Recently, the European Institute for Climate and Energy held its annual conference in Germany, with more than 200 attendees. This year, however, the organization met in hiding from the Open Anti-Capitalist Climate Protest, affiliated with the communist domestic terror group Antifa.
The protestors’ goal has been to shut down climate debate through harassment, intimidation, disruption, and violence. Americans are familiar with the violent tendencies of Antifa, but its German counterpart is even more radical and echoes the brownshirt terror of the 1920s-30s. This year, therefore, the climate scientists had to hold their conference at a secret location.
EcoFascism
What were the offending words the ecofascists wanted to prevent the audience from hearing? Speeches with titles like “The Real Condition of the Great Barrier Reef,” “The Influence of Greenhouse Gases on Climate Research,” and “What Role Did the Sun Play in Climate Change” presented by top scientists from all over the world.
The activists, however, were recruited with the narrative that the conference attendants were “near-AfD.” Alternative for Germany (AfD) is a nationalist-populist party that has risen immensely in popularity in recent years due to the influx of Third World migrants. Because supporters of AfD want to limit immigration, Antifa views them as neo-Nazis. Portraying climate scientists and conference attendees as “near-AfD” painted a virtual target on their foreheads.
This confluence of socialism and environmentalism is not new. The National Socialists in Germany were pioneers in vegetarianism, ecological food, renewable energy, and animal welfare. On Aug. 28, 1933, Hermann Göring announced in a radio speech that:
“An absolute and permanent ban on vivisection is not only a necessary law to protect animals and to show sympathy with their pain, but it is also a law for humanity itself … I have therefore announced the immediate prohibition of vivisection and have made the practice a punishable offense in Prussia. Until such time as punishment is pronounced, the culprit shall be lodged in a concentration camp.”
The profound commitment by the Third Reich to totalitarian environmentalism is detailed in Ecofascism: Lessons From the German Experience by author Janet Biehl and associate professor at Marquette University Dr. Peter Staudenmeier.
After Germany’s defeat in World War II, environmentalism was picked up by other socialists, first in the 1960s and then in the 1990s. After the fall of the Soviet Union in 1991, disillusioned communists in search of a new leftist ideology became climate activists. Now, 30 years after the fall of the Berlin Wall, the Soviet failure has been forgotten and suppressed, and a new generation of ignorant youth now openly embraces both communism and ecofascism.
Violence Versus Debate
In the good old days of the late 1990s there was still a vigorous and healthy climate debate, and even those who warned of pending doom conceded that the science was shaky and uncertain. Then, as the influence of ecofascism increased, the message was changed to “the science is settled,” even though the evidence is mounting for the climate skeptic position. Now, we see that debate is abandoned altogether in favor of outright threats of violence.
Fascism, in any form, if it is permitted to grow, tends to end in a dark place. On one occasion, Göring sent a fisherman to a concentration camp for cutting up a bait frog. The Enlightenment philosophers valued free speech as the primary value of a free society because they understood that, if debate as an arena for the outlet of disagreement is stifled, the only alternative is violence.
Nowadays, everyone who disagrees with the radical left is branded as racist, misogynist, homophobic, Islamophobic, and transphobic. Even climate scientists skeptical of catastrophic global warming are given the same treatment. Who’s next?
“Black Friday Is Dying” – Shopping Malls Turn To “Ghost Towns” Amid Online Shift
Black Friday is undergoing a transformative period where consumers are ditching brick-and-mortar stores for online shopping.
Reuters noted Friday, that traffic volumes at stores across the country on Thanksgiving eve were soft — and it’s likely the trend will continue through the weekend.
Another report via KeyBanc Capital Markets found traffic “somewhat muted at malls” during Thanksgiving and Black Friday.
KeyBanc’s analyst Edward Yruma attributed the decline to more online sales.
KeyBanc’s note said Gap, Banana Republic, Express and Zara offered 50% discounts, but that still wasn’t enough to attract shoppers.
Though traffic was steady at Walmart, Target, and Lululemon.
As of noon, Salesforce.com observed online sales of $7.4 billion on Black Friday, 16% higher than a year ago.
“It speaks to the fact that we’re amidst this digital transformation that’s happening for both the consumers and the retailers,” Rob Garf, vice president of industry strategy and insights at Salesforce, told Bloomberg.
Some other possible reasons behind the weak turn out could be due retailers already offered an entire month of aggressive sales leading up to Black Friday. There are often limitations of how much a consumer can purchase as credit card rates soar to 25-year highs.
The National Retail Federation (NRF) polled consumers earlier this month who said most of their shopping has already been done, many of whom took advantage of the deals leading up to Black Friday.
NRF said retail sales for November through December are expected to increase by 3.8% to 4.2% YoY, for a total of around $730 billion, but a larger portion could be coming from e-commerce.
Another reason for the softer turn out could be generational trends. As millennials take over the workforce, they don’t want to follow in the footsteps of their ‘Ok Boomer’ parents who have been herded like sheep into stores for decades. Millennials would rather “Netflix and chill” while surfing for deals on their mobile devices.
There’s also evidence that the US economy is rapidly slowing and the US consumer is pulling back on spending as a recession could be nearing. The chart below shows the industrial recession has likely transmitted weakness into the consumer, which could produce a rather weak holiday spending period.
As for some evidence of consumers ditching brick-and-mortar stores this Black Friday, we turn to Twitter:
Other Black Friday halftime news:
No Baby Yoda until January. “to keep it a secret”. Plenty of secrets from Frozen II are available. $LB is a ghost town. Specifically the bordello in a ghost town. $M wasn’t terrible(!).
Against my better judgement I agreed to take my daughter to the Castleton Square Mall in #Indianapolis for #BlackFriday shopping. I was shocked to see no traffic jams, plenty of parking, and some stores with few customers. I just might liquidate my retail stocks on Monday😂 pic.twitter.com/IV7n38L9NM
And to get an idea of what Black Friday used to look like before the consumer went broke and the internet came around. Here are a few short minutes of fights, stampedes, riots, and utter chaos, all over cheap plastic junk that was mostly made in China.
One of the annoying things about continuing to write about the OPCW/Douma scandal in the near-total absence of mainstream media coverage is the fact that it’s difficult for a new reader to just jump in on this developing story without having followed it from the beginning. There are a lot of details to go over to introduce someone to the story, and if I repeat them every time I write an article on the subject I’m twelve paragraphs in before I get to the new developments, and by that time I’ve bored all the readers who didn’t need the introduction. I’m sure other alternative media figures commenting on this story have encountered the same problem.
Fortunately for us, In The Now and journalist Dan Cohen have stepped up to the plate and put together a concise, easy-to-follow video on both Twitter and Facebookexplaining the OPCW scandal in a way that enables anyone to familiarize themselves with the story in seven minutes. This article exists solely to draw attention to this excellent resource.
A leaked email accuses the OPCW of doctoring a report to suit the US government’s justification for its illegal bombing of Syria in April 2018. I explain the scandal mainstream media is trying to supress: pic.twitter.com/MTS4OWwqkH
Cohen has been really great about quickly getting concise, quality videos out to help people make sense of specific developing stories which the haze of western propaganda makes difficult to understand; his recent videos on the Bolivia coup and the Hong Kong protests were very helpful in the same way. He uses robust arguments and independently verifiable facts to clearly show that there’s much more to these stories than the mass media have been letting us know.
I’ll definitely be linking to this video in my articles going forward to enable anyone who hasn’t been following the OPCW scandal closely to quickly familiarize themselves with the story. The more of these lucid, accessible resources we’ve got circulating within the information ecosystem, the better.
“Forget The KKK, Modern-Day Liberals Are The Biggest Impediment”: Clarence Thomas Reflects On Biden Experience
Supreme Court Justice Clarence Thomas says that modern day liberals posed the biggest impediment to his career, as opposed to what he was taught to believe.
“I felt as though in my life I had been looking at the wrong people as the people who would be problematic toward me. We were told that, ‘Oh, it’s gonna be the bigot in the pickup truck; it’s gonna be the Klansmen; it’s gonna be the rural sheriff,” Thomas says in a forthcoming documentary, “Created Equal: Clarence Thomas in His Own Words.”
“But it turned out that through all of that, ultimately the biggest impediment was the modern day liberal,” he added. “They were the ones who would discount all those things because they have one issue or because they have the power to caricature you,” according to ABC News.
Thomas has joined public criticism of former Vice President and 2020 Democratic candidate Joe Biden, whose handling of Thomas’s 1991 Supreme Court hearings when he was a Senator has fallen under harsh scrutiny.
Thomas sat for more than 22 hours of interviews over a six-month period in 2018, according to the film’s publicist. Manifold has advertised the movie as a chance to “tell the Clarence Thomas story truly and fully, without cover-ups or distortions.”
The movie also casts a spotlight on Biden, who has faced renewed criticism from his fellow Democrats for his treatment of Anita Hill, an African-American law professor who had accused Thomas of sexual harassment and testified publicly before the committee during the 1991 hearings. Biden called Hill to apologize earlier this year for his handling of the case. –ABC News
Thomas denied Hill’s allegations, which he referred to during the Biden-led hearings as a “high-tech lynching.”
“Do I have like stupid written on the back of my shirt? I mean, come on. We know what this is all about,” Thomas says in the documentary.
“People should just tell the truth: ‘This is the wrong black guy; he has to be destroyed.’ Just say it. Then now we’re at least honest with each other. The idea was to get rid of me. And then, after I was there, it was to undermine me.”
While Thomas does not mention Biden by name, he is asked by filmmakers to respond directly to Biden’s line of questioning during the hearings on his views of natural law.
“I have no idea what he was talking about,” Thomas says of Biden.
“I understood what he was trying to do. I didn’t really appreciate it,” he added. “Natural law was nothing more than a way of tricking me into talking about abortion.” –ABC News
In response to the documentary, Biden’s deputy communications director Bill Russo said in a statement to ABC: “Then-Senator Biden voted against Clarence Thomas in the Senate Judiciary Committee, he argued against him on the Senate floor, and he voted against his confirmation to a lifetime seat on the Supreme Court. It is no surprise that Justice Thomas does not have a positive view of him.”
Thomas was eventually confirmed in the Senate by a slim margin of 52 to 48 on Oct. 15, 1991.
“Most of my opponents on the judiciary committee cared about only one thing,” Thomas says in the film. “How would I rule on abortion rights. You really didn’t matter and your life didn’t matter. What mattered is what they wanted and what they wanted was this particular issue.”
Thomas speaks at length about his journey from childhood in impoverished rural Georgia, to a stint in a Roman Catholic seminary, and on to the elite classrooms of Holy Cross and Yale. He describes his grandfather, a fuel oil deliveryman in Savannah, as one of the biggest influences on his life, teaching him determination and self-reliance.
Thomas says those values are what sustain him in the face of persistent criticism as a black conservative.
“There’s different sets of rules for different people,” he says. “If you criticize a black person who’s more liberal, you’re a racist. Whereas you can do whatever to me, or to now (HUD Secretary) Ben Carson, and that’s fine, because you’re not really black because you’re not doing what we expect black people to do.” –ABC News
The documentary is set for theatrical release in early 2020 and will air on PBS next spring.
I wanted to write something to address how little people know and acknowledge about how disastrous central bank policies have been for our societies and economies.
Because they don’t, and they have no clue, largely and simply because of the way central banks are presented both by themselves and by the financial press that covers them. Make that “covers”. Still, going forward, we will have no way to ignore the damage done. All the QE and ZIRP and NIRP will turn out to be so destructive for us all they will rival climate change or actual warfare. That’s what I wanted to talk about.
You see, free markets are a great idea in theory. Or you can call it “capitalism”, or combine the two and say “free market capitalism”. There’s very little wrong with it in theory. You have an enormous multitude of participants in an utterly complex web of transitions, too complex for the human mind to comprehend, and in the end that web figures out what values all sorts of things, and actions etc., have.
I don’t think capitalism in itself is a bad thing; what people don’t like is when it veers into neo-liberalism, when everything is for sale, when communities or their governments no longer own anything, when roads and hospitals and public services and everything that holds people together in a given setting is being sold off to the highest bidder. There are many things that have values other than monetary ones, and neo-liberalism denies that. Capitalism in itself, not so much.
It’s like nature, really, like evolution, but it’s Darwin AND empathy, individuals AND groups. The problem is, and this is where it diverges from nature, you have to make sure the markets remain free, that certain participants -or groups thereof- don’t bend the rules in their own favor. In that sense it’s very similar to what the human race has been doing to nature for a long time, and increasingly so.
Now, if you limit the discussion to finance and economics, there would appear to be one institution that’s in an ideal place to make sure that this “rule-bending” doesn’t take place, that markets are fair and free, or as free as can be. That institution is a central bank. But whaddaya know, central banks do the exact opposite: they are the ones making sure markets are not free.
In the ideal picture, free markets are -or would be- self-correcting, and have an inbuilt self-regulating mechanism. If and when prices go up too much, the system will make sure they go lower, and vice versa. It’s what we know from physics and biology as a negative -self correcting- feedback loop. The self-correcting mechanism only activates if the system has veered too much in one direction, but we fail to see that as good thing when applied to both directions, too high and too low (yes, Goldilocks, exactly).
It’s only when people start tweaking and interfering with the system, that it fails. Negative feedback vs positive feedback are misunderstood terms simply because of their connotation. After all, who wants anything negative? But this is important in the free markets topic, because as soon as a central bank starts interfering in, name an example, housing prices in a country, the system automatically switches from negative feedback to positive -runaway- feedback, there is no middle ground and there is no way out anymore, other than a major crash or even collapse.
Well, we’re well on our way to one of those. Because the Fed refused to let the free market system work. They, and the banks they represent, wanted the way up but then refused the way down. And now we’re stuck in a mindless positive feedback loop (new highs in stocks on a daily basis), and there’s nothing Jay Powell and his minions can do anymore to correct it.
The system has its own correction mechanism, but Greenspan, Bernanke, Yellen and now Powell thought they could do better. Or maybe they didn’t and they just wanted their banker friends to haul in all the loot, it doesn’t even matter anymore. They’ve guaranteed that there are no free markets, because they murdered self-correction.
Same goes, again, for ECB and BOJ; they’re just Fed followers (only often even crazier). In fact since they have no petrodollar, they don’t just follow, they have to do the Fed one better. Which is why they have negative interest rates -and the US does not -yet-: it’s the only way to compete with the reserve currency. Of course today even the Fed, and “even even” the PBOC, are discussing moving to negative rates, and by now we’re truly talking lemmings on top of a cliff.
“Let’s throw $10 trillion at the wall just so home prices or stock prices don’t go down!” Yeah, but if they’ve been rising a lot, maybe that’s the only direction they can and should go. It may not be nice for banks and so-called “investors”, but it’s the only way to keep the system healthy. If you don’t allow for the negative feedback self-correction, you can only create much bigger problems than you already have. And then you will get negative feedback squared and cubed.
Unless, of course, you have stellar economic growth, and you find unparalleled amounts of oil, and you have a growing population with way more kids born than people dying. But in case you don’t, you’re merely making an initially relatively minor problem much much worse with QE and ZIRP.
What central banks have been doing is they’ve utterly destroyed savings and pensions, i.e. the only thing “ordinary” people had to stave off their own personal collapse and that of their communities. ZIRP and NIRP move all those savings and pensions towards the bankers. And yes, pension funds may have moved into equities from bonds, and they may look good momentarily, but the current parade of new highs in stock markets only exists because of central banks’ QE and ZIRP.
There are tons of zombie enterprises in the world, many of whom have been kept alive by central bank policies, but wait till it becomes evident that the pension funds and systems themselves have turned into zombies. That’ll wake you up. Because who’s going take care of grandma, or her daughter, in a few years’ time? One thing’s for sure, it won’t be Jay Powell.
China Braces For December D-Day: The “Unprecedented” Default Of A Massive State-Owned Enterprise
Something is seriously starting to break in China’s financial system.
Three days after we described the self-destructive doom loop that is tearing apart China’s smaller banks, where a second bank run took place in just two weeks – an unprecedented event for a country where until earlier this year not a single bank was allowed to fail publicly and has now had no less than five bank high profile nationalizations/bailouts/runs so far this year – the Chinese bond market is bracing itself for an unprecedented shock: a major, Fortune 500 Chinese commodity trader is poised to become the biggest and highest profile state-owned enterprise to default in the dollar bond market in over two decades.
In what Bloomberg dubbed the latest sign that Beijing is more willing to allow failures in the politically sensitive SOE sector – either that, or China is simply no longer able to control the spillovers from its cracking $40 trillion financial system – commodity trader Tewoo Group – the largest state-owned enterprise in China’s Tianjin province – has offered an “unprecedented” debt restructuring plan that entails deep losses for investors or a swap for new bonds with significantly lower returns.
Tewoo Group is a SOE conglomerate, owned by the local government and operates in a number of industries including infrastructure, logistics, mining, autos and ports, according to its website. It also operates in multiples countries including the U.S., Germany, Japan and Singapore. The company ranked 132 in 2018’s Fortune Global 500 list, higher than many other Chinese conglomerates including service carrier China Telecommunications and financial titan Citic Group. Even more notable are the company’s financials: it had an annual revenue of $66.6 billion, profits of about $122 million, assets worth $38.3 billion, and more than 17,000 employees as of 2017, according to Fortune’s website.
The state-owned company is neither publicly listed nor rated by the top three international ratings companies, although it does have publicly traded bonds whose performance in recent months has been nothing short of terrifying for anyone who thought purchasing a company explicitly backed by Beijing can never fail.
As one can deduce from the above chart, the first time Tewoo Group’s financial difficulties emerged was in April when it sought debt extension from its lenders on its offshore, dollar bonds and sold copper below market rates amid a cash crunch. At that time, Fitch Ratings – the only rating agency to appraise the company’s credit standing – slashed the company’s credit score first from BBB to BBB- on April 18, and then by a whopping six notches, from BBB – to B- on April 29, to reflect its weak liquidity and higher-than-expected leverage.
According to Bloomberg the company has proposed an exchange/tender offer on the three dollar bonds due to mature over the next three years, as well as a perpetual note. What makes what would otherwise be a mundane exchange offer in the US, is that this is the first ever distressed plan of its kind from a state-owned Chinese firm.
What is just as striking is that the Tewoo Group – with its $66 billion in revenues and $38 billion in assets – is likely to default on its $300 million dollar bond due Dec. 16, a Bloomberg source said, unless the exchange is consummated. This means that the company’s bondholders have just a few weeks to decide between either taking as much as 64% in losses or accepting delayed repayment with sharply reduced coupons on $1.25 billion of dollar bonds, something which the rating agencies will describe as an event of default.
A de facto default by Tewoo would be considered a “landmark case,” said Cindy Huang, an analyst at S&P Global Ratings. Central government support for SOEs is likely to be selective in the future, while local government aid will be limited by the slowing economy and weaker fiscal position, she said.
The “distressed exchange offer” comes after Tewoo Group said last week it would be unable to pay interest on a $500 million bond, prompting Industrial & Commercial Bank of China to transfer $7.875 million to bondholders on its behalf. ICBC provided a standby letter of credit on the note – a pledge to repay if the borrower can’t. However, the firm’s remaining $1.6 billion of dollar bonds lack such protection.
Worse, Tewoo Group is already in effective default after some of its units previously missed local debt payments – in July, Tianjin Hopetone missed a coupon payment on its 1.21 billion yuan note sending the company’s dollar bonds tumbling below 50 cents on the dollar, while Tianjin Haoying Industry & Trade missed a loan interest payment due in June. Also in July, rating agency Fitch – which somehow missed all of this when it was rating the company investment grade – withdrew its rating on Tewoo Group due to insufficient information to maintain the ratings. It last rated the issuer at B-.
And as furious bondholders scramble to demand an explanation how a state-owned enterprise can default, Beijing is already bracing for the inevitable next steps: earlier this month, Tianjin State-owned Capital Investment and Management, an entity wholly-owned by the Tianjin municipal government, was appointed to manage the company’s offshore debt. For now, the entity has no plan to hold controlling stakes in Tewoo Group, although that will likely change as soon as the company’s financial situation fails to improve. Meanwhile, Tewoo Group said it plans to take a series of debt management measures, by which we assume it means it will restructure its debt.
The fact that a state owned enterprise such as Tewoo has just days before it defaults, in either a prepack or “freefall” form, suggests that Beijing will no longer bail out troubled SOEs, let alone private firms, perhaps due to the strains imposed by the economy which is slowing the most in three decades. It also raises concerns over Tianjin, where it’s based, following a series of rating downgrades and financing difficulties suffered by some of the city’s state-run firms. The metropolis near Beijing also has the highest ratio of local government financing vehicle bonds to GDP in China.
In short, if there a glitch with Tewoo’s default, the Chinese dominoes could start really falling.
Since the first SOE bond default emerged in China’s domestic market four years ago, 22 such firms have failed to make good on a combined 48.4 billion yuan ($6.9 billion) onshore bonds as of the end of October, according to Guosheng Securities. However, as Bloomberg adds, despite periodic scares such as late repayment, Chinese SOEs have yet to suffer any high-profile default in the dollar bond market since the collapse of Guangdong International Trust and Investment Corp. in 1998.
Tewoo would be precisely that high-profile default.
* * *
There were early signs of Tewoo Group’s debt crisis. The bankruptcy of Bohai Steel Group in 2018 triggered systemic risk in Tianjin’s financial market. The incident involved a large number of local companies and financial institutions, which recorded huge amounts of bad debt. Financial institutions became more conservative in their lending standards, and this resulted in liquidity issues for a number of Tianjin enterprises.
At the same time, Beijing’s deleveraging and capacity reduction reforms made it difficult for a traditionally highly-leveraged company like Tewoo to raise financing. The default in May 2018 by Hsin Chong Group Holdings Limited, a company controlled by Tewoo, showed further signs of financial problems at Tewoo Group.
While normally such a critical company as Tewoo would be quietly bailed out by either Beijing or the local province, investors told Bloomberg that the company’s excessive debt levels will limit Tianjin authorities’ ability to lend support to the city’s troubled firms, prompting them to shun the latter’s debt. In July, Tianjin Binhai New Area Construction & Investment Group postponed plans to sell a three-year dollar bond offering amid such concern.
Tewoo’s debt issues that had surfaced from its current crisis may be only the tip of the iceberg. Tianjin’s economic growth has slowed down sharply since the beginning of 2016. GDP growth dropped to 1.9% in the first quarter of 2018. Even as it started to rebound thereafter, the outlook is still pessimistic, with GDP growth in 2018 less than 4%, which ranked last in the country according to iFast.
On the other hand, according to a 2016 report released by ratings agency Moody’s, state-owned enterprises in Tianjin recorded an aggregate liability-to-fiscal revenue ratio of more than 600%, which was the highest in the country.
At the same time, as shown in Tianjin municipal government’s most recent three-year revenue and debt data, Tianjin government’s fiscal revenue has declined significantly since 2017. Fiscal revenue fell by close to RMB40 billion in 2017, while government borrowings rose rapidly. By the end of 2018, debt owed by the Tianjin government was almost double its fiscal revenue.
The bankruptcy of Bohai Steel, a Tianjin SOE, in 2018 may also be a sign that the Tianjin government has lost control over the local debt crisis. Other than Bohai Steel and Tewoo, there have been a number of state-owned companies in Tianjin that are fighting to stave off insolvencies, such as Tianjin Real Estate Group Co. Limited, which owes RMB200 billion in debt. From the above observations, we think that in the event of a default by Tewoo, the company is likely to go into bankruptcy reorganization in a similar way as Bohai Steel, which has brought in capital from the private sector for its corporate restructuring. But for bondholders, recovery of their investments may be difficult, and potential loss heavy.
So with Tianjin unlikely to step up, in the aftermath of Tewoo’s proposed debt restructuring, which will indicate that Beijing will no longer bail out even SOEs, investors’ skepticism about state support for such state-linked firms will collapse, and a default could have wider implications on how investors assess and price their bonds in the future, said Judy Kwok-Cheung, director of fixed-income research at Bank of Singapore.
“Investors would be going back to basics in assessing credit risk in that the company’s stand-alone ability to repay is the first line of defense when it comes to non-repayment risk,” said Kwok-Cheung.
In short, “investors” would be reacquainted with a thing called “fundamentals.” The horror, the horror.
* * *
It gets worse: should Tewoo’s default spread to provincial-backed debt, an already ugly situation could quickly turn catastrophic as Tianjin has the highest debt burden among megacities and provinces in China according to S&P. Earlier this year, Fitch cut ratings on several government-related entities from the city, which is reliant on heavy industry and commodities trading. As a result of having the highest debt, Tianjin also has to slowest growth – Tianjin’s local economy grew by 3.6% last year, the slowest in China; at the end of last year, Tianjin’s government had 407.9 billion yuan worth of debt outstanding, or about 22% of the size of its economy, said the Chinese credit risk assessor.
And just in case the upcoming Tewoo D-Day isn’t troubling enough, Moody’s said that it expected the number of Chinese defaults to continue to rise in 2020 as economic growth sputters and the government attempts to rein in support to indebted companies. Specifically, Moody’s expects 40-50 new defaults in 2020, up from 35 this year, according to Ivan Chung, head of greater China credit research and analysis at Moody’s.
“The regulators’ intention is to reduce moral hazard” while at the same time ensuring any defaults “won’t undermine socioeconomic stability or trigger systemic risks,” Chung said on Wednesday, who added that whereas state support may be available for companies engaged in social welfare projects, for those that are more commercial in nature, “government support may not be so forthcoming,” he said.
Which is the worst possible news for Tweoo’s bondholders.
So what happens next?
Tewoo’s bondholders must quickly decide whether to accept the exchange/tender proposal by December 9 and 10 respectively, with the settlement date due on or around December 17. Since an event of default is now assured, the next big question is what will bondholders of China’s other SOE’s – those who bought bonds on the assumption that China will always bail them out – do next? A flurry of aggressively selling may be just the catalyst that cracks the market if it emerges in the extremely illiquid days just before Christmas.
a change in the world order, in this case the rise of China and the potential for trade wars/technology wars/capital wars.
He threw in a few quick comments as their time was running out, alluding to the potential for the end of the world reserve system and the collapse of fiat monetary regimes.
Maybe it was in his rush to finish as their time is drawing to a close, but it certainly sounded a more challenging tone than I have seen in his writings.
Currency Wars
It brought to mind an essay I read last week from my favorite central banker, former BIS Chief Economist William White.
He was warning about potential currency wars, aiming particularly at the US Treasury’s seeming desire for a weaker dollar. Ditto for other governments around the world. He believes this is a prescription for disaster.
One possibility is that it might lead to a disorderly end to the current dollar based regime, which is already under strain for a variety of both economic and geopolitical reasons. To destroy an old, admittedly suboptimal, regime without having prepared a replacement could prove very costly to trade and economic growth.
Perhaps even worse, conducting a currency war implies directing monetary policy to something other than domestic price stability. There ceases to be a domestic anchor to constrain the expansion of central bank balance sheets.
Should this lead to growing suspicion of all fiat currencies, especially those issued by governments with large sovereign debts, a sharp increase in inflationary expectations and interest rates might follow. How this might interact with the record high debt ratios, both public and private, that we see in the world today, is not hard to imagine.
I called Bill to ask if he thought this was going to happen. Basically, he said no, but it shouldn’t even be considered. It was his gentlemanly way of issuing a warning.
Currency devaluations against gold were part of the root cause of the Great Depression. Coupled with protectionism and tariffs, they devastated global economic growth and trade.
The Repeat of the 1930s?
Do I think it will happen in any significant way in the next few years?
It is not my highest probability scenario. But imagine a recession that brings the US deficit to $2 trillion, possibly followed by a governmental change that raises taxes and spending.
Couple this with a concurrent crisis in Europe, potentially even a eurozone breakup, resulting in countries all over the world trying to weaken their currencies with the potential for higher inflation in many places.
In such a scenario, is it hard to imagine a desperate president and Congress, toward the latter part of the next decade, regardless of which party is in control, instructing the US Treasury to use its tools to weaken the dollar?
Can you say beggar thy neighbor? Can you see other countries following that path? All as debt is increasing with no realistic exit strategy except to monetize it?
* * *
New York Times best seller and renowned financial expert John Mauldin predicts an unprecedented financial crisis that could be triggered in the next five years. Most investors seem completely unaware of the relentless pressure that’s building right now. Learn more here.
Please enjoy the latest edition of Short Circuit, a weekly feature from the Institute for Justice.
In 2015, an armed shoplifter who was fleeing from police broke into a Greenwood Village, Colo. family’s home. After he shot at police, a SWAT team used explosives, high-caliber ammunition, and a battering ram mounted on a BearCat armored vehicle to apprehend him, completely destroying the home in the process. Last month, the Tenth Circuit ruled that the city need not compensate the family. This week, IJ petitioned the court to rehear the case en banc. Click here to learn more.
New on the podcast: A different case about SWAT destroying an innocent person’s home, Maryland’s law of the land clause, and making civil forfeiture victims whole.
Brown University student takes it upon herself to treat take-home exam as group project. University: The exam was decidedly not supposed to be a team effort. Hence, discipline. Student files 13-count complaint against the university, alleging, among other things, that the school’s handling of her disciplinary proceeding violated its policies. First Circuit: Any deviations from the school’s policies could not have harmed the student, not least because she was a repeat player in the disciplinary system and “could reasonably be expected to navigate it with some skill.”
Owner of a Canadensis, Penn. pizza shop arrested, jailed for allegedly vandalizing two competing restaurants. Over the next four days, he interacts with seven medical professionals from the for-profit medical contractor that provides the jail’s health care services. Those professionals learn he takes antidepressants but fail to evaluate him for suicide or ensure he properly receives his medicine. He dies by suicide. Jury: They owe the man’s estate nearly $12 million for violating his Fourteenth Amendment right to adequate medical care (three-quarters of which comes in the form of punitive damages). District court: Sure, they were bad, but not that bad. No punitive damages. Third Circuit: They were that bad. Pay up.
Homeland Security learns a suspected sex trafficker has left the country and is set to return through JFK, so they ask Customs and Border Protection to seize any electronic devices he has upon arrival. CBP seizes the devices and gives them to Homeland Security. A forensic search of the devices turns up evidence of sex trafficking, leading to the man’s arrest and conviction. Was the warrantless search of the devices justified by the “border search” exception? Fourth Circuit: It was not, because the suspected crime had no connection to border security, but the evidence still comes in under the good-faith exception. Concurrence: No Fourth Amendment violation here.
Las Vegas police conduct traffic stop of a member of the Bikers for Christ ministry group. The biker’s attorney is present, armed, and refuses to comply with orders to step away during the traffic stop. So an officer arrests the attorney. Attorney: False arrest! Malicious prosecution! Harassment of motorcycle clubs! Ninth Circuit (over a dissent): The right to counsel probably does not encompass such conduct. In any event, the officer had probable cause to arrest him when he failed to step away.
Owner of Florida real estate business sets up phony nonprofit that files thousands of vague FOIA requests against the town of Gulf Stream. When the town fails to respond adequately, he has his son sue the town more than 30 times in an effort to extract settlements. Town files a RICO lawsuit to stop harassment but loses. Director of nonprofit sues for First Amendment retaliation. Eleventh Circuit (in a deep dive on recent retaliation case law): There’s no First Amendment claim here because the town had probable cause to support the RICO suit. Concurrence: But we’re not saying probable cause always defeats a retaliation claim.
“If this were an Encyclopedia Brown mystery, it might be called The Case of the Polite Bank Robber.” So begins an unsigned Eleventh Circuit opinion, vacating a sentence enhancement for a “less bad” bank robber whose actions probably didn’t put anyone in fear of their life.
Illinois man is convicted of sex offenses, placed on probation for four years. One condition of probation is that he can’t use any social media during his sentence. A First Amendment violation? Appellate court: Nope, unlike the Supreme Court’s recent ruling on these issues, the conditions here aren’t permanent. Illinois Supreme Court: Doesn’t matter. The defendant didn’t use the internet in the commission of his crimes, and the other conditions on his probation are more than adequate to address the government’s concerns. (via @G_Padraic)
If you marry a woman who, as a condition of probation, has agreed to let the police conduct a warrantless search of her home at any time, it’s probably not a great idea to start selling meth. Per the Tennessee Supreme Court, the police won’t even need reasonable suspicion to conduct the search that will lead to your arrest on drug charges. Dissent: We have more than 65,000 probationers in Tennessee, all of whom are now open to suspicionless searches of their homes. That’s unconstitutional. (via @TNCrimDefense)
Last summer, California legislators enacted a law barring presidential candidates from appearing on a ballot in the primaries unless they publicly disclose their tax returns for the previous five years. California Supreme Court: Which violates the state constitution’s guarantee that primaries include all recognized candidates on the ballot of a political party that qualified to participate in the primary. It’s up to voters to punish candidates who fail to disclose their tax returns, if they wish to. (Click here for some journalism.)
In 2006, the Oklahoma Supreme Court ruled that the state constitution prohibits using eminent domain to take private property for economic development. But Tulsa officials are trying to do an end run around the constitution, seizing homes in the city’s historic Pearl District—ostensibly for flood prevention. But the neighborhood does not have drainage problems, and the city’s own planning documents make clear that the flood control facilities are a pretext for a “reinvention of this near-downtown neighborhood.” And, indeed, the city has asked developers to submit bids for “housing and mixed-use development.” This month, residents and supporters formed a new group, Save the Pearl Coalition. Click here to learn more.
from Latest – Reason.com https://ift.tt/2OY0A0B
via IFTTT
String Of Attacks Rocks Globe: Hague Stabbings Leave Several Injured, Man Takes Hostages In Rio
During a day where people from around the world join long lines to begin their Christmas shopping, a string of attacks in shopping centers and London’s famous London Bridge have raised the specter of terrorism and a possible retaliation for the killing of Islamic State leader Abu Bakr al-Baghdadi.
The string of attacks occurred almost one month to the day after Baghdadi’s murder at the hands of US special forces and one trained military dog.
The latest, a stabbing attack in the Hague (notoriously the home of the ICC and several other NGOs), has left several people injured (the exact number is unclear)om several peope
Emergency services said they had arrived on scene, and were
Steekincident met meerdere gewonden aan de #GroteMarktstraat in #DenHaag. Hulpdiensten zijn ter plaatse. Meer info volgt via dit kanaal.
While this was the second stabbing attack in Europe in a matter of hours, another incident unfolded in the Brazilian city of Rio, as a man armed with a knife held six people hostage at a bar in Central Rio, as a local police Captain confirmed.
LAPA | RUA DO RESENDE segue fechada (ocorrência policial). Reflexos na Av. Mem de Sá. Av. República do Paraguai, Rua Texeira de Freitas e Rua do Riachuelo.
Evite a região da Lapa e opte pela Av. Pres. Vargas, Rua Visconde do Rio Branco ou T. Sta Bárbara. #centropic.twitter.com/z0iKJqYvZW
At 3:34 pm, the first hostage, identified only as Sergio, was released. Another hostage, a woman named Lucia, reportedly the owner of the bar, was released shortly after.
Back in the Hague, a manhunt continues for the attackers, with officers reportedly looking for suspects aged between 45 and 50 wearing grey tracksuits.
Please enjoy the latest edition of Short Circuit, a weekly feature from the Institute for Justice.
In 2015, an armed shoplifter who was fleeing from police broke into a Greenwood Village, Colo. family’s home. After he shot at police, a SWAT team used explosives, high-caliber ammunition, and a battering ram mounted on a BearCat armored vehicle to apprehend him, completely destroying the home in the process. Last month, the Tenth Circuit ruled that the city need not compensate the family. This week, IJ petitioned the court to rehear the case en banc. Click here to learn more.
New on the podcast: A different case about SWAT destroying an innocent person’s home, Maryland’s law of the land clause, and making civil forfeiture victims whole.
Brown University student takes it upon herself to treat take-home exam as group project. University: The exam was decidedly not supposed to be a team effort. Hence, discipline. Student files 13-count complaint against the university, alleging, among other things, that the school’s handling of her disciplinary proceeding violated its policies. First Circuit: Any deviations from the school’s policies could not have harmed the student, not least because she was a repeat player in the disciplinary system and “could reasonably be expected to navigate it with some skill.”
Owner of a Canadensis, Penn. pizza shop arrested, jailed for allegedly vandalizing two competing restaurants. Over the next four days, he interacts with seven medical professionals from the for-profit medical contractor that provides the jail’s health care services. Those professionals learn he takes antidepressants but fail to evaluate him for suicide or ensure he properly receives his medicine. He dies by suicide. Jury: They owe the man’s estate nearly $12 million for violating his Fourteenth Amendment right to adequate medical care (three-quarters of which comes in the form of punitive damages). District court: Sure, they were bad, but not that bad. No punitive damages. Third Circuit: They were that bad. Pay up.
Homeland Security learns a suspected sex trafficker has left the country and is set to return through JFK, so they ask Customs and Border Protection to seize any electronic devices he has upon arrival. CBP seizes the devices and gives them to Homeland Security. A forensic search of the devices turns up evidence of sex trafficking, leading to the man’s arrest and conviction. Was the warrantless search of the devices justified by the “border search” exception? Fourth Circuit: It was not, because the suspected crime had no connection to border security, but the evidence still comes in under the good-faith exception. Concurrence: No Fourth Amendment violation here.
Las Vegas police conduct traffic stop of a member of the Bikers for Christ ministry group. The biker’s attorney is present, armed, and refuses to comply with orders to step away during the traffic stop. So an officer arrests the attorney. Attorney: False arrest! Malicious prosecution! Harassment of motorcycle clubs! Ninth Circuit (over a dissent): The right to counsel probably does not encompass such conduct. In any event, the officer had probable cause to arrest him when he failed to step away.
Owner of Florida real estate business sets up phony nonprofit that files thousands of vague FOIA requests against the town of Gulf Stream. When the town fails to respond adequately, he has his son sue the town more than 30 times in an effort to extract settlements. Town files a RICO lawsuit to stop harassment but loses. Director of nonprofit sues for First Amendment retaliation. Eleventh Circuit (in a deep dive on recent retaliation case law): There’s no First Amendment claim here because the town had probable cause to support the RICO suit. Concurrence: But we’re not saying probable cause always defeats a retaliation claim.
“If this were an Encyclopedia Brown mystery, it might be called The Case of the Polite Bank Robber.” So begins an unsigned Eleventh Circuit opinion, vacating a sentence enhancement for a “less bad” bank robber whose actions probably didn’t put anyone in fear of their life.
Illinois man is convicted of sex offenses, placed on probation for four years. One condition of probation is that he can’t use any social media during his sentence. A First Amendment violation? Appellate court: Nope, unlike the Supreme Court’s recent ruling on these issues, the conditions here aren’t permanent. Illinois Supreme Court: Doesn’t matter. The defendant didn’t use the internet in the commission of his crimes, and the other conditions on his probation are more than adequate to address the government’s concerns. (via @G_Padraic)
If you marry a woman who, as a condition of probation, has agreed to let the police conduct a warrantless search of her home at any time, it’s probably not a great idea to start selling meth. Per the Tennessee Supreme Court, the police won’t even need reasonable suspicion to conduct the search that will lead to your arrest on drug charges. Dissent: We have more than 65,000 probationers in Tennessee, all of whom are now open to suspicionless searches of their homes. That’s unconstitutional. (via @TNCrimDefense)
Last summer, California legislators enacted a law barring presidential candidates from appearing on a ballot in the primaries unless they publicly disclose their tax returns for the previous five years. California Supreme Court: Which violates the state constitution’s guarantee that primaries include all recognized candidates on the ballot of a political party that qualified to participate in the primary. It’s up to voters to punish candidates who fail to disclose their tax returns, if they wish to. (Click here for some journalism.)
In 2006, the Oklahoma Supreme Court ruled that the state constitution prohibits using eminent domain to take private property for economic development. But Tulsa officials are trying to do an end run around the constitution, seizing homes in the city’s historic Pearl District—ostensibly for flood prevention. But the neighborhood does not have drainage problems, and the city’s own planning documents make clear that the flood control facilities are a pretext for a “reinvention of this near-downtown neighborhood.” And, indeed, the city has asked developers to submit bids for “housing and mixed-use development.” This month, residents and supporters formed a new group, Save the Pearl Coalition. Click here to learn more.
from Latest – Reason.com https://ift.tt/2OY0A0B
via IFTTT
