Grasping Reality with the Invisible Hand… 2016-06-30 23:06:57

Must-Read: James Pethokoukis: The Magical Thinking of America's Pro-Brexit Conservatives: "Lawrence Kudlow called Brexit a 'Thatcher moment' that could put Britain 'on the pro-growth path of free-market supply-side policies'...

...The Wall Street Journal ... explained... 'now more than ever Britain will need supply-side economic policies that reassure investors and make Britain a growth model for Europe.'... By detaching from the EU regulatory superstate, an unchained Britain would return to its risk-taking, free-trading roots. London would become a sort of Hong Kong on the Thames, England a Texas on the North Sea. With the Voldemort of Brussels vanquished, free-market magic could be unleashed. Economicus growthus leviosa! Or not.

This is the sort of magical, fantastical thinking all too common in the Republican Party and among American conservatives... why Donald Trump can offer a $10 trillion tax cut plan that would need to quintuple GDP growth to break even--all with scant criticism from many leading voices on the right.... Even if you doubt the potential for long-term damage--permanently slower economic growth, the disintegration of the EU--the short-term post-Brexit picture is pretty ugly.... A 2017 recession as likely. Not to mention that disentangling from the EU might consume British politics and policy for years. And all for what, exactly? The U.K.... ranks ninth for global competitiveness, says the World Economic Forum. And it ranks 10th... on the Index of Economic Freedom.... Britain is already a relatively well-run, free-trading nation.... Never has so much been risked for potentially so little.

Procrastinating on June 30, 2016


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The Closer 6/30/16 – “Railroads: Prices Matter”

Looking for deeper insight on global markets and economics?  In tonight’s Closer sent to Bespoke clients, we highlight the slow growth of railroad shipping relative to truck traffic, as well as assessing the driver of the divergence between the two. We also preview a significant wave of overnight data to close the week.


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Restaurant Performance Index declined in May

Here is a minor indicator I follow from the National Restaurant Association: RPI drops in May
Due in large part to softer same-store sales and customer traffic results, the National Restaurant Association’s Restaurant Performance Index (RPI) declined in May. The RPI stood at 100.6 in May, down 0.9 percent from a level of 101.6 in April.

"The RPI continued along a choppy trend line in May, with the index bouncing between moderate gains and losses in recent months," said Hudson Riehle, senior vice president of research for the National Restaurant Association.

"Much of the May dip came from declines in the same-store sales and customer traffic indicators, which softened from their stronger April performance. In addition, operators’ expectations for future business conditions are at the lowest level in three and a half years," he said.
emphasis added
Restaurant Performance Index Click on graph for larger image.

The index decreased to 100.6 in May, down from 101.6 in April. (above 100 indicates expansion).

Restaurant spending is discretionary, so even though this is "D-list" data, I like to check it every month.

Liveblogging Postwar: June 30, 1946: China

China 1946 Google Search

George C. Marshall: To Harry S. Truman:

Top Secret

Dear Mr. President:

I saw Generalissimo for lengthy conference this morning in which exceedingly frank and lengthy statements were made by both of us, I principally reflecting on the plainly evident and tremendous pressure of military leaders (who also occupy powerful political positions) to pursue without delay a policy of force for which all plans have been made.[1] However drastically they reduce their application to Communist territorial holdings and territory occupied by Communist troops or eliminate local Communist governmental set ups of long standing, the Generalissimo laid great emphasis on the necessity of arrangements which would safeguard the Government against the uncertainties of agreements with the Communists or future hostile threats or actions by them to influence political negotiations.[2]

I had been endeavoring to have a small group of civil representatives of high position or reputation convened immediately to undertake the solution of the exceedingly complicated problem involved with regard to the local civil governments of the regions to be evacuated by the Communist troops and to which thousands of refugees would be immediately returning. With regard to the previous unwillingness to accept such a proposition I stated that the procedure contemplated by the Government officials would in effect be washing their hands of any idea of democratic procedures and deliberately following the dictates of Army officials as did Japan to her ruination.

The Generalissimo finally announced that he had already issued instructions continuing in effect his orders against aggressive offensive action by his troops. He accepted my proposal that he have a personal interview with Chou En-lai tomorrow and that he would discuss with his people the appointment of a special group of six, the three from the Government to include my suggestion of Doctor Wang, Minister of Foreign Affairs and General Chen Cheng, Chief of Staff. General Chou En-lai would head the Communist representatives. If he decided on this procedure he agreed to propose it himself to General Chou. The latter incidentally had formulated such a proposal the preceding day at my suggestion.

I just completed a meeting with Chou En-lai who is preparing for his meeting with the Generalissimo. The latter issued a statement to the press this afternoon of which I was shown a draft. I have not yet seen the statement actually issued so I do not know to what extent my rather extensive alterations were accepted.

  1. Information he had gleaned from the newspapers, Marshall had told the Generalissimo, ‘indicated plainly that the Government was washing its hands of any democratic procedure and was pursuing a dictatorial policy of military force. I further stated that the comparison would be inevitable of the army leaders’ procedure in this case with that of the army dictatorship in the case of Japan, which led to the destruction of that nation.’ (Foreign Relations, 1946, 9: 1263-64.)

  2. A few hours after this message was dispatched, Marshall sent another message (GOLD 1029) asking that this sentence be replaced with: ‘The Generalissimo laid great emphasis on the necessity for harsh measures or demands to safeguard the Government against the uncertainties of agreements with the Communists and also against future hostile threats or actions by them to influence political negotiations.’ (Ibid., p. 1272.)

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