Menu Icon

Debt Rattle April 10 2023

Apr 102023
 
 April 10, 2023  Posted by at 9:11 am Finance Tagged with: , , , , , ,  64 Responses »


Camille Pissarro The Boulevard Montmartre at Night 1897

 

• Europe Must Resist Pressure To Become ‘America’s Followers,’ Says Macron (Pol.eu)
• Refugees Or Displaced Persons? (Konrad Rekas)
• Pentagon In ‘Panic’ After Intel Leak – WaPo (RT)
• CNN: Ukraine Changes Military Plans Due To Leaked Classified Documents (Az.)
• Ukraine Will Eventually Reveal ‘Horrible’ Losses – Kiev Ambassador To UK (RT)
• NATO To Launch Biggest Air Forces Drill In Its History (RT)
• US ‘Open’ To Deploying Troops In Taiwan – Lindsey Graham (RT)
• Russia Almost Shot Down British Spy Plane In September 2022 – WaPo (RT)
• Yemeni Govt Holds Talks With Saudi Arabia To End 3-Year Civil War (CGTN)
• Global Economy Outlook Weakest In Decades – IMF (RT)
• Ukraine’s Foreign Reserves Hit Record High (RT)
• Psychologist Suspended For 2 Years For Warning About Great Reset and WEF (RAIR)
• Elon Musk Refuses To Delete Medvedev’s Post On Twitter (TASS)
• Albert Camus on the Denial of Freedom (Tucker)
• Accurate Measure of US Temperature Shows No Recent Warming But Is Hidden (DS)
• Polish MP Proposes Law To Require Labels On Insect-Containing Foods (ZH)
• Mexico’s Plan to Slash Glyphosate Imports Triggers Firestorm in US (CHD)

 

 

 

 

RFK jr mercury vaccines


https://twitter.com/i/status/1645073574443593728

 

 

 

 

Yeadon

 

 

50 years of bank credit

 

 

Gates

 

 

 

 

Rogan gender

 

 

 

 

Putin Holy Book
https://twitter.com/i/status/1645028443711586304

 

 

McCullough

 

 

 

 

“I feel at ease with [Xi], including on substance. There’s a mutual attraction between France and China, a fascination, a friendship, a singular journey.”
– Macron

“NATO is an organization that weakens our defense capabilities, instills the idea that defense is inconceivable without it, thus numbing our sense of national independence. NATO is in fact a deception, a camouflage for the US takeover Europe.”
– Charles de Gaulle

• Europe Must Resist Pressure To Become ‘America’s Followers,’ Says Macron (Pol.eu)

Europe must reduce its dependency on the United States and avoid getting dragged into a confrontation between China and the U.S. over Taiwan, French President Emmanuel Macron said in an interview on his plane back from a three-day state visit to China. Speaking with POLITICO and two French journalists after spending around six hours with Chinese President Xi Jinping during his trip, Macron emphasized his pet theory of “strategic autonomy” for Europe, presumably led by France, to become a “third superpower.” He said “the great risk” Europe faces is that it “gets caught up in crises that are not ours, which prevents it from building its strategic autonomy,” while flying from Beijing to Guangzhou, in southern China, aboard COTAM Unité, France’s Air Force One.


Xi Jinping and the Chinese Communist Party have enthusiastically endorsed Macron’s concept of strategic autonomy and Chinese officials constantly refer to it in their dealings with European countries. Party leaders and theorists in Beijing are convinced the West is in decline and China is on the ascendant and that weakening the transatlantic relationship will help accelerate this trend. “The paradox would be that, overcome with panic, we believe we are just America’s followers,” Macron said in the interview. “The question Europeans need to answer … is it in our interest to accelerate [a crisis] on Taiwan? No. The worse thing would be to think that we Europeans must become followers on this topic and take our cue from the U.S. agenda and a Chinese overreaction,” he said.

Just hours after his flight left Guangzhou headed back to Paris, China launched large military exercises around the self-ruled island of Taiwan, which China claims as its territory but the U.S. has promised to arm and defend. [..] Xi responded by saying anyone who thought they could influence Beijing on Taiwan was deluded. Macron appears to agree with that assessment. “Europeans cannot resolve the crisis in Ukraine; how can we credibly say on Taiwan, ‘watch out, if you do something wrong we will be there’? If you really want to increase tensions that’s the way to do it,” he said. “Europe is more willing to accept a world in which China becomes a regional hegemon,” said Yanmei Xie, a geopolitics analyst at Gavekal Dragonomics. “Some of its leaders even believe such a world order may be more advantageous to Europe.”

In his trilateral meeting with Macron and von der Leyen last Thursday in Beijing, Xi Jinping went off script on only two topics — Ukraine and Taiwan — according to someone who was present in the room. “Xi was visibly annoyed for being held responsible for the Ukraine conflict and he downplayed his recent visit to Moscow,” this person said. “He was clearly enraged by the U.S. and very upset over Taiwan, by the Taiwanese president’s transit through the U.S. and [the fact that] foreign policy issues were being raised by Europeans.” In this meeting, Macron and von der Leyen took similar lines on Taiwan, this person said. But Macron subsequently spent more than four hours with the Chinese leader, much of it with only translators present, and his tone was far more conciliatory than von der Leyen’s when speaking with journalists.


Macron also argued that Europe had increased its dependency on the U.S. for weapons and energy and must now focus on boosting European defense industries. He also suggested Europe should reduce its dependence on the “extraterritoriality of the U.S. dollar,” a key policy objective of both Moscow and Beijing. “If the tensions between the two superpowers heat up … we won’t have the time nor the resources to finance our strategic autonomy and we will become vassals,” he said.

Paris April 8
https://twitter.com/i/status/1644667412011163650

Read more …

Someone forgot to cancel him…

Speech at the international conference “Security policy challenges for Europe 2023: Ukraine conflict, mass migration, energy supply and current developments”, organized on March 30, 2023 in Vienna by the Vienna Association of Academics and the Center for Geostrategic Studies.

• Refugees Or Displaced Persons? (Konrad Rekas)

It is with real sadness that we see our Slavic brothers in the Ukrainians, and we observe the effects of many years of Nazi indoctrination among the newcomers. The state cult of Stepan Bandera , Roman Shukhevych and other Nazi collaborators left a lasting mark on subsequent generations of Ukrainians. A terrible harm has been done to these people by raising them to hate their neighbours, ethnic and religious minorities and all non-cult criminals. Ukraine is an area where de-Nazification is absolutely necessary, and while it is regrettable that it is currently taking place in the form of a fratricidal war, this should not blind us toopening up the neo-Nazi nature of the current Ukrainian state and its authorities .

When we talk about the crimes of the Ukrainian Nazis, we do not mean only the Volhynian Massacre, when during the summer months of 1943 the Banderites murdered almost 200,000 of their Polish, Jewish, Czech, Armenian and even Ukrainian neighbors. The crime of Nazi genocide was both the burnt offering in the Trade Union House in Odessa on May 2, 2014, and the attack by Ukrainian troops on defenseless demonstrators in Donetsk, demanding language rights, on May 26, 2014, and the crimes of Azov and other Ukrainian Nazi-Special Battalions in the Donbass in 2014-2022, and finally, the murders of prisoners and civilians perpetrated every day by the troops of the Kiev junta during the current war.

These are Nazi criminals, and their recruitment camps are masses of Ukrainian immigrants to Europe. No one from the outside controls what content Ukrainian youth is indoctrinated with, just like in Poland, all mentions of the crimes of the Ukrainian Nazis were removed from school curricula “because you shouldn’t annoy the guests”. So, 78 years after the end of World War II, we have a Nazi state in the middle of Europe and we ourselves pay for the upbringing and training of its militarized cadres, and at the same time when the governments of our countries persecute their own citizens for even the slightest sign of patriotism, self-defense or a sense of national dignity .

As Europeans, as patriots of our countries and nations, we face an existential threat. The mass migrations of the Ukrainian population to the territory of the European Union threaten to destabilize at least on a macro-regional scale, involve the disorganization of our economies and confront us with an enemy wrongly considered defeated: Nazism. And it is Nazism additionally accumulated through its alliance with Anglo-Saxon imperialism and the interests of international finance. The question is: can we defend ourselves against this threat?

Podolyak
https://twitter.com/i/status/1645075473695637504

 

 

Prigozhin
https://twitter.com/i/status/1645225759131201537

Read more …

“..exposed how the US “spies on friends and foes alike,” the report says, suggesting the files could stir diplomatic unease..”

• Pentagon In ‘Panic’ After Intel Leak – WaPo (RT)

A recent leak of classified documents on Washington’s war planning in Ukraine has caused turmoil in the Pentagon, forcing officials to step up security, the Washington Post reported on Saturday, citing sources. Several Western officials interviewed by the outlet said they were still trying to assess the damage from dozens of leaked national security papers which grabbed the public’s attention in recent days, with many wondering how the breach had gone unnoticed for so long. While the first media reports on the story emerged only this week, a batch of the documents was shared on the Discord chat platform in late February and early March. The authenticity of the intelligence remains unverified. Two US officials told the Post that the Pentagon leadership has “restricted the flow of intelligence” in response to the leak.

One source described the measures as unusually strict, and a testament to “a high level of panic” among the top brass. Both US officials and their foreign partners were “stunned” and even “infuriated” by the level of detail provided in the documents, which exposed how the US “spies on friends and foes alike,” the report says, suggesting the files could stir diplomatic unease. A senior Ukrainian official told the Post that the leak had caused anger in Kiev, as the files provided insight into information it wanted to keep secret from Russia – namely “vulnerabilities related to ammunition shortages and other battlefield data.” Meanwhile, a European intelligence official reportedly expressed concerns that due to the disclosures, the US could cut back on intelligence sharing with allies.


While some of the documents made public were supposed to be shielded from foreign nationals, others had been cleared for transfer to the Five Eyes intelligence alliance, composed of the US, the UK, Canada, Australia, and New Zealand. The wide-ranging batch of sensitive documents, which made media headlines this week, provides an assessment on Russian and Ukrainian battle readiness and casualties, timetables for training and equipment deliveries, as well as tactical information on the conflict between Moscow and Kiev. However, the true scale of the leak remains unclear, as on Friday the New York Times reported that a new trove of secretive American documents had appeared online, this time covering not only the Ukraine conflict, but also China, the Middle East and terrorism.

Read more …

“..expose the extent of US eavesdropping on key allies, including South Korea, Israel and Ukraine.”

• CNN: Ukraine Changes Military Plans Due To Leaked Classified Documents (Az.)

Ukraine has already changed some of its military plans due to the leak of classified US documents, Report informs via CNN. The news agency notes that secret Pentagon documents posted online in recent weeks show how the United States spies on both allies and adversaries, which has deeply concerned American officials who fear that the revelations could jeopardise sensitive sources and compromise important international relations. Some of the documents, which US officials say are authentic, expose the extent of US eavesdropping on key allies, including South Korea, Israel and Ukraine.

Read more …

“..we have to fight to the very last of them or, very unfortunately, the last of us as well..”

• Ukraine Will Eventually Reveal ‘Horrible’ Losses – Kiev Ambassador To UK (RT)

Ukraine will reveal the extent of its “horrible” losses once its conflict with Russia is over, Vadim Pristaiko, Kiev’s ambassador to the UK, said in an interview released on Friday. Asked by British tabloid the Daily Express to comment on casualties among Ukrainian military personnel and civilians, Pristaiko said “it has been our policy from the start not to discuss our losses.” “When the war is over, we will acknowledge this. I think it will be a horrible number,” he added. Pristaiko dismissed any possibility of talks between Moscow and Kiev – at least until Russia withdraws its troops from the territories Ukraine claims as its own. “So, we have to fight to the very last of them or, very unfortunately, the last of us as well,” the envoy said.

The ambassador also commented on the assault brigades that Ukraine says it has assembled for a much-anticipated spring offensive against Russia. “Whoever says there are 40,000 men in these brigades, I would like to point out that we have mobilized a million men,” Pristaiko stated. Both sides of the Ukraine conflict rarely provide data on their losses. However, last autumn, EU Commission President Ursula von der Leyen put Kiev’s fatalities at 100,000, a claim that was disputed by Ukraine and later removed from the official’s website. In December, Mikhail Podoliak, a senior aide to Ukrainian President Vladimir Zelensky, put the death toll among Kiev’s military at between 12,000 and 13,000 people.


Russia has not officially updated its losses since last September, when Moscow’s Ministry of Defense estimated that 5,937 service members had died. Pristaiko’s comments come as Ukrainian and Western officials claim that Ukraine will launch a counteroffensive in the coming weeks. Commenting on statements about a potential Ukrainian push, Kremlin Press Secretary Dmitry Peskov noted that the Russian military “thoroughly tracks all the relevant information” on the matter.

Read more …

To impress the home front.

• NATO To Launch Biggest Air Forces Drill In Its History (RT)

NATO is planning to hold the largest Air Force exercise this summer, the German Armed Forces – the Bundeswehr – announced in a statement. Dubbed ‘Air Defender 23,’ the drills are scheduled to take place between June 12 and June 24 and are expected to involve hundreds of aircraft from dozens of nations. A total of 10,000 soldiers and 220 aircraft are to be involved in the exercise, the Bundeswehr said, adding that they are to train “in the European airspace.” The US is to supply 100 of the aircraft out of its stocks, the statement said. According to Berlin, the drills are to be held mostly over German territory, although a map published by the Bundeswehr shows that the airspace of Estonia, which borders Russia, and of Romania, which borders Ukraine, could be used as well.

The plan of the drills “is modeled after an Article 5 Assistance scenario,” the Bundeswehr said, calling it “challenging air operations training” for the participating troops. The exercise is aimed at “optimizing” the cooperation between the participating nations and demonstrating the “strength” of the military bloc. A total of 24 nations are to take part in the drills, including Finland, which only joined NATO earlier in April. Sweden, which has yet to join the bloc, will participate in the exercise too. The US Air National Guard will provide around half the aircraft used in the German-led exercise in June. Its commander, Lieutenant General Michael Loh, maintained that there is no set scenario pitting the NATO forces against a particular adversary during the drills. Yet, he still did mention Moscow during a briefing on the matter earlier this week.

“This is now putting the alliance together quickly, with a credible force, to make sure that if Russia ever lines up on the NATO border, that we’re ready to go,” he said on Wednesday. “We’re going to defend every inch.” A similar tone was struck by the German Air Force. “We won’t write [Russia] a letter,” its commander, Lieutenant General Ingo Gerhartz said, adding that he thinks “they get the message.” The drills coincide with a separate US-led exercise called Defender Europe 23. “This annual, nearly two-month-long exercise is focused on the strategic deployment of US-based forces, the employment of Army pre-positioned stocks and interoperability with European allies and partners,” the Pentagon’s deputy press secretary, Sabrina Singh, told journalists earlier this week.

A total of 9,000 US soldiers, together with 17,000 troops from 26 other nations, are to participate in the drills, which would take place across ten European nations, Singh said. Washington had already started shipping the equipment needed for the exercise to Europe, she added. According to the Pentagon, the first pieces of equipment have already arrived in Spain. Some 7,000 pieces of equipment are to be transported to Europe as part of the drills. Around 13,000 other pieces of equipment are to be drawn from pre-positioned stocks, the Pentagon said. The US-led exercise is to kick off on April 22.

Read more …

“I believe in a One China policy, but I would be willing to fight for Taiwan because Taiwan is a democracy..”

• US ‘Open’ To Deploying Troops In Taiwan – Lindsey Graham (RT)

US Senator Lindsey Graham has declared that he would support a formal defense alliance with Taiwan and would send US troops to fight a hypothetical Chinese invasion. Graham, one of the most hawkish Republicans in Congress, claimed that defending Taiwan is in the US’ national security interest. Speaking to Fox News on Sunday, the Republican lawmaker claimed that the US policy of “strategic ambiguity” on Taiwan – under which Washington recognizes, but does not endorse, China’s sovereignty over the island – is not working, and should be replaced with a formal defense agreement. “So the question for the Congress, should we have a defense agreement with the island of Taiwan?” he asked. “I’d be very much open to using US forces to defend Taiwan, because it’s in our national security interest to do so.

“I believe in a One China policy, but I would be willing to fight for Taiwan because Taiwan is a democracy,” he continued, later adding that the US has an economic incentive to fight China over the island. “90% of the high-end chips are made in Taiwan,” he said. “[China] would have a monopoly on the digital economy.” Graham said he would support the sale of US-made fighter jets to Taipei, and would back the movement of “war forces to South Korea and Japan.” There are currently several dozen US troops stationed in Taiwan, and the Wall Street Journal reported in February that Washington plans to increase this number to between 100 and 200. Graham’s position on Taiwan is hawkish, but in line with that of a growing number of both Democrats and Republicans. House Speaker Kevin McCarthy met with Taiwanese President Tsai Ing-wen in California on Wednesday.


Meanwhile, during a visit to Taipei on Friday, House Foreign Affairs Committee Chairman Michael McCaul told Fox News that Congress would authorize military action against China in the event of an invasion of Taiwan. McCarthy’s predecessor, Nancy Pelosi, flew to Taipei last summer to meet with President Tsai. Defying calls from Beijing, US President Joe Biden did not intervene to stop Pelosi’s trip, and the president suggested on several occasions that he would use military force to deter any attempts by China to invade the island. In a policy paper released last August, Beijing stated that it would strive for a peaceful reunification with Taiwan but would not renounce the use of force to achieve this goal if necessary. Beijing responded to Tsai’s visit to California by launching simulated strikes on Taiwan on Sunday. Graham is a longtime advocate of military intervention and regime change, and called last year for the assassination of Russian President Vladimir Putin.

Read more …

“SECDEF Directed Standoff.”

• Russia Almost Shot Down British Spy Plane In September 2022 – WaPo (RT)

Russia and NATO were just a step away from a potential all-out war last year after a Russian fighter jet almost shot down a British surveillance aircraft, the Washington Post claimed on Sunday, citing a new document from a trove recently leaked from the Pentagon. The incident, which occurred in late September 2022 was allegedly much more serious than London had previously admitted, the newspaper reported. Back in October 2022, Britain’s Secretary of Defence Ben Wallace told the parliament about the incident, adding that Moscow blamed it on a technical malfunction and London accepted this explanation. The document, seen by WaPo, describes it as a “near-shoot down of UK RJ” – a reference to the ‘River Joint’ moniker common for the RC-135 reconnaissance aircraft used to collect radio transmissions and electronic messages.

The UK said in October that the plane had been intercepted by two Russian Su-27 fighters over the Black Sea, with one of them “releasing a missile” near the British plane. According to WaPo, the incident could have potentially triggered Article 5 of the NATO Treaty, possibly leading to a direct involvement of NATO forces in the conflict in Ukraine, or even a direct conflict between Moscow and the military bloc. Neither has the US or the UK nor has Russia commented on the document’s contents, WaPo said. The same paper also suggested that the US took a more cautious approach towards reconnaissance missions in the Black Sea region and in particular told its Air Force to stay away from the Crimean Peninsula, the newspaper reported.

A map contained in the document shows several lines drawn over sections of the Black Sea to mark the areas where American surveillance aircraft can and cannot fly, WaPo reported. One of them goes about 12 nautical miles off the coast of Crimea – a distance marking the territorial waters of a nation under international law. Another one drawn about 50 nautical miles from the shore is called “SECDEF Directed Standoff.” According to the US media outlet, this line might indicate that US Secretary of Defense Lloyd Austin might have ordered the US Air Force to keep their aircraft away from the peninsula. Unlike France and the UK, which made crewed surveillance flights over the Black Sea, the US relied on drones, including the RQ-4 Global Hawk, the RQ-170 Sentinel, and the MQ-9 Reaper, the document said, adding that several such unmanned flights take place every month.

In March, the Pentagon accused Russian pilots of reckless flying and claimed that one of the Russian jets had clipped the propeller of a US MQ-9 Reaper drone, causing it to go down. Russia denied hitting the drone or using weapons against it. It also said the US aircraft was flying with its transponder switched off in a no-go zone declared by the Russian military. A video allegedly shot by the drone only showed a Sukhoi Su-27 fighter jet buzzing over it and allegedly ejecting fuel in the process. According to CNN, the Pentagon has further rerouted its surveillance drone flights over the Black Sea in the wake of the incident.

Read more …

China makes peace.

• Yemeni Govt Holds Talks With Saudi Arabia To End 3-Year Civil War (CGTN)

Yemeni government officials have gathered in Riyadh, the capital of Saudi Arabia, to discuss a comprehensive three-year peace plan to end the country’s civil war, a Yemeni diplomat said on Friday. The move signals that regional rifts are easing. A permanent ceasefire in Yemen would mark a milestone in stabilizing the Middle East. “Saudi Defense Minister Khalid bin Salman held a meeting on Thursday with Rashad Al-Alimi, chairman of Yemen’s Presidential Leadership Council (PLC), and other high-ranking Yemeni government officials in Riyadh, during which he presented the kingdom’s plan for peace in Yemen,” the Yemeni diplomat told Xinhua on condition of anonymity.

The proposed plan is based on a series of back-channel negotiations between Saudi Arabia and the Houthi rebels in Muscat, the capital of Oman, that have been conducted for the past few months. It’s focused on a truce between warring factions, a full reopening of Yemen’s ports and airports, payment of wages for public servants, a rebuilding process and a political transition. The plan has three main stages that will be implemented over a period of three years, the diplomat said, adding the Yemeni officials have already shown their initial support for the plan.

The first phase of the plan is “a six-month truce between warring factions in Yemen, during which hostilities will cease and efforts will be made to rebuild trust and lay the groundwork for peace.” The second phase would entail a dialogue to address key issues and grievances among the various Yemeni factions and reopen the closed roads, airspace and seaports. The third stage would be a two-year transitional period during which a new and inclusive government would be established, paving the way for long-term stability and peace in the country, according to the official. If a truce agreement is reached, the parties could announce it before Islam’s Eid holiday starting April 20, according to Reuters.

Meanwhile, another Yemeni government official told Xinhua that Muhammad Al Jaber, the Saudi ambassador to Yemen, along with an Omani delegation, is planning to meet leaders of the Houthi rebels in the Yemeni capital of Sanaa to discuss the “the final arrangements” of the truce. Oman and the United Nations have mediated previous rounds of negotiations between the Yemeni government, Saudi Arabia, and the Houthi rebel group, but previous attempts have failed due to a lack of trust between the warring parties and continued violence on the ground.

Read more …

“..restrictions on capital flows and international cooperation, as well as curbs on migration, could slash global GDP by up to 7% or $7 trillion..”

• Global Economy Outlook Weakest In Decades – IMF (RT)

The world economy is facing its weakest period of growth since the 1990s in the next five years due to problems triggered by the pandemic and political tensions, International Monetary Fund (IMF) Managing Director Kristalina Georgieva stated on Thursday. A severe slowdown in the global economy last year following the Covid-19 pandemic and the conflict in Ukraine is set to continue in 2023 and could persist for the next five years, she warned. Global GDP will grow at about 3% over the next half decade compared to an average of 3.8% seen in the past 20 years, representing the worst economic performance in more than three decades. The IMF expects global GDP to expand by less than 3% this year, which is in line with its January projection of 2.9%.

Last year, global growth almost halved following an initial post-pandemic rebound in 2021, sliding from 6.1% to 3.4%, Georgieva said ahead of the IMF World Economic Outlook report, which is due to be released on April 11. Up to 90% of advanced economies are likely to experience a decline in their growth rate this year, she warned, with activity in the US and the Eurozone hit by higher interest rates. “With rising geopolitical tensions, with inflation still running high, a robust recovery remains elusive,” Georgieva said. “That harms the prospects of everyone, especially for the most vulnerable people and most vulnerable countries,” she added. The IMF head warned against economic fragmentation stemming from geopolitical tensions and urged countries to take action to boost global productivity.


According to Georgieva, soaring inflation facing most of the world’s wealthy nations will force central banks to continue interest-rate hikes, adding pressure to the banking industry despite financial uncertainty following recent turmoil with lenders in the US and Switzerland. She urged the world community to “be vigilant and more agile than ever,” adding that regulators may come across more complicated choices to protect the financial system amid persistent inflation and challenges in the banking sector. Long-term disintegration in global trade such as restrictions on capital flows and international cooperation, as well as curbs on migration, could slash global GDP by up to 7% or $7 trillion, which is the equivalent of the combined annual production of Germany and Japan, Georgieva warned.

BRICS

Read more …

They have no money but their reserves are at a record high… Now you know where your taxes go…

• Ukraine’s Foreign Reserves Hit Record High (RT)

The gold and foreign currency reserves of Ukraine have reached an all-time high of $30 billion, presidential adviser Oleg Ustenko said on Sunday, adding that the funds are enough to pay for Ukrainian imports for at least five months. “Our foreign reserves have reached a decade all-time high of over $30 billion,” Ustenko told Rada TV channel. “The amount would be enough to cover more than five months’ worth of Ukrainian imports.” According to Ustenko, the economic situation is considered to be stable if the reserves are sufficient to pay for the country’s imports for at least three months. The senior official warned that inflation in Ukraine is projected to reach 25% in 2023, adding that the huge number could further increase if warring tensions and attacks on the country’s infrastructure intensify.


The National Bank of Ukraine previously reported that the nation’s international reserves in February 2023 had seen a decline of 3.5% month-over-month, and amounted to about $29 billion. The regulator attributed the drop to its interventions in the currency market. Ukraine’s international reserves decreased by 7.9% over the past year, having totaled $28.5 billion as of January 1, according to preliminary data. In March, the International Monetary Fund approved a four-year $15.6 billion loan program for Ukraine that came as part of a broader $115 billion international support package. The loan is the first major financing program approved by the institution for a country involved in a large-scale military engagement. The country’s previous $5 billion IMF program expired last year.

Read more …

This is so 2020.

• Psychologist Suspended For 2 Years For Warning About Great Reset and WEF (RAIR)

Belgian Psychologist Steve Van Herreweghe has received a two-year suspension for his statements on social media about The Great Reset and the World Economic Forum. Van Herreweghe intends to appeal the decision made by the disciplinary board of the Psychologists’ Commission, which is an independent body responsible for protecting the title of psychologist and has the authority to take disciplinary action. Van Herreweghe took to Twitter to express his opposition to the suspension, stating that the issue is not about his title but rather the perceived injustice of the decision and the rejection of his right to free speech. He believes that everyone should have the right to express their opinions on matters related to public health and well-being without fear of political or commercial interference.

Van Herreweghe used his social media platform to voice his concerns about The Great Reset and the World Economic Forum (WEF), which he believes are components of a larger effort to establish a “New World Order.” He has singled out virologists Steven Van Gucht and Marc Van Ranst in his posts, referring to them as “ordinary, well-paid, narcissistic hostages commissioned by WEF puppet governments.” Van Gucht is a Belgian virologist who has been a key figure in the country’s controversial Covid response, while Van Ranst is a prominent epidemiologist who has been outspoken about the pandemic and its impact on society. He has strongly advocated for lockdowns and other measures to control the population, which has earned him massive criticism for hurting the economy and citizens’ freedoms.


The Great Reset, a global initiative proposed by the WEF, is a sinister plot to establish a new world order of global governance. Klaus Schwab, the founder and executive chairman of the WEF, has openly stated that crises, such as the Covid pandemic, present “special opportunities” for the establishment of a new global order. This has led many to realize that the Great Reset aims to undermine national sovereignty and individual freedoms in the pursuit of a technocratic vision of the future. Van Herreweghe has also made statements on other topics, linking the energy crisis, the financial-economic crisis, the war against Putin, the climate crisis, and the gender identity propaganda to the “Great Reset.” He describes the transgender movement as a “prime example of how alienated humanity is from its deeper nature.” He warns that the trivialization of sexuality is a dangerous trend that could lead to the normalization of pedophilia.

Read more …

Why would he?

• Elon Musk Refuses To Delete Medvedev’s Post On Twitter (TASS)

American entrepreneur Elon Musk, who heads Tesla and SpaceX and owns Twitter, refused to delete a statement posted earlier by Russian Security Council Deputy Chairman Dmitry Medvedev on the Twitter social network. One of Twitter subscribers earlier turned attention of Musk to Medvedev’s tweet on Saturday, when he stated why no one needs Ukraine any more. The American billionaire responded that all news is propaganda to a certain degree and people should make decisions on their own adding that the platform at the issue was not intended to restrict or promote accounts of Russian state structures. In April last year, Twitter announced that it would block social network users, who have accounts affiliated with the state authorities that allegedly restrict access to the “open Internet.” A spokesman for the company said back then that the measure would primarily affect the Russian government and would involve more than 300 accounts.

Read more …

You can download it or read it for free at Archive.org.

• Albert Camus on the Denial of Freedom (Tucker)

Jan Jakielek of the Epoch Times recently conducted an in-depth interview with Robert Kennedy, Jr., and asked him in particular about the relationship between truth seeking and suffering. Kennedy recalled a moment from his childhood when his father gave him a book to read. It was The Plague by Albert Camus, published in 1947. I can see how and why the son was well prepared to deal with the torments of our times. For many people, these last 3 years was their first experience in a full denial of freedom. Locked in their homes. Prevented from traveling. Separated from loved ones. Forced to spend day after day wondering about big things previously unconsidered: why am I here, what are my goals, what is the purpose of my life?

It was a transformation. We are not the first to go through this. It is something experienced by prisoners, and by previous populations under lockdown. Camus’s classic has a chapter that describes the inner life of people who have experienced lockdown for the first time. It came suddenly in the presence of a deadly disease. The entire town of 200,000 closed. No one in or out. It’s fiction but all-too-real. I’m astonished at Camus’s perceptive insight here. Reading it slowly and nearly out loud is an experience. The poetry of the prose is incredible, but more so the depth of knowledge of the inner workings of the mind.


One interesting feature of the narrative is the difference in communication. They could only communicate via telegraph with the outside world, and with limited vocabulary. There were also letters outgoing but one had no idea whether the intended recipient would see it. Today of course we have vast opportunities for digital communication in audio and video, which is glorious, but no real substitute for the freedom to assemble and meet. Here I am quoting this one chapter. I hope it helps you understand yourself as much as it did help me gain awareness of my own experience. The entire book is compelling. You can download it or read it for free at Archive.org.

Read more …

“Many stations are compromised by being placed next to air conditioners, jet exhausts and concrete, asphalt and nearby buildings..”

• Accurate Measure of US Temperature Shows No Recent Warming But Is Hidden (DS)

Government-controlled surface datasets, the bedrock of climate thermogeddon fears promoting Net Zero, cannot possibly be accurate, and are only “an estimate with high uncertainty”. The claim comes from the noted U.S. meteorologist Anthony Watts, who has spent the last decade highlighting the numerous flaws built into global temperature monitoring systems. Data are collected by government bodies from a weather station network, “that was never intended to detect a ‘global warming signal’”, notes Watts. He goes on to call for a new independent global climate database. Given that governments are spending billions of taxpayer dollars on climate mitigation programmes, “doesn’t it make sense to get the most important thing – the actual temperature – as accurate as possible”, he asks.


To date, continues Watts, there is only one network of climate capable weather stations that is accurate enough to fully detect a climate change signal. This is the U.S. Climate Reference Network (USCRN), started in 2005 as a state-of-the-art automated system designed specifically to accurately measure climate trends at the surface. It comprises 114 stations across North America sited well away from any non-climatic effects, such as urban heat caused by humans.

The USCRN graph above shows that there has been no significant warming trend over the last two decades in the United States. “Unfortunately, the data from the USCRN network are buried by the U.S. Government, and are not publicly reported in monthly or yearly global climate reports. [The network] has also not been deployed worldwide,” observed Watts.


Watts notes that past temperature records were collected to validate weather forecasting. Temperatures were rounded by volunteers to the nearest whole degree of Fahrenheit. When comparing such “coarsely recorded” data to claims of 1.8°F global warming since the late 1800s, “obvious questions” of accuracy arise. Referring to his own recent work, Watts says that even more concerning is the widespread corruption of data by urbanisation. Many stations are compromised by being placed next to air conditioners, jet exhausts and concrete, asphalt and nearby buildings. This happens not just in the USA but in many other territories, including the U.K.

Read more …

“If Rafal Trzaskowski wants to eat mazurek [a traditional Polish Easter cake] make of dried insects, he has the right to do so..” “We, as conservatives, as Poles, definitely prefer normal Polish food..”

• Polish MP Proposes Law To Require Labels On Insect-Containing Foods (ZH)

A Polish deputy agriculture minister has proposed an “anti-bug law” which would require all food products containing insects to be labeled with a special warning. The move by the member of the ruling conservative party comes amid accusations that if progressive opposition parties win power during this year’s elections, they will push an Orwellian ‘eat the bugs’ campaign to restrict the consumption of traditional meat. The opposition has not formally announced any such plans, according to Notes from Poland. “Dried mealworm larvae, powdered cricket – these are among the insects that the eurocrats and Rafal Trzaskowski [the opposition mayor of Warsaw] call new food,” said Janusz Kowalski, a deputy agriculture minister, while unveiling the plans in parliament on Thursday.


“That is why we, United Poland [Solidarna Polska], have initiated the preparation of legal regulations, following the examples of Hungary and Italy, that will give Polish consumers clear knowledge about food products containing so-called bug additives,” he continued. “This is an anti-bug law.” Under the proposed law from the ruling Law and Justice party (PiS), products containing bugs would be required to include a label on their packaging stating “Warning, this food product contains insect protein.” “If Rafal Trzaskowski wants to eat mazurek [a traditional Polish Easter cake] make of dried insects, he has the right to do so,” said Kowalski, referring to the opposition mayor. “We, as conservatives, as Poles, definitely prefer normal Polish food, Polish meat, Polish dairy products.”

Read more …

“There are at least 12 alternatives to glyphosate, “which do not risk the Mexican countryside or the health of the population..”

• Mexico’s Plan to Slash Glyphosate Imports Triggers Firestorm in US (CHD)

Amid a high-stakes standoff with U.S. trade officials over favored American agricultural products, Mexico is slashing the amount of glyphosate allowed to be imported into the country by 50% for 2023. The move is no surprise — Mexico issued a decree in 2020 giving its farmers until 2024 to stop using the weed-killing chemical. But coming amid an increasingly heated dispute with U.S. trade officials, the action underscores Mexico’s commitment to free itself from a dependence on the synthetic pesticides and genetically engineered crops promoted by American interests. Along with banning glyphosate, Mexico is ratcheting back imports of genetically engineered corn that is designed to be sprayed with glyphosate. Mexico says the changes are needed to protect the health of its population.

The country has also signaled concerns about other genetically modified (GMO) crops sprayed with glyphosate. Glyphosate is classified as a probable human carcinogen by the World Health Organization’s International Agency for Research on Cancer and is linked to an array of other human and environmental health problems. It was introduced by Monsanto in 1974 and is the world’s most widely used weedkiller, known best as the active ingredient in the Roundup brand. Monsanto developed genetically engineered corn, soybeans, canola and other crops to tolerate being sprayed with glyphosate, a trait that makes it easier for farmers to kill weeds in their fields. Foods made with crops sprayed with glyphosate commonly carry residues of the weedkiller, and people then consume the residues through their daily diets.


Mexico’s retreat from these types of agricultural products has triggered a firestorm of industry opposition in the U.S. In response, the Office of the U.S. Trade Representative (USTR) and other U.S. agencies are fighting Mexico’s efforts, alleging violations of trade provisions of the U.S.-Mexico-Canada trade agreement (USMCA) with respect to Mexico’s restrictions on GMO corn. Mexico’s policies “threaten to disrupt billions of dollars in agricultural trade,” the USTR said in a press statement last month. [..] There are at least 12 alternatives to glyphosate, “which do not risk the Mexican countryside or the health of the population,” Mexico’s health ministry, the Federal Commission for the Protection against Sanitary Risks (COFEPRIS), said in announcing its new glyphosate quota.

Read more …

 

 

 

 

Pelosi
https://twitter.com/i/status/1645010906529538051

 

 

13 years ago – Collateral Murder

 

 

Joyful

 

 

Clean energy

 

 

Peacock
https://twitter.com/i/status/1645151908909178880

 

 

 

 

Support the Automatic Earth in virustime with Paypal, Bitcoin and Patreon.

 

 

 

 

 

Will China Retreat Into Itself?

Aug 052019
 
 August 5, 2019  Posted by at 7:30 pm Primers Tagged with: , , , , , , , , , , , , , ,  16 Responses »


Odilon Redon Peyrelebade landscape 1880

 

It’s never easy to gauge what exactly is happening in China, or why the CCP Politburo takes the decisions it does. Today, or overnight, is no exception to that. However, one thing that appears certain, but which I don’t see reflected in all the analyses, is that Beijing pushing the value of the renminbi (yuan) down below 7 to the USD in one fell swoop, is a major setback for Xi Jinping and his government.

Yes, China may have given up hope of reaching positive conclusions in its trade talks with the US. And yes, some may think, even in China itself, that devaluing the currency is a tool that can be useful in a potential currency war. But there’s another side to this coin. It’s not even about the value itself, or the change in it, it’s the heavy-handed way it’s executed.

 

China wants, and desperately needs too, for the yuan to be a force in global financial markets. In very simple terms this is true because if it then wants to buy something, it can simply print the money for it. But only about 1% of global trade today is executed in yuan. That is not nearly enough. It means China needs dollars and euros, all the time. And devaluing the yuan means the country needs even more of those.

You’d almost think: why would you want to do that? What are the long-term prospects for a move like this? You’re telling forex markets that the value of the yuan is not trustworthy, because if Xi or the PBOC decides in the next five minutes that it should go up or down by 10% or 20%, they can do it. The Fed and ECB also have tools to manipulate their currencies (re: interest rates), but none of that magnitude.

 

The crux of the dilemma probably lies in the Belt and Road Initiative (BRI), which I’ve been saying for years is just China’s way to sell its overcapacity and overproduction abroad. Sure, there may be loftier goals, and surely in the glitzy brochures, but the fact remains that China has tried to be an economic miracle, doing in 10 years what took the US a century, and it never slowed down its growth, at least not voluntarily, even if that might have been a wise move.

Already lately, purchases by Chinese citizens and companies of real estate and businesses abroad have been curtailed, and not a little bit, by Beijing. There’s no better way to convince Chinese people of the miracle’s success than to let them travel the world and spend there, but that, too, may well soon be cut. It kills foreign reserves.

If Beijing could charge participating countries in the Belt and Road Initiative in yuan, and they could pay for the overcapacity’s steel and cement and what not in yuan, that could be a game-changing program for the entire planet. But these countries have no reason to hold yuan, other than the BRI itself. And they, too, were watching the overnight move above 7 and must have thought: let’s be careful now.

And to top it all off, China right now needs for these countries to pay in dollars instead of yuan, because its foreign reserves are shrinking so fast. It’s Catch-22 all the way down. China’s need for dollars goes against everything BRI stands for.

 

Could the move hurt the US as well? Absolutely. But the long-term view behind the tariffs, and the talks China appears to have lost faith in, is to move the US away from its near all-encompassing addiction to Chinese production, and to move at least some of that production back home. Problem of course is, that is precisely what China’s miracle growth has been built on.

If the US starts bringing production home, who is Beijing going to sell its (over-)production to? Yes, I hear you, to the BRI countries. But there it runs into the currency problems mentioned before. To Europe? The top of that trade route is also behind us. Europe will have to follow the US to an extent, and also bring factories back to the continent (and not just to Germany either).

China could perhaps sell more than it does today to Russia. But that country still does produce a lot of things, and has been forced to be much more self-sufficient due to US and EU sanctions. It’s also a mighty small market compared to 350 million North Americans and 500 million Europeans, who are on average much richer than your average Russian to boot.

 

There is a way for China to make the yuan more important in global trade (but devaluation is definitely not that way): Beijing could let go of its central and total control over the value of its currency, and let forex markets figure it out. That would give traders -and everyone else- faith in the value. Problem with that is, this is not how central control communist governments think.

Beijing wants both: central total control AND a prominent place in world trade. And it may take them a long time to figure out that is not going to happen, unless of course they first conquer the entire world militarily. That is not an option, at least not for the foreseeable future. Come see me next century.

 

It wouldn’t be the first time for me to say I can see China retreat into itself, into its own borders and culture and market (1.3 billion people!). If the Communist Party wants to remain in power, and there’s no doubt it does, this may be only possible choice going forward. If growth has indeed left the miracle -as many observers think-, it can implode in very rapid succession. And even if growth hasn’t yet evaporated, it may well very soon. Without the growth, there is no miracle anymore.

And if China can no longer grow its exports, its domestic growth will also become a thing of the past. Domestic consumption can only grow as long as exports do too. Seen from that angle, the problems with trade and the currency look downright ominous. If you need dollars that badly, and you notice that you’re already getting fewer of them, not more, you’re in trouble.

Devaluing your currency may afford you some temporary respite, but it can’t possibly solve your troubles. It can make them much worse though.

I think China has wanted too much too fast, got carried away and forgot to take care of a few potential barriers to its growth, in particular the standing its currency had and still has in the world, and the grinding need for dollars that stems from it. And the Communists have no answer to this problem.

 

 

 

 

Debt Rattle November 16 2017

Nov 162017
 
 November 16, 2017  Posted by at 9:47 am Finance Tagged with: , , , , , , , , ,  8 Responses »


Leonardo da Vinci Salvator Mundi 1513

 

• Landmark Study Links Tory Austerity To 120,000 Deaths (Ind.)
• Jeremy Corbyn Will Inevitably Become UK Prime Minister – Varoufakis (BI)
• Why Care More About Benefit Scroungers Than Billions Lost To The Rich? (G.)
• No Evidence Of Russian Interference In Brexit, PM May Admits In Parliament (RT)
• China’s Outbound Investment Plunged 41% On Year In January To October (BBG)
• Senior China Minister Says Some Officials Practice Sorcery (R.)
• Corruption in China Could Lead To Soviet-Style Collapse – Graft Buster (ToI)
• The Complete Idiot’s Guide To The Biggest Risks In China (ZH)
• Why the Anti-Corruption Drive in Saudi Arabia is Doomed to Fail (CP)
• Saudi Walks Back Escalation As Dramatic Moves Backfire (AP)
• Friendly Reminder That Jeff Bezos Is Trying To Take Over The Universe (CJ)
• Why Japan Knocks Down Its Houses After 30 Years (G.)
• Kyle Bass: Investors to Pour Billions into Greece after Political Change (GR)
• Lesvos Reaches Breaking Point, Mayor Declares General Strike (G.)
• Monsanto, US Farm Groups Sue California Over Glyphosate Cancer Warnings (R.)
• Plastics Found In Stomachs Of Deepest Sea Creatures (G.)

 

 

It doesn’t get much more damning than this. Nothing Monty Python about it.

• Landmark Study Links Tory Austerity To 120,000 Deaths (Ind.)

The Conservatives have been accused of “economic murder” for austerity policies which a new study suggests have caused 120,000 deaths. The paper found that there were 45,000 more deaths in the first four years of Tory-led efficiencies than would have been expected if funding had stayed at pre-election levels. On this trajectory that could rise to nearly 200,000 excess deaths by the end of 2020, even with the extra funding that has been earmarked for public sector services this year. Real terms funding for health and social care fell under the Conservative-led Coalition Government in 2010, and the researchers conclude this “may have produced” the substantial increase in deaths.

The paper identified that mortality rates in the UK had declined steadily from 2001 to 2010, but this reversed sharply with the death rate growing again after austerity came in. From this reversal the authors identified that 45,368 extra deaths occurred between 2010 and 2014, than would have been expected, although it stops short of calling them “avoidable”. Based on those trends it predicted the next five years – from 2015 to 2020 – would account for 152,141 deaths – 100 a day – findings which one of the authors likened to “economic murder”. The Government began relaxing austerity measures this year announcing the end of its cap on public sector pay rises and announcing an extra £1.3bn for social care in the Spring Budget. Over three years the additional funding for social care is expected to reach £2bn, which Labour leader Jeremy Corbyn said was “patching up a small part of the damage” wrought by £4.6bn cuts.

[..] The papers’ senior author and a researcher at UCL, Dr Ben Maruthappu, said that while the paper “can’t prove cause and effect” it shows an association. And he added this trend is seen elsewhere. “When you look at Portugal and other countries that have gone through austerity measures, they have found that health care provision gets worse and health care outcomes get worse,” he told The Independent. One of his co-author’s, Professor Lawrence King of the Applied Health Research Unit at Cambridge University, said it showed the damage caused by austerity “It is now very clear that austerity does not promote growth or reduce deficits – it is bad economics, but good class politics,” he said. “This study shows it is also a public health disaster. It is not an exaggeration to call it economic murder.”

Read more …

After a report like that, yes. The Tories have taken things too far.

• Jeremy Corbyn Will Inevitably Become UK Prime Minister – Varoufakis (BI)

Yanis Varoufakis, former finance minister of Greece and author of “Adults in the Room: My Battle with the European and American Deep Establishment,” explains that Jeremy Corbyn as Prime Minister may be a likely scenario and that this would be beneficial for the UK economy. The following is a transcript of the video. Isn’t it astonishing that after Jeremy Corbyn was being described as “the longest suicide note by the Labour Party” about a year ago, today there is an air of inevitability in a Corbyn-led government. I think it’s a delicious irony and I’m very excited by this transition from impossibility to inevitability. In the interests of full disclosure, I’m a friend of Jeremy Corbyn, a supporter, I’ve worked with his team and will continue to do so.

I believe that the re-orientation of British politics under Corbyn and in particular of the Labour Party is highly beneficial, not only to the large strata within British society that have been discarded in the last 20 to 30 years, but interestingly also for British business that produces real stuff as opposed to the City of London and various other service sectors that produce precarious jobs and nothing much of substance. British manufacturing has been left in the margins for far too long and the dearth of investment in fixed capital is something that this Conservative government has absolutely no interest in, or no concept of. A Labour, Corbyn-led government, might be what is necessary in order to create better circumstances both for labour and manufacturing capital in the United Kingdom.

Read more …

“Quite simply, people get hurt when the rich don’t pay their taxes.”

• Why Care More About Benefit Scroungers Than Billions Lost To The Rich? (G.)

Will the Paradise Papers shift the public’s focus? The leaks alone are seemingly not enough. The 2016 British Social Attitudes survey was conducted just four months after the release of the Panama Papers. Even then, the British public remained more concerned about benefit claimants than tax avoiders. Fundamentally, the Paradise Papers are about numbers – vast sums of money disappearing offshore that could be spent on public services here in the UK. However, as the former chair of the UK Statistics Authority, Andrew Dilnot, has often pointed out, people are bad at dealing with numbers on this scale. Unless you are an economist or a statistician, numbers in the millions and billions are just not particularly meaningful.

The key is to link these numbers to their consequences. The money we lose because people like Lewis Hamilton don’t pay some VAT on their private jet means thousands more visits to food banks. The budget cuts leading to rising homelessness might not have been necessary if Apple had paid more tax. Fewer people might have killed themselves after a work-capability assessment if companies like Alphabet (Google) had not registered their offices in Bermuda, and the downward pressure on benefits payments was not so intense. The causal chains connecting these events are complex and often opaque, but that does not make their consequences any less real, especially for those who have felt the hard edge of austerity.

The Paradise Papers have dragged the murky world of offshore finance into the spotlight. However, calls for change may founder against the British public’s persistent focus on the perceived crimes of the poor. That is, unless we – as academics, politicians, journalists and others – can articulate how the decisions of the very rich contribute to the expulsion of the vulnerable from the protection of state-funded public services. Quite simply, people get hurt when the rich don’t pay their taxes.

Read more …

Oh, cut it out.

• No Evidence Of Russian Interference In Brexit, PM May Admits In Parliament (RT)

Theresa May has rejected allegations that Russia interfered in the Brexit referendum. Speaking during Prime Minister’s Questions, she stated: “If they care to look at the speech on Monday, they will see that the examples I gave were not in the UK.” During a speech May gave at the Lord Mayor’s banquet, the British leader accused Russia of meddling in European elections, hacking attacks on western government institutions, and spreading fake news. During the customarily confrontational Prime Minister’s Questions, May said that, in her speech, she had indeed cited “Russian interference” occurring “in a number of countries in Europe.” However, she denied that this applied in any way to her own country.

Following the session, a spokesperson for Labour leader Jeremy Corbyn said that “I think we need to see more evidence about what’s being talked about. “In relation to Russia and tensions between NATO and Russia and western powers and Russia more generally, Jeremy has made clear on a number of occasions that we need to see an attempt through dialogue to ratchet down tensions with Russia.” May was responding to a question from Labour MP Mary Creagh, who referred to an assertion by Foreign Secretary Boris Johnson that he had seen no evidence of Russia interfering in the Brexit referendum. Johnson made the comment during an appearance before a Commons committee hearing on November 1. Upon prompting by a senior civil servant, Johnson replied “nyet,” and added in English that there was “not a sausage” of evidence.

Read more …

Once again: China needs its foreign reserves.

• China’s Outbound Investment Plunged 41% On Year In January To October (BBG)

China’s non-financial outbound investment slumped to $86.3 billion in January to October, plunging 41% from a year earlier, as projects in some industries dried up. There were no new real estate, sports or entertainment deals for the period, the Commerce Ministry said in a statement Thursday. Most outbound investment was in leasing and business services, manufacturing, wholesale and retail sales and information technology services. “Irrational” outbound investment has been curbed further, the ministry said, repeating the language it has used this year as authorities push to halt capital outflows.

That’s reversing an unbroken streak of acceleration since at least 2010: Outbound investment soared 44.1% last year to $170.1 billion, about four times the 2009 level, Mofcom data show. “The combination of hardened capital controls and a crackdown on outbound M&A has dented China’s overseas investment,” said Tom Orlik, chief Asia economist at Bloomberg Economics in Beijing. “A short-term downturn was necessitated by the pressing need to stabilize the yuan. Sustained for too long, falling overseas investment would be tough to square with ambitions for greater international influence through the Belt and Road program.”

Read more …

In which sorcery is somehow the opposite of socialism.

• Senior China Minister Says Some Officials Practice Sorcery (R.)

Some top Chinese officials are guilty of practicing sorcery and would rather believe in gurus and Western concepts of democracy than the Communist Party, a senior minister wrote on Thursday, warning of the danger they presented to its survival. China guarantees freedom of religion for major belief systems such as Buddhism, Christianity and Islam, but party members are meant to be atheists and are barred from what it calls superstitious practices, such as visits to soothsayers. Recent years have seen several cases of officials jailed as part of President Xi Jinping’s crackdown on corruption being accused of superstition, part of the party’s efforts to blacken their names.

Some senior officials in leadership positions had “fallen morally”, their beliefs straying from the correct path, wrote Chen Xi, the recently appointed head of the party’s powerful Organisation Department that oversees personnel decisions. “Some don’t believe in Marx and Lenin but believe in ghosts and gods; they don’t believe in ideals but believe in sorcery; they don’t respect the people but do respect masters,” he wrote in the official People’s Daily, referring to spiritual leaders or gurus. People in China, especially its leaders, have a long tradition of turning to soothsaying and geomancy to find answers to their problems in times of doubt, need and chaos. The practice has grown more risky amid Xi’s war on graft, in which dozens of senior officials have been imprisoned.

Read more …

Large scale arrests in the future?

• Corruption in China Could Lead To Soviet-Style Collapse – Graft Buster (ToI)

China must step up its battle against corruption in order to safeguard against a Soviet-style collapse, the country’s second most senior graft buster said in an editorial on Wednesday. Yang Xiaodu, the deputy secretary of the Central Commission for Discipline Inspection, who was promoted to the ruling Communist Party’s 25-strong Politburo last month, said failure would risk the “red country changing colour”. In unusually direct and strongly worded criticism of previous administrations, Yang said “in a previous period”, corruption had been allowed to fester to such an extent that the party’s leadership had weakened, with supervision soft, and ideology apathetic. “It had developed to the point where if not rectified, the country could change colour,” Yang wrote in the official People’s Daily.

“The future fate of the party and the country’s people could follow the same old road to ruin as the Soviet Union and the Eastern Bloc.” President Xi Jinping, like many officials before him, is steeped in the party’s long-held belief that loosening control too quickly or even at all could lead to chaos and the break up of the country. The party regularly implores cadres to study the collapse of the Soviet Union in the early 1990s. Yang’s editorial is the latest salvo signalling that the intensity of Xi’s signature war on corruption would not wane despite the departure of Xi’s right-hand man, Wang Qishan, who was widely seen as China’s second most powerful politician before being replaced as anti-corruption chief in a leadership reshuffle last month. Wang’s replacement, Zhao Leji, wrote a similarly strongly worded editorial in the People’s Daily on Saturday.

Read more …

Not doing well. At all.

• The Complete Idiot’s Guide To The Biggest Risks In China (ZH)

With both commodities and Chinese stocks suffering sharp overnight drops, it is hardly surprising that today trading desks have quietly been sending out boxes full of xanax their best under-25 clients (those veterans who have seen one, maybe even two 1% market crashes), along with reports explaining just what China is and why it matters to the new generation of, well, traders. One such analysis, clearly geared to the Ritalin generation complete with 3 second attention spans, comes from Deutsche Bank which in a few hundred words seeks to explain the key risks threatening the world’s most complex centrally-planned economy, and ground zero of the next financial crash. Which, one day after our summary take on why the Chinese commodity, economic and financial crash is only just starting (as those who traded overnight may have noticed), is probably a good place to reiterate some of the more salient points.

As Deutsche Bank’s Zhiwei Zhang writes in “Risks to watch in the next six months”, the key thing to keep in mind about China now that the 19th Party Congress is in the rear-view mirror, is that the government is likely to tolerate slower growth in 2018. Han Wenxiu, the deputy head of the Research Office of the State Council, said that GDP growth at 6.3% in 2018-2020 would be sufficient to achieve the Party’s 2020 growth target. And while this is a positive message for the long term, it indicates growth will likely slow in 2018. And, as DB warns, recent economic data suggest the economic cycle has indeed cooled down. For all those seeking key Chinese inflection points, here are the three big red flags involving China’s economy:

For the first time since Q4 2004, fixed asset investment (FAI) growth turned negative in real terms in Q3 this year.

Growth of property sales for the nation turned negative as well in October, the first time since 2015.

The property market boom in Tier 3 cities is also losing momentum.

We hope not to have lost by now all the Millennial traders who started reading this post. To those who persevered, here – in addition to the risks facing the economy – are the other two main risks facing China’s investors: (rising) inflation and (rising) interest rates.

Read more …

The most corrupt are the most powerful. Cue China.

• Why the Anti-Corruption Drive in Saudi Arabia is Doomed to Fail (CP)

The problem in resource-rich states is that corruption is not marginal to political power, but central to acquiring it and keeping it. Corruption at the top is a form of patronage manipulated by those in charge, to create and reward a network of self-interested loyalists. It is the ruling family and its friends and allies who cherrypick what is profitable: this is as true of Saudi Arabia as it was true of Libya under Gaddafi, Iraq under Saddam Hussein and his successors, or Iraqi Kurdistan that was supposedly different from the rest of the country. Corruption is a nebulous concept when it comes to states with arbitrary rulers, who can decide – unrestrained by law or democratic process – what is legal and what is illegal. What typifies the politics of oil states is that everybody is trying to plug into the oil revenues in order to get their share of the cake.

This is true at the top, but the same is the case of the rest of the population, or at least a large and favoured section of it. The Iraqi government pays $4bn a month to about seven million state employees and pensioners. These may or may not do productive work, but it would be politically risky to fire them because they are the base support of the regime in power. Anti-corruption drives don’t work, because if they are at all serious, they soon begin to cut into the very roots of political power by touching the “untouchables”. At this point principled anti-corruption campaigners will find themselves in serious trouble and may have to flee the country, while the less-principled ones will become a feared weapon to be used against anybody whom the government wants to target.

A further consequence of the traditional anti-corruption drive is that it can paralyse government activities in general. This is because all officials, corrupt and incorrupt alike, know that they are vulnerable to investigation. “The safest course for them is to take no decision and sign no document which might be used or misused against them,” a frustrated American businessman told me in Baghdad some years ago. He added that it was only those so politically powerful that they did not have to fear legal sanctions who would take decisions – and such people were often the most corrupt of all.

Read more …

Wishful thinking?

• Saudi Walks Back Escalation As Dramatic Moves Backfire (AP)

Saudi Arabia’s dramatic moves to counter Iran in the region appear to have backfired, significantly ratcheting up regional tensions and setting off a spiral of reactions and anger that seem to have caught the kingdom off guard. Now it’s trying to walk back its escalations in Lebanon and Yemen. On Monday, the kingdom announced that the Saudi-led coalition fighting Shiite rebels in Yemen would begin reopening airports and seaports in the Arab world’s poorest country, days after closing them over a rebel ballistic missile attack on Riyadh. The move came just hours after Lebanese Prime Minister Saad Hariri, who shocked the nation by announcing his resignation from the Saudi capital on Nov. 4, gave an interview in which he backed off his strident condemnation of the Lebanese militant Hezbollah, saying he would return to the country within days to seek a settlement with the Shiite militants, his rivals in his coalition government.

The two developments suggest that Saudi Arabia’s bullish young crown prince, Mohammed bin Salman, may be trying to pedal back from the abyss of a severe regional escalation. “This represents de-escalation by the Saudis,” said Yezid Sayigh, a senior fellow at the Carnegie Middle East Center in Beirut. “The general trend is that the Saudis are going to back off and this is largely because of the unexpected extent of international pressure, and not least of all U.S. pressure.” Mohammed bin Salman, widely known by his initials, MBS, has garnered a reputation for being decisive, as well as impulsive. At just 32 years old and with little experience in government, he has risen to power in just three years to oversee all major aspects of politics, security and the economy in Saudi Arabia. As defense minister, he is in charge of the Saudi-led war in Yemen.

He also appears to have the support of President Donald Trump and his son-in-law, senior adviser Jared Kushner, who visited the Saudi capital earlier this month. Saudi partners in the Gulf and the Trump administration rushed to defend the kingdom publicly after a rebel Houthi missile was fired at the Saudi capital, Riyadh, from Yemen last week. A top U.S. military official also backed Saudi claims that the missile was manufactured by Iran. However, Saudi Arabia’s move to tighten an already devastating blockade on Yemen in response to the missile was roundly criticized by aid groups, humanitarian workers and the United Nations, which warned that the blockade could bring millions of people closer to “starvation and death.” Saudi Arabia’s decision to ease the blockade after just a week suggests it bowed to the international criticism, and did not want the bad publicity of even more images of emaciated Yemeni children and elderly people circulating online and in the media.

Read more …

“WaPo ran sixteen smear pieces on Bernie Sanders in the span of sixteen hours at the hottest point in the Democratic presidential primary battle.”

• Friendly Reminder That Jeff Bezos Is Trying To Take Over The Universe (CJ)

Jeff Bezos, currently the wealthiest human being on planet Earth, did not purchase the Washington Post in 2013 because he was expecting newspapers to make a lucrative resurgence. This self-evident fact doesn’t receive enough attention. I will say it again for emphasis: Jeff Bezos, who has used his business prowess to become the wealthiest person in the world, did not purchase the Washington Post in 2013 because he was expecting newspapers to make a profitable comeback. That did not happen. What did happen is the world’s richest plutocrat realizing that he needed a mouthpiece to manufacture public support for the neoliberal corporatist establishment that he is building his empire upon. This is why WaPo ran sixteen smear pieces on Bernie Sanders in the span of sixteen hours at the hottest point in the Democratic presidential primary battle.

[..] Last year Silicon Valley venture capitalist Chamath Palihapitiya said that Amazon is “a multi-trillion-dollar monopoly hiding in plain sight.” In June Stacy Mitchell, co-director of the Institute for Local Self-Reliance, wrote that Amazon is trying to “control the underlying infrastructure of the economy.”\ Bezos continues to get cozier and cozier with the US power establishment as his empire metastasizes across human civilization. He kicked WikiLeaks off Amazon servers in 2010, he scored a 600 million dollar contract with the CIA in 2013, he joined a Pentagon advisory board in 2016, he hung out with Defense Secretary James Mattis in August, and he’s spent nearly ten million dollars this year lobbying the federal government, which is likely what led to an NDAA amendment gifting Amazon a $54 billion market it’s expected to dominate as a supplier to the Pentagon. Billion. With a ‘b’.

[..] I gave this story a jokey headline, but seriously, watch Jeff Bezos very closely. Your future is increasingly more likely to be imperiled by new money tech plutocrats like him than by old money plutocrats like Soros and the Rothschilds.

Read more …

Interesting. Earthquakes are no. 1 incentive.

• Why Japan Knocks Down Its Houses After 30 Years (G.)

In the suburban neighbourhood of Midorigaoka, about an hour by train outside Kobe, Japan, all the houses were built by the same company in the same factory. Steel frames fitted out with panel walls and ceilings, these homes were clustered by the hundreds into what was once a brand new commuter town. But they weren’t built to last. Daiwa House, one of the biggest prefabricated housing manufacturers in Japan, built this town in the 60s during a postwar housing boom. It’s not unlike the suburban subdivisions of the western world, with porches, balconies and rooflines that shift and repeat up and down blocks of gently curving roads. Most of those houses built in the 60s are no longer standing, having long since been replaced by newer models, finished with fake brick ceramic siding in beiges, pinks and browns.

In the end, most of these prefabricated houses – and indeed most houses in Japan – have a lifespan of only about 30 years. Unlike in other countries, Japanese homes gradually depreciate over time, becoming completely valueless within 20 or 30 years. When someone moves out of a home or dies, the house, unlike the land it sits on, has no resale value and is typically demolished. This scrap-and-build approach is a quirk of the Japanese housing market that can be explained variously by low-quality construction to quickly meet demand after the second world war, repeated building code revisions to improve earthquake resilience and a cycle of poor maintenance due to the lack of any incentive to make homes marketable for resale. In Midorigaoka, even the newer homes built in the 80s and 90s are nearing the end of their expected lifespan.

Under normal circumstances, their days might be numbered. But down at the end of one block, there’s a sign things are changing. Scaffolding surrounds a vacant house on a corner and workers from Daiwa House are clanging away inside. They’re not demolishing the house but refurbishing it – reorganising the floor plan, knocking down walls, opening up the kitchen and enhancing the insulation. Rather than tear down the house so the next buyer can build something new, they’re rebuilding it from the inside and putting it back on the market. It’s a relatively rare commodity, but something that is increasingly common across Japan: a secondhand home.

Read more …

I’ve long predicted that Greece will be much less peaceful once Syriza loses power. But yeah, the whole country’s put up for sale, so foreigners are certain to take over.

• Kyle Bass: Investors to Pour Billions into Greece after Political Change (GR)

Hedge fund manager, Kyle Bass, believes that Greece will come out of the crisis and investors will pour billions into its economy once the government changes, according to a CNBC report. The founder and chief investment officer of Hayman Capital Management; which manages an estimated $815 million in assets, is closely following the course of the Greek economy and political situation, and has invested in Greek bank stocks. Bass says that foreign investors are waiting on the sidelines for a political shift to take place in 2018. “My best guess is a snap election for prime minister will be called between April and September of next year and Prime Minister Alexis Tsipras will lose power. When that happens, there will be a massive move into the Greek stock market. Big money will flow in as investors feel more confident with a more moderate administration,” Bass said.

“It’s going to take Kyriakos Mitsotakis; president of New Democracy, the Greek conservative party, to be voted in as prime minister to reform the culture and rekindle investor confidence,” the investor said. “I have no doubt 15 billion euros in bank deposits will come back to Greek banks if he’s elected. The stock and bond markets will also jump following the election.” Bass says that global investors are waiting for the political change in order to invest in real estate, energy and tourism. So far, the hedge fund manager noted, Greece has proceeded with privatizations of its main port; regional airports; its railway system; the largest insurance company, and there are more important ones to be completed within the next two years. “There is so much potential in Greece,” Bass said, noting that investors are waiting for the right moment to enter, the CNBC report concludes.

Read more …

Europe just lets it get worse.

• Lesvos Reaches Breaking Point, Mayor Declares General Strike (G.)

With reception centers on Lesvos bursting at the seams and dozens more migrants arriving daily, the island’s mayor, Spyros Galinos, on Tuesday declared a general strike for Monday in protest. Currently, some 1,500 people – including hundreds of small children – are stranded on the island living in tents, and fears are growing that winter may bring a new humanitarian crisis. In total, there are more than 8,000 migrants and refugees on Lesvos, a favored destination of traffickers bringing people over from neighboring Turkey. “Lesvos has a population of 32,000 residents and there are at the moment 8,300 migrants and refugees,” Galinos told Kathimerini. Moreover, local police union members held a protest over deteriorating working conditions.

“The situation on Lesvos has fueled insecurity among citizens. The police force is dealing exclusively with the migrant issue,” the union chief Dimitris Alexiou said. “We are not expendables,” he added. And with flows to the eastern Aegean islands from Turkey showing no signs of letting up, locals and migrants have reached the end of their tether. Since the beginning of November, 1,603 people have arrived on the islands. In September, 6,000 people arrived from Turkey, the same number as in October. On Monday, another 101 migrants landed on eastern Aegean islands, while more than 400 arrived over the weekend. The situation in the Moria camp on Lesvos is a case in point.

“Conditions at Moria have reached breaking point as the facility is three times over capacity,” said Michael Bakas, coordinator of the northern Aegean branch of the Ecologist Greens, who escorted visiting Group of the Greens MEP and vice chairwoman of the European Parliament’s Subcommittee on Human Rights Barbara Lochbihler. Bakas said about 1,000 children are currently stranded at the camp. The issue will be discussed at the EU assembly on Wednesday.

Read more …

Monsanto must now have as many lawyers as scientists on its payroll. Time to say enough is enough.

• Monsanto, US Farm Groups Sue California Over Glyphosate Cancer Warnings (R.)

Monsanto and U.S. farm groups sued California on Wednesday to stop the state from requiring cancer warnings on products containing the widely used weed killer glyphosate, which the company sells to farmers to apply to its genetically engineered crops. The government of the most populous U.S. state added glyphosate, the main ingredient in Monsanto’s herbicide Roundup, to its list of cancer-causing chemicals in July and will require that products containing glyphosate carry warnings by July 2018. California acted after the World Health Organization’s International Agency for Research on Cancer (IARC) concluded in 2015 that glyphosate was “probably carcinogenic”. For more than 40 years, farmers have applied glyphosate to crops, most recently as they have cultivated genetically modified corn and soybeans.

Roundup and Monsanto’s glyphosate-resistant seeds would be less attractive to customers if California requires warnings on products containing the chemical. In the lawsuit, filed in federal court in California, Monsanto and groups representing corn, soy and wheat farmers reject that glyphosate causes cancer. They say the state’s requirement for warnings would force sellers of products containing the chemical to spread false information.“Such warnings would equate to compelled false speech, directly violate the First Amendment, and generate unwarranted public concern and confusion,” Scott Partridge, Monsanto’s vice president of global strategy, said in a statement.

The controversy is an additional headache for Monsanto as it faces a crisis around a new version of an herbicide based on another chemical known as dicamba that was linked to widespread U.S. crop damage this summer. The company, which is being acquired by Bayer AG for $63.5 billion, developed the product as a replacement for glyphosate following an increase of weeds resistant to the chemical. Monsanto has already suffered damage to its investment of hundreds of millions of dollars in glyphosate products since California added the chemical to its list of products known to cause cancer, according to the lawsuit.

Read more …

Weep.

• Plastics Found In Stomachs Of Deepest Sea Creatures (G.)

Animals from the deepest places on Earth have been found with plastic in their stomachs, confirming fears that manmade fibres have contaminated the most remote places on the planet. The study, led by academics at Newcastle University, found animals from trenches across the Pacific Ocean were contaminated with fibres that probably originated from plastic bottles, packaging and synthetic clothes. Dr Alan Jamieson, who led the study, said the findings were startling and proved that nowhere on the planet was free from plastics pollution. “There is now no doubt that plastics pollution is so pervasive that nowhere – no matter how remote – is immune,” he said. Evidence of the scale of plastic pollution has been growing in recent months. Earlier this year scientists found plastic in 83% of global tapwater samples, while other studies have found plastic in rock salt and fish.

Humans have produced an estimated 8.3bn tonnes of plastic since the 1950s and scientists said it risked near permanent contamination of the planet. Jamieson said underlined the need for swift and meaningful action. “These observations are the deepest possible record of microplastic occurrence and ingestion, indicating it is highly likely there are no marine ecosystems left that are not impacted by anthropogenic debris.” He said it was “a very worrying find.” “Isolating plastic fibres from inside animals from nearly 11 kilometres deep (seven miles) just shows the extent of the problem. Also, the number of areas we found this in, and the thousands of kilometre distances involved shows it is not just an isolated case, this is global.”

[..] The team examined 90 individual animals and found ingestion of plastic ranged from 50% in the New Hebrides Trench to 100% at the bottom of the Mariana Trench. The fragments identified include semi-synthetic cellulosic fibres, such as Rayon, Lyocell and Ramie, which are all microfibres used in products such as textiles, to plastic fibres that are likely to come from plastic bottles, fishing equipment or everyday packaging. Jamieson said deep-sea organisms are dependent on food “raining down from the surface which in turn brings any adverse components, such as plastic and pollutants with it.” “The deep sea is not only the ultimate sink for any material that descends from the surface, but it is also inhabited by organisms well adapted to a low food environment and these will often eat just about anything.”


This microscopic arrow worm has eaten a blue plastic fibre that is blocking the passage of food along its gut. Photograph: Richard Kirby/Courtesy of Orb Media

Read more …

China Hits a Fork in the Road

Dec 282016
 
 December 28, 2016  Posted by at 9:03 pm Finance Tagged with: , , , , , , , ,  1 Response »


Claude Monet Woman with a Parasol – Madame Monet and Her Son Dec 31 1874

 

The end of the year is always a time when there are currency and liquidity issues in China. This has to do with things like taxes being paid, and bonuses for workers etc. So it’s not a great surprise that the same happens in 2016 too. Then again, the overnight repo rate of 33% on Tuesday was not exactly normal. That indicates something like a black ice interbank market, things that can get costly fast.

I found it amusing to see Bloomberg report that: “As banks become more reluctant to offer cash to other types of institutions, the latter have to turn to the exchange for money, said Xu Hanfei at Guotai Junan Securities in Shanghai. Amusing, because I bet many will instead have turned to the shadow banking system for relief. So much of China’s financial wherewithal is linked to ‘the shadows’ these days, it would make sense for Beijing to bring more of it out into the light of day. Don’t hold your breath.

Tyler on last night’s situation: ..the government crackdown on the credit and housing bubble may be serious for once due to fears about “rising social tensions”, much of the overnight repo rate spike was driven by the PBOC which pulled a net 150 billion yuan of funds in open-market operations..”. And the graph that comes with it:

 

 

It all sounds reasonable and explicable, though I’m not sure ‘core leader’ Xi would really want to come down hard on housing -he certainly hasn’t so far-, but there are things that do warrant additional attention. The first has to be that on Sunday January 1 2017, a ‘new round’ of $50,000 per capita permissions to convert yuan into foreign currencies comes into effect. And a lot of Chinese people are set to want to make use of that, fast.

Because there is a lot of talk and a lot of rumors about an impending devaluation. That’s not so strange given the continuing news about increasing outflows and shrinking foreign reserves. And those $50,000 is just the permitted amount. Beyond that, things like real estate purchases abroad, and ‘insurance policies’ bought in Hong Kong, add a lot to the total.

What makes this interesting is that if only 1% of the Chinese population -close to 1.4 billion people- would want to make use of these conversion quota, and most of them would clamor for US dollars, certainly since its post-election rise, if just 1% did that, 14 million times $50,000, or $700 billion, would potentially be converted from yuan to USD. That’s almost 20% of the foreign reserves China has left ($3.12 trillion in October, from $4 trillion in June 2014).

In other words, a blood letting. And of course this is painting with a broad stroke, and it’s hypothetical, but it’s not completely nuts either: it’s just 1% of the people. Make it 2%, and why not, and you’re talking close to 40% of foreign reserves. This means that the devaluation rumors should not be taken too lightly. If things go only a little against Beijing, devaluation may become inevitable soon.

 

In that regard, a remarkable change seems to be that while China’s always been intent on keeping foreign investment out, now all of a sudden they announce they’re going to sharply reduce restrictions on foreign investment access in 2017. While at the same time restricting mergers and acquisitions by Chinese corporations abroad, in an attempt to keep -more- money from flowing out. Something that has been as unsuccessful as so many other pledges.

The yuan has declined 6.6% in value in 2016 (and 15% since mid-2014), and that’s probably as bad as it gets before some people start calling it an outright devaluation. More downward pressure is certain, through the conversion quota mentioned before. After that, first there’s Trump’s January 20 inauguration, and a week after, on January 27, Chinese Lunar New Year begins.

May you live in exciting times indeed. It might be a busy week in Beijing. As AFP reported at the beginning of December:

Trump has vowed to formally declare China a “currency manipulator” on the first day of his presidency, which would oblige the US Treasury to open negotiations with Beijing on allowing the renminbi to rise.

Sounds good and reasonable too, but how exactly would China go about “allowing the renminbi to rise”? It’s the last thing the currency is inclined to do right now. It would appear it would take very strict capital controls to stop the currency from plunging, and that’s about the last thing Xi is waiting for. For one thing, the hard-fought inclusion in the IMF basket would come under pressure as well. AFP continues:

China charges an average 15.6% tariff on US agricultural imports and 9% on other goods, according to the WTO.

Chinese farm products pay 4.4% and other goods 3.6% when coming into the United States.

China is the United States’ largest trading partner, but America ran a $366 billion deficit with Beijing in goods and services in 2015, up 6.6% on the year before.

I don’t know about you, but I think I can see where Trump is coming from. Opinions may differ, but those tariff differences look as if they belong to another era, as in the era they came from, years ago. Lots of water through the Three Gorges since then. So the first thing the US Treasury will suggest to China on the first available and convenient occasion after January 20 for their legally obligatory talk is: let’s equalize this. What you charge us, we’ll charge you. Call it even and call it a day.

That would both make Chinese products considerably more expensive in the States, and open the Chinese economy to American competition. There are many hundreds of billions of dollars in trade involved. And of course I see all the voices claiming that it will hurt the US more than China and all that, but what would they suggest, then? You can’t leave this tariff gap in place forever, so what do you do?

I’m sure Trump and his team, Wilbur Ross et al, have been looking at this a lot, it’s a biggie, and have a schedule in their heads for phasing out the gap in multiple steps. Steps too steep and short for China, no doubt, but then, I don’t buy the argument that the US should sit still because China owns so much US debt. That’s a double-edged sword if ever there was one, and all hands on the table know it.

If you’re Xi, and you’re halfway realist, you just know that Trump will aim to cut the $366 billion 2015 deficit by at least 50% for 2017, and take it from there. That’s another big chunk of change the core leader stands to lose. And another major pressure point for the yuan, obviously. How Xi would want to avoid devaluation, I don’t know. How he would handle it once it can no longer be avoided, don’t know that either. Trump’s trump card?

 

One other change in China in 2016 warrants scrutiny. That is, the metamorphosis of many Chinese people from caterpillar savers into butterfly borrowers. Or gamblers, even. It’s one thing to buy units in empty apartment blocks with your savings, but it’s another to buy them with money you borrow. But then, many Chinese still have access to few other investment options. That’s why the $50,000 conversion to USD permission as per January 1 could grow real big.

But in the meantime, many have borrowed to buy real estate. And they’ve been buying into a genuine absolute bubble. It’s not always evident, because prices keep oscillating, but the last move in that wave will be down.

 

 

If I were Xi, all these things would keep me up at night. But I’m not him, and I can’t oversee to what extent his mind is still in the ‘omnipotent sphere’, if he still has the impression that in the end, come what may, he’s in total control. In my view, his problem is that he has two bad choices to choose from.

Either he will have to devalue the yuan, and sharply too (to avoid a second round), an option that risks serious problems with Trump and other leaders (IMF), and would take away much of the wealth the Chinese people thought they had built up -ergo: social unrest-.

Either that or he will be forced, if he wants to maintain some stability in the yuan’s valuation, to clamp down domestically with very grave capital controls, which carries the all too obvious risk of, once again, serious social unrest. And which would (re-)isolate the country to such an extent that the entire economic model that lifted the country out of isolation in the first place would be at risk.

This may play out relatively quickly, if for instance sufficient numbers of people (the 1% would do) try to convert their $50,000 allotment of yuan into dollars -and the government is forced to say it doesn’t have enough dollars-. But that is hard to oversee from the outside.

There are, for me, too many ‘unknown unknowns’ in this game. But I don’t see it, I don’t see how Xi and his crew will get themselves through this minefield without getting burned. I’m looking for an escape route, but there seem to be none available. Only hard choices. If you come upon a fork in the road, China, don’t take it.

And mind you, this is all without even having touched upon the massive debts incurred by thousands upon thousands of local governments, and the grip that these debts have allowed the shadow banks to get on society, without mentioning the Wealth Management Products and other vehicles in that part of the economy, another ‘industry’ worth trillions of dollars. I mean, just look at the growth rates in these instruments:

 

 

There’s simply too much debt all throughout the system, and it’s due for a behemoth restructuring. You look at some of the numbers and graphs, and you wonder: what were they thinking?