War Talk Roundup: China Has “No Room for Compromise with Japan”; Spotlight on China, Japan, US, Iran, Russia, Ukraine, North Korea
by ilene - March 10th, 2014 4:04 am
Courtesy of Mish.
The global macro picture is bad enough in and of itself. Simmering feuds between rival nations certainly do not help the picture. Here are a few recent stories that caught my eye.
China has No Room For Compromise with Japan
The New York Times reports China has No Room For Compromise with Japan.
March 8, 2014
The Chinese foreign minister took a strong stand Saturday on China’s growing territorial disputes with neighboring nations, saying that “there is no room for compromise” with Japan and that China would “never accept unreasonable demands from smaller countries,” an apparent reference to Southeast Asian nations.
In the East China Sea, China refuses to accept Japan’s administration of, or its claims to, islands that Japan calls the Senkaku and China calls the Diaoyu.
“On the two issues of principle — history and territory — there is no room for compromise,” Mr. Wang said in answer to a question from a Japanese reporter on the deterioration of China-Japan relations. “If some people in Japan insist on overturning the verdict on its past aggression, I don’t think the international community and all peace-loving people in the world will ever tolerate or condone that.”
Tensions between China and Japan have been playing out in diplomacy around the globe. In January, the Chinese ambassador to Britain and his Japanese counterpart both wrote op-ed articles for The Daily Telegraph in which they equated the other country to Lord Voldemort, the villain in the Harry Potter series. The two ambassadors even refused to sit at the same table during a televised BBC interview. Also in January, Mr. Abe told an audience at the Davos conference in Switzerland that the rivalry between China and Japan was similar to that between Germany and Britain before World War I, meaning their differences could supersede their close trade ties.
In the South China Sea, China has been trying to stake sovereignty to islands and waters that are also claimed by Southeast Asian nations. Vietnam, the Philippines and Malaysia are among the opponents to China’s claims. The United States has said it takes no side on sovereignty issues but will maintain freedom of navigation. More recently, it has asserted that the so-called nine dashes map that some Chinese officials say defines China’s ambitious claims in the
by ilene - March 9th, 2014 11:23 pm
By John Mauldin
“The belief that wealth subsists not in ideas, attitudes, moral codes, and mental disciplines but in identifiable and static things that can be seized and redistributed is the materialist superstition. It stultified the works of Marx and other prophets of violence and envy. It frustrates every socialist revolutionary who imagines that by seizing the so-called means of production he can capture the crucial capital of an economy. It is the undoing of nearly every conglomerateur who believes he can safely enter new industries by buying rather than by learning them. It confounds every bureaucrat who imagines he can buy the fruits of research and development.
“The cost of capturing technology is mastery of the knowledge embodied in the underlying science. The means of entrepreneurs’ production are not land, labor, or capital but minds and hearts….
“Whatever the inequality of incomes, it is dwarfed by the inequality of contributions to human advancement. As the science fiction writer Robert Heinlein wrote, ‘Throughout history, poverty is the normal condition of man. Advances that permit this norm to be exceeded – here and there, now and then – are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of society, the people slip back into abject poverty. This is known as bad luck.’
“President Obama unconsciously confirmed Heinlein’s sardonic view of human nature in a campaign speech in Iowa: ‘We had reversed the recession, avoided depression, got the economy moving again, but over the last six months we’ve had a run of bad luck.’ All progress comes from the creative minority. Even government-financed research and development, outside the results-oriented military, is mostly wasted. Only the contributions of mind, will, and morality are enduring. The most important question for the future of America is how we treat our entrepreneurs. If our government continues to smear, harass, overtax, and oppressively regulate them, we will be dismayed by how swiftly the engines of American prosperity deteriorate. We will be amazed
by ilene - March 9th, 2014 9:51 pm
IF you walk into a farm-supply store today, you’re likely to find a bag of antibiotic powder that claims to boost the growth of poultry and livestock. That’s because decades of agricultural research has shown that antibiotics seem to flip a switch in young animals’ bodies, helping them pack on pounds. Manufacturers brag about the miraculous effects of feeding antibiotics to chicks and nursing calves. Dusty agricultural journals attest to the ways in which the drugs can act like a kind of superfood to produce cheap meat.
But what if that meat is us? Recently, a group of medical investigators have begun to wonder whether antibiotics might cause the same growth promotion in humans. New evidence shows that America’s obesity epidemic may be connected to our high consumption of these drugs. But before we get to those findings, it’s helpful to start at the beginning, in 1948, when the wonder drugs were new — and big was beautiful.
That year, a biochemist named Thomas H. Jukes marveled at a pinch of golden powder in a vial. It was a new antibiotic named Aureomycin, and Mr. Jukes and his colleagues at Lederle Laboratories suspected that it would become a blockbuster, lifesaving drug. But they hoped to find other ways to profit from the powder as well. At the time, Lederle scientists had been searching for a food additive for farm animals, and Mr. Jukes believed that Aureomycin could be it. After raising chicks on Aureomycin-laced food and on ordinary mash, he found that the antibiotics did boost the chicks’ growth; some of them grew to weigh twice as much as the ones in the control group.
Mr. Jukes wanted more Aureomycin, but his bosses cut him off because the drug was in such high demand to treat human illnesses. So he hit on a novel solution. He picked through the laboratory’s dump to recover the slurry left over after the manufacture of the drug. He and his colleagues used those leftovers to carry on their experiments, now on pigs, sheep and cows. All of the animals gained weight. Trash, it turned out, could be transformed into meat.
Keep Reading The Fat Drug – NYTimes.com.
by ilene - March 9th, 2014 9:43 pm
Courtesy of Mish.
Every day numerous people send links to articles, edit my typos, comment on the blog, monitor comments on my blog, translate articles, etc.
It’s a community and I appreciate the global involvement and global help.
Each day I get between 50 and 200 emails from readers. I respond to most of them. But even though I spend 2 hours or more every day reading and answering emails, I cannot respond to all of them.
Frequently, I offer a one word response: thanks.
That does not do justice to how I feel, especially to those who send something every day or nearly every day.
Unlike other bloggers, I seldom offer “hat tips” and the reason is simple. I tend to read emails LIFO (last in first out), and most often when someone sends me a link, another person already has.
So here is my word of thanks. But I also need to do more. For those who contribute every day, I need to offer special thanks.
I have three mainstay spell checkers: Randy, Curt, and Mark. What one of them misses, another one of them will catch. The only problem is how long it takes me to find the email pointing out my error. Typically it’s not spelling per se, as I spellcheck myself, but rather stuff like saying “an” when I mean “and” or vice versa. When you proof your own article you do not see such things.
I am going to get in trouble over this one because I am sure to leave someone out. Apologies offered in advance.
by ilene - March 9th, 2014 9:28 pm
Courtesy of ZeroHedge
Over the past three years there has been endless debate over whether the Fukushima radioactive fallout is hitting the US west coast, or if, as the media spin would have it, it is largely isolated, and best to just take their word for it for the simple reason that no federal agency currently samples Pacific Coast seawater for radiation.
The answer may finally be in sight, and it is not a pleasant one: USA Today reports that "very low levels of radiation from the Fukushima nuclear disaster likely will reach ocean waters along the U.S. West Coast next month, scientists are reporting. Current models predict that the radiation will be at extremely low levels that won't harm humans or the environment, said Ken Buesseler, a chemical oceanographer at the Woods Hole Oceanographic Institution who presented research on the issue last week.
Hopefully these "models" are better at forecasting than the Fed's (which are operated by three supercomputers), and the definition of "minimum" hasn't undergone the same material revisions as did "maximum" in the context of the maximum permitted radiation dose falling on Tepco workers in the days when Japan desperately was lying every day about the magnitude of the radioactive disaster. Obviously, it is one thing to make up predictions for the sake of avoiding a panic, it is something entirely different to have empirical data: "I'm not trying to be alarmist," Buesseler said. "We can make predictions, we can do models. But unless you have results, how will we know it's safe?"
As if Buesseler doesn't know that any actual data that reveals alarming results will be seasonally adjusted, and then all excess radiation will be blamed on the "harsh winter weather."
Mockery of economists and other idiots aside, here are the facts on the prevailing models:
There are three competing models of the Fukushima radiation plume, differing in amount and timing. But all predict that the plume will reach the West Coast this summer, and the most commonly cited one estimates an April arrival, Buesseler said.
A report presented last week at a conference of the American Geophysical Union's Ocean Sciences Section showed
by ilene - March 9th, 2014 9:24 pm
- Mean Girls
One of the biggest stories of the week was the ongoing fallout from the Mohamed El-Erian / Bill Gross break-up at PIMCO. In the wake of Greg Zuckerman’s incredible story at the Wall Street Journal, it had become the talk of the industry, forcing many investors to think twice about their allocations to the firm’s products.
My friend Jenn Ablan, a Reuters reporter who covers all the Bond Kings for Reuters came away from a call with Gross that contained some wild accusations about the Zuckerman article and the whole thing just blew wide open the other day.
The question for investors everywhere is whether or not PIMCO is in disarray or if its vaunted decision-making process can be trusted anymore. Institutions, individual investors, professional advisers and money managers of all kinds have allocated hundreds of billions to the firm. The now-public issues about Gross’s ego and monomania have led to a public discussion to this effect.
My own take is that we will never know about all of the dynamics between Gross and El-Erian – both of whom I have a great deal of respect for as investors and thinkers – but that we probably shouldn’t rush to judgment over a few errant quotes and comments during an emotionally charged time for both of them. Also, as others have posited, bull markets don’t end pleasantly – especially bond bull markets that had run on for thirty years. The aftermath at PIMCO could never have been congenial after three decades of downhill marathoning.
Below are some of the better musings on the topic:
BTW, Barry and I have promised our employees and ourselves not to split so acrimoniously if, heaven forbid, we ever felt the need to (we don’t, I’m writing this blog post wrapped in his arms at our getaway cottage in New England).
by ilene - March 9th, 2014 9:06 pm
Courtesy of ZeroHedge
"It's the weather" That's all Abe has left to pretend that 'recovery' is right around the corner. Japan just printed its worst current account deficit on record and its worst GDP growth since Abenomics was unveiled – both missing by the proverbial garden mile and both confirming that all is not well in Asia. As for the perpetual hope of a J-curve (or miracle hockey-stick reversal)? There won't be one! As Patrick Barron noted, "monetary debasement does not result in an economic recovery, because no nation can force another to pay for its recovery."
Worst current account deficit ever – and a chart that shows absolutely no hope of a turn anytime soon…
and the worst GDP growth since Abenomics was unveiled and 2nd quarter missed in a row…
Perhaps I can shed some light on Japanese Prime Minister Abe’s missing J-curve; i.e., why Japan’s trade deficit seems to be increasing rather than decreasing after massive monetary intervention to reduce the purchasing power of the yen. Monetary debasement does NOT result in an economic recovery, because no nation can force another to pay for its recovery.
Monetary debasement transfers wealth within an economy by subsidizing exports at the expense of the entire economy, but this effect is delayed as the new money works it way from first receivers of the new money to later receivers. The BOJ gives more yen to buyers using dollars, euros, and other currencies, as the article states, but this is nothing more than a gift to foreigners that is funneled through exporters. Because exporters are the first receivers of the new money, they buy resources at existing prices and make large profits. As most have noted, exporters have seen a surge in their share prices, but this is exactly what one should expect when government taxes all to give to the
by ilene - March 9th, 2014 8:55 pm
SALEM, Ore. — Very low levels of radiation from the Fukushima nuclear disaster likely will reach ocean waters along the U.S. West Coast next month, scientists are reporting.
Current models predict that the radiation will be at extremely low levels that won't harm humans or the environment, said Ken Buesseler, a chemical oceanographer at the Woods Hole Oceanographic Institution who presented research on the issue last week.
But Buesseler and other scientists are calling for more monitoring. No federal agency currently samples Pacific Coast seawater for radiation, he said.
"I'm not trying to be alarmist," Buesseler said. "We can make predictions, we can do models. But unless you have results, how will we know it's safe?"
Keep reading Scientists: Test West Coast for Fukushima radiation.
by ilene - March 9th, 2014 8:29 pm
String field theory co-founder Michio Kaku did not even try to explain his controversial yet undeniably brilliant cosmological theory of everything during his interview on Reddit, beyond this analogy:
"In string theory, all particles are vibrations on a tiny rubber band; physics is the harmonies on the string; chemistry is the melodies we play on vibrating strings; the universe is a symphony of strings, and the 'Mind of God' is cosmic music resonating in 11 dimensional hyperspace."
(The "Mind of God" is what Stephen Hawking said we would understand once we completed a theory of everything.)
While Kaku's cursory approach annoyed some Redditors (the top-voted response brings up problems with string field theory like its lack of testable theses that he did not address), it allowed him to respond to a wide array of fascinating scientific questions.
On coming breakthroughs:
"Time travel and teleportation will have to wait. It may take centuries to master these technology. But within the coming decades, we will understand dark matter, perhaps test string theory, find planets which can harbor life, and maybe have Brain 2.0, i.e. our consciousness on a disk which will survive even after we die.
"I think, in the coming years, we will have a brain pacemaker that can stimulate the memory of people with Alzheimer's disease. They will be able to upload simple memories of who they are and where they live. Beyond that, we will be able to use electronics to upload vacations we never had, perhaps. And the internet itself will be a brain-net of emotions and memories.
"The 20 century was the century of physics, with computers, lasers, TV, radio, GPS, the internet, etc. Physics, in turn, has made possible that can probe biology. So I think the 21st century will be the century of physics and…
Spain Modifies Bankruptcy Laws to Prevent Corporate Liquidations; 65,000 Companies, 1.3 Trillion Euro Delinquencies in Play
by ilene - March 9th, 2014 7:53 pm
Courtesy of Mish.
In the name of saving jobs, the Spanish government has decided to change the rules as to whether or not a business is viable.
In bankruptcy proceedings, companies will no longer be free to decide whether they prefer to liquidate the company.
Instead, corporations will be obliged to accept debt restructuring offerings from creditors on creditor-proposed terms centered around debt-to-equity conversions.
Via translation from El Economista.
According to various judicial, legal and bankruptcy administration sources consulted by elEconomista, companies will no longer be free to decide whether they prefer to liquidate the company.
New rules favor foreign financial institutions including the vulture funds, to take over companies. The decree aims to end the massive liquidation of companies in bankruptcy.
Followup post by el Economista
The Ministry of Economy approved the bankruptcy reform legislation to save viable businesses including a provision that transforms debt into equity.
If creditors representing at least 60% of the financial liability agree, forced conversion of loans into equity may last up to five years. If creditors representing at least 75% of the financial liability agree, forced conversion of loans into equity may last ten years.
Dissenting creditors may choose a haircut equivalent to the nominal amount of the shares that would correspond subscribe or take and, where appropriate, the corresponding premium or assumption.
Judges may override the 60% threshold to as low as 51%.
1.3 Trillion Euro Delinquencies in Play
Via translation Libre Mercado discusses the number of potential forced debt-to-equity conversions.
Deputy Prime Minister Soraya Saenz de Santamaria, said that the new law completes a package of measures that are aimed at companies that, despite their high debt, "can continue to run their business while maintaining their employment."
In Spain, 90% of companies that enter bankruptcy end up in liquidation. At first, this may seem logical and even reasonable: if a company is not viable, what is best for everyone to pay the maximum of their debts, creditors save everything and these goods are reallocated to more productive tasks. The problem is that, perhaps, not every business in competition (and even more in preconcursal phase) should close. …