Draghi Is “Desperate To Avoid A Japan-Style Lost Decade”

As we noted previously, it is likely that whatever Draghi does this week “will not deliver a significant impulse to the real economy” in Europe but while negative rates are almost guaranteed (based on the consensus), reviving the ABS market (via focused QE) is being heralded by many as a positive swing factor. Unfortunately, as SocGen explains, even if the ECB began purchasing ABS in H2 2014, the size and reach of the market is not enough to move the scale as Europe acts desperately to avoid a Japanese-style lost decade.

 

Via SocGen,

ABS for dummies or what the ECB could do…

ECB to act to help peripheral SMEs

“What we need to be particularly watchful for at the moment is the potential for a negative spiral to take hold between low inflation, falling inflation expectations and credit, in particular in stressed countries” warned ECB president last week. Real rates remain too high compared to GDP in peripheral countries and the strength of the euro is reinforcing disinflationary pressures.

With ongoing concern on SME financing in the periphery, we expect the ECB to take unconventional measures at the 5 June meeting to boost SME lending. Action could take the form of a targeted LTRO (similar to the Bank of England’s Funding for Lending  cheme) and/or an ABS* repurchase programme. *ABS: A financial instrument collateralised by one or more types of assets, including real estate, mortgages, receivables etc.

Reviving the ABS market

ABS issuance has been subdued in recent years for economic reasons (weak demand) but also due to technical obstacles, (including the deemed unfavourable regulatory treatment applicable to the ABS market).

For now, we expect that the ECB could start purchasing ABS in H2 14 (either in the market or directly from banks) to revive the ABS market. As the size of the ABS market linked to SME loans is small (c. €120bn in Europe) any asset purchase programme is likely to include other types of ABS to have more impact on the economy. But, according to SG ABS & Covered bonds analysts, ECB-eligible ABS outstandings amount to just €760bn (Q1 14). Therefore purchases could be further extended to other assets, such as supranational agency bonds, or corporate paper.

ECB is acting to avoid a Japanese-style lost decade
 
Successful reform of the ABS market could help improve credit conditions in the periphery and break the vicious circle between banks and sovereigns. Initiatives from different European institutions are under investigation (the EIB, the European Commission, the ECB, etc.) but reforming the securitisation market will take several years. Banking Union will also help reduce fragmentation in the future. But, for now, deflation risks are increasing, and the ECB could well fall ‘behind the curve’ if it does not take sufficient action. Any significant downward revision of inflation expectations would require a broader based QE programme (over €1 trillion in asset purchases, including sovereign assets).

The goal is clearly to avoid a Japanese style lost decade… because QE worked out so well for Japan?!




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China HSBC PMI Misses; Economy Contracts For 5th Month In A Row

Despite this weekend’s exuberance over an oddly exuberant “20th month of expansion” official China PMI (survey) given the hard-macro-data that has been exhibited by the reforming nation, it seems China’s ‘other’ PMI (HSBC/Markit – less biased to larger SOEs) just missed expectations (for the 7th month in a row), fell and printed in contraction for the 5th month in a row as China’s economy is clearly bifurcating between the have (government’s help) and have-nots… (as employment continued to plunge) which are you investing in?

 

The ‘official’ government PMI – 20th month in a row of expansion, no matter what the macro data says…

 

HSBC PMI remains sub-50 – in contraction for the 5th month in a row and the fact that HSBC China PMI contracted from its Flash print (fina 49.4 vs 49.7 flash) suggests things are not accelerating either.

 

and missed expectations for the 7th month in a row…

 

HSBC/Markit explains…

“…growth momentum looked weaker than suggested in the flash reading as the stocks of finished goods index was revised up to 49.8 from 48.8 in the flash reading. The final PMI reading for May confirmed that the economy is stabilizing, but it is too early to say that it has bottomed out, particularly in light of a weaker property sector. The lack of a sustainable growth momentum warrants stronger policy support. We expect both monetary and fiscal policy to be loosened gradually over the coming months.”

Tomorrow you will read about how great it is that this PMI rose from 48.1 (last month’s print) and how that confirms the China is recovering meme… remember 1) that is below 50 and thus in contraction, 2) that is below the flash print which means things got materially worse in the last 2 weeks, and 3) it’s all made up anyway.

 

Most desks tend to believe that HSBC’s PMI is more indicative of the true state of commerce in the broad economy – in light of liquidity restrictions for all but the largest and most favored SOEs.

Employment at manufacturing companies declined again in May, as has been the case since November 2013. The rate of reduction was marked overall, and partly driven by company down-sizing policies.

Charts: Bloomberg




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Deadly Ukraine Fighter Jet Bombing Caught On Tape

Earlier today we reported that even as the western media blackout of events in Ukraine gets more black, the ongoing civil war is getting ever more uncivil, following a Ukraine fighter jet attack on the east Ukraine town of Lugansk, in which it struck not only the local administration building, but a neighboring area, resulting in numerous civilian casualties and injuries. Kiev was quick to deny that it was using its airforce on its own people, claiming instead that the explosion quite clearly caught on tape was merely locals trying to unsuccessfully shoot at the fighter jet.

So for your viewing displeasure, because the reality of yet another fratricidal war is hardly enjoyable, and so readers can make up their own minds, here is the moment of the fighter jet bombing caught on tape, as well as the tragic consequences.

The first clip shows CCTV footage as the rocket explosion is spread out across a park neighboring the administration building.

The next clip captures moment the Kiev fighter fired at fellow Ukrainians – something the west vocally condemned when it was allegedly conducted under former president Yanukovich, and is all too quiet this time.

From a different angle:

And the aftermath.




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China Sends 4 More Fighter Jets To Oil Rig Area As Vietnam Threatens Legal Action

A number of Vietnamese officials have now threatened to bring legal action against China over their territorial dispute in the South China Sea; but it does not seem to be having any impact on China's efforts to defend and sustain their presence. As Bloomberg reports, a total of five Chinese fighter jets have now been deployed to the area of exploration in disputed waters off the coast of Vietnam today (compared to 1 previous day) citing Fishing Control Department under Vietnam’s agriculture ministry. China has refused to answer the case the Philippines filed with an international tribunal at The Hague. It is likely to pursue a similar strategy if Vietnam appeals to international law in its own disputes with China.

 

Vietnam appears set to use international law to settle its territorial disputes with China in the South China Sea… (via The Diplomat)

A number of Vietnamese officials have now threatened to bring legal action against China over their territorial dispute in the South China Sea.

And China is responding in kind (as Bloomberg reports)…

Total of five Chinese fighter jets deployed to area of exploration rig in disputed waters off coast of Vietnam today, compared to 1 previous day, newspaper reports, citing Fishing Control Department under Vietnam’s agriculture ministry.

 

China still maintains 120 vessels of all kinds, including 4 military ships in disputed Paracel Islands area: newspaper

 

Some 50 Vietnamese ships are fishing in Paracel Islands area 20-30 nautical miles from the rig: newspaper

And as The Diplomat notes, it is unlikely China will care…

Speaking to Bloomberg News on Friday, Prime Minister Nguyen Tan Dung said that Vietnam is preparing to bring its territorial row with China to an international arbitrator. “We are prepared and ready for legal action,” Dung said, according to Bloomberg. “We are considering the most appropriate timing to take this measure.”

 

Deputy Defense Minister Nguyen Chi Vinh reiterated the prime minister’s statement on the sidelines of the Shangri-La Dialogue in Singapore over the weekend. He also stated that China has asked Vietnam not to pursue legal action. “They [China] have asked us several times not to bring the case to international court,” Vinh told reporters on the sidelines of the annual security forum. “Our response was that it’s up to China’s activities and behavior; if they continue to push us, we have no choice. This [legal] option is also in accordance with international law.”

 

Earlier in the summit, Vinh held a bilateral meeting with Wang Guanzhong, deputy chief of general staff of the People’s Liberation Party, the highest ranking military official Beijing sent to the Shangri-La Dialogue.

 

Vietnam was one of many countries who used the Shangri-La Dialogue to criticize China’s actions in Asia’s maritime disputes in the South and East China Seas. As The Diplomat has previously reported, Japanese Prime Minister Shinzo Abe made implicit criticisms of China’s recent actions in his keynote speech on Friday, while U.S. Defense Secretary Chuck Hagel made more explicit criticisms of China.

 

Australia also criticized China’s recent actions. “They’ve been certainly unhelpful, and if they’re unhelpful they must be destabilizing,” Australian Defense Minister David Johnston said at the Singapore conference. “The unilateral action of the declaration of boundaries is completely unhelpful and takes us in the wrong direction.”

 

General Wang lashed out at both Japan and the United States during his own speech to the annual forum on Sunday. He accused Tokyo and Washington of colluding together in criticizing China, though he said he preferred Hagel’s remarks because they were more direct than Abe’s, which didn’t mention China directly.

 

Vietnam’s threats to take up its case for sovereignty with an international arbitrator has obvious parallels with the Philippines, who is also appealing to international courts to deal with its territorial disputes with China over parts of the South China Sea. Last month, Prime Minister Dung traveled to the Philippines to meet with President Benigno Aquino III as well as attend the World Economic Forum on East Asia. Dung said during the trip that the two leaders “shared deep concern over the current extremely dangerous situation caused by China’s many actions that violate international law.”

 

Around the same time, Dung told the Associated Press that, “like all countries, Vietnam is considering various defense options, including legal actions in accordance with the international law.” According to the Associated Press, it was the first time Vietnam had seriously considered using international law to help resolve its dispute with China. Two unnamed Vietnamese diplomats told the Associated Press at the time that Vietnam might join the Philippines ongoing case or else begin its own complaint against China.

China has refused to answer the case the Philippines filed with an international tribunal at The Hague. It is likely to pursue a similar strategy if Vietnam appeals to international law in its own disputes with China. Interestingly, in his remarks at the Shangri-La Dialogue, General Wang rejected U.S. criticisms that China isn’t following international law by noting that the U.S. has not signed onto the UN Convention on the Law of the Seas.




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The Federal Reserve “Explained” In 7 Minutes

As members of the world’s central banks (most importantly Draghi and the ECB this week) are held up as Idols on mainstream business TV, despite their disastrous historical performances and inaccuracies, we thought it time to dust off the dark ‘reality’ behind the Federal Reserve – the uber-central bank… perhaps summed up nowhere better than in the words of former Fed Chair Alan Greenspan himself… “There is no other agency of government which can over-rule actions that we take.”

 

The Federal Reserve in 7 Minutes…

 

Source: Belligerent Politics




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Steen Jakobsen: Expect A 30% Stock Market Correction in 2014

Submitted by Adam Taggart of Peak Prosperity,

This week, Chris talks with Steen Jakobsen, Chief Investment Officer of Saxo Bank. We wanted to see through the eyes of a professional economist, which Steen kindly allowed us to do.

Steen agrees that central banks have largely failed in their misguided attempts to boost growth via trickle-down programs. Pretty much all the benefits of the recent years of money printing have gone to the upper echelons, with the true engines of growth and jobs — small to medium sized enterprises (SMEs) — getting very little.

As a result, financial asset prices have been driven up too high, which Steen anticipates will correct at some point in 2014; likely by 30% or so:

Here is my practical view. Since Q3 of last year I’ve been 70% in fixed income because I do believe, and I continue to believe, that we’ll see new low interest rates. In a world that cannot restart itself, it a world that believes in 'extend and pretend', you will not have any activity. You don’t have any move towards a mandate for change. So that means that history tells us the only way we get change is through the system failing. I’m not talking about a systemic failing; I'm talking about people owning up to the fact that we need to activate the SME. So I think we’ll see a progression towards helping the SMEs.

 

But in terms of the market, I have been very on fixed income, an increase in the exposure right now from 70 to 90% taking whatever equity I have down. Not because I’m afraid of 'doom and gloom' but simply because I think you can have a huge amount of leverage into the fixed income market here when everybody seems to believe that interest rates cannot go lower — now confirmed today by the Q1 data from the US. The world is simply starving because the world is rebalancing. The US current account deficit moved from -800 to -400. The world needs $400 billion worth of new export markets before it gets back to break even.

 

At the same time, Asia and China certainly are rebalancing their way from nominal growth towards quality growth. Again, the first derivative of that is lower growth, deflation, exported to the rest of the world.

 

So I think the low comes in economically in Q1 and Q2 in 2015. Every single macro indicator you can find will bottom at Q1/Q2. For the equity market, I think the top is 1900/1950. But you can't both predicted the level and the timing. And I’m more confident about the timing, not the level. So my timing I’m confident, and the timing I am confident on is the fact that the second half of this year is going to see a 30% correction from the top.

He also agrees that rising energy costs and overall resource scarcity are real threats to future economic growth; threats that he believes most economists and investors are blind to.

On all the above, we're in agreement with Steen.

In other areas, our predictions differ. But that's why we have guests like him on the program: to hear the rational behind contrasting views, and to learn what those moving large sums of capital in today's markets are thinking.

Despite the near term likelihood of a major correction, Steen remains quite optimistic. He believes that the correction will be a clearing event not just for overly-elevated prices, but also will serve as a wake-up call about the net energy situation that will lead to better policy decisions. We sure hope he's right, but we sadly think it will take a major price shock or supply shortage of key commodities to get the attention of our leaders.

Click the play button below to listen to Chris' interview with Steen (42m:43s):

 




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The Most Worrying Chart For Europe’s Stability

While we have historically noted the explosion of youth unemployment as a key factor for instability in Europe, there appears to be an ever more concerning indicator of the potential fragility of the European Union. As Bloomberg’s Maxime Sbahi notes, the difference in economic performance (and mood) between France and Germany, often referred to as the European “engine,” is at a record high. This disparity is likely to weaken France and isolate Germany further, heightening political tensions and indecision in the euro area.

And the “mood” of the people – perhaps even more contentiously – is near 30 year highs…

 

Via Bloomberg Brief,

The political consequences of these economic gaps are growing clearer, though the differences in underlying policy choices have been visible for some time. Last week’s European Parliament elections provided a first glimpse of the political shakeout, with the victory of the National Front in France. The country will send a record 24 euroskeptic members to the European Parliament in a total delegation of 74, compared with seven out of 96 from Germany.

Disagreements between the two EU founding members are likely to intensify as past common interests are now strained by increasing economic divergence. Recently, France has repeatedly argued for a relaxation of fiscal targets and called on the European Central Bank to be more proactive to weaken the euro. Germany has retorted by insisting on the ECB’s independence and respect for fiscal discipline, directly warning France against non-compliance with budget commitments.

If the French economy continues its slide from the euro area’s core to the profile of a periphery member, new standoffs are likely to materialize, weakening the Franco-German relationship that has provided leadership in the past. This might slow down the functioning of the euro area, where decisions are mostly made between heads of government in summits. Over the long term, one of the most disturbing consequences is a potential lack of a common strategic view for the euro area’s future at a time when direction is needed more than ever.

If its historic partner is downgraded to a junior status, Germany may grow even more powerful on the European stage. The country may find
itself in a more isolated and uncomfortable
position.




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Presenting 13 “Insane” Proposals To Fix China’s Unprecedented Smog Problem

When it comes to ridiculous, bizarre, and even "insane" contraptions, projects and ideas, China is indeed second to none. Which is why it was only a matter of time before China's engineers came up with unprecedented "solutions" to what has rapidly become perhaps the biggest problem for people living in China: air quality, in a broad sense, and specifically: unprecedented smog covering all the major metropolises on a daily basis.

As Vagabond Journey explains "China’s air quality has gotten so bad that it has been described, rather accurately, as resembling nuclear winter, as crazy bad, even as something chewable. It is no longer uncommon for people to wake up in the morning and not be able to see through the opaque haze far enough to cleanly make out the buildings right across the street."

What makes the situation even worse is that the problem is no longer localized to big cities and major manufacturing centers, and “storms” of insanely thick air pollution now have the power to cover incredible swaths of the country (i.e.  the ENTIRE northeast or from Shanghai to Chongqing), shutting down cities and blanketing even natural areas for thousands and thousands of miles.

But fear not: China is on top of it.

Declaring war on air pollution, the PRC is prepared to pump 1.7 trillion yuan ($277 billion) into coming up with solutions to curb the fuzzy sludge that opaques most of their country’s cities. This has led to the creation of several new and innovative, interesting — even ridiculous — pollution fighting methods

So here, courtesy of VJ, are the 13 most head-scratching proposals intended to do just that: fix China's smog. Good luck.

#13. Sky Watering Skyscrapers

Technically, it is called precipitation scavenging. In actuality all this means is turning skyscrapers into giant sprinklers in an effort to wash the skies of pollution. “If you can offer a half-hour watering your garden, then you can offer a half-hour watering your ambient atmosphere to keep air clean . . . ,” rings the sales pitch of this rather lo-fi geoengineering strategy.

Basically, precipitation scavenging works on the premise that rain clears smog, so artificial rain should do the same. To create “rain,” giant sprinklers will be attached to the roofs of tall buildings in China’s most polluted cities. During times when the air pollution rises due to a lack of rain the sprinklers will turn on, pulling SO2, NOx, and other airborne poisons out of the sky and dropping them down to the ground below. Researchers estimate that even on China’s worst air days it would only take a few hours to a few days of artificial rain to drop the PM 2.5 content down to 35 µg m-3, the recommended WHO limit — leaving blue skies in its wake.

As for where this water will come from, researchers say that it could easily be taken from nearby lakes and rivers, where it could be pumped up to the tops of skyscrapers, sprayed, collected, and then cycled back through the system. Though I have to admit that the thought of having the bubbling sludge from many of China’s polluted waterways being sprinkled out on top of my head doesn’t sound very appealing. The last thing we need is a second deadly aerial assault.

As for the cost of precipitation scavenging, researchers estimate that it would only take 1 kilowatt hour of electricity to lift one ton of water 200 meters, which would apparently only cost around $0.05. “. . . the low-tech nature of this geoengineering approach has led us to believe that it will cost much less than many other interventions such as cutting emissions.”

(Yes, that’s  a direct quote.)

Oh yeah, proponents of precipitation scavenging would also like to add that their system comes with a built in duel purpose bonus: it could also be used to fight fires.

Read Shaocai Yu’s research on this geoengineering method.

#12. Giant Floating Jellyfish-Like Acid Eating Membranes

If you don’t necessarily like the idea of artificial rain showers of potentially toxic Chinese river water knocking particulate matter out of the sky then here’s another solution you may prefer. It consists of launching squadrons of giant floating jellyfish-like membranes into the sky that eat SO2, NOx, and other pollutants which harm plants, animals, architecture, and humans, and then turning them into reclaimed water and chemical fertilizer.

Floating jellyfish?

Technically they’re called aerocysts.

Aerocysts?

Giant membranes filled with H2.

The H2 makes the aerocysts float and the long flowing tentacles hanging off of their bottoms make them look unequivocally like jellyfish.

If this strategy is ever implemented on a large scale China’s urban skies will be full of these things hovering 200-300 meters off the ground, where the most acidic pollutants hang out. The membrane, which makes up the jellyfish-like “head” of the apparatus is porous and will suck in the acidic materials it touches, thus removing them from the environment.

But these dystopian drones don’t stop there, as after the acidic materials are collected they are run through an on-deck purifier, which neutralizes them with with an on board microorganism produced alkaline substance. The now PH balanced gunk will then be transformed into a neutral, benign liquid with ammonium salt, which will conveniently be derived from the plants which will be growing off of the tentacles. When all filled up, the aerocysts will be programmed to return to port and deposit the liquid into a receptacle, where it can later be used as reclaimed water.

#11. Smog Fighting Drones

While talking about unmanned aerial anti-pollution devices we can’t leave out the array of smog fighting drones that are being tested throughout China. The most promising is a parafoil drone, which basically looks like a generator hanging from a parachute, that is being developed by the Aviation Industry Corporation of China. It’s function is to soar through the air blasting PM 2.5 particles with a chemical which freezes them, thus making them fall to the earth below. Each of these drones can clean a five square kilometer area, which is about large enough to scrub the air around an airport, port, or, as the case may be, urban districts where select groups of influential citizens wish to have cleaner air. Apparently, the Chinese government has already been using fixed-wing drones to chemically remove smog for some years now, but this new design allows each one to carry far more ammunition.

Though, of course, nobody really knows what effect these airborne “chemicals” will have on the humans and environment they will inevitably dust below.

#10. Impregnating the Air with Liquid Nitrogen

It is know that under the right circumstances artificially cooling particulate matter can disperse them from the atmosphere, and liquid nitrogen has been shown to be one of the best smog fighting chemicals yet available. Basically, the idea is to blast industrial coolant into the sky, which can cause crystals to form on PM 2.5 particles, whereupon gravity will do the rest. This method can also create a blanket of cool air which prevents warmer, polluted air from reaching the street surface.

“It is possible in theory to create a smog-free zone with liquid nitrogen and a shield against air pollutants with man-made cold, but even in laboratories we handle liquid nitrogen with care due to its extremely low temperature,” Dr. Wang Xinfeng, a researcher out of Shandong University in Jinan, told the SCMP.

#9. Cloud Seeding

As we’ve previously discovered, precipitation knocks smog out of the skies. So why not just create rain and snow? Cloud seeding, an anti-pollution measure which consists of blasting silver iodine packed rockets into clouds, is back. This was one of the ways that Beijing manufactured blue skies for the Olympics, and, according to a document published by the China Meteorological Administration, in 2015 local municipalities across China will be given the go ahead to use it at will.

When the silver iodine is shot into the clouds it assists in the formation of ice crystals, which then melt and drop to the ground below as rain, cleaning the skies in the process.

As a side note, silver iodide is toxic.

#8. Just Vacuum It

It has been suggested by Dutch researcher Daan Roosgaarde that China could create patches of clean air by essentially vacuuming it up. The method consists of burying Tesla coils just beneath the ground, which would then create an electrostatic field that could create a shaft of clean air by sucking away particulate matter and depositing it on the ground. In laboratory tests at the University of Delft, Roosgaarde has been able to clear smog from a one cubic meter area in five cubic meter room. He currently has a deal with Beijing to test out one of these devices in one of the city’s parks.

#7. Biodomes

A year or so ago a high-end school in Beijing offered my wife a job. Like so many others, she ultimately turned it down due to the atrocious quality of the city’s air. The school’s rebuttal was that they were building a giant bubble around their playground. This fact came off as more frightening than enticing: Is the air there really so bad that people are living in airtight domes?

In China’s smog encapsulated wealthy cities biodomes may soon become a part of life. Well, they may someday become a part of life for those who can afford to go to institutions that can pick up the tab — as at $950 per square meter, biodomes don’t come cheap.

These structures are essentially giant transparent domes that can enclose gardens, playgrounds, sports centers, schools yards — maybe someday even homes or entire neighborhoods. The ambient environment within these pods will be controlled, the air will be filtered of particulate matter and other pollutants, essentially creating an entire artificial environment.

From Dvice:

The “Bubbles” concept is designed to be an encapsulated oasis of clean air, much like the planet-sized air shield from the movie Spaceballs. Bubbles won’t be anywhere near planetary, of course. Instead, this air shield will house a park and botanical garden. Above the canopy, an undulating glass roof will contain translucent solar cells meant to collect whatever light actually penetrates Beijing’s Mordor-like perpetual gloom.

Though their builders are approaching them like any other project. “It’s just an infrastructure project like building metro stations and parks,” said Rajat Sodhi of Orproject, a British company that specializes in biodomes. (Yes, there are now companies specializing in biodomes). Perhaps more than anything else on this list, this strategy makes us realize that yes, it has really come to this.

#6. Banning Outdoor Barbecues

Air pollution looks like smoke and, well, smoke looks like smoke. Cooking food produces smoke, so perhaps cooking could be partiality responsible for the atrocious state of China’s air? Apparently, this is the thinking behind Beijing’s ban on outdoor barbecues. According to the Global Times, almost 13% of the particulate matter in Beijing’s air comes from cooking. That doesn’t quite seem right, but as the GT is the international mouthpiece of the PRC who could deny it? The outdoor barbecue ban was first enacted in 2000 but was not enforced until recently, when the city’s chengguan have been going around smashing smoke emitting street food stales and fining their proprietors.

#5. Removing 6 Million Cars

Calling the country’s environmental situation “extremely grim,” the PRC announced that it will remove nearly 5.3 million higher polluting cars off the roads this year. Basically, all vehicles manufactured before 2005 are going to get the boot. 330,000 will be removed from Beijing alone, and an incredible 660,000 will be decommissioned in Hebei Province, which is one of the smoggiest regions in the world. China currently has 240 million automobiles on the road, half being passenger cars. Though, in rather typical Chinese fashion, the decree lacks a disclosure as to how this measure is going to be put into effect.

Along with this initiative comes a plan to require gas stations in Beijing, Shanghai, and a handful of other large cities to sell only the highest grade, lowest polluting fuel available.

Actually, this doesn’t seem to be that deranged of a pollution fighting method after all.

#4. Removing Mountains

In 1997, Lanzhou’s Daqingshan Project aimed to remove a 1,689 meter high mountain that encased the city improve its air quality — as well as to create a little extra land that could be sold to developers. Lanzhou also has some of the worst air on the planet, which is partially a result of the fact that it sits deep down in a valley and is hemmed in on all sides by mountains. So to increase circulation a little and whisk away some smog the city decided to just remove one of the largest mountains that rose above it. They actually removed half of it before it became obvious that it just wasn’t going to work: the air quality remained as sordid as ever.

This is not a potential “solution” that has yet been replicated elsewhere.

#3. Coal by Wire

Out of sight out of mind. Or, more poignantly, if it’s far away from major cities then who gives a shit seems to be the philosophy behind China’s coal by wire initiative. This is one of the most massive infrastructural projects going in the world today, and consists of building large amounts of coal fired power plants way out in remote places in China’s north and west and sending the energy over thousands of miles to big cities. The initiative is a continuation of an ongoing movement to decentralize and disperse heavy polluting industries into the hinterlands of the country, where less people will see them and feel their immediate effects.

So in-focus places like Beijing and Shanghai will become less and less polluted while previously pristine areas that hardly anybody knows even exist, like Hulunbuir, will become wastelands. Already, the wide open grasslands of Inner Mongolia are speckled with expansive arrays of power plants, and this looks to be a trend that will be intensified over the coming decades.

The biggest problem with coal by wire, besides environmentally assaulting millions of innocent bystanders and destroying China’s last unpolluted frontiers, is the fact that the places most of the power plants are going tend to have a low supply of water. As coal fed power plants need incredible amounts of freshwater to function, there is a definite conflict of interests built into this initiative.

#2. Turning Coal into Gas

China plans to cut down the particulate matter in the northern reaches of the country by 25 per cent by 2017. One of the main ways it intends to do this is by turning coal into gas. While coal is often blamed for the most of China’s air pollution woes, natural gas burns cleaner, creating less emissions. So why not just convert the coal to natural gas in order to use China’s abundant supplies of this energy source in a way that will create less air pollution? That’s the strategy behind China’s new initiative to raise synthetic coal-to-gas output to 50 Bcm a year by 2020, which would account for 12.5% of the country’s total domestic gas supply. To these ends, approval was given to build 18 new large scale synthetic natural gas (SNG) plants across China’s northern fringes.

 

Though this plan does not seem to be the environmental solution it’s initially billed to be:

While SNG emits fewer particulates into the air than burning coal, it releases significantly more greenhouse gases than mainstream fossil fuels. Peer-reviewed studies in the journal Energy Policy estimate that life-cycle CO2 emissions are 36–108 percent higher than coal when coal-based SNG is used for cooking, heating, and power generation. Rapidly deploying SNG projects might, therefore, be a step backward for China’s low-carbon energy strategy.

According to the World Resources Institute (WRI), the production of synthetic gas could ultimately result in twice the total carbon emissions as coal-fired energy.

Converting coal to natural gas is also takes an incredible amount of water. It takes 6-10 liters of water to produce one cubic meter of SNG. As most of the new coal to gas power plants are to be built in the China’s arid northern regions — Xinjiang and Inner Mongolia — they will further add stresses to a water table that’s already coming close to tapping out.

Like the Coal By Wire initiative, SNG production is an effort to keep the big cities of China’s east running with cleaner skies by exporting environmental stresses out to the hinterlands:

Under a memorandum of understanding with the Inner Mongolia Government, Beijing will become the first Chinese city powered by SNG, receiving at least 4 billion cubic meters of the fuel annually. This production would consume more than 32 billion liters of freshwater, enough to meet 1 million Inner Mongolians’ domestic needs for an entire year.

#1. Building Ecocities

The words “eco” and “city” combined together in any fashion sound like an oxymoron. If ecological well-being alone was truly the goal, China probably wouldn’t being plowing up thousands of square kilometers of agricultural fields, small villages, wooded areas, and foothills to build new ecocities. “It’s difficult everywhere, all over the world, to develop something like cities in a sustainable way,” spoke Fanny Hoffman-Loss, the principle architect of the Nanhui eco-city that sits at the far edge of Shangha’s Pudong district. Though there are nearly 300 ecocities that are being built across China. That’s around one ecocity per every two municipalities in the entire country, and the trend is expected to grow until 50% of all new urban developments will flaunt the “eco” banner. These cities are sold as being a low polluting alternative to conventional cities, tend to have tight emissions standards, and are meant to be models for future urbanism. But does building any type of new city from scratch actually serve to better the environment in anyway? Who knows, but in the mean time these intriguing cutting edge developments can at least take our minds off the thick gray air that invariably hems them in.

Conclusion

In the war against air pollution China is obviously very committed, but one relatively decent solution is oddly missing from this list: a reduction of coal power. As emissions from coal fired power plants make up a huge portion of China’s particulate matter it would seem as if improving air quality would mean an immediate transitioning away from this source of energy. But that’s not the case — at least not anytime soon. In fact, China is actively at work increasing its coal power capacity. By 2020 China’s coal derived energy will rise by 75%, taking on another 557GW (around half the total energy capacity of the USA) from 363 new coal fired power plants. China already burns nearly as much coal as almost the rest of the world combined, and plans to rise this intake from 3.5 billion tons per year (2012) to 4.8 billion tons by 2020. Though the PRC claims that it aims to reduce coal power to 65% of the nation’s total energy supply in the coming decade, it also plans on nearly doubling its total energy output — which will be primarily lead by increasing coal energy production.

Yes, in the face of mass public discontent, millions of premature deaths, a pandemic of respiratory illnesses, and economic backlashes due to air pollution, China is rampantly increasing it’s use of coal as an energy source. As each coal fired power plant has a lifespan of 50 to 75 years, China will remain dependent on this energy source throughout most of the coming century — and it’s skies will remain a murky gray sludge, no matter what insane pollution fighting measures are taken.

While some say that tighter regulations on industrial pollution, stronger emission standards, and a quicker transition away from coal power would drastically improve the quality of China’s air, the PRC would apparently rather go with sci-fi-esque smog fighting drones, floating acid eating membranes, biodomes, air sprinkling skyscrapers, cloud seeding, and aerial liquid nitrogen blasters. China wants to have their emissions and breath clean air too, but even with squadrons of pollution scrubbers hovering over airtight domes in the middle of ecocities, ‘Airpocalypses’ will more than likely remain an integral part of the China experience for a long time yet.




via Zero Hedge http://ift.tt/1kjYdSB Tyler Durden

Ron Paul: “Mental Health Screening A Good Way To Decrease Liberty, Poor Way To Increase Security”

Submitted by Ron Paul via The Ron Paul Institute,

Last week Americans were shocked and saddened by another mass killing, this one near a college campus in California. We all feel deep sympathy for the families of the victims.

As usual, many people responded to this shooting by calling for new federal gun control laws, including the mental health screening of anyone attempting to purchase a firearm. There are a number of problems with this proposal. Federally-mandated mental health screenings would require storing mental health records in a government database. This obviously raises concerns about patient privacy and doctor-patient confidentiality, as well as the threat of identity theft. Anyone who doubts that these are legitimate concerns should consider the enormous privacy problems with the Obamacare website; some have even suggested that healthcare.gov be renamed indentifytheft.gov.

Giving government the power to bar some Americans from owning guns by labeling them as “mentally ill” could easily lead to serious abuses. Even authors of mental health manuals admit that mental health diagnoses are subjective and can be based on “social constructions.” Thus, anyone whose behavior deviates from some “norm” could find himself deprived of his second amendment, and possibly other, rights.

People could be even be labeled “mentally ill” because they are outspoken critics of the government. Currently, as part of the Department of Homeland Security’s “Operation Vigilant Eagle” program, veterans who express dissatisfaction with government polices run the risk of being labeled mentally-unstable terrorist threats. There has also been at least one federally-funded violence prevention program that determined that holding certain political and social views indicates a propensity for violence. So there is precedent for labeling those with unpopular political beliefs as being “mentally ill.”

We have also seen how US presidents from both parties have used the IRS to target political opponents. Imagine the potential for abuse if those same politicians had access to the mental health records of their political opponents, or the power to label opponents mentally ill because those opponents were “dissatisfied” with the government?

People who say that the threat to liberty posed by mental health screenings is outweighed by the enhanced security they provide should consider that expanding background checks and mental health screening is unlikely to make us safer. Professor Richard Alan Friedman, director of the Psychopharmacology Clinic at Weill Cornell Medical College, has written that it is imposable to predict whether an individual will act in a violent manner.

One effective way to limit mass shootings may be to repeal gun control laws that, by disarming the law-abiding, turn the innocent into victims. Like most recent shootings, this one took place in a location where the attacker could be confident his intended targets could not defend themselves. It is interesting that even though the attacker used hammers and knives on some of the victims, no one is calling for background checks on those wishing to purchase hammers.

Instead of focusing on passing more laws, our focus should be replacing the entitlement culture with a culture of self-responsibility and respect for the rights of others. Government can help this process by ending its routine violation of our rights and the use of violence as a means to achieve domestic and foreign policy goals. This is not to suggest that government policies are directly responsible for the shootings, but it is not unreasonable to suggest that growing up in a time of preemptive war may feed a deranged person’s delusion that violence is a proper way to deal with personal frustrations. Fixing the culture is much more difficult than passing new laws but is the only way to guarantee our liberty and our security.




via Zero Hedge http://ift.tt/1uaJpYs Tyler Durden