Month: September 2022

Authored by Dave DeCamp via AntiWar.com,

The head of Germany’s armed forces told Reuters on Wednesday that Berlin plans to expand its military presence in the Asia Pacific as it has its eye on Chinese forces in the region.

Gen. Eberhard Zorn said that Germany’s military, known as the Bundeswehr, plans to expand its presence in the region by sending more warships and participating in more military exercises. “This is how we want to consolidate our presence in the region,” he said.

Specifically, Zorn said that Germany will send troops to participate in drills in Australia next year and plans to send a fleet of ships to the region in 2024. Last year, Germany sailed a warship through the South China Sea, marking the first time Berlin has done so in almost 20 years.

Germany’s plans are the latest example of the US’s European allies joining in on provocations against China in the Asia Pacific. France and the UK have also deployed warships to the region in recent years, and NATO has its eye on expanding in the area.

When asked if Germany planned to send a warship through the Taiwan Strait, Zorn said:

“We do not want to provoke anyone with our presence but rather send a strong sign of solidarity with our allies.” He said that Germany is observing an “enormous buildup” of Chinese forces in the region.

China recently launched its largest-ever military exercises around Taiwan, which were a response to House Speaker Nancy Pelosi visiting the island.

On Thursday, Beijing responded to Berlin’s latest announcement as follows:

“This will probably lead to some bad memories and associations in many countries in the world,” said Chinese foreign ministry spokesman Wang Wenbin on Thursday.

‘Bad memories’: China mocks Germany’s plans to expand military presence in Asia https://t.co/xZ001AstXc

— South China Morning Post (@SCMPNews) September 1, 2022

The Chinese military pressure continues as the US shows no sign of backing down on its policy of increasing ties with Taipei, which Beijing views as Washington moving away from the one-China policy.

China hit an ominous milestone this week as one of the largest property developers reported a 96% profit drop, blaming a “severe depression” in the real estate market where “only the fittest can survive,” reported WSJ. 

Garden Holdings Co.’s first-half earnings crashed the most since its 2007 listing in Hong Kong as the housing market crisis worsened. It said preliminary net profit collapsed from $2 billion to just $88 million in the first six months. 

Alarm is spreading in China as the once robust property market is at risk of collapse. The Guangdong-based company warned demand is slipping and property values are sliding: 

“All these exert mounting pressure on all participants in the property market, which has slid rapidly into severe depression. The harsh business environment in which only the fittest can survive means even higher requirements for businesses’ competitive strength.”

On Aug. 15, Fitch Ratings and Moody’s Investors Service slashed Country Garden’s outstanding debt rating from investment grade to junk. What’s different about this developer is that it focuses on low-income housing, where buyers have been more susceptible to financial troubles amid the economic slowdown. 

Shares of Country Garden are down more than 66% this year, while most of its offshore bonds are trading south of 50 cents on the dollar. 

China’s housing market has been a major driver of growth over the last quarter century and is one of the biggest asset classes in the world, with a notional value of between $55 trillion and $60 trillion. Its size outpaces the capitalization of the US stock market. 

Warning signs emerged last year when the second biggest developer, Evergrande, couldn’t repay its offshore, dollar-denominated debt. It appears debt contagion has spread from Evergrande to not just Country Garden but dozens of other developers: 

“More than 30 Chinese real-estate companies, including China Evergrande Group and Sunac China Holdings Ltd., have already defaulted on their international debt,” WSJ said. 

The bleak outlook for property markets came as zero-Covid lockdowns and snarled supply chains had strangled economic activity across the world’s second-largest economy. 

 “The real estate market is undergoing a cruel and drastic reshuffling process,” Midea Real Estate Holding Ltd., another Chinese developer, said, adding it would “forge ahead in a tough way.” 

China’s deflating property bubble has also sparked discontent among households. There have been reports this summer that some homeowners have stopped paying mortgage payments on at least 100 projects in more than 50 cities because many who bought new construction units at the highs have seen values plunge, setting up for what appears to be a debt jubilee as non-payment could spread to the broader financial system as countless mortgages default. 

There’s reason to believe China’s real estate crisis is far from over, as noted by Country Garden Chief Financial Officer Wu Bijun:

“The home market hasn’t entirely bottomed out, and the sector’s consolidation isn’t over. Property sales nationwide still haven’t stabilized.”

A weakening economy could exacerbate things for property developers, and perhaps the reports of a national bailout fund to finance stalled real-estate projects is Beijing’s attempt to keep the music going. 

So what happens if China can’t stop the economic hemorrhaging? 

Taiwan’s Foreign Minister Joseph Wu warned back in 2019 that if a slowdown in China gets too “serious,” then “We need to prepare ourselves for the worst situation to come … military conflict.”

Authored by John R. Lott Jr. via RealClear Politics,

A lot of people are moving out of California. Over the last two years, California has lost about 300,000 people. Major companies, including Telsa, Oracle Corp, and HP have abandoned California for Texas. With high taxes, lots of regulations, high crime, poor schools, mishandling of the pandemic, and “woke” policies, it isn’t surprising that many people have been willing to give up the beautiful state and fantastic weather.

Understandably, some are upset with that turn of events, but the billboards put up in Los Angeles and San Francisco are a cheap shot. They warn Californians about mass public shootings in Texas, specifically pointing to the recent Uvalde school shooting. The billboards warn, “The Texas Miracle died in Uvalde.” They replace Texas’ slogan, “Don’t Mess With Texas,” with “Don’t Move to Texas.” 

The billboards have received extensive national and international news coverage. But California, despite all its gun control laws, has more mass public shootings than Texas.

A mass public shooting is an attack where four or more people are murdered. It must occur in a public place and cannot involve some other crime such as a robbery or a gang fight over drug turf. Since 2000, when California enacted its major assault weapons ban, the state has experienced 10 such attacks. In Texas, over that time, there were six.  Since 2010, California has had eight attacks and Texas, five.

Even when you adjust for California’s larger population, California has more mass public shootings per capita than Texas does. On a per capita basis, California has had 18% more since 2010.

By the way, Texas’ violent crime rate has also been lower than California’s in five of the last six years. The Houston Chronicle speculates that the billboards may be paid for by “right-leaning Texans eager to keep liberal Californians away from their voting booths.”

That’s ridiculous. More likely, liberal Californians are trying to stem the flow of California ex-pats, or are simply playing partisan politics. This summer, Gov. Gavin Newsom has already launched attacks on Texas gun control laws. On July 22, 2022, Newsom took out full-page ads in three Texas newspapers, attacking Texas Gov. Greg Abbott on guns and abortion. Newsom claimed that, unlike Texas, “California can ban deadly weapons for war and save lives.”

Just nine days before Newsom’s ads, the Associated Press’ highly influential Stylebook opposed the use of the term “assault weapon.” It acknowledges that semi-automatic guns aren’t actually weapons of war.

“The preferred term for a rifle that fires one bullet each time the trigger is pulled, and automatically reloads for a subsequent shot, is a semi-automatic rifle,” the AP accurately summarizes. “An automatic rifle continuously fires rounds if the trigger is depressed and until its ammunition is exhausted. Avoid assault rifle and assault weapon, which are highly politicized terms that generally refer to AR- or AK-style rifles designed for the civilian market, but convey little meaning about the actual functions of the weapon.”

Eighty-four handguns and a similar number of rifles are semi-automatics for a reason. Semi-automatic weapons are needed to protect people and save lives. Single-shot rifles that require manual reloading after every round may not do people a lot of good. The first shot may miss, or there may be multiple attackers.

At a May press conference addressing the Uvalde murders, Gov. Abbott said that stricter gun control laws, such as those in California, are “not a real solution” to ending mass shootings. Assault weapons bans do nothing to prohibit the vast majority of semi-automatic guns, so it is little wonder that banning “assault” rifles does nothing to stop crime.

Under the 1994-2004 federal assault weapons ban, there was no drop in the number of attacks with “assault weapons,” and virtually no change in total mass shootings. The misinformation persists. First lady Jill Biden still called AR-15s “machine guns” at a Democratic National Committee fundraiser in Massachusetts after the AP’s statement.

Texans aren’t running around with machine guns. Many Californians who want safety would be well advised to leave their state.

While there is a wide range of forecasts for tomorrow’s payrolls print (see below), the median Street consensus expects the rate of payrolls growth to resume cooling in August, following a blowout month in July. The jobless rate is expected to hold steady, and there will be focus on the rate of participation after a decline last month. Average hourly earnings metrics will be a key focus to help gauge how surging consumer prices are translating into second-round effects and the wage-price spiral; some gauges suggest that the rate of pay rises is now exceeding the Fed’s preferred measures or inflation.

As Newsquawk notes, the Fed is yet to show signs that it is relenting in its fight against inflation, and is expected to keep tightening policy to put a lid on prices, even if that means stunting economic growth, although a big jobs drop will promptly force Powell to reverse once the Karen Liz Warrens of Congress start calling him every 5 minutes. Markets currently expect a 75bps rate hike at the September 21st FOMC, but officials have been suggesting that the CPI data due on September 13th could provide a more influential steer.

Here are the key median forecasts summarized:

• +298K headline print (Goldman at +350k) vs +528k prior, even though the Household Survey has shown far weaker numbers and there is a non trivial chance we may get a 100k or lower print if the Establishment Survey catches down (as we explained here)
• Unemployment rate of 3.5% (GIR 3.4%, prior 3.5%),
• Average Hourly Earnings 0.4% vs 0.5% prior and 5.3% Y/Y.
• Goldman writes, that August seasonal factors have evolved favorably in recent years, and the bank’s forecast assumes positive residual seasonality worth roughly +150k (mom sa).

In terms of market reaction, as Goldman trader John Flood writes, “we are still in a bad is good and vice versa set up for US stocks as Fed has made it clear that they want to see some froth exit the labor market in tandem with cooling inflation: i) Strong print here will clearly make 75bps much more likely on 9/21; ii) Inline print of 300k(ish) will keep pressure on this tape…anything close to last month’s shocking print of 528k would lead to real risk unwind into the wknd (I think at least a 200bp sell off). iii) Sweet spot for stocks tomorrow is a 0 – 100k headline reading…should get a 100+bp rally for S&P in this scenario after this recent drawdown. If we happen to get a negative number an even sharper rally”, and the pivot will be right back on the Q1 calendar.

What do others think? Here is a snapshot of tomorrow’s payrolls forecast by bank (higher to lower):

• Pantheon 400k
• BNPP 375k
• Wells 375k
• TD 370k
• GS 350k
• MS 350k
• BofA 325k
• Citi 305k
• Credit Suisse 300k
• DB 300k
• HSBC 300k
• JPM 300k
• SocGen 300k
• UBS 300k
• Nomura 290k
• StanChart 275k
• Jefferies 270k
• Evercore 250k
• ING 250k
• Mizuho 250k
• Natwest 200k
• Pictet 160k

Some more observations on what to expect tomorrow, courtesy of Newsquawk:

Headline to resume cooling: After a blowout jobs report in July, where almost all measures surprised to the upside, analysts are expecting the cooling in payroll growth to resume in August, with the consensus view looking for 300k nonfarm payrolls to be added; this would be lower than the prior 528k, the 3-month average of 437k, the 6-month average of 465k, and the 12-month average of 512k. This week, the White House said it was expecting the rate of payroll additions to “cool off a bit” into a “more stable and steady” growth rate as the economy “transitions”. Fed officials have also been talking about how some cooling of the labor market would be welcomed, as alluded to in its recent meeting minutes. The ADP’s new gauge of its National Employment also alludes to this theme, and reported that 132k private payrolls were added to the economy in August, against expectations for 288k (July’s reading was stated as 270k), although analysts have still expressed some scepticism around the data series.

Unemployment Rate Seen Steady: The jobless rate is expected to remain at the post-pandemic low of 3.5% (which was also the level of unemployment seen in February 2020, before the impact of the pandemic began hitting the labour market). The decline in the participation rate in July may have contributed to the fall in unemployment (this was perhaps the only ‘blip’ in last months’ data), but other gauges of the labour market (the July JOLTs figures, for instance) continue to allude to extremely tight conditions. NOTE: the Fed’s June forecasts (which will be updated at the September 21st FOMC) projected that the jobless rate will tick up to 3.7% by the end of this year, rising to 3.9% in 2023, before again rising to 4.1% in 2024, above the Fed’s longer-run estimate of 4.0%.

Policy Implications: Money markets are currently suggesting that there is a greater chance that the FOMC will raise interest rates by 75bps at the September 21st meeting rather than a smaller 50bps increment. The Fed has said that its policy on rate changes is data-dependent. This will be the final jobs report before the September confab, but there is still the US CPI report, due September 13th, that could influence officials’ view; indeed, Fed’s Mester, who votes on policy this year, said she’d be basing her decision on the inflation data, not the jobs report. That could mean that any market reaction to the data would be subject to revision based on the incoming CPI metrics. That said, the average hourly earnings measures will still provide some insight on how inflation dynamics are feeding through into second-round effects.

Wage Inflation: The wages metrics will be looked at by traders to gauge how surging (and broadening) consumer prices are translating into second-round effects; the consensus looks for average hourly earnings of +0.4% M/M in August, easing from the +0.5% pace in July, but the annual rate is still expected to climb by one-tenth of a percentage point to 5.3% Y/Y, while average workweek hours are seen unchanged at 34.6hrs. The ADP’s revamped National Employment Report said that the median change in annual pay was running at a rate of +7.6% Y/Y for job-stayers, and +16.1% Y/Y for those who had switched jobs – those rates are higher than the current level of average hourly earnings in July, as well as both the rate of headline and core PCE prices, the Fed’s preferred gauges of inflation (which were respectively 6.3% Y/Y and 4.6% Y/Y in the latest data for July). Fed officials have been emphasizing that the fight against inflation is not complete, refusing to overread into some nascent signs that the surge in consumer prices is peaking; many believe that the central bank will be comfortable in firing another large rate rise, particularly if other growth dynamics continue to hold up in Q3.

Arguing for a better-than-expected report (from Goldman):

• Seasonal Factors: According to Goldman, the August seasonal factors have evolved favorably in recent years, with an August month-over-month hurdle for private payrolls of -315k in 2021 and -326k in 2020 compared to -54k in 2019 and -126k in 2017 (which unlike 2019 was also a 4-week August payroll). The BLS seasonal factors appear to be overfitting to the reopening-related job surges in June and July of both 2020 and 2021. Goldman’s forecast assumes positive residual seasonality worth roughly +150k (mom sa). This compares to a seasonality headwind of around 100k in the previous report.

• Big Data. High-frequency data on the labor market were generally strong in August, with increases across all four measures  tracked.

• Job availability. The Conference Board labor differential—the difference between the percent of respondents saying jobs are plentiful and those saying jobs are hard to get—remained elevated, edging down by 0.2pt to +36.6. JOLTS job openings surprised to the upside, increasing by 199k in July to 11.2mn to a very elevated level.

Arguing for a worse-than-expected report:

• August slowdown effect. Payrolls have exhibited a tendency toward weak August first prints, which may reflect a recurring seasonal bias in the first vintages of the data. August job growth has decelerated in 8 of the last 10 years relative to the first-print July reading, with an average slowdown of 167k (and by 40k during the pre-pandemic decade, 2010-2019). Softness in the first vintage also tends to manifest in many of the same industries—including manufacturing, professional services, retail, and information. However, consensus may already reflect this tendency with its 230k forecasted deceleration.
• ADP. Private sector employment in the ADP report increased by 132k in August, below expectations for 325k. The ADP data adopted a new methodology in August, and while the updated series shows a strong correlation with BLS private payrolls over the full sample (+0.90 since 2010, mom sa), the relationship has broken down over the last year (correlation = -0.04), as shown in Exhibit 3. The ADP measure has also understated private payroll growth by 97k on average over the last year, including by 203k in July (+268k vs. +471k in the official measure).
• Employer surveys. The employment components of business surveys generally decreased in August. Our services survey employment tracker decreased by 0.3pt to 53.2 and our manufacturing survey employment tracker decreased by 0.6pt to 54.6.
• Job cuts. Announced layoffs reported by Challenger, Gray & Christmas rebounded 8.1% month-over-month in August, after decreasing 15.1% in July (SA by GS).

Last but certainly not least, after touting for months the strong employment numbers as a way to deflect criticism of soaring inflation, the White House on Tuesday warned that the numbers released later this week by the Labor Department will likely show a job markets that is “cooling off.” White House press secretary Karine Jean-Pierre said the slower hiring pace is a sign that the economy is “in transition.”

“It is going through a transition from the historic economic growth that we saw last year to a more stable and steady growth and that is kind of important to note,” she told reporters aboard Air Force One.

“We are expecting job numbers to cool off a bit as we are going into transition. We are expecting job numbers to not be at the high growth rate,” she Pierre continued. But will they be low enough to turn negative and send futures limit up…

Via The Mises Institute,

[Dr. Gilbert Berdine of the Texas Tech University Health Sciences Center and Ryan McMaken discuss the policy makers’ justifications for vaccine mandates over the past two years. Will any of these policy makers admit to any mistakes?]

Ryan McMaken: The Centers for Disease Control and Prevention (CDC) earlier this month greatly scaled back its recommendations for quarantine and social distancing. It also now makes the same recommendations “regardless of vaccination status.” In other words, the CDC now apparently does not regard vaccinated people as any less a public health risk than the unvaccinated. What does this tell us about where we are right now with the value of vaccination mandates as public policy at this point?

Dr. Gilbert Berdine: The vaccine mandates were based on assumptions. It was assumed that the vaccine prevented infection and transmission of virus. The mandates were justified as protection of vaccinated people from the unvaccinated. The new CDC policy recognizes that this assumption was incorrect. The CDC concedes that natural immunity from prior exposure to the virus is at least as effective as vaccination in preventing subsequent infection. The CDC concedes that vaccinated people are at least as likely to spread disease as unvaccinated people. The new policy also recognizes that at this point in time the vast majority of people have been exposed to viral antigen either by natural exposure or vaccination. Given our current knowledge about covid-19, the CDC can no longer justify a vaccine mandate at present based on protecting the public from unvaccinated people.

RM: Yet, the US government is still imposing vaccine mandates. The US military bureaucracy is still threatening to force out service members who refuse vaccination, and tennis player Novak Djokovik apparently can’t enter the country without proof of vaccination. What is the scientific basis for this?

GB: There is no scientific basis for a vaccine mandate. Unvaccinated people pose no risk to vaccinated people. The CDC admits this to be the case. The only possible justification for a vaccine mandate is a paternalistic argument that people need to be protected from their own decisions. Free people should not be treated as pets. This leads into the next question as to whether there is scientific evidence that the vaccine saves lives.

RM: In the past, you have noted that the public health benefit of the mandates has always been very limited, and an enormous number of vaccine doses has been necessary to prevent a small number of deaths. Is this still the case?

GB: I have previously noted that a very high number of vaccinations were required to prevent a single death when the vaccines were first made available based on the original Pfizer trials. The efficacy of the vaccine in preventing hospitalization from covid, ICU care for covid, and deaths attributed to covid has declined over time, so the number to vaccinate to prevent a death are higher than when I reported on this issue. At the time the vaccines were introduced, the risks were unknown given the small number of people in the trials. We now have data on adverse events from the vaccine. The VAERS database was created to detect adverse events from new vaccines that were missed during initial trials. Yet, the overwhelming signal coming from the VAERS database has been ignored. The life insurance industry has made public that deaths in 2021 were far above expectations from actuarial data. The CDC reports large numbers of excess deaths in 2021 that have persisted during 2022. These excess deaths cannot be explained by covid infection. Respiratory deaths have been average ever since approximately July 2020. It is cardiovascular deaths that are unexpectedly and unexplainably high. These cardiovascular deaths include strokes, heart attacks, sudden deaths attributed to arrhythmias, and congestive heart failure including unexpected cases of myocarditis. There have been numerous claims that the vaccines are responsible based on regression of mortality rates vs. vaccination rates. The CDC has the data to either confirm or reject the vaccine as a cause of the excess deaths, but the CDC refuses to release the data to the public.

RM: Now that the Pfizer and Moderna vaccines have been around for nearly two years, has the federal government shown any interest in evaluating the efficacy of these vaccines or the problem of side effects? Surely, we know much more now, but do you think the federal government give a fair hearing to negative information about the effects of the mandates?

GB: The control group in the original vaccine trials were eliminated after 90 days. Everyone in the trial received the vaccine. There is no control group to monitor for long term adverse events. The excess deaths in 2021 that have persisted into 2022 are probably the biggest medical story at the current time, yet the CDC seems uninterested in finding an explanation. The CDC has the data that would either confirm or exclude the vaccine as the cause of these excess deaths, yet the CDC refuses to release this data. In my opinion, both the CDC and the Food and Drug Administration have failed to be scientific organizations that protect the public from medical harm. Both organizations have become political in nature. This was a criticism of public funding of scientific research made by John Galt in the novel, Atlas Shrugged, and the prediction has become reality.

RM: Within the medical community, is it possible to criticize the mandates? One heard very little dissent on this in 2020. Is it possible to dissent more now?

GB: It is very risky for anyone in the medical community to criticize any aspect of covid policy. This includes mask policy, alternative therapies, vaccine mandates, or quarantines. Licensing boards, including the American Board of Internal Medicine, have threatened physicians with the loss of licensure for spreading “disinformation” about covid-19. Of course, disinformation has nothing to do with correct or incorrect information, but rather means anything that contradicts a political narrative. The practice of medicine is gradually being transformed from a scientific inquiry seeking fact into a religious cult accepting dogma under the threat of excommunication.

Ever since March 2018, when Moscow dumped practically all of its US Treasury holdings, Russia has been at the forefront of a global process of ‘de-dollarization’. Practically speaking, reducing the nation’s dependence on the global hegemon’s control of payments and thus everything else.

The Central Bank of Russia got out of US assets (and scaled back its dollar exposure) back in 2018 … and Russia’s holdings of euros are a much higher share of global euro reserves than its dollars are of global dollar reserves.

2/n pic.twitter.com/jhG2mZi3m7

— Brad Setser (@Brad_Setser) September 1, 2022

China joined the fight more recently but has been increasing its gold reserves while reducing its US Treasury reserves quite consistently for over two years.

Of course, all of that ‘normal’ process has been thrown into chaos since Putin invaded Ukraine with sanctions, bans, and virtue-signaling by Washington curb-stomping the freedoms of many so-called ‘friendly’ nations to Russia (and some un-friendly who simply prefer to feed/heat/cool their citizenry than fall in line).

Since the invasion, the ‘Ruble is rubble’ narrative has been crushed after initial weakness in the Russian currency reversed to massive strength amid soaring energy prices (and energy-for-Rubles agreements)…

All of which brings us to a stunning new report from Bloomberg that Russia is considering a plan to buy as much as $70 billion in yuan and other “friendly” currencies this year to slow the ruble’s surge.

“In the new situation, accumulating liquid foreign exchange reserves for future crises is extremely difficult and not expedient,” a presentation on the proposal prepared for the meeting said.

For years, the Kremlin contained spending and saved hundreds of billions in dollars, euros and other foreign currencies as a cushion to insulate the economy from the ups and downs of oil prices.

“The frozen $300 billion were of no help to Russia; on the contrary, they became a vulnerability and a symbol of missed opportunities,” the presentation said, in a rare official admission of the true impact of sanctions.

Bloomberg saw a copy of the document, which isn’t public, and the people familiar with the meeting confirmed its authenticity. The government and central bank didn’t immediately respond to requests for comment on the plan.

According to people familiar with the deliberations who spoke on condition of anonymity to discuss matters that aren’t public, the plan won initial support at a special “strategic” planning meeting of top government and central bank officials including Governor Elvira Nabiullina on Aug. 30.

With earnings from exports of oil and gas flooding in and driving the current account surplus to a record this year and pushing the ruble higher, the proposal calls for spending 4.4 trillion rubles ($70 billion) to buy the currencies of “friendly” countries, mostly yuan…which it has been gathering for a couple of years…

Alexander Isakov, Bloomberg’s Russia economist noted that “the purchases will help Russia cap unprecedented real-exchange-rate strength, which is hurting exporters and the budget’s commodity revenues. For neutral countries, these purchases will bring some support for local currencies, help fix their current account issues and help fund commodity imports.”

So, as CFR senior fellow Brad Setser notes, the Russian Central Bank could become the first big central bank to hold the bulk of its reserves in emerging market currencies.

Currencies of ‘friendly’ currencies like offshore Yuan, Turkish Lira, and India’s Rupee all caught a bid on the report earlier in the day.

As Ruchir Sharma recently noted, reflecting on the false security many are getting from seeing a strong dollar, the impact of US sanctions on Russia is demonstrating how much influence the US wields over a dollar-driven world, inspiring many countries to speed up their search for options. It’s possible that the next step is not towards a single reserve currency, but to currency blocs.

Setser adds that “the real lesson of Russia isn’t about the dollar (or euro).  It is that excess reserve holdings of all G-7 currencies may not be as strategically valuable as thought.“

As Banque de France noted in a July article, recent geopolitical tensions have put the hegemonic role of the dollar, and its potential demise, back into the spotlight. Looking at a new long run measure of global currency competition over two centuries, no global currency leader has been able to sustain such a large lead over its competitors for such a prolonged period.

Remember, nothing lasts forever…

Since the 15th century, the last five global empires have issued the world’s reserve currency – the one most often used by other countries – for 94 years on average. The dollar has held reserve status for more than 100 years, so its reign is already older than most.

Authored by Andrew Thornebrooke and Tiffany Meier via The Epoch Times (emphasis ours),

Chinese tech giant Baidu is developing its own quantum computer to compete with the United States in the race toward next-generation information processing. The computer does not outperform rivals currently being developed in America but, according to one expert, signals dire competition over the future of data security.

Arthur Herman, a senior fellow at the conservative think tank Hudson Institute, said that Baidu’s recently announced quantum effort fell short of similar efforts being made by companies like Google and IBM.

“This quantum computer that they’re touting has only 10 qubits, and that’s a pretty small number,” Herman said during an Aug. 29 interview on the “China in Focus” program on NTD, a sister media outlet of The Epoch Times.

“Google’s Sycamore quantum computer has 60 Plus qubits. IBM’s is upwards of 70 qubits.”

A quantum bit, or qubit, is a basic unit of quantum information used by quantum computers. Whereas traditional processors use regular bits, which can be turned on or off to create binary code, qubits can be turned on, off, or both on and off simultaneously in a phenomenon known as superposition.

The existence of this third state will allow quantum processors, theoretically, to achieve much quicker processing speeds than their traditional counterparts.

Governments and companies alike are thus rushing to develop quantum computing in order to be the first to achieve data dominance, as such quick processing speeds could allow for the mass decryption of current security measures. However, the real-world applications of the technology are still only very limited.

Herman, who directs the Hudson Institute’s Quantum Alliance Initiative, said that that limited usefulness now belied the world-changing implications of quantum technology. Moreover, he said, the race toward revolutionary quantum capabilities could hit a breakthrough at any time.

“There’s too many indications that with one or two major breakthroughs, at the conceptual level [or] at an engineering level, that suddenly the process will take [a] much shorter time than even the experts have wanted to predict,” Herman said.

“It will be easy for such a device to decrypt all of the existing public encryption systems. In other words, such a device will be able to wipe out any kind of encryption that currently exists today in order to extract whatever kind of data, classified or otherwise, that it wants to get its access to.”

That possible capability is what makes the technology so prized among the nations of the world, and why the United States and China are competing to deploy it before the other.

“Right now, it’s nothing that we really have to worry about,” Herman said. “It’s an indication that the United States … [is] still very much ahead in the race towards developing a large-scale quantum computer.”

“The fact that we have a lead doesn’t necessarily mean we’re going to win,” Herman added. “It’s like the hare and the tortoise. We’re like the hare, we’ve sprinted ahead … but the Chinese are moving ahead toward us, slowly but surely.”

‘As Important as the Manhattan Project’

While Baidu’s recently announced quantum computer is only 10 qubits, the company claims to have also developed a 36 qubit chip. IBM, meanwhile, has said that it hopes to develop a 4,000-cubit quantum computer by 2025.

For his part, Herman said that the 10,000 or more qubits needed for codebreaking efforts to really begin would likely not happen until sometime in the 2030s.

“People are beginning to realize that what seemed to be a threat far off [on] the horizon is actually a lot closer than we had thought,” Herman said.

“What you’re talking about is the ultimate weapon in cyber warfare that could come as a result of the race that we’re engaged in with China towards a quantum computer.”

Herman said that the unstable timeline to develop next-generation quantum technologies was one problem. Another, he said, was developing adequate security protocols for when that technology arrives. Predicting what quantum cyberwarfare will look like is difficult, he said.

Read more here…

The already increasingly woke US military is going even woker, moving closer to adopting “preferred pronouns” – a trend which has become dogma a fixture of progressive university campuses, according to an internal memo from US Pacific Air Forces (PACAF).

The Washington Free Beacon this week published a screenshot of a PACAF memo circulated among commanders which advises a shift to more neutral language, especially when writing reports, directives, and in daily on-the-job speech. While this order applies to a specific Air Force major command, the instance strongly suggests this is the path all armed forces branches could soon take in the coming months or years.

The partial copy of the internal memo, which was circulated in the form of an email this past May, says: “In accordance with the Diverse PACAF priority, ‘We must embrace, promote and unleash the potential of diversity and inclusion.’“

The Beacon writes that it was sent senior leaders and commanders at the Andersen Air Force Base in Guam under the Pacific Air Forces, which it must be noted is among branches tasked with confronting China.

Absurdly, the more ‘pronoun sensitive’ environment on the remote island base will help enhance the American fighting force’s “lethality” – the memo explains.

Across the waters, in Beijing, Chinese officers must be laughing… The email further lays out the following: 

Leaders at the base are instructed, “Do not use pronouns, age, race, etc.” when writing performance reviews or other materials, such as recommendations for awards. “Competition against near-peer adversaries requires a united focus from the command, the joint team, and our international partners. Welcoming and employing varied perspectives from a foundation of mutual respect will improve our interoperability, efficiency, creativity, and lethality.”

Below – screenshot of the directive revealed by The Washington Free Beacon:

The Department of Defense has already for years mandated that classes be given to all enlisted and officer personnel regarding LGBTQ++ sensitivity training – and more recently there’s been a move to provide greater accessibility to “gender-transition surgery” – all at the US taxpayer’s expense of course.

Just how the gender neutral language directive pushed by US Pacific Air Forces leadership could possibly improve “lethality” is unclear and left unexplained in the content published by the Beacon.

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Real military recruitment ads: China vs. Russia vs. USA

Authored by Katie Hutton via TheMindUnleashed.com,

The new spending plan for the United States’ intelligence agencies includes a directive to the Pentagon to concentrate its examination of unidentified flying objects (UFOs) on the types of objects that the military is unable to classify.

After years of discoveries of weird lights in the sky, first-hand testimonies from Navy pilots regarding UFOs, and investigations by the government, Congress seems to have conceded something unexpected in print: it does not think that all UFOs are “man-made.”

Two shocking assertions were just made by Congress, but they were buried deep inside a report that was an addition to the Intelligence Authorization Act for Fiscal Year 2023. This act is the budget that oversees the United States’ clandestine operations.

Number one is that:

“cross-domain transmedium threats to the United States national security are expanding exponentially.” 

The second reason is that it wishes to differentiate between extraterrestrial craft that originated from humans and those that did not: 

“Temporary nonattributed objects, or those that are positively identified as man-made after analysis, will be passed to appropriate offices and should not be considered under the definition as unidentified aerospace-undersea phenomena,” the document reads.

According to VICE, the admission is particularly shocking for a number of reasons, the most important of which is that, as more details concerning the investigation of UFOs by the United States government have been made available to the public, a number of politicians have avoided claiming that the unidentified objects originated from another planet or another dimension.

The acceptable speech surrounding UFO’s up until now is that sophisticated, man-made vehicles are the most plausible explanation for the existence of unidentified flying objects (UFOs). Politicians most times refuse to publicly entertain the idea.

As VICE points out, when pressed explicitly about the possibility of aliens on The Late Show with James Corden, for example, Obama declined to affirm the existence of extraterrestrial life but did add that people had seen a lot of unusual things in the sky recently. On the other hand, it seems that the Congress wants to now make a clear distinction between things that are “man-made” and those that are.. you know.. not so “man made”.

According to the description provided by the Pentagon, a “cross-domain transmedium” danger is one that may migrate from water to air to space in ways that we are unable to predict or control. In July, the Pentagon made the announcement that it was going to examine these dangers by establishing the All-domain Anomaly Resolution Office, or AARO.

This may have something to do with a topic we covered last year titled “US Navy Detects Crafts That Travel ‘Hundreds Of MPH’ Underwater Ahead of Pentagon UFO Report,” which you can read at that link.

Unidentified Aerial Phenomena, which is the term used by the government to refer to UFOs, would be renamed Unidentified Aerospace-Undersea Phenomena under this bill, and the office inside the Pentagon would also be renamed to reflect the new title.

A video that had been leaked and then authenticated by the Pentagon seemed to show an unidentified flying object (UFO) gliding over and below the water without making a sound last year.

Senator Marco Rubio, who serves as the vice head of the Senate Select Committee that oversees intelligence and was responsible for releasing the report, has said publicly that he hopes the UFOs are extraterrestrial beings rather than hostile military craft.

Why Congress would seem to be acknowledging this in public at this late date is, of course, a significant question. After all, legislators have access to confidential information that the broader public does not.

An opinion piece in The Hill on the budget that was written by Marik von Rennenkampff, who served as a Department of Defense official under the Obama administration, include a quote saying: 

“It strains credulity to believe that lawmakers would include such extraordinary language in public legislation without compelling evidence.”

According to the opinion piece, UFO researcher Douglas Johnson was the one who reportedly became aware of the remarks initially.

“This implies that members of the Senate Intelligence Committee believe (on a unanimous, bipartisan basis) that some UFOs have non-human origins,” Mark von Rennenkampff continued. “After all, why would Congress establish and task a powerful new office with investigating non-‘man-made’ UFOs if such objects did not exist?”

“Make no mistake: One branch of the American government implying that UFOs have non-human origins is an explosive development.”

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