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A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.

A brilliant post by Bloomberg View's Matt Levine highlights the absurdity of derivatives, capital gains taxation and hedge fund regulation. Mr. Levine's piece describes an ongoing legal battle to determine the correct "magic words" that will either result in Deutsche Bank and Barclays being handed huge fines, or allow hedge fund Renaissance Capital to avoid a massive tax bill.

He writes, "In the world, there are only the things [structured products]. Someone needs to decide how to name them. If the Senate wants to decide, I guess it's free to. It makes laws and stuff, and laws are good for naming things. But right now, mostly, the banks are the ones handing out the names. And when they name things, they take a certain amount of poetic license."

"Senate literary critics don't like fictional derivatives " – Bloomberg View

The impending debt default by China's Huatong Road & Bridge Group Co Ltd was tapped by some as the starting gun for a major correction in Chinese credit markets. The government, predictably, has come to the rescue to prevent the default.

The bailout can be viewed a number of ways but although I'm not looking to convert anyone to my point of view, the bailout for me is an admission that the government can't even allow a small debt default because of the risk of contagion.

"Chinese construction firm gets funds, avoids landmark bond default" – Reuters

A related report details the extreme overcapacity issues in the Chinese economy caused by excess investment. Using the country's steel industry as an example, the Reuters report notes,

"[Government] support has saddled the steel industry with huge debts and at least 200 million tonnes of excess production capacity – far more than either U.S. output of 87 million tonnes or the European Union's 166 million tonnes."

You read that right – China has more excess capacity than the entire United States, the world's largest economy, produces.

"As credit dries up, troubled Chinese steel makers lose lifeline" – Reuters

Is Obamacare dead? According to (left-leaning) Vox, a recent U.S. Supreme Court ruling endangers the legality of Obamacare in 36 states. It would be funny if it wasn't tragic, but the government's loss in the case is attributed to a typo in the original legislation.

"Without subsidies, health reform could fall apart. That makes this court case a bigger deal than GOP efforts to repeal Obamacare… The government might be hesitant to argue that this lawsuit is premised on an error in how the law was drafted because it's possible that the court would hold the government to the text of the law — even if that text is flawed and contrary to Congress's original intent — so, framing it as an "error" could result in losing the suit."

"Halbig says Congress meant to limit subsidies. Congress disagrees." – Vox

A scathing review of Australia's transport infrastructure program brings up the issue that few in North America are willing to discuss – government incompetence in infrastructure spending. Most citizens of Canada and the United States accept that infrastructure spending is necessary and would boost the economy, but are rightly suspicious of government's ability not to waste taxpayer funds. This doesn't mean infrastructure spending shouldn't be done, but legal assurances on how the money is spent would be helpful in avoiding another Ontario gas plant debacle.

"Billions spent on roads in 'hideously inefficient' way" – The Way (Victoria, Australia)

Tweet of the Day is from @barnejek, who presents an excellent table from UBS Research that summarizes the current state of major emerging market economies. "On how various EMs are 'healing' pic.twitter.com/b8EcyANFgL"

Diversion: "Here are 10 of the most awesomest movie stunts in film history" - Gizmodo

Follow Scott Barlow on Twitter @SBarlow_ROB

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