And The Best Performing World Stock Market In August Was…

China…

 

3 of the top 10 best performing world equity indices in August are from China with HSCEI the best overall, gaining 6.5% in local currency terms. We find this move in China interesting as officials start to sound the alarm over the real estate market and need an outlet for that hot money flow… back into stocks – to avoid major currency weakness.

At the other end of the scale is Venezuala's market which tumbles 7.74% – which is actually better than we thought it would be.

 

One thing that is notable is that the last month has seen correlation across asset classes remains high… but this time it's rolling over – as Global Central Bank balance sheets actually fall modestly in USD terms…

 

Charts: Bloomberg

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Fear Spreads Of A Housing Crash In Canada

Submitted by Wolf Richter via WolfStreet.com, 

More Canadians sour on their Magnificent Housing Bubble.

Canadians have been gung-ho about their magnificent housing bubble, feeding it with an endless willingness to pay every higher prices, even as regulators and international institutions issued warnings, as short sellers began circling, as subprime liar-loan scandals made their reappearance, and as a generation was getting priced out of the hottest housing markets in Canada, the metros of Toronto and Vancouver, and as locals came up with an acronym to describe what has fired up the market: HAM – Hot Asian Money.

But the Vancouver housing bubble, the hottest even in Canada, hit rough waters in early summer. By July the first serious troubles appeared.

Even as apartment prices soared 27% year-over-year and detached house prices 38%, overall sales plunged 19%, while sales of detached homes plummeted 31% [Vancouver Housing Bubble, Meet Pin].

Then on August 2, British Columbia’s notorious 15% transfer tax on home purchases involving foreign investors took effect. Preliminary data indicate that sales over the first two weeks in August plunged 51% year-over-year, with sales of detached homes down 66%.

And this flood of news on the Canadian housing bubble and speculations about a Canadian housing crash have now begun to slice into the previously imperturbable confidence of regular Canadians in their housing miracle.

The housing related part of the Bloomberg Nanos Canadian Confidence Index just had its worst spill in the history of the monthly data series, going back to May 2013: The percentage of the respondents who expected a decline in local home prices jumped from 12% to 20.5% in one fell swoop.

The percentage of those who expected home prices to rise dropped 2.3 percentage points to 41.4%, and the percentage of those expecting little change dropped 5.3 percentage points to 36.3%. Bloomberg:

The reading marks a change from almost unbridled consumer optimism in a housing market that has carried the Canadian economy since the 2008 global financial crisis, even as policy makers warn price gains in some cities are unsustainable.

That list of fretting policy makers, regulators, and other organizations now includes:

The IMF (January 2015), the Bank of Canada (most recently in June 2016), the Canada Mortgage and Housing Corporation (CMHC), which found “strong evidence of problematic conditions,” and the Office of the Superintendent of Financial Institutions (July 2016), which said that it would require smaller banks to stress-test their mortgage portfolios to ensure they could withstand a drop in Vancouver home prices of 50%.

Plus, warnings about record levels of household debt have been circulating for a couple of years.

So when Nik Nanos, Chairman of Nanos Research Group, commented on the soaring expectations of home price declines in the Bloomberg Nanos Canadian Confidence Index, he said it showed Canadians’ “increasing concern about the value of real estate.”

The monthly data didn’t exist during the Financial Crisis. The quarterly data available at the time showed that expectations of price declines soared by 24 percentage points at the end of 2008. But it was just a blip. Two quarters later, optimism was higher than before, and Canadian home prices resumed their surge, particularly in Vancouver and Toronto.

Canadians have been bombarded with news about their housing bubble and by warnings about a potential housing crash, and by even more numerous and vigorous counter-arguments larded with hype that everything was hunky-dory, that now was the best time to buy or else you’ll be forever priced out of the market.

This summer, famed short seller Marc Cohodes came out of retirement (he now raises chickens on a farm in Sonoma County, CA, and sells the eggs for a fortune in San Francisco) and jumped into ring with a number of interviews on TV and in the print media, and this too rattled some nerves – largely because it hit home.

“I think it’s a money laundering-induced market,” he said as we reported at the time. “Where the local politicians, or the BC Liberals, are kept or in cahoots with the real estate brokers, developers, lawyers, that angle. And they have sought Chinese money to keep the market propped up and it won’t last,” he said. “China has capital controls on, and Vancouver has become the money laundering mecca of either the world or North America, and something is going to change and change drastically.”

He’s shorting the housing market not by shorting the banks but by going after “alternative” lender – in US Financial-Crisis English “subprime” lender – Home Capital Group, the same company I lambasted over a year ago.

Despite industry assurances that the hottest housing markets in Canada, particularly Vancouver, will always remain hot, and that it is physically impossible for prices to decline in this miracle economy, Canadians are now becoming aware that those assurances have just been another load of industry hype. And a larger share of them are starting to grapple with a new reality – a reality in an over-leveraged, inflated housing market where prices have come to rest on the edge of a cliff.

In Vancouver’s once white-hot commercial real estate market, the hunt is now on for Chinese buyers as big institutional investors are trying to unload. Read… Suddenly Scared of Vancouver’s Commercial Property Bubble?

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Colorado Professors Kick ‘Deniers’ Out – “We Will Not, At Any Time, Debate Climate Change”

Colorado Springs

Professors Laroche, Haggren and Skahill of the University of Colorado – Colorado Springs will not allow you to invade their man-made climate change "safe space" and if you don't like it then you can get out.  According to The College Fix, that is the response students recently received from the progressive teacher trio after "expressing concern" for their success in a course that refused to debate climate change. 

The full email from the teachers is posted below but here are a couple of the highlights:

"We have received several emails from students expressing concern for their success in our course given their personal perspectives on climate change."

 

“The point of departure for this course is based on the scientific premise that human induced climate change is valid and occurring. We will not, at any time, debate the science of climate change, nor will the ‘other side’ of the climate change debate be taught or discussed in this course.  Opening up a debate that 98% of climate scientists unequivocally agree to be a non-debate would detract from the central concerns of environment and health addressed in this course.”

 

“… If you believe this premise to be an issue for you, we respectfully ask that you do not take this course, as there are options within the Humanities program for face to face this semester and online next.”

 

Here is the full email from the professors of HUM 3990 SECOL1 – Master – Special Topics in Humanities:  Climate Change (click picture for a larger image.)

Email

 

Would it be inappropriate to share Nasa's findings that Antarctica's ice sheet has actually been growing larger rather than shrinking (see "Another Inconvenient Truth? New NASA Study Finds Antarctica Is Gaining Ice")? 

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Trader Bullishness Hits Three Year High As NYSE Margin Debt Jumps Most Since April 2015

Having plumbed the depths of despair in early 2016, market participants are now in a state of near-record euphoria. One indication of this comes from the latest NYSE margin debt data, which showed the biggest jump since April 2015, rising by $27 billion to $474.6 billion, the highest since last July, as investor net worth calculated by the difference of Margin Debt from Free Credit Cash Accounts and Credit Balances in Margin accounts, once again dipped lower.

Another one comes courtesy of Gluskin Sheff’s David Rosenberg who in his daily note reports that “net speculative position on the CME as far as SPX contracts are concerned have ballooned nearly 70% since mid-July to 38,083 net longs, a bullish bet we have not seen since June 2013, and this is one vivid sign of just how complacent the masses are.”

Rosenberg speculates that “the buyers look to have exhausted themselves at this point”, even though it is still not clear just who the buyers are, with mutual fund flows rising on a weekly basis without an offsetting rebound in ETF inflows in recent weeks, stock buybacks declining and insider stock buying at the lowest on record.

He also points to the previously noted record collapse in asset volatility, namely the VIX which in recent weeks recorded its lowest prints in years.

Rosenberg’s conclusion is that complacency and pervasive bullishness abounds, which is somewhat at odds with the constant refrain that the market is at all time highs because this remains the “most hated rally”  in history.

His warning: “As per Bob Farrell and his Rule #5, ‘the general public buys the most at the top and the least at the bottom’.”

That’s true but Bob Farrell never explained just when central banks buy as well, which is topic now that even Reuters – more than one year after we first pointed it out – has an article describing how the “Swiss central bank steps up stock buying spree

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#VeteransForKaepernick, Compulsory Patriotism, Free Speech, and Dissent

We remember so much we forgot.I remember watching the 2001 Major League Baseball (MLB) playoffs, weeks after the devastating September 11th terror attacks killed thousands in my home city of New York (as well as hundreds more at the Pentagon and on United Flight 93, which crashed in a Pennsylvania field). The displays of patriotism during the games (and really, everywhere) were ostentatious, but understandable, as the country braced for a war against an enemy we clearly did not understand, with no idea that our response to the horrors unleashed the morning of 9/11/01 would beget horrors in Afghanistan and Iraq and elsewhere that have no resolution in sight a full decade-and-a-half later.

My friends and family each had suffered through the shock and grief of loved ones being wrenched from our lives in sudden and exceptionally cruel fashion. Lower Manhattan smoldered for months as the pile of buildings and bodies burned, emanating an unspeakably foul and unnatural stench the likes of which I had never experienced before but will never forget for as long as I live. The gash in the skyline was a constant reminder that nothing would ever be the same.

Everything stopped, including sports, for about two weeks. People wanted normalcy to return, but everything felt “too soon.”

Still, eventually we had to try, and during those first few weeks after, baseball (particularly in New York) provided a venue for shared expressions of grief, unity, and even hope. The New York Mets played the city’s first game after the attacks, which culminated in a stirring game-winning Mike Piazza home run that is still cited as an example of “the healing power of sports.”

For the rest of the season, the pre-game performances of “The Star Spangled Banner” (a tradition started by the Boston Red Sox during World War I) were rousing, emotional, and cathartic. They frequently featured American flags big enough to fill an entire outfield, as well as special appearances by first responders who survived the collapse of the World Trade Center and family members of the fallen.

Prior to Game 2 of 2001 World Series played by the Arizona Diamondbacks and New York Yankees (who despite being widely-hated outside of New York became America’s unlikliest sentimental favorites for that brief period), the national anthem was followed by a soulful and mournful Ray Charles performance of “America the Beautiful.” Considering the context of the moment, you’d have to be a pretty hard-hearted person not to be moved by his rendition (to say nothing of the fact that it’s a much better song than the “Banner”):

But that’s the thing, these moments were special because they were unusual. They were rare. They would lose their meaning if they became expected and demanded displays of a unity which no longer existed, or of a shared patriotism which had become complicated by protracted and unpopular wars.

This is precisely what happened when “God Bless America” became a regular staple of baseball’s 7th inning stretch.

In the weeks after 9/11, the performing of Irving Berlin’s song was a moment for somber reflection. 15 years later, it’s a gratuitous and maudlin interruption which 61 percent of baseball fans would happily do away with. Besides, after the pre-game national anthem, do fans really need to be subjected to what New York Daily News writer Gersh Kuntzman described as a “ponderous Mussolini-esque introduction of the song, when fans are asked to rise, remove their caps and place them over their hearts”?

Peaceful protestThat’s why the outrage over San Francisco 49ers backup quarterback Colin Kaepernick’s hardly unprecedented choice to protest the socially-compulsory tradition of standing for the playing of the national anthem before a professional sports contest feels as forced as the tradition itself.

In response to his decision to sit out the anthem to protest police brutality and systemic racism in his country, the biracial Kaepernick (raised by adoptive white parents) was described by former New England Patriots safety Rodney Harrison as not black (or not black enough) to protest on behalf of black people. San Francisco’s police union demanded an apology from both the National Football League (NFL) and the 49ers. The Blaze’s Tomi Lahren called him a “whiner” and a race-baiter. Fox News’ Sean Hannity speculated that Kaepernick might be a secret Muslim.

It is equal parts inexplicable and totally predictable that Hannity — who adores Donald “Make America Great Again” Trump — would take such exception to a rich person implying that America is not great. But whether or not one thinks Kaepernick’s protest is opportunistic or disrespectful to the military, one can’t argue with the fact that it is a peaceful and constitutionally protected protest, the kind that critics of Black Lives Matter protests insist are the only legitimate modes of expressing dissent.

It’s silly to suggest that a marginal player’s refusal to stand during a pre-game rendition of a song commemorating the military stalemate of the War of 1812 — and which features lyrics (albeit rarely sung lyrics) valorizing slavery — is somehow as much of an insult to American patriotism and military veterans as say, the NFL’s acceptance of millions of dollars in taxpayer money for “paid patriotism” in the form of fighter jet flyovers and other military tributes that are never disclosed to the fans as the commercials for the military that they really are.

When Arizona Cardinals player Pat Tillman famously left a contract worth millions of dollars to enlist in the Army after 9/11, he was lionized as the living embodiment of selfless patriotism and masculine heroism. After he was killed by friendly fire in Afghanistan less than three years later, the NFL did everything it could to attach its image to his. But Tillman the man was harder to pigeonhole than Tillman the dead hero. He was a well-read political liberal and atheist who abhorred the war in Iraq (which he fought in) as “illegal and unjust” and “an imperial folly that was doing long-term damage to US interests,” according to Jon Krakauer, the author of Where Men Win Glory, the Odyssey of Pat Tillman.

What if Tillman had lived? Would he have chafed at being used by the NFL and the Pentagon as a prop to sell a war he felt was unjust? What would the reaction have been had he decided to sit his heroic ass down during the national anthem to draw attention and support for the idea that he believed the war was wrong and should be stopped?

See, that’s the thing, the military is not a monolith, and “heroes” are just people.

Take Jackie Robinson, the universally adored American hero who broke baseball’s color barrier in 1947, and who also served in the Army during World War II (though he was never deployed to a combat zone). In Robinson’s autobiography I Never Had It Made, the man whose number is the only one retired by all 30 MLB teams wrote of his experience standing for the national anthem during his first World Series game in his rookie season with the Brooklyn Dodgers:

There I was, the black grandson of a slave, the son of a black sharecropper, part of a historic occasion, a symbolic hero to my people. The air was sparkling. The sunlight was warm. The band struck up the national anthem. The flag billowed in the wind. It should have been a glorious moment for me as the stirring words of the national anthem poured from the stands. Perhaps, it was, but then again, perhaps, the anthem could be called the theme song for a drama called The Noble Experiment.

Robinson adds that despite his role in ending segregation in American sport, his reality trumped others sentimentality, and that for him, the anthem couldn’t mean what others wanted it to mean for him:

As I write this twenty years later, I cannot stand and sing the anthem. I cannot salute the flag; I know that I am a black man in a white world. In 1972, in 1947, at my birth in 1919, I know that I never had it made.

Sure, Kaepernick’s protest has offended many veterans and their families, and their feelings are not to be discounted. Kaepernick’s right to freedom of speech does not grant him the right to be free of criticism.

But just as with Robinson, people are not defined by the images projected upon them, which can be seen through the #VeteransforKaepernick Twitter hashtag, where statements of solidarity with have come from veterans for any number of reasons.

Some explicitly support Kaepernick’s motivations:

Some veterans don’t want to be used as pawns in other people’s political signaling:

Or just his right to protest:

Some just prefer not to be condescended by those who parrot “Support the Troops” when they really only mean “Support the Troops Who Agree with Me Politically”:

Kaepernick says he has no plans to discontinue his silent protest at the 49ers’ final preseason game tomorrow night in San Diego — a metropolitan area home to a large number of military bases and service-people — on the very night the San Diego Chargers host their “Salute to the Military.” Expect the arguments over everything other than what Kaepernick’s protest is actually motivated by to continue.

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Dear Millennials: If You Want To Escape Minimum Wage Debt-Serfdom…

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

Those without value-creating human/social capital will be mired in a low/minimum wage environment that will make it difficult to escape debt-serfdom.

Let's start with the sobering reality that the Millennial generation faces economic challenges that are unique to this era: sky-high student loan debt, soaring costs for basics such as rent and healthcare, a stagnant neofeudal crony-cartel economy and an intellectually bankrupt status quo in thrall to failed ideologies: Keynesian Cargo Cult central banking, outdated models of capital and labor and an unthinking worship of debt-funded centralization as the "solution" to all social and economic ills.

The potential solutions are also unique to this era. Never before has humankind had such a wealth of revolutionary decentralizing technologies: nearly friction-free peer-to-peer networks and commerce, decentralized cryptocurrencies and the expansion of what my friend G.F.B. describes as neo-tribalism: opt-in communities that are not bound to geography or central-state imposed identities.

Many smart, well-informed people see massive government stimulus using borrowed money as the "solution" to Millennial impoverishment and under-employment–in other words, more debt-funded centralization.

The idea here is that such debt-funded stimulus will employ millions of Millennials to rebuild America's crumbling infrastructure.

While we all understand the appeal of this proposal, those proposing it have little experience in actually building or repairing infrastructure. The assumption that such massive public spending will create millions of jobs is never examined closely, nor is the impact of adding trillions of dollars in additional public debt considered.

What such schemes boil down to is: Millenials are supposed to borrow trillions from their future earnings and their children's earnings to fund a few years of employment.

But what happens after the bridges get repaired and the homeless housing gets built? In the conventional fantasy, the economy magically moves into a self-sustaining growth cycle because those construction workers will be buying more coffee at Starbucks, more lunches at Mickey D's, and so on.

But the cold reality is: once the money has been spent, those jobs go away. Once the bridge has been repaired with public money, the workers are laid off because there is no private-sector funding for more bridges or homeless housing, etc. Once the construction workers are laid off, sales at coffee shops and fast-food outlets fall back to pre-stimulus levels.

The surge in employment fades as soon as the funding dries up. Additionally, there is little productivity gain from the infrastructure spending: the repaired bridge performs the same service as the aging bridge.

The problem is this: after the government funding dries up, we still have a corrupt crony-cartel economy based on predatory privilege, parasitic rackets and central-state enforced fraud. In other words, we still have an economy that strangles productivity that could benefit the many in order to further enrich the few.

And as Gail Tverberg and Art Berman have explained, we have an economy that is facing lower energy consumption per capita (per person)–even if oil prices remain around $40/barrel.

Oil Prices Lower Forever? Hard Times In A Failing Global Economy

An Updated Version of the “Peak Oil” Story

Central state stimulus funded by debt only creates a brief illusion of prosperity; it changes nothing in our broken system. All it does is burden a heavily indebted generation with more debt–a generation that cannot afford to consume more because so much of their income is already devoted to debt service.

The other fly in the ointment is this sort of spending doesn't create as many jobs as the uninformed assume. If you stop and look at a bridge being repaired, you'll note the crew is small–in many cases, a half-dozen or less. The same is true of road resurfacing crews and other infrastructure repair work.

You'll also notice the crew has skills that take years to acquire: operating a crane, welding, etc. The unskilled are limited to waving the traffic-control flags.

The same is true of new construction. If you count the workers erecting large new residential buildings, you'll note a few dozen workers on site–and the buildings are finished in a matter of months.

Since on-site construction labor has been more expensive than factory labor for decades, construction fabrication has been pushed to the factory. Beams, walls and other components are assembled at the factory, where wages typically remain between $15 and $20/hour. These components are shipped to the site and assembled by small crews of skilled workers.

Much of the expense in construction is now in the financing (private or public, the interest payments and bond sales fees constitute a large percentage of total construction costs), permits/fees and materials. The actual labor component of major construction/repair work is relatively modest.

It makes no financial sense to hire people with little experience for high-skill tasks. What makes sense is to increase the hours of the experienced workers the contractor already employs. What is the payoff for a contractor to spend three years training neophytes to become productive? That only makes sense if you can keep the trained worker, and the intermittent nature of construction work means your workforce shrinks when demand falls. The worker you trained goes off to work for somebody else.

The beneficiaries of infrastructure stimulus will be workers that already have the requisite skills and experience–Gen X and those Millennials who have completed formal or informal apprenticeships.

But even these workers have to look beyond the few years of infrastructure stimulus, and acquire whatever skills the private sector will need.

As I explain in my book Get a Job, Build a Real Career and Defy a Bewildering Economy, whatever is abundant has little scarcity value: that includes unskilled labor and credentials such as college degrees.

What's scarce are value-creating skillsets, most of which are path-dependent, i.e. they must be accumulated over years of work experience.

What creates value? The ability to solve problems and increase productivity.

If you want to know why the economy and Millennial prospects are both stagnating, just look at productivity–it's tanking:

As I explain in the book, the line between labor and capital is becoming blurred. Capital is increasingly intangible: the most productive forms of capital are human, social and intellectual–the knowledge, experience and networks acquired by people.

In contrast, the return on money–a traditional form of capital–is near-zero.

Owning a credential is not the same as owning skills. If we think of human/social capital as an asset, then we see a new line between labor and capital: labor is low-skilled labor with little scarcity value, and capital is high-skilled human/social capital.

Those without value-creating human/social capital will be mired in a low-wage/minimum wage environment that will make it difficult to escape debt-serfdom. To understand why human/social capital is the most important form of capital, we must understand that this capital asset is fundamentally an enterprise.

If we look at what wealthy households own, we note they own enterprises. This is not a coincidence, as wealth is generated by value-creating enterprises.

If you want to escape Minimum Wage Debt-Serfdom, start by developing skills that create value by solving problems and increasing productivity, which is another way of saying doing more with less.

Understand that your human/social capital is fundamentally an enterprise that you own and manage. Taking ownership of your capital and managing that asset as an enterprise is the first step to escaping stagnation.

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Global Supply Chains Paralyzed After World’s 7th Largest Container Shipper Files Bankruptcy, Assets Frozen

After years of relentless decline in the Baltic Dry index…

 

… today the largest casualty finally emerged on Wednesday when South Korea’s Hanjin Shipping, the country’s largest shipping firm and the world’s seventh-biggest container carrier, filed for court receivership after losing the support of its banks, leaving its assets frozen as ports from China to Spain denied access to its vessels.


For those unfamiliar with the company, here is a brief overview from its website:

Hanjin Shipping is Korea’s largest and one of the world’s top ten container carriers that operates some 70 liner and tramper services around the globe transporting over 100 million tons of cargo annually. Its fleet consists of some 150 containerships and bulk carriers.

 

 

With 4 regional headquarters in the U.S., Europe, Asia and South East & West Asia, approximately 5,000 global staffs as well as container terminals in world’s major ports contribute to Hanjin Shipping’s world-class logistics network around the world.

As Reuters reports, banks led by state-run Korea Development Bank withdrew backing for the world’s seventh-largest container carrier on Tuesday, saying a funding plan by its parent group was inadequate to tackle debt that stood at 5.6 trillion won ($5 billion) at the end of 2015.

Suk Tai-soo, president and chief executive officer of Hanjin Shipping Co, arrives
at a court in Seoul, South Korea, August 31, 2016.

South Korea’s biggest shipping firm, announced the filing for receivership and a request to the court to freeze its assets, which the Seoul Central District Court planned to grant, a judge told Reuters.

As part of the company’s insolvency process, the court will now decide whether Hanjin Shipping should remain as a going concern or be dissolved, a process that usually takes one or two months but is expected to be accelerated in Hanjin’s case, the judge said. A bankruptcy for Hanjin Shipping would be the largest ever for a container shipper in terms of capacity, according to consultancy Alphaliner, exceeding the 1986 collapse of United States Lines.

Coming as no surprise to anyone who has followed the persistent decline in worldside trade, global shipping firms have been swamped by overcapacity and sluggish demand, with Hanjin booking a net loss of 473 billion won in the first half of the year. 

South Korea’s ailing shipbuilders and shipping firms, which for decades were engines of its export-driven economy, are in the midst of a wrenching restructuring. According to Reuters, KDB’s decision to stop backing Hanjin Shipping shows the government is taking a tougher stance with troubled corporate groups.

The fallout from the country’s unprecedented bankruptcy invoked a statement from South Korea’s Finance Minister Yoo Il-ho, who said that “the government will swiftly push forth corporate restructuring following the rule that companies must figure out how to survive and find competitiveness on their own while taking responsibility.”

To be sure, this decision is a fresh breath of air in a world in which mega-corprations across the globe have become “too big to fail” by default, and in many cases anticipate a government bail-out.

According to South Korea’s Financial Services Commission, Hyundai Merchant Marine, the country’s second-largest shipping line, will look to acquire its rival’s healthy assets, including profit-making vessels, overseas business networks and key personnel,  A Hyundai Merchant Marine spokesman told Reuters nothing had been decided about the potential acquisition of Hanjin assets and that the firm will hold talks with KDB. Hyundai Merchant Marine is also in the process of a voluntary debt restructuring.

The question now is whether as a result of the bankruptcy process there will be an unexpected failure in the global supply-chain: South Korea’s oceans ministry estimates a two- to three-month delay in the shipping of some Korean goods that were to be transported by Hanjin Shipping, and plans to announce in September cargo-handling measures which could include Hyundai Merchant Marine taking over some routes, a ministry spokesman said on Wednesday.

Making matters worse, Reuters adds that KDB’s move to pull the plug was already having an impact on Hanjin’s operations, with the company’s various shipping assets already frozen. Ports including those in Shanghai and Xiamen in China, Valencia, Spain, and Savannah in the U.S. state of Georgia had blocked access to Hanjin ships on concerns they would not be able to pay fees, a company spokeswoman told Reuters.

Another vessel, the Hanjin Rome, was seized in Singapore late on Monday by a creditor, according to court information. “Now Hanjin must do everything it can to protect its clients’ cargoes and make sure they are not delayed to their destination, by filing injunctions to block seizures in all the countries where its ships are located,” said Bongiee Joh, managing director of the Korea Shipowners’ Association.

Finally, while jarring Hanjin’s bankrtupcy was inevitable: shipping industry economics have deteriorated. Charter rates for medium-sized container ships have dropped from around $26,000 a day in 2010 to $13,000 per day now.  Container rates from Shanghai to the U.S west coast have more than halved since then, from around $2,000 per 40-foot container in January 2010 to $596 per 40-foot box last week, data from the Shanghai Shipping Exchange shows.

Shares in Hanjin Shipping have been suspended after plunging 24% on Tuesday.

The global implications from the bankruptcy are unknown: if, as expected, the company’s ships remain “frozen” and inaccessible for weeks if not months, the impact on global supply chains will be devastating, potentially resulting in a cascading waterfall effect, whose impact on global economies could be severe as a result of the worldwide logistics chaos. The good news is that both economists and corporations around the globe, both those impacted and others, will now have yet another excuse on which to blame the “unexpected” slowdown in both profits and economic growth in the third quarter.

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Climate Change Court Drama: What Does New York’s Attorney-General Have to Hide?

GaggedFolksMonkeyBusinessImagesDreamstimeNew York Attorney-General Eric Schneiderman, as I reported earlier, issued subpoenas to oil giant ExxonMobil last fall demanding that it turn over internal communications regarding what the company knew about the risks of climate change. Schneiderman says that he wants to find out if the oil company fraudulently misled its investors with regard to how man-made climate change would affect its financial prospects.

This effort at legal intimidation then morphed into a group effort with more than a dozen Democratic state attorneys-general who anointed themselves AGs United for Clean Power. The group planned a legal attack not just on ExxonMobil, but also one aimed at many groups or individuals to which the company might donated over the past several decades. The AG from the U.S. Virgin Islands issued a particularly broad and intrusive subpeona to the free market think tank, the Competitive Enterprise Institute, demanding that it turn over “a decade’s worth of communications, emails, statements, drafts, and other documents regarding CEI’s work on climate change and energy policy, including private donor information. It demands that CEI produce these materials from 20 years ago, from 1997-2007, by April 30, 2016.” This attack was clearly meant to intimidate and silence policy players who disagree with the climate consensus. CEI fought back, and the USVI AG backed down.

CEI suspects that the AGs United for Clean Power had worked/colluded with activist groups to devise their attack. So this past spring the think tank filed a Freedom of Information Law (FOIL) petition with Schneiderman’s office asking to see what are called Common Interest Agreements, that is, agreements to share information and other activities with the environmental groups and other AGs. Specifically CEI asked to see “copies of any Common Interest Agreement(s) entered into by the Office of Attorney General and which are signed by, mention or otherwise include any of the following: John Passacantando, Kert Davies, the Eco-Accountability Project, Matt Pawa, the Pawa Law Group, the Center for International Environmental Law, the Climate Accountability Institute, or theattorney general for any other U.S. state or territory, from the period of January 1, 2016 through the date this request was processed.”

Schneiderman’s office said no and so did a records appeal officer. CEI’s request was rejected on several grounds including that such agreements are privileged as attorney work product, confidential communications made between attorney and client, and the disclosure of which would interfere with law enforcement investigations or judicial proceedings. It is notable that a footnote in the administrative FOIL rejection states, “There are no agreements signed by the other entities and individuals listed in your request—i.e., John Passacantando, Kert Davies, the Eco-Accountability Project, Matt Pawa, the Pawa Law Group, the Center for International Environmental Law, orthe Climate Accountability Institute.”

CEI has now appealed to the Supreme Court of New York asserting that the none of grounds for rejecting the FOIL request are legitimate under New York law. We shall see.

CEI General Counsel Sam Kazman, in press release today, asks, “”What is AG Schneiderman’s office trying to hide?” He adds, “The public deserves to know what this AG, and the other AGs cooperating with him, agreed to when it came to targeting their political opponents, and that’s why we sought the Common Interest Agreement in the first place.”

In his article, “The Transparency Bullies,” my colleague Matt Welch cogently argued:

It is apparently necessary in 2016 to state what should be constitutionally and morally obvious: Criminalizing unpopular opinions in the name of progress is the work of dictators, not scientists. Giving politicians access to the inner workings of private groups engaged in policy analysis and advocacy will produce selective and nakedly political legal harassment. Today’s new powers exercised by Attorney General Harris will be tomorrow’s new enforcement tool exploited by President Donald Trump.

The United States—for the moment, anyway—enjoys a First Amendment bulwark against the illiberal fantasies of frustrated activists. Keeping the one-way transparency advocates at bay will be an important bellwether for the future of American freedom.

Disclosure: Over the years I have worked with several groups listed in the USVI subpoena, including CEI, on a wide variety of public policy issues relevant to resisting government encroachments into free markets, mostly not having anything to do with climate change. And I still own 50 shares of ExxonMobil stock that I bought with my own money.

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How Libertarian Activists Helped Impeach Brazilian President Dilma Rousseff

The Free Brazil Movement marched 750 miles to Brasilia to deliver an impeachment bill to congress ||| Alexandre SantosBrazilian President Dilma Rousseff was impeached today, as the senate voted 61 to 20 in favor of ending her term two and a half years early. Rousseff was removed from office for secretly borrowing money from state owned banks to paper over the federal government’s fiscal problems. Her actions were in violation of a 16-year-old-law that puts stringent controls on government spending. A left-wing populist and member of the Workers Party, Rousseff has champioened policies that have contributed to one of the worst economic crises in Brazilian history. The country’s unemployment rate is above 11 percent, and its economy has been contracting over the last couple years. In the 2016 Index of Economic Freedom, which categorizes countries based on the level of government interference in the private economy, Brazil ranked 122 out of 178.

“With the impeachment of Dilma Rousseff, Brazil’s democracy has never been stronger,” says Sérgio Praça, a political scientist at the Getulio Vargas Foundation in Rio de Janeiro. Rousseff’s defenders say her misdeeds weren’t significant enough to warrant impeachment, but Praça disagrees. “Congress should be the judge of that,” he says, and “it’s her fiscal crimes that helped throw Brazil into our biggest recession in history.”

The backstory is of particular interest to libertarians. Today’s impeachment probably wouldn’t have happened if it weren’t for the Free Brazil Movement, a libertarian activist group that was determined to bring Rousseff down. The group helped organize a succession of demonstrations over the past year and a half that involved millions of anti-Rousseff protesters. In May of 2015, the Free Brazil Movement led a 33-day, 750-mile march from São Paulo to the federal capital of Brasilia while carrying an impeachment bill to deliver to Congress. After arriving in Brasilia, members of the group sat down with congressional leaders to make their case. Throughout the process, the group continued to meet with members of congress, promising to mobilize their constituents against them if they didn’t come out in favor of impeachment.

For more on how the Free Brazil Movement helped bring down a president—and the surging libertarian movement in Brazil that helped make it all possible—watch below:

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Larry the Cable Guy: “I’m a Trump man and when I say ‘Trump Man,’ I mean Gary Johnson”

Via the Libertarian Republic comes footage of “Blue Collar Comedy” star and Prilosec pitchman Larry the Cable Guy dissing both Hillary Clinton and Donald Trump. Not that anyone could blame him, but Larry goes deeply scatological while also making the case for personal autonomy.

On Fox & Friends a couple of days ago, he said, “I’m a Trump man and when I say Trump Man, I mean Gary Johnson.” He clarified, “The choice is, let’s see, Do I want to poop my pants or do I want somebody else to poop my pants….I think I’ll go with pooping my own pants. That ought to give you an answer right there.”

Larry the Cable Guy (real name: Daniel Lawrence Whitney) indicated there was no way he’d vote for Hillary Clinton and that while he agrees with some of what Trump says, he’s put off by “some of the things he says.” In a wide-ranging conversation, Larry also weighs in on the controversy surrounding the refusal of San Francisco 49ers quarterback Colin Kaepernick to stand during pre-game performances of the national anthem (“that’s the great thing about America—you have the right to do something like that—that’s one of the greatest things about America; that and the cheese bread at Red Lobster”), what he considers unprecedented levels of political divisiveness, Obamacare (“I’m pretty sure it’s not doing well”), and his new special, which is already streaming on Netflix.

Watch below.

The Johnson campaign responded with this tweet:

While celebrity endorsements really mean very little in the grand scheme of things, this one is intriguing given Larry’s working-class, common-man shtick. His routines are often taken simply to be racist, sexist, anti-intellectual gags designed to comfort rednecks and hillbillies (comedian David Cross made precisely this case years ago), but that’s wrong, in my opinion. As often as not, his jokes satirize all elements of America, including the preferences and customs of his own apparent audience of “blue-collar” whites (he used to do a bit where he noted that illegal immigrants “don’t speak no good English” in a way that undercut criticism of English as a second language) and he’s a pretty sharp person (read this interview with The Onion’s AV Club). To the extent that he “represents” the constituency that supposedly forms Donald Trump’s core base, it’s certainly interesting that he is openly (and in character) talking up Gary Johnson rather than the Republican nominee.

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