Then we would’ve clicked on the big “Review Order” button at the bottom of the window, compared our limit price with the current market quote and bid and ask offers on the display that popped up next, and, deciding we were okay there, hit “Place Order”.

         For some inexplicable reason, thoughts of who your testamentary heirs are probably going to be next year often runs through the typical investor's mind at this point in the order-placing process, as well as how much of the estate each is probably going to get his/her grabby little hands on this time, and we would've been no exception to this inexplicability, we're sure.

         The final step, hitting “Order Status” on the top bar of the current window, would've come next, and we always pause for something more than a millisecond before doing so as it generally takes at least a millisecond to fill an order these days, only, Holy Calamari, yesterday one could’ve sat for up to maybe three whole hours, or whatever it was, waiting for a fill to come in.

         Would we have been savvy enough to check the “Streaming Quotes” screen and see WTF?  You betcha.  That display is always up and dazzling us before we ever get started with the wheeling and dealing.  And there would’ve been no changes to any of the NASDAQ numbers there.  The NYSE quotes would’ve been flipping green and red and the occasional black to indicate up, down, or even from the last trade or yesterday’s close, depending on which column you were gawking at, but the NASDAQ, they would’ve been, like, totally lifeless.  Since we only have two NASDAQ issues on our “Streaming Quotes” thingie, tech giants INTL and AAPL, it would’ve looked tech-specific to us.  Like China stopped using computers.  Or somebody had invented something, and it wasn't INTL or APPL.  Maybe time travel, and nobody was going to stay home in front of a laptop anymore.  Or need cell phones when people can now warp over and say what they want in person.

         ALL NASDAQ STOCKS HAD JUST GONE TO ZERO, AND THE OBAMA WHITE HOUSE DIDN"T KNOW HOW TO TELL US.

         Subscribers, we’re too old for this kind of calamari.  Somebody needs to fix these dysfunctions and soon.

         NOW would be a good time for us.