After Davos, The China-Japan ‘Cold-War’ “Situation Is Getting Worse”

China and Japan’s war of words reveals a larger struggle for regional influence akin to a mini Cold War. Last week's tempestuous pissing contest in Davos, which The FT's Gideon Rachman notes, left people with the belief that "this is not a situation that is getting better; it is getting worse." Following Abe's analogies to WWI, China's Yi compared Abe's visit to the Yasukuni shrine to Merkel visiting the graves of Nazi war criminals and as the rhetoric grows the US has asked for reassurance from Abe that he will not do it again. So we have two countries, each building up their militaries while insisting they must do so to counter the threat of their regional rival. Added to this, a deep distrust of each other’s different political systems coupled with a history of animosity makes the two nations deeply suspicious of each other. Each country insists it loves peace, and uses scare tactics to try to paint its opponent as a hawkish boogeyman. Sound familiar to anyone else?

 

As The WSJ reports,

U.S. officials say they are seeking assurances from Japan that Prime Minister Shinzo Abe won't repeat a visit to a war shrine that angered China and South Korea and will ask Mr. Abe to consider reaffirming Tokyo's previous formal apologies over World War II in a bid to ease tensions in East Asia.

 

But even as Washington looks for calm, Seoul and Beijing bristled again this week over new comments by Mr. Abe on his shrine visit, underscoring the challenges the U.S. faces in its diplomatic push.

The FT sums up the tensions in Davos last week…

 

Via Shannon Tiezzi via The Diplomat,

Lately, it seems that Japanese officials can’t sneeze without incurring the wrath of the Chinese — and vice versa. So it’s no surprise that even conciliatory statements from Shinzo Abe have been soundly rebuffed. On Thursday, Abe wrote a message, published in local Chinese-language papers, conveying greetings for the lunar new year. According to Reuters’ translation of the Japanese-language version, Abe insisted that Japan has “taken the path of peace” since World War II, and “nothing has been changed in the policy of continuing to uphold this position.”

Friday, Abe further extended the olive branch. According to Channel NewsAsia, Abe told a parliamentary session that “Japan and China are inseparable.” He also expressed his desire for the two countries to restart diplomatic meetings. “Instead of refusing to hold dialogue unless issues become resolved, we should hold talks because we have issues,” Abe said.

China flatly rejected these overtures. Responding to earlier requests for a bilateral dialogue, Qin Gang responded with bitter sarcasm: “Such kind of dialogue will be of no effect. Chinese leaders are very busy. Let them spend more time on things useful and effective.” China has repeatedly expressed its position that no diplomatic meetings between China and Japan can be held until Shinzo Abe proves his sincerity. During Friday’s press conference, Qin Gang laid down a specific path for restarting dialogue: Abe should declare that “I will pull back from the precipice, immediately admit and correct mistakes and make no more visits to the Yasukuni Shrine.”

As I wrote earlier, at this point it seems impossible that anything Abe will do will satisfy Chinese leaders (the things he could do, like apologizing for his visit to Yasukuni and/or Japan’s imperialistic past, are incredibly unlikely). To Chinese officials, Abe is “self-contradictory,” as an editorial in China Daily put it. Unless Abe apologizes for and refrains from repeating actions that upset China (from visiting Yasukuni to building up Japan’s military), China will dismiss as insincere his rhetoric about dialogue and peace. Meanwhile, from the Japanese perspective, were Abe to devote the rest of his administration to proving his friendship to China, it would have obvious negative repercussions for Japanese interests.

So we have two countries, each building up their militaries while insisting they must do so to counter the threat of their regional rival. Added to this, a deep distrust of each other’s different political systems coupled with a history of animosity makes the two nations deeply suspicious of each other. Each country insists it loves peace, and uses scare tactics to try to paint its opponent as a hawkish boogeyman. Sound familiar to anyone else?

Ever since the Cold War ended, strategists have been warning leaders to drop the “Cold War mentality.” But it apparently hasn’t worked, because that is exactly what we have right now between China and Japan. The two countries identify so strongly as rivals that it’s impossible for either country to do or say anything without triggering a response from its counterpart. The tensions pop up in the most unexpected places – during Abe’s Africa tour, during a global economic summit in Switzerland.

Even the strong economic ties between China and Japan haven’t helped forestall tensions. In fact, it’s the other way around – tensions are eroding the economic relationship. The Telegraph recently reported that, according to a poll, 60 percent of Chinese business leaders are unwilling to work with Japanese firms. In 2012, China-Japan tensions even erupted into outright calls to boycott Japanese products, with rioters targeting Japanese businesses and restaurants. While Japan’s business view of China is less affected (according to The Telegraph, 80 percent of Japanese are willing to continue trade with China and South Korea), economic interests are shifting to other regions, notably Southeast Asia. Economic ties are likely to continue worsening. It’s certainly hard to see the next round of negotiations on a trilateral China-Japan-South Korea free-trade agreement going off as planned in February 2014.

As with the Cold War, part of the problem is that both China and Japan willfully read each other’s every move as a challenge or threat. For all the distrust between China and the United States, the problem hasn’t reached this level (yet). The U.S. has too many potential enemies (Russia, Iran, North Korea) and too many global interests for China to realistically interpret every diplomatic or strategic maneuver as somehow anti-China (although certainly some hawks within China do try). Japan, with its more limited global presence and strategic interests, is a different story. Meanwhile, as China is currently limiting its military build-up and strategic goals to the near seas, it’s easy for Tokyo interpret each move (for example, a new air defense identification zone) as directly aimed at Japan.

My colleague Zachary wrote Friday that one byproduct of the United States’ decline could be the emergence of regional hegemons. We might be seeing the beginning of this process now, with China and Japan in a Cold War-style battle, not for global power but for regional dominance. The territorial dispute highlights this by increasing the possibility of military conflict, but even if the Diaoyu/Senkaku Islands were to sink into the ocean tomorrow (one possible benefit of global warming) the tensions would remain. It’s a regional Cold War, currently being fought with words but with an arms race looming on the horizon. And, like the Cold War, tensions are unlikely to end until one country claims victory.

 


    



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After Davos, The China-Japan 'Cold-War' "Situation Is Getting Worse"

China and Japan’s war of words reveals a larger struggle for regional influence akin to a mini Cold War. Last week's tempestuous pissing contest in Davos, which The FT's Gideon Rachman notes, left people with the belief that "this is not a situation that is getting better; it is getting worse." Following Abe's analogies to WWI, China's Yi compared Abe's visit to the Yasukuni shrine to Merkel visiting the graves of Nazi war criminals and as the rhetoric grows the US has asked for reassurance from Abe that he will not do it again. So we have two countries, each building up their militaries while insisting they must do so to counter the threat of their regional rival. Added to this, a deep distrust of each other’s different political systems coupled with a history of animosity makes the two nations deeply suspicious of each other. Each country insists it loves peace, and uses scare tactics to try to paint its opponent as a hawkish boogeyman. Sound familiar to anyone else?

 

As The WSJ reports,

U.S. officials say they are seeking assurances from Japan that Prime Minister Shinzo Abe won't repeat a visit to a war shrine that angered China and South Korea and will ask Mr. Abe to consider reaffirming Tokyo's previous formal apologies over World War II in a bid to ease tensions in East Asia.

 

But even as Washington looks for calm, Seoul and Beijing bristled again this week over new comments by Mr. Abe on his shrine visit, underscoring the challenges the U.S. faces in its diplomatic push.

The FT sums up the tensions in Davos last week…

 

Via Shannon Tiezzi via The Diplomat,

Lately, it seems that Japanese officials can’t sneeze without incurring the wrath of the Chinese — and vice versa. So it’s no surprise that even conciliatory statements from Shinzo Abe have been soundly rebuffed. On Thursday, Abe wrote a message, published in local Chinese-language papers, conveying greetings for the lunar new year. According to Reuters’ translation of the Japanese-language version, Abe insisted that Japan has “taken the path of peace” since World War II, and “nothing has been changed in the policy of continuing to uphold this position.”

Friday, Abe further extended the olive branch. According to Channel NewsAsia, Abe told a parliamentary session that “Japan and China are inseparable.” He also expressed his desire for the two countries to restart diplomatic meetings. “Instead of refusing to hold dialogue unless issues become resolved, we should hold talks because we have issues,” Abe said.

China flatly rejected these overtures. Responding to earlier requests for a bilateral dialogue, Qin Gang responded with bitter sarcasm: “Such kind of dialogue will be of no effect. Chinese leaders are very busy. Let them spend more time on things useful and effective.” China has repeatedly expressed its position that no diplomatic meetings between China and Japan can be held until Shinzo Abe proves his sincerity. During Friday’s press conference, Qin Gang laid down a specific path for restarting dialogue: Abe should declare that “I will pull back from the precipice, immediately admit and correct mistakes and make no more visits to the Yasukuni Shrine.”

As I wrote earlier, at this point it seems impossible that anything Abe will do will satisfy Chinese leaders (the things he could do, like apologizing for his visit to Yasukuni and/or Japan’s imperialistic past, are incredibly unlikely). To Chinese officials, Abe is “self-contradictory,” as an editorial in China Daily put it. Unless Abe apologizes for and refrains from repeating actions that upset China (from visiting Yasukuni to building up Japan’s military), China will dismiss as insincere his rhetoric about dialogue and peace. Meanwhile, from the Japanese perspective, were Abe to devote the rest of his administration to proving his friendship to China, it would have obvious negative repercussions for Japanese interests.

So we have two countries, each building up their militaries while insisting they must do so to counter the threat of their regional rival. Added to this, a deep distrust of each other’s different political systems coupled with a history of animosity makes the two nations deeply suspicious of each other. Each country insists it loves peace, and uses scare tactics to try to paint its opponent as a hawkish boogeyman. Sound familiar to anyone else?

Ever since the Cold War ended, strategists have been warning leaders to drop the “Cold War mentality.” But it apparently hasn’t worked, because that is exactly what we have right now between China and Japan. The two countries identify so strongly as rivals that it’s impossible for either country to do or say anything without triggering a response from its counterpart. The tensions pop up in the most unexpected places – during Abe’s Africa tour, during a global economic summit in Switzerland.

Even the strong economic ties between China and Japan haven’t helped forestall tensions. In fact, it’s the other way around – tensions are eroding the economic relationship. The Telegraph recently reported that, according to a poll, 60 percent of Chinese business leaders are unwilling to work with Japanese firms. In 2012, China-Japan tensions even erupted into outright calls to boycott Japanese products, with rioters targeting Japanese businesses and restaurants. While Japan’s business view of China is less affected (according to The Telegraph, 80 percent of Japanese are willing to continue trade with China and South Korea), economic interests are shifting to other regions, notably Southeast Asia. Economic ties are likely to continue worsening. It’s certainly hard to see the next round of negotiations on a trilateral China-Japan-South Korea free-trade agreement going off as planned in February 2014.

As with the Cold War, part of the problem is that both China and Japan willfully read each other’s every move as a challenge or threat. For all the distrust between China and the United States, the problem hasn’t reached this level (yet). The U.S. has too many potential enemies (Russia, Iran, North Korea) and too many global interests for China to realistically interpret every diplomatic or strategic maneuver as somehow anti-China (although certainly some hawks within China do try). Japan, with its more limited global presence and strategic interests, is a different story. Meanwhile, as China is currently limiting its military build-up and strategic goals to the near seas, it’s easy for Tokyo interpret each move (for example, a new air defense identification zone) as directly aimed at Japan.


My colleague Zachary wrote Friday that one byproduct of the United States’ decline could be the emergence of regional hegemons. We might be seeing the beginning of this process now, with China and Japan in a Cold War-style battle, not for global power but for regional dominance.
The territorial dispute highlights this by increasing the possibility of military conflict, but even if the Diaoyu/Senkaku Islands were to sink into the ocean tomorrow (one possible benefit of global warming) the tensions would remain. It’s a regional Cold War, currently being fought with words but with an arms race looming on the horizon. And, like the Cold War, tensions are unlikely to end until one country claims victory.

 


    



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Sleet, snow up to 2 inches forecast for Tuesday and Wednesday

Out of the blue, a forecast of snow for Fayette and Coweta

We’ve been watching TV pictures of snow accumulations well north of us. Now we’ll experience Old Man Winter for ourselves by mid-week, according to the National Weather Service’s Forecast Office in Peachtree City.

No official word yet on whether that means school closings Tuesday and Wednesday.

The forecast for Fayette and Coweta counties calls for a 40 percent chance of snow after 1 p.m. Tuesday. Cloudy, with a high near 33. Northwest wind 5 to 10 mph, with gusts as high as 20 mph.

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Gold Hits $1280 As Stocks Edge Lower Despite Small Carry-Trade Rebound

More of the same this evening as Friday’s close not off-the-lows in stocks has seen no dead cat bounce yet in early trading. The 2nd worst trade deficit ever did not help USDJPY which was already sliding lower, back under 102.00 and to 7-week lows. Most of the USDJPY move was catch-down to US and Nikkei futures moves from late-Friday. Once it recoupled (briefly) JPY staged a small fade-back (off USD 102.00 and EUR 139.50) which dragged Gold back off its 2-month highs at $1,280 briefly. However, the rally in JPY carry is having no impact on US equity futures which remain marginally red… a problem for the momentum igniters… Perhaps even worse, the Nikkei is starting to lose its correlation with JPY once again.

Oops – Nikkei is not behaving itself…

 

and US futures continue to slide…

 

and gold tagged up to 1280,…


    



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Markets Are Falling, Which Means It’s Time For The US To Bomb A Sovereign Nation

After the worst week for the market in over a year, the US knows the drill. Must. Distract. Population. And if a drunk-driving, prepubescent Miley Cyrus Canadian lookalike on a work visa won’t do the trick, then by all means resort to ye olde faithful – bombing the feces out of some “independent” nation. In this case Somalia. CNN reports that earlier today, the US conducted a missile strike in Southern Somalia. The target: a “senior leader” affiliated with al Qaeda and Al-Shabaab, al Qaeda’s affiliate in Somalia. Supposedly this is the Al Qaeda that the US isn’t officially funding and supporting in Qatar’s desperate and ongoing attempt to push its pipeline under Syria.

From CNN:

The U.S. military conducted an airstrike in southern Somalia on Sunday against a suspected militant leader, a U.S. military official told CNN.

 

The target was described by the official as a “senior leader” affiliated with al Qaeda and Al-Shabaab, al Qaeda’s affiliate in Somalia.

 

The United States has not yet been able to determine whether the target was killed, the official said.

 

Last October, the elite U.S. Navy SEAL Team Six aborted a pre-dawn raid in southern Somalia to capture Al-Shabaab leader Ikrima after an intense firefight prevented them from reliably taking him alive, a senior U.S. official told CNN at the time.

 

In a second raid that same weekend, members of the U.S. Army Delta Force captured Abu Anas al Libi, an al Qaeda operative wanted for his alleged role in the deadly 1998 bombings of two U.S. embassies in Africa, during an operation in the Libyan capital of Tripoli.

 

The U.S. military official said Sunday’s strike involved missiles. No U.S. troops were on the ground.

 

Al-Shabaab, designated a terrorist organization by the United States, has a relationship with al Qaeda that goes back several years. In 2012, the two groups effectively merged, said CNN national security analyst Peter Bergen.

And this is happening after the market has dropped a mere 4% from all time highs. Wait until we enter a bear market: tactical nukes will be going off left and right…


    



via Zero Hedge http://ift.tt/1aB5bz5 Tyler Durden

Markets Are Falling, Which Means It's Time For The US To Bomb A Sovereign Nation

After the worst week for the market in over a year, the US knows the drill. Must. Distract. Population. And if a drunk-driving, prepubescent Miley Cyrus Canadian lookalike on a work visa won’t do the trick, then by all means resort to ye olde faithful – bombing the feces out of some “independent” nation. In this case Somalia. CNN reports that earlier today, the US conducted a missile strike in Southern Somalia. The target: a “senior leader” affiliated with al Qaeda and Al-Shabaab, al Qaeda’s affiliate in Somalia. Supposedly this is the Al Qaeda that the US isn’t officially funding and supporting in Qatar’s desperate and ongoing attempt to push its pipeline under Syria.

From CNN:

The U.S. military conducted an airstrike in southern Somalia on Sunday against a suspected militant leader, a U.S. military official told CNN.

 

The target was described by the official as a “senior leader” affiliated with al Qaeda and Al-Shabaab, al Qaeda’s affiliate in Somalia.

 

The United States has not yet been able to determine whether the target was killed, the official said.

 

Last October, the elite U.S. Navy SEAL Team Six aborted a pre-dawn raid in southern Somalia to capture Al-Shabaab leader Ikrima after an intense firefight prevented them from reliably taking him alive, a senior U.S. official told CNN at the time.

 

In a second raid that same weekend, members of the U.S. Army Delta Force captured Abu Anas al Libi, an al Qaeda operative wanted for his alleged role in the deadly 1998 bombings of two U.S. embassies in Africa, during an operation in the Libyan capital of Tripoli.

 

The U.S. military official said Sunday’s strike involved missiles. No U.S. troops were on the ground.

 

Al-Shabaab, designated a terrorist organization by the United States, has a relationship with al Qaeda that goes back several years. In 2012, the two groups effectively merged, said CNN national security analyst Peter Bergen.

And this is happening after the market has dropped a mere 4% from all time highs. Wait until we enter a bear market: tactical nukes will be going off left and right…


    



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Working Age Americans are the Majority of People on Food Stamps for the First Time

When people ask me to describe the state of the U.S. economy, what I always say is that it can best characterized as an ongoing state-sanctioned theft. This theft consists of the 0.01% oligarch class intentionally leveraging a corrupt monetary and political system in order to funnel all of the wealth of the non-oligarch rich and middle-class upward to them. The underclasses are kept quiet and in-line via food stamps and other forms of so-called “welfare.”

In reality, I have frequently maintained that food stamps are actually corporate welfare and that the stock market represents food stamps for the 1%. The entire economy is a gigantic bait and switch in which a handful of people rape and pillage everyone else.

With unemployment and GDP statistics hopelessly manipulated, we must look at other data points in order to gain an understanding of how things really stand. Data related to food stamp rolls is one way to gain real insight into the true state of the U.S. economy.

In an excellent article from the Associate Press, we learn several things.

  • For the first time ever, working-age people now make up the majority in U.S. households that rely on food stamps.
  • Food stamp participation since 1980 has grown the fastest among workers with some college training.
  • By education, about 28 percent of food stamp households are headed by a person with at least some college training, up from 8 percent in 1980.

More from the AP:

WASHINGTON (AP) — In a first, working-age people now make up the majority in U.S. households that rely on food stamps — a switch from a few years ago, when children and the elderly were the main recipients. 

Some of the change is due to demographics, such as the trend toward having fewer children. But a slow economic recovery with high unemployment, stagnant wages and an increasing gulf between low-wage and high-skill jobs also plays a big role. It suggests that government spending on the $80 billion-a-year food stamp program — twice what it cost five years ago — may not subside significantly anytime soon.

“High employment, stagnant wages.” Huh? Don’t these people realize we’ve been in a recovery for almost five years now!

Food stamp participation since 1980 has grown the fastest among workers with some college training, a sign that the safety net has stretched further to cover America’s former middle class, according to an analysis of government data for The Associated Press by economists at the University of Kentucky. Formally called Supplemental Nutrition Assistance, or SNAP, the program now covers 1 in 7 Americans.

Notice the statement, “America’s former middle class.” At least they are honest. The middle class is gone.

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“We’re Living Within A Money Bubble Of Epic Proportions”

Submitted by Adam Taggart via Peak Prosperity,

James Turk believes the time we live in now will be studied by future historians for generations to come. Just as we today marvel at the collective madness that resulted in the South Sea and Dutch tulip manias, our age will be known as the era when society lost sight of what money really is.

And as result, the wrong kinds of wealth — today, that's mostly financial assets — are valued and pursued. And just like those bubbles from centuries ago, when the current asset boom goes bust, the value of paper wealth will vaporize. 

In contrast, those holding tangible productive assets or real money will fare much better on a relative basis.

James and co-author John Rubino (of DollarCollapse.com) have recently published a new book covering the details of this prediction called The Money Bubble: What To Do Before It Pops. Within it, they delve into the reasons for why the world is destined for what Ludwig von Mises termed a "crack up boom":

Wealth comes in two forms.  It comes in financial assets, bonds, and T-Bills, and things of that nature, and it also comes in tangible assets: real estate, oil wells, timberland, farmland, houses and things that are tangible. And when you’re in a financial bust – and we’ve been in a financial bust since the dot-com bubble collapsed back in 2000 – what you want to do is you want to be involved with tangible assets and you want to avoid, as much as possible, your involvement in any financial assets.  So, consequently, what people should still be focusing on, even though we’re 14 years into this bust, is continuing the accumulation of tangible assets.

 

Because when this bust is over, promises are going to be broken left and right.  And that means financial assets where you have counterparty risk where you own an asset, the value of which is based on someone’s promise – a lot of those financial assets are going to be diminished in value.  Now, there’s a special kind of financial asset called a stock in a company.  It’s almost like a tangible asset in the sense that if you own stock in EXXON, you’re basically owning a tangible asset, because it’s involved in oil and it owns tangible assets all over the world.

 

But then, there are financial stocks, credit-card companies and banks, that are financial wealth rather than tangible wealth.  So, you don’t want to own stocks in those companies.  So, basically, own tangible assets or stocks in companies that are involved with tangible assets – those stocks, I call near-tangible – I think that’s the thing that everybody should be focusing on.

 

And when it comes to money and liquidity, the money, of course, would be physical gold or physical silver or a combination thereof because they will re-emerge in the historical and traditional role as money.

 

Keep in mind, gold’s been money for 5,000 years.  It was made money by the market.  Money comes from the market.  It doesn’t come from the government.  Over the past century, government’s certainly usurped that authority to control money.  And over the last 40 years, they’ve gone even further afield by completely divorcing fiat currency from the gold that used to back money.  And because of the time element that’s involved, we’ve lost sight of what money really is, and that’s what’s created the money bubble, Chris.

 

And it’s this money bubble where people have to come back to reality as to what money really is.  It’s liquid, tangible assets being used in the economy in exchange for real goods and services.  And it’s ultimately where we’re going.  And I think it’s going to be very, very disruptive because if you look at an individual country like Weimer, Germany or Zimbabwe more recently, or what Venezuela or Argentina are going through now.  You can see the disruption to the economy when the money is no good.

 

We’re talking here about fiat currencies throughout the world because nobody’s tied to gold anymore.  No country’s currency is tied to gold anymore.  So this is going to be the bubble, I think, that generations from now, hundreds of years from now people are going to be talking about just like we talk today about the South Sea Bubble or the Mississippi Bubble, from those episodes in history a couple hundred years ago.

Click the play button below to listen to Chris' interview with James Turk (35m:26s):

 


    



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