Aug 192019
 


Edouard Vuillard The window 1894

 

Kudlow: ‘There’s No Recession On The Horizon’ (Hill)
White House Offers Reassurances Amid Recession Fears (Hill)
Trump: Purchasing Greenland ‘Strategically’ Interesting (Hill)
Hong Kong Readies For More Mass Protests After Huge, Peaceful Rally (R.)
China State Council Calls For Shenzhen Integration With Hong Kong, Macau (R.)
China Works To Turn Shenzhen Into The New Hong Kong (Nikkei)
‘Operation Yellowhammer’ Documents Reveal Brexit ‘Worst Case Scenario’ (NW)
UK Elderly In Severe Poverty Up Fivefold Since 1986 (G.)
Russia Hoax Coup and Epstein Interlocked – Kevin Shipp (USAW)
Palace In Damage Control Over Video Of Prince Andrew In Epstein Mansion (RT)
Where Did All The Cod Go? Fishing Crisis In The North Sea (G.)

 

 

Larry Kudlow in Dec. 2007: “Despite all the doom and gloom from the economic pessimistas, the resilient U.S. economy continues moving ahead.”

Kudlow: ‘There’s No Recession On The Horizon’ (Hill)

White House economic adviser Larry Kudlow on Sunday sought to allay fears of an economic downturn, saying, “I don’t see a recession at all.” The White House adviser demurred when asked by “Fox News Sunday” guest host Dana Perino whether the Trump administration is considering concrete steps to stave off a potential recession after short-term U.S. Treasury bonds last week fell below yields for longer-term bonds. The development, which can signal a forthcoming recession, sparked the worst single-day losses for stocks of 2019. “The Trump pro-growth program, which I believe has been succeeding, we’re going to stay with that,” Kudlow told Perino.


“There’s no recession on the horizon,” he added. “What’s wrong with a little optimism?” Kudlow echoed the comments in an interview on NBC’s “Meet the Press.” Host Chuck Todd noted, however, that Kudlow made similar remarks in 2007, shortly before the Great Recession began, and wrote, “There’s no recession coming. … The pessimistas were wrong.” “I plead guilty to that,” Kudlow responded on NBC. Fox’s Perino also asked Kudlow about President Trump’s frequent references ahead of the 2018 midterm elections to a 10 percent tax cut for middle-income earners that never materialized. Kudlow responded that the administration is “looking at it” and also touted a proposal by Sen. Rick Scott (R-Fla.) to offset tariffs with additional tax cuts.

Read more …

The Democrats think it’s a viable tactic to scare people on the economy?

White House Offers Reassurances Amid Recession Fears (Hill)

Chief White House trade advisor Peter Navarro echoed the optimism, saying on ABC’s “This Week,” “Before I came to the White House, I spent the better part of 20 years forecasting business cycle and stock market trends and what I can tell you with certainty is that we’re going to have a strong economy through 2020 and beyond.” Navarro made a similar claim Sunday on CBS’ “Face the Nation,” telling host Margaret Brennan, “What I’m seeing when I look at all the macro tea leaves is a very strong Trump economy.” Democratic presidential candidates, meanwhile, sounded the alarm on the economy Sunday morning, pointing to the effects it has had on Americans’ lives. South Bend, Ind., Mayor Pete Buttigieg said on CNN’s “State of the Union” that a recession is “probably” forthcoming.


However, Buttigieg said, the bigger issue was that even in a period of economic expansion, “most Americans can’t get ahead… and the president has made it abundantly clear he doesn’t care.” “[W]e’ve got an economy not working for most Americans,” he added. Buttigieg’s fellow presidential contender, Sen. Kirsten Gillibrand (D-N.Y.) also refuted the rosy outlook Sunday on ABC’s “This Week” following Navarro’s segment. “I don’t think [Navarro’s] world view is reflected in the everyday, kitchen-table issues that families are facing,” Gillibrand said, telling the program that in a meeting with out-of-work Ohio voters, she learned “[t]hey’re worried about their jobs, they’re worried about access to health care… they’re worried about providing for their kids.”

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Nothing to say? We’ll invent something.

Trump: Purchasing Greenland ‘Strategically’ Interesting (Hill)

President Trump on Sunday said buying Greenland is “strategically” interesting amid reported interest from the administration last week. Speaking to reporters as he left his Bedminster, N.J., golf club, Trump acknowledged that purchasing the landmass owned by Denmark has been discussed. “Denmark essentially owns it. We’re very good allies with Denmark. We protect Denmark like we protect large portions of the world,” he said. Trump added, “Strategically, it’s interesting, and we’d be interested, but we’ll talk to them a little bit. It’s not number one on the burner.”


Trump has reportedly mulled attempting to buy the largest island in the world that is home to more than 50,000 people from Denmark, though no official inquiries have been made yet. Trump compared buying the territory from Denmark to a “large real estate deal.” “A lot of things could be done. It’s hurting Denmark very badly because they’re losing almost $700 million a year carrying it. So they carry it at a great loss. And strategically for the United States, it would be nice. And we’re a big ally of Denmark, and we help Denmark, and we protect Denmark,” he said.

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Yesterday the press was talking about thousands of protesters. There were 1.7 million.

Hong Kong Readies For More Mass Protests After Huge, Peaceful Rally (R.)

Hong Kong is gearing up for more protests this week after hundreds of thousands of anti-government demonstrators braved heavy rain to rally peacefully on Sunday, marking a change to what have often been violent clashes. Sunday’s turnout of an estimated 1.7 million people, according to the rally’s organizers, showed that the movement still has widespread support despite chaotic scenes last week when protesters occupied the Chinese-ruled city’s airport. Some activists have apologized for events at the airport. The protests began more than 11 weeks ago as opposition to a now-suspended bill that would have allowed suspects to be extradited to mainland China for trial in Communist Party-controlled courts and have since swelled into wider calls for democracy.


[..] The protests have presented one of the biggest challenges for Chinese President Xi Jinping since he came to power in 2012. Further demonstrations are planned in coming weeks, including another strike in districts across the city. Police said on Monday that, while Sunday’s demonstration was mostly peaceful, acts of breaching public peace happened later when some protesters damaged government offices and aimed laser beams at police officers. Protesters spilled out from Victoria Park, the designated rally area on Hong Kong island, on Sunday and streamed onto major thoroughfares toward the city’s financial center, chanting for Beijing-backed leader Carrie Lam to step down.

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Two stories: Reuters says China wants to integrate Shenzhen with Hong Kong and Macau….

China State Council Calls For Shenzhen Integration With Hong Kong, Macau (R.)

China’s State Council has called for greater development of the southern city of Shenzhen and the integration of its culture and economy with neighboring Hong Kong and Macau. The directive comes as anti-government protests in Hong Kong threaten the status of the Asian financial hub. Hong Kong, one of the world’s busiest ports, is on the verge of its first recession in a decade as violent anti-government protests scare off tourists and bite into retail sales and investment. The State Council 19-point directive, published in state-media outlet People’s Daily, calls for Shenzhen’s “economic strength and development” to rank among the best in the world by 2025, and a “global benchmark” by the middle of the century.


In the 1990s, market-oriented reforms and government support transformed Shenzhen from an ordinary Chinese village to a major hub for China’s manufacturing and technology sectors. The city now houses the global headquarters for Tencent, China’s social media giant, and Huawei, the networking equipment maker that U.S. President Donald Trump effectively barred U.S. companies from supplying. The directive called for the “modernization of social governance” in Shenzhen via the “comprehensive application of big data, cloud computing, artificial intelligence and other technologies.” It called for the integration of the culture and economy of Shenzhen with Hong Kong and Macao via funding for hospitals, joint disaster relief efforts and cultural exchanges, and to further develop the Hong Kong-Macao Greater Bay Area and “enrich the new practice of the ‘one country, two systems’ policy.”

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…while Nikkei says Beijing wants to create a new Hong Kong on the mainland.

China Works To Turn Shenzhen Into The New Hong Kong (Nikkei)

The Chinese government aims to transform Shenzhen into a global business center, in an apparent gambit to position the southern city as a model of stable prosperity compared with neighboring Hong Kong. Shenzhen will receive business regulations that conform to international standards, as well as more favorable rules to spur investments and acquisitions, according to a document released Sunday by the State Council, China’s cabinet. China looks to draw multinationals worldwide to the tech hub, a move that essentially would rob Hong Kong of its forte as a magnet for investment. The guidelines come as Chinese paramilitary officers train in Shenzhen amid the weeks-old protests in Hong Kong, suggesting that Beijing may apply both economic pressure and armed force to the restive territory.


Shenzhen will serve as a “demonstration area” for Chinese socialism, the document reads. This will include upgraded health-care infrastructure, coupled with a world-class education system that includes job training. The city will accelerate the development of a fifth-generation wireless network. Talent from outside the mainland will find it easier to cross the border and reside in Shenzhen. Shenzhen will turn into “one of the leading cities in the world in terms of economic strength and quality of development” by 2025, the guidelines say. The city will become a “national model of high-quality development” by 2035 and a “top cosmopolis” worldwide by the middle of the 21st century.

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It was my understanding that it was not a worst case, but a middle one.

‘Operation Yellowhammer’ Documents Reveal Brexit ‘Worst Case Scenario’ (NW)

The United Kingdom could face food, medicine, and fuel shortages when it splits from the European Union on October 31, according to a government report leaked to British newspaper The Sunday Times. The report, entitled “Operation Yellowhammer,” outlines a laundry list of ways life on the British Isles could be disrupted if politicians can’t reach a trade deal with the EU in the next 11 weeks. The yellowhammer is a small bird that is on track for extinction. According to one BBC report, the document was leaked to the press by a former government minister hoping to influence negotiations with the EU. Starting on November 1, trade with Britain’s neighbors could slow to a trickle as Britain’s main route into Europe gets blocked.

“On Day 1 of No Deal, 50%-85% of [trucks] travelling via the short straits may not be ready for French customs,” according to the report, which would cause them to be turned back at the French border. It goes on to add that: “The worst disruption to the short Channel crossings might last 3 months before flow rates rise to about 50%-70%.” Currently, 56 percent of U.K. exports land in Europe. Such a major, prolonged reduction in those numbers could have a catastrophic impact on Britain’s economy. Inversely, the flow of important goods into Britain could also be cut off.


Three quarters of the medicines used in the U.K. come from Europe, according to the report. With no trade or customs agreements in place, imports “could be as low as 40% on Day 1 of No Deal…with significant disruption lasting up to six months.” Perhaps most alarmingly, “Certain types of fresh food supply will decrease. Critical elements of the food supply chain (such as ingredients, chemicals and packaging) may be in short supply.” If that weren’t bad enough, the Yellowhammer report goes on to foretell gas shortages in London and other areas, and the loss of 2,000 jobs at oil refineries that will be forced to close. Rule of law is also under threat, as “job losses are likely to result in protests and direct action with road blockades” and price increases “are likely to lead to the growth of the illegitimate economy.”

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State pensions are much lower than in for instance Germany, something like 75% lower.

UK Elderly In Severe Poverty Up Fivefold Since 1986 (G.)

The proportion of elderly people living in severe poverty in the UK is five times what it was in 1986, the largest increase among western European countries, according to a new study. The rise, from 0.9% of the elderly population to around 5%, is attributable to Britain’s state pension system and its “low basic payments and means-tested supplements”, says the author of the report, Pension Reforms and Old Age Inequalities in Europe. Professor Bernhard Ebbinghaus, of the University of Oxford, will tell a European Sociological Association conference this week that the UK is one of five countries out of 16 that he has studied where there has been an increase in people aged 65 and over who are living in “severe poverty”, which is defined as having an income of 40% or less of the median average.


“The United Kingdom is a good example of the Beveridge-lite systems that have historically failed to combat old-age poverty,” Ebbinghaus said. “These have rather ungenerous basic pensions with means-tested supplements, and this reproduces relatively high severe poverty rates among the elderly. British basic pensions are particularly low, 16% of average earnings, and require a long contribution period. Income-tested or means-tested targeted benefits are needed to supplement basic pensions and to lift them out of severe poverty – every sixth British pensioner receives such additional benefits.”

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Greg Hunter has videos of the interview. Click the link.

Russia Hoax Coup and Epstein Interlocked – Kevin Shipp (USAW)

Former CIA Officer and whistleblower Kevin Shipp says the Russian hoax and attempted coup of President Trump and the sex trafficking case against Jeffery Epstein are linked together by the same Deep State players. Shipp explains, “The FBI has completely raided his vault, and they have some pretty damning material. I don’t know why it took so long, but they have raided Epstein’s island . . . So, there is a lot of damning information the FBI has now on certain people. At the top of the list, and the one who flew the most, was Bill Clinton. Then he lied about it. They are intertwined in that regard and with the Clinton Foundation that we know is a fraud. It is known around the world, and you’ve got these two intersections with Bill and Hillary Clinton.

Of course, Hillary Clinton is tied to the dossier in an attempt to get rid of Donald Trump. So, these webs interlocked with each other, and these people interlock with each other. Welcome to the global elite. Welcome to human trafficking. These things are connected, and with Epstein dead, there are a lot of prominent people breathing a sigh of relief—for now. Is Barr aggressive enough? He says he is going to pursue this case anyway. Is he going to call in the people seen on the CD’s, videos and photographs? That remains to be seen.”

On Epstein’s officially ruled suicide while in prison, Shipp says, “Epstein tries to commit ‘suicide,’ and his cellmate, a four-time convicted murderer, said he didn’t see (or hear) it because he had his headphones on. Attorney General William Barr was in charge of the safety of Jeffery Epstein. There should have been an entire contingent of U.S. Marshals to protect this huge witness, but there were none. Why is that? . . . . It is just unbelievable how they left this huge witness to die in prison. The prison guards were off, as we know. The cameras were not functioning. He was taken off of suicide watch and on and on we go.


There are so many things that add up to this not being a suicide that it is remarkable. . . . We are all still hoping that Attorney General Barr will do his job and people are charged, but this is starting to bother me a little bit. A major witness that was connected to high level people in government and finance was left alone to die in prison, and I think he was murdered. This was all left to happen by William Barr. The pieces to this just don’t add up. . . .We’ve got so many strange things going on here that do not add up, and Attorney General Barr is ultimately responsible for this happening.”

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The original bumbling fool. Epstein kept him around for shady reasons.

Palace In Damage Control Over Video Of Prince Andrew In Epstein Mansion (RT)

A video showing the Duke of York waving off a young woman from inside financier Jeffery Epstein’s New York mansion has reignited speculation online, sending Buckingham Palace into full-on damage-control mode. A short, blurry video released by the Mail on Sunday shows a man, who the tabloid newspaper identifies as Prince Andrew, the second son of Queen Elizabeth, saying goodbye to a young, dark-haired woman at the doorstep of Epstein’s New York mansion – a notorious sex lair where the financier used to prey on young girls. After exchanging courtesies with the brunette, the prince gives her a nod, and then takes a quick look around the door as if to make sure that no paparazzi were in sight.


Moments before Prince Andrew appears in the doorway, Epstein himself can be seen leaving the house accompanied by a blonde girl. The video dates back to December 2010, two years after Epstein was convicted of soliciting a minor for prostitution and was sentenced to 18 months in an open-door prison after striking a sweetheart plea deal. But Buckingham Palace claims the prince was unaware of any wrongdoing going on at the mansion, saying he “has been appalled by the recent reports of Jeffrey Epstein’s alleged crimes.”

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I see jellyfish and chips in your future.

Where Did All The Cod Go? Fishing Crisis In The North Sea (G.)

By 7.30am all the cod at Peterhead fish market had been sold, snapped up by competing buyers wearing thick fleeces, woolly hats and rubber boots against the chill of the vast indoor warehouse. A gaggle of middle-aged men clutching books of brightly coloured “tallies” followed the auctioneer alongside crates of glassy-eyed fish nestling in ice. With a curt nod or a swift hand gesture, the price was settled, tallies thrown down to indicate the fish’s new owner, and the group moved on. It took less than 10 minutes to dispose of the night’s catch. Most of the fish would be heading south, to England or mainland Europe. The Scots are not big cod eaters, preferring haddock with their chips. This dates, apparently, from pre-refrigeration days: haddock is a fish best eaten really fresh, whereas cod is tastiest a couple of days after being caught.


The Peterhead buyers were cagey about naming their customers, but the fish they purchased was destined for supermarkets, fishmongers, restaurants, and a few of the classic takeaway chippies that are a national institution. But all this could now be under threat: a report published last month by the International Council for the Exploration of the Sea (Ices) revealed that North Sea cod stocks had fallen to critical levels. Warning that cod was being harvested unsustainably, it recommended a 63% cut in the catch – and that’s on top of a 47% reduction last year. Independent auditors are reviewing the Ices report, and by late September they will announce whether the fisheries can retain their Marine Stewardship Council (MSC) certificates of sustainability – issued only two years ago – or whether those certificates will be suspended. Depending on the decision, North Sea cod could soon be off the menu.

Read more …

 

 

 

 

 

May 222015
 


NPC Dedication of Francis Asbury statue, Washington, DC 1924

The present Chinese leadership appears to be trying to gain (regain?) more -if not full- control over the country’s economic system, while at the same time (re-)boosting the growth it has lost in recent years.

President Xi Jinping, prime minister Li Keqiang and all of their subservient leaders – there are 1000’s of those in a 1.4 billion citizens country- apparently think this can be done. Yours truly doubts it.

As I’ve repeatedly said over the past years, I don’t think that they ever understood what would happen if they opened up the country to a more free-market, capitalist structure. That doing so would automatically reduce their political power, since a free market, in whatever shape and form, does not rhyme with the kind of control which the Communist Party has been used to for decades, and which the current leaders have grown up taking for granted.

I don’t think they’re fools or anything, just that their -preconceived- ideas of power don’t rhyme with the kind of economy Beijing, starting with Deng Xiao Ping, has created. In particular, they have allowed other segments of society to accumulate great wealth, and with wealth comes power.

And in fine Pandora’s Box fashion, it’s very hard, if not impossible, to reverse the process. This failure to grasp to what extent these ‘market liberation’ policies have had a Sorcerer’s Apprentice effect, may, if not must, lead to utter chaos and worse…

A closely related failure is that the rulers have allowed the shadow banking system to grow to ginormous proportions. Likely, in their eyes this ‘merely’ helped the economy grow at double digit speed for years, and they could stop it at will. But something else was growing along with it: the power of the shadow banks -and the people behind them-, both economic and political. Which is not acceptable in a one party rules all system.

And so there is a crackdown going on, presented as ‘reform’, and shadow bank loans have indeed diminished. But that is hurting the economy much more than it heals it. And so measures are reversed on the fly.

The official line is that China has to become a more consumer based economy, if only because exports are not what they used to be, due to lower living standards in the major customer economies in the western world.

The first part of the private citizens’ segment of this shift was the housing boom. Though the Chinese are traditionally strong savers, certainly compared to for instance Americans, they did borrow a lot, got into debt, to fund their real estate purchases. The first part of the problem is that not exactly all of that was borrowed from ‘official’ banks. The second is that home prices are now falling in most cities.

The Chinese are not only known as savers, they’re also notorious gamblers. That accounts for a substantial part of the housing boom, but it accounts even more for what came when that boom started fainting: stock market insanity. A craze that was fully encouraged by Beijing. As Bloomberg put it the other day:

[..] government officials and state media have encouraged the rally. China’s official Xinhua News Agency reported last week that the advance in stocks has further to go, while the China Securities Regulatory Commission has said that market gains reflect support for the economy.

Private investors, grandmas and teenage granddaughters, still believe Beijing controls the whole game. They undoubtedly must also think Xi and Li will make the housing sector rise from its ashes. This is a huge risk for the Communist Party. But they must have the illusion that they got it down. Government and citizens all believe.

The past few days have seen 2 notable companies, Hanergy Thin Film Solar and real estate/electronics conglomerate Goldin Group, lose about half their market cap within a day, for a total loss of some $50 billion. In Hanergy’s case, it reportedly took less than half an hour. And yesterday, Joyou, a Chinese branch of German bathroom giant Grohe, went straight from $400 million to just about zero.

It looks like all Beijing has left in its arsenal is extend and pretend. The question is, does it have the gunpowder to do that? While tons of people habitually point to Beijing’s $4 trillion sovereign bonds stock, they may not be a cure-all.

The same people might want to consider to what extent the Chinese growth ‘miracle’ has been funded by debt. By the printing press. And while they’re at it, they may want to ponder what’s going to happen to that debt, now growth has started sputtering.

There seems to be a consensus that Chinese debt is somewhere in the range of $28 trillion, which is almost twice US GDP, and almost three times Chinese GDP. And for all we know the debt may be much higher still. All we really have is official numbers, plus a few ‘indirect’ data. One thing we do know is that Beijing will always make everything look better than it is. Every politician does.

And we know that they have a substantial series of issues to deal with. In fact, there are so many it’s impossible to catch them all in one comprehensive essay. China’s not nearly as simple as Greece. Let’s try a few:

• China’s housing boom is deflating, with prices down up to 6% YoY in many places, though of course for now less severe in major cities like Beijing and Shanghai. As one comment said recently, paraphrased: ‘there are no more buyers, everyone around here already owns property.’

• China is in the grip of a stock mania, with millions who are losing out on their apartment investments trying to make up for their losses with stocks. Many borrow heavily for their ‘profits’ (and not always from official banks). The stock mania is already popping as well. It will probably rise a bit more at times and at places, but exchanges that skyrocket when economies flatline or worse, will be smacked down by fundamentals at some point. That is true on Wall Street and in Europe, and it’s also true in Hong Kong, Shanghai and Shenzhen.

IPO’s are falling out of the deep blue skies like so many frogs, and people seem to think there’s all this pent-up demand for them, but the Hanergy and Goldin examples should serve as huge red lights flashing. And besides: what does pent-up demand mean when people borrow substantial parts of credit used for stock purchases?

When you read that at the Shenzhen exchange, rallies of more than 500% aren’t unusual, and the 103 stocks listed trade at an average 375 times reported earnings, you should know you’re looking at an ordinary slot machine, not an exchange that reflects any underlying real economy.

• Local governments are heavily in debt to the shadow banking system. Their liabilities may well exceed $6 trillion The crack down on the latter does not change that. Beijing has introduced a swap system, where paper can be swapped for bonds of much longer maturity at lower rates, but that leaves the question of who’s going to pay the debt to the shadow system.

Do local governments now need to borrow more from state banks just to pay off their loans to the shadow banking system? Or are the state banks themselves going to pay the debt after the swap? Or is perhaps the PBoC itself going to pay off the shadow banks directly? It looks as if the swap measures, which are pretty absurd in themselves since they encourage more borrowing, do not -or hardly at all- involve the ‘shadow debt’.

• Chinese factory activity is contracting. This is not growth slowing down, this is negative growth. Chinese consumers don’t help to avoid this, because they’re not consuming. They are doing one of three things: pay off housing -margin- debt as prices are falling, go nuts for stocks, or they are saving. No consumer based society is in sight.

• Capital outflow was $159 billion in Q1. This should be a major worry for Beijing. It hurts China’s international financial position. The country’s also stuck in its US dollar peg, and it dare not risk get out because of the potential losses on its Treasurys holdings. It’s all nice and stuff that the IMF considers including the yuan into its SDR basket, but it’s not a one way street to glory, or to the demise of the USD as some would have you think, for that matter.

Meanwhile, China keeps investing billions abroad. Untold billions in Africa. $50 billion in Brazil to damage the Amazon even more, $60 billion in the new Silk Road project.

But where does that money come from? Why is there so little scrutiny of that? Why do we all allow the Chinese to purchase our homes and our land and our industries, and make them all more expensive for ourselves?

Given that $28 trillion debt load, how is this not monopoly money, and why couldn’t we just as easily print that ourselves?

Is this a sign of how great the Chinese economy is, or is it perhaps a sign of how awful our own economies are really doing, and how indebted we are compared to Beijing? Is it because they caused our manufacturing sectors to all but vanish? How and why can a country blow a $28 trillion+ debt bubble in a decade and proceed to use that debt to buy the world? What does that say about that world?

As for China itself, and the losses on homes and stocks that are in the offing, I’ve long been on record stating I can’t see how it will not descent into civil war, and I still don’t. As I said above, Beijing never understood what forces it unleashed when it started ‘freeing’ its market, and from what I can see, it still doesn’t.

Or maybe it has, and got too scared to call a halt to what’s happening. That recent sudden permission for all 1.4 billion Chinese to open 20 stock trading accounts may be an act of desperation, as it came when real estate prices started tanking. But Xi and Li still must know, and fear, what awaits them if and when those stocks and apartments start their descent into hell.