Escobar: No Respite For France As A ‘New Africa’ Rises

Escobar: No Respite For France As A ‘New Africa’ Rises

Authored by Pepe Escobar via The Cradle,

Like dominos, African states are one by one falling outside the shackles of neocolonialism. Chad, Guinea, Mali, Burkina Faso, Niger, and now Gabon are saying ‘non’ to France’s longtime domination of African financial, political, economic, and security affairs.

By adding two new African member-states to its roster, last week’s summit in Johannesburg heralding the expanded BRICS 11 showed once again that Eurasian integration is inextricably linked to the integration of Afro-Eurasia.

Belarus is now proposing to hold a joint summit between BRICS 11, the Shanghai Cooperation Organization (SCO), and the Eurasia Economic Union (EAEU).  President Aleksandr Lukashenko’s vision for the convergence of these multilateral organizations may, in due time, lead to the Mother of All Multipolarity Summits.

But Afro-Eurasia is a much more complicated proposition. Africa still lags far behind its Eurasian cousins on the road toward breaking the shackles of neocolonialism.   

The continent today faces horrendous odds in its fight against the deeply entrenched financial and political institutions of colonization, especially when it comes to smashing French monetary hegemony in the form of the Franc CFA – or the Communauté Financière Africaine (African Financial Community). 

Still, one domino is falling after another – Chad, Guinea, Mali, Burkina Faso, Niger and now Gabon. This process has already turned Burkina Faso’s President Captain Ibrahim Traoré, into a new hero of the multipolar world – as a dazed and confused collective west can’t even begin to comprehend the blowback represented by its 8 coups in West and Central Africa in less than 3 years. 

Bye bye Bongo 

Military officers decided to take power in Gabon after hyper pro-France President Ali Bongo won a dodgy election that “lacked credibility.” Institutions were dissolved. Borders with Cameroon, Equatorial Guinea, and the Republic of Congo were closed. All security deals with France were annulled. No one knows what will happen with the French military base.

All that was as popular as it comes: soldiers took to the streets of the capital Libreville in joyful singing, cheered on by onlookers.  

Bongo and his father, who preceded him, have ruled Gabon since 1967. He was educated at a French private school and graduated from the Sorbonne. Gabon is a small nation of 2.4 million with a small army of 5,000 personnel that could fit into Donald Trump’s penthouse. Over 30 percent of the population lives on less than $1 a day, and in over 60 percent of regions have zero access to healthcare and drinking water. 

The military qualified Bongo’s 14-year rule as leading to a “deterioration in social cohesion” that was plunging the country “into chaos.”

On cue, French mining company Eramet suspended its operations after the coup. That’s a near monopoly. Gabon is all about lavish mineral wealth – in gold, diamonds, manganese, uranium, niobium, iron ore, not to mention oil, natural gas, and hydropower. In OPEC-member Gabon, virtually the whole economy revolves around mining.   

The case of Niger is even more complex. France exploits uranium and high-purity petrol as well as other types of mineral wealth. And the Americans are on site, operating three bases in Niger with up to 4,000 military personnel. The key strategic node in their ‘Empire of Bases’ is the drone facility in Agadez, known as Niger Air Base 201, the second-largest in Africa after Djibouti.  

French and American interests clash, though, when it comes to the saga over the Trans-Sahara gas pipeline. After Washington broke the umbilical steel cord between Russia and Europe by bombing the Nord Streams, the EU, and especially Germany, badly needed an alternative. 

Algerian gas supply can barely cover southern Europe. American gas is horribly expensive.

The ideal solution for Europeans would be Nigerian gas crossing the Sahara and then the deep Mediterranean. 

Nigeria, with 5,7 trillion cubic meters, has even more gas than Algeria and possibly Venezuela. By comparison, Norway has 2 trillion cubic meters. But Nigeria’s problem is how to pump its gas to distant customers – so Niger becomes an essential transit country.  

When it comes to Niger’s role, energy is actually a much bigger game than the oft-touted uranium – which in fact is not that strategic either for France or the EU because Niger is only the 5th largest world supplier, way behind Kazakhstan and Canada. 
Still, the ultimate French nightmare is losing the juicy uranium deals plus a Mali remix: Russia, post-Prighozin, arriving in Niger in full force with a simultaneous expulsion of the French military. 

Adding Gabon only makes things dicier. Rising Russian influence could lead to boosting supply lines to rebels in Cameroon and Nigeria, and privileged access to the Central African Republic, where Russian presence is already strong.  

It’s no wonder that Francophile Paul Biya, in power for 41 years in Cameroon, has opted for a purge of his Armed Forces after the coup in Gabon. Cameroon may be the next domino to fall.

ECOWAS meets AFRICOM

The Americans, as it stands, are playing Sphynx. There’s no evidence so far that Niger’s military wants the Agadez base shut down. The Pentagon has invested a fortune in their bases to spy on a great deal of the Sahel and, most of all, Libya. 
About the only thing Paris and Washington agree on is that, under the cover of ECOWAS (the Economic Community of West African States), the hardest possible sanctions should be slapped on one of the world’s poorest nations (where only 21% of the population has access to electricity) – and they should be much worse than those imposed on the Ivory Coast in 2010.  

Then there’s the threat of war. Imagine the absurdity of ECOWAS invading a country that is already fighting two wars on terror on two separate fronts: Against Boko Haram in the southeast and against ISIS in the Tri-Border region.

ECOWAS, one of 8 African political and economic unions, is a proverbial mess. It packs 15 member nations – Francophone, Anglophone and one Lusophone – in Central and West Africa, and it is rife with internal division.

The French and the Americans first wanted ECOWAS to invade Niger as their “peacekeeping” puppet. But that didn’t work because of popular pressure against it. So, they switched to some form of diplomacy. Still, troops remain on stand-by, and a mysterious “D-Day” has been set for the invasion. 

The role of the African Union (AU) is even murkier. Initially, they stood against the coup and suspended Niger’s membership. Then they turned around and condemned the possible western-backed invasion. Neighbors have closed their borders with Niger.  

ECOWAS will implode without US, France, and NATO backing. Already it’s essentially a toothless chihuahua – especially after Russia and China have demonstrated via the BRICS summit their soft power across Africa. 

Western policy in the Sahel maelstrom seems to consist of salvaging anything they can from a possible unmitigated debacle – even as the stoic people in Niger are impervious to whatever narrative the west is trying to concoct. 

It’s important to keep in mind that Niger’s main party, the “National Movement for the Defense of the Homeland” represented by General Abdourahamane Tchiani, has been supported by the Pentagon – complete with military training – from the beginning.  

The Pentagon is deeply implanted in Africa and connected to 53 nations. The main US concept since the early 2000s was always to militarize Africa and turn it into War on Terror fodder. As the Dick Cheney regime spun it in 2002: “Africa is a strategic priority in fighting terrorism.” 

That’s the basis for the US military command AFRICOM and countless “cooperative partnerships” set up in bilateral agreements. For all practical purposes, AFRICOM has been occupying large swathes of Africa since 2007.

How sweet is my colonial franc

It is absolutely impossible for anyone across the Global South, Global Majority, or “Global Globe” (copyright Lukashenko) to understand Africa’s current turmoil without understanding the nuts and bolts of French neocolonialism

The key, of course, is the CFA franc, the “colonial franc” introduced in 1945 in French Africa, which still survives even after the CFA – with a nifty terminological twist – began to stand for “African Financial Community”. 

The whole world remembers that after the 2008 global financial crisis, Libya’s Leader Muammar Gaddafi called for the establishment of a pan-African currency pegged to gold. 

At the time, Libya had about 150 tons of gold, kept at home, and not in London, Paris, or New York banks. With a little more gold, that pan-African currency would have its own independent financial center in Tripoli – and everything based on a sovereign gold reserve. 

For scores of African nations, that was the definitive Plan B to bypass the western financial system. 

The whole world also remembers what happened in 2011. The first airstrike on Libya came from a French Mirage fighter jet.  France’s bombing campaign started even before the end of emergency talks in Paris between western leaders. 

In March 2011, France became the first country in the world to recognize the rebel National Transitional Council as the legitimate government of Libya. In 2015, the notoriously hacked emails of former US secretary of state Hillary Clinton revealed what France was up to in Libya: “The desire to achieve a greater share in Libyan oil production,” to increase French influence in North Africa, and to block Gaddafi’s plans to create a pan-African currency that would replace the CFA franc printed in France. 

It is no wonder the collective west is terrified of Russia in Africa – and not just because of the changing of the guard in Chad, Mali, Burkina Faso, Niger, and now Gabon: Moscow has never sought to rob or enslave Africa. 

Russia treats Africans as sovereign people, does not engage in Forever Wars, and does not drain Africa of resources while paying a pittance for them. Meanwhile, French intel and CIA “foreign policy” translate into corrupting African leaders to the core and snuffing out those that are incorruptible. 

You have the right to no monetary policy 

The CFA racket makes the Mafia look like street punks. It means essentially that the monetary policy of several sovereign African nations is controlled by the French Treasury in Paris.

The Central Bank of each African nation was initially required to keep at least 65 percent of their annual foreign exchange reserves in an “operation account” held at the French Treasury, plus another 20 percent to cover financial “liabilities.” 

Even after some mild “reforms” were enacted since September 2005, these nations were still required to transfer 50 percent of their foreign exchange to Paris, plus 20 percent V.A.T.

And it gets worse. The CFA Central Banks impose a cap on credit to each member country. The French Treasury invests these African foreign reserves in its own name on the Paris bourse and pulls in massive profits on Africa’s dime.

The hard fact is that more than 80 percent of foreign reserves of African nations have been in “operation accounts” controlled by the French Treasury since 1961. In a nutshell, none of these states has sovereignty over their monetary policy. 

But the theft doesn’t stop there: the French Treasury uses African reserves as if they were French capital, as collateral in pledging assets to French payments to the EU and the ECB. 

Across the “FranceAfrique” spectrum, France still, today, controls the currency, foreign reserves, the comprador elites, and trade business. 

The examples are rife: French conglomerate Bolloré’s control of port and marine transport throughout West Africa; Bouygues/Vinci dominate construction and public works, water, and electricity distribution; Total has huge stakes in oil and gas. And then there’s France Telecom and big banking – Societe Generale, Credit Lyonnais, BNP-Paribas, AXA (insurance), and so forth. 

France de facto controls the overwhelming majority of infrastructure in Francophone Africa. It is a virtual monopoly. 

“FranceAfrique” is all about hardcore neocolonialism. Policies are issued by the President of the Republic of France and his “African cell.” They have nothing to do with parliament, or any democratic process, since the times of Charles De Gaulle. 

The “African cell” is a sort of General Command. They use the French military apparatus to install “friendly” comprador leaders and get rid of those that threaten the system. There’s no diplomacy involved. Currently, the cell reports exclusively to Le Petit Roi, Emmanuel Macron.  

Caravans of drugs, diamonds, and gold

Paris completely supervised the assassination of Burkina Faso’s anti-colonial leader Thomas Sankara, in 1987. Sankara had risen to power via a popular coup in 1983, only to be overthrown and assassinated four years later. 

As for the real “war on terror” in the African Sahel, it has nothing to do with the infantile fictions sold in the West. There are no Arab “terrorists” in the Sahel, as I saw when backpacking across West Africa a few months before 9/11. They are locals who converted to Salafism online, intent on setting up an Islamic State to better control smuggling routes across the Sahel. 

Those fabled ancient salt caravans plying the Sahel from Mali to southern Europe and West Asia are now caravans of drugs, diamonds, and gold. This is what funded Al-Qaeda in the Islamic Maghreb (AQIM), for instance, then supported by Wahhabi lunatics in Saudi Arabia and the Gulf. 

After Libya was destroyed by NATO in early 2011, there was no more “protection,” so the western-backed Salafi-jihadis who fought against Gaddafi offered the Sahel smugglers the same protection as before – plus a lot of weapons.

Assorted Mali tribes continue the merry smuggling of anything they fancy. AQIM still extracts illegal taxation. ISIS in Libya is deep into human and narcotics trafficking. And Boko Haram wallows in the cocaine and heroin market.  

There is a degree of African cooperation to fight these outfits. There was something called the G5 Sahel, focused on security and development. But after Burkina Faso, Niger, Mali, and Chad went the military route, only Mauritania remains. The new West Africa Junta Belt, of course, wants to destroy terror groups, but most of all, they want to fight FranceAfrique, and the fact that their national interests are always decided in Paris. 

France has for decades made sure there’s very little intra-Africa trade. Landlocked nations badly need neighbors for transit. They mostly produce raw materials for export. There are virtually no decent storage facilities, feeble energy supply, and terrible intra-African transportation infrastructure: that’s what Chinese Belt and Road Initiative (BRI) projects are bent on addressing in Africa.  

In March 2018, 44 heads of state came up with the African Continental Free Trade Area (ACFTA) – the largest in the world in terms of population (1.3 billion people) and geography. In January 2022, they established the Pan-African Payment and Settlement System (PAPSS) – focused on payments for companies in Africa in local currencies. 

So inevitably, they will be going for a common currency further on down the road. Guess what’s in their way: the Paris-imposed CFA. 

A few cosmetic measures still guarantee direct control by the French Treasury on any possible new African currency set up, preference for French companies in bidding processes, monopolies, and the stationing of French troops. The coup in Niger represents a sort of “we’re not gonna take it anymore.”

All of the above illustrates what the indispensable economist Michael Hudson has been detailing in all his works: the power of the extractivist model. Hudson has shown how the bottom line is control of the world’s resources; that’s what defines a global power, and in the case of France, a global mid-ranking power.

France has shown how easy it is to control resources via control of monetary policy and setting up monopolies in these resource-rich nations to extract and export, using virtual slave labor with zero environmental or health regulations. 

It’s also essential for exploitative neocolonialism to keep those resource-rich nations from using their own resources to grow their own economies. But now the African dominoes are finally saying, “The game is over.” Is true decolonization finally on the horizon? 

Tyler Durden
Wed, 09/06/2023 – 02:00

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Rescheduling Marijuana Would Leave Federal Prohibition Essentially Untouched


The HHS-recommended rescheduling of marijuana would leave federal prohibition essentially untouched. | MIS Photography

For half a century, reformers have been urging the Drug Enforcement Administration (DEA) to reclassify marijuana, which since 1970 has been assigned to Schedule I of the Controlled Substances Act, the law’s most restrictive category. Although the DEA has always rejected that proposal, it could change course in light of a recent recommendation from the Department of Health and Human Services (HHS).

Last week, HHS recommended that the DEA move marijuana from Schedule I, which includes illegal drugs such as heroin, LSD, psilocybin, and MDMA, to Schedule III, which includes prescription medications such as anabolic steroids and Tylenol with codeine. Although that reclassification would facilitate medical research and indirectly benefit state-licensed marijuana businesses, it would leave federal prohibition essentially untouched.

Schedule I supposedly is reserved for drugs with “a high potential for abuse” that have no recognized medical applications and are so dangerous that they cannot be used safely even under a doctor’s supervision. Marijuana’s Schedule I status never made much sense, and the justification for that designation has become steadily weaker over the years.

Back in 1985, the Food and Drug Administration (FDA) approved Marinol—a synthetic version of THC, marijuana’s main active ingredient—as a treatment for nausea and vomiting caused by cancer chemotherapy. The FDA later extended that approval to AIDS wasting syndrome, and five years ago it approved Epidiolex, which contains cannabis-derived CBD, as a treatment for two forms of severe, drug-resistant epilepsy.

Research indicates that marijuana is effective at relieving various symptoms, including neuropathic pain and muscle spasms as well as nausea and epileptic seizures. Based on such findings, 38 states allow medical use of cannabis.

It is therefore hard to defend the proposition that marijuana has “no currently accepted medical use,” as Schedule I requires. And since marijuana’s side effects compare favorably to those of many prescription drugs, the idea that it cannot be used safely “under medical supervision”—another Schedule I criterion—is also at odds with reality.

If the DEA, which has the final say on scheduling decisions, ultimately agrees with HHS, that decision would not authorize medical use of marijuana, which still would be limited to FDA-approved products legally available only by prescription. But rescheduling would facilitate medical research that could pave the way for FDA approval of cannabis-based medicines.

“The moment that a drug gets a Schedule I [designation], which is done in order to protect the public so that they don’t get exposed to it, it makes research much harder,” National Institute on Drug Abuse Director Nora Volkow, whose agency participated in the HHS review of marijuana’s classification, noted during congressional testimony in 2019. That designation, she explained, entails special regulatory requirements that deter scientists from studying marijuana’s therapeutic potential.

Moving cannabis to Schedule III would benefit marijuana suppliers as well as researchers. Because of an Internal Revenue Code provision aimed at drug traffickers, companies that sell Schedule I or Schedule II substances without federal authorization are barred from deducting standard business expenses when they pay income taxes—a huge financial burden that rescheduling would eliminate.

State-authorized marijuana merchants nevertheless would still be committing federal felonies every day because they would still be selling controlled substances without federal permission. And they still would have trouble obtaining financial services—an obstacle that fosters a heavy reliance on cash, which invites sometimes deadly robberies—because banks would still be leery of serving a federally illegal industry.

The most straightforward way to address these problems would be to completely deschedule marijuana instead of merely reclassifying it. That reform, which two-thirds of Americans favor, would treat marijuana like alcohol and tobacco, recreational intoxicants that are not considered “controlled” substances at all.

The HHS recommendation, which resulted from a review that President Joe Biden ordered last October, shows that he has come a long way since his days as a zealous drug warrior. Unfortunately, he has not come far enough to resolve the longstanding conflict between federal and state marijuana laws.

© Copyright 2023 by Creators Syndicate Inc.

The post Rescheduling Marijuana Would Leave Federal Prohibition Essentially Untouched appeared first on Reason.com.

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The Global War On Thought Crime

The Global War On Thought Crime

Authored by David James via The Brownstone Institute,

Laws to ban disinformation and misinformation are being introduced across the West, with the partial exception being the US, which has the First Amendment so the techniques to censor have had to be more clandestine.

In Europe, the UK, and Australia, where free speech is not as overtly protected, governments have legislated directly.

The EU Commission is now applying the ‘Digital Services Act’ (DSA), a thinly disguised censorship law. 

In Australia the government is seeking to provide the Australian Communications and Media Authority (ACMA) with “new powers to hold digital platforms to account and improve efforts to combat harmful misinformation and disinformation.”

One effective response to these oppressive laws may come from a surprising source: literary criticism. The words being used, which are prefixes added to the word “information,” are a sly misdirection. Information, whether in a book, article or post is a passive artefact. It cannot do anything, so it cannot break a law. The Nazis burned books, but they didn’t arrest them and put them in jail. So when legislators seek to ban “disinformation,” they cannot mean the information itself. Rather, they are targeting the creation of meaning. 

The authorities use variants of the word “information” to create the impression that what is at issue is objective truth but that is not the focus. Do these laws, for example, apply to the forecasts of economists or financial analysts, who routinely make predictions that are wrong? Of course not. Yet economic or financial forecasts, if believed, could be quite harmful to people.

The laws are instead designed to attack the intent of the writers to create meanings that are not congruent with the governments’ official position. ‘Disinformation’ is defined in dictionaries as information that is intended to mislead and to cause harm. ‘Misinformation’ has no such intent and is just an error, but even then that means determining what is in the author’s mind. ‘Mal-information’ is considered to be something that is true, but that there is an intention to cause harm.

Determining a writer’s intent is extremely problematic because we cannot get into another person’s mind; we can only speculate on the basis of their behaviour. That is largely why in literary criticism there is a notion called the Intentional Fallacy, which says that the meaning of a text cannot be limited to the intention of the author, nor is it possible to know definitively what that intention is from the work. The meanings derived from Shakespeare’s works, for example, are so multifarious that many of them cannot possibly have been in the Bard’s mind when he wrote the plays 400 years ago. 

How do we know, for example, that there is no irony, double meaning, pretence or other artifice in a social media post or article? My former supervisor, a world expert on irony, used to walk around the university campus wearing a T-shirt saying: “How do you know I am being ironic?” The point was that you can never know what is actually in a person’s mind, which is why intent is so difficult to prove in a court of law.

That is the first problem.

The second one is that, if the creation of meaning is the target of the proposed law – to proscribe meanings considered unacceptable by the authorities – how do we know what meaning the recipients will get? A literary theory, broadly under the umbrella term ‘deconstructionism,’ claims that there are as many meanings from a text as there are readers and that “the author is dead.” 

While this is an exaggeration, it is indisputable that different readers get different meanings from the same texts. Some people reading this article, for example, might be persuaded while others might consider it evidence of a sinister agenda. As a career journalist I have always been shocked at the variability of reader’s responses to even the most simple of articles. Glance at the comments on social media posts and you will see an extreme array of views, ranging from positive to intense hostility.

To state the obvious, we all think for ourselves and inevitably form different views, and see different meanings. Anti-disinformation legislation, which is justified as protecting people from bad influences for the common good, is not merely patronising and infantilising, it treats citizens as mere machines ingesting data – robots, not humans. That is simply wrong.

Governments often make incorrect claims, and made many during Covid. 

In Australia the authorities said lockdowns would only last a few weeks to “flatten the curve.” In the event they were imposed for over a year and there never was a “curve.” According to the Australian Bureau of Statistics 2020 and 2021 had the lowest levels of deaths from respiratory illness since records have been kept.

Governments will not apply the same standards to themselves, though, because governments always intend well (that comment may or may not be intended to be ironic; I leave it up to the reader to decide). 

There is reason to think these laws will fail to achieve the desired result. The censorship regimes have a quantitative bias. They operate on the assumption that if a sufficient proportion of social media and other types of “information” is skewed towards pushing state propaganda, then the audience will inevitably be persuaded to believe the authorities. 

But what is at issue is meaning, not the amount of messaging. Repetitious expressions of the government’s preferred narrative, especially ad hominem attacks like accusing anyone asking questions of being a conspiracy theorist, eventually become meaningless.

By contrast just one well-researched and well-argued post or article can permanently persuade readers to an anti-government view because it is more meaningful. I can recall reading pieces about Covid, including on Brownstone, that led inexorably to the conclusion that the authorities were lying and that something was very wrong. As a consequence the voluminous, mass media coverage supporting the government line just appeared to be meaningless noise. It was only of interest in exposing how the authorities were trying to manipulate the “narrative” – a debased word was once mainly used in a literary context – to cover their malfeasance. 

In their push to cancel unapproved content, out-of-control governments are seeking to penalise what George Orwell called “thought crimes.”

But they will never be able to truly stop people thinking for themselves, nor will they ever definitively know either the writer’s intent or what meaning people will ultimately derive.

It is bad law, and it will eventually fail because it is, in itself, predicated on disinformation.

Tyler Durden
Tue, 09/05/2023 – 23:40

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Six Red Flags Pointing To China’s Economic Slowdown

Six Red Flags Pointing To China’s Economic Slowdown

The People’s Republic of China is the world’s second-largest economy, responsible for one quarter of global GDP growth this millennium – so when the country catches a cold, the world notices.

The past several months have seen an avalanche of bad economic news for China, putting the country’s post-pandemic recovery, and global economic growth, in jeopardy.

In this visualization, Visual Capitalist’s Chris Deckert looks at six important indicators that point to China’s economy slowing down. Data comes from the National Bureau of Statistics of China, the People’s Bank of China, and the General Administration of Customs, to see what is flashing red.

Six Red Flag Indicators on China’s Economy

1. GDP

China’s annual GDP growth rate has averaged 9% since 1978, when the country opened itself up to the global market under Deng Xiaoping.

However, growth seems to have slowed to a crawl, down to 0.8% (quarter-to-quarter) in the second quarter of 2023 driven by weakness in the Tertiary Sector, which includes retail spending and the troubled real estate sector. This follows a more robust 2.2% figure in Q1, which was driven by pent-up demand released by the end of COVID-era lockdowns.

On an annual basis, China’s GDP expanded 6.3% year-over-year, below the forecasted 7.3% rate.

2. Exports

Exports fell by 14.5% in July, marking the third straight month of declines, and hitting lows not seen since February 2020. Meanwhile, imports fell 12.4%, reflecting the cautious consumer mood.

On a regional basis, exports fell year-over-year to China’s three biggest customers, ASEAN, the EU, and the U.S., by 17.4%, 15.1%, and 20.8% respectively.

There was one bright spot, however: exports to sanction-burdened Russia increased 51.8%, but that wasn’t nearly enough to offset the overall downward trend.

3. Consumer Price Index

The consumer price index moved into deflationary territory for the first time since 2021, with prices falling 3% year-over-year. The decline was led by Household Articles and Services, Food & Tobacco, and Transportation and Communications.

At the same time, the prices that producers paid for industrial products (PPI) fell 4.4% (year-over-year), the tenth month in a row with a negative reading.

4. Youth Unemployment

And while the headline unemployment rate remained steady at 5.3% in August 2023, up slightly from 5.2% the month before, it papers over serious weakness for urban youth, aged 16 to 24.

In July, the urban youth unemployment rate reached 21.3%, the highest ever recorded in the country, leading the National Bureau of Statistics of China to suspend future releases.

5. Yuan vs. USD

Given the stream of economic bad news, it’s no surprise that the yuan fell to a 16-year low against the U.S. dollar on August 16, 2023 in offshore trading.

In an effort to stabilize the currency, major state-owned Chinese banks were seen buying up yuan in offshore money markets. At the same time, the spread between the fixed exchange rate set by the People’s Bank of China and the offshore rate, rose to more than 1,000 basis points.

6. New Loans

Adding to the dismal economic mood, people borrowed less money according to the most recent figures provided by the government.

New bank loans fell to ¥346 billion in July, down from ¥3.05 trillion in the month before. This was the lowest reading since late-2009, and less than half of the ¥780 billion economists had forecast.

What’s Next?

Foreign Affairs recently published an article with the provocative title “The End of China’s Economic Miracle,” arguing that China’s troubles could be a U.S. opportunity.

And while this may be somewhat premature, the Middle Kingdom has some serious structural issues to contend with, many of them of their own making. Some of the top challenges include crackdowns on the tech sector, a collapsing real estate market, a larger debt crisis, and a shrinking population.

But large-scale government intervention does not appear to be in the offing, beyond exhortations for consumers to spend more and blaming Western media for engaging in “cognitive warfare.”

It’s no wonder that consumer confidence has plunged so low. At least we think so: the Chinese government stopped publishing that too.

Tyler Durden
Tue, 09/05/2023 – 23:20

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Russia, China & North Korea To Launch Trilateral War Games

Russia, China & North Korea To Launch Trilateral War Games

Authored by Kyle Anzalone via The Libertarian Institute,

South Korea’s intelligence services believe that Russia, China and North Korea are preparing to conduct joint military drills. Moscow, Beijing, and Pyongyang have all frequently complained about American war games near their borders.

According to Yoo Sang-bum, a South Korean legislator, Russian Defence Minister Sergei Shoigu likely proposed that North Korean soldiers join Russian and Chinese troops for military exercises during a July meeting with Supreme Leader Kim Jong Un. Yoo says he learned the information during a closed-door discussion with South Korea’s National Intelligence Service.

The report comes as Moscow, Beijing and Pyongyang have become increasingly frustrated with Washington and its allies conducting war games near their borders.

Last week, US and South Korean soldiers wrapped up the Ulchi Freedom Shield annual joint military exercises which included sending American strategic assets to the Korean Peninsula. In response to the drills, Kim ordered his forces to conduct a test of their nuclear capabilities.

In the South China Sea, Washington contests Beijing’s territorial claims by sending warships into Chinese waters and claiming the deployment is a “freedom of navigation operation.”

Prior to the invasion of Ukraine, Russian President Vladimir Putin explained that NATO war games in Ukrainian territory were viewed as an intense provocation by Moscow.

On Saturday, the Kremlin’s envoy to Pyongyang, Alexander Matsegora, explained North Korea’s participation in joint military exercises with China and Russia was an “appropriate” response to “constant bilateral and trilateral exercises” being held by the US and its “junior partners in Asia.”

On Monday, Shoigu confirmed Moscow was planning to conduct joint military drills with Pyongyang. When asked about deepening defense cooperation, he said per Reuters:

“Why not, these are our neighbors. There’s an old Russian saying: you don’t choose your neighbors and it’s better to live with your neighbors in peace and harmony,” Interfax news agency quoted Russia’s Defence Minister, Sergei Shoigu, as saying on Monday.

When asked about the possibility of joint exercises between the two countries, he said “of course” they were being discussed, it said.

Additionally, the Russian defense minister said Kim was planning to travel to Russia for an upcoming meeting with Putin.

Tyler Durden
Tue, 09/05/2023 – 23:00

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How Student-Teacher Ratios Vary Across The Globe

How Student-Teacher Ratios Vary Across The Globe

Around the world, schools have been struggling to recruit teachers before the start of the school year.

As Statista’s Anna Fleck reports, it’s a phenomenon not only seen in the U.S. but also in Canada, Australia and in Europe, as low salaries, long hours, stress and burnout from the pandemic have led to a mass exodus from the profession.

According to NPR, it is children living in isolated rural areas and big city districts in the U.S. that are particularly impacted. This is because these schools may not be able to compete for teachers with the better-funded suburban schools that can offer higher pay.

The following chart shows how there are fairly significant differences in class sizes between countries.

Infographic: How Student-Teacher Ratios Vary Across the Globe | Statista

You will find more infographics at Statista

Of the OECD countries listed, Norway and Belgium appear as examples of teachers working with smaller classes, with an average of around 10 pupils per teacher in public education (primary and secondary). By contrast, classes are fairly busy in Mexico. The country has the highest student-teacher ratio of the study, with around 24 to 27 students per teacher. In the U.S., there are usually around 15 students per teacher in both public elementary and secondary education.

Teachers warn that teacher shortages and increased class sizes could lead to a detrimental impact on pupils’ progress, attainment and behavior. This is because it makes it harder to provide adequate provision of learning resources to children, while teachers say they can’t meet the needs of all pupils under those circumstances.

While the student-staff ratio alone does not guarantee academic success, with teaching styles, teaching methods and extra-curricular choices also influencing factors, many teachers believe it is important.

Tyler Durden
Tue, 09/05/2023 – 22:40

via ZeroHedge News https://ift.tt/CtyT7D6 Tyler Durden

Pennsylvania High School QB Needs ‘Miracle’ After Collapsing Mid-Game, Family Says

Pennsylvania High School QB Needs ‘Miracle’ After Collapsing Mid-Game, Family Says

Authored by Lorenz Duchamps via The Epoch Times (emphasis ours),

A high school football player in Pennsylvania needs “a miracle” after collapsing on the field in the middle of a game on Sept. 1, according to his family, who said in a health update on Sept. 3 that the 17-year-old has been in critical condition for more than 36 hours.

A customized football in Pacific Palisades, Calif., on May 26, 2018. (Meg Oliphant/Getty Images)

Mason Martin, a quarterback for Karns City High School, suffered a “significant brain bleed as well as a collapsed lung,” his family told KDKA-TV.

The matchup between the Karns City Gremlins and Redbank Valley Bulldogs was cut short in the third quarter when referee Mike Vasbinder noticed Martin started to stagger after he received a hit during the game.

Despite the hit, the quarterback continued to play defense without any apparent issue until he left the field for the extra point and then came back for the return kick-off. However, the referee noticed something was off before the play started, prompting him to blow his whistle as Martin collapsed.

“I had to talk to him, and when I asked if he was alright, he told me, ‘no,'” Mr. Vasbinder said, according to the Butler Eagle. “So that’s when I knew something was wrong.”

The game was stopped early and the Redbanks were named the winner as they were leading 35–6 when the incident occurred.

Mr. Vasbinder said the medical emergency led staff members to enforce a series of protocols, including some of which the referee never had to follow in a game before last week’s incident.

“When we saw it got to the point where they were bringing on an ambulance, we talked to Redbank Valley’s coach and Karns City’s coach, who was obviously with his player,” he said. “And we just tried to stay back and keep calm, so things didn’t escalate.

Martin was taken off the field in a Karns City ambulance before being flown to UPMC Presbyterian Hospital in Pittsburgh in a STAT MedEvac helicopter, D9Sports.com reported.

His mother, Stacy King Martin, shared an update on her son’s health condition in a statement on social media on Sept. 3, thanking everyone for their love and support.

“Mason remains in critical condition with little change over the last 36 hours,” her message reads. “The truth is we need a miracle. I’m not saying that to sound grim, but to let you know that we need the strength of your prayers.”

No one believes in this kid more than us, but he needs everyone’s strength and prayers,” the message continues. “Right now, we have to wait for the swelling to go down to assess the extent of the damage to the brain. So please pray the way he has always played the game, all out holding nothing back, maybe a little angry, definitely aggressive.”

The Karns City Gremlin Football Program also issued a lengthy statement after the incident, saying the school has counselors available for students and staff who need to talk to someone after witnessing Martin’s serious on-the-field injury.

Brittany Thompson, a spectator who was there with her daughter, said the situation was reminiscent of Buffalo Bills safety Damar Hamlin’s collapse during the Jan. 2 game against the Cincinnati Bengals.

“We’re not from this school district, but my daughter wanted to come to the game,” Ms. Thompson said, the Butler Eagle reported. “It’s just really scary.”

Mr. Hamlin revealed the official cause of his collapse during a press conference in April, saying he collapsed due to a condition that mostly happens to teenagers playing baseball.

“The diagnosis of what happened to me was basically commotio cordis. It’s a direct blow at a specific point in your heartbeat that causes cardiac arrest,” he explained. “And five to seven seconds later, you fall out.”

Cardiac Issues Among Young Athletes

News of Martin’s medical emergency comes about a month after Lebron James’s son, Bronny James, suffered a sudden cardiac arrest while he was practicing for the USC basketball team.

A spokesperson for the family said on Aug. 26 that a congenital heart defect likely caused the cardiac arrest. The condition had been identified “after a comprehensive initial evaluation” at the center and follow-up evaluations at the Mayo Clinic and Atlantic Health/Morristown Medical Center.

It is an anatomically and functionally significant Congenital Heart Defect which can and will be treated,” the spokesperson said in a statement.

However, soon after the medical situation, rampant speculation emerged on social media, including a post from X owner Elon Musk suggesting that the cardiac incident was associated with the COVID-19 vaccine.

“We cannot ascribe everything to the vaccine, but, by the same token, we cannot ascribe nothing. Myocarditis is a known side effect. The only question is whether it is rare or common,” the Tesla CEO said in late July.

At the same time, CNN interviewed its own medical analyst, Dr. Sanjay Gupta, who asserted that the younger James’s health scare, as well as similar sudden cardiac arrest events involving young athletes, are “more common than people realize.”

Last month, the death of Caleb White, 17, from Alabama’s Pinson Valley High School also became a hot topic online as inquiries continue into the unclear links between COVID-19, COVID-19 vaccines, and heart issues.

“24 hours ago, my grandson Caleb White collapsed on the basketball court, went into cardiac arrest and all attempts to resuscitate him failed. This was similar to the illness Labron James’ son experienced as he was working out,” Caleb’s grandfather, George Varnadoe Jr., said in a Facebook post on Aug. 11.

Studies on Vaccine Risks

A study funded by the South Korean government has confirmed that COVID-19 vaccines can cause sudden death. In June, authorities said that eight people died suddenly after receiving an mRNA vaccine due to myocarditis.

All the sudden cardiac deaths (SCD) occurred in people aged 45 and younger. One of the victims was a 33-year-old man who died just one day after he received the second shot of the Moderna vaccine. Another case involved a 30-year-old woman who died three days after getting her first dose of a Pfizer vaccine.

The results show the need for “careful monitoring or warning of SCD as a potentially fatal complication of COVID-19 vaccination, especially in individuals who are ages under 45 years with mRNA vaccination,” the study said.

In an interview with The Epoch Times, Dr. Andrew Bostom, a retired professor of medicine in the United States, said that the results show why mandating COVID-19 vaccines for young people was flawed.

“These are people who ostensibly did not need the vaccine,” he said. “That’s what adds insult to injury.”

Aldgra Fredly and Naveen Athrappully contributed to this report.

Tyler Durden
Tue, 09/05/2023 – 22:20

via ZeroHedge News https://ift.tt/CkmogUt Tyler Durden

Musk-The-Merciless? SpaceX Launching “80% Of All Earth Payload Mass To Orbit”

Musk-The-Merciless? SpaceX Launching “80% Of All Earth Payload Mass To Orbit”

According to Elon Musk, SpaceX has exceeded the previous year’s rocket launch count, delivering 80% of all Earth payload mass to orbit for the year so far. He said China accounts for the other 10%. 

On Sunday night, SpaceX launched 21 Starlink internet satellites to low Earth orbit atop a Falcon 9 rocket from NASA’s Kennedy Space Center. The mission was the 62nd of the year, setting a new record for the most flights in a year. The previous record was set in 2022 by the company. 

Musk said, “Aiming for 10 Falcon flights in a month by the end of this year, then 12 per month next year.” 

He explained, based on the 2024 launch schedule, “SpaceX will deliver ~90% of all Earth payload to orbit,” adding, “Starship will take that to >99% in future years.” 

Musk’s latest predictions about SpaceX’s rocket launch monopoly come as new aerial images show Starship is preparing for the second test flight (the first flight ended with a bang). 

On Tuesday, X account RGV Aerial Photography posted a timelapse video of Starship, explaining, “Starship full stack!”

Musk said the world’s largest rocket underwent a successful static fire in recent weeks. He said, “Getting ready for the next Starship flight.”  

RGV Aerial Photography posted a list of milestones Starship has completed and what still needs to be achieved ahead of the next launch (list courtesy of blog spacex.information)

Meanwhile, Musk has managed to infuriate Democrats as they weaponize government agencies, such as the DoJ and SEC, against him… 

Is this how Dems see Musk?

… and a former Obama administration official recently declared: “The US government needs to end its relationship with Musk immediately.” 

Good luck with that one. Then no Starlinks for Ukraine. 

Tyler Durden
Tue, 09/05/2023 – 22:00

via ZeroHedge News https://ift.tt/qoyR6Ld Tyler Durden

The Third World Revolt

The Third World Revolt

Authored by Christopher Roach via American Greatness,

Back in my high-school debating days, policy debate teams frequently concluded their arguments with an extreme and somewhat absurd parade of horribles. This was a testament to their intelligence and creativity, plus being dead wrong carried few consequences. Through convoluted chains of logic, they argued that some small change in environmental or trade policy would lead to nuclear war or America’s domination by the “global south.”

Even then, this all struck me as ridiculous. How could the Third World, with its periodic famines and coups, ever threaten the United States? Back then we were fully dominant over the entire world after the collapse of the Soviet Union and the Warsaw Pact.

A lot has changed.

The Birth of the Nonaligned Movement

During the Cold War, the various nations on the periphery acted, in some ways, as judges of the two competing systems. While the United States and Soviet Union were accused of manipulating the Third World for selfish reasons, the manipulation went both ways. Being coy, Third World leaders often managed to squeeze real benefits, like infrastructure projectsdiscounted military equipment, and other forms of aid by siding with one side or the other.

During the Cold War, the nations of the Third World were wary of being compelled to take sides, risking conflicts orthogonal to their own interests and sacrificing their sovereignty through excessive dependence on a patron. This is why the nonaligned movement gained power, with India in particular at the forefront, where it was joined by interested Middle Eastern, African, and Latin American nations.

These nations, which had gained sovereignty only very recently from their colonial masters, were understandably touchy about their independence. They did not want to exchange a formal colonial structure for an informal one.

When the Cold War ended, the United States remained the sole superpower for some time, but, rather than achieving worldwide assent, this instead fueled envy, fear, and resentment. No longer able to chart their own path, every nation became subordinate on some level to American power.

Aggressive Idealism Fuels Anti-Americanism

At the height of its military power, starting during the Clinton presidency, American leaders began to embrace an aggressive “idealism” that set out to change the character, values, and customs of other countries. Purely “humanitarian” interventions like Kosovo and Somalia became common.

In Iraq and Afghanistan, this idealism meant feminism and democracy. In Eastern Europe, it meant the promotion of gay rights and secularism, alienating the conservative and religious people who once idealized the United States. In Latin America, idealism demanded capitalism and loosened trade restrictions.

The invocation of “Freedom” and “Democracy,” while it sounds noble and idealistic to our ears, began to sound like a threat to nations who were out of step with the West’s ruling classes. Unilateral American military intervention in such diverse places as Panama, Iraq, Serbia, Syria, and Libya made nations on the sidelines wary that they could be next.

Brazil, Russia, China, India and South Africa—the so-called BRICS—do not have much in common. They have diverse economic and political systems, distinct languages, very different histories, and members appeared on both sides of Cold War alliances. But they share a common orientation to American power:  our aspirations to maintain “sole superpower” status threatens their national power and independence.  Perceiving this as a zero-sum game, they seek to pivot world attention, prosperity, and power away from the United States and its Western European allies.

Among these American competitors, China and Russia stand out most of all. Through their de facto alliance, they now dominate the Eurasian landmass. Their industrial capacity has revealed significant advantages in a war of attrition. And, finally, with their history as former American enemies, they have a habitual and strong resistance to American interference with their destinies.

While Russia and China’s conduct is easily understood, the growing and diverse anti-American coalition, along with these other nations’ willingness to accept Russian and Chinese leadership, needs explanation.  The heart of the matter is sovereignty. American demands and desires currently constrain each of the BRICS nations and the many smaller nations of the Third World, whether it is in energy, central banking, sanctions, trade, or even domestic policies on issues like feminism and gay rights.

The proposed “multipolar world” has a lot of momentum because it does not require submission to a particular Chinese or Russian model for internal governance. Russia and China are mostly agnostic about internal affairs, unlike the “idealistic” United States. Rather, the alternative promotes a more organic (and potentially chaotic) distribution of power from the current system.

Finally, neither Russia nor China could displace the United States. Thus, at most, they can usher in a world of “multipolarity,” where all countries will be less constrained, and larger countries like them have, at most, regional strength.

Ukraine War Now Existential for the American Empire

The current war in Ukraine is bringing a lot of things to a head. The United States and Europe imagined the rest of the world would view the conflict as a morality play: a big, powerful bully dominating its innocent and unassuming neighbor. This, indeed, is how most leaders and many people in the West perceive events.

But this has been a tough sell in the Third World, which is the chief reason sanctions have faced resistance. While Russia is bigger than Ukraine, Ukraine is big relative to its separatist eastern provinces, with whom it has had a conflict since 2014. Since most developing nations began as anti-colonial movements for national liberation, Ukraine’s attempts to forcibly reintegrate the East does not look so different from the types of struggles Brazil and India had during their independence movements.

Moreover, with Ukraine aligned so closely with the West—using NATO tanks, NATO mercenaries, and NATO money to prosecute its defense—much of the world does not perceive a bully pushing around its stalwart neighbor, but rather an American bully using its Ukrainian lackey for realpolitik designs against Russia. This is a particularly popular view in China, of course. But, judging from editorials and open source comments, it is also widely held in places like Africa and India, where many people view Russia in a positive light because of its opposition to the United States.

Until now, American power rested on actual American superiority in economics, military power, and cultural influence.  The United States soundly defeated Iraq in the first Gulf War, emerged from the Cold War intact and wealthy, and soon proceeded to project power with great skill in the early days of the Afghanistan and Iraq campaigns. But since that time, we have departed Afghanistan and Iraq without a victory. In parallel, we spread chaos in Libya and Syria, failing to conclude regime change operations in the latter.

American military prowess is no longer undisputed or inevitable, undermining the broader claim of America as the “sole superpower.” This was all avoidable, but having overextended itself, the visible evidence of American decline is now confirmed. This is what happens when a nation is ruled by disloyal, short-sighted, and foolish people.

To state the obvious, losing wars is never good for an empire. The Ottoman and Russian empires dissolved under the stresses of the First World War. While part of the victorious allies, World War II cemented the subordinate status of France and the United Kingdom, and their empires fell apart after the war. Finally, and most recently, the Soviet Union broke apart after its costly and controversial campaign in Afghanistan.

Russia’s attempts to assert power in its near-abroad fueled America’s interest in the current Ukraine War.  The theory was that we would pursue our interests on the cheap, prevent challenges to American hegemony, with the added benefit that Ukrainians would be doing the dying. Because of our military and economic superiority, supporters claimed the war would kill Russians, weaken their military, and destabilize Putin’s hold on power.

Proponents of the war did not really consider what would happen in the reverse case. What if not Russia, but the United States found itself strained economically, losing critical and hard-to-replace weapons in a war of attrition, visibly demonstrating its impotence and weakness on the world stage? Wouldn’t the same dire consequences intended for Russia now happen to us?

Indeed, they would. Luckily, actual American security does not depend on the continuation of America’s dominance of the globe, nor does American prosperity. Indeed, our prosperity has declined as the requirements of the military industrial complex and the behemoth welfare state devalue our currency and impoverish taxpayers. Further, our aspirations to maintain sole superpower status has endangered us by fueling anti-Americanism, while encouraging significant moral compromise at home.

Although losing a war and taking a blow to prestige can be a painful process, the American people’s interests require the dismantling of the American empire. Our current course risks manifesting the dire and once-implausible scenarios popular on the high school debate circuit. It is time to change course.

Tyler Durden
Tue, 09/05/2023 – 21:40

via ZeroHedge News https://ift.tt/vMN9aFp Tyler Durden

AirBnBust: New York “Effectively Bans” Short-Term Rentals

AirBnBust: New York “Effectively Bans” Short-Term Rentals

Last week, we wrote that the bursting of the AirBnB bubble will also pop the broader housing bubble, which has shown remarkable resilience in the face of the highest interest rates since Volcker (although today’s ominous tumble in homebuilder stocks is certainly a concern), largely the result of a staggering divergence between effective mortgage rates (since almost everyone refinanced into a 30Y mortgage when rates were at record lows a few years back and is locked into a nice, low rate for a long, long time… or until they sell) and current 30Y mortgages, which at 7.5% nobody can afford.

So back to the coming AirBnB fiasco, last Wednesday the real estate experts at RedFin wrote that investor home purchases fell 45% from a year earlier in the second quarter, outpacing the 31% drop in overall home sales. That’s the biggest decline since 2008 with the exception of the quarter before, when they dropped 48%.

The drop in purchases has brought the total number of homes bought by investors below pre-pandemic levels, which is a major concern for a market where investors remained the last remaining support pillar now that most average Americans seeking to buy their first home are simply unable to afford it and are stuck renting indefinitely.

Real estate investors bought roughly 50,000 U.S. homes in the second quarter, the fewest of any second quarter in seven years, with the exception of the start of the pandemic.

The decline comes as this year’s relatively cool housing and rental markets makes investing in homes less attractive than it was during the pandemic-driven homebuying frenzy of 2021 and early 2022, when record numbers of AirBnB were purchased as hotel and lodging surrogates.

There is another, more tangible reason why the AirBnBoom is turning into an AirBnBust: starting today, the short-term rental landscape is changing drastically in New York City, and according to the company itself, will be “effectively banned” threatening the entire AirBnB model in the Big Apple, and other big cities to follow. 

As the RealDeal reports, beginning Tuesday, short-term rental hosts in New York City will be required to register their units, which will likely have a significant impact on platforms like Airbnb and potentially steer travelers toward hotels or New Jersey.

The new regulation, known as Local Law 18, includes several rules that may prove inconvenient for travelers and hosts:

  • Limit on Guests: Short-term rentals can accommodate no more than two paying guests at a time, regardless of the property’s size or the number of bedrooms.
  • Host Presence: Hosts are required to be physically present while their properties are being rented.
  • Unlocked Doors: Hosts and visitors must leave the interior doors within the rental unlocked, allowing occupants access to the entire unit.

The measure aims to curb illegal short-term rentals (which is basically every AirBnB listing), enhance guest safety, and alleviate housing market pressures. It could also drive travelers away from short-term rental platforms altogether, as the restrictions effectively eliminate the appeal of staying in apartments, and forces them to share space with strangers or opt for hotel rooms.

“Unless it is a really big unit, I think a lot of travelers will find it uncomfortable to stay in an apartment that fully complies with and abides by the city’s new regulations,” Sean Hennessey, a professor at New York University’s Jonathan M. Tisch Center of Hospitality, told the outlet. And if there is one thing New York does not have a lot of, it is “really big” apartments.

For those hoping to follow and comply with the regulatory framework, good luck: as of Aug. 28, the Office of Special Enforcement in New York City had received over 3,250 applications for short-term rental listings. They reviewed 808 submissions, granted 257 certificates, rejected 72, and returned 479 for further information or corrections, according to the Post.

The OSE also maintains a Prohibited Buildings List of units that can’t be rented short-term due to lease terms or rent regulations.

Penalties for hosts for violations of these regulations can range from $100 to $1,000 for the first offense, while guests will not face penalties for staying in an illegal property.

Naturally, Airbnb sued to have the law gutted, claiming it was effectively a ban on short-term rental  but a judge dismissed the lawsuit in August.

The company said that listings without a registration number will be unable to accept new reservations once the law is activated. To minimize disruptions to existing bookings, Airbnb will honor reservations made before Tuesday for stays through Dec. 1, refunding the service fee. After Dec. 1, Airbnb will cancel and refund reservations at uncertified properties. The platform, along with hosts, are attempting to work with local officials to pass a less-restrictive version of the measure.

With New York City’s tourism market already experiencing high demand, with more than 63 million travelers expected in 2023, the outlet reported, Airbnb alternatives are rapidly emerging to try and fill the short-term rental gap.  Some of these alternatives, however, will face similar predicaments to the short-term rental giant.

San Francisco-based Sonder could provide one alternative. The company has units in the Financial District and elsewhere that aren’t covered by the short-term rental law. The company’s business model, however, is reliant on receiving business from other platforms, including Airbnb.

Additionally, Sonder has had some issues of its own. In the spring, the startup was warned that it had until mid-October to improve its share price or face delisting from Nasdaq. The company, which manages and leases rentals itself (unlike Airbnb), has experienced multiple rounds of layoffs in recent months.

Kindred is a startup that charges residents to join a cohort of travelers and homesharers to host or swap homes without money changing hands directly. There are more than 1,000 residents registered in the New York metro area, co-founder Justine Palefsky told Crain’s.

The biggest beneficiaries from the suspension of AirBnB, are traditional hotels, but even some luxury brands are willing to at least partially embrace a short-term rental model. The Ritz-Carlton in NoMad has 16 short-term rental units up for grabs for $9,000 a night.

Finally, even if the New York crackdown seems too regional to crush the company’s business model, it is the other abovementioned trends that have sealed AirBnB’s coffin, and assure that the short-term rental company will be the proverbial canary in the housemine. And for those who were in kindergarten during the bursting of the 2007 housing bubble and today are AirBnB moguls, the following refresher from BowTiedBroke will be a useful walkthru for what comes next:

It has begun:

Since I went through Short Sales, Deed in Lieu’s and straight up Foreclosures with my RE adventures of ‘01-‘09, here is how the process plays out. I firmly believe heavy Airbnb markets are going to feel some pain.

The question is: How many first time STR owners/over-leveraged STR owners are out there and how will getting their credit ruined affect other markets or sectors in the US. I have no clue how the trickle down will go.

But, here are the steps:

1) Cash flow isn’t covering the mortgage and other expenses.

2) You stop making the payments

3) The bank QUICKLY reaches out to see what they can do to “help you” continue making payments to them. They won’t call daily, but they do call at least once/week, sometimes every few days.

4) You have no way to make the payments so the bank may offer to allow you to try a “Short Sale”, selling the home for less than the amount you owe and being forgiven of the difference (maybe).

5) You get an offer on the home. Bank rejects it. (There are instances where they accept..maybe more so now, but I never had any short sale offers accepted in ‘’08-‘09 by BofA or Wells Fargo)

6) If no offers are accepted by the bank, the next step is to try a Deed in Lieu. You attempt to hand keys back to the bank for a “sum” and they take over property. You write a check for a negotiated dollar amount, they send you all types of paperwork which will often say “We can still come after you for the forgiven difference one day”.

7) To do the DIL, the person at bank you’re negotiating with is not the one making the decision. It’s usually their supervisor. So your hardship “story” is usually being relayed to another person that you never even get to talk to who has the final say.

8) If the DIL is rejected, it’s straight up Foreclosure through the courts.

9) You get a wonderful 1099-C. Cancelation of Debt Form. Let’s say you owe $1,000,000. They foreclose and resell your property at auction and the bank gets $750,000 for it. They forgave $250,000 of your debt. It’s their “gift” to you. So you get to pay taxes on a $250,000 gift. Fun times.

The other issue with all of the above: Your credit is shot from the get go. Even in the short sale process, you aren’t making your payments. So each month that passes just dings your credit more and more. Say goodbye to having any ability to purchase anything on credit for around 5 years. At the 7 year mark, it falls off if they finalize your DIL or foreclosure, but your purchasing power is shot for a long time. My credit was 790 in 2008. By 2009, it was 400. Literally everything after this process has to be purchased with cash or some type of high interest hard money loan.

Tyler Durden
Tue, 09/05/2023 – 21:20

via ZeroHedge News https://ift.tt/7NieKbG Tyler Durden