I hope all BattleSwarm readers are safe from the Joe Biden Armageddon thus far. Today’s LinkSwarm features Democrats disdaining the rules followed by the little people, the UN is delusional enough to think they can run the world and defy the laws of economics, and petting dogs is good for you.
UNCTAD, the UN agency dealing with global trade, demanding *all* central banks stop rate hikes and instead switch to price controls. They argue, “policymakers appear to be hoping that a short sharp monetary shock – along the lines, if not of the same magnitude, as that pursued… under Paul Volker – will be sufficient to anchor inflationary expectations without triggering recession. Sifting through the economic entrails of a bygone era is unlikely, however, to provide the forward guidance needed for a softer landing given the deep structural and behavioural changes that have taken place in many economies, particularly those related to financialization, market concentration and labour’s bargaining power.”
I am not playing tennis with them either, but note the radicalism. Indeed, their latest report also argues, “supply-chain disruptions and labour shortages require appropriate industrial policies to increase the supply of key items in the medium term; this must be accompanied by sustained global policy coordination and (liquidity) support to help countries fund and manage these changes.” So, industrial policy. And Fed swap-lines. Expect both ahead.
They also ask why we haven’t regulated shadow-banking, and why we allow speculators in global commodity markets who have nothing to do with underlying trade. On the latter they note, “Market surveillance authorities could be mandated to intervene directly in exchange trading on an occasional basis by buying or selling derivatives contracts with a view to averting price collapses or deflating price bubbles.” I expect nothing but that ahead – and geopolitically driven to boot.
This boils down to: “Hey, we need to institute economic policies proven to fail, because otherwise lots of rich people will lose money!” Wage and price controls were tried in the 1970s and they failed miserably. The longer governments try to defy the market, the more terrible the snapback when those efforts fail.
On Tuesday, the New York Times framed a story circulating on the right over a software company’s connection with the Chinese Communist Party as a “right-wing conspiracy theory.”
“At an invitation-only conference in August at a secret location southeast of Phoenix, a group of election deniers unspooled a new conspiracy theory about the 2020 presidential outcome,” was the Times’ original lede (via the Daily Caller).
In it, the Times wrote that “right-wing” election deniers in Arizona had fabricated a conspiracy theory that election software company Konnech had secret ties to the CCP, and was passing them information on around two million US poll workers.
“In the two years since former President Donald J. Trump lost his re-election bid, conspiracy theorists have subjected election officials and private companies that play a major role in elections to a barrage of outlandish voter fraud claims,” reads the article. “But the attacks on Konnech demonstrate how far-right election deniers are also giving more attention to new and more secondary companies and groups. Their claims often find a receptive online audience, which then uses the assertions to raise doubts about the integrity of American elections.”
The next morning, Konnech executive Eugene Yu was arrested for the alleged theft of poll workers’ personal information.
New Orleans Mayor LaToya Cantrell is facing the threat of a recall election and it’s not just the city’s rising crime that has petition signers enraged.
The two people behind the petition are both Democrats demanding the Democrat mayor leave office for her “failure to put New Orleans first and execute the responsibilities of the position,” according to Fox News.
In 2021, more than 150 officers left the New Orleans Police Department, despite a surge in murders and carjackings. Carjackings so far this year stand at 217, an increase of over 200 percent since 2019, according to the Metropolitan Crime Commission weekly bulletin.
But it’s the mayor’s exorbitant travel spending that has people up in arms.
She traveled to sister cities Ascona, Switzerland, and Juan Antibes-les-Pins on the French Riviera this summer, costing the City of New Orleans close to $45,000, including first-class international airfare with lie-flat seating.
The city’s travel policy requires employees to pay the difference in cost for work-related airfare upgrades, stating “employees are required to purchase the lowest airfare available … employees who choose an upgrade from coach, economy, or business class flights are solely responsible for the difference in cost,” Fox News reported.
But Cantrell hasn’t paid the near $30,000 bill from her first-class international flight upgrades over the summer.
She has claimed the visits are an investment in the city and necessary for her safety.
“My travel accommodations are a matter of safety, not of luxury,” The Times-Picayune/The New Orleans Advocate reported. “As all women know, our health and safety are often disregarded and we are left to navigate alone. As the mother of a young child whom I live for, I am going to protect myself by any reasonable means in order to ensure I am there to see her grow into the strong woman I am raising her to be. Anyone who wants to question how I protect myself just doesn’t understand the world Black women walk in.”
Yes, I’m sure the men and women who walk the streets of New Orleans at night have never know unthinkable fear of having to fly coach to Switzerland.
“Federal Law Does Not Exempt LGBT Employees From Bathroom, Dress Code, Policies, Judge Rules…A U.S. Equal Employment Opportunity Commission (EEOC) policy document from June 2021 overreached in its interpretation of the Supreme Court’s ruling forbidding employment discrimination based on sexual preference and gender identity, Judge Matthew Kacsmaryk of the U.S. District Court for the Northern District of Texas found. Texas sued over the guidance.”
Well, fellas, if you don’t want OPEC+ to be in a position where it can influence U.S. gasoline prices a month before the election, you need policies that minimize the U.S. market’s dependence upon the global oil market. This means maximizing U.S. oil production and expanding U.S. refinery capacity.
It would be a mild exaggeration to declare that the Biden administration hascompletely stopped issuing leases for oil and gas drilling on federal lands and in federal waters, but only a mild one. As the Wall Street Journal reported last month, “President Biden’s Interior Department leased 126,228 acres for drilling through Aug. 20, his first 19 months in office, the analysis found. No other president since Richard Nixon in 1969-70 leased out fewer than 4.4 million acres at this stage in his first term.” It’s not a complete halt, but it’s very close to one. This means that the U.S. is almost entirely dependent upon oil production from private lands.
The good news is that there’s still a lot of oil beneath private lands. As of July, the U.S. was producing 11.8 million barrels per day, an increase from the 11.1 million barrels per day produced in January 2021, the month President Biden took office. But before the pandemic hit in early 2020, the U.S. was producing 12.8 million barrels per day, and it even hit 13 million barrels per day in November 2019. We have the proven ability to produce about 1.2 million more barrels per day than we are, if we want to do so and our public policies encourage it. But right now, they do not.
The Biden administration keeps insisting that it’s doing everything it can to bring gas prices down, including releasing oil from the Strategic Petroleum Reserve — which is now at its lowest level in 40 years. But what’s in the SPR is oil, not gasoline, and oil must still be refined. You can’t just pump the stuff out of the ground and put it in your car.
U.S. refineries are running at full capacity, or just short of full capacity. This is why oil from the Strategic Petroleum Reserve releases got sent to Europe and Asia, because they had the room and equipment to turn it into actual usable fuel. The U.S. currently has no more spare ability to turn the oil from the reserve into stuff that will actually make your car move; yelling at the oil companies isn’t going to change what is fundamentally an engineering problem.
And Democrats absolutely refuse to let anyone build new oil refineries.
Multiple sources have confirmed that Nord 2 was full of natural gas; that it was full for at least months; and that said natural gas had never moved.
It. Just. Sat. There. For — allegedly — months.
During normal operations of a pipeline, you run a pig through fairly regularly. A “pig” is a bit of equipment pushed by the gas flow, and as it moves along it shoves water and hydrate slurry down to where it can be removed; and it scrapes compounds off the inside walls (hydrogen sulphide, I’m looking at you) that might be are probably eating your pipe.
Note the part above where the pigs are pushed by the gas. The gas in Nordstream 2 never moved. That means no pig ever went down the line to shove water out, move hydrate slurry, or stop H2S from corroding the steel of the pipeline.
As I said in the previous post — and I will continue to say — none of this rules out intentional Acts of War. There are idiots enough in that region that sabotage can’t be discounted.
“A lot of folks are running the White House. Joe Biden just isn’t one of them.” “Biden is surrounded with longtime D.C. power players, such as Ron Klain, Susan Rice, Anita Dunn, John Podesta, Gene Sperling – a veritable “who’s who” of Beltway knife fights and insider skullduggery. Throughout their long careers, they’ve never sought credit or voter approval. Just power.”
“NYC Mayor Declares State of Emergency over Influx of Illegal Immigrants. [New York City mayor Eric Adams] said at least 17,000 asylum seekers have arrived in the city by bus from other parts of the country since April.” Oh, a million illegal aliens come over the border into Texas and it’s no big deal, but 17,000 show up in your “sanctuary city” and suddenly it’s a problem!
“NYU Fires Chemistry Professor After Students Launch Petition Claiming His Course is Too Hard.” The lesson here seems to be that businesses shouldn’t hire NYU grads…
British blogger eats on £1 for a single day and has a very tough time of of it, even with foraging and scavenged condiments. Despite the dollar-pound exchange rate being so favorable, I don’t think I could do that on $1 a day shopping at HEB, and even if you made it $1.25, it would have to be three meals of ramen. Also, I don’t think I can even buy a single carrot at HEB (if I had wanted to), spaghetti is considerably more than 23¢ for 500 grams. $5 for $5, that I could do, and $30 for 30 days would be grim but very doable (price, pasta, and beans).
Can the pound reach parity versus the dollar? It’s now a one-in-four chance when it comes to options pricing.
The UK currency is heading for its biggest daily loss since early May after Chancellor of the Exchequer Kwasi Kwarteng outlined the government’s plans to stimulate the economy with tax cuts and spending. The simultaneous sharp sell off in Gilts [historical term for UK government bonds – LP] suggests that tackling inflation will be a very hard task for UK authorities and that the currency market sees no easy way out for the Bank of England.
To attract foreign investors, a weaker pound may be the answer and that is what FX traders are betting on.
Cable fell as much as 2.1% to touch $1.1021, the lowest since March 1985, and was at $1.1036 as of 12:38pm in London. Risk reversals, a barometer of market positioning and sentiment, show that traders see the greatest downside risks for the pound over the medium term in two years.
According to Bloomberg’s options pricing model, the pound holds a 26% chance of touching parity versus the greenback in the next six months. That compares to a reading of 14% Thursday.
I think the real odds are probably higher than that.
Dollar-pound parity is something that’s never happened, with the nearest it came to some 1.05 dollars to the pound in the mid-1980s. But there’s always a first time for everything, and with the Bank of England doing more quantitative easing and the UK government going on a spending spree during soaring inflation while the Fed ratchets up interest rates, now is as good a time as any.
Besides making imports from the UK less expensive, what effects will dollar-pound parity have on the financial world? Hard to say for sure, but my prediction is: Weird things.
There are a variety of reasons for this, starting with the fact that currency trading is itself a weird thing. You may think “American financial houses buy pounds to purchase English goods, while UK financial houses buy dollars to purchase American goods,” but there’s a whole ecology of counter-party trades, hedging strategies, currency reserve requirements, portfolio balancing, and a host of other considerations.
Here’s a brief video that cover some of the basics for how brokerages handle FX trading:
That’s a fairly streamlined view, as it doesn’t cover how liquidity pools are set up, different hedging strategies, etc.
There are even traders who specialize in just trading different duration T-Bills, selling the eight-week-out and buying the four-week-out (or vice versa) for esoteric arbitrage reasons.
None of that will change if the market hits dollar-pound parity. So where’s the danger? That comes from the possible non-linear effects of the market doing something that a lot of algorithmic instrument designers never considered a possibility.
For a simple example, let’s talk about the swaps cases. To summarize a whole lot of very complex cases, a whole bunch of local UK governments entered into interest rate swap agreements. Interest rate swap agreements are a legitimate hedging strategy to minimize exposure to interest rate swings, but a few municipalities saw it as a license to print money. To quote Wikipedia, the source of all vaguely accurate knowledge:
The position of Hammersmith and Fulham London Borough Council was quite different from most of the other local authorities. From about 1985 onwards Hammersmith had entered into interest rate swap transactions on an extremely large scale. At one stage it was calculated that Hammersmith was a counterparty to 0.5% of the global trade in swaps, and 10% of the sterling denominated trade. Moreover, quite exceptionally, all of Hammersmith’s positions in the swap market were betting on a fall in interest rates. Most large participants in the swap market have their exposure balanced by taking positions on both sides and across multiple currencies, but Hammersmith was essentially repeatedly entering into one-way bets that sterling interest rates would fall; a bet that they would end up losing spectacularly when interest rates climbed from around 8 per cent to 15 per cent in the space of ten months.
This was, to put it in technical terms, “a really fucking stupid thing to do.” The swaps cases were unwound with great expense and difficulty, and various English banks ended up taking a bath (which you know they must have regarded as some sort of diabolical violation of the natural order) after courts determined that the authorities in question didn’t have the authority under English law to enter into such agreements.
The possibility that interests rates can rise should be an obvious one. But the idea that the pound might be worth less than the dollar is one that people have probably thought about a good deal less, since it hasn’t happened ever. It’s quite possible it hasn’t been contemplated in some percentage of the trillions in derivatives markets and hedging instruments around the world.
For many financial systems, this is going to be an untested use case. Some systems may work just fine, others may break down, and still others may experience race conditions or cascading failures; think of the flash crash of 2010, or the 1987 Black Monday crash. Somewhere, somehow, something is likely to go off the rails.
Hopefully, whatever does blow up won’t be big enough to take down the entire market, or at least not for long. Hopefully it won’t uncover massive problems like the 2008 subprime meltdown uncovered, and there won’t be a firm of systemic importance like AIG was there.
Ron DeSantis drives more enemies before him, the Biden Administration keeps doubling down on tranny madness, Batgirl dies for DC’s sins, and the most “Ewww” inducing headline of the year. It’s the Friday LinkSwarm!
Construction projects are undertaken within a legal and regulatory system that presents persistent, costly obstacles, while projects are being overseen by agencies who lack the resources and in some cases even the expertise to manage them.
Sepulveda’s numerous lawsuits and stakeholder conflicts are an example of a phenomenon that can be traced back to the passage of the National Environmental Policy Act (NEPA) in 1969. NEPA mandates developers to provide environmental impact statements before they can obtain the permits necessary for construction on huge swathes of infrastructure.
Shortly following the passage of NEPA, California’s then-governor Ronald Reagan signed the California Environmental Quality Act (CEQA) into law, which required additional environmental impact analysis. Unlike NEPA, it requires adopting all feasible measures to mitigate these impacts. Interest groups wield CEQA and NEPA like weapons. One study found that 85 percent of CEQA lawsuits were filed by groups with no history of environmental advocacy. The NIMBY attitude of these groups has crippled the ability of California to build anything. As California Governor Gavin Newsom succinctly put it, “NIMBYism is destroying the state.”
It is also destroying the U.S.’s ability to build nationally. The economist Eli Dourado reported in The New York Times that “per-mile spending on the Interstate System of Highways tripled between the 1960’s and 1980’s.” This directly correlates with the passage of NEPA. If anything, the problem has gotten worse over time. Projects receiving funding through the $837 billion stimulus plan passed by Congress in the aftermath of the financial crises were subject to over 192,000 NEPA reviews.
The NEPA/CEQA process incentivizes the public agencies to seek what is often termed a “bulletproof” environmental compliance document to head off future legal challenges. This takes time, with the average EIS taking 4.5 years to complete. Some have taken longer than a decade. A cottage industry of consultants is devoted to completing these documents, earning themselves millions in fees.
The NEPA consultants are just one of the numerous types of consultants that benefit from the way we build. Most infrastructure in the U.S. is built through a huge number of state and local agencies: for example, there are 51,000 community water systems alone in the U.S. This decentralized structure makes it much more difficult to develop the depth of expertise needed to manage the complexities posed by megaprojects. Often, the multiple public agencies that are involved with projects also have overlapping authorities, creating bureaucratic delays and slowing decision making.
The expertise problem is compounded by the fact that agencies are often staffed with a workforce of people either just at the beginning of their careers or near the end of them. Those at the beginning tend to leave if they are ambitious, which leaves senior positions in the hands of agency lifers. Because of this dynamic, and the fact that it is not economically feasible to have the wide range of expertise needed in-house, public agencies employ engineering consulting firms. These firms fill a valuable niche. If you are building a complex project—say, a long-span bridge or a desalination plant—you want advice from someone who has designed and built dozens of them. The problem arises when you become too dependent on such advice.
The High-Speed Rail project was undermined by such a failure. At its peak, the agency responsible for the project, the California High-Speed Rail Authority, had fewer than 30 permanent employees managing the $105 billion project. Instead of hiring staff, the Authority relied heavily on outside consultants. These consultants were well paid, with the primary consultant compensation for HSR at $427,000 per engineer, compared with the Authority’s in-house cost of $131,000 per engineer. This structure creates a principal-agent problem where they are incentivized to maximize their billable hours. As a California State Auditor assessment of the project noted, consultants “may not always have the state’s best interest as their primary motivation.”
This lack of in-house institutional expertise leads to bad decision-making. Bent Flyvbjerg, a professor at Oxford University who has written extensively about megaprojects summarized the problem when asked about California’s HSR project: “If you depend on consultants to know what you are doing then you are in real trouble…a good balance is where the owners are not outsourcing all the knowledge. A bad balance guarantees a bad outcome.”
The pitfalls of this lack of balance appeared before large parts of the project began. In 2014, Dragados, the contractor for a 63-mile section of the HSR, proposed radical design changes that they projected could save $300 million. The fact that Dragados’s bid was $500 million lower than its competitors and that it rested upon a design concept that had not been thoroughly vetted should have caused alarm. As a senior engineer who worked on the original environmental compliance document for HSR and reviewed the concepts told the Los Angeles Times, “it is mind-boggling they would entertain some of the things that Dragados proposed.”
Dragados’s approach may have been driven by the fact it didn’t have the experience of its competitors; it had never built a rail project in the U.S. before and needed an edge to be selected. It was a measured risk because it knew there were ways to limit its financial exposure if its design ideas didn’t work. A Los Angeles Times investigation of the project in 2021 found Dragados had issued 273 change orders for additional payment and had completed less than 50 percent of its planned work four years after its section was supposed to be complete. Its design ideas had been almost completely abandoned as unworkable and Dragados’s section of the work was $800 million over budget.
The principal-agent problem arises with union construction labor as well. Skilled union workers, such as electricians and carpenters, make solid hourly wages, but their pay really explodes with overtime. A 2011 study by the Real Estate Board of New York found that some union crane operators made up to $500,000 a year in pay. Union contracts mandate unnecessary positions as well, to the benefit of its members. The same study found 50 workers in unnecessary positions such as relief crane operators on the World Trade Center Project, including 14 unproductive employees making $400,000 a year at the project.
Similar statistics can be found on other projects; an investigation into the costs of the East Side Access rail project in New York, which cost nearly $3.5 billion for each new mile of track, found that only 700 of the 900 workers being paid on the project were needed. A TBM, which is largely run automatically and typically staffed with under 10 people, ostensibly had 25 or 26 people working on it. Because you can’t drill without a TBM, and you can’t build a high-rise without a crane operator, these union workers have inordinate power.
A common retort to the claim that union labor drives up costs is that other countries, especially in Europe, have both high union participation and lower project costs. But it is widely recognized in the industry that unions increase project labor costs by 20 to 25 percent on average in the U.S.
The fundamental problem isn’t unions per se, but rather the way that unions operate within parts of the U.S. system. The Netherlands has strong unions, but the Port of Rotterdam has been automated to an extent that has proven impossible in the U.S. due to union resistance. As the president of the International Longshoremen’s Association, Harold Dagget, recently put it, his union will “fight tooth and nail” against further automation in the U.S. Any attempt at real construction innovation runs into similar barriers at every level of the system. There are too many layers of permission needed to innovate, including groups whose interests run counter to innovation.
Innovation in physical work ultimately means substituting or complementing labor through technology to improve productivity. If your pay depends on overtime, you want inefficiency. The average dockworker at the Port of Los Angeles makes over $100,000 a year, largely due to overtime. The majority of foremen and managers earn more than $200,000, and the mariners who guide ships in and out of the port average nearly $450,000.
The result is that innovation is inhibited by both labor resistance and a decentralized government bureaucracy that has neither the incentives nor the capability of driving real change. Perhaps it should not be shocking that U.S. construction productivity has fallen by half since the 1960s according to research conducted by the consulting firm McKinsey.
In San Francisco, Soros-funded DA Chesa Boudin has seen a flood of departures from his office due to his criminal justice reform policies.
Boudin campaigned on a platform to end mass incarceration, eliminate cash bail, and vowed to create a panel to review sentencing and potential wrongful convictions. Following his election in November 2019, Boudin announced he would deemphasize the prosecution of drug cases, so-called quality-of-life cases, and property offenses.
Under his watch, vehicle break-ins increased 100-750% in parts of the city between 2020 and 2021, with the number of reported vehicle thefts reaching 1,891 in May 2021—more than double the 923 reported in May 2020.
San Francisco also recorded one of the largest increases in burglaries among major cities last year, with a jump of 47 percent—a trend that has continued this year. Fatal and nonfatal shootings in the first six months of this year were up more than 100 percent from the year-earlier period, increasing to 119 from 58, the city’s police chief said at a July press conference.
More than 700 people died of drug overdoses in 2021 in the city, a record that is likely to be surpassed this year, according to the chief medical examiner.
Rudy Giuliani – the former Mayor of New York City whose claim to fame was a massive reduction in crime (and who’s traded barbs with Soros in the past), isn’t letting the billionaire off the hook.
“If there is one single person responsible for the record increases in murder and violence in America’s cities it’s George Soros,” Giuliani said in a Monday tweet.
“Major contributor to BLM, Antifa, Democrat Party, Biden, Harris and 40 or so pro Criminal DAs. The blood is on his hands,” he added.
Assistant State’s Attorney James Murphy described an understaffed office in turmoil in his email to colleagues, saying, “I cannot continue to work for an Administration I no longer respect.”
“I would love to continue to fight for the victims of crime and to continue to stand with each of you, especially in the face of the overwhelming crime that is crippling our communities,” Murphy wrote. “However, I can no longer work for this Administration. I have zero confidence in their leadership.”
Murphy, who could not be reached directly for comment, zeroed in on many of the issues that have made Foxx a target of opponents who argue she’s gone easy on some accused of violent crimes, as carjackings and gun violence have risen in the Chicago area.
Murphy wrote that he first started thinking about leaving the office early in 2021 with Foxx’s involvement in the passage of the SAFE-T Act, a wide-ranging law that aims to reform the state’s approach to criminal justice, including by narrowing the definition of who can be charged with first-degree murder.
DeSantis has suspended State Attorney Andrew Warren for ‘picking and choosing which laws to enforce based on his personal agenda,’ and has appointed Susan Lopez as his replacement during the suspension.
Warren, who had served the Thirteenth Judicial Circuit, has most recently refused to follow state policy criminalizing abortion in the wake of the Supreme Court’s decision to overturn Roe v. Wade – and repeatedly refused to enforce laws cracking down on child sex-change surgeries, according to DeSantis.
The liberal state attorney also declined to prosecute 67 protesters arrested in George Floyd demonstrations, and said in 2017 that he would only pursue the death penalty “in the very worst cases,” and not where “mental illness played a role.”
“We are suspending Soros-backed 13th circuit state attorney Andrew Warren for neglecting his duties as he pledges not to uphold the laws of the state,” DeSantis’ office said in a statement, per Fox News.
Update: DeSantis sent state police to physically remove Warren from his office, “with access only to retrieve his personal belongings, and (ii) to ensure that no files, papers, documents, notes, records, computers, or removable storage media are removed from the Office of the State Attorney…”
PayPal has reportedly unfrozen Moms for Liberty’s account funds after Florida Gov. Ron DeSantis announced his state would crack down on woke banking.
Payment platform PayPal allowed grassroots, anti-woke education group Moms for Liberty to access its funds after DeSantis’s new initiative against woke banking, Florida’s Voice reported. Moms for Liberty co-founder Tina Descovich reportedly told Florida’s Voice that her organization had been using PayPal for more than a year before the platform censored the group.
Descovich reportedly said that many Moms for Liberty donors give monthly and automatically through PayPal. The payment processor not only stopped these donor payments but froze $4,500 belonging to Moms for Liberty, and prohibited any transfer of the money out of the account, according to Florida’s Voice. PayPal subsequently reversed its block by unfreezing the funds.
PayPal notified Descovich that Moms for Liberty’s accounts were initially frozen during DeSantis’s July 15 speech at the Moms for Liberty National Summit, according to Florida’s Voice. The funds were unfrozen after DeSantis announced his initiative against woke banking.
The world is facing serious food and energy shortages as an outgrowth of the war in Ukraine and supply-chain shortages. Farmers are working to solve these problems, but we need help from the federal government if we are going to have any chance of success.
That’s why national corn grower leaders recently called on the Biden administration to address regulatory overreach.
That call comes after the U.S. Environmental Protection Agency recently revised its atrazine registration, a move that could restrict access to a critical crop protection tool that has been well tested and shown to be safe for use. Farmers fear that new requirements will impose arduous new restrictions and mitigation measures on the herbicide, limiting how much of the product they use.
The atrazine decision comes on the heels of a development involving the herbicide glyphosate. In June, the U.S. Supreme Court refused to hear a case decided by a lower court from California, leaving in place a ruling that supports the claim that glyphosate use causes cancer – even as the EPA has repeatedly affirmed that the widely sold and well-studied herbicide is not carcinogenic.
The Supreme Court’s decision came after the solicitor general in the Biden administration submitted an amicus brief advising the court against hearing the case.
As a result, the door is now open for states to create a patchwork of regulations governing herbicide use, which will increase costs as manufacturers must now jump through hoops in every state, on top of making compliance difficult for the users of these products.
Farmers in Iowa and across the country have also experienced major fertilizer price hikes and shortages over the last year, thanks in part to steps taken by the U.S. International Trade Commission to impose tariffs on fertilizers. Thankfully, ITC recently voted against adding tariffs on nitrogen fertilizers. But tariffs on phosphorous fertilizers from Morocco remain in place, driving up input prices for growers.
Speaking of foolish regulations that can contribute to famine, new “debarbonization” shipping rules could do just that.
A new report found that more than 75% of ships will not meet the International Maritime Organization’s (IMO) new Environmental social and corporate governance (ESG) index aimed at decarbonizing the industry. This means that many ship owners will be forced to slow ships down to reduce emissions but doing so could deepen the global food and energy crisis by reducing available ship capacity.
“IMO decarbonization targets will cause ships to slow down delaying food shipments and people will starve,” a global security analyst told gCaptain. “How many people will die as a result of the IMO’s ESG efforts is unknown at this time. I don’t think most shipowners even understand the severity of the EEXI threat but it could be millions of lives.”
“Ships have to attain EEXI approval once in a lifetime, by the first periodical survey in 2023 at the latest.” The certification is currently voluntary, but banks and insurers may force ships to comply or be cut off. (Hat tip: Sarah Hoyt at Instapundit.)
Russo-Ukrainian War update: “Ukraine takes out Russian ammunition railway connecting Kherson to Crimea.” I keep seeing rumors of a big Ukranian counteroffensive to retake Kherson, but it seems like it’s slow to make much headway.
In 2016, the Obama administration’s Department of Health and Human Services issued a rule that would have forced doctors across the country to assist in transitioning patients out of their biological sex, regardless of a provider’s medical opinion or conscience objections.
“A provider specializing in gynecological services that previously declined to provide a medically necessary hysterectomy for a transgender man,” for example, “would have to revise its policy to provide the procedure for transgender individuals in the same manner it provides the procedure for other individuals.”
The rule left no room for religious physicians or institutions to breathe, instead menacing them with draconian fines, were they not to toe the controversial new line.
In stepped the Becket Fund for Religious Liberty, which swiftly secured a preliminary injunction in federal court that stopped the rule from going into effect, on the grounds that it violated the Administrative Procedure Act, and likely violated the Religious Freedom Restoration Act. It was a decision later confirmed in 2019, and made permanent by a 2021 ruling.
On August 4, however, Becket attorney Luke Goodrich, who has been working on the case since the Obama-era rule was first issued, will march back into the courtroom, having been dragged back in by the Biden administration and Secretary of Health and Human Services Xavier Becerra.
“They say that our lawsuit was only about the 2016 rule. . . . They say, ‘well, all you were challenging was the 2016 rule, and you won that, but now we’re using a different rule or a different rationale for imposing the same requirement on you, and so you have to file a new lawsuit,’” explained Goodrich.
Under the Biden administration’s theory, the Affordable Care Act provides the administration with “all the authority” it needs “to punish groups that don’t perform gender transitions and abortions,” Goodrich told National Review. The 2016 rule also included language that Becket alleges would force religious institutions to perform abortions.
Remember how Republicans said ObamaCare would endanger religious liberty and the MSM dismissed their concerns? Just like “If you like your doctor, you can keep your doctor.”
According to Goodrich, “the merits are completely resolved and haven’t been appealed; the fight on appeal is about the scope of relief.” He described an effort to work around a losing legal argument by burdening religious objectors and opening up new fronts of battle.
“They want religious organizations to have to play Whac-A-Mole every time the government violates the Religious Freedom Restoration Act, and they want a ruling that will leave them free to keep violating religious liberty every time they shuffle the same legal requirement from one volume of the Federal Register to another,” he said.
That strategy is observable in the proposal of yet another, even broader rule — modeled after the 2016 one — issued by Becerra, who has made his political brand on waging one ruthless culture war after another.
As attorney general of California, Becerra sought to punish independent journalists who exposed Planned Parenthood’s sale of fetal remains harvested during abortions. The Los Angeles Times editorial board described his decision to charge those involved with felonies “disturbing,” and the progressive Mother Jones called it “chilling.”
He also happily enforced a plainly unconstitutional California statute requiring pro-life crisis pregnancy centers to provide pro-abortion materials to patrons, and, as a member of the U.S. House of Representatives, voted against legislation that would allow providers not to perform abortions without fear of government reprisal.
Has Tranny Madness peaked in the UK? There, the Rugby Football Union and Rugby Football League just banned men from playing women’s rugby. In other news, there’s evidently women’s rugby.
“What’s the worst performing stock in the Dow Jones Industrial Average so far this year? Disney.”
The Mickey Mouse company, headquartered in Burbank, has lost about 35% of its value this year versus a nearly 15% loss for the broader index. As a result, tens of millions of Americans who hold Disney stock either directly or indirectly as part of passive index funds have seen their finances take a hit at the worst possible time as inflation spirals out of control.
Disney’s poor financial performance is a product of its own making. In recent months, the company has aggressively waded into controversial cultural issues such as gender identity, making it clear it is putting politics over its shareholders and customers. Disney is a prime example of the threat posed to shareholders and the broader economy of “woke” capitalism. Its story should serve as a cautionary tale for other companies looking to follow in its footsteps.
Disney has all but admitted it’s leveraging its prized position as a top children’s content creator to push a divisive cultural agenda. In March, Disney’s president of content told employees the company plans to have at least 50% of its regular characters come from “underrepresented groups.” Another top producer boasted about Disney’s “not-at-all-secret gay agenda,” including “adding queerness” to children’s programming. Yet another senior executive promised that Disney would implement a “tracker” to ensure programs contain enough “canonical trans characters.”
We’re getting a look at what this woke agenda looks like in practice. An upcoming episode of Disney’s new children’s show “Baymax!” features a transgender man buying menstrual pads. “I always get the ones with wings,” says the “man” wearing a shirt with the transgender flag. Disney is also abolishing the words “boys” and “girls” at its theme parks.
“BLM Activist Shaun King Used Donor Funds To Buy $40k Thoroughbred Show Dog.” That’s infuriating. Not that premagrifter Talcum X siphoned BLM money into his own pockets. That part’s hilarious and predictable. No, that he spent forty grand on a dog when they are so many shelter dogs who need a home.
A pretty good list of the 95 Best Action Movies Ever. Has all the stuff you would expect to be on there (Die Hard, Hard-Boiled, The French Connection, etc.), plus a good bit of Jackie Chan, Sorcerer, Safety Last, Hot Fuzz, and even Andy Sedaris’ hilarious low-budget breastsplotation “classic” Hard Ticket To Hawaii.
And, oh yeah, the Critical Drinker is there. “Warner Brothers may be the first domino to fall, but something tells me they won’t be the last. And when other companies realize that you can safely drop THE MESSAGE and the people peddling it…well, the next year or two could turn out to be very interesting.”
Remember the bank runs in China story after all those bank accounts in Hunan were frozen? I’ve been looking for signs of wider contagion amidst the Chinese banking sector, and mostly haven’t seen it. But I have seen a lot of other cracks appear in China’s overall economic system, so here’s a roundup.
One reaction to the frozen accounts: “Chinese Bank Run Turns Violent After Angry Crowd Storms Bank of China Branch Over Frozen Deposits.”
A large crowd of angry Chinese bank depositors faced off with police Sunday in the city of Zhengzhou, and many were injured as they were taken away, amid the freezing of their deposits by some rural-based banks.
The banks froze millions of dollars worth of deposits in April, telling customers they were upgrading their internal systems. The banks have not issued any communication on the matter since, depositors said.
According to Chinese media the frozen deposits across the various local banks could be worth up to $1.5 billion and authorities are investigating the three banks.
On Sunday, about 1,000 people gathered outside the Zhengzhou branch of China’s central bank on Sunday to demand action; they held up banners and chanted slogans on the wide steps of the entrance to a branch of China’s central bank in the city of Zhengzhou in Henan province, about 620 kilometers (380 miles) southwest of Beijing.
China’s communist government reacted to the protests with their usual tact and understanding:
But it looks like some of them will finally get some money back:
(Plus more on the property slump.)
The official line on the Hunan account freeze: “Henan police said in a statement on July 10 that further investigations showed that, since 2011, a criminal group led by a suspect named Lu Yi had gradually taken control of several rural banks, through companies including the Henan New Wealth Group, to illegally transfer out funds. The police said they had arrested more suspects and seized more assets involved in the case.” I have no doubt the aforementioned were probably guilty, but I bet a whole lot more bank officials, regulators, and CCP officials (to the extent that those are separate groups and not mostly-overlapping Venn circles) were in on the scheme, plus a whole bunch more in dozens of other schemes that siphoned off depositor money into various pockets and a host of entirely different schemes. As I’ve said before, it’s smoke and mirrors all the way down.
Another thing driving unrest: “Rotten tail buildings,” that is residential buildings on which all construction is stopped, but for which those with mortgages for individual units are still expected to pay for:
A rapidly increasing number of “disgruntled Chinese homebuyers” are refusing to pay mortgages for unfinished construction projects, exacerbating the country’s real estate woes and stoking fears that the crisis will spread to the wider financial system as countless mortgages default.
According to researcher China Real Estate Information, homebuyers have stopped mortgage payments on at least 100 projects in more than 50 cities as of Wednesday, up from 58 projects on Tuesday and only 28 on Monday, according to Jefferies Financial Group Inc. analysts including Shujin Chen.
And that was over a week ago.
According to Citi analysts, average selling prices of properties in nearby projects in 2022 were on average 15% lower than purchase costs in the past three years. Meanwhile, it’s only getting worse as China’s home prices fell for a ninth month in May, with June figures set for release Friday.
The crisis engulfing Chinese developers is reaching a new phase, with a debt selloff expanding to firms once deemed safe from the cash crunch, including investment-grade names such as Country Garden Holdings, the largest builder by sales.
The payment refusals, which come at a time when China’s economy is set to post what may be a negative GDP print due to the latest economic shutdown over Xi’s catastrophic zero covid policies, underscore how the storm engulfing China’s property sector is now affecting hundreds of thousands of average citizens, posing a threat to social stability ahead of a Communist Party Congress later this year. Chinese banks already grappling with challenges from liquidity stress among developers now also have to brace for homebuyer defaults.
As a result of the unprecedented push for a debt jubilee, shares of China’s banks extended their recent decline Thursday, with the CSI 300 Banks Index falling as much as 3.3% before closing down 2.2%. A Bloomberg Intelligence index of Chinese developer stocks slid as much as 2.7%, even though Chinese lenders were quick to try and dispel fears that the movement could crash the economy: according to Bank of Communications, its outstanding balance of overdue mortgage loans linked to housing projects with risks of delayed delivery is 99.8 million yuan, accounting for 0.0067% of its domestic housing mortgage balance. The bank added that its housing mortgage loan quality is stable and risks are controllable, the Shanghai-based lender says in an exchange filing. At the same time, Postal Savings Bank of China says its overdue mortgage loans linked to halted housing projects is 127m yuan, and risks are controllable. Of course, it’s not like Chinese banks would ever lie, now is it?
The Great Debt Jubilee is picking up speed: China’s homebuyer mortgage boycott, which prompted Beijing to scramble to avoid a potentially devastating crash in what is the world’s biggest asset is spreading, and according to Bloomberg, some suppliers to Chinese real estate developers are now also refusing to repay bank loans because of unpaid bills owed to them, a sign that the loan boycott that started with homebuyers is starting to spread.
In a jarring case study of what happens when a ponzi scheme goes into reverse, hundreds of contractors to the property industry complained that they can no longer afford to pay their own bills because developers including China Evergrande Group still owe them money, Caixin reported, citing a statement it received from a supplier Tuesday.
Similar to homebuyers who have taken a stand and refuse to pay for properties that remain uncompleted, one group of small businesses and suppliers circulated a letter online saying they will stop repaying debts after Evergrande’s cash crisis left them out of pocket.
“We decided to stop paying all loans and arrears, and advise our peers to decline any requests to be paid on credit or commercial bill,” the group said in the letter dated July 15, which was sent to the developer’s Hubei office. “Evergrande should be held responsible for any consequence that follows because of the chain reaction of the supply-chain crisis.”
As Bloomberg oh so perceptively puts it, “the payments protest is the latest sign of how a movement by homebuyers to boycott mortgages on unfinished homes in China is spreading to affect other sectors in the economy.”
Yes it is, and it’s also why Beijing should be freaking out (if it isn’t), because what is taking place in China is far worse than what took place in March 2020 when the global credit machinery ground to a halt, only back then it’s because there was no other option, now it’s a voluntary development and not even fears of reprisals from China’s ruthless, authoritarian, Lebron-beloved dictatorship is stopping millions of people from calling for a systemic boycott, one which can topple China’s entire $60 trillion financial system in moments.
Probably an overstatement, just because it takes a whole lot to overcome the inertia of the average Chinese citizen just wanting to keep their head down and not be the nail that sticks up.
Embattled Chinese real estate giant Evergrande is expected to deliver a preliminary restructuring plan this week, following the exit of two bosses.
The firm says its chief executive and finance head have resigned, after an internal probe found that they misused around $2bn (£1.7bn) in loans.
Chinese businessmen misusing funds? Try to contain your shock.
Evergrande has more than $300bn in liabilities and defaulted on its debts late last year.
The crisis has spooked traders who fear contagion in China’s property sector.
On Friday, Evergrande said it found that chief executive Xia Haijun and chief financial officer Pan Darong were involved in diverting 13.4bn yuan ($2bn; £1.7bn) in loans secured by its property services unit to the wider group.
The firm said in a filing to the Hong Kong Stock Exchange that Mr Xia and Mr Pan had resigned because of their “involvement in the arrangement of the pledges”.
Getting caught trying to cook the books even after it’s hit the fan. Classic Chinese management.
The U.S. Securities and Exchange Commission has started the process, compelled by a 2020 law, and investors have started to pay attention. So has China, which moved to potentially clear a big hurdle that stymied U.S. regulators for years.
1. Why does the U.S. want access to audits?
The 2002 Sarbanes-Oxley Act, enacted in the wake of the Enron Corp. accounting scandal, required that all public companies have their audits inspected by the U.S. Public Company Accounting Oversight Board. According to the SEC, more than 50 jurisdictions work with the board to allow the required inspections, while two historically have not: China and Hong Kong. The long-simmering issue morphed into a political one as tensions between Washington and Beijing ratcheted up during the administration of President Donald Trump. The Chinese chain Luckin Coffee Inc., which was listed on Nasdaq, was found to have intentionally fabricated a chunk of its 2019 revenue. The following year, in a rare bipartisan move, Congress moved to force action.
2. Where does it stand?
As required by the law, known as the Holding Foreign Companies Accountable Act or HFCAA, the SEC in March started publishing its “provisional list” of companies identified as running afoul of the requirements. While the move had long been telegraphed, the first batch of names fueled a sharp decline in U.S. shares of companies based in China and Hong Kong as it dashed hopes for some kind of compromise. In all, the PCAOB has said it’s blocked from reviewing the audits of more than 200 of those businesses. The companies say Chinese national security law prohibits them from turning over audit papers to U.S. regulators. SEC Chair Gary Gensler said in late March that the Chinese authorities faced “a hard set of choices.” Days later, China announced it would modify a 2009 rule that restricted the sharing of financial data by offshore-listed firms, potentially clearing one obstacle.
3. What is China changing?
The China Securities Regulatory Commission said the requirement that on-site inspections should be mainly conducted by Chinese regulatory agencies or rely on their inspection results would be removed. It said it would provide assistance for cooperation with foreign regulators. The CSRC said it’s rare in practice that companies need to provide documents containing confidential and sensitive information. However, if required during the auditing process, they must obtain approvals in accordance with related laws and regulations.
4. What’s the broader issue?
Critics say Chinese companies enjoy the trading privileges of a market economy — including access to U.S. stock exchanges — while receiving government support and operating in an opaque system. In addition to inspecting audits, the HFCAA requires foreign companies to disclose if they’re controlled by a government. The SEC is also demanding that investors receive more information about the structure and risks associated with shell companies — known as variable interest entities, or VIEs — that Chinese companies use to list shares in New York. Since July 2021, the SEC has refused to greenlight new listings. Gensler has said more than 250 companies already trading will face similar requirements.
5. How soon could Chinese companies be delisted?
Nothing is going to happen this year or even in 2023, which explains why markets initially took the possibility in their stride. Under the HFCAA, a company would be delisted only after three consecutive years of non-compliance with audit inspections. It could return by certifying that it had retained a registered public accounting firm approved by the SEC.
6. How many companies will be affected?
There’s not much discretion. If a company from China or Hong Kong trades in the U.S. and files an annual report, it will soon find itself on the SEC’s list simply because those have been identified as non-compliant jurisdictions. In the March interview, Gensler pointed out that the law focuses on non-compliant countries, rather than specific companies.
For that and other reasons, Beijing is looking to impose more controls to prevent capital flight.
What would a “China is screwed” roundup be like without a Peter Zeihan video?
“Demographically they’re in collapse…China’s not even going to survive this decade. They don’t even have the numbers to try…China doesn’t have the naval capacity to secure markets and resources….Xi Jinping has enacted a cult of personality that is tighter than anything that has existed through Chinese history. It’s gotten so tight that no one wants to bring him information about anything…This is how countries die.” Plus: China doesn’t know how to store grain.
The widely acclaimed globalization of the post-Cold War era is now running in reverse. A protracted slowdown in global trade has been reinforced by persistent pandemic-related supply-chain disruptions, ongoing pressures of the US-China trade war, and efforts to align cross-border economic ties with geostrategic alliances (“friend-shoring”). These developments tighten the noose on China, arguably the country that has been the greatest beneficiary of modern globalization.
Of the many metrics of globalization, including financial, information, and labor flows, the cross-border exchange of goods and services is most closely tied to economic growth. Largely for that reason, the slowdown in global trade, which commenced in the aftermath of the 2008-09 global financial crisis and intensified in the COVID-19 era, points to a sea change in globalization. While global exports went from 19% of world GDP in 1990 to a peak of 31% in 2008, in the thirteen years that followed (2009-21), global exports have averaged just 28.7% of world GDP. Had world exports expanded on a 6.4% trajectory – halfway between the blistering 9.4% pace of 1990-2008 and the subdued post-2008 rate of 3.3% – the export share of global GDP would have soared to 46% by 2021, far above the actual share of 29%.
China’s gains from the globalization of trade have been extraordinary. In the decade prior to China’s 2001 accession to the World Trade Organization, Chinese exports averaged just 2% of total world exports. By 2008, that share had risen nearly fourfold, to 7.5%. China had timed its WTO membership bid perfectly, just when the global trade cycle was on a major upswing. While the financial crisis took a brief toll on Chinese export momentum, the interruption was short-lived. By 2021, Chinese exports had surged to 12.7% of world exports, well above the pre-2008 peak.
China is unlikely to maintain this performance. Overall growth of global trade is slowing, and China’s slice of the trade pie is under mounting pressure.
The ongoing trade war with the United States is especially problematic. During the first phase of China’s export-led growth surge in the aftermath of WTO accession, the US was consistently China’s largest source of external demand. Largely due to former US President Donald Trump’s tariffs, that is no longer the case. By 2020, US imports of Chinese goods and services had fallen 19% below the peak levels of 2018. Despite rebounding sharply on the heels of the US economy’s post-pandemic snapback, in 2021, US imports from China remained 5% below the 2018 peak. Partial tariff rollbacks for selected consumer products, which President Joe Biden’s administration is apparently considering as an anti-inflation gambit, are unlikely to jump-start bilateral trade.
At the same time, enduring pandemic-related supply-chain disruptions are likely to take a sharp toll on China and the rest of the world.Over the six months ending in April, a “global supply chain pressures index” constructed by researchers at the Federal Reserve Bank of New York averaged 3.6, well above the 2.3 reading in the first 21 months following the February 2020 onset of pandemic-related lockdowns, and sharply higher than the “zero” reading associated with the absence of supply-chain disruptions.
This is a big deal for a world connected by supply chains. Global value chains accounted for more than 70% of the cumulative growth in overall global trade from 1993 to 2013, and China has enjoyed an outsize share of this GVC-enabled expansion. As supply-chain disruptions persist, exacerbated by China’s zero-COVID policies, pressures on Chinese and global economic activity are likely to remain intense.
Mounting geostrategic tensions are the wild card in deglobalization, especially their implications for China. “Friend-shoring” in effect turns Ricardo’s efficiency calculus of cross-border trade into an assessment of the security benefits that come from strategic alliances with like-minded countries. China’s new unlimited partnership with Russia looms especially relevant in this regard. With China edging closer to crossing the line by providing support to Russian military efforts in Ukraine, the US has recently moved to impose sanctions on five more Chinese companies through its so-called Entity List.
You’ve heard about the ghost cities. Did you hear about the failed ghost developments that were built as weird, cheap imitations of western structures?
Is Xi Jinping in danger from a coup?
No doubt I’ve missed many other examples of cracks in China’s economic edifice. Feel free to share them in the comments below.
Halifax Bank in the UK decided to do some virtue signaling, unveiling ads celebrating their pronouns. When customers objected, the bank tweeted “If you don’t like it, close your account.”
Halifax’s pronouns badge PR disaster has sparked an exodus of customers and their savings today as its bosses were branded ‘old fashioned bullies’.
Britons are closing their accounts en masse after the bank’s social media team told them to leave if they don’t like their new badges to help avoid ‘accidental misgendering’ of staff.
One account holder told MailOnline that he and his family has already pulled out investments and savings worth £450,000 while many more said they are closing ISAs after they accused the bank of ‘alienating’ them with ‘pathetic virtue signalling’.
Another reader cancelled his Halifax credit cards online today and told customer services: ‘Pronouns matter when used properly, I will not be told by a bank what I can and can’t’. Other critic said: ‘I care because they paid someone to come up with this rubbish but they keep closing branches’.
Branding expert Martin Townsend said Halifax’s policy is a ‘Ratner moment’ and an ‘astonishing’ mistake that will be considered one of the biggest PR blunders in recent history.
He told LBC: ‘It’s a Ratner moment I would say.
For those unfamiliar with the saying, Gerald Ratner was a jewelry store chain owner who joked that his products were crap. “Within a few days of the speech, Ratners Group shares dropped by £500 million (US$1.8B today); by the end of 1991, its stock was down 80%.”
It’s astonishing that they do something to make themselves look right on and virtue signalling – and they end up looking like the most old fashioned bullies, telling them: “If you don’t like it you’re welcome to leave”. It’s extraordinary. Who treats their customers like that? I’ve never heard of a company inviting their customers to go. How is that inclusive?’.
Natwest, Nationwide and HSBC all have optional pronoun policies for badges. HSBC entered the debate and shared the Halifax post, tweeting its 101,000 followers: ‘We stand with and support any bank or organisation that joins us in taking this positive step forward for equality and inclusion. It’s vital that everyone can be themselves in the workplace’.
The row began this week when Halifax, which was propped up by the taxpayer to the tune of £30billion as part of a 2008 bailout, tweeted its 118,000 followers on Tuesday revealing that it would allow staff to display their pronouns on their name badges, in a post that read ‘pronouns matter’.
It showed a photo of a female staff member’s name badge, which featured ‘she/her/hers’ in brackets under the name Gemma.
One customer replied: ‘There’s no ambiguity about the name “Gemma”. It’s a female person’s name. In other words, it’s pathetic virtue signalling and is seen as such by almost everyone who has responded to the initial tweet. Why are you trying to alienate people?’ Within 20 minutes a member of the Halifax social media team, calling himself Andy M, replied: ‘If you disagree with our values, you’re welcome to close your account’.
Andy M’s response has outraged customers, and seen hundreds claiming they will boycott the bank with many saying they have closed their accounts. Others have cut up their credit cards or getting rid of insurance policies and said the threat was the final straw after it cut 27 branches alone in 2022.
One told MailOnline: ‘My entire family have now transferred their accounts to Nationwide, cards etc. Loss to Halifax is in excess of 450K in investment accounts and savings’.
Reader Kirk suggested Chinese bank runs might be the next story to cover. I think I covered bank runs at smaller rural Chinese banks in a previous “China is screwed” post. Is a wider run in progress? Maybe.
Multiple sources contacted by Asia Markets, have confirmed deposits at the following six banks have been frozen since mid-April.
Yuzhou Xinminsheng Village Bank (located in Xuchang City, Henan Province)
Zhecheng Huanghuai Bank (City of Shangqui, Henan Province)
Shangcai Huimin Rural Bank (Zhumadian City, Henan Province)
New Oriental Village Bank (City of Kaifeng, Henan Province)
Huaihe River Village Bank (Bengbu City, Anhui Province)
Yixian County Village Bank (Huangshan City, Anhui Province)
It’s understood the banks with branches across the Henan and Anhui Provinces successively issued announcements in April, stating they would suspend online banking and mobile banking services due to a system upgrade.
At the same time, clients reported their electronic deposits in online accounts, mobile apps and third-party platforms could not be withdrawn.
This led to depositors rushing to local bank branches, only to be told they were unable to withdraw funds.
By late May, images emerged on Chinese social media of demonstrations at the front of numerous bank branches. Asia Markets has verified these images with local contacts.
Snip.
Regardless of the cause, the developments raise serious questions about the health of China’s and its regulatory oversight. The more immediate concern, however, is the prospect of contagion, which could see the (so-far) rural-only bank run spread to bigger cities.
There’s evidence this is already happening.
In one of the only mainstream international media articles to report on the unfolding situation, local residents highlighted the seriousness of the situation and the likelihood of contagion.
From the Financial Times on June 9:
“Some depositors such as Xu have already lost trust in the system. The 39-year-old said he had withdrawn all of his deposits from 10 other small banks that had promised him an annualised yield of more than 4 per cent.
“Another depositor, a 30-year-old father, said he had placed more than Rmb900,000 in his village’s banks since 2020 at a return of 4.1 per cent. “I felt like being slaughtered,” he said, declining to give his name. He drove overnight to negotiate with the banking regulator in Zhengzhou, capital of Henan, in mid-May. “This is the money my wife and I have saved together since we got married. I had to lie to her that I was away for work.”
On Twitter, a video of a large line at an ICBC Bank in China (one of China’s largest state-owned banks) posted on Tuesday, June 9, suggest contagion is in progress.
Translated to English, the tweet reads “The bank card system is locked, and these people are here to unlock it. Massive runs are coming.”
Blogger, Jennifer Zeng, has reported major issues with withdrawing cash from banks in Shanghai in recent days. The uncertainty no doubt exacerbated by the prospect of more lockdowns as COVID cases again spike.
“All banks in Shanghai have restricted depositors from withdrawing money… A bank run is about to sweep China,” she said.
Maybe. This, from five days ago, suggests Shanghai banks are limiting total transactions to 300 a day.
While I’m always willing to believe the worst about China’s smoke-and-mirrors economy, it’s possible that Shanghai’s problems are just temporary post-lockdown issues that will subside, assuming China doesn’t lock that city down again. (Don’t count on it.)
All the reports of bank runs I’m seeing either link to that Asia Markets piece, or the Hal Turner radio show piece that largely reprints it.
Right now I’m going to go with “Not Yet Proven” for current bank runs in China.
Though Lord knows if I were stuck in China (and had somehow managed not to get imprisoned or executed), I’d be pretty intent on getting my money out of Yuan entirely and into something more stable like gold, silver, or even U.S. dollars…
I’ve been too busy to post earlier today, and the Texas Primary voting day is TOMORROW, so this may be brief.
Yesterday’s post noted: “Russia has failed to encircle and isolate Kyiv with the combination of mechanized and airborne attacks as it had clearly planned to do. Russian forces are now engaging in more straightforward mechanized drives into the capital along a narrow front along the west bank of the Dnipro River and toward Kyiv from a broad front to the northeast.”
That’s what you can see on the Livemap of Kiev here, with that red area being controlled by Russian forces:
If Ukrainian forces can keep them from entering Kiev proper, that will go a long way toward stopping Putin’s invasion cold.
The “swift and severe” sanctions of the U.S. and its allies took a while to arrive, not taking effect until 96 hours or so after the first steps of the Russian invasion of Ukraine.
But to give credit where its due, once those sanctions did kick in, the consequences were indeed intense:
At one point, “The ruble plunged to a record low of less than one U.S. penny” — at one point 118 rubles to a dollar, before recovering to 84 rubles to a dollar.
The Economist noted, even with the recovery, that it was “one of the largest one-day slumps in the Russian currency’s modern history, similar in scale to the one-day declines recorded during the worst moments of the country’s financial crisis in 1998, when Russia defaulted on its debt. In mid-morning in Moscow, the Russian central bank raised its key interest rate from 9.5 percent to 20 percent in an effort to stem the ruble’s slump, and the country’s finance ministry ordered companies with foreign-currency revenues to convert 80 percent of their income into rubles.”
One analyst on CNBC summarized that the Russian currency has “pretty much lost all value outside of the country. . . . To me, it doesn’t really feel like we’re looking at or at least we’re going to see the bottom in the ruble here. I think there still is plenty more room for weakness to come.”
The Moscow stock exchange initially delayed its opening this morning, then declared it would be closed for the day.
Russians no longer have faith that their banks will remain solvent: “Russians waited in long queues outside ATMs on Sunday, worried that bank cards may cease to function, or that banks would limit cash withdrawals. ‘Since Thursday, everyone has been running from ATM to ATM to get cash. Some are lucky, others not so much,’ St Petersburg resident, Pyotr, who declined to give his last name, said.”
CNN reports that, “One early casualty was the European subsidiary of Sberbank, Russia’s biggest lender that has been sanctioned by Western allies. The European Central Bank said Sberbank Europe, including its Austrian and Croatian branches, was failing, or likely to fail, because of ‘significant deposit outflows’ triggered by the Ukraine crisis.”
It’s now five days since Russian President Vladimir Putin sent his mostly conscript army into Ukraine to overthrow the government of President Volodymyr Zelenskyy, and it hasn’t gone as planned. In what may signal frustration, Putin has put his nuclear forces on alert in one last desperate move to beat his chest and show the world who’s in charge.
Time has given some clarity to the operation and allows the drawing of some conclusions.
I’m a retired Army lieutenant colonel—an intelligence officer. My training, from 1983 to 2007, was a Cold War focus on the old Soviet Union, the predecessor state to the Russian Federation. Never in my time as an intelligence officer was I able to see the worst-case scenario of a large-scale conventional Russian attack in Europe—until now.
I’ve seen multiple reports of Russian conscripts who didn’t know they were invading Ukraine. They’re confused. They don’t know who to shoot at, as “Ukrainians look the same as us.” The Russian force appears to suffer from: Poor training; poor leadership (bad officers); and a cultural disregard for information-sharing down the chain of command, which prevents lower-ranking soldiers from making informed decisions in the chaos of war.
The result of all this is a lack of initiative from soldiers when non-commissioned officers and officers are killed or wounded.
It is important to note that the Russian army hasn’t fought a conventional war against a near-peer enemy since 1945. It’s out of practice, poorly trained, poorly led, and poorly motivated. It does have plenty of heavy armaments—very large thermobaric bombs. It can destroy, but it can’t fight effectively.
Regarding the “Father of Bombs,” a large thermobaric or “vacuum” bombs capable of destroying a city block, killing 10,000 or more civilians and soldiers. Using one on Kyiv would horrify the world and likely increase calls for war crimes charges on Russian leaders. The Russians have used smaller thermobaric weapons against Ukrainian bunkers.
This opens another question: How powerful are Russia’s reconstituted zampolit? Putin brought them back in 2018. The zampolit were political officers in the old Red Army, previously called “commissars” until 1942 when the position’s battlefield power was scaled back in response to negative military command implications.
If a Russian field commander is ordered to use a city-busting thermobaric bomb, will he? Or will he refuse to carry out the order, like German Gen. von Choltitz when Adolf Hitler ordered him to destroy Paris—unless a zampolit is looking over his shoulder with a pistol?
Logistics is also manifesting itself as a Russian weak spot. Logistics is hard—it’s harder in combat. It requires synchronizing the delivery of fuel, ammo, and food to frontline forces all while the enemy is shooting at your resupply trucks. At four days in, Russian forces are running out of basic supplies. This has a powerfully negative effect on morale.
Complicating Russian resupply efforts are indications that Ukrainian light forces hunkered down during the initial Russian wave passed by, only to reemerge when the lightly armored supply columns entered Ukraine. Also of note is the increasingly effective Ukrainian use of Turkish-designed BayraktarTB2 drones. These low-cost, slow, non-stealthy drones have scored dozens of kills on Russian columns. Ukraine has about 60 of them.
As Ukrainian resistance stiffens and tens of thousands of Ukrainian citizens rush to defend their nation, other nations in the region have been emboldened. Germany is sending 1,000 antitank missiles and 500 Stinger antiaircraft missiles. The Czech Republic and the Netherlands are sending small arms and ammunition.
His successor Shoygu knew better than that. Now who's Shoygu? Shoygu is the *only* single Russian minister who uninterruptedly worked in government since 1991, since the very beginning of Russian Federation. He worked for all presidents, all prime ministers avoided all purges pic.twitter.com/EOx5MH6lb3
There was another issue. Shoygu is ethnic Tuvan. In such a country as Russia minority member can hardly become the supreme leader. People don't perceive him as ethnic Russian (see his palace) which means he's not dangerous for the leader and you can safely delegate him the army pic.twitter.com/a4zJA1ePa0
He also says Russia is only using one echelon of troops:
How is a Blitzkrieg organised? By echelons. First echelon is moving forward as fast as they can. Ofc this means that lots of defenders will be left in their rear. But then the second echelon comes, then third, etc. They finish defenders, occupy territory, control the supply lines pic.twitter.com/AQtm8ntLfO
Secondly, launching several echelons would require long arduous preparation. You need to mobilise them, move to the borders, quarter, maintain and supply. It's not that easy. It's a hard job that should have been done well in advance to wage a Blitzkrieg. And it hadn't been done
Though quite jaundiced and cynical about the “good intentions” of our national and international elites (political and otherwise), I’ve tried to avoid buying into conspiracy theories about a “great reset” being planned for us by Klaus Schwab of the World Economic Forum. But now come news that Justin Trudeau wants to make all the “temporary” expanded financial surveillance powers permanent.
As all eyes were trained on the aggressive police sweep of the Ottawa trucker convoy this week, Canadian prime minister Justin Trudeau’s administration was quietly moving to implement a sweeping expansion of surveillance power at the federal level.
The Trudeau government’s financial war against the truckers has been covered at length. But one underreported aspect of this broader assault on Canadian civil liberties is the effort to bring crowdfunding and payment service providers — two of the most prominent routes for financial transactions on the Internet — under the permanent control of a centralized government authority.
In a February 14 news conference, Canadian finance minister Chrystia Freeland said that the government was using the Emergencies Act to broaden “the scope of Canada’s anti-money-laundering and terrorist financing rules so that they cover crowdfunding platforms and the payment service providers they use.” That broadened power requires all forms of digital transactions, including cryptocurrencies, to be reported to the Financial Transactions and Reports Analysis Center of Canada. (I.e., “Fintrac”). “As of today, all crowdfunding platforms and the payment service providers they use must register with Fintrac, and they must report large and suspicious transactions to Fintrac,” Freeland said. She justified the move as a way to “mitigate the risk” of “illicit funds” and “increase the quality and quantity of intelligence received by Fintrac and make more information available to support investigations by law enforcement.” Trudeau, standing behind Freeland at the press conference, nodded his head in agreement.
Freeland said the trucker convoy, which had assembled to protest coronavirus restrictions, had “highlighted the fact” that digital assets and funding mechanisms “weren’t captured” by the Canadian government’s pre-existing surveillance powers. As a result, she said, “the government will also bring forward legislation to provide these authorities to FinTrac on a permanent basis.”
That seems an awful lot less like an emergency measure to deal with honking truckers and more like a naked power grab to further the building of a sinister, ubiquitous surveillance state, doesn’t it? It’s the sort of thing that makes accusations of trying to impose a Chinese-style social credit system on western democracies a lot more credible, doesn’t it?
It doesn’t help that Schwab dresses and talks like a supervillain.
Why do they dress like sci-fi supervillains? Klaus Schwab looks like he could be on the set of Babylon 5 or The Expanse. pic.twitter.com/qgQVUDALDt
James Lindsay has a long thread on Schwab’s book The Fourth Industrial Revolution, his sweeping vision of “a technological fusion of the ‘physical, digital, and biological worlds,’ which is creepy transhumanism under their direction.”
Read this however you want, but this is Schwab's stated objective: to take the Fourth Industrial Revolution, which is already naturally underway, and shape it according to his vision. That vision is elsewhere seen to be fascistic, Communist, transhumanist, and under WEF control. pic.twitter.com/6wUigHDpNB
— James Lindsay, useful degenerate (@ConceptualJames) February 21, 2022
Is all this just paranoid pattern-matching confirmation bias? Possibly. Let’s hope so. It probably is crazy to ascribe every baleful trend of recent memory (social justice, creeping authoritarianism, tranny madness, rising crime, pedophilia among left-wing elites, media insistence that ordinary people need to start eating bugs, etc.) to one grand conspiracy. It’s paranoid to ascribe every problem to a single malevolent actor. There are always going to be competing agendas by competing power players. It’s a mistake to assume that all the bad guys, from Schwab to George Soros to Bill Gates to Xi Jinping, are on the same team, working with each other. That way lies madness.
But there sure seems to be a whole lot of something going on.
There are so many horrible government reactions to Flu Manchu across the globe that when reports of the latest repressive measures spread on social media you’re inclined to believe them. However, one that’s not so much wrong but out-of-date is the one that Italy will prevent the unvaccinated from using banks:
Italy on Wednesday made COVID-19 vaccination mandatory for people from the age of 50, one of very few European countries to take a similar steps, in an attempt to ease pressure on its health service and reduce fatalities.
The measure is immediately effective and will run until June 15.
Italy has registered more than 138,000 coronavirus deaths since its outbreak emerged in February 2020, the second highest toll in Europe after Britain.
Prime Minister Mario Draghi’s government had already made vaccination mandatory for teachers and health workers, and since October last year all employees have had to be vaccinated or show a negative test before entering the workplace.
Refusal results in suspension from work without pay, but not dismissal.
Wednesday’s decree toughens this up for workers over the age of 50 by removing the option of taking a test rather than vaccination. It was not immediately clear what the sanction would be for those flouting the rule, effective from Feb 15.
Snip.
Ministers from the right-wing League issued a statement distancing themselves from the over-50 vaccine rule, calling it “without scientific foundation, considering that the absolute majority of those hospitalised with Covid are well over 60.”
The League succeeded in softening a previous draft of the decree which proposed that only people with proof of vaccination or recent infection could enter public offices, non-essential shops, banks, post-offices and hairdressers.
The final decree ruled that these venues will remain open to the unvaccinated so long as they can show a negative test.
With Omicron markedly less deadly than previous not-terribly-deadly variants, all this Draconian Covid Theater is destroying lives an livelihoods to accomplish nothing in particular. All should be dispensed with, but here’s once case where the actual rules aren’t quite as bad as rumor would leave you to believe.
