Abu Al-Fin

Slow Motion Collapse of the Welfare State from the US to the EU

2012-01-30T16:31:00.000Z

Walter Russell Mead has written an important essay on the collapse of the welfare state, which he refers to as "the blue model." It is worth reading in its entirety at the link after the excerpts below:

The blue model is breaking down so fast and so far that not even its supporters can ignore the disintegration and disaster it now presages. Liberal Democrats in states like Rhode Island and cities like Chicago are cutting pensions and benefits and laying off workers out of financial necessity rather than ideological zeal. The blue model can no longer pay its bills, and not even its friends can keep it alive.

...Demographic change is accelerating the crisis of the blue social model, as retirement and other social benefits come under increasing pressure. Social Security and Medicare are covering a steadily growing percentage of the population. Younger workers no longer believe these systems will be in place for their old age. They are at least partly right. Without major change, the current Medicare system cannot last. Beyond that, a general crisis of the pension system threatens to reduce the income of older people even as government is less able to take up the slack. Defined benefit retirement programs have largely disappeared in the private sector; state and municipal pensions threaten to bankrupt some cities and states, and they are forcing officials in others to choose between drastic service cuts and breaking pension commitments to retirees. _Walter Russell Mead American Interest

The welfare state contained the seeds of its own death, just as the Russian Soviet system did. As humans give up more and more of their autonomy to an ever-bloating bureaucratic system, more and more of the internal systems which made them human begin to decay and become vestigial. Eventually most citizens are unable to grow out of the dependency stage of childhood. Birth rates collapse along with family stability. The very future of the society fades away with the declining competence and courage of its citizens.

he real crisis today in the United States is the accelerating collapse of blue government, not blue private industry, which is a phenomenon largely behind us. We are witnessing a multi-dimensional meltdown that affects our lives and politics in many ways. Three elements of the blue government meltdown in particular are worth mentioning.

The first is the government’s role in providing the benefits associated with the blue system. When we talk about “runaway entitlement programs”, we are talking about commitments by the government to provide retirement and other social benefits that originated as part of the blue system social contract. Workers could retire as early as 62 with a combination of Social Security and private pensions. These costs are now exploding according to the immutable logic of demographic and actuarial facts, and it is clear that the government can’t pay them into the future.

The second crisis is that the government is now the last “true blue” employer in the country. Federal, state and local governments are often staffed by lifetime civil servants whose jobs are protected by law and by some of the last truly powerful unions in the country. All the Reagan Administration and like-minded state governments ever managed to do was to slow the growth of government, not reduce it; government at all levels today accounts for a larger share of U.S. gross national product than it did in 1981 (and that was when government did a lot more in regulating the economy). It has become incredibly expensive for governments to do anything at all, and they are poorly equipped to respond nimbly to the fast-changing conditions of America today. _American Interest WRM

Read (or at least carefully skim) the entire essay.

Having allowed governments to control the economy via monstrous budgets and central banks, the private sectors of western nations have become almost completely dependent upon government caprice. As the core populations which allowed these societies to advance slowly shrink away, so does any chance of ultimate recovery from the welfare state's collapse, when it comes.

Europe has gone through a similar process, and is somewhat advanced along the downward pathway:

Europe's demographics also aren't on the side of growth. Populations across the developed world are graying, but Europe's low productivity growth means that its future labor shortfall will be especially acute. It doesn't help that Europeans draw social security benefits earlier and more easily than their developed-world peers. Pension commitments will strain national budgets even if Angela Merkel gets her way on handcuffing euro-zone public debt.

Which brings Messrs. Gill and Raiser to the other serious drain on European growth. Big government, by their calculation, shaves about two percentage points off growth once public spending passes 40% of GDP. Some welfare states are better-run than others—think Sweden and Germany—but the World Bank report highlights a few important connections between the welfare state and growth.

Today, European governments spend more on social protection than the rest of the world combined, thereby entrenching powerful disincentives to work and enterprise. Social protections have also come at huge direct cost to taxpayers. _WSJ

And so we see European nations on the verge of economic collapse, one by one, like dominoes. The same thing is occurring in the US, but on the city and state level -- for exactly the same reasons.

The welfare state is dying, and defiantly threatening to take down the rest of the world with it. Is it any wonder that many of the less intelligent global economic analysts look to China and India as the last great hopes for the future of global civilisation?

Fragmentation is likely, widespread hardship is possible, and war is not out of the question. Hope for the best. Prepare for the worst.

The "Obama Recovery" Doesn't Look Much Like a Recovery Somehow

2012-01-27T18:04:00.000Z

... the Obama Recovery stinks. Even if today’s GDP report—for the fourth quarter of 2011—shows 3 percent growth or better, it would be just the fourth time that has happened since the economy began turning up in June 2009: 3.8 percent in the fourth quarter of 2009, 3.9 percent in the first quarter of 2010, and 3.8 percent in the second quarter of 2010. But no 3 percent-plus quarters since then.

The first nine quarters of the Reagan Recovery, by contrast, looked like this: 5.1 percent, 9.3 percent, 8.1 percent, 8.5 percent, 8.0 percent, 7.1 percent, 3.9 percent, 3.3 percent, 3.8, percent, 3.4 percent. In fact, the Reagan Boom went from the first quarter of 1983 until the second quarter of 1986 without notching a sub-3 percent GDP quarter.

So, while the Reagan Recovery quickly made up for lost years of growth, not so much for the Obama Recovery, as this chart in today’s Wall Street Journal makes clear: _American

The housing market, which has historically helped lead the economy out of recession, remains deeply depressed. Many business leaders say they are also being held back by policy-related uncertainty...the threat of new regulations and higher taxes.... Recent economic research has given some weight to those complaints. A study by a trio of academic economists found that policy uncertainty has risen in recent years, and that periods of uncertainty have in the past corresponded with rising unemployment and slowing growth. _American

Everything about the Obama regime seems customised to hamper private, voluntary economic activity. As a disciple of socialist radical Saul Alinsky, Barack Obama is something of the anti-America President. At least, he is opposed to the enlightenment principles of individual freedom embedded in the US Constitution which have allowed the US to prosper so well, for so long.

When contemplating the type of regime Obama wishes to put in place of what the US Constitution formerly permitted, it is best to hope for the best, but prepare for the worst.

China's Massive Misallocation of Resources in Building an "Infrastructure to Nowhere" Is Becoming Sadly Apparent

2012-01-26T00:04:00.000Z

Despite all the denials by Chinese government officials and die-hard China bulls, it is becoming clear that China's massive infrastructure buildup is unsustainable.

Little by little the claim repeated by so many China bulls – that you can never spend too much on infrastructure – is being eroded. It is possible, it turns out, to waste a lot of money even on infrastructure, and if debt-fueled investment is being wasted in China, as I have been arguing for over half a decade, then without doubt debt must be rising at an unsustainable pace. _MPettis

Local governments nationwide have slashed infrastructure spending since last summer, and the urban rail business has slowed to a crawl after several years of rapid growth. Spending for subways was cut as central government economic planners put the brakes on rail projects and indirectly reduced local government spending power by maintaining real estate market controls designed to prevent housing price inflation. _Caixin

China's banks may be understating their exposure to runaway local borrowing that is raising fears of a government bailout, according to a Bloomberg analysis of debt disclosed by all 231 local-government financing companies that sold bonds, medium-term notes or commercial paper through Dec. 10 this year.

...“You should be more worried than you think,” he said of Bloomberg’s findings. “Certainly more worried than the banks will tell you.
“You know how this story ends -- badly,” he said. _Bloomberg

For the last few years, Al Fin economists have predicted that China's massive buildup of ghost infrastructure would eventually run out of steam, against all the contrary sentiments coming from official statistics and China advocates both inside and outside of China. How could they be so confident?

In early 2009, the newly inaugurated US President Obama began laying out his policies more clearly, in conjunction with the then all-Democratic Congress. It was clear that Mr. Obama's policies were distinctly antagonistic to private sector growth, with a strong odour of energy starvationism attached. Combined with the banking and housing crises largely created and abetted by unwise government policies related to banking and house financing, it was apparent that the US economy could not recover in a healthy manner -- no matter how many $trillions Mr. Obama squandered on his political cronies and supporters.

Likewise in Europe, it was clear that a combined crisis of debt and demographic decline had been building over a long period of time, which combined with the international banking crisis and financial collapse would not allow Europe ot bounce back this time.

Since the bulk of China's income derived from its export markets, and since its two largest customers for exports were suffering extended economic problems of their own -- and of their own making -- China could not sustain its monster growth rates in any legitimate way, over the short term.

The ad hoc strategy of attempting to build and borrow its way into sustained high growth might have worked had China been able to liberalise its markets and society while tightening restrictions on economic activity by all local and central governments. In other words, China needed to institute constitutional restrictions on government action while loosening restrictions on private action. That would have taken time, and would have been strenuously resisted by entrenched political powers inside the country.

In a society as insular as the current Chinese society, the sense of threat from real and imagined entities both inside and outside one's borders tends to be overwhelming, in times of rapid change. It was clear the CCP would only liberalise gradually, if at all.

Therefore the over-building and over-borrowing gambit could have been seen as unsustainable from the beginning -- to anyone who properly anticipated the economic effects of US President Obama's policies on the world's largest economy.

The fact that so many US economists of the highest rank failed to anticipate the tragic reality of Mr. Obama's regime and its policies, is a sad testimony to modern economics whenever it is influenced by leftist political philosophy.

16 Million Americans Who Should be Working, Aren't

2012-01-25T16:14:00.000Z

Prior to the recession, nearly 65 percent of working-age Americans (not in the military or in prison) had jobs. Now it’s down to 58%. The difference is 16 million people who should be working, but aren’t — about the same as the entire working-age population of Australia. The slight increase in employment during the past few months barely tracks the natural increase in population.

...People are hurting, and badly. The official unemployment rate may have fallen, slightly, but the real unemployment rate — the number of working-age Americans who aren’t working — rose from about 12% before the 2008 crisis, to about 23%, and hasn’t come down. That includes people who have retired early because they can’t find work, spouses who used to earn a second income but have gone back to homemaking because work isn’t available, self-employed people whose businesses have collapsed, young people who live in their parents’ basement because they can’t afford tuition and can’t find work. _Spengler

The article linked above contains several informative charts that provide visual time trends.

The American skankstream media will pull out all the stops to help President Obama win re-election in November. But when the media message conflicts with the "in your face reality" which average Americans must contend with, the final outcome in the poll booth remains in doubt.

Obama will also get a lot of help from labour unions and Democratic Party election officials at the local and state levels. Help that will probably, at times, cross over the line of legality. But that's politics, the US Democratic Party way.

It is not just the future of the US that will be at stake. The global economy has scant chance of recovery as long as the US is stuck in an ongoing Obama recession.

China: Hard Landing in Real Estate Market Likely

2012-01-23T19:00:00.001Z

The housing frenzy has driven prices so high, so fast, that a crash on the scale of the real estate collapse in Japan in the 1990s is a virtual certainty. And China's already exaggerated official growth rate could take a pounding, all the way to the zone of the unthinkable, into the low single-digits. _Fortune

China's government gambled that the rest of the world -- particularly Europe and the US -- would recover within a few years, allowing the rich export markets to restore a healthy income flow to the empire. But in the case of Europe, this does not seem to be happening.

The global economy faces a depression-era collapse in demand if Europe doesn't quickly act to dramatically boost the size of its debt-crisis firewall, implement pro-growth policies and further integrate the euro zone, the head of the International Monetary Fund warned Monday. _FoxBusiness

And if the US also fails to rebound from the extended economic downturn under President Obama, China's central and regional governments may be pressed for answers.

Although China emerged rapidly from the downturn of 2008-09, Edwards said the recovery had been the result of a massive reflationary package by the Chinese government. Beijing, he added, could not afford another big stimulus to offset a weakening of the economy. Falling imports have led to a widening of China's trade surplus, but Edwards said exports were set to slow and a trade deficit was looming.

He added that despite the recent run of more upbeat economic news from the United States, the risk of another recession in the world's biggest economy was "very high". _Guardian

China's building spree and commodities-buying spree was a calculated risk. At this point, it appears that the strategy may not be sustainable.

More: Local governments and land grabs against ordinary citizens....

...if grabbing land is costly, risky, and threatens the regime, why is it so commonplace? Because neither the Communist Party honchos in Beijing, nor their local minions in Wukan and Kanwu, have a choice in the matter.

...The Party’s authority and legitimacy are predicated on guaranteeing at least 8 percent GDP growth a year, and economic growth is the mandate of all Party officials. If you’re Ningbo or Yantai or any large Chinese urban center with an entrepreneurial population and large resources then that’s not a problem. But if you’re a rural township of subsistence farmers then your best shot at producing the numbers you need to win praise and promotion is to grab that worthless land and put a factory or a condo on it. The magic of economic statistics is that, even if the factory or condo is empty, the value of land shoots up, and so does your career prospects.

Land grabbing is the Chinese equivalent of alchemy, and this quick immediate economic fix is just too addictive for local officials to say no to. This is a problem not just commonplace in the villages, but everywhere in China. _Diplomat

Obama and Clinton: Friends of Thugs and Killers?

2012-01-22T19:14:00.000Z

President Bill Clinton's administration acquiesced in the Taliban's ascension to power in Kabul in 1996 and turned a blind eye as that thuggish militia, in league with Pakistan's Inter-Services Intelligence, fostered narco-terrorism and swelled the ranks of the Afghan war alumni waging transnational terrorism.

...Now, U.S. policy is coming another full circle on the Taliban in its frantic search for a deal. This has been underscored by a series of secret U.S. meetings with the Taliban last year and the current moves to restart talks in Qatar by meeting the Taliban's demand for the release of five of its officials who are held at Guantánamo Bay. Mohammed Tayeb al-Agha, an aide to the one-eyed Taliban chief Mohammad Omar, has emerged as the Taliban's chief negotiator with Marc Grossman, America's Afghanistan-Pakistan (Afpak) envoy.

The Qatar-based negotiations serve as another reminder why the U.S. political leadership has refrained from decapitating the Taliban's top command-and-control. The U.S. military has had ample opportunities to eliminate the Taliban's Rahbari Shura, or leadership council...Yet, tellingly, the U.S. military has not carried out a single drone, air or ground strike against the shura. _JapanTimes

Obama's sympathies are rather unclear, whenever the Muslim world is involved. Anyone who has read the autobiographies of the former junior senator from Illinois can be forgiven for suspecting that Mr. Obama identifies more with a third world perspective, than with the perspective of a world order maintained by the first world -- specifically, by the US as the world's only superpower.

Since coming to office, President Barack Obama has pursued an Afghan war strategy summed up in just four words: "surge, bribe and run." The U.S.-led military mission has now entered the "run" part, or what euphemistically is being called the "transition to 2014" — the year Obama arbitrarily chose as the deadline to wind down all NATO combat operations....The central aim is to cut a deal with the Taliban — even if Afghanistan and the region pay a heavy price...

...Obama was right to seek an end to this protracted war. But he blundered by laying out his cards in public and emboldening the enemy....Within weeks of assuming office, Obama publicly declared his intent to exit Afghanistan, before he even asked his team to work out a strategy. _JapanTimes

Just as President Jimmy Carter facilitated the creation of the murderous Islamic government in Revolutionary Iran, and unbelievably destructive government of Robert Mugabe in the formerly prosperous nation of Zimbabwe, so did President Clinton oversee the creation of the terrorist Taliban regime of thugs and brutal fanatics in Afghanistan. One must naturally wonder what sort of bizarre and monstrous governmental abortions Mr. Obama is likely to midwife during his disastrous stay in office.

China's Regional Governments Suffer Economic Slowdown

2012-01-20T17:22:00.000Z

Land sale revenues for local governments in 25 cities declined 11 percent between January and November, compared to the same period 2010, to a combined 950 billion yuan, according to the China Index Academy.

"Sharp declines in land revenues have put enormous financial pressure on local authorities," said Li. "Right now, local governments are more worried than developers."

...A source at a state-owned property firm in one provincial capital told Caixin that local agencies don't have enough money to cover basic healthcare costs or pay teachers.

"City officials are coming to us and asking us to buy land to bolster the land market," said the source, who declined to be identified because of the issue's sensitivity. He said his company in November complied with a local officials' order to buy a 900,000 square-meter site "whether we wanted to or not."

... _Caixin

The problem with this slowdown in property and housing sales, is that the repercussions tend to echo all the way down the Chinese economy. Real Estate is just the tip of the iceberg.

If investment actually declines — which is hardly unthinkable based on other property booms and busts — the picture is even worse. For instance, if property investment falls 10% (in real terms) in 2012, GDP growth drops to 5.3%. Even if investment grows at 10% (half last year’s growth rate, in real terms), GDP still drops to 7.9% — below the magic 8%. You can plug in any numbers you like, and see what you get. The point is, real estate has been a huge driver of growth, and even a modest real estate slowdown matters — it can’t just be brushed aside as though it were of minimal consequence for the broader Chinese economy.

I also want to emphasize — before we get totally preoccupied with the fate of the property bubble — that the property story is really just one aspect of a much broader investment boom that has been driving the economy. If real estate accounts for 10-13% of GDP, investment in fixed assets accounts for nearly half (the all-in sum for fixed asset investment, including inputs, that was released this week adds up to an amount equal to an astounding 64% of GDP). The health of the property sector is particularly important in China because of the pervasive role that land values play in underwriting lending, but the risks to China’s economy extend far beyond the market for homes and offices. For China, real estate is just the tip of a much larger iceberg, one that I’ll explore in my next “China data” installment. _Chovanec

It is clear that the nominal GDP numbers coming from China do not provide the substantive information one needs, to judge the health of the Chinese economies -- both regional and central. It is most unwise to take Chinese governmental figures at face value.

A Question of Human Survival vs. Human Die-Off

2012-01-19T20:07:00.000Z

I think I may fairly make two postulata.

First, That food is necessary to the existence of man.

Secondly, That the passion between the sexes is necessary and will remain nearly in its present state. _Thomas Malthus Essay pub. 1798

From those postulates, Malthus argues that population grows exponentially while food production can only grow in a linear fashion.

Keith MontgomeryOur first indication that something may be wrong with Malthus' argument lies in the colours in the map above.

If population growth were necessarily exponential as Malthus argues, the colors on the map above would be uniformly pink to red, indicating high fertility and likely geometric population growth -- as in Sub Saharan Africa. The fact that several relatively prosperous countries exhibit either very low -- and even negative -- population growth suggests that the Malthusian and neo-Malthusian thesis may be in error.

Edward Morgan 5 Stage Demographic Transition
And indeed, if we look at the 5 stage demographic transition graphic above (extended from Warren Thompson's 4 stage demographic transition graphic seen below), we see what happens when Malthusian man meets post-Malthusian woman, and very low fertility rates appear to reverse the earlier Malthusian exponential growth.

Some current trends lead to some fascinating projections of the future demographic make-up of the most technologically advanced factions of our global society. The low birth rate, especially in Europe, has allowed for an empowerment of women unseen before in history. Many are essentially swapping children for careers. _NewGeography

Keith Montgomery: Warren Thompson's 4 Stage Demographic TransitionWarren Thompson's 4 stage demographic transition model, seen above, was devised in 1929 -- long before the invention of modern contraception, and the modern demographic collapse. Thompson's model suggests that as societies move through industrialisation and into a post-industrial state, that death rates and birth rates will converge, leading to a stable population.

Despite modern contraceptive methods, and the ongoing demographic collapse of Russia, Japan, and the greater part of Europe, neo-Malthusian doomsterism is alive and well. Mish's Global Economic Analysis presents an extremely coherent and up to date version of the neo-Malthusian vision only today. As you can see from Mish's piece, peak oil (and many other forms of) doomerism is closely tied to the neo-Malthusian vision.

Each of the global problems we face today is the result of too many people using too much of our planet's finite, non-renewable resources and filling its waste repositories of land, water and air to overflowing. The true danger posed by our exploding population is not our absolute numbers but the inability of our environment to cope with so many of us doing what we do... _Mish

Such thoughts must have occurred to melancholic misanthropes since the coming of Australopithecus, although not in so many words (modern human language not having originated yet).

The neo-Malthusian website of Paul Chefurka is an abbreviated version of what you can find in much more detail at dieoff.org. Wherever you look, such doomerism is solidly based upon Thomas Malthus' kindly but jaundiced vision. Such authors appear not to have noticed the rapid fall in fertility across the developed world. Not having noticed the demographic transition, they are not forced to confront the implications.

We should also mention the anti-Malthusians, who feel that the growth of human populations can be a good thing, rather than an unmitigated evil -- as the neo-Malthusians appear to view population growth.

population is not just a factor in consumption. It is the basis for “human capital.” No humans, no human capital. Humans are not just mouths, but also hands and brains. As famously noted by Julian Simon, they are the Ultimate Resource. This is something Neo-Malthusians have difficulty in comprehending. _Indur Goklany

But at this point in time, both the neo-Malthusian doomers and the anti-Malthusian cornucopians may be overlooking important details. Human populations are not uniform in their history of invention, innovative progress, and the creation of widespread health and prosperity. And judging by the map above, it is the populations that have failed most dismally to create prosperity and progress which are reproducing the most rapidly. Given the critical dependency of these rapidly reproducing populations upon the largesse and technological savvy of other populations which are in fact decreasing in fertility, some of the glow could easily pass from the anti-Malthusian rose very rapidly.

In fact, anti-Malthusian cornucopianism applies largely to higher-IQ societies which have the human capital to create prosperity in the first place. Neo-Malthusian doomerism applies largely to lower-IQ societies which are dependent upon other, higher IQ populations for their own ability to reproduce beyond their own ability to feed, energise, and otherwise support themselves.

Here is the crux of the matter: The elite within several advanced societies have uncritically adopted the dismal neo-Malthusian vision -- including peak oil doom, carbon hysteria, overpopulation doom etc. -- despite its many failings when applied to intelligent and advanced populations. The neo-Malthusian policy prescriptions which are being progressively loaded onto the backs of the citizens of these advanced societies are creating a situation of self-fulfilling doom prediction. In other words, neo-Malthusian "solutions" are worse than the original problem would have been, had it been left to human ingenuity to solve.

The anti-nuclear (and anti-coal, anti-oil, anti-oil sands, anti-shale) policies currently in vogue in much of Europe, in Japan, and popular among many pseudo-intellectuals of North America and Oceania, cause government policy-makers to pursue unreliable, exorbitantly expensive, and ultimately destructive power sources such as big wind and big solar. With government policies such as that, there is no need for actual peak oil from resource depletion. "Political peak oil" will do just as well or better in terms of destroying a society's prosperity, competitiveness, and morale, as the real thing would have done, had it existed.

When government policy is based upon models which are not good at matching the realities in the outside world, the end result is likely to be disastrous.

The map is not the territory. The model is not the reality. Your solutions are likely to be worse than the problem. Everything you think you know, just ain't so.

But there is still time for certain enclaves within the more developed world to innovate their way into long-term prosperity, riding the current wave of rapid scientific and technological advances. For these enclaves to escape the destructiveness of the more likely occurrences of neo-Malthusian doom (the coming anarchy), they will need to be areas of relatively high average population IQ and high trust among citizens, which requires relative homogeneity of culture and language. They will also need abundant reliable affordable energy supplies. And those are only a few of the crucial things to consider, if you are thinking about relocating.

Things can go very badly for most of the planet -- largely due to political ineptness and corruption -- and yet things can turn out well for humanity in the end.

Hope for the best. Plan for the worst.

Originally published on Al Fin blog

Revised 2011 China GDP Numbers Indicate Big Slowdown

2012-01-17T17:05:00.001Z

There are two pieces of data I saw today, easily lost in the fine print, that I found particularly revealing. First, the NBS disclosed that real estate investment accounted for 13% of China’s GDP in 2011 (compared to Stephen Roach’s estimate of 10%), and grew at a rate of 27.9%. However, I noticed something that I admit I missed before, in my earlier calculations — that this is a nominal rate (not adjusted for inflation) whereas the GDP growth rate figures are real (they take inflation into account). The real (and therefore comparable) rate of expansion for real estate investment in 2011 was 20.0%.

So I went back and re-ran the numbers, using these more accurate figures. Given GDP growth of 9.2% (a higher starting point than I used in my initial calculations), a real growth rate of 20.0% for real estate implies a real growth rate of 7.6% for the rest of the economy. If, in 2012, real estate construction were merely to level off at zero growth, and the rest of the economy was unaffected, that would bring overall GDP down from 9.2% to 6.6%. That’s higher than the number I initially came up with, but still well into “hard landing” territory. The fall-off of 2.6% is also closer to the 3.0% drop I initially calculated than the 1% decline predicted by Stephen Roach. I errored in my back-of-the-envelope exercise, but my point remains a valid one. Keep in mind, these calculations assume no impact on dependent industries like steel and cement, no impact on the financial system, and no correlation to related risks in the Chinese economy _Patrick Chovanec

More from Chovanec at the BBC, with video

Patrick Chovanec
I suspect that Chovanec is being generous to the Chinese economy, given what we have already seen recently, of the decline in both the steel and cement industries coming hard on the heels of the real estate decline. Here is the view of a Chinese steel plant:

Notice the similarity of the empty car park above, to the many expensive -- but already crumbling -- Chinese ghost properties spread across the celestial kingdom.

In the near future, we will look at the compulsive dynamics of why regional Chinese governments continue to press ahead, building shoddy but exorbitant ghost properties, against all economic logic.

An Inside Look at China's Slowing "Situation"

2012-01-17T04:55:00.000Z

So what evidence do we have that a construction slowdown may be occurring? Official data on housing starts does exist, but it’s not a reliable metric....A better approach is to look at the market for construction inputs. The clearest picture we have is for steel. According to a friend of mine who is an analyst in the steel and commodities sector, and recently completed a countrywide tour of talking to producers, sentiment in China’s steel industry is as gloomy as he has ever seen it. In November, Chinese steel output was down -8.8% month-on-month, down for the sixth month in row. More importantly, it was down -0.6% year-on-year, indicating this was more than just a seasonal or partial fall-off from the all-time highs it hit in the first half of 2011, which were driven in large part by demand for cheap rebar for construction. Apparently, the demand that drove that boom has almost entirely disappeared. Interestingly, according to one report by Shanghai Security News, steelmakers say that actual sales in 2011 failed to match official “social housing” construction data. Figures released by the China Iron and Steel Association last week indicate that steel output continued falling in December, by 3.87% month-on-month.

Not surprisingly, two things have happened. First, domestic iron ore prices have plummeted as unused stockpiles have accumulated. The China Iron and Steel Association recently announced that its iron ore price index has fallen 22% in the past four months, since the beginning of September, while iron ore inventories at Chinese ports rose to 96.8 million tons by the end of 2011, up 32% from the year before (Chinese iron ore imports were still up 10% y-on-y in December, but analysts expect buying to slow in coming months, due to flagging demand). Second, Chinese steelmakers are suffering. According to Caijing, more than 1/3 of them experienced losses in October and November, and the industry as a whole saw a net loss of RMB 920 million (US$ 146 million) excluding investment gains. The magazine said industry executives foresee an even tougher year in 2012.

Cement and glass also show a marked deceleration in growth. Cement output in November grew 11.2% y-on-y, but that represented a significant fall-off from 17.2% y-on-y expansion for the first 11 months as a whole, and the 17.3% y-on-y growth the industry saw in November 2010. Glass also saw a similar deceleration, growing 7.1% y-on-y in November, compared to 17.0% y-on-y from the first 11 months. Cement prices have been declining steadily over the past few months, a trend that Fitch projects will continue into 2012, due to overcapacity. It notes that, because of their high level of investment in building even more capacity, major Chinese cement producers are cash flow negative.

Copper presents a more unusual picture. China’s copper imports in December hit an all-time record high of 508,942 tons, up 47.7% y-on-y. However, there is little reason to believe this was driven by end user demand. Most analysts I’ve talked to believe it was primarily due to a resurgence in speculative arbitrage based on the gap between copper prices in Shanghai and London, and possibly renewed interest in using stockpiled copper as collateral for obtaining loans — both practices spurred by expectations of monetary easing. In short, the Chinese are buying copper, like homes, to trade not to use.

Of course, land is also a key construction input. I’ve already written about the dramatic fall-off in local government land sales to developers, here as well as here. Newly released year-end figures show that Beijing’s overall revenues from land sales in 2011 dropped 35.7% compared to 2010, despite robust sales in the first half of the year. Land sales revenues for residential projects plunged even more steeply, by 55.4%, while the average auction price for residential land dropped 30.5% (from RMB 7,317 per sq. meter to RMB 5,088). In Shanghai, total land sales revenues dropped 20.0% y-on-y, and average the average price of residential land plummeted 41.0%. _Patrick Chovanec

And so on . . . . A fascinating look at some of the generally unspoken numbers behind the numbers from Patrick Chovanec, Professor at Tsinghua University School of Economics and Management, in Beijing.

It is remarkable how many people continue to take official statistics seriously, without the slightest degree of scepticism. In the short term, it is probably easier to take everything on trust. In the long term, such an approach is disastrous.

The Future of Commodities: Light and Dark

2012-01-15T18:06:00.000Z

Commodities Now
No one holds a crystal ball which will give the commodities investor perfect advice for maximising his return on investment. So it is a good idea to consider a range of projections, and ponder the logic behind each prognostication most carefully. Here are excerpts from two recent projections, at somewhat different ends of the investment spectrum.

What will happen over the next 10 years? I believe the supercycle of growth across emerging markets will continue with rising urbanization and income rates. This bodes well for commodities, especially copper, coal, oil and gold, and we’ll continue to focus on companies that will benefit the most from these much-needed resources.

...10 years of tremendous income growth and little household debt, make China the “world’s best consumption story, for everything from instant noodles to luxury cars” in 2012.

According to December Chinese trade figures, month-over-month and year-over-year imports of aluminum and copper increased significantly. This may be a result of China restocking ahead of Chinese New Year, but M2 money supply growth rapidly rose in recent months, a sign the government is attempting to reaccelerate the economy. Also, the urban labor market has been robust over the past two years, with an annual change just below 5 percent—a record high over the past 15 years. _CommoditiesNow

Well, it is good to put a positive face on things if you can. The author of the piece excerpted below, takes a very jaundiced view of the coming world of commodities. When reading it, try to maintain a sense of perspective, and stay away from high places, loaded guns, and prescription drugs.

I'm interested in how both shadow and dark inventory phenomena pervert their respective markets, as well as the entire free market system as a whole, where everyone is supposed to have "full access to information". Something both dark and shadow inventories make impossible. Something the 99% general public are not aware of. At all.
If you are the accumulator of dark inventory, or privy to the flow, you are able to foresee the market rallies and position yourself accordingly. This is a profitable time.
Of course, in continually oversupplied markets you will begin to suffer the costs of hedging inventory, if you are bothering to hedge, (since forward curves may eventually flatten out) as well as the burden of balance sheet expansion. Eventually it will make sense to park that inventory off-balance sheet._Dark Inventory
...I certainly recommend reading Izabella's entire piece (like all other pieces I quote from). But even from the quote above alone, you can, even if you're not familiar with the topic, still get a genuinely queasy feeling. We're talking market manipulation here, a way to influence investment decisions without anyone ever knowing they’re being manipulated. And fully legal.
Chris Cook, former compliance and market supervision director of the International Petroleum Exchange, writes this about "dark oil inventory" at Naked Capitalism:
All is not as it appears in the global oil markets, which in my view have become entirely dysfunctional and no longer fit for its purpose. I believe that the market price is about to collapse as it did in 2008 and that this will mark the end of an era in which the market has been run by and on behalf of trading and financial intermediaries.
In this post I forecast the imminent death of the crude oil market [..] _Naked Oil
...In a nutshell: Cook argues that QE measures from the Fed and BOE have caused large investors to flee from dollars into commodities.
This in turn has led to a price bubble through contango (forward prices are higher than spot prices), for which they are all positioned, but this will down the line inevitably lead to the opposite - backwardation -, and the bubble must burst. Severely, says Cook: to as low as $45 a barrel. Given how conservative Cook is in the numbers he uses, even that may be a high estimate.
In yet another article at Naked Capitalism, Irish journalist Philip Pilkington summarizes Cook’s point so well it seems pointless to try and improve on it:
...if this is a bubble of fear and it bursts – the financial sector is going to see a huge wiping out of the profits they have been reaping from it. We have no way of knowing how much profitability is tied up in these dodgy markets – but my thinking is: a lot. _Fear and Loathing Bursting Bubbles
...while I think it's important for everyone to see and understand that, and how, manipulation sets market prices for commodities (and stocks, but that's another story) on a daily basis, and not some free market principle, I started out trying to figure out what connects dark oil inventory and shadow housing inventory.
Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, has - extensively- looked at the latter:
...if shadow inventory is large, housing prices have a good bit further to go before they hit bottom, which has dire consequences for communities, homeowners, and the broader economy. _Shadow Inventory in Housing
...I think perhaps the best way to make the connection between dark inventory in commodities and shadow inventory in real estate is to look at, no surprise, what pays for it. And that leads me to what I have long since coined "zombie money".

Zombie money is the money that seems, but only seems, to exist because of unrecognized losses. QE measures, for instance, basically serve to keep those losses unrecognized. That’s what they're for. To make markets, and ordinary people, believe that banks are still solvent when in reality they're not.

Funny thing is, even with all the accounting tricks that hide those losses, the entire system is still, and already, on the verge of collapse. And when it goes, the loser will be you, not the gamblers that lost fair and square. If dark inventory shows you anything, it’s that fair and square is a thing of some mythical fairy tale past. The reality for you and me is, and this is not the first time I put it like this: heads you lose, tails you die. _The Automatic Earth

Perhaps the truth is somewhat in between these two scenarios. But it is becoming more and more difficult to trust all the "happy talk" about China coming from those who stand to profit from your investments, one way or another.

The idea that markets are being manipulated behind the scenes may seem far-fetched. And yet, wherever there are profits to be made by any means, there are those who will take the risk. It is best to remember that.

Who Needs Apocalypse When You Have Detroit?

2012-01-15T15:18:00.002Z

Failure like this is not built overnight. Decades of corruption, sloth, bad hiring decisions, political cronyism and depraved indifference to the needs of the poor were required to bring things to such a pass. No doubt Detroit has a generous pension program for all the wastrels and incompetents whose combined efforts created this train wreck. These people somehow manage to protect themselves even as they blight the lives and hopes of the inner city kids they were hired to serve. _WalterRussellMead

Leftist crony policies of the US Democratic Party are on display in Detroit, Michigan. If this level of devastation were to occur almost anywhere else in the US, the place would be declared a state of emergency, placed under marshal law, and razed to the ground for reconstruction. But it is only business as usual in the poster child city of the true-blue Obamaesque world of the new US political triad: The Democratic Party, organised labour, and the mob.

It is hard to see how a city recovers when things have fallen this far. Detroit’s voters do not seem interested in good governance, either unwilling or unable to penalize incompetence at the polls; the political class spouts blue liberal slogans but appears to have the compassion and generosity of a pack of velociraptors; the city’s core institutions have been so corroded and degraded after decades of decline that there is little hope for improvement anytime soon. _WalterRussellMead

How do US Democratic Party-dominated governments respond when the going gets tough? They cut vital services.

Located [next to Detroit] in an area already plagued by high crime and widespread urban decay, Highland Park has essentially signed a proverbial death warrant by cutting public power. The city has already lost nearly half of its residents over the past two decades and is reportedly $58 million in debt -- but the elimination of its street lights basically ensures its continued downward spiral.

"How can you darken any city?" asked Victoria Dowdell, a resident of Highland Park who, along with her neighbors, must now deal with pitch-black public streets after dark. "I think that was a disgrace."

Detroit has also cut various city services over the years as it edges towards bankruptcy. Mike Shedlock from Business Insider wrote last December that "Motor City" has been headed towards financial insolvency for many years. An attempt to stave off collapse, city officials there have also cut major services like street repair, garbage collection, and police forces in some areas. _Michigan Third World America

As Michelle Obama so often tells her husband, referring to the ingrates who fail to worship the first couple of the US with sufficient adoration: let them eat cake -- if they can find it!

Okay, perhaps she only behaves as if she says such things, without actually saying them. At least in public.

Who needs apocalypse when you have Doombama?

More on turning out the lights in crime-ridden cities

More here

Naked Oil: Are Oil Markets Stripped and Readty to Be Raped?

2012-01-12T16:08:00.000Z

Brian Westenhaus discussed a fascinating dissection of global oil markets recently, which deserves some comment. The article in question is written by Chris Cook, entitled "Naked Oil," published on The Oil Drum website. It is presented as an attempt at predicting the global price of oil over the next 6 to 12 months.

After explaining how the world oil markets work, Mr. Cook proceeds to make a bold prediction:

...my forecast is that the crude oil price will fall dramatically during the first half of 2012, possibly as low as $45 to $55 per barrel.

Then What?

As the price collapses we will see producer nations generally and OPEC in particular once again going into panic mode, and genuinely cutting production. We will also see the next great regulatory scandal where a legion of risk-averse retail investors who have lost most or all of their investment will not be pleased to hear that they were warned on Page 5, paragraph (b); clause (iv) of their customer agreement that markets could go down as well as up.

At this point, I hope and expect that consumer and producer nations might finally get their heads together and agree that whereas the former seeks a stable low price, and the latter a stable high price, they actually have an interest – even if intermediaries do not – in agreeing a formula for a stable fair price. _Naked Oil

It is important to read Mr. Cook's preliminary analysis and discussion in order to understand his audacity in predicting a disruptive oil price collapse in the near term.

A few days ago, Al Fin Energy presented a parallel argument for moderation of oil prices, based upon a number of current economic trends affecting global oil demand. Some readers may wish to consider the two articles as complementary and reinforcing to each other's arguments. Certainly they are both of the contrarian variety, given modern fund manager sentiment, and popular peak oil superstitions.

Al Fin economists and energy analysts have always found it more fun to be contrarian.

Mexican Drug War: Part of the Coming Anarchy

2012-01-12T00:12:00.041Z

Mexican officials said Wednesday almost 13,000 people died in drug violence in the first nine months of 2011, pushing the toll since the start of a five-year military crackdown above 47,000.

Drug-related killings in 2011 were up 11% compared with the same period in 2010... _NatPost

National Post
Thanks to organised crime cartels, Mexico ranks as one of the most violent countries in the world. The only nations more violent than Mexico, are other Latin American nations caught up in drug cartel violence, or Sub Saharan African nations caught up in the perpetual tribal violence and power struggles of the dark continent.

One year ago, the government released figures showing 34,612 people had died in suspected drug violence since President Felipe Calderon started a controversial military crackdown on organized crime gangs at the end of 2006.

The latest figures were gathered from the offices of state prosecutors.

Wednesday’s statement underlined that 70% of last year’s suspected drug-related killings occurred in only eight of 31 states and the capital.

Local authorities have reported 40 gangland-style killings so far this week, including 13 bodies dumped near a gas station in the western state of Michoacan and two bodies found burned and decapitated in the capital Wednesday. _NatPost

Of course, without the rich drug markets of the US, Mexican organised crime would not be nearly so well-funded. If the US government were to discover an alternative approach to the problem of drug abuse which achieves better overall results than prohibition, a wide range of misery and violence might be mitigated in one fell swoop.

If the rich payoffs from drug crimes were suddenly taken away from the cartel jefes, they would probably feel forced into some other criminal activity such as kidnapping for ransom, or human trafficking. The general idea behind anti-crime policy-making should be to limit the extent and duration of harm that individual crime bosses can inflict, and to reduce the number of big crime bosses overall.

In low IQ societies, decapitation strikes are often quite successful against large criminal and insurgent organisations.

A Return to 2008? Speculators Banking on Ever-Rising Commodities

2012-01-11T00:46:00.002Z

Money managers expanded their combined net-long positions across 18 U.S. futures and options by 25 percent to 671,915 contracts (.MMLOSH) in the week ended Jan. 3, Commodity Futures Trading Commission data show. Bullish bets on cotton rose the most since April 2009 and those on coffee doubled. Crude-oil holdings reached a three-week high. _Bloomberg

They are betting your pension and 401K money, university endowments, municipal holdings and more -- just as they did in 2008.

Commodities to be Volatile this Year
The recent history of commodity prices has not been so good, overall, and if recent unfavourable developments in China and Europe continue on their downward course, commodities prices could be subject to further significant drops.
Prices of raw materials have plunged this year. The prices of copper, coffee, aluminum, cotton, nickel, natural gas, wheat and silver are all down more than 20% since the end of April, according to Bloomberg. Gold, widely viewed as a barometer of inflation, has fallen 11% since its September high of $1,900 an ounce.

Inventories of commodities have gotten so high that metals dealers have had to buy extra warehouse space for them.

In November, copper warehouses in New Orleans were 98% full, and aluminum inventories in the U.S. are at an all-time peak, according to FastMarkets.com. _USAToday

The prices of commodities futures depend upon anticipated demand from the big consumers of commodities. That would be China, the US, and Europe. But with a turbulent decline in Chinese real estate and stock markets, and a Eurozone crisis of confidence still building, what could be boosting the confidence of hedge funders and institutional investors?

Bloomberg attributes this aggressiveness by fund money managers to recent favourable economic news from the US government, such as improved job numbers. But these job numbers have already been shown to be unreliable at best and uniformly misleading at worst. Are money managers so easily manipulated by fudged numbers?

Many funds managers are particularly excited by the prospects of a huge runup in oil prices, just as they were in 2008. Looking at current prices of oil in dollars, prices do seem to be trending upward. But look at the chart below, showing the price of oil in gold:

Source
Another aspect to consider when looking at historical price trends, is the inflation of the US dollar. One cannot compare today's prices of commodities such as oil with historical prices, unless one first adjusts for inflation.

Here is a table that shows the inflation adjusted price of oil beside the historical price of oil.

A handy US dollar inflation calculator

It is not possible to predict future prices of commodities with any great precision. But by understanding the bases of commodities demand, there are benchmarks which one can monitor.

Economic data from governments is apt to be fudged. Always confirm and corroborate.

Originally published at Al Fin Energy blog

East Asian Prosperity Slipping on Eurozone Difficulties

2012-01-10T18:06:00.000Z

The eurozone’s worsening problems are affecting the export-dominated economies of East Asia hard. The 17-nation zone contracted in Q4, and it will probably shrink this quarter as well. “We expect a fall in GDP of about 1.0 per cent this year and an even sharper decline in 2013,” said Jennifer McKeown at Capital Economics. Unemployment is at a record high, retail sales are falling, and consumer and business confidence is headed in the wrong direction.

The zone’s performance will continue to fail to meet consensus estimates because there is an unreal quality to expert predictions about Europe. The eurozone’s problems, despite the serial announcements of interim solutions, remain intractable. European leaders need growth, and they are not going to get it until they either fundamentally restructure their currency or implement some sort of fiscal union. And on top of that, they need to eliminate growth-destroying regulation. _Forbes

Europe is not only suffering from growth-destroying regulation and cascading banking difficulties. On the energy front, many of Europe's governments are literally committing suicide.

And there is always the problem of Europe's demographic collapse, which is magnifying Europe's debt crisis to intractable levels.

Put simply, Europe is no longer capable of holding up its end of the tacit global trade bargain.

There’s no mystery why Singapore’s economy, a regional bellwether, is in trouble. The country’s trade is about three times its gross domestic product, and the external outlook is not favorable. Prime Minster Lee, not surprisingly, blamed the deteriorating global environment in general and Europe in particular. “As a small, open country,” he noted in his message, “Singapore will inevitably be affected.”

And so will tiny Hong Kong’s trading economy. Analysts are talking about 2% growth this year, down from a forecasted 5% for 2011. The slowdown has already started. Growth estimates for last quarter range from a relatively optimistic 3.3%, from HSBC, to a gloomy 1.5%, issued by JP Morgan.

It’s not only the small open economies that are having problems. India, which is certainly large and not considered especially trade-dependent, is also seeing the economy stumble. There, the retreat from reform is having a negative effect. Growth could drop below 6%, from 6.9% last quarter.

Japan may have actually contracted in Q4. The Tokyo-based Japan Center for Economic Research estimates that the economy shrank in both October and November, in large measure due to weak exports with Europe as the primary culprit. The weak fourth quarter is especially disheartening as it ends the recovery evident in Q3, when the economy soared 5.6% due to rebuilding from the March 11 earthquake-tsunami.

South Korea, a pillar of strength in East Asia, is also experiencing difficulties. The Bank of Korea, the central bank, is lowering forecasts for both this year and last. Nomura International sees South Korean growth slowing to 3% in 2012, due to softness in exports, off from an estimated 3.5% for 2011. If there is a risk to the Nomura estimates, it is to the downside.

The story is much the same in flood-ravaged Thailand, where there was a contraction in Q4 due to export problems; the steady Philippines, hurt by export prospects for the electronics sector; and impressive Vietnam, where analysts think that growth last year was off the 2010 pace. If you’re looking for exceptions to the downward trend, try Indonesia, where growth remained steady at 6.5% last quarter, and Malaysia, which was helped because exports held up last year. In Kuala Lumpur, however, the government is now worried about Europe. _Forbes

Europe's problems are largely of Europe's own making. But her problems do not stop at her own borders. They propagate outward, adversely impacting all the nations which depend upon trade with Europe. Long-term prospects for Europa -- given the twin curses of debt and demographic decline -- are not good, unless a miracle happens.

Focus on Debt -- One of the Twin Catastrophes of Decline

2012-01-07T17:39:00.001Z

Spiegel
Two of the most important catastrophes leading to a modern collapse are debt and demographic decline. The two catastrophes are strongly interrelated. Let's look first at debt:

Old debts are paid with new ones, with borrowers giving not the slightest thought to repayment. This has been going on for a long time, far too long, in fact. It was only with the eruption of the financial crisis in 2007 and the outrageously expensive bailouts of banks and economies that many people realized that the entire world is living on credit.

"Debt is rising to points that are above anything we have seen, except during major wars," economists at the Bank for International Settlements (BIS) concluded in a recent study. "The debt problems facing advanced economies are even worse than we thought."

This is even true of seemingly rock-solid Germany. In the third quarter of 2011, German public debt amounted to €2.028 trillion, an increase of €10.8 billion over the debt level just three months earlier. Germany's public debt grew by about €120 million a day -- or more than €80,000 a minute -- between July and September.

To make matters worse, this increase occurred in a quarter marked by plentiful tax revenues and a significant decline in unemployment. But debts increase independently of whether times happen to be good or bad.

...The fact that nations are continually spending more than they take in cannot turn out well in the long run. The word "credit" comes from the Latin "credere," which means "to believe." The system will only function as long as lenders believe in borrowers. Once the belief in the creditworthiness of borrowers is destroyed, hardly anyone will be willing to buy their securities.

When that happens, the system is finished.

...The social security coffers contain absolutely no reserves for members of the baby-boomer generation. "As a result of our government's generosity, we are creating substantial financial burdens for future generations," says economist Raffelhüschen. But no one really wants to hear this. Besides, all of this will happen so far in the future that many feel it simply doesn't concern them.

Next to pensions, health insurance is the second-largest item on Raffelhüschen's list, accounting for a shortfall of €2 trillion. The inevitable aging of society will only exacerbate the problem. With age or, more precisely, with the number of old people, healthcare spending rises dramatically.

...Whatever approach the Western world uses to combat its debt crisis -- be it austerity measures, taxes, inflation or, what is most likely, a mixture of the three -- solving this problem will shape the lives and work activities of a generation.

"If history is a model, we can expect to see many years of debt repayment," the McKinsey management consulting firm predicts in a study. In other words, the debt avalanche is inevitable, and the only question is whether countries can protect themselves in time.
_Spiegel

Spiegel
Demographic decline is the other twin cause of modern collapse. Here is more on that topic:

...U.N. forecasts [show] that, by the year 2050, the whole of Europe, including Russia, will shrink by 130 million people. Decades of low birth rates have resulted in aging populations that have placed a huge strain on pensions and health care largely covered by Europe’s generous social welfare systems. These problems are now affecting many key policies. Indeed, in the current euro crisis, German government officials say their reluctance to bail out Greece, Spain, Italy and Portugal is driven largely by fears among its own taxpayers that the bill will become so onerous as to jeopardize their retirement. _WaPo

When combined, the twin catastrophes of debt and demographic decline are difficult to overcome. The post-war generations of Europeans have grown up soft, and entitled. Men are increasingly feminised, while women refuse to have children. Perhaps the answer is to transplant female uteri into the males, to allow male childbirth?

China's Collapsing Future: 1...2...3...

2012-01-06T17:04:00.000Z

1. Ghost cities
The Chinese government has announced plans to build 20 cities a year for the next 20 years, but they seem to be forgetting one thing: people. According to some estimates, there are already 64 million vacant apartments across the country. One recent development, Daya Bay, is designed for 12 million people, but even the state-controlled media admits that 70% of its residential units are unoccupied. China analyst Gillem Tulloch considers it the modern equivalent of building pyramids. "It doesn't really add to the betterment of lives," he said, "but it adds to the growth of GDP."

Residential real estate construction now accounts for a tenth of China's GDP compared to just 6% in the U.S. at the peak of the housing bubble in 2005, and prices have become severely inflated. The average home price in China is about nine times the mean annual income, while the historic average in the U.S. is three, and only reached 5.1 at the peak of the housing bubble. Real estate prices have now started declining, which will have an impact on everything from prices for commodities like iron, copper, cement, and coal to a slowdown in the global credit market. A UBS analyst called the Chinese real estate market "the single most important sector in the entire global economy, in terms of its impact on the rest of the world" because of the materials needed for all that construction.

2. Cooking the books
Those falling real estate prices may cause government authorities to default on their loans. The severity of the debt underreporting uncovered by the Bloomberg report can be seen on the books of the banks financing the construction. For instance, the Industrial and Commercial Bank of China, the largest of the banks, reported loans of 931 billion yuan, but the Bloomberg survey of 2% of its borrowers found totals of about 266 billion yuan. Extrapolating those figures suggests that ICBC could hold debts of over 13 trillion yuan ($2.05 trillion), and ICBC is just one of several banks involved.

China is well known for intellectual property theft -- one consulting group called it the second most common form of fraud in a country -- and without an official governing body or accounting standards, the finance sector has fallen victim to the same kinds of wholesale lies. Activist investors like Andrew Left and Carson Block have taken the place of regulators, and the two men have called bluffs on a number of Chinese companies. Left precipitated a 17.4% drop in China MediaExpress Holdings after calling the company a "phantom" and saying it was "too good to be true." Last year, as my colleague Dan Newman described, Block published a screed against RINO International, asserting that many of its customers were fictional, which led to a total collapse of the stock and its delisting from Nasdaq.

3. Civil unrest
The Chinese government's draconian land-grab policies have become all too real in places like Wukan, in Southern China. Most rural land in China is nominally owned by village collectives, but officials can seize it by paying a (usually undervalued) fee. The townspeople in Wukan responded to the confiscation of a pig farm by destroying police vehicles and government buildings, and the protest turned into a full-on revolt earlier this month as residents set up blockades to keep the police out and armed themselves with homemade weapons. After negotiations last week, the uprising appears to have come to a resolution.

Even if the Wukan uprising turns out to be an isolated incident, it's still evidence of China's growing pains. The Asian power's transformation into a modern economy and its coming-of-age in the information era make for strange bedfellows with the regime's command economy and media and speech controls. This explosive mix can only last so long. At least one Chinese official, Zhu Mingguo, secretary of the southern Guangdong province, believes the Wukan rebellion is a sign of things to come. "In terms of society, the public's awareness of democracy, equality, and rights is constantly strengthening, and their corresponding demands are growing," he said. _MotleyFool

The overbuilding of ghost infrastructure is a catastrophic waste and misallocation of resources. A large number of these ghost buildings and structures will never be occupied or utilised because the construction was so shoddy -- they will collapse before good use can be made of them.

As for the "cooking of the books," the truth will never be fully known. Shadowy methods of funds disbursal and record-keeping go far back in Chinese history. The multi-level governance model of modern China creates plenty of secret cubby-holes and crevices where mischief and mistakes can be hidden away from prying eyes.

Civil unrest in China is largely hidden from the greater outside world -- and from most of China. Tight control of the media and the internet prevents the truth from being as widely exposed as it would otherwise have been. But new information and communication technologies are allowing Chinese activists to spread the word among themselves. Often, they are able to get the word out to collaborators on the outside for wider disbursal.

China is gradually growing old before most Chinese can enjoy the benefits of affluence. Different levels of Chinese government and state owned enterprises are full of corrupt criminals, cronies and hacks. In truth, no one -- from the top to the bottom -- actually knows what is going on, or is truly in control. All that they can do is to try to sit on any bad news as long as they can.

Wait Until He Gets Inside Before You Shoot Him

2012-01-05T21:30:00.001Z

video platform video management video solutions video player
Eighteen year old Sarah McKinley was home with her infant son, when two adult male drug addicts broke into her home. The young woman's husband had died a week earlier of cancer, on Christmas day. The drug addicts wanted to steal her dead husband's prescription medicine, and perhaps commit other mischief as well.

Mrs. McKinley had other ideas, and when she asked the 911 dispatcher whether she could shoot the intruders, they told her to wait until they were inside, in order to be compliant with the law.
In a tape released to the media of the emergency 911 call, Mrs McKinley can be heard asking the operator: "I've got two guns in my hand. Is it OK to shoot him if he comes in this door?"

The operator responds: "Well you have to do whatever you can to protect yourself. I can't tell you that you can do that, but you have to do what you have to do to protect your baby".

Oklahoma law allows deadly force to be used against intruders.

... Sarah McKinley's 58 year-old husband died of cancer on Christmas Day, only a week before the incident.

The police say the two men knew about this and targeted her home hoping to find prescription drugs.

..."They said I couldn't shoot him til he was inside the house, so I waited til he got in the door and then I shot him."

"You have to make a choice, you or him and I chose my son over him," she said.

"There's nothing more dangerous than a mother with her baby."_BBC
Yes, and that is as it should be.

Russia, Iran, and Venezuela all Suffer from Underinvestment in Oil Fields

2012-01-03T21:44:00.000Z

National oil companies in Russia, Iran, Venezuela, Mexico, Bolivia etc. are beginning to reap what they have sown. Their oil & gas infrastructures are beginning to show the wear and decline of underinvestment. The governments of these countries all seized many billions of dollars worth of assets from private multi-national oilcos that had developed difficult oil & gas fields, then allowed the seized assets to decline from lack of maintenance and upkeep.

Is it any surprise that foreign investors are reluctant to go back into these treacherous countries to help bring their petroleum infrastructures back up to basic standards?
Venezuela's oil industry is hampered by a lack of foreign investment, and the country will be keen to see prices high this year while output can be maintained....Iran finds it more difficult to get access to modern technology to rejuvenate its ailing production infrastructure, output is forecast to drop. The International Energy Agency says Iran's oil production could be cut by as much as 890,000 bpd to just under 3 million bpd by 2016...Russia's economy would suffer greatly from a meltdown of the European economy, losing out on both exports and investment flows. This would exacerbate a potential revenue loss from oil production, which could go into decline if investment is not stepped up sufficiently, says the International Energy Agency (IEA). _National

Oil dictatorships in Asia, MENA, SS Africa, and Latin America, are little better than organised criminal gangs -- which do not hesitate to seize valuable assets of any foreigners trusting enough to invest inside their countries.

If the energy starvationist regime of US President Obama is ever removed from office, far more North American energy assets should become available for development. Significant opportunities for multi-national oilcos would then open up in the Arctic, offshore in multiple US continental shelf areas, in coal resources, bitumen resources, kerogen resources, and eventually methane hydrate resources.

Getting rid of Obama should also allow the Nuclear Regulatory Commission to begin licensing safe new reactor designs. This would benefit the hydrocarbon markets in multiple ways besides the reliable provision of electrical power -- prolonging supplies of gas and coal for many decades. One of the most fascinating impacts on hydrocarbon markets by advanced nuclear power would be the use of nuclear process heat to develop several trillion barrels of oil equivalent liquids from coal, gas, bitumens, kerogens, methane hydrates, and biomass. That is nothing to sneeze at.

While Russia continues to bang its head against the wall trying to develop rich Arctic reserves in the face of a global cooling trend and increased Arctic sea ice, the countries of North America, Oceania, and Europe could be developing alternative and unconventional sources of liquid fuels at a price below today's inflated oil prices.

Germany, Energy Starvation, and the Collapse of the Eurozone

2012-01-02T16:33:00.000Z

Up until now, Germany has been the rock of the Eurozone. Stalwart German workers and relatively responsible German bankers and governments, have prevented much of the economic disaster that has befallen southern Europe. I say "up until now," because a recent decision by the German government to expand German dependency on wind power while shutting down all German nuclear plants, has sown the seeds of future decay of the German economy. Here is Spiegel online, describing some of the early stage problems in Germany's grand plan for energy starvation:One of the central projects of Chancellor Angela Merkel's center-right coalition government, the scrapping of atomic energy and the switch to renewable energy, has hit a major obstacle. Nine months after the disaster at the Fukushima nuclear power plant in Japan, Berlin's multi-billion-euro project is facing increasing difficulties. And the expansion of the country's offshore wind farms in particular, which Minister Röttgen considers of paramount importance, is constantly beset by new problems.

...The energy industry is currently under more stress than almost any other sector of the German economy. The country's utilities are being forced to completely change their focus: away from nuclear power; away from their centralized structure; and away from their accustomed business models. The quartet of E.on, RWE, EnBW and Vattenfall, which for so long have been spoilt by enormous profits, has had to implement tough cost-cutting measures, and countless jobs have been sacrificed. E.on alone is shedding up to 11,000 of its workers, and the industry as a whole could ax more than 20,000 jobs in all.

At the same time, the sector is forging aggressively into the business of regenerative sources of energy -- or at least that was the plan. Now it's becoming increasingly clear that the promised expansion will not progress as hoped due to a lack of the necessary conditions for its success.

...According to internal estimates, RWE alone could lose more than a hundred million euros. Delaying construction is no longer possible. The timing of shipping transports, supplies of materials and the use of specialized construction teams is simply too intricate to easily reorganize.

One particularly devastating consequence is that private investors, who only recently overcame their wariness about the technologically challenging business of offshore power generation, now have doubts once more.

...Time and again, the projects have been tested for possible weaknesses, and their funding tweaked accordingly. Teyssen finally released the money just before Christmas, but his planners estimate that the projects' start dates will be pushed back by 12 to 18 months.

The delays on the high seas are a bitter blow for the German government's sensational about-face on electricity generation. Should the expansion of the offshore wind farms be delayed further still, this could lead to not only higher prices but also bottlenecks in energy supplies.

Pressing for Damages

The utilities could presumably only alleviate such a possible shortage of electricity by importing nuclear-generated power from the Czech Republic or France. "Political blunders are carelessly threatening the hard-won faith in offshore technology," says RWE's clearly annoyed manager Vahrenholt. After all, it's the job of Germany's ministers and civil servants to guarantee the timely connection of the wind farms with the national grid.

Unfortunately both the politicians and the Federal Network Agency are ducking their responsibility. In their letter of December 6, the wind farms operators suggested offsetting the financial losses they would suffer by increasing or extending the feed-in payments for the offshore wind farms under the Federal Renewable Energy Act. They also demanded the introduction of legally binding connection deadlines for wind farms to allay investors' fears as quickly as possible.
The German government has yet to respond to the pleas. However there's little enthusiasm at the environment ministry for reopening the tough negotiations that preceded the passing of the Renewable Energy Act in the first place.

RWE's bosses say they won't be satisfied with that. If the government sticks by its hard line, the company vows to press for damages in the triple-digit millions. _Spiegel
"Damages in the triple-digit millions?" That is a rather low-ball estimate of the actual damages which the utility will suffer. The German economy as a whole is likely to suffer damages in the trillions, once the repercussions of the grand plan for energy starvation cascades down to its denouement.

Here is what intelligent people need to know about big wind power, before the energy starvationists are able to force this catastrophe down their throats more than is already the case:

Electrical Energy: Sound Scientific Solutions

View more presentations from John Droz

Arm yourselves with knowledge or you will have your posterior reamed in the manner of the German taxpayer, by the big-money greens and the big-wind developers. The reaming will not stop for decades after the fact, since besides paying higher prices for unreliable energy, your economies will suffer from chronic power shortages. Huge broad fields of giant rusting wind turbines will litter the landscape as a monument to the stupidity of politicians, the unscrupulous grubbing at the public trough by big wind developers and investors (such as Warren Buffett and Boone Pickens), and the thorough corruption of big money Green activism.

China 2012: Collapse vs. Triumph vs. Mere Survival

2011-12-30T22:23:00.000Z

Gordon Chang has been predicting the collapse of the CCP Chinese government since 2001. Mr. Chang is not yet ready to change his mind about the ultimate demise of Chinese communism -- although he admits his timing may have been off by several years. Here he updates his predictions of collapse:Why has China as we know it survived? First and foremost, the Chinese central government has managed to avoid adhering to many of its obligations made when it joined the WTO in 2001 to open its economy and play by the rules, and the international community maintained a generally tolerant attitude toward this noncompliant behavior. As a result, Beijing has been able to protect much of its home market from foreign competitors while ramping up exports.

By any measure, China has been phenomenally successful in developing its economy after WTO accession -- returning to the almost double-digit growth it had enjoyed before the near-recession suffered at the end of the 1990s. Many analysts assume this growth streak can continue indefinitely. For instance, Justin Yifu Lin, the World Bank's chief economist, believes the country can grow for at least two more decades at 8 percent, and the International Monetary Fund predicts China's economy will surpass America's in size by 2016.

Don't believe any of this. China outperformed other countries because it was in a three-decade upward supercycle, principally for three reasons. First, there were Deng Xiaoping's transformational "reform and opening up" policies, first implemented in the late 1970s. Second, Deng's era of change coincided with the end of the Cold War, which brought about the elimination of political barriers to international commerce. Third, all of this took place while China was benefiting from its "demographic dividend," an extraordinary bulge in the workforce. _Gordon Chang China Collapse 2012
Chang goes on to explain why China no longer enjoys these favourable conditions...worth a look.

Damien Wa takes a different position on China's prospects, one that could almost be called giddy, considering many of the changes currently taking place within the celestial kingdom:Major economic adjustments are usually never pleasant, and most leaders would prefer to minimize the pain on the largest swath of the population possible during that process. The Chinese are no different in this regard, but how much heavy-lifting can they tolerate?

Yu and a similarly reform-minded lot are advocating temerity over timidity, likely in a bid to influence the direction of debate as there are forces inevitably arrayed against them. Plenty of interests in China eschew these changes that will involve taking away some of their wealth, likely prompting a vigorous defense of the status quo...

To me, one of the biggest questions next year is whether China can create the necessary political conditions, amid one of the most important transitions in a decade, to forge ahead with its restructuring. With the anticipated slow down in growth and a shrinking export surplus, there appears to be an opportunity to steer the ship of state in a different direction. _Damien Wa The Atlantic
Alright, perhaps Wa is not being giddy over China's prospects. But he is allowing the possibility that China's leadership might make the right decisions over the next year or two.

Investor Jim Rogers has long been a China optimist, and has even moved himself and his children to Singapore, in order that his progeny could learn to speak fluent Mandarin Chinese. But is Mr. Rogers' optimism justified?Claims by Jim Rogers, talking up his New Asian Home, that Chinese real estate financing methods avoid the extremes which gave us the subprime crisis are hopeful and highly charitable but are unreal. Before 2007, his storyline is that Americans and Spaniards were buying four or five houses with no job, no down-payment, and 120% loans (with the 20% extra to buy Donald Duck furniture and washing machines from China). The myth goes that China and India dont have that problem - but in fact what they have is far worse.

The loans to finance phantom housing projects are lent to nobody, or rather persons who might or could buy in 5 to 10 years, represented "in trust" by often fictive or notional municipalities that either do not exist or will never be created. Housing and apartment types and fixtures/fittings are deliberately given upmarket specifications and costs, making it even more unlikely that real human beings can or could buy them. Exactly like the USA or Spain, Asian banks take the mortgage amounts and jiggle them up even more, play the cash on the pinwheel casino of the global finance machine, go bankrupt, and get bailed out by the State. We can ask: How is this different from the US subprime crisis or Spain's real estate meltdown ?

Maybe only in one respect: related to their economies and average GNP per capita, the Chinese and Indian real estate bubbles are several times bigger than in the US, UK, Spain, Portugal, Ireland and other hard-hit countries now either openly in recession or near it.

Strong industrial production growth and growth of exports from China and India can only absorb this hole in their domestic economies for a certain amount of time. With sales to the depressed European and US markets - their biggest export markets - already declining, the multiplier feedback of decline inside their economies will rapidly grow, This feedback inside their economies to falling demand growth is already producing the fast feedback of their central banks printing a lot more money: the inflation generating process is well under way, even harder to control than in the OECD economies which were already semi-stagnant or "in persistent slow growth" when the crisis hit, and is unlikely to stop anytime before the economy slumps. Our concern is to predict when decline shifts to sudden and rapid falls in overall economic activity. _Market Oracle
All of this is not meant to suggest that Europe and the Anglosphere -- not to mention the Asia Tigers -- are sailing clear and untroubled waters. Every industrial power on Earth is going through difficult times of one sort or another -- particularly problems of debt and demographic decline.

But China (and India) was (were) meant to be the hope of the future, the economic bulwark (s) for the 21st century. Signs of significant cracks in China and the other BRICs may be telling us to look elsewhere for hope.

Gazing at Economic Doomsyear: 2012?

2011-12-27T16:39:00.000Z

In general, the parts of Canada that are producing energy are doing well economically. The same is true for US states such as North Dakota and Texas, and parts of Australia and Norway. But the overall global economic picture for 2012 is not so bright -- if looked at without the rose-tinted glasses. Here is a decidedly negative look at the near term economic future:
The economic, political and social outlook for 2012 is profoundly negative. The almost universal consensus, even among mainstream orthodox economists is pessimistic regarding the world economy. Although, even here, their predictions understate the scope and depth of the crises, there are powerful reasons to believe that beginning in 2012, we are heading toward a steeper decline than what was experienced during the Great Recession of 2008 – 2009. With fewer resources, greater debt and increasing popular resistance to shouldering the burden of saving the capitalist system, the governments cannot bail out the system.

Many of the major institutions and economic relations which were cause and consequence of world and regional capitalist expansion over the past three decades are in the process of disintegration and disarray. The previous economic engines of global expansion, the US and the European Union, have exhausted their potentialities and are in open decline. The new centers of growth, China, India, Brazil, Russia, which for a ‘short decade’ provided a new impetus for world growth have run their course and are de-accelerating rapidly and will continue to do so throughout the new year. _Infowars

The viewpoint above paints with a broad brush, but is in many ways correct. The US under Obama is in full energy-starvation mode, which starves industry and commerce, and adds unnecessary economic burdens to every household. Europe after Fukushima is likewise in energy-starvation mode, which further hampers the debt and demographic decline which was already sinking the continent. As for the BRICs, the picture is quite uneven and in rapid flux, but the early rosy predictions are beginning to fail.
China ’s economic growth, which is largely dependent on real estate speculation, will be adversely affected when the bubble is burst. A sharp downturn will result, leading to job losses, municipal bankruptcies and increased social and class conflicts. This can result in either greater repression or gradual democratization. The outcome will profoundly affect China ’s market – state relations. The economic crisis will likely strengthen state control over the market.

...The world recession will weaken the Russian economy and will force it to choose between greater public ownership or greater dependency on state funds to bail out prominent oligarchs.

...All indications point to 2012 being a turning point year of unrelenting economic crisis spreading outward from Europe and the US to Asia and its dependencies in Africa and Latin America . The crisis will be truly global. _Infowars
All predictions must be taken with a grain of salt. Infowars is a political activism site with many rigidly held viewpoints which do not always mesh with each other smoothly. But by looking at the world through a variety of eyes, one can better understand the wide range of perceptions -- and better predict how people will react to changes and events.

Russia is the Birthplace of Modern Terrorism

2011-12-26T16:31:00.000Z

Russia is the birthplace of modern terrorism. The Russian nihilists of the 19th century combined political powerlessness with a propensity for gruesome violence, but their attacks were aimed at the Tsarist state and ruling classes. Later, the Soviet Union and its allies actively supported terrorism as a means to politically inconvenience and undermine its opponents. The East German Stasi and the KGB provided funds, equipment, and "networking" opportunities to the myriad of leftist German terrorist cells in the 1960s, 70s and 80s. The Red Army Faction and the 2nd June Movement in Germany, as well as the Red Brigades in Italy, shared Marxist philosophies, a hatred of America, solidarity with the Palestinians, and opposition to the generation, some of its members still in power, that had supported the Nazis and fascists. They were good foundations for a Cold War fifth column. It was not just Europe, either: Soviet equipment, funding, training and guidance flowed across the globe, either directly from the KGB or through the agencies of key allies, like the Rumanian Securitate, the Cuban General Intelligence Directorate.

Palestinian groups were enthusiastic participants in Soviet terror largesse. General Alexander Sakharovsky, head of the KGB's First Chief Directorate, famously said in 1971, "Airplane hijacking is my own invention," referring to the Palestinian Liberation Organization's hijackings. In the 1950s and 60s there was, on average, five hijackings a year; in 1969, Palestinian terrorists hijacked 82 aircraft. George Habash's Popular Front for the Liberation of Palestine was crucial. The secular, left-wing Habash boasted, "Killing one Jew far away from the field of battle is more effective than killing a hundred Jews on the field of battle, because it attracts more attention."

When the Soviet Union ended, so did much of the secular, left-wing terrorism it had sponsored. Logistical support, funding, and advice all stopped. But, just as importantly, the intellectual, spiritual, and philosophical engine of leftist terror had become broken and powerless. Communism did not work; liberal democracy and capitalism had won. Marxism lost its inspirational impact without a superpower cheerleader and benefactor. The potential terrorists were no longer motivated by Marxism and, crucially, neither were their supporters.

Terrorism has always been about more than the terrorists themselves. The perpetrators need a motivating ideology to justify their crimes, as well as committed enablers around them. The enablers themselves require a broader base of political supporters and advocates -- "the useful idiots" (an expression credited to Lenin). In the early 1970s, one poll reported that a tenth of Germans under the age of 40 said they would shelter members of terrorist group Baader-Meinhof; a quarter expressed their broad support, even after Baader-Meinhof had murdered over 30 people, including police officers, newspaper workers, and businessmen. With the fall of the Soviet Union and the collapse of communism, extreme leftism lost its inspiration and the terrorists lost their support. Baader-Meinhof announced its own disbandment in 1998, five years after its last terrorist attack and seven years after the Soviet Union disbanded. _Atlantic

And then Muslim terrorism rose up to fill the gap left by the suspension of leftist terrorism. But the idea behind leftist terrorism has not actually gone away. In the west, the erstwhile left-terror enablers have taken over much of the establishment and are able to control the message to some extent, without the use of overt violence which can be linked to them.

And back in Russia, Putin's use of terror to control his own population has not gone unnoticed. Given popular discontent with the Putin dynasty in Moscow, it is likely that Putin will be forced to pull out the old tools of terror once again, to cow his people into total submission.

Terrorism is apt to come into vogue over a wider domain, as debt and demography continue to take their toll on a declining west, and as the formerly hopeful BRICs begin their inexorable crumble. The tools of terror are likely to grow more sophisticated, as its practitioners extend from the primitive tribal populations of Islam into the more imaginative, better educated, and higher IQ populations of the western and East Asian worlds.

Think of it as Russia's gift to the modern world.

Yes, Virginia, China Still Uses Political Prisoners as Organ Donours

2011-12-24T20:01:00.000Z

Thirty-six scheduled executions would translate into 72 kidneys and corneas divided among the regional hospitals. Every van contained surgeons who could work fast: 15-30 minutes to extract. Drive back to the hospital. Transplant within six hours. Nothing fancy or experimental; execution would probably ruin the heart.

With the acceleration of Chinese medical expertise over the last decade, organs once considered scraps no longer went to waste. It wasn’t public knowledge exactly, but Chinese medical schools taught that many otherwise wicked criminals volunteered their organs as a final penance. _TWS

China is a land of many contrasts. The modern face of the Shanghai urban waterfront stands in contradiction of what is taking place in the hinterlands, well out of sight of western newsmen.

Outsiders would generally like to believe the best of China's leadership, given the rapid ascendancy of Chinese wealth and power in the world. If the coming century is to be "The Chinese Century," westerners do not want to wake up to discover that they have ceded superpower status to a nation that is little better than Germany under Hitler.
In July 2009, Urumqi exploded in bloody street riots between Uighurs and Han Chinese. The authorities massed troops in the regional capital, kicked out the Western journalists, shut down the Internet, and, over the next six months, quietly, mostly at night, rounded up Uighur males by the thousands. According to information leaked by Uighurs held in captivity, some prisoners were given physical examinations aimed solely at assessing the health of their retail organs. The signals may be faint, but they are consistent, and the conclusion is inescapable: China, a state rapidly approaching superpower status, has not just committed human rights abuses—that’s old news—but has, for over a decade, perverted the most trusted area of human expertise into performing what is, in the legal parlance of human rights, targeted elimination of a specific group.

... By the end of 1999, the Uighur crackdown would be eclipsed by Chinese security’s largest-scale action since Mao: the elimination of Falun Gong. By my estimate up to three million Falun Gong practitioners would pass through the Chinese corrections system. Approximately 65,000 would be harvested, hearts still beating, before the 2008 Olympics. An unspecified, significantly smaller, number of House Christians and Tibetans likely met the same fate.

By Holocaust standards these are piddling numbers, so let’s be clear: China is not the land of the final solution. But it is the land of the expedient solution. _TWS
China is not what you might have thought. It is not an orderly, well-behaved, good-intentioned and benevolent nation that is ready to become a global hegemon.

The neighbors of China better understand what a nightmare living under Chinese hegemony would be. That is why they have scrambled to form political and military alliances with the US and anyone else who might act as a cushion against Chinese aggressiveness and bullying. Not to mention China's hunger for human organs . . . .

China In Hard Landing Mode?

2011-12-21T21:46:00.000Z

China is obviously in hard landing mode: Excavator sales in China tumbled 27% in October from the previous month, the sixth consecutive monthly decline. Cumulative sales volume through October were up only 16% year-on-year after surging 78% in the 12 months to last December. With property sales falling, developers are buying less land from local governments, which rely on land sales for around 70% of their revenue. The ratio of land acquisition expense to property revenue for leading developers is now as low as 21%, according to a report of Centaline Property Agency. _EM
China's communist government was certain that it could control the swings and uncertainties in a mixed industrial economy. But the CCP figured wrong.

In the middle of plans for its once a decade transition of power, deep schisms are forming both within the Beijing government, and between the central government and the regional governments.
China is now in an export hole. Reuters reports flows are down. Exports fell in sequence 2% lower in each month in the 4Q. West Coast ports data comfirms the same trend. November marks six months in a row of YoY declines.

This squares with my theory that the Chinese export sector began a severe contraction back in early part of 2011. The only thing that sustained exports in the first half were warehouses of inferior goods, which are now emptying. If imports from China are down for the reasons I have always cited, it does stand to reason that a little marginal production might move back to the US.

So at tremendous cost and because Chinese exports are hollowing, the US gets a minor uptick in production output, that could last all of about a quarter or two. Remember that the spin last year was that the BRICs would keep growing and support the global economy. Now it centers around this artificial and expensive pickup in US activity.

For anybody who is alert in the US, the quality of Chinese goods is way down. My girl friend is so in tune with this that she checks manufacturing tags. One aspect she has noted is that origin is now frequently omitted.

In the surprise, surprise Dept. it turns out that China is the epicenter in illicit financial flows, with over $2 trillion in illegal money moving in and out of China between 2000 and 2009, according to a new report from Global Financial Integrity. GFI defines illicit financial flows as “the cross-border movement of money that is illegally earned, transferred, or utilized.” And noting what I observed years ago, GFI cites trade mispricing as the major conduit for transferring illegal money in China.

Factoid front: every year since 2005, more than 20% of China’s GDP has consisted of construction-related spending versus 6% in the US. To put this in perspective, in 2010 China consumed 25 X of the US consumption of concrete. China’s low hanging infrastructure build out fruit has been largely picked, and projects on the board are declining. China has built out the equivalent to the entire EU housing stock in less than a decade. 60% of elevator delivery go to China. On a paved road per car basis, China is far ahead of it’s development curve. Charts taken from a Societe General report. _EM

Between China's trillion dollar "infrastructure to nowhere" and its massive overcapacity in real estate and manufacturing capacity, China is getting a crash course in capitalist economics 101. That is the economics course which all NYTimes columnists are required to have either flunked or skipped.

Regardless, in the real world, what a government wants and what it can achieve in the end, are usually two different things.

2011-12-21T00:37:00.000Z

Videa h/t Mish

Ron Paul is threatening the status quo by being competitive in the Iowa caucus and the New Hampshire primary. It is understandable why the Republican Party establishment is blasting away at Paul with both barrels. But even Democratic Party press outlets such as the Washington Post and the Huffington Post have been running hit pieces on Ron Paul.

It seems that Ron Paul threatens everyone who feeds at the public trough.

The Manipulation Behind the Markets: Who Pulls the Strings?

2011-12-20T17:02:00.001Z

Great fortunes can be made by manipulating global markets. And if you can tip the markets far enough, you may even be able to bring down governments. Here is the story of a market manipulation that may have helped trigger the great 2008 global markets crash:... a group of scientists has released a study that shows a critical piece of the puzzle went missing, and that piece continues to go ignored, to everyone’s peril, including the banks.

...Their new study shows that banks themselves were under attack by other players on Wall Street. The study authors at the New England Complex Systems Institute (NECSI) retraced events to show that at a critical point in the financial crisis, the stock of Citigroup was attacked by traders by selling borrowed stock (short-selling) which may have caused others to sell in panic. The subsequent price drop enabled the attackers to buy the stock back at a much lower price.
This kind of illegal market manipulation is called a bear raid and the new study supports earlier suspicions that the raids played a role in the market crash.

The study has direct evidence. Through its analysis of stock market data not generally available to the public, namely the borrowing of shares, NECSI reconstructs the chain of events.
On November 1, 2007, the number of borrowed Citigroup shares jumped by 100 million shares, a value of almost $6 billion. Six days later, a similar number of shares was returned on a single day.

Shares are generally borrowed to sell on the market. The trading on November 1 was almost four times the usual volume. The newly borrowed shares represented over three-quarters of the volume on that day. When a large volume of shares is sold it can drive prices down. The price of shares that day dropped by almost 7 percent. By the time the shares were returned, it had dropped nearly 20 percent.

Professor Yaneer Bar-Yam, President of NECSI, maintains this was no "freak" or coincidental event. "When 100 million shares are borrowed on a single day and then returned on a single day, the evidence that this is a concerted action is hard to refute. The likelihood of such an event happening by coincidence is one in a trillion."

The NECSI scholars are also voicing concern about how the incident was allowed to happen. Selling shares to deliberately cause a price drop to induce others to buy or sell is illegal, but enforcing the law after it is violated is much less effective than preventing it from happening in the first place, they maintain.

"There used to be a rule that prevented it from happening by forbidding borrowed shares from being sold in large blocks that drive the price down," said Bar-Yam. "The Securities and Exchange Commission repealed that rule, known as the price test or uptick rule, on July 6, 2007."

Last year, the authors of the report sent preliminary results of their study to the financial services committee of Congress, and Congressmen Barney Frank and Ed Perlmutter sent it to the SEC.

Unfortunately, Professor Bar-Yam says that he hasn’t seen any action by the SEC to identify or prosecute those responsible or to prevent its occurring in the future. _Physorg
Of course, the affirmative action banking rules put into place by Presidents Carter and Clinton -- and reinforced by assorted members of Congress such as Dodd, Frank, Waters, etc -- did not help to calm the instability that was building in the markets.

Certainly the SEC dropped the ball, as did the ratings agencies, and the due diligence mechanisms of financial institutions themselves -- which should have known to fight back against destructive government rules rather than to be complicit in their own quasi-suicide. Or perhaps they knew they would be bailed out, no matter what dysfunctional government regulations forced them to do?

The episode related above was likely just one of many -- one that was particularly clumsily done, and easiest to detect. Certainly the Russians had made threats against the US economy sometime before the crash. Wealthy currency traders / manipulators such as George Soros are always looking for an inside play, and have hands in many pockets, and on many strings.

The larger the government bureaucracy, the more difficult it is to clean it out when it becomes corrupted and infested by assorted rats, spies, and the cats' paws of assorted power players.

The unsightly and unstable towers of governance in the US and Europe have grown so large and off-balance, that less and less pressure will be required to send them tumbling. The problem was predicted and predictable many decades ago -- even farther. But they will not listen. They never listen.

You should begin making preparations, should the worst occur.

Popular Discontent in the Most Populous Nation On Earth

2011-12-18T04:07:00.000Z

Growing public discontent [in China] over corruption and mismanagement in the government has led to growing unrest and more violent protests. Public demonstrations against corruption or government policies have increased in the last two decades from under 8,000 a year to over 180,000 a year. Attempts to hide this have backfired as the Internet and cell phones quickly spread news, and images, of police brutality. _StrategyPage

As economic conditions worsen in China, disillusionment about the future is beginning to set in. A normally subservient populace is growing restive over government abuses and rampant acts of corruption and theft by officials. Modern communications technologies are making it easier for citizens to catch government officials lying to them.
The central government can intervene but rarely does. That's because the central government does not have the resources to run the entire country. China has always depended on strong local governments at the province level and below to take care of things. But this is where the corruption is worst. More and more provincial officials are being prosecuted for corruption but there are so many of them and they tend to help each other out. In effect, China is at war with itself over the corruption and bad government and everyone is losing.

Another cause of growing unrest is uncontrolled air and water pollution. For example, the government is pressuring the United States to halt the use of an air quality monitor on the roof of the Beijing embassy and releasing the data hourly on the Internet. This began in 2008 before the Olympics that year as an aid for American tourists. The Chinese government only publishes data on sand storms that blow in (as they have for over 10,000 years) from the Gobi Desert. Pollution from coal burning vehicles and factories, and the thick smog the create, is simply called "fog" and officially ignored. The citizens of Beijing know better and pay close attention to the U.S. Embassy pollution reports. Increasingly, the pollution is ten times the legal limit in the West. This is no trivial matter as more people are getting sick from the pollution and dying. _StratPage
In a country where citizens generally have no siblings, no uncles, aunts, cousins . . . and virtually no social safety net, alienation and anger can easily set in when the economy goes down.

The bursting property bubble is eating up the life savings of the older generations, just as the younger generations are finding it harder to find good opportunities. It is the time just after optimistic hopes are dashed, that resentment against officials and the well connected can grow the greatest.

The Chinese government missed its best chance for cleaning up rotten state owned enterprises and banks. And the 3 year spending spree that was meant to send the Chinese economy into self-sustain mode seems to have done little more than help China and much of the rest of the world to avoid taking its bitter medicine for a little while longer.

China, Europe and the US all seem to be facing a cross-roads in 2012. If none are willing to do the difficult things that must be done to clear bad debt and get on sounder footings for healthy economic growth, the time period between now and 2020 is likely to see some very difficult and even desperate times.

Economic Growth: The Limits Are In the Human Mind

2011-12-15T16:37:00.001Z

Are human societies reaching their "limits to growth." One might think so when observing the economic problems faced by Europe, the US, Japan, and a number of other more advanced technological societies. The most popular modern argument for "limits to growth" revolves around the issue of limited energy supplies, eg "peak oil."
... in a recent article, Richard Heinberg, author of The End of Growth, claimed that growth has come to an end. Millennia of growth have now apparently come to a crashing end. We have gone from the slow-burning Neolithic revolution, which re-arranged nature to our liking, to the expansion of agriculture, and the great Industrial Revolution, which eventually freed us from the land. However, growth sceptics such as Heinberg are positing why economic growth should end right now, in the early twenty-first century, when we are more prosperous and resourceful than at any time in the past.

...The key point to Heinberg’s argument is that growth is constrained by the availability of energy. In this, he is correct. Physics tells us that we can put order into disordered matter using high-grade energy, generating low-grade waste heat in the process...Heinberg argues that high-grade energy is becoming scarce, that we have eaten the low-hanging fruit. Consequently, growth must end as we lack sufficient energy to rearrange matter into more useful forms, whether smartphones, tractors or vaccines. In reality, high-grade energy is anything but scarce.
_Spiked-online

We live in a finite world, with finite resources. Even the sun will expand and die out eventually, and life on the planet will be unsustainable. But that will likely take a few billion years to occur. In the meantime, perhaps there are steps that we can take to maximise our chances of survival?
Even the prophet of ‘peak oil’, M King Hubbert, a man beloved of growth sceptics, cleverly recognised that while fossil-fuel use will no doubt ultimately peak, nuclear fuels are essentially forever, because they are so energy dense.

Let’s be clear: there is no shortage of high-grade, carbon-free energy to deliver a future of shared prosperity. But we need the will, ambition and inventiveness to exploit it. We also need to recognise that we have only scratched the surface of nuclear energy. Even modern light-water reactors are woefully inefficient at turning the energy of collapsing stars stored in nuclear fuels into useful work. But through future innovation, we can tap almost all of that clean, compact energy considerately provided by nature. _Spiked-online

Modern environmentalists consider all forms of abundant and reliable energy to be unsafe. They consider fossil fuels to be unsafe due to pollution and global warming. Nuclear energy is said to be unsafe due to radioactive contamination and nuclear weapons proliferation. If biomass fuel and power are considered, environmental activists warn that food supplies would be threatened and planetary biodiversity would be destroyed.

The Obama administration has followed the environmentalist agenda of energy starvation almost to the letter -- creating political limits to energy and resources which would not otherwise exist.

Humans are always looking for better, cleaner, more economical sources of fuels and energy. But an innovation society cannot "think its way" out of current conundrums if its political leaders shut off the energy flow to society -- for whatever reason.

Eventually, human ingenuity will devise cleaner, more abundant, and more economical forms of energy than the dominant energy forms today. But big wind and big solar are too expensive and unreliable to substitute for natural gas, coal, nuclear, oil sands, and crude oil. Pursuing the solutions proposed by environmental activists will lead us down the path to global poverty, disease, die-off, and long term backwardness -- a new dark ages.

Here is the alternative: The Ultimate Resource. The human mind is constantly looking for better ways to do more with less. When allowed the freedom to innovate, experiment, invent, and create, the human mind can solve problems in a wide range of often unexpected ways.

The environmental greens who control the US government, the EU government, and many powerful inter-governmental and non-governmental organisations, cannot imagine the possible solutions to the problems which haunt their dreams. Their minds were never tuned to innovative problem-solving in the sense of science, technology, industry, and energy.

The human mind must be freed and empowered to solve problems. This means that the huge governmental, inter-governmental, and non-governmental bureaucracies of the world will have to relinquish significant power of action to ordinary people.

If these inbred monstrosities of cancerous bureaucracy cannot be reined in and partially dismantled -- if they are allowed to continue to grow out of control -- they will choke the life out of the societies they pretend to watch over.

What will you do about it?

Russia and China on Tenderhooks?

2011-12-11T20:44:00.000Z

Those who know Russia the best are the most eager to get themselves and their money out.
Money is flowing out of Russia faster than it is flowing in. The net outflow is expected to reach $70 billion by year-end, and the figures suggest that the bulk of that will be from large investors.

Yaroslav Lissovolik, chief economist for Deutsche Bank here, notes that “the scale of capital flight has more than compensated for the rise of oil prices.”

Even if oil output is maintained and crude prices stay relatively high, according to Russian finance ministry estimates, the nation’s current account will slip into deficit by 2014. Then Russia’s economy, like that of the United States, will depend on an inflow of investment, economists say. _NYT

Russia faces a political crisis as well as an economic one. And underlying it all, is the crisis of the shrinking demographic -- the vanishing away of the ethnic Russian.
After a decade of “stability”, Russia now looks as vulnerable to shock as the Soviet Union was at the end of its days. The big difference, however, is that the Soviet Union had a clear structure and, in Mikhail Gorbachev, a leader who was not prepared to defend himself with force. Today’s circumstances are very different.

Mr Putin is unlikely to follow the advice of Mr Gorbachev and cancel the results of the rigged election. He may instead resort to more active repression, thereby making the country look a lot more Soviet. This would only make the crisis worse. _Economist

China's situation is somewhat different from Russia's, although there are a few parallels in terms of movement along the spectrum from totalitarianism to partial liberalisation. But China's demographic is in no danger of shrinking to nothing. Instead, China's demographic is dangerously close to asserting itself against the government by revolutionary means.
When China's leadership saw how Moammar Kadafi was shot in the street, how Saddam Hussein was marched onto the scaffold and how Hosni Mubarak was tried as he lay in a cage — when they saw, as those autocrats lost power, how their families lost everything too — they must have sensed, I think, that it is not democracy they should fear but revolution. As the relatives of our high officials grow more wealthy, they emigrate to democratic countries (never to dictatorships); they know that the possibility of revolution in China is growing by the day. They know that revolution is never reasonable, that it drips with blood. _LATimes
When comparing the serious financial and political problems present in advanced nations such as Germany or the United States, with the problems facing Russia and China, the salient thing to remember is this: We expect that the Germans and the Americans understand, by and large, what is wrong and what will eventually have to be done to fix it. That is far from true for the Russians and the Chinese, who are sailing far from charted waters.

Of course, even in the more prosperous west, with its traditions of order and rule of law, the coming disruptions of growing debt and massive demographic change may prove to be too much of a shock for the governmental infrastructures of some nations to bear. Uncertainty about the future is not limited to "the coming anarchy" nations of the third world and nations trying to emerge from a recent totalitarian past.

Hope for the best. But keep your eyes open, your gas tank full, your boots oiled, your powder dry, and your knives sharp.

After the Collapse of Advanced Civilisations, Comes a Greater Die-Off

2011-12-10T19:51:00.000Z

The idea of a coming great human die-off is gaining popularity among those of the lefty-Luddite green enviro persuasion. Whether the die-off will be triggered by resource scarcity, by a voluntary reduction of human fertility, or by more aggressive means, such a great die-off is being seen more as a positive event by the more trendy and green forces which have taken over most media outlets, Green NGOs, funding agencies, and large segments of academic institutions.

Advanced societies are considered "soft targets," because their populations have become so accustomed to things running relatively smoothly. Just a bit of disruption can go a long way toward upsetting such societies.

It is becoming easier for individuals and small groups to trigger events which can lead to momentous calamity in the advanced world. Increased networking of vital infrastructure is making it easier for hackers to commit cyber-terrorism:

Cyber Terrorism

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Government pressure to create "smart power grids" to replace traditional grids, provides malicious hackers with a wide range of new targets to attack, at various scales.

The threat of an EMP attack -- capable of taking out continental scale power grids -- is likewise increased, as nuclear proliferation proceeds across the Pakistan-Iran-N.Korea axis (aided by China and Russia). As many as 90% of an advanced society can be expected to die within 1 year as a result of a large-scale EMP attack.

Chemical terrorism is another way in which advanced cultures could be targeted specifically. Coordinated chemical attacks using various vectors could decapitate leadership and expertise in several vital areas, leading to widespread paralysis of normal infrastructure. Such a paralysing strike might well be a set-up for a more devastating followup attack.

Increasing sophistication of inexpensive tools for "bio-hacking" are also making it more likely that individuals or small groups will create novel microbial agents of mass contagion.
Security futurist Marc Goodman says that synthetic biology will lead to new forms of bioterrorism — opportunities for the bad guys to create never-before-seen forms of bio-toxins. These bio-threats might be nearly impossible to detect because they can be customized to the genome of a certain person or groups of people. Goodman, who has long worked on cyber crime and terrorism with organizations such as Interpol and the United Nations, believes the potential bio-threat is greatly underestimated. “Bio-crime today is akin to computer crime in the early 1980s,” said Goodman at the Singularity University executive program this week. “Few initially recognized the problem, but one need only observe how the threat grew exponentially over time.” _WaPo
It is not necessary to target the third world, in order to achieve a high magnitude die-off such as is depicted in the chart above. The third world has become so dependent upon the technological infrastructures and products provided by more advanced societies, that if the advanced world goes, most of the third world will quickly follow.

The resulting world of much lower human population, will also be much less technologically capable than the world at present, in a quantitative sense. In a qualitative sense, however, most of human technology will be saved in digital and book form. This means that within 1 to 2 centuries after the great die-off, the higher intelligence populations of the presently advanced world will grow to a large enough size to begin implementing modern technologies on a global scale once again.

In other words, if lefty-Luddite greens are engineering the great human die-off for purposes of saving the world -- or simply out of hatred for the human species -- their efforts will ultimately fail.

But that will be cold comfort for your children and grandchildren who will have to suffer through the bloody mess aftermath left to them by the possibly well-intentioned greens.

It is up to you to make sure that they survive that bloody mess. Hope for the best, prepare for the worst.

Jim Rogers Explains Current Economic Situation

2011-12-07T17:57:00.000Z

Jim Rogers is a world class investor with a useful perspective on current economic trends. It is worth a bit of time to listen to his POV. Although Mr. Rogers is not perfect nor omniscient, his ideas are thought provoking and closer to the truth than what one generally hears from the skankstream media.
In a pyrrhic victory for America, Rogers believes things will eventually get so bad that Americans will finally vote for real change and economic progress. Alas, the measures he feels are needed to cure our economy are so harsh that those same officials will also get tossed out when voters realize just how harsh the road back to prosperity is.

Regardless of the necessary suffering, spending cuts are needed in order to save the most fiscally responsible citizens, those whose savings are funding this disaster.

"What the Federal Reserve is doing now is ruining an entire class of investors," says Rogers. By forcing rates down and keeping the economy on a flatline, he believes the Fed could cause another lost generation of investments. Suffice it to say, vaporizing those who faithfully accumulated savings over the years is no way to restore confidence in our financial markets.
Rogers isn't simply a disgruntled American patriot, he's an investor with a legendary record of success. That being the case, and having established what the depths of suffering the world is facing now, the obvious question is where Rogers is putting his money to avoid or even profit from the pain. _YahooFinance

The US Federal Reserve is following the dictates of the Obama administration. The US regime which is currently in power, has dedicated its political capital to the destruction of the private sector and the middle class of the US. Both fiscal and monetary policies of the US government -- along with bureaucratic regulations and judicial trends -- all lead to those ends.

Knowing this, you had best do whatever you can to protect your assets and locate yourself in a reasonably secure location. Even if you do not live inside the US, the fallout from the Obama devastation of the US economy will spread to cover the globe.

Michael Pettis on China's Economic Prospects

2011-12-06T17:57:00.000Z

For years I have been arguing that the Achilles heel of the Chinese growth model is the unsustainable rise in debt that comes as a necessary consequence of capital misallocation fueled by bank lending.

Capital misallocation, I argued, was the nearly inevitable consequence of high investment growth over many years in a system in which price signals are severely distorted and there is political incentive to maximize economic activity in the near term. If capital misallocation is funded by debt, the increase in debt is necessarily unsustainable. _EM

One could say the same things about government misallocation of capital in the west, of course. Rapid unsustainable buildup in debt in western nations has already caused one collapse (2008), and threatens another -- even as the world flounders in a quagmire of ongoing recession.

But China has been "the golden child." China has represented "the way out," the hope for the rest of the world. What Michael Pettis is saying, is that the Chinese government has no secret formula for building perpetual sustained economic growth. The mandarins of Beijing are "playing at economics" just like everyone else.

China was the beneficiary of a massive transfer of capital and technology from the advanced world, and built a sizable nest egg based upon cheap labour exports. But when the export markets collapsed, did China's government overstep its bounds in the Sisyphean effort to maintain internal order for the empire?
Analysts too easily argue that investment in social housing is China’s trump card that will guarantee sustainable annual growth of 8-9% or more for the next several years. It isn’t. First, there is almost no way social housing investment will be large enough to replace investment in manufacturing capacity, other real estate development, and infrastructure, and if there is a problem with the latter, it will continue. Second, investment in social housing may itself be economically wasteful. Certainly there is no reason simply to assume that, given the conditions that have encouraged capital misallocation for over a decade, calling the investment “social housing” will change anything. _Much more at EM
Pettis looks at China's investment in electric vehicles, various state owned enterprises, and social housing, as examples of what he sees as an unsustainable misallocation of resources by China's governments.

China -- like Europe and the US -- may have misallocated itself into a corner, with no easy escape.

No, that isn't true. There is a simple escape, but it would be painful for many, in the transition. And for China, it would be particularly painful, given the long history of authoritarianism that has been stamped into the Chinese character.

What is the escape I am referring to? The escape which the European settlers to the 13 North American colonies of England chose -- freedom from arbitrary and tyrannical government. This freedom -- if well designed and codified -- opens the door to human innovation and enterprise. Self-interested productivity often serves where nothing else will do. But only if the people know how to profit from their own efforts, and are able to build upon those profits.

Russia, like a dog, keeps going back to the vomit (authoritarianism eg Putin), and it is likely that a liberated China would do the same -- or break up into competing fiefdoms. There is not always a perfect solution to every conundrum.

More on the Putin-Triggered Grand Exodus from Russia

2011-12-05T04:21:00.000Z

Fifteen years ago, a teenage [Natalia] Lepleiskaya branded her cousin a traitor for moving to the United States rather than staying and working to change life in Russia for the better. As an adult, along with building a successful career, she volunteered at an orphanage and collected money and clothes for those in need.

In the early 2000s, she voted for Putin and his party, but as the years went by she became increasingly angered by what is happening in the country. Social inequality has worsened, corruption runs amok, opposition protests are violently dispersed and the television news often resembles Soviet propaganda.

"There came a moment when I stopped caring ... nothing will change substantially," Lepleiskaya said.

....She realizes that Russia's emerging market provides opportunities for high profits and quick career advancement in some spheres, but she doesn't trust the government to protect her savings against inflation and economic turmoil. Her father, a college instructor for 40 years, recently retired and receives a pension equivalent to $270 (euro200) per month.

"I don't want to sit on top of a tinderbox. I would rather build my career slowly, step by step, work and know that eventually when I am 60 the government will not let me down," she said.

She and her husband, Alexander, a 27-year-old IT specialist are set to receive their Canadian entry visas in the coming days and plan to fly to Montreal in the spring. Lepleiskaya now has to vaccinate her cat, who has the French name Xavier, sell off their belongings and begin saying goodbye to loved ones. _CBS

The depressing reality of life in Russia would wear down anyone, even a young, energetic idealist like Natalia. With up to 80% of Russia's elite university students eager to abandon ship and leave Russia, the ability for Russia to keep pace with global developments in science, technology, manufacturing, and infrastructure are virtually nonexistent.
Mikhail Denisenko at the Higher School of Economics in Moscow estimates that at least a half million Russians moved abroad in 2002-2009 and more are on the way in what he describes as the fifth wave of emigration since the beginning of the 20th century.

"The level of frustration is higher ... it's a feeling of discomfort, an aversion to life in Russia," said Lev Gudkov, the head of the Levada Center.

"The prospect of another 12 years of stagnation or even a worsening of the situation is frightening them and they are beginning to think about moving to a different country or at least providing a future for their children" abroad.

Numerous recent websites and blogs offer advice on how to emigrate. One of them, "Time to Shove Off," offers commentaries and videos exposing alleged crime and corruption among top Russian officials. "Yet another governor buys himself yet another Mercedes for 7 million rubles ($233,000 or euro175,000)," reads one posting. "Corruption as a lifestyle," a headline says.

"The news that Putin is staying has spoiled people's mood and this talk (of emigration) started resonating more," said Anton Nossik, a popular blogger and Internet expert, who holds seminars on emigration.

The democratic reforms ushered in by the 1991 Soviet collapse generated hope that Russia could finally become a free and progressive nation. But Putin's 11 years in power, first as president and now as prime minister, have left many people disillusioned and gloomy about the future. _CBS
Recent Russian parliamentary elections handed Vladimir Putin's party a stunning defeat, suggesting that even the Russians who stay behind are in no mood to put up with Putin's Tsar complex.

Putin believes that his control of Russia's massive energy resources and his own vast personal wealth will make him immune from growing popular discontent inside Russia -- and his growing unpopularity abroad. But it would be a mistake on Putin's part to count on the energy card too much. Global energy supply and demand are subject to significant change and flux.

Furthermore, if US voters wise up and eject Obama from the White House in the 2012 elections, the US is likely to turn into a formidable global energy competitor. Should that happen, a complete collapse of the Putin government between 2015 - 2020 is not out of the question.

Emperor Putin Prepares to Assume Role as Supreme Leader

2011-12-02T18:15:00.000Z

Hanging over all the festivities in Moscow, like the sword of Damocles, is the demographic reality of progressive shrinkage and collapse of the core ethnic population of Russia. An empire requires the constant support of armies of loyal soldiers and citizens. Things may be moving too quickly for the sclerotic Russian bear too keep up.

2004 Premonitions of Putin Personality Cult
Back in 2004 at Putin's second swearing-in as Russian President, the mood in Russia was considerably more upbeat. Russia was clearly coming back from the brink, as oil prices were rising, and the global economic bubble was in full inflate mode.

Seven years later, in 2011, the prospects of 12 more years of Putin as "supreme leader" of Russia create a more somber mood. The underlying bombast and belligerence of an imperial Russia under Putin is just another thing the world has to worry about.
"Russia will begin this new iteration of a Russian empire by creating a union with former Soviet states based on Moscow's current associations, such as the customs union and the collective security treaty organisation. This will allow the 'EuU' [a Eurasia union] to strategically encompass both the economic and security spheres … Putin is creating a union in which Moscow would influence foreign policy and security but would not be responsible for most of the inner workings of each country," said Lauren Goodrich in a Stratfor paper.

Putin's third empire project also includes, crucially, a tightening of Moscow's politicised grip on Europe's strategic energy supplies.

Following last month's Gazprom deal with Belarus, industry analysts suggest up to 50% of Europe's natural gas could be controlled by Russia by 2030. This is hugely significant: Putin's new Russian empire can only be financed by continuing, high-priced energy export revenues. In effect, Europe could be paying for its own future domination.

The empire-fights-back scenario has numerous other aspects. Recent remarks by Medvedev about the lack of wisdom, in the context of the 2008 Georgia conflict, of unchecked Nato enlargement vividly illustrated Russia's visceral opposition to any interference in what used to be called its "near abroad" – and Putin's desire to roll back the western encroachments of the past 20 years. Russia's determination to defend wider spheres of traditional influence in the non-aligned and developing world can be seen in its obdurate refusal to penalise Syria, in the face of almost universal outrage over the crackdown there; and in its de facto defence of Iran's nuclear programme. Putin, meanwhile, continues to prioritise Russian military modernisation.

Western countries inclined to take issue with this external empire-building, or with Russia's lamentable internal democracy and human rights deficit, have been told to save their breath. "All our foreign partners need to understand this: Russia is a democratic country, it's a reliable and predictable partner with which they can and must reach agreement, but on which they cannot impose anything from the outside," Putin told the United Russia convention. Attempts to influence the election process or the reform agenda were "a wasted effort, like throwing money to the winds".

As Putin – former secret policeman, physical fitness fanatic and hyper-nationalist – prepares to resume Russia's presidency, his third empire ambitions become ever clearer. March's election will be no contest. Only when it is over will the real fight begin. _Guardian

The inability of the USSR's economic, scientific, and technological infrastructure to keep up with those of the western nations led to its much belated collapse. Something very similar is taking place in Russia now, with an important exception: The gates of emigration -- once closed tightly by the USSR dictatorship -- are now open. Russia's young can clearly compare Russia with the outside world, now, thanks to advanced telecommunications technologies, and communications with the huge numbers of Russians who have already emigrated.

Birthrates of Russian women after emigration to healthier societies tend to go up, compared with the unlucky girls who are left behind. The good Russian genes that created the beautiful women, world class chessmasters, top rank physicists and engineers, and highly skilled computer scientists and mathematicians, are being propagated mainly outside of Russia -- well-mixed with the genes of other, more worldly successful peoples.

Putin's empire may be shrinking, but the blood of Russia is mixing with the blood of the western world, outside the tsar's control. The resulting hybrid mix is likely to be hardier, if a bit more fatalistic.

China's Death Row is No Picnic

2011-12-01T17:41:00.000Z

From the first day of his detention, Chen was subjected to torture, as authorities sought to extraction a confession. The method was simple. Bronze wires from an old hand-cranked telephone were wrapped around his fingers and toes. The telephone handle was then cranked, sending an electric current through the wires. This is called: “being connected”. Repeatedly, the guards shook him and tried to wring a confession out of him. “Now can you remember what you have done?” they would ask. “Are you going to confess now?”

Chen said he had no idea why he’d been arrested. “The police never asked specific questions. They just kept on pressing me to give an account.”

When the police were not satisfied with his answers, they “connected” him. “As an instrument of torture, this old appliance is worse than being hit with a baton. It is extremely painful. You wish you could just die,” said Chen.

According to reports, Chen complained of his torture during his court appearances. He spoke of shocks to his genitals from an electric baton, forced drinking of hot-chili water, suffocation with a plastic bag, burning the soles of his feet with a lighter, squeezing his fingers with pliers, as well as the telephone wire technique.

The most horrific experience was when he was connected to five telephone appliances on his hands, feet and ears at the same time. He tried to commit suicide by biting his own tongue, and was hospitalized and treated with seven stitches before returning to prison.

After more than a month of continual torture, Chen almost surrendered. He told his torturers “Write whatever you like. There’s no need to beat me anymore.” Nevertheless when the policeman pulled his hand to sign on the hearing record, he deliberately erred in signing his family name, signing with a Chinese character that is slightly different from the one in his family name. He did this with the faint hope that “If I really died, maybe the superior court would find that my signature was false, and maybe they’d investigate…I didn’t want to shame my family name.”

Yang Hongyi, who was acquitted at the same time as Chen Ruiwu, as well as the other three involved but released earlier for the same case, all claimed to have been subjected to similar torture. _WorldCrunch
The president of the SEIU, Andy Stern, asserts that the Chinese economic system is a better system than the western one. One wonders whether Stern also promotes the Chinese system of justice? No doubt there are a number of people that Stern would like to subject to Chinese methods, beginning with Wisconsin governor Walker.

Mr. Putin's Paradise for One

2011-11-30T22:06:00.000Z

A private poll of 5,000 students at Moscow State University found that 80% intended to leave the country. Nor are Russia's filthy rich too patriotic about the motherland. Negative capital flows doubled this year from $34bn to $70bn. Even if the price of crude oil hit $125 a barrel, more money would be flowing out of the country than in. As it is, four times as much money (as a percentage of GDP) is going out than in. It tells you everything you need to know about a Russia digging in for another 12 years of Putin.

__Guardian

Mr. Putin holds all the cards in Russia at this time. His enemies are in prison or dead. His friends and cronies hold positions of power around the country, and pay him tribute on a regular basis. Anyone willing to publicly threaten Putin within Russia would have to be crazy.
The going rate is $50m for a governorship, $500,000 for a middle-ranking bureaucrat. Little wonder that once in power, their job is to get a healthy return on their investment. There are decent governors, and the group saw one at work effectively attracting foreign investment in Kaluga, south of Moscow, but the directly appointed system itself is rotten. Putin makes little secret of his disdain for the alternative, freely elected governors. Some observers say he has a pathological hatred of democracy. To underline his disdain he has now, for the second year in a row, told the story of the elected governor who legged it out the back door rather than face the fury of the mob after a local disaster.

But, truth be told, Putin is also at a loss when he gets jeered. And this, according to the pollsters, will happen more often. It is not just that Putin's personal brand is ageing. The popularity of the entire St Petersburg clique around him is falling with him. United Russia, the party of apparatchiks he created, will by hook or by crook, but largely by crook, get the required percentage of votes in Sunday's Duma elections. Last time round Moscow students were told by tutors to take digital snaps of their ballot sheets if they wanted the right grades – one of many examples of the "vote early, vote often" variety. But the party is a fragile instrument of power because it represents no one but itself.

Putin's problem is not staying in power. It is leaving it – without all hell breaking lose between rival boyars, and with his personal fortune intact. _Guardian
Putin is easily one of the wealthiest men alive. In third world countries, that is how men grow rich -- through political power. In such states, opportunities for success outside government are minimal, and never secure or lasting. That is why the truly ambitious and competent persons in such countries who do not wish to work in the public sector, often emigrate to freer environments.

Wanna Save the Euro? That'll Cost You €2.3 Trillion

2011-11-29T19:51:00.000Z

...the joint liability would amount to €2.3 trillion. But it would technically be temporary. For all these safeguards, Germany’s government has so far poured cold water on the idea. But time is running out. And the scale of the impending catastrophe demands radical answers. _Economist

There is no guarantee that €2.3 trillion would be enough to save the Eurozone or its currency. Recent equity markets have been behaving as if eurosalvation were a foregone conclusion. But that is far from true.
The crisis in the euro area is turning into a panic and dragging the zone into recession. The risk that the currency disintegrates within weeks is alarmingly high.

...there are signs that the euro zone’s economy is heading for recession, if it is not there already. Industrial orders in the euro zone fell by 6.4% in September, the steepest decline since the dark days of December 2008. A closely watched index of euro-zone sentiment, based on surveys of purchasing managers in manufacturing and services, is also signalling contraction, with a reading of 47.2: anything below 50 suggests activity is shrinking. The European Commission’s index of consumer confidence fell in November for the fifth month in a row.

Now an even bigger calamity is looking likelier. The intensifying financial pressure raises the chances of a disorderly default by a government, a run of retail deposits on banks short of cash, or a revolt against austerity that would mark the start of the break-up of the euro zone. _Economist
There is much more at the article excerpted above. Follow the link.

The ongoing demographic collapse of several nations of Europe is not helping their economic prospects at all. Greece, Italy, Spain, and Portugal are losing core populations particularly quickly. Without people, there is no economy worth speaking of. And yet the topic of demographic collapse across Europe is studiously ignored, in favour of virtually any other conceivable topic of conversation -- no matter how trivial.

The Great Green Energy Suicide and the turning away from new clean reliable nuclear energy, should just about put the finishing touches to the failed Euro experiment.

No one can say that the Europe of the past 30 years has not been full of the best of intentions. Good intentions mean very little after one is dead, however.

Teacher's Unions Destroying Education in US

2011-11-28T18:05:00.000Z

There is also evidence that the overall quality of teachers has declined over time and that a significant fraction of this decline reflects teacher unions. For example, Caroline Hoxby and Andrew Leigh find that the share of teachers who are among the top aptitude individuals, as measured by SAT scores, has declined over time from about 5 percent of teachers in 1963 to only 1 percent in 2000, and that much of this decline is due to the fact that teacher unions, like most other unions, compress compensation, which means that the spread in compensation between the highest quality and lowest quality teachers is reduced.17 And it is not only the very top aptitude individuals that are entering teaching at a lower rate. Wage compression benefits lower ability teachers, but reduces compensation of the best teachers, and this decline in compensation at the top end leads to fewer top aptitude individuals pursuing a teaching career.

Hoxby and Leigh also note that there has been a large increase in the lowest aptitude individuals—those in the bottom 25 percent of SAT achievement—entering teaching, and that they now make up about 16 percent to around 36 percent of the teacher population.18 This change in the composition of teachers is negatively impacting teaching outcomes...

...if the bottom 5 to 8 percent of teachers were replaced with average quality teachers, then U.S. student test scores in math and science would be at the top of international comparisons. This means that the human capital of future U.S. workers would rise, and thus generate higher production and income in the future. Hanushek estimates that the present discounted value of higher future incomes that would result from replacing poorly performing teachers would be about $100 trillion. _LeeOhanion_American.com

The public sector union problem in the US will have to be solved on a state by state basis. Once that is done, any remaining federal level problem with public sector unions should be solvable via elected representatives. In the meantime, some states such as California, New York, and Illinois may have to descend into painful bankruptcy proceedings, before the citizens of those states understand how their governments have hornswoggled them into serfdom.

Unionization is much higher in the public sector than in the private sector, and there has been no tendency for unionization to decline in the public sector. While private sector unionization has declined from about 37 percent to about 6 percent, unionization in local government has been steady at around 45 percent.

Public sector unions have been able to thrive because of the very limited competition in state and local governments. This has allowed unions to increase wages above competitive levels. In particular, state and local government compensation has increased by about 40 percent since 1980, compared to about a 20 percent increase in the private sector. The average public sector compensation level is now $70,000, compared to an average of $60,000 in the private sector.

Moreover, the much higher rate of job security in the public sector, plus superior public pensions, suggest that state and local government workers would be willing to work for less than private sector pay. My findings indicate that accounting for just the much higher rate of public sector job security suggests that public sector employment could be competitive even with compensation that was about 10 percent lower than the private sector. The fact that average public sector worker compensation is higher than in the private sector, without taking into account pension benefits, suggests that public sector compensation levels may be significantly above competitive levels. I find that reducing the wages of state workers by 5 percent would reduce California’s 2011-2012 state budget deficit by nearly 15 percent. _Lee Ohanion

China's Emerging Hereditary Elite: Inevitable Decay of Empire?

2011-11-27T16:55:00.000Z

Every empire eventually reaches a point where the number of individuals and factions vying for power passes out of balance. This is true from empires as small as a family farm to empires such as the USSR, Communist China, Imperial Rome, or the bloated and rapidly inflating bureaucracy of the USA.

In China, the one-child policy tends to retard the development of hereditary clashes within the same family. But the ruling (and ravaging) of the Chinese empire is developing along clear family lines. An obvious hereditary elite -- a new nobility -- is arising within the celestial kingdom, and it is set to acquire a firmer grip on power with the decadal change of leaders next year.
Their visibility has particular resonance as the country approaches a once-a-decade leadership change next year, when several older princelings are expected to take the Communist Party's top positions. That prospect has led some in Chinese business and political circles to wonder whether the party will be dominated for the next decade by a group of elite families who already control large chunks of the world's second-biggest economy and wield considerable influence in the military.

"There's no ambiguity—the trend has become so clear," said Cheng Li, an expert on Chinese elite politics at the Brookings Institution in Washington. "Princelings were never popular, but now they've become so politically powerful, there's some serious concern about the legitimacy of the 'Red Nobility.' The Chinese public is particularly resentful about the princelings' control of both political power and economic wealth."

...The antics of some officials' children have become a hot topic on the Internet in China, especially among users of Twitter-like micro-blogs, which are harder for Web censors to monitor and block because they move so fast. In September, Internet users revealed that the 15-year-old son of a general was one of two young men who crashed a BMW into another car in Beijing and then beat up its occupants, warning onlookers not to call police.

...Many princelings engage in legitimate business, but there is a widespread perception in China that they have an unfair advantage in an economic system that, despite the country's embrace of capitalism, is still dominated by the state and allows no meaningful public scrutiny of decision making.

The state owns all urban land and strategic industries, as well as banks, which dole out loans overwhelmingly to state-run companies. The big spoils thus go to political insiders who can leverage personal connections and family prestige to secure resources, and then mobilize the same networks to protect them.

The People's Daily, the party mouthpiece, acknowledged the issue last year, with a poll showing that 91% of respondents believed all rich families in China had political backgrounds. A former Chinese auditor general, Li Jinhua, wrote in an online forum that the wealth of officials' family members "is what the public is most dissatisfied about." _WSJ "China's Princelings"
Speaking of lowered social mobility, one intriguing development in the Chinese educational system, is the slashing of the number of subject areas in university. Education has generally been seen as a path toward upward social mobility in most countries. But China's leaders appear to feel that too many Chinese are becoming college educated.

Revolutions typically begin among intellectuals, and the better educated, when they feel that a society has grown too closed to allow them to achieve their potential. It will be interesting to see how those who are being closed out of the hereditary elite's celestial wonderland will react, as the new nobility tightens its grip on both political and economic power.

And it will be fascinating to watch the inevitable coming power plays between the members of the hereditary elite as they spar for advantage in the higher reaches of wealth and power. It is the sort of infighting one expects to see before deep schisms start to form, and power becomes consolidated regionally rather than nationally.

Tragic Shortage of Bras Due to Chinese Worker's Strike

2011-11-26T21:46:00.001Z

Chinese factory workers across the Pearl River Delta have gone on strike, protesting low wages and limited opportunities, in the midst of an export slowdown. Regrettably, even bra factories have been affected, with the result that even fashion models are being caught without bras (see below).

The strains underline recent warnings of a looming export slowdown from a senior Guangdong official and a survey of country-wide industrial activity in November that showed the worst contraction since 2009.

At Yue Yuen Industrial Holdings' giant shoe factory in Huangjiang town — a major supplier for sports brand New Balance — the mood remained tense after most of its 8,000 workers took to the streets on Thursday, blocking roads, overturning cars and clashing with police.

...
Experts and labor advocacy groups warn an external economic slowdown in debt-stricken Europe and countries like the United States could exacerbate the risk of social upheaval in China.

Besides labor disputes, Guangdong province — a crucial locomotive of China's economic growth with a GDP matching Indonesia's — has been roiled in recent months by riots over rural land grabs in Lufeng city, and abuse of power several hours drive west in the city of Zengcheng that saw angry crowds ransack government buildings.

A former deputy editor-in-chief of the official party newspaper, the People's Daily, said the number of “mass incidents” in China, an official euphemism for social disorder, was consistently above 90,000 per year from 2007 to 2009.

...As leaner times provoke aggressive factory cost-cutting and wage trimming, Chinese workers increasingly lashed by persistent inflation are often in no mood to compromise.

In a recent report, consultancy Exclusive Analysis said it sees growing risks of “violent labor unrest” flaring up in Chinese factories and causing property damage and losses, adding: “Real-time use of social media by striking workers and firms' decreased ability to meet workers' demands due to falling Western export demand are likely to drive this violence.”

Europe's economic woes, Chinese manufacturing fragility and flat consumer spending in the United States have all raised the risk that the world is headed for a steep downturn. _ChinaPost
Be that as it may, the threat of being forced to go without bras is sending panic through the ranks of most affluent western women over the age of 30. Some middle aged feminists have even threatened retribution against the Chinese government. If shipments of bras (particularly "wonder bras") to the west are not resumed, they threaten to send planeloads of feminists to the communist mainland to incite ill feeling between the sexes within the celestial kingdom.

No word yet on any response from China's leaders to the feminists' ultimatum.

Blowback from Chinese "Infrastructure to Nowhere"

2011-11-22T13:53:00.000Z

In October, however, property transactions fell 39 percent year-on-year in China’s 15 biggest cities , according to government data. Nationwide, transactions dropped 11.6 percent, accelerating from a 7 percent fall in September.

The fall-off in transactions has affected developers’ cash flows and, in some cases, their ability to repay bank loans. Rising defaults after a lending surge in 2009 and 2010, much of which ended up in the property sector, were cited by the International Monetary Fund this month as one of the Chinese financial sector’s biggest risks. _CNBC
Property prices are falling in cities across China. Local and regional governments are chafing against the Beijing central government's recent tightening of lending rules, aimed to prevent runaway inflation. Some cities have openly defied the tightened banking rules, increasing tensions between the centre and the periphery in China today.
Residential property prices are in freefall in China as developers race to meet revenue targets for the year in a quickly deteriorating market. The country’s largest builders began discounting homes in Shanghai, Beijing, and Shenzhen in recent weeks, and the trend has now spread to second- and third-tier cities such as Hangzhou, Hefei, and Chongqing. In Chongqing, for instance, Hong Kong-based Hutchison Whampoa cut asking prices 32% at its Cape Coral project. “The price war has begun,” said Alan Chiang Sheung-lai of property consultant DTZ to the South China Morning Post.

...Citi’s Oscar Choi believes prices will decline another 10% next year, but that’s a conservative estimate. Even state-funded experts are more pessimistic. For example, Cao Jianhai of the prestigious Chinese Academy of Social Sciences sees price cuts of 50% on homes if the government continues its cooling measures.

When Beijing’s pet analysts are saying prices could halve in a few months, we can be sure they are thinking the eventual sell-off will be worse. In any event, the markets are bracing for trouble.

...recent purchasers have taken to the streets because they had suffered losses even before taking possession of their homes. A crowd of about 300 people in Shanghai smashed windows at the sales office of Longfor Properties on October 22, two days after the builder had ended a sales promotion on a project. The protestors had bought properties in earlier phases of the same project at prices as much as 30% higher than the discounted ones.

And then, on the 23rd, a smaller crowd—on the same street—demonstrated against another developer, Greenland Group. Protesters were injured in Shanghai at another demonstration, this time against a unit of China Overseas Holdings. There were also protests against builders in Beijing and in other cities, Hangzhou and Nanjing.

The cities of Hangzhou and Hefei have reportedly told developers to limit discounts to 20% to avoid unrest, but the attempt to establish fiat prices will not work for long because many builders face insolvency.

Moreover, Premier Wen has to be concerned that sometimes he cannot control his own cities, which have flouted his decrees by removing curbs on property ownership. _Forbes _ Gordon Chang
It is indeed a reason for concern, when inter-governmental discipline within a police state such as China begins to break down. China has a long history of its empires fracturing into warring fiefdoms. As China braces itself for a leadership change next year, such pressures can only be seen as unwelcome.

Putin's Coming Next 12 Years: Rumblings of Instability?

2011-11-21T04:06:00.000Z

Challenged with the view that Russia and its exhausted political system were heading towards stagnation, he disarmingly said, “I have nothing to object to in what you are saying”, adding later that “our system is not perfect.” _Economist

Economist

Mr Putin seemed blithely confident that Russia’s economic growth would not be affected by the global crisis. Others are more doubtful, including his former finance minister, Alexei Kudrin, who predicts that the oil price could fall to $60 a barrel, presenting Russia with challenges as serious as those in Europe and America. Mr Kudrin’s resignation, after Mr Putin’s promise to make Mr Medvedev prime minister, also lowers the chances of the sort of authoritarian modernisation that some liberals had once hoped for.

In foreign policy Mr Putin remained unrepentantly blunt, notably on missile defence (see article). He promoted his pet idea of a Eurasian union to foster economic integration with Russia’s former Soviet neighbours. But the Kremlin has neither the money nor the popular support for this—and Ukraine, the biggest potential prize, remains unenthusiastic. _Economist
Russia is warning that the threat of nuclear war is rising once again, with Mr. Putin's return to the presidency. Putin wants to return Russia to superpower status, and one of his strategies is apparently to wave the nuclear threat.
"The possibility of local armed conflicts virtually along the entire perimeter of the border has grown dramatically," [General] Makarov said. “I cannot rule out that, in certain circumstances, local and regional armed conflicts could grow into a large-scale war, possibly even with nuclear weapons.” _rt.com
But at its core, Russia is a sick, ageing, and shrinking nation. It is doubtful whether Russia can hold on to its land holdings in the far east for many more decades.
The fate of babies that are born in Russia is a bleak one. Russia ranks #6 in the world for fatality by suicide. It has the second-highest prevalence of AIDS in Eurasia. It is #7 in the world for cigarette consumption and #5 in the world for alcohol consumption. Its rate of fatality by fire is ten times that of the United States, and it is the most dangerous place in the world to drive a car or get on a plane.

...Russians are deeply, fundamentally, infamously suspicious of anyone who is not white, Slavic and Orthodox, and therefore the notion of creating a "melting pot" in Russia is nothing more than a pipe dream. If the inflow of such persons continues there will be a furious backlash led by Russia's fearless and shameless skinhead nationalists.
What's more, with every day that passes, more and more Russians flee their country, while they still have the chance. Entrepreneurs most particularly, are leaving in droves. As this process accelerates and the supply of wretched refuse so lowly that they see Russia as a step up diminishes, immigration will cease to be a factor in stabilizing Russia's population._AT
Here is how Russia can still throw its weight around:

...First, nuclear weapons. Simplest and most direct, Russia can threaten to blow up the world if it doesn't get what it wants.

Second, oil and gas. Especially in former Soviet space, Russia can threaten energy blackmail, turning off the lights and the heat in any country that doesn't do Moscow's bidding. The government of Ukraine has recently announced a massive shale exploration program to try to break its dependence on Russian crude.

Finally, cold war politics. Russia can funnel money, weapons and diplomatic support to the rogue regimes of the Middle East, just the way the USSR always did. It can threaten to roil their oil markets and create political instability throughout the region. _AT

Mr. Putin is not reluctant to play the international thug on the world stage, either. If he can not be the leader of a world superpower, at least he can make things more difficult for other leading economic powers. According to traditional thinking of the Russian peasant class, it is better to keep your rival from getting ahead, than to get ahead yourself.

But the erstwhile tsar will have his hands full just keeping his own country in one piece. Meddling in the far corners of the globe while his own human infrastructure crumbles, may be his downfall.

Russia's Ongoing Brain Drain to the West

2011-11-19T21:51:00.000Z

Not for the first time, Russian scientists are taking their considerable knowledge and moving abroad. Some of the brainy emigrants cite funding problems and Russian red tape as reasons to move. For others, heading West is simply a lifestyle choice.

...Russian graduate students prefer just about any small, unknown laboratory in Europe over the brand-new Russian scientific complex [Skolkovo]. “A stable trend has been established: 100% of working young people who get the opportunity to work abroad leave Russia,” said one scientific analyst. “If a young researcher gets the opportunity to enter the international arena, he or she will do it.”

Indeed, the trend extends beyond scientists. In October, 2011, a survey found that 22% of Russian citizens in general were prepared to leave the country. The only thing that sets the scientists apart is that they tend to be much more welcome by the receiving countries. “It’s not even really about the lack of financing for scientific projects, but general quality of life,” said one of the scientists. “If regular people are not coming back to Russia, then why would scientists do so?” _WorldCrunch

Russia is the world's largest country, in terms of land mass. It is a land rich with natural resources, and one of the world's foremost energy exporters. But not all is well in the land of the Russian bear. Alcoholism, suicide, mental illness, crime, and infectious diseases such as HIV and Tuberculosis, are all endemic. Russia's men die before they can retire, leaving Russian women with nothing but vodka to keep them warm at night.

Beautiful young Russian women compete to be mail order brides for European, North American, and Australian men. Ambitious and competent young Russian men compete for overseas positions -- anything to escape the dreary dead-end that Russia has come to represent to so many of its young.
“It turns out that in only two years the number of articles published by Russian scientists has dropped by 10%. That is unprecedented,” said a researcher at a Physics Institute in Moscow, who like other protesters interviewed, asked to remain anonymous. “That hasn’t happened in the United States, where funding is still plentiful for scientists, in Japan, which has suffered through several years of economic stagnation, or even in Greece, which is drowning in its own debt.”

...“Scientists have always left our country, but now we are talking about a large increase in the number of people who are moving away. Nearly all of our friends have packed up their things,” said one of the protest organizers. “Dissertation advisors don’t discourage young scientist from choosing to leave. Now we’re seeing a huge wave of people who are leaving the country. The only thing keeping most of them here is that they haven’t defended their dissertation yet.”

There are no specific statistics on the number of scientists who leave – emigrants don’t generally notify the Russian migration office that they are leaving. But this is not the first exodus. There was a massive wave of scientists who left Russia after the fall of the Soviet Union. Mathematicians, physicists, and biologists took whole laboratories to the United States. The second most popular destination was Israel, where a previous wave of Russian scientists had already set up shop in the 1970s.

By the beginning of the 2000s, nearly all the top names from Soviet science were working outside of Russia. According to the Association of Russian Speaking Scientists, there are around 100,000 Russian-speaking scientists and researchers working outside of the Russian Federation, counting those who left Russia before and after the fall of the Soviet Union.... _WorldCrunch
Russia's core population would be shrinking even without the outgoing emigration. But the loss of Russia's most ambitious, competent, and fertile young people to the outside world does nothing to improve the morale of those left behind.

Iran's Insurgency Begins to Heat Up

2011-11-18T00:08:00.029Z

The world has been watching the Syrian dictatorship fighting off an insurgency made up of army defectors and disaffected citizens, with Turkey warning Syria to stop murdering its civilians. And now, an insurgency movement inside Iran is apparently beginning to heat up.

Iran's insurgency is likely to have much larger global repercussions, because Iran's mullahcracy has been the center of so much regional discord and killing over the past 32 years -- from Gaza to Lebanon to Iraq to Saudi Arabia. Overthrowing the backward and bloody theocracy of Iran would be a significant step forward to world harmony, and the dismantling of the Russia - Iran - North Korea - Cuba - Venezuela axis of global destabilisation.

What we are beginning to see in Iran, is an upsurge in explosions targeting Iran's energy infrastructure, and its Iranian Revolutionary Guard in-house instrument of terror and murder. If the Iranian insurgency is able to reach into the heart of the Iranian government's terror apparatus, it is apparently serious about changing the established order.
These attacks on the Guards — the symbol of the regime’s intensifying repression and slaughter of the Iranian people — are part of a pattern that includes explosions at refineries and pipelines. At the same time, strikes have been spreading (and no wonder; up to 30,000 retired teachers have been waiting for their pensions for many months). In short, people have lost patience, and the smaller of the two explosions at the RG base was aimed at Major General Hasan Tehrani Moghaddam, one of the most brutal of the country’s military leaders.

Contrary to the inevitable suspicions of the thumb-suckers (the Americans did it! no, the Israelis did it! no, it was an accident!), the operation was planned and carried out by Iranians from the opposition-that-does-not-exist. They intended to demonstrate that no leader is safe from the people’s wrath (if that base can be penetrated, any place can, and if that man can be assassinated, anyone can), and that the opposition knows its gravediggers.

The second, larger, explosion was not planned, nor was the extremely high number of casualties (I am told that hundreds of people, including some “very important foreign dignitaries,” were blown up). That second blast was apparently from a quantity of liquid fuel designed to extend the speed and accuracy of Iran’s Shahab-3 missile, the one the mullahs hope will some day carry a nuclear warhead. My sources claim that the fuel caused the big white plume seen in the photographs. The cloud may well have caused respiratory problems for the survivors.

There is another, fascinating report, that right after the explosions, the two main Green Movement leaders, Mir Hossein Mousavi and Mehdi Karroubi, were taken from house arrest, leaving their wives behind. This bespeaks a high level of anxiety within the regime, suggesting that they feared an all-out assault was under way, and under those circumstances they would take vengeance on the two Green leaders. Whether or not the rumor is true, its existence suggests that Khamenei et. al. take a more serious view of the opposition than some of our own expert analysts.

What this all means is clear enough....it was only a matter of time until the opposition abandoned its commitment to non-violence. We are now in a new phase. A French analyst, Jean-Jacques Guillet, understands the situation very well, and has called for a Western policy to intensify the pressure on the Iranian regime in order to bring it down. “If we press the regime strongly,” he said, “there could be an implosion. The real objective these days should be the regime’s implosion, not more talk.”

Instead, we have leaders [Dumbama etc.] who still believe in the talking cure, and who seem not even to know what the Iranian opposition wants, even when it’s delivered to them in black and white. As it was, at the height of the turmoil in 2009. _PJMedia

China's Economy Faces a Bumpy Road Ahead

2011-11-17T17:57:00.000Z

Yuhan Xhang recommends caution when viewing the Chinese economic "miracle":

Over-reliance on investment and exports makes China’s economy very unbalanced, vulnerable, and unsustainable. Prolonged investment on a massive scale creates significant overcapacity in a range of sectors such as steel and solar heating, which diminishes productivity improvements. Additionally, huge investment including the 4 trillion renminbi stimulus plan leads to increasing debt. Much of the medium- and long-term bank lending for infrastructure flows to local quasi-government agencies. At the end of 2009, local debt incurred by China’s investment reached to 6 trillion renminbi (Lardy 2010) and now stands at 10.7 trillion or even more (New York Times 2011 and Wang and Hu 2011). It is not likely that those local quasi-government agencies will go bankrupt, because local governments repay the debt through household wealth transfers. Too much dependence on exports is also risky for China, as the West may start to save and consume much less. During the global economic crisis, the depression penetrated China’s 31 provinces, and in the fourth quarter of 2008, millions of migrant workers lost their jobs.

...Spurring private consumption and leveraging its share to 50% will also be a challenge. In 2012, private consumption will grow faster than GDP, supported by solid employment and wage growth and increased government social expenditures on pensions and healthcare (Wang and Hu 2011). But the Chinese stimulus programme and ongoing massive investment in the emerging strategic industries have already led to overcapacity and huge nonperforming loans, which will ultimately be paid off by Chinese households. Chinese private consumption will be hampered (Pettis 2011). In the past two decades, China’s consumer confidence index and consumer expectation index have trended downward overall. Future improvement depends on systemic reform.
In 2011–20, China’s economy will become even bigger, but its growth rate will somehow wane down..... _Voxeu

Although Xhang recommends caution, it is likely that he is himself a bit over-optimistic as to the true middle-term future for China. China's enormous investment bubble -- its "infrastructure to nowhere" -- will have to be dealt with, at the same time as China's dysfunctional and corrupt financial infrastructure will have to be reformed.

Failure to deal with either problem expeditiously and scrupulously will result in lingering and worsening problems over the long run.

Truth About China's Finances Slowly Seeping Out

2011-11-16T15:20:00.000Z

Larry Lang is the chair professor of Finance at the Chinese University of Hong Kong. If he says that China's finances are in a difficult position, outsiders should pay attention. Keep in mind that these incendiary remarks were made in a session where all forms of filming or taping were strictly forbidden:In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures. “What I’m about to say is all true. But under this system, we are not allowed to speak the truth,” he said.

Despite Lang’s polished appearance on his high-profile TV shows, he said: “Don’t think that we are living in a peaceful time now. Actually the media cannot report anything at all. Those of us who do TV shows are so miserable and frustrated, because we cannot do any programs. As long as something is related to the government, we cannot report about it.”

...Lang’s assessment that the regime is bankrupt was based on five conjectures.
Firstly, that the regime’s debt sits at about 36 trillion yuan (US$5.68 trillion). This calculation is arrived at by adding up Chinese local government debt (between 16 trillion and 19.5 trillion yuan, or US$2.5 trillion and US$3 trillion), and the debt owed by state-owned enterprises (another 16 trillion, he said). But with interest of two trillion per year, he thinks things will unravel quickly.

Secondly, that the regime’s officially published inflation rate of 6.2 percent is fabricated. The real inflation rate is 16 percent, according to Lang.

Thirdly, that there is serious excess capacity in the economy, and that private consumption is only 30 percent of economic activity. Lang said that beginning this July, the Purchasing Managers Index, a measure of the manufacturing industry, plunged to a new low of 50.7. This is an indication, in his view, that China’s economy is in recession.

Fourthly, that the regime’s officially published GDP of 9 percent is also fabricated. According to Lang’s data, China’s GDP has decreased 10 percent. He said that the bloated figures come from the dramatic increase in infrastructure construction, including real estate development, railways, and highways each year (accounting for up to 70 percent of GDP in 2010).

Fifthly, that taxes are too high. Last year, the taxes on Chinese businesses (including direct and indirect taxes) were at 70 percent of earnings. The individual tax rate sits at 81.6 percent, Lang said.

Once the “economic tsunami” starts, the regime will lose credibility and China will become the poorest country in the world, Lang said. _ET
Apologists for the communist regime's finances have not been silent, attempting to portray Lang as a sensatinalist and a rabble-rouser. If that were the case, why would he insist that no taping or filming be allowed for his closed-door presentation?

Brian Wang has a somewhat contrary view from Lang's here: Lang Xian ping claims a depression has started in China

It is important to understand and acknowledge that the Chinese communist government is a police state which carefully controls as much information coming out of China as possible. China jails political prisoners, uses them for organ donours, and executes them if the person is obscure and little known outside the country.

Like Russia, China has never had a stable representative democracy. China has always cycled from insurrection to warring fiefdoms to empire and back again. No one really knows how long the current empire can last.

Problems With Africa's Rapidly Growing Population

2011-11-16T00:25:00.017Z

No other region will come close to having such a rapid rate of population growth in the coming decades (1.9 percent per year). Africa’s billion only represents 15 percent of world population today, but Africa will account for 49 percent of global population growth over the next four decades.

High fertility rates are driving rapid population growth in Africa. Globally, women are having an average of 2.5 children over the course of their childbearing years. But the average African woman is having nearly 4.5 children (and over 6 in four countries). One consequence of Africa’s high fertility is that a preponderance of its population is young. Twenty-seven percent of the world’s population is under age 15, but in Africa, the figure is 40 percent.

These facts are troubling because population growth is clustered with, and aggravates, other major problems. If you look at all countries in terms of income poverty, water poverty, and the Failed States Index , the 14 countries that rank high on all three, all but one are in Africa (Burkina Faso, Burundi, Central African Republic, Chad, Democratic Republic of the Congo, Ethiopia, Guinea, Guinea-Bissau, Malawi, Niger, Nigeria, Sierra Leone, and Uganda). And the average annual population growth rate of those countries is a whopping 2.6 percent. _Independent

This is a useful article, so I will excerpt roughly 1/3 of the total article below. The author makes some very important points, and reveals some of subSaharan Africa's most pressing problems.
There are three main reasons for pessimism. The first is that even today it struggles to provide for its people. Africa’s population is still growing, even if more slowly because fertility is falling in many countries. And it still faces the classic constraints, identified by Thomas Malthus in the 19th century, of land and water.

Africa today produces less food per head than at any time since independence. Farms are getting smaller, sometimes farcically so. Dividing village plots among sons is like cutting up postage stamps. The average smallholding of just over half an acre (0.25 hectares) is too small to feed a family—hence the continent’s widespread stunting. Africa’s disease burden extends to its animals and crops. Bananas, for example, are subject to two diseases—bunchy top disease and bacterial wilt disease—which can ruin 80% of a harvest. Scientists reckon 30m people who depend on the fruit are at risk; many of them live in conflict zones such as eastern Congo.

...One African in two is a child. The numbers are such that traditional ways of caring for children in extended families and communities are breaking down. In southern Africa, as a result of HIV/AIDS, an increasing number of families are headed by children. A recent report by the African Child Policy Forum, says there are now 50m orphaned or abandoned children in Africa. It thinks the number could rise to 100m, meaning misery for them and more violent crimes for others.

Millions of children already live rough in towns and cities. Prostitution and death await the poorest girls. The boys take to glue, petrol and crime. Africa has the highest rate of child disablement in the world. Some think 10-20% may be disabled, a staggering number.

Throughout Africa the burden of disease weighs heavily. Between them, malaria and HIV/AIDS account for about a third of the continent’s 10m deaths each year. In the ten years to 1995, more than 4m Africans died of AIDS and many countries have ten times as many people living with HIV as have died. Most are between 20 and 59. So HIV/AIDS is damaging that very section of the population—working-age adults—on which the demographic dividend depends.

...Africa’s highest fertility rates are in the refugee and internally displaced camps in Sudan and Somalia, then in those countries recovering from war, then in famine-pocked patches of desert and scrub stretching from Mauritania to Kenya.

Some Africa-watchers fear that parts of the continent may be getting trapped in a downward spiral: more babies mean more competition for resources, more instability—and more babies. Jared Diamond, a professor at the University of California, Los Angeles, thinks bits of the continent are already suffering a Malthusian collapse of a sort.

...Africa needs a green revolution; more efficient cities; more female education; honest governments; better economic policies. _Independent
It would be expecting too much to think that the author would discuss the elephant in the room -- Africa's famously low average population IQ. Without more high IQ persons in Africa, there will never be a sustainable green revolution, there will not be more efficient cities, there will not be honest governments nor better economic policies. Everything hinges upon Africa somehow acquiring a larger "smart fraction," which will be capable of guiding the many cultures of Africa into a more prosperous and orderly future.

Without an increase in Africa's human capital, the prospects are not only dismal -- they are hopeless.

More On Obama's Green Crony Crusades

2011-11-15T03:06:00.000Z

Putting green lipstick on a pig doesn’t turn that pig into Ralph Nader. A full generation after the movement kicked off, too many greens are still clueless babes in the woods, regularly taken to the cleaners by cunning and clever corporate interests who know how to say all the right words. Like ethanol, solar and subsidy.

There may be a dumber mass movement in the country than the fuzzy minded sentimentalists of the great green herd, but it isn’t easy to figure out which mass movement that would be. _WalterRusselMead

There is no pig like political pigs feeding from the public trough. And no one lays on a better pigfest for his supporters and cronies than the current US President, Barack H. Obama.

at least 10 members of Obama’s finance committee and more than a dozen of his campaign bundlers were big winners in getting your money. At the same time, several politicians who supported Obama managed to strike gold by launching alternative-energy companies and obtaining grants. How much did they get? According to the Department of Energy’s own numbers ... a lot. In the 1705 government-backed-loan program, for example, $16.4 billion of the $20.5 billion in loans granted as of Sept. 15 went to companies either run by or primarily owned by Obama financial backers—individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party. The grant and guaranteed-loan recipients were early backers of Obama before he ran for president, people who continued to give to his campaigns and exclusively to the Democratic Party in the years leading up to 2008. Their political largesse is probably the best investment they ever made in alternative energy. It brought them returns many times over. _Newsweek

China's Hard Soft Crash Landing -- What Do You Bet?

2011-11-14T20:00:00.000Z

Image Source

In response to the 2008 worldwide financial collapse, Chinese authorities unleashed $2.1 trillion of stimulus, or almost 33% of GDP. This compares to the US stimulus of $800 billion, or 5.5% of GDP, spent on worthless Keynesian pork. Unlike the US, where no jobs were created, China’s command-and-control structure funneled the stimulus into building cities, malls, roads, office buildings, and residential units. Millions of Chinese were employed in creating properties for which there was no demand. Moody’s approximates that China’s banks have funded at least RMB 8.5 trillion (US$1.3 trillion) of the RMB 10.7 trillion of outstanding local government debt, which was a significant portion of the 2008 national stimulus package. When the central authorities tell the banks to lend, the banks ask, “How much?” The result has been soaring real estate inflation and malinvestment.

Everyone has seen the pictures of the ghost cities (Chenggong) with no inhabitants; ghost malls (South China Mall, Dongguan Mall) with no shoppers; residential towers with no residents; and roads with no cars.

...All of the major ratings agencies are warning about an impending banking crisis in China. Fitch downgraded the country’s credit rating and warned there was a 60% chance the Chinese banking system will require a bailout in the next two years. Just like the US, China has too-big-to-fail banks, with five banks accounting for 50% of the lending in China. In a July 2011 report, Moody’s cautioned that the non-performing loans on the balance sheets of Chinese banks could rise to between 8% and 12%, versus the 1% proclaimed by Chinese officials. China’s regulators have belatedly applied the brakes, but it is too late. The house of cards looks susceptible to just the slightest of breezes.

Fraser Howie, managing director at CLSA in Singapore, captured the essence of the coming collapse in his recent assessment:

If you are going to address the misallocation of capital in the banking system and credit system, that’s going to have huge knock-on effects on the profitability and viability of the banks. And if there were a major banking crisis, you would start to see money trying to get out of China. What would the government do to maintain stability? You could have a whole host of problems. It’s almost far too complicated to contemplate.

There is one sure thing regarding bubbles: They always pop. It’s in their nature. _Source

More on the drastic slowdowns to hit China (and India) here
Conference Board

Have the Energy Starvationists and Carbon Hysterics Taken Over?

2011-11-13T18:57:00.002Z

The International Energy Agency (IEA) has released its Energy Outlook 2011. What strikes Al Fin energy analysts the most deeply, is the defeatist tone of the document (executive summary PDF). Briefly put, the IEA assumes that demand for energy will continue to grow exponentially -- mainly from the emerging world -- and that the world will largely reject nuclear power as a result of the Fukushima earthquake & tsunami triggered tragedy. It further assumes that the continued use of carbon based fuels will have adverse effects on the climate, a certain sign of the absence of rational thought going into the document.
 World demand grows for all energy sources. The share of fossil fuels in global primary energy consumption falls slightly from 81% in 2010 to 75% in 2035. Natural gas is the only fossil fuel to increase its share in the global mix over the period to 2035. Absolute growth in natural gas demand is similar to that of oil and coal combined. Oil demand increases by 15% and is driven by transport demand. Coal demand, dictated largely by emerging economies, increases for around the next ten years but then stabilises, ending around 17% higher than 2010.

 In the power sector, nuclear generation grows by about 70%, led by China, Korea and India. Renewable energy technologies, led by hydropower and wind, account for half of the new capacity installed to meet growing demand. Overall, modern renewables grow faster than any other energy form in relative terms, but in absolute terms total supply is still not close to the level of any single fossil fuel in 2035.

 Large-scale investment in future energy supply is needed. In the New Policies Scenario, $38 trillion in global investment in energy-supply infrastructure is required from 2011 to 2035, an average of $1.5 trillion per year. Two-thirds of this is required in non-OECD countries. The power sector claims nearly $17 trillion of the total investment. Oil and gas combined require nearly $20 trillion, increasing to reflect higher costs and a need for more upstream investment in the medium and long term. Coal and biofuels account for the remaining investment. _IEA 2011 Outlook Factsheet PDF

One cannot judge the entire document from its executive summary, factsheet, and presentations to the media, of course. But the available material reeks of groupthink and the lack of imagination. No room is given to innovative science or engineering.

The abject surrender of the document makers to the IPCCs big money climate scam would disqualify the document from serious consideration all by itself. But such conformity is to be expected on the international front these days, with groupthink being highly rewarded -- and heretical rationality being roundly condemned and demonised.

Humans live in such large numbers on the planet for one reason only: A small fraction of humans throughout history have developed innovative and evolutionary / revolutionary technologies, in areas where most humans at the time would have least expected it.

It is fashionable to bet on human failure these days, and if one were restricted to mainstream thinkers, academics, journalists, politicians, media makers, labour unions, attorneys organisations, NGOs, intergovernmental organisations, and behind the scenes string pullers such as George Soros, such a bet would pay off rather well.

But if one wants to understand why human ingenuity has won out over the doomers throughout the period of time humans have existed, one might wish to look at this free online book.

Occupy Yourself! Zombies of Occupy Defecate on Everyone

2011-11-12T14:29:00.000Z

Young persons who sense that there is something wrong with the world, and who have never been exposed to the boggling complexity of circular causation interwoven into the real world, may be attracted to the Occupy! movement, as a novelty. The movement appears to be "accomplishing something," as opposed to meekly taking it on the chin from an indifferent world ruled by wealthy narcissists. To such relative babes in the world, Occupy may seem to hold a promise of ultimate justice for all the wrongs done to the weak.

In the real world, Occupy is a herd of naive assholes being led by well-paid and cynical professional activists, who bring out the worst behaviour in everyone they influence.

Here's another point of view, from California Occupy! observers:Last night, San Diego residents held a fundraiser for two street vendors whose carts were burglarized and vandalized, with blood and piss, by Occupy protesters. The protesters were angry that the vendors would not “donate” their wares to the movement. CBS Los Angeles reports that the vendors, one who sold hot dogs, and one who sold coffee, also received death threats for refusing to give away their goods.

At the Port of Oakland earlier this month, workers and observers could only enter—and more horrifying, leave—the port after the mob “voted” their permission. When one trucker tried to break through the blockade, his vehicle was attacked. The protester who did the attacking had this to say: "These people tried to kill us. I can't believe they are being that aggressive over a paycheck, over your own people fighting for you." (Savor the irony.) While people waited into the early morning hours for permission to see their families and do their jobs, Oakland Mayor Jean Quan, who gave the OK for Oakland Police to fire tear gas and rubber bullets into a crowd of Occupy Protesters, sat safely in a government building.

Even if we are to assume that the bulk of these crimes have been committed by members of Black Blocs—groups of anarchic nihilists who cover their faces in order to wreak meaningless havoc, yet are not really on board with the wider aims (whatever they may be) of the Occupy movement—and other minorities of the movement, there’s still no good explanation for why Occupy protesters on the whole are causing more harm to their local economies than they are to their government.

Show me an Occupy demand that can be met by destroying the livelihoods of people who are on the cusp of poverty (due to government regulations on food vendors), smashing the windows of a Men’s Warehouse and a coffee shop, trashing the bathroom of a Manhattan restaurant, pushing an old lady down a flight of D.C. stairs after imprisoning her and her fellow conservative conference attendees using a human chain, or "clobber[ing] a store manager with a credit-card reader." You can’t. That’s because the government holds the strings here, not the people who Occupy is hurting. The government gives away corporate welfare, controls cops, sends perverse signals to the market, drops bombs, exposes itself to regulatory capture, deals out special favors to big interests, operates drones, prohibits drugs, and destroys immigrant families through deportation. Hot dog vendors sell hot dogs, restaurants sell food, store managers manage stores, truck drivers drive trucks.

While disrupting local businesses is significantly easier than disrupting local and national government (Hot dog vendors don’t pack heat, the government—and sometimes, the NYT—does), screwing over the rest of the 99 percent simply because it's easier isn't going to accomplish Occupy's goals, unless of course triggering schadenfreude and alienating possible allies are agenda items on one of the dozen-or-so lists of demands floating around the web. _Reason
Occupy! will never go after the real source of all the problems they bemoan. Because that would mean going after their backers and their heroes. The naivete of the true believers in the camps is both heart-rending and sickening, as is the ease with which they are manipulated.

No one ever said that dumbing down entire societies would be without its repercussions.

Occupy Movement: Lord of the Flies for Modern Devolved Leftists?

2011-11-11T15:10:00.000Z

The Occupy movement is becoming more and more surreal. At UC Berkeley and Harvard, students are clamouring to build occupy camps of their own, on campus. Expect this to become a growing trend at elite universities where children of the 1% are prepared to rule the world.

Here is a short list of one day's misadventures in the Occupy camps of the world:If you have ever wondered what would happen in a society consisting entirely of liberals, the Occupier movement is providing the answer: devolution. It is almost impossible to keep up with the downward spiral, but here are some of the highlights of the last 24 hours:
* In Portland, an Occupier was arrested for throwing a Molotov cocktail down the stairwell of a building.
* In London, employees of St. Paul’s Cathedral have had to clean up human waste left by Occupiers inside the cathedral. (What is it with the Occupiers and toilet issues?)
* In Portland, another drug overdose.
* In Vermont, a man was shot to death at the Occupy Burlington encampment.
* At Occupy San Diego, a citizen journalist was violently assaulted.
* In Atlanta, tuberculosis has broken out among the Occupiers.
* In Salt Lake City, four were arrested after a melee broke out in the Occupy encampment.
* In San Francisco, police expressed concern about escalating violence among the Occupiers, following incidents including gun possession, assault on a city worker and trespassing on the new holiday ice rink.
And this is just a smattering of today’s headlines! The Occupiers are conducting a sort of experiment in the viability of left-wing ideas, and the results aren’t pretty.
_Powerline
Others have been shot and killed, raped, molested, robbed, assaulted, etc. in the immediate vicinity of Occupy camps. Business and properties have been badly vandalised. Public health and sanitation have flown out the window, with public hazards largely ignored by lawful authorities.

This is a movement subsidised by wealthy leftists, abetted by leftist government administrators, and populated by professional activists of the left. It is a useful phenomenon, as a test for idiocy. If one joins the "movement," one is clearly an idiot with nothing important to do.

Either that, or someone who is a peripheral "hanger-on." A curiosity seeker (with nothing important to do), or someone with darker motives.

It is certainly an entertaining circus, as long as you can keep your distance.

Economic Troubles in Europe Causing a Global Headache

2011-11-10T04:48:00.000Z

Uncertainty over the future of European economies and the European currency are throwing a pall of uncertainty over world markets. Market indexes for the US, Europe, and Asia were uniformly down as of this writing, as were most commodities and industries across the board. No one seems to know what is going to happen in European economies from one day to the next:"The authorities should understand the gravity of the situation. If they don't, then they are admitting defeat and the euro will be called into question," said Goncalves. _CNBC

Simply, private investors and other governments, notably cash-rich China and other big exporters, expect Italian and other European sovereign debt to fail. They are concerned the euro will simply implode all together -- leaving no European government with both the resources and inclination to stand behind the ESFS’s failing bonds.
With the implosion of Italy, Portugal and Spain would not be far behind, and French debt will come under closer scrutiny. At that point, investors will stampede from the euro-denominated debt of most governments. With rates so low on US Treasuries and too little Japanese and Chinese sovereign debt in open circulation, gold would become the asset of choice. _NYPost

Europe rattled its begging bowl, and the Chinese walked on by. Mendicants who can't control their spending, with family members who refuse to put up their own cash, don't make for attractive borrowers. _WSJ

Rosenberg remains a harsh critic of Europe: “It is apparent to me that there is no near-term resolution to the European sovereign debt and banking sector problems. This latest bailout attempt for Greece has proven to be little more than a charade.”

Charades are facades; well-intentioned, perhaps, but spineless. What investors need now is certainty. What they’ve got is certainly far less. _Marketwatch

China’s exports rose at the slowest pace in almost two years in October as Europe’s deepening debt crisis crimped demand, adding pressure on policy makers to support growth in the world’s second-biggest economy. _Bloomberg

Along with the ongoing European economic slowdown, and the ongoing Obama recession in the US, there are signs of a likely middle- to long-term slowdown in the BRIC nations as well as in most nations which are heavily dependent upon commodities and manufacturing exports, over the next decade.

Spotlight on China via Mish

2011-11-09T16:30:00.000Z

Mike Shedlock (Mish) presents a broad look at the state of China's economic state today:Reuters reports Global Shipping Downturn Worse Than 2008
November 3
Global shipping is in a downturn even worse than during the 2008 financial crisis, China's transportation minister said on Thursday, with the outlook for the industry made increasingly uncertain by the European debt crisis...
Shanghai Daily reports Hong Kong Home Sales Fall Over 50% in October
November 3
HONG Kong's home sales fell for a 10th straight month, dropping by half in October from a year ago as buyers put off purchases....
This is a prediction but Hong Kong Tips Into Recession, Most Accurate Forecaster Says
November 7
Hong Kong’s economy, a barometer of global growth, probably sank into recession with a contraction in the third quarter, according to Daiwa Capital Markets Ltd. and Australia & New Zealand Banking Group Ltd....
Bloomberg reports China Credit Squeeze Prompts Suicides
Nov 6, 2011
Hours after a creditor and his gang of tattooed thugs hustled Zhong Maojin into a coffee shop in Wenzhou, he says he wouldn’t yield to their demands....
September 29: China Loan Shark Market Crashes; Scores of Chinese Business Owners Unable to Pay Black Market Loans Commit Suicide or Disappear

October 14: Chinese Banks Deteriorate; Loan Sharks Come Knocking; Copper Ponzi Financing Revisited; 5 Reasons to Expect Lower Commodity Prices

Cash Crunch Reported by Ministry of Railways

The Standard reports Rail Authority Faces Dire Cash Crunch
November 7
The Ministry of Railways could be facing a shortfall of up to 800 billion yuan (HK$980 billion), putting many projects on hold, mainland media reported....
Reuters reports Gloomy Outlook for China Exporters as Factory Closure Wave Looms
November 8
Up to a third of Hong Kong's 50,000 or so factories in China could downsize or shut by the end of the year as exporters get hit by cost rises and darkening global demand for Chinese goods, a major Hong Kong industrial body said on Tuesday....
Anyone expecting China to disconnect from a slowing global economy is not thinking clearly, nor are they looking at the increasingly grim facts.

Europe is in recession and Europe is China's biggest export market. The US is slowing as well, just not as rapidly.

Moreover, and as I have reported on numerous occasions, a regime change is coming in China in 2012. That regime change is highly likely to be more focused on an overheating property bubble as well as China's unsustainable dependency on a heavily overbuilt infrastructure model.

Even if the Chinese economy as a whole does not crash, the real estate and infrastructure sectors will. If so, commodity prices will come down, and that in turn will pressure the hard asset currencies of Australia and Canada.

An outright global recession is likely, led by Europe.
... _Mish
Bubbles eventually burst, whether in Europe, North America, Australia, or China.

In order to rejuvenate the global economy, a host of political and economic reforms will be necessary across the developed, emerging, and developing world. Given the general unpopularity of these "tough love" reforms among the parasitic classes in government, academia, the media, and other unproductive institutions, they are not likely to be put into place any time soon. Hence, the likelihood of much more suffering in the future than would be necessary if we would only bit the bullet today.

China's Structural Economic Problems Coming Home to Roost?

2011-11-08T18:46:00.001Z

The Chinese banks are in serious trouble. They have papered over losses. The bank books in China aren’t giving an accurate picture of their true financial position. In the US this is fraud. In China, it’s supported by the government.

The Chinese government has a lot of competing interests to control. It is virtually impossible to have a long term successful centrally planned economy in a country as large and diverse as China.

I have heard stories of how the Chinese simply take huge tracts of land and develop it . The concept of property rights and individual rights are non-existent. It’s impressive to see how they have built amazingly gargantuan cities practically overnight. Underneath all of that, the foundation is unsteady. _PointsandFigures

Al Fin economists have been warning about the structural problems within China's economic structure for years now. Slowly but surely, the overt reality is catching up to the covert reality which had triggered the alarm bells within the Al Fin Economic Institute, years ago.
...China’s growth is likely to slow to 8.7 percent next year, 6.6 percent in each of the four years after that, and then average 3.5 percent per year between 2017 and 2025. It has long been an article of faith inside China and among most China watchers that the country needs 9 percent growth per year to avoid widespread instability.

If China’s growth decelerates that fast, that far, the biggest question in world politics won’t be how the rest of us will accommodate China’s rise. The question will shift to whether China can last.

The report, well covered in the Wall Street Journal, is a sober read. Overall, world growth is expected to decline, with both China and India leading the decline. The advanced countries are expected to recover from the current slump, but growth will remain anemic for years to come. In other parts of the developing world, growth could slow to a crawl, presumably reflecting poor demand for basic commodities in a slow growth world. _WalterRussellMead
As the economies of India, China, Brazil, Turkey, Russia, etc. slow down, the decline of the BRICS will trigger a secondary decline in commodities producing nations, as demand for commodities fails to keep up with supplies.

Regimes across the globe will fall, rise, and fall again in the resulting economic and political instability. Wars will be triggered -- and if the world is lucky, they will be confined to local regions, and not be allowed to escalate to global and nuclear scales.

The mass delusions of carbon hysteria, global resource scarcity, exponential growth in demand, overpopulation doom, and all the rest of the lefty-green instigated wild-goose-chases which have led to such great resource misallocation, will die a long overdue death.

The challenge will be to maintain the momentum of advanced research and technology which will allow the global population to move up to a cleaner and more abundant future. This can never happen as long as the lefty-greens maintain influence.

Russia Attempts to Build Its Own "Silicon Valley" De Novo

2011-11-05T16:32:00.001Z

Russia’s version of Silicon Valley — an "innovation city" built from scratch on the outskirts of Moscow — is finally starting to take shape. The project, popularly known as Skolkovo, has already lined up over $1 billion in financing from Western tech giants such as Cisco and Nokia as well as the official government support of both Prime Minister Vladimir Putin and President Dmitri Medvedev. All Skolkovo needs, quite simply, is an influx of the right technology start-ups to make it work. Which begs the question: Is it really possible to create a state-planned high-tech hub in an emerging market like Russia, where Western institutions such as IPOs and venture capital are virtually unknown and the free-wheeling, risk-taking culture of Silicon Valley has yet to take root?

...it will require the types of incentives — both financial and creative — that will encourage the best and the brightest in Russia to choose careers in technology and technical fields when they could easily be making fortunes in natural resources and finance. It is the same choice ahead of many young American graduates — either a career in investment banking or with an established Fortune 500 company, or a risky attempt to create a new company with a speculative new technology. For now, the odds appear to be stacked against Moscow - the nation’s business regulations are notoriously difficult to negotiate, with the country ranking among the most difficult in the world to do business in. _WaPo
It is a question of evolution vs. intelligent design. Silicon Valley evolved naturally due to a confluence of economic and intellectual factors that was largely unplanned. The Russians, on the other hand, are attempting to transplant innovation into the heart of a stagnant statist autocracy. The odds are against this approach.

The COO of the Skolkovo Foundation feels more optimistic about the project's potential:What we are trying to do is build a world-class innovation center. And, if you study innovation centers around the world, whether they are Silicon Valley, or Boston, or Cambridge, or Singapore, you’ll find 4-5 core elements that together create an environment that allows innovation to happen. The first element is people, and that’s basically based around a strong university doing scientific research. And that’s what we are building with MIT. The second you find is policy, some type of government support. Silicon Valley came out of the original DoD contracts in 1950s. We have that government support coming from the Russian government in the first phase of our project. The next thing you find I investment money. And that is initially coming from the government and also from the private sector. You need the money to build these physical assets and to attract people and to fund start-ups. The next element is a physical infrastructure, a physical place, where people can within a certain amount of proximity interact and work together. Digital advances, telecommunication advances have reduced the need for a face to face interaction. But still, being in close proximity – researchers in close proximity to a venture capitalist, students in close proximity to the researchers, multinational laboratories in close proximity to the researchers they are funding – all these things tend to work better when they are in one place. That one place for us is Skolkovo city inside Moscow area, about 100 ha. You put these elements in place and you find, if you get very lucky, they all start to interact and create synergies together, where they start “feeding off” each other and you get a nice virtual feedback loop. And that’s what we are trying to create in Skolkovo. These elements in place simultaneously, once they start working together, they start interacting, they start developing innovation that we witness in other successful innovation centers around the world. _Voice of Russia
But look at what Putin's Russia has done to earlier Russian innovators: It has thrown them in prison, forced them into exile overseas, and in some cases it may have liquidated them, KGB style.

To Putin, innovation represents a threat to his absolute control of power in Russia. All dictators such as Putin, and would-be dictators (such as Obama?), fear the private sector ferment which is likely to spawn all types of new forces likely to be disruptive to the established power blocs. That is why dictators tend to destroy innovation whenever they can, to limit the number of surprises they must face.

Russia needs an infusion of fresh, new blood, and new ideas. Without new approaches, Russia will shrivel and die in stagnant statist autocracy. If not under Putin, then under some other bombastic autocrat. For Russia to live and thrive, something has to give.

A Measure of a Society's Resilience

2011-11-05T15:58:00.000Z

The US is a dynamic mixture of large and small. While in most nations it is the large central cities which feed knowledge and culture to the rest of the society, in the US knowledge and culture flows in both directions.

In ancient times, power tended to flow from one city-state to another, as conditions suitable for prosperity naturally shifted over time. With the coming of the nation-state, it was thought by many analysts that the city-state concept had become obsolete -- particularly in regard to smaller cities. But it is the health of cities -- including small cities -- that contributes to the resilience and robustness of the nation.

Images from Wired
Livable cities draw creative people, and creative people spawn jobs. Some places you’d never expect—small cities not dominated by a university—are learning how to lure knowledge workers, entrepreneurs, and other imaginative types at levels that track or even exceed the US average (30 percent of workers). Here are some surprising destinations from the data of the Martin Prosperity Institute, directed by Richard Florida, author of The Rise of the Creative Class. _Wired

Most conventional analysts of societal growth and knowledge dynamics will assume that knowledge flows out of large universities and university towns into society at large. But in a free society with a market economy, knowledge is apt to originate most anywhere the market operates. And that knowledge is apt to flow anywhere the market can reach.

Above: How Omaha Nebraska was transformed into one of the US Midwest's most vibrant cultural hubs, starting in the 1990s and proceeding into the 2000s (see case study).

Adapted from an earlier article published originally in Al Fin Potpourri

China's Impending Struggle to Survive As an Empire, As a Nation

2011-11-04T04:35:00.000Z

HuffingPost
The modern Chinese empire is riding a whipsaw of a politico-economic trajectory. China's billion and a half are growing old before growing rich. And they are growing old without a social safety net to speak of. Things are growing tense in the celestial kingdom already, and are likely to only grow worse.
According to a recent article in Foreign Affairs by Yanzhong Huang, The Sick Man of Asia, China's Health Crisis in 2006 80% of China's health care expenditures were funneled into the treatment of only 8.5 million government officials. Another amazing statistic Huang cites: more than 73% of Chinese hospitals have reported violent incidents between patients and healthcare professionals. Why? Because feelings run high when you are told that your child, your parent or your spouse cannot be given treatment because you cannot pay for it. China is worried about getting both old and sick: by 2040, more Chinese will be suffering from Alzheimer's than the total populations of all the developed nations combined.

Health care is not the only area of concern. The Chinese government is aware that there is growing resentment of income inequality, the result of the introduction of capitalism and the wholesale abandonment of its social safety net. When I first went to China in 1979, the so-called Gini coefficient, the measurement of income inequality, was low. China was a truly socialist country and all services including housing were provided by the state. China in 2011, nominally and in fact politically still a communist country, has greater income inequality than the US.

...The bullet train tragedy, the grounding of the new Airbus made in China, and similar events add up to an enormous glitch factor as China attempts to step up the technology ladder to more complex systems. Overheard comment--an inspector on the Shanghai's vaunted subway system will not allow his family to use their trains. Whenever there is an atmosphere of fear, bad news does not get reported up the command chain.

Other countries are increasingly less willing to share their technology with China for a variety of reasons. Some businesspeople have had bad experiences, either in terms of political pressure (Google) or more commonly, theft of intellectual property. Lack of protection by China's legal system is cited as the number one structural impediment to foreign companies doing business in China.

... Chinese banks are equipped to funnel loans to the large state-owned businesses, but they do not have credit analysts who can determine whether or not a business should be given a loan on its own merits. The languishing stock market is still dominated by behemoth state-owned enterprises, so when startups need capital, they often turn to foreign investors. In spite of the glut of savings within China's banking system, all of China's major Internet firms raised funds in US stock markets--Sina, Sohu, Alibaba. Lack of access to capital has also resulted in the loss of thousands of Chinese engineers and entrepreneurs who decided to come to the US to start their businesses, to the inestimable gain of Silicon Valley.

Another common misperception is that China will overcome the US militarily. First of all, China has no major allies, with the possible exception of Russia, which clearly seeks to protect its own interests first and foremost. The US on the other hand has firm global allies, military bases worldwide, and a navy that girdles the earth. Secondly, in today's world, warfare is all about technology, and in spite of its successes with rockets and satellites, China is still handicapped in this area. Finally, there is the question of political will. China will fight to protect its interests in Taiwan and in Tibet. But other than that, North Korea has proved to be a major albatross, and there is another strong power in the region, Japan, which will do everything it can to check China's military ascendency. _HuffingPost

China’s Ministry of Railways has halted 90 percent of projects due to lack of funds, leaving many railway stations, bridges, and tunnels in construction sites across China unfinished, and wages owed to tens of thousands of migrant workers.

The Railways Ministry has halted projects affecting about 10,000 kilometers (6,213 miles) of railway tracks, Wang Mengshu, a scholar at the Chinese Academy of Engineering and deputy chief engineer of the China Railway Tunnel Group, told Chinese media.

...The scale of this work disruption is unprecedented in China’s railway history, a high-level official from a large state-owned engineering company told The Economic Observer. Once a project stops, it triggers a domino effect; many parties, including migrant workers, construction companies, and the equipment and materials suppliers are all affected, he said.

A supervisor at one construction site told First Financial Daily that he has been working in the railway industry for 23 years and has never seen anything this serious before. _EpochTimes
The Chinese government cannot afford its massive misallocation of capital into the "infrastructure to nowhere," but so many government officials are tied into the massive state owned enterprises, and are addicted to the wild profits of the last two decades, that they are willing to break all the rules to keep the good times coming -- at least for themselves and others who are well connected.

For everyone else, things are likely to become very difficult. And when you are talking about hundreds of millions of people who are essentially disenfranchised, with no voice or clout within the system, the room for unruly disenchantment is quite substantial.
Due to the One Child Policy, China’s fertility rates plummeted during the 1980’s and 90’s. In 1970, China’s fertility rate was 5.5 births per woman; by 1980, it dropped to 2.6 and in 1990, even lower at 2.3 (source: World Bank, World Development Indicators).

What this means of course, is that there will soon be a sustained decline in new entrants into the labor force. Over the past three decades, political legitimacy in China has been built on fast economic growth, which has been powered by a seemingly inexhaustible supply of cheap, young labor.

...With a virtually non-existent government pension and social welfare systems, Chinese leaders will likely need to reprioritize and shift resources away from investment and production in the coming decades. (Caixin, a Beijing newspaper, recently reported that there’s already a severe shortage of nursing services and elderly residential facilities in Beijing).

Today, China’s 65+ population is only around 8%, which is a lot lower than that of the US, Germany, or Japan (around 20% for all three). But they’ll catch up in about 30 years, when they may face the same problems that have led to Japan’s current economic stagnation: a declining labor supply, aging population, and increased public spending obligations. _ChinaTimeBomb
Can China last that long? It is debatable whether the CCP government can hold the empire together under such severe demographic stress.

It is best to tread carefully when investing in China, and to keep your options open for a quick retreat if called for.

Who Will the Hacker Group "Anonymous" Go After Next?

2011-11-03T23:07:00.002Z

Update 6 Nov 2011: There are reports that the Zeta gang has released the individual associated with the Anonymous hackers. It is further reported that the Anonymous hackers have backed down from their threat against the Zetas. No harm, no foul, apparently. But regardless of the outcome of this isolated episode, the problem of the cartels and other organised crime gangs will not go away using conventional law enforcement -- particularly in third world nations such as Mexico or Peru. The corrupting influence of large sums of illegal money flowing through these organisations is too great for the defence and law enforcement operations of most undeveloped nations to withstand.

Image Credit
The group of hackers calling itself "Anonymous" has gone after child poronography sites and is threatening Fox News. But now a person claiming to represent "Anonymous" is publicly threatening the notorious murdering Mexican drug gang, the Zetas!

The Zetas are one of the biggest players in Mexico's drug war, which has resulted in about 40,000 deaths since 2006. Earlier this month, a YouTube video showed a man in a Guy Fawkes mask who claimed to speak for Anonymous warning the Zetas that the collective would reveal the names of people who had aided the cartel, including taxi drivers, police officers and journalists, if a kidnapped member of Anonymous weren't released.

...BBC News reports that local authorities weren't able to authenticate the video, in which the claim was made that "we cannot defend ourselves with weapons, but we can with their cars, houses and bars" and that exposing Zetas is "not difficult ... we know who they are and where they are."

...In September, the narcogang decapitated 39-year-old Marisol Macías Castañeda in the town of Nuevo Laredo for supposedly posting comments to social-networking sites under the name Laredo Girl. The sign next to her body read, "Nuevo Laredo en Vivo and social networking sites, I'm The Laredo Girl, and I'm here because of my reports, and yours."

That same month, two bodies were found hanging next to a sign that stated, "This is going to happen to all Internet snitches. Pay attention, I'm watching you."

The name of the supposedly kidnapped Anonymous member was not revealed. If the collective does reveal the identities of Zeta members, those members will likely be vulnerable to attacks from rival gangs. _Techland

Technology is likely to play an ever greater role in the pursuit of violent gangs, cartels, and organised crime syndicates.

Better nanotechnological methods of surveillance and intervention will give the controllers of such technology what would once have been considered god-like powers. Of course, one would almost need god-like powers to deal with such ruthlessly murderous groups like the Zetas. In Latin America, such groups often have more power than governments, within their area of control.

World Population to Peak in 2050s, Then Rapidly Decline

2011-11-02T00:58:00.032Z

...it is likely that world population will peak at nine billion in the 2050’s, a half-century sooner than generally anticipated, followed by a sharp decline. _ProjectSyndicate
More people are beginning to look at the rapid aging and shrinking of populations in the developed world. And some people are predicting that the baby bust that is seen in modern nations is likely to spread to the primitive third world, resulting in a rapid and significant collapse of the global population beginning in the second half of this century.
According to the United Nations’ Population Division, the world’s human population hit seven billion on October 31. As always happens whenever we approach such a milestone, this one has produced a spike in conferences, seminars, and learned articles, including the usual dire Malthusian predictions. After all, the UN forecasts that world population will rise to 9.3 billion in 2050 and surpass 10 billion by the end of this century.

Such forecasts, however, misrepresent underlying demographic dynamics. The future we face is not one of too much population growth, but too little.

Most countries conducted their national population census last year, and the data suggest that fertility rates are plunging in most of them. Birth rates have been low in developed countries for some time, but now they are falling rapidly in the majority of developing countries. Chinese, Russians, and Brazilians are no longer replacing themselves, while Indians are having far fewer children. Indeed, global fertility will fall to the replacement rate in a little more than a decade. _ProjectSyndicate

Europe, Russia, Japan, and South Korea seem to be aging and shrinking particularly quickly. But it will not be long before the process begins in earnest in China and other parts of the developing world. This transformation is apt to trigger significant unrest both within and between the countries where it is most pronounced. International wars and intranational unrest and civil war are both likely to occur, as differential birthrates between subpopulations shift the balance of power away from a dominant group and toward groups of lower rank.
The TFR for most developed countries now stands well below replacement levels. The OECD average is at around 1.74, but some countries, including Germany and Japan, produce less than 1.4 children per woman. However, the biggest TFR declines in recent years have been in developing countries. The TFR in China and India was 6.1 and 5.9, respectively, in 1950. It now stands at 1.8 in China, owing to the authorities’ aggressive one-child policy, while rapid urbanization and changing social attitudes have brought down India’s TFR to 2.6.

An additional factor could depress future birth rates in China and India. The Chinese census suggests that there are 118.6 boys being born for every 100 girls. Similarly, India has a gender ratio at birth of around 110 boys for every 100 girls, with large regional variations. Compare this to the natural ratio of 105 boys per 100 girls. The deviation is usually attributed to a cultural preference for boys, which will take an additional toll on both populations, as the future scarcity of women implies that both countries’ effective reproductive capacity is below what is suggested by the unadjusted TFR.

...These shifts have important implications for global labor supply. China is aging very rapidly, and its working-age population will begin to shrink within a few years. Relaxing the one-child policy might have some positive impact in the very long run, but China is already past the tipping point, pushed there by the combined effect of gender imbalance and a very skewed age structure.

The number of women of child-bearing age (15-49 years) in China will drop 8% between 2010 and 2020, another 10% in the 2020’s and, if not corrected, at an even faster pace thereafter. Thus, China will have to withdraw an increasing proportion of its female workforce and deploy it for reproduction and childcare. Even if China can engineer this, it implies an immediate outflow from the workforce, with the benefits lagging by 25 years.

Meanwhile, the labor force has peaked or is close to peaking in most major economies. Germany, Japan, and Russia already have declining workforces. The United States is one of a handful of advanced countries with a growing workforce, owing to its relative openness to immigration. But this may change as the source countries become richer and undergo rapid declines in birth rates. Thus, many developed countries will have to consider how to keep people working productively well into their seventies. _ProjectSyndicate
The average IQ of populations will play into this global transformation. The highest birthrates are currently in regions and nations with the lowest average IQ levels. This dysgenic trend is likely to continue for several decades longer, at least.

Since such low IQ areas are also places with some of the highest crime rates in the world, expect the large population overflow from these areas to immigrate to parts of the modern world, bringing high crime rates with them. This is likely to prove a terrible shock to the aging populations of Europe, who will be totally unprepared for dealing with these violent and prolific youngsters from alien, untrainable, and unassimilable populations.

The US has already experienced this culture shock, in the face of a quasi-invasion of violent illegals from Latin America and the Caribbean. But in much of Latin America, population growth is likely to decline, leading to lower rates of emigration to the North.

In subSaharan Africa, on the other hand, populations are slated to soar. The overflow from those populations is likely to flow directly toward North Africa and on to Europe, joining overflows from Southern and Western Asia.

If you want to see Western Europe as a tourist, before the deluge, you had better hurry. Most of Eastern Europe will likely resist the alien invasion.

More on the World Baby Bust

2011-11-01T16:58:00.000Z

Now that we can confidently say that there are 7 billion humans living on the planet, we need to be more clear about what that fact means for the future -- if anything. Leftists, greens, Luddites, carbon hysterics, and regressives of all types are declaring doom. The United Nations is now fearfully predicting that 15 billion humans will walk the Earth in the year 2100. And yet, should we really be worrying about overpopulation, in the real world?

The world’s population recently passed the 7 billion mark, and, of course, the news was greeted with hysteria and consternation in the media. “It’s not hard to be alarmed,” intoned National Geographic. “We should all be afraid, very afraid,” warned the Guardian.

To be sure, continued population increases, particularly in very poor countries, do threaten the world economy and environment — not to mention these countries’ own people. But overall the biggest demographic problem stems not from too many people but from too few babies.

This is no longer just a phenomenon in advanced countries. The global “birth dearth” has spread to developing nations as well. Nearly one-third of the 59 countries with “sub-replacement” fertility rates — those under 2.1 per woman — come from the ranks of developing countries. Several large and important emerging countries, including Iran, Brazil and China, have birthrates lower than the U.S. _NewGeography

Joel Kotkin New Geography
This scenario [global aging] is already a reality in Japan and much of the European continent, including Greece, Spain, Portugal, much of Eastern Europe, Scandinavia and Germany. Adults over the age of 65 make up more than 20% of these countries’ populations — compared with 15% in the U.S. — and their numbers could double by 2030, according to researchers Emma Chen and Wendell Cox.

In many of these countries, rising debt burdens and shrinking labor markets have already slowed economic growth and suppressed any hope for a major long-term turnaround. The same will happen to even the best-run European economies, just as it has in Japan, whose decades-long growth spurt ended as its workforce began to shrink.

By 2030 the weight of an aging population will strangle what’s left of these economies. Germany, Japan, Italy and Portugal, for example, will all have only two workers for every retiree. The U.S. will fare somewhat better, with closer to three workers per retiree. By 2030 the median age will also be higher in China and Korea than in the U.S. This age difference will grow substantially by 2050, according to the Stanford Center on Longevity.

The biggest impact of aging, however, will not occur in northern Europe and Japan, where there may be enough chestnuts hidden away to keep the aged fed, but in Asia. In the next few decades, South Korea, Taiwan, Singapore, Thailand, and even Indonesia will start following Japan into the wheelchair stage of their demographic histories. These are not quite rich places like China and Brazil, which still lack the wealth and a developed welfare state to take care of the elderly Although not headed directly to European or Japanese rates of aging, these countries will experience a doubling of their Old Age Dependency Ratios; both will rise slightly above current U.S. levels by 2030.

...Largely left out of the analysis may well be the next big demographic phenomenon: the rise of childlessness. We have already seen how the move in developing countries from six kids or more per household has reduced population growth. In a similarly dramatic way the shift towards zero children, particularly in wealthier countries could have unforeseen lasting consquences. After all, with two children, or even with one kid, there’s the possibility of two or more grandchildren. With no children, it’s game over — forever.

Of course, there have always been unmarried people and childless people; some by necessity or health reasons, others by choice. But now a growing proportion of young child-bearing age women in countries as diverse as Italy, Japan and Taiwan are claiming no intention of having even one child. One-third of Japanese women in their 30s are unmarried, and similar trends are developing in other Asian countries.

...The chidlessness phenomenon stems largely from such things as urbanization, high housing prices, intense competition over jobs and the rising prospects for women. The secularization of society — essentially embracing a self-oriented prospective — may also be a factor.

If this trend gains momentum, we may yet witness one of the greatest demographic revolutions in human history. As larger portions of the population eschew marriage and children, today’s projections of old age dependency ratios may end up being wildly understated. More important, the very things that have driven human society from primitive time — such as family and primary concern for children — will be shoved ever more to the sidelines. Our planet may be less crowded and frenetic, but, as in many of our child-free environments, a little bit sad and lot less vibrant.

Our future may well prove very different from the Malthusian dystopia widely promoted in the 1960s and still widely accepted throughout the media. With fewer children and workers, and more old folks, the “population bomb” end up being more of an implosion than an explosion. _Kotkin NewGeography

Of course, the last populations to achieve zero population growth may arrive on the scene and find everyone else already gone. In this case, the first ones to adopt the trend lose -- permanently.

China's One-Child Rule Has Led to Abuses

2011-10-26T21:06:00.000+01:00

China can claim to have curbed its birth rate to around 1.5 children per woman since the policy was introduced in 1979.

Without the birth limits, which no other country applies as rigorously or on such a scale, the world's most populous nation would have hundreds of millions more mouths to feed than the 1.34 billion it has now.

But from modern cities to remote villages, its implementation has involved abuses from mass sterilisation to abortions as late as eight months into the pregnancy. Baby girls have also been abandoned and killed.

Couples who defy the rule can face fines amounting to several years' salary, have access to social services cut and even go to prison. Their so-called "black children" have no legal status in China. _News.Yahoo.com
Imagine how it would feel to be Chinese, born in China, and to have no legal status inside China.

The one-child policy is having other effects on China -- it is causing the country's population to grow old very quickly.
...three decades on, demographers, sociologists and economists are warning of a looming crisis as China becomes the only developing country in the world to face growing old before it grows rich.

China's crisis is approaching "incomparably faster" than in Europe, where fertility has fallen very gradually over the last century, Paris-based demographer Christophe Guilmoto told AFP.
In the next five years the number of people in China over 60 will jump from 178 million to 221 million -- 13.3 percent to 16 percent of the population -- according to the People's Daily Online

By 2050, a quarter of China's population will be over 65, the Commission for Population and Family Planning said, compared to just nine percent today.

Already, half of China's over-60s live alone, a situation unthinkable before, when four generations would live under one roof.

The upside-down pyramid -- whereby a single child shoulders responsibility for two parents and four grandparents -- is a major headache for the government, particularly as unemployment rises, forcing more and more people to migrate to cities for work.

Liang Zhongtang, a demographer involved in family planning, said the pressure would grow as Chinese born between 1962 and 1972 retire. _YahooNews
If each child becomes responsible for two parents and four grandparents, what if that "one child" dies? The social safety net can fall apart rather quickly in a country with an upside-down population pyramid.

What if China relaxed its one-child rule. Would fertility quickly jump back up where it was prior to the policy?"Even if China relaxes the one-child policy, I believe there won't be many couples wanting too many children", He told AFP, as middle-class couples around the world opt increasingly for smaller families.

Guilmoto is hopeful that fertility might rise in the future, even if "this is very uncertain when we look at the most advanced regions where it comes close to one child per woman".
Women are increasingly deciding against having children at all, opting instead to pursue careers and enjoy their growing material wealth.

But the southern province of Guangdong -- the engine of China's economy with its 104 million residents -- this month decided against relaxing the policy.

China's most populous province ruled there would be "no major adjustments" to the policy in the next five years, said Zhang Feng, head of the Population and Family Planning Commission. _News.Yahoo.com
A society where children have no brothers or sisters, uncles or aunts, no cousins...that is a society where alienation could easily occur. This alienation and potential indifference to the sufferings of others, was on full display recently when a 2 year old girl named Yue Yue was left bleeding in the middle of a Guangdong road by several passers-by.

The Chinese preference for sons has led to a disproportionate number of male youth -- an excess into the millions. This imbalance is likely to grow worse over time, leading to a dangerous male youth bulge that could easily lead to internal unrest, or war.

Bombing Iran Into an Islamic Stone Age -- Who'd Know the Diffierence?

2011-10-25T16:47:00.000+01:00

Iran has threatened to destroy America, and has been frantically working to develop the type of nuclear missile technology which could throw the US back into a pre-industrial age. Both Iran and North Korea understand how easy it would be to detonate a nuclear warhead hundreds of miles above the US -- in outer space -- then sit back and watch American society implode. Both rogue nations are working to develop both the nuclear and the missil technology to achieve that feat.

But the irascible Spengler says that the US should not wait for Iran to collapse its electrical infrastructure. No, Spengler says the US should pre-empt Iranian plans, and do whatever is necessary to prevent the mad mullahs from making that one, last, fatal gesture:Iran has terrorized the United States, and inevitably will acquire nuclear weapons — unless it’s stopped. At that point its terror capacity will multiply a thousand-fold, because its terrorists will operate under a nuclear umbrella. So the argument boils down to this: Iran is a terrorist state ready to murder American citizens and American allies all over the Middle East and around the world. Which means that we had better not stop them from acquiring nuclear weapons, because then they might be mad at us, and hurt us. What does that imply about what a nuclear-armed Iran might do?

... keep in mind that Iran is a dying nation. As I report in How Civilizations Die (and Why Islam is Dying, Too), Iran is suffering the fastest fertility decline on record, any time, ever. The average Iranian has six or seven brothers and sisters, but will have one or two children. The population pyramid will invert: within a single generation, it will go from having 7 children to take care of elderly parents, to just 1.5. And in a country where the average person has $4000 to spend per year, that means starvation. The Iranian leadership knows it. They’ve been screaming about it in public for years. Like Hitler, they think they have one last chance at empire before the curtain comes down. If they’re not stopped, millions of Americans might die. _PJMedia
Rather than decapitation strikes against Iran's leaders, or deep penetration bombing strikes against Iran's nuclear infrastructure, some have suggested that the US should use EMP on Iran, to throw the nation back into an "Islamic stone age." Yes, "Islamic stone age" is a redundant phrase, granted. And it is possible that no one would even notice the difference.

But Iran's international terrorist proclivities are enabled by its energy wealth, and knocking out the ability of Iran to get its energy to market would certainly cut the legs out from under the ability of Iran to export terror and mayhem.

But if the more enlightened world were to use EMP against Iran, it would be better not to use a nuclear variety of EMP weapon, but rather one of the more advanced conventional EMP weapons. Such weapons could be mass produced, pre-placed, and timed to knock out selected electrical and electronic infrastructure. Alternatively, they could be unleashed from cruise missiles or drone aircraft.

When combined with advanced energy beam weapons, such an attack could effectively "decapitate" the mad mullahs' ability to commit mischief abroad.

Oil prices would naturally shoot up, which would upset the already-shaky economies of Europe. Iranian allies such as Russia, China, North Korea, Syria, Gaza, and Venezuela would likewise be upset at the loss of revenues and the loss of a useful cat's paw.

But if the possible EMP threat from Iran is to be taken seriously, one must weigh all the options for a possible response.

Once the EMP djinn is let out of the bottle, there is no telling where it might stop. We like to assume that advanced societies could rebuild their infrastructures within a year or two, but that is assuming that somewhere in the world an advanced infrastructure willing and able to supply their replacement transformers and other massively expensive replacement infrastructure, has survived attack. That is an unlikely bet, once the dogs of EMP war are unleashed.

Haunting Video of 2 Year Old YueYue: Death by Indifference in Guangdong

2011-10-21T19:17:00.002+01:00

Warning! Do not watch this video if you have a tender heart. The brutal indifference of ordinary Chinese in Guangdong shown toward a badly injured 2 year old girl is almost unbelievable. And China considers itself the civilised society!

(h/t Mish)

Two year old YueYue died in the hospital after a week in coma. She died of progressive organ failure.

The media is claiming that the little girl's injury, neglect, and subsequent death raises painful questions in China about the value of human life in the Celestial Kingdom. The media is also saying that "it was too dark to see" the little girl, lying crushed and bleeding in the middle of the road.

But let's be honest about this tragic incident. The original van driver may not have seen the little girl before knocking her down. But after that, he knew he had hit something or someone -- and never bothered to look! After that, the events unfolded as if in a zombie movie -- except without the flesh-eating.

The video speaks for itself.

In the Al Fin blogs, we have commented at length on the alienating nature of Chinese society, particularly its one-child policy which leaves individuals with no siblings, no uncles or aunts, no cousins, no extended family or sense of belonging. In this case, if YueYue was an only child, the line stops there.

Ray Kurzweil vs. Paul Allen: Is the Singularity Near?

2011-10-21T17:53:00.001+01:00

When will humanity reach Singularity, that now-famous point in time when artificial intelligence becomes greater than human intelligence? It is aptly called the Singularity proponents like Ray Kurzweil: like the singularity at the center of a black hole, we have no idea what happens once we reach it. However, the debate today is not what happens after the Singularity, but when will it happen. _BigThink
In the video below, Kurzweil discusses some of his ideas about the coming singularity, including timelines and cautionary notes.

Microsoft co-founder and billionaire Paul Allen recently expressed skepticism about Kurzweil's timeline for the singularity, in a Technology Review article.
Futurists like Vernor Vinge and Ray Kurzweil have argued that the world is rapidly approaching a tipping point, where the accelerating pace of smarter and smarter machines will soon outrun all human capabilities. They call this tipping point the singularity, because they believe it is impossible to predict how the human future might unfold after this point. Once these machines exist, Kurzweil and Vinge claim, they'll possess a superhuman intelligence that is so incomprehensible to us that we cannot even rationally guess how our life experiences would be altered. Vinge asks us to ponder the role of humans in a world where machines are as much smarter than us as we are smarter than our pet dogs and cats. Kurzweil, who is a bit more optimistic, envisions a future in which developments in medical nanotechnology will allow us to download a copy of our individual brains into these superhuman machines, leave our bodies behind, and, in a sense, live forever. It's heady stuff.

While we suppose this kind of singularity might one day occur, we don't think it is near.

...Kurzweil's reasoning rests on the Law of Accelerating Returns and its siblings, but these are not physical laws. They are assertions about how past rates of scientific and technical progress can predict the future rate. Therefore, like other attempts to forecast the future from the past, these "laws" will work until they don't. More problematically for the singularity, these kinds of extrapolations derive much of their overall exponential shape from supposing that there will be a constant supply of increasingly more powerful computing capabilities. For the Law to apply and the singularity to occur circa 2045, the advances in capability have to occur not only in a computer's hardware technologies (memory, processing power, bus speed, etc.) but also in the software we create to run on these more capable computers. To achieve the singularity, it isn't enough to just run today's software faster. We would also need to build smarter and more capable software programs. Creating this kind of advanced software requires a prior scientific understanding of the foundations of human cognition, and we are just scraping the surface of this. _Technology Review_Paul Allen
Allen goes on to discuss the "complexity brake," which the limitations of the human brain (and the limitations of the human understanding of the human brain) will apply to any endeavour that begins to accelerate in complexity too quickly.

Allen's argument is remarkably similar to arguments previously put forward by Al Fin neurscientists and cognitivists. The actual way that the human brain works, is something that is very poorly understood -- even by the best neuroscientists and cognitivists. If that is true, the understanding of the brain by artificial intelligence researchers tends to be orders of magnitude poorer. If these are the people who are supposed to come up with super-human intelligence and the "uploading of human brains" technology that posthuman wannabes are counting on, good luck!

But now, Ray Kurzweil has chosen the same forum to respond to Paul Allen's objections:Allen writes that "the Law of Accelerating Returns (LOAR). . . is not a physical law." I would point out that most scientific laws are not physical laws, but result from the emergent properties of a large number of events at a finer level. A classical example is the laws of thermodynamics (LOT). If you look at the mathematics underlying the LOT, they model each particle as following a random walk. So by definition, we cannot predict where any particular particle will be at any future time. Yet the overall properties of the gas are highly predictable to a high degree of precision according to the laws of thermodynamics. So it is with the law of accelerating returns. Each technology project and contributor is unpredictable, yet the overall trajectory as quantified by basic measures of price-performance and capacity nonetheless follow remarkably predictable paths.

...Allen writes that "these 'laws' work until they don't." Here, Allen is confusing paradigms with the ongoing trajectory of a basic area of information technology. If we were examining the trend of creating ever-smaller vacuum tubes, the paradigm for improving computation in the 1950s, it's true that this specific trend continued until it didn't. But as the end of this particular paradigm became clear, research pressure grew for the next paradigm.

...Allen's statement that every structure and neural circuit is unique is simply impossible. That would mean that the design of the brain would require hundreds of trillions of bytes of information. Yet the design of the brain (like the rest of the body) is contained in the genome. And while the translation of the genome into a brain is not straightforward, the brain cannot have more design information than the genome. Note that epigenetic information (such as the peptides controlling gene expression) do not appreciably add to the amount of information in the genome. Experience and learning do add significantly to the amount of information, but the same can be said of AI systems.

...How do we get on the order of 100 trillion connections in the brain from only tens of millions of bytes of design information? Obviously, the answer is through redundancy. There are on the order of a billion pattern-recognition mechanisms in the cortex. They are interconnected in intricate ways, but even in the connections there is massive redundancy. The cerebellum also has billions of repeated patterns of neurons.

...Allen mischaracterizes my proposal to learn about the brain from scanning the brain to understand its fine structure. It is not my proposal to simulate an entire brain "bottom up" without understanding the information processing functions. We do need to understand in detail how individual types of neurons work, and then gather information about how functional modules are connected. The functional methods that are derived from this type of analysis can then guide the development of intelligent systems. Basically, we are looking for biologically inspired methods that can accelerate work in AI, much of which has progressed without significant insight as to how the brain performs similar functions. _TechnologyReview_Ray Kurzweil
Kurzweil's attitude seems to be: "Because difficult problems have arisen and been solved in the past, we can expect that all difficult problems that arise in the future will also be solved." Perhaps I am being unfair to Kurzweil here, but his reasoning appears to be fallacious in a rather facile manner.

Al Fin neuroscientists and cognitivists warn Kurzweil and other singularity enthusiasts not to confuse the cerebellum with the cerebrum, in terms of complexity. They further warn Kurzweil not to assume that a machine intelligence researcher can simply program a machine to emulate neurons and neuronal networks to a certain level of fidelity, and then vastly expand that model to the point that it achieves human-level intelligence. That is a dead end trap, which will end up wasting many billions of dollars of research funds in North America, Europe, and elsewhere to discover.

This debate has barely entered its opening phase. Paul Allen is ahead in terms of a realistic appraisal of the difficulties ahead. Ray Kurzweil scores points based upon his endless optimism and his proven record of skillful reductionist analyses and solutions of previous problems.

Simply put, the singularity is not nearly as near as Mr. Kurzweil predicts. But the problem should not be considered impossible. Clearly, we will need a much smarter breed of human before we can see our way clear to the singularity. As smart as Mr. Kurzweil is, and as rich as Mr. Allen is, we are going to need something more from whatever humans who eventually birth the singularity.

Originally written for Al Fin, the Next Level

The Hollow Paper Tiger That is Russia's Military

2011-10-20T04:33:00.000+01:00

Russia's severe and growing shortage of 18 year old men fit for military conscription is sending repercussions throughout the corrupt and corroding infrastructure of Russian defense forces. When a nation's military is as unpopular with its own people as the Russian military, its credibility as a viable defense diminishes. As this process continues to its seemingly inevitable conclusion, the bulk of Eastern Siberia becomes less and less likely to remain in Russian hands for many more decades.
The basic problem is two-fold. First, military service is very unpopular, and potential conscripts are increasingly successful at dodging the draft. But the biggest problem is that the number of 18 year olds is rapidly declining each year. The latest crop of draftees was those born after the Soviet Union dissolved. That was when the birth rate went south. Not so much because the Soviet Union was gone, but more because of the economic collapse (caused by decades of communist misrule) that precipitated the collapse of the communist government. The number of available draftees went from 1.5 million a year in the early 1990s, to 800,000 today. Less than half those potential conscripts are showing up, and many have criminal records (or tendencies) that help sustain the abuse of new recruits that has made military service so unsavory.

With conscripts now in for only a year, rather than two, the military is forced to take a lot of marginal (sickly, overweight, bad attitudes, drug users) recruits in order to keep the military and Ministry of Interior units up to strength. But this means that even elite airborne and commando units are using a lot of conscripts. Most of these young guys take a year to master the skills needed to be useful, and then they are discharged. Few choose to remain in uniform and become career soldiers. That's primarily because the Russian military is seen as a crippled institution, and one not likely to get better any time soon. With so many of the troops now one year conscripts, an increasing number of the best officers and NCOs get tired of coping with all the alcoholics, drug users and petty criminals that are taken in just to make quotas. With the exodus of the best leaders, and growing number of ill-trained and unreliable conscripts, the Russian military is more of a mirage than an effective combat (or even police) organization.

...Conscription itself, and the prospect of being exposed to the hazing, has led to a massive increase in draft dodging. Bribes, and document fraud, are freely used. Few parents, or potential conscripts, consider this a crime. Avoiding the draft is seen as a form of self-preservation.

...When the Soviet Union dissolved in 1991, it had five million troops in its armed forces. Now it's less than one million in just Russia (which got about half the population of the Soviet Union, and most of the territory). Although the Russian armed forces lost over 80 percent of its strength in the last 18 years, a disproportionate number of officers remained.

...As a result of these personnel problems, Russian efforts to reform and upgrade its armed forces have, so far, failed. The basic problem is that few Russian men are willing to join, even at good pay rates. Efforts to recruit women and foreigners have not made up for this. The Russian military has an image problem that just won't go away. This resulted in the period of service for conscripts being lowered to one year (from two) in 2008. That was partly to placate the growing number of parents who were encouraging, and assisting, their kids in avoiding military service.

...Russia has tried to change public attitudes towards the armed forces, by publicizing all the new changes and programs. But word got around that most of these efforts failed. Blame that on the Internet. A recent poll revealed that 75 percent of military age men do not want to serve in the military, and the main reason is the hazing and prison-like conditions in the barracks. _StrategyPage
That is not entirely true. There are far too many reasons to list, as to why 75% of military age men do not want to serve in the military. Take away the hazing and the prison-like conditions, and perhaps only 74% of military age men would not want to serve in the military.

But the way things are going, the number of military age men in Russia of sound mind, body, and character -- and who are also ethnic Russians -- are shrinking rapidly.

If the Russians were smart, they would get rid of Putin however they could, and make firm and irrevocable partnership and investment deals with successful and reputable outside entities, to allow upgrading of Russia's infrastructure from top to bottom. Such a move would hurt the famous Russian pride and egomania, but it might just save the country from itself, and make it a place worth living for once.

Occupy Sit-Ins: Nostalgia for the 60's, or Haven for Rape and Pedophilia?

2011-10-19T16:27:00.001+01:00

According to Walter Russell Mead, the Occupy movement's sit-ins and demonstrations remind him a lot of similar leftist demonstration in the US 1960's.
The news that 175 people were arrested over the weekend in a Chicago OWS protest started me thinking about the ritualized nature of left demonstrations. The drums, the chants, the defiance, the arrests — and, sometimes, the glass smashing and the fire setting: it all unfolds according to a predictable pattern that in its modern form is essentially unchanged since the Vietnam War.

...Back in the day, when most workers in American industry had workweeks of seventy and eighty hours, had little or no formal education and lacked the money and the leisure to do much about politics as individuals, mass demonstrations really meant something. People were giving up all the leisure time they had in a week, they were risking being blacklisted — losing their jobs and being blocked from working in their field in a time with no unemployment insurance or social safety net — and they were walking into situations where “police brutality” meant getting killed or disabled, with no lawsuits or compensation.

...Those demonstrations were often the only way people had to show what was on their minds and how deeply they felt. These days, when the electorate is being constantly polled, and cable news channels are feverishly tracing every tiny tick in public opinion, demonstrations don’t really tell us anything. Nor do they change things much; if the Tea Party had stopped with rallies, it would have been forgotten very quickly. It was only when Tea Party activists stopped dressing up in those ridiculous three cornered hats and started organizing, fundraising and attending town halls that the movement had a substantive impact. _WalterRussellMead
He does have a point. The Occupy protestors are either professional activists, unemployed dropouts, or union agitators on the make -- with a few anarchists, pedophiles, and other career criminals to add diversity.

At the Cleveland Occupy sit-in, a young girl was raped -- and the organisers apparently tried to cover it up. At the Baltimore Occupy sit-ins, the cover-up machine is in full pre-emptive swing. At the Seattle Occupy sit-in, a pedophile was out exposing himself to young children. And how many other incidents are we not hearing about, because the politically correct clamp-down is in full effect. Remember: If it shows Obama and his supporters in a bad light, the skankstream media will simply ignore it.

It is instructive to look at the riots occurring on the tiny island of Mayotte. The native islanders -- largely unemployed and on the dole -- have gone on the rampage, demanding much more generous welfare benefits from the paternal French protectors of the island. How do these island riots -- and similar riots on French islands in the Caribbean -- relate to the Occupy movement?

It is quite simple. Persons who are largely outside the productive wealth-generating system of a society will often demand to be supported by the government apparatus of redistribution, once they feel they have the political power to make those demands. Rather than gaining the skills, competencies, and expertise to become part of the productive, wealth-generating segment of society themselves, they choose to use the threat of violence and civil disorder to extort redistributionist "tribute" from the state.

The Occupy sit-ins are not about justice in any meaningful sense of the word. Instead, they are about moolah. They are about taking money from productive persons and transferring that money to layabouts, so that they can continue to pay their bills while laying about.

Readers who remember discussions here about psychological neoteny, the flight from childhood responsibility, and the lack of meaningful rites of passage in modern child-raising, will start to understand how movements such as Occupy can gain traction -- even in a modern society.

The Third World? It's Murder Out There

2011-10-16T21:56:00.000+01:00

The above map gives a rough idea of where the global hot spots of murder occur. Across Latin America, the Caribbean, SubSaharan Africa, and other third world areas. A finer level of detail would reveal the third world hot spots of crime within the cities of North America, Europe, and Oceania.

Intentional homicide tends to drop off in areas of greater development, and where populations are most homogeneous and the least multicultural. As Europe, Canada, and Oceania become more multicultural -- closer to the United States -- the crime rates for those areas are likely to approach the crime rates in the US. If countries such as Finland are able to resist immigration from the third world, they should be able to keep their crime rates among the lowest in the world.

Honduras is on the path to having the highest murder rates in the world.

Jamaica is a perennial crime capital of the Caribbean -- which is saying quite a lot.

Latin America is often dangerous, but if you look you should find some safe havens.

Part of the problem involves race. As we have noted before, in the US, African American males are the worst offenders. Take away African American crime from the US, and the country compares well with the best of Europe on that score. Areas of the world with large populations of African descent will typically have high rates of violent crime. Low IQ and low impulse control appear to be the most likely heritable traits contributing to high violent crime in persons of African descent.

US Hispanics likewise exhibit higher rates of violent crime than both European and Asian Americans, although Hispanic crime rates are not nearly as high as African American crime rates. That being the case, one must wonder why Latin American crime rates rival the worst of African rates.

Part of the problem is the violently competitive drug trade in Latin America. Another part of the problem is the conflation caused by African American populations living in Latin American cities who exhibit high crime rates there. In addition, given the extreme high rates of crime within some indigenous tribes in Latin America, one must allow for the possibility that some behavioural traits contributing to criminal behaviour are inherited within the mestizo communities.

Given these possible reasons for high crime in Africa and Latin America, it should be clear that the politically correct agenda of modern leftists will be of absolutely no help at all in lowering third world crime rates.

So what do we do? First of all, immigration from the third world into the advanced world should be severely curtailed immediately. Second, black markets within the advanced world which contribute to third world crime should be crippled, using market means and deregulation as much as possible rather than law enforcement. Third, every effort should be made to aid the deportation of third world career criminals who have taken up residence within advanced nations.

More on this topic later.

And You Thought There Was No Such Thing As Zombies!

2011-10-16T17:48:00.002+01:00

We live in a time when zombies walk the Earth. This breed of zombie is proud of its lack of knowledge and its inability to think through complex issues. Simplifying the problems of societies to just a few emotion-laden issues is the most that these addle-brained zombies can handle.

This zombie movement is spurred by a global economic recession without apparent end. And the zombie contagion is spreading...
Thousands of people across the world railed against corporate power, grinding poverty and government cuts Saturday as the Occupy Wall Street movement spread to the streets of Europe, Asia and Australia -- and took a particularly violent turn in Rome....

...Police said hundreds of anarchists in Rome moved in where peaceful demonstrators had gathered as part of the global Occupy movement. The anarchists -- some wearing ski masks and belonging to a group termed "Black Bloc" -- torched cars, broke windows and clashed with police.

...In London, protester Peter Vaughn, reflecting the mood of many in the crowd there, said people criticized financial institutions that have "gambled away our money."

...Europeans turned out amid debt troubles and austerity plans in Greece, Belgium, Italy, Spain, Ireland, Portugal and Germany.

United for Global Change -- the central site for the movement organizing worldwide protests -- said 951 cities in 82 countries were to take part in the demonstrations after online organizers called for a worldwide rally.

...Around the world, protesters marched, listened to speeches, and displayed banners reading anti-corporate slogans, including the now ubiquitous "we are the 99%," "Banks are cancer" and tax the rich 1%."

...Canadians turned out in Toronto, with placards jutting up from a crowd saying "Arrest the 1%" and "Stop ignoring the youth, we are your tomorrow." A sign on a dog said "99% against (corporate) fat cats."

...Australian cities of Melbourne and Sydney joined rallies against "corporate greed" as protesters aligned themselves with the global movement.

...The worldwide movement is galvanized by the Occupy Wall Street movement started last month as a backlash against the economy and what demonstrators say is an out-of-touch corporate, financial and political elite.

Occupy Wall Street organizers say they are inspired by the Arab Spring that led to the toppling of regimes in Tunisia and Egypt. _CNN

Similar worldwide zombie movements have led to bombings in New York, London, Madrid, Bali, Israel, and across the zombie lands from the near east to the far east. Zombies are single-minded in their hunger and violent compulsions. Whether obsessed with global warming and peak oil, the "greed of the 1%", doomsday comets, or the need to spread Islam to every nation, zombies have one-track minds. Should these different breeds of zombies somehow join together for just a short time into a truly global movement, the resulting devastation could be the tipping point into the Idiocracy.

It is not so far from the obsessive-compulsive "occupy zombies" or the "islamosupremacist zombies" to the blood-thirst zombies of legend and lore. Once societies let slip the autophagic forces of zombiehood, the fragile bonds that tie a society together are also "let slip."

President Obama Makes Economic Prediction Easy

2011-10-12T17:17:00.000+01:00

Growing a healthy economy is very much like growing a healthy garden. Economies need the proper conditions to grow, just as gardens do. When a gardener is neglectful of his garden, one can predict a poor result long before the crop is due to mature. The same thing applies to the managers of an economy. Bad -- incompetent or even malicious -- managers make prediction of the future easy.

US President Obama rode into the White House on a huge wave of hope, change, and popular enthusiasm. Everywhere he went, he was met by huge and adoring crowds. Expectations for this new president were astronomically high . . . . and then something happened -- the new president was inaugurated and put in a position where he had to accomplish something, for the first time in his life.

Over the years, Mr. Obama's achievements failed to live up to his promises and the astronomical expectations set for him. As the economy failed to improve -- and in many ways actually worsened -- the number of people flocking to his banner gradually and reluctantly fell away. "How could I have known that he would be such a bad president?", Obama voters would ask themselves, as they walked away from the president, sadly shaking their heads in disappointment and shame.

But in the real world, anyone paying attention could have predicted the ongoing debacle of the Obama economic descent into quagmire. Instead of providing conditions for the economy to grow and prosper, under Obama, debt, designed energy-starvation, and growth-strangling regulations expanded exponentially.

It is easy to see where the economy was going when the gardener is a narcissistic clown of no achievement and no competence, such as Obama. Never having participated in the productive private sector, Obama had no interest in seeing the prospering of markets and trade.

Consequently, debt has ballooned, the dollar has progressively lost value, the cost of consumables has exploded, jobs have disappeared in the millions, wages have shrunk, government has grown, regulations that make starting businesses difficult have proliferated, gold and silver prices have soared, and anyone with cash is holding onto it, just waiting for a glimmer of hope -- such as the Obama's packing up and moving out of the White House.

Of course, the damage Obama has done will live on for many years and decades. Once government regulations and departments are established, they can become almost impossible to remove -- no matter how destructive they are to the prosperity and well-being of the people.

And yet, economic seeds of prosperity -- just like the seeds of plants -- are still there waiting for the proper conditions that will allow them to bloom and grow. Growth and prosperity will be much spottier than they would have been without Obama, but they will come back to parts of the US. Look to the places where shale oil & gas fracking are being done to see pockets of prosperity so strong as to resist even Obama's attempts to shut them down.

The Obama economic agenda is equivalent to a "salting of the soil" approach to gardening. But even salt-toxic soil can be remediated so that healthy growth can take place again. But as I said, the post-Obama recovery in the US (and consequently around the globe) will be spotty. Keep your eyes open. Pay attention.

Predicting the economy will not be so easy when a different president is elected.

Cross-posted from Al Fin

Quick! Someone Tell Tea Partiers that Herman Cain is Black!

2011-10-11T21:28:00.000+01:00

Either the Tea Partiers were never properly instructed in the art of being racists, or they are unaware that presidential candidate Herman Cain is black. Cain is enjoying increasing support among members of the Tea Party movement and among the more conservative GOP voters. Walter Russel Mead wants to know how the media "spin" on the Tea Party went so badly wrong:Either a lot of Democrats have been slandering millions of American voters as racist, or the Tea Party hasn’t gotten the word that Herman Cain is African American. That is the only conclusion that can be drawn after a slew of recent polls shows that Cain is picking up the ‘teavangelical’ vote as former favorites like Michelle Bachmann and Rick Perry fade.

In particular, this morning we get the word from my native state of South Carolina that Cain is the leader in the Republican primary there. According to this American Research Group poll, Cain has a small and statistically insignificant lead over Mitt Romney: 26 percent to 25 percent.

Unless there has been a heretofore unnoticed surge of Black voters into the ranks of the South Carolina GOP, this means that one out of every four voters in the most conservative electorate in the United States are now ready to vote for a Black candidate for president. _WalterRusselMead
Mead goes on to describe a few other incongruities between the skankstream media spin on southern US voters and the reality on the ground.

I suppose it takes at least 4 years of university indoctrination to learn how to ignore reality, and stick to the approved message. All of those paid demostrators at the "Occupy" sit-ins, for example, must be exceptionally well indoctrinated. They must have at least 8 or 10 years of college apiece, on average. All that self righteousness on display, and $22 an hour too! Just to protest in support of the Obama status quo. Heh! And the media skanks love the "occupiers", too, not like the Tea Party rough-housers, rabble rousers and racists.

The Age of Professional Activists: Protest as a Permanent Avocation

2011-10-10T01:50:00.002+01:00

Billionaire George Soros who is backing the protests for reasons still not clear will probably have to rethink.

On Monday one of the demonstrators wore a T-shirt with the message, "The present is struggle. The future is ours. - Che". Another protestor had a placard with the Latin American revolutionary Che Guevara on it, and it read: "Si se puede - The workers' struggle has no borders". _allAfrica
Left-wing Obama supporters, ‘Occupy Wall Street’ protesters have continued a third week of demonstrations conveying “hope” that President Barack Obama will continue on with “change” and his path of socialist reforms and anti-capitalist government policies.

The movement has earned the financial support and public endorsement of [billionaire curency market manipulator] George Soros, which means Obama may soon coordinate community activism from the White House. _DallasBlog

Marketwatch
...what are OccupyLA, Occupy Wall Street and other movements like them? What do they think about? Where do they hope to get?

“Our message right now is very vague. It’s left vague, slightly intentionally,” Davis says as passing cars honk in support and news cameras lurk nearby. “What we’re trying to do is unify a voice.”

Such is life in New York, Los Angeles and other venues throughout the U.S. for those that have taken up this “vague” cause that seems to have put a bulls-eye on Wall Street’s back. Bands of mostly young adults are gathering in normally peaceful settings to generally express their outrage over the inequity between the haves and have-nots. _Marketwatch
Who is paying these people to sit around and "protest" for weeks at a time? Labour unions? Community organiser grous like ACORN? Obama's DNC? Difficult to say. But the blatant lack of an agenda -- other than to support Obama when he is down -- is rubbing some genuine activists the wrong way.
“If you are doing a protest you need to have an agenda. If you wake up in the morning and poke a guitar, take a drum downtown and someone is singing and another one is dancing and movie stars are coming and saying do this, do that… and everyone is confused, you’ll be there for a long time.”
Some pundits believe that a likely avenue for Occupy Wall Street is to develop into a left-wing version of the conservative Tea Party movement.
The Tea Party has likewise lacked unity over much other than anger at the status quo. Yet it proved a powerful weapon during the 2010 congressional elections.
According to this scenario, the youth-driven activists of Occupy Wall Street would then reignite Obama’s tattered base just in time for what will likely be a bitter reelection fight in 2012.
A budding alliance between the activists and high-profile trade unions already has the potential to generate considerable street power. _BigGovernment
To be sustained, such a pointless, waste-of-time movement requires some deep-pockets supporters, such as George Soros, organised labour, big-money green movements, and socialist / communist movements which get their money from the international shadows.

NYTimes Graphs Ascent of Activist Media Whores
With the bandwagon alliance of media whore protestors and the mainstream media growing and firming up nicely, expect to see more protests -- perhaps with a bit more gratuitous violence for extra emphasis. At least until the weather grows nasty in the northern US states. At that point, the protests may move into the sun belt.

As long as George Soros and the other big money backers of Obama wish to keep up the charade of serious protests, US media consumers are apt to be hammered by this pretend activism political street theatre. You can get a lot of activism as long as you are willing to pay for it.

The Tea Party activists, on the other hand, held limited events, and always cleaned up after themselves. They had jobs and families to attend to after all, and they took their responsibilities seriously.

The Obama style professional troupe of activists, on the other hand, just live to do what they are doing. They are protesting, you see, for the status quo. A very odd breed of activist indeed.

Putin's Return to the Presidency: Russia's Limited Options

2011-09-30T19:49:00.000+01:00

Russia is a vast country, rich in natural resources and energy wealth. But Russia's core population of ethnic Russians is shrinking and aging. The industrial infrastructure of Russia -- including its military infrastructure -- is rusting and losing its human capital via natural loss and out-emigration. Russia's political aristocracy continues shipping the nation's wealth to overseas banks and investments. And the core of Russia's hopes -- the health and optimism of its citizens -- is in decline.

Here are a few other problems that Russia will face under Czar Putin:For the last ten years, the Russian government's budget has ballooned, from 1.96 trillion rubles in 2000 to 20.4 trillion rubles in 2011 ($63 billion to $680 billion). Much of this spending has come in the form of direct tributes to regional governors, as well as to some ministries and their officials. It will be difficult to maintain this level of expenditure, since today, more than at any other moment in Russia's history, state revenues depend on the price of fossil fuels; oil, gas, and other petroleum products make up 72 percent of exports. If oil prices continue to fall, Putin may have to cut the budget, which could have a dangerous and unpredictable effect.

A new Putin presidency will cause the Russian public's passive dissatisfaction with their country and its rulers to grow and become more active, reflected by an increased outflow of educated professionals to other countries. Some opposition groups will form, perhaps based on Internet communities, brought together by a sharp rejection of bureaucratic arbitrariness and cynicism. _ForeignAffairs

With Putin’s return to the Kremlin, analysts are predicting a new “brain drain”—an exodus of Russia’s educated and creative young professionals who will not see a future with a ruler that plans to remain in power longer than Joseph Stalin (on the current timetable, until 2024). Another likely result is a renewed crackdown on what remains of Russia’s independent media and the already-illusive civic freedoms; a new round of repressions against the regime’s political opponents; continuing corruption; and a more confrontational stance toward the West and the ex-Soviet “near abroad,” especially as Russia’s increasingly shaky economic situation will necessitate diverting people’s attention elsewhere (the government recently admitted that the budget would only balance at an elevated oil price of $116 per barrel—with the current price being $104).

The most dangerous result of Putin’s attempt to cement his power, however, is an increased likelihood of upheavals. Popular discontent is rising: the August surveys by the independent Levada polling agency showed that 54 percent of Russians disapprove of the current government, while 64 percent would like to see the composition of the United Russia–dominated Parliament change “significantly” or “totally.” According to the same polling data, most Russians also believe that the upcoming parliamentary elections on December 4 will be a farce. With nine political parties across the spectrum—from the left-wing United Labor Front to the center-right Popular Freedom Party—denied registration and barred from the ballot, and a strict de facto censorship operating on national television, it is difficult to disagree with them. _WorldAffairs

We have known since 1996 that Russia wasn’t a democracy. We now know that Russia isn’t a dictatorship controlled by one party or one dynasty. It is a regime ruled by one man. “The party doesn’t exist,” said one of Russia’s leading independent economists. “The politics is all about one person.”

That new reality might seem to be a victory for Mr. Putin. But it is a flawed triumph. His resumption of absolute power is also an admission that he and his cronies have failed in the project they set themselves in 2008. That was to create a self-replicating institutional base for the regime he brought to power in 2000, when he took over from Boris Yeltsin and dismantled the fledgling democratic structures.

Russia’s transformation into what political scientists call a sultanistic or neo-patrimonial regime is a break both with Russian history and with the global trend. The Kremlin has been home to plenty of murderous dictators. But the czars drew their legitimacy from their blood and their faith. The general secretaries owed their power to their party and their ideology. Mr. Putin’s rule is based solely on the man himself. _Globe&Mail
As the price of oil fluctuates, the Russian government's hold upon its people's loyalty will likewise fluctuate. Time is working against Putin in this regard, rather than for him as most pundits appear to think. The Arctic, for example, is more likely to freeze a harder thicker ice cap rather than to thaw and create a sea passage, and open drilling zones. The growth of the shale oil & gas industry in Europe threatens to severely reduce one of Russia's most lucrative markets. In addition, substitutions of other feedstocks in place of crude oil in many areas from transportation to plastics, is likely to put a downward pressure on Russia's Ural crude prices.

Putin is seen as the "strong man" president. But if the declining nature of Russia's military technology and power is exposed to the world, inadvertently, Putin will find it all the harder to maintain order. And such an exposure becomes ever more likely with the passage of time, and the increasing bellicosity of Mr. Putin's regional bullying.

Russia cannot supply its army with a full contingent of ethnic Russians. In Georgia, it was forced to use Muslim mercenaries to do a lot of its dirty work. Putin will be forced to depend upon more and more non-Russians serving within the ranks of the Russian armed forces, and of divided loyalties.

Putin will find it difficult to keep Chinese influence out of Eastern Siberia, as more and more illegal Chinese immigrants move in and occupy the towns and industries there. Russians have never wanted to live in Siberia in large numbers, and the shrinking demographic dynamic is hitting the ethnic Russian population of Siberia very hard.

Looking at the underlying fundamentals, Russia has no alternative to Putin.

Russia's options are limited, after having so many of its non-Kremlin institutions destroyed by the Putin machine. Putin sees anything that he does not directly control as a direct threat to his power, and so he will continue to try to destroy anything new that tries to form an independent existence in Russia.

Any outside entity stupid enough to form an alliance or partnership with Putin's Russia is certain to be badly shafted by the czar, if the opportunity arises.

The best strategy for the rest of the world in dealing with Putin's brave new Russia, is to do everything possible to reduce the international prices of oil & gas. Since Obama's energy starvation policies are oriented toward doing exactly the opposite of that, Obama simply must go.

China's Overreliance On Government Directed Investment

2011-09-29T20:19:00.000+01:00

China's property bubble is set to burst, causing greater damage to the domestic economy than the U.S. suffered after its housing market collapsed in 2008, a government economist warned in comments published Friday. Yi Xianrong, a researcher at the Chinese Academy of Social Sciences with a reputation for speaking out against the government's housing policy, said the U.S. housing bubble was smaller than China's and still burst, despite the country's superior legal and credit systems. _SeekingAlpha

China’s problem, however, is that most of this investment is state-directed and this means China’s investment expansion is arguably more likely to create a financial bubble and be less productive than that of the US, Germany et al before it. Again, past is prologue. Both Korea and Japan’s investment spree ended with a bubble bursting – Korea’s in the Asian financial crisis in 1997 and Japan’s in 1990. _FT
Read both of the articles above in their entirety, for a balanced view of China's predicament.

When China's export markets collapsed in 2008, the CCP government turned to local infrastructure spending to maintain employment and GDP growth. But much of the spending and construction occurred on the basis of government direction, rather than in response to the needs of any market. This type of central economic planning led to the collapse of the old USSR, and is leading to chronic creeping poverty in Cuba, North Korea, and increasingly in Venezuela.

China's regional governments are going further and further out on an economic limb to finance projects which may look good on the balance sheets, but which will not provide enough return to pay back the loans which were extended to finance them. The famous "ghost cities," "ghost shopping malls," "ghost trade centres," and such are but the tip of the iceberg.

When this widespread overextension of banks, governments, state-owned enterprises, and politically well-connected enterprises becomes stressed sufficiently, the painful effects of this misallocation of capital and the "Potemkin economy" will be more difficult to hide.

Black Mob Invades Home and Beats Innocent Husband

2011-09-28T22:39:00.000+01:00

Mark Lavelle is a Philadelphia area father, and a youth sports league coach, who experienced the raw side of interracial relations in Obama's US. Here is the story from Philly.com:ABOUT 11 P.M. on Sept. 9, dozens of youths with bats and pipes descended on a tidy residential area of Port Richmond looking for white teens who allegedly had attacked an African-American kid at Stokely Playground a couple of hours earlier.

Two fearful white teens spotted Mark LaVelle on Indiana Avenue near Belgrade Street and asked for help. Suddenly, the mob appeared. LaVelle, who said that he didn't know the two kids, who looked to be 13 or 14, ran with them into his nearby house.

" 'We got you, you white mother-------!' " LaVelle said he heard someone yell in the "mob" of black and Hispanic youths.

Inside his house, LaVelle, 37, called to his wife, Kim, 30, to go to their bedroom with their twin 13-month-old boys, Mark and Mason, and to call police. He also ordered his two other sons, 11 and 17, and his nephew, 7, to stay upstairs.

With the two teens hiding in the house, LaVelle, 5 feet 10, 220 pounds, a well-known sports-league organizer and coach in the community, went outside to try to calm the angry mob.

They were standing on his steps. One shouted, " 'Something's going to happen now!' " LaVelle recalled in an interview Friday at his house. LaVelle got nervous and went back inside, locking his door with a deadbolt.

But the attackers pounded on his front windows and kicked his wooden door so hard, it flew open and some of them entered his house.

"The first guy hits me with a pipe. The second guy knocks me in the face. All I'm hearing is my wife and kids screaming," said LaVelle, who feared that the next time they saw him, he would be in a casket.

He said that he was able to push the attackers out the door, but then a third man - who had a gun - tried to extend his arm. LaVelle grabbed onto the gunman's lower arm and shoulder so he couldn't raise the weapon. Then, police sirens screamed in the neighborhood, and the mob turned and ran.

LaVelle was able to identify three of the people from the melee. He said he did not know if they had been chasing the white teenagers, or if they were just trying to find someone to attack.

Police arrested Bergson Morin, 21, of Rosehill Street near Wyoming Avenue, Feltonville, as the man with the gun. They arrested Enrique Delgado, 32, of Rockland and C streets, Feltonville, as the man who hit LaVelle with the pipe. And they arrested a 17-year-old juvenile as the one who punched LaVelle in the face, giving him a black eye.

LaVelle said that the next day the mother of the juvenile came back with some other people, banging on his door, screaming. LaVelle, who was at a charity sports event, was called back to the house by one of his sons.

When he got home, LaVelle said, the mother yelled at him, " 'You white mother------, you got my kid locked up! You got my son locked up because he's black, you're white!' " The mother claimed that her son had been "a witness," not an attacker. To that, LaVelle said if that were true, it would come out in court.

But the mother, according to LaVelle, then yelled: " 'If you make it to court! I know where you live!' "

Police public affairs could not confirm yesterday if the mother has been arrested for making threats. _Philly.com
Philadelphia has been the scene of several violent flash mobs this summer, populated almost entirely by black youth. Even Philadelphia's black mayor has lost patience with the violence among the black youth of his city. But he -- and other responsible black adults in the community -- is apparently helpless to put the cork back in the bottle.

Here is the kind of news story that Philadelphians are becoming more accustomed to hearing. Philadelphia is a demographic horror story in the making, an illustration of demographic replacement by a more violent and less productive population group than the group it replaced. It is the same story across many cities in North America, as well as a growing problem in Europe, the UK, and Australia.

Political correctness prevents modern people of good will from calling the phenomenon what it is -- and stops them from taking the necessary steps to put an end to the violence. And so it will continue to get worse for as long as the violent perpetrators are sheltered by politically correct authority and law enforcement. Too bad.

Which Comes First? Collapse of Commodities Prices, or the Crumbling of BRICs?

2011-09-24T16:09:00.001+01:00

Common wisdom assumes that commodity prices, including oil prices, will continue to rise on exponential demand from emerging nations, such as China, India, Brazil, Turkey, Russia, etc. But under the sheen of those rosy projections, exists a growing excremental stench of corruption and decay. If the magical trajectory of the BRICs should falter, how far would commodities prices fall? And what would be the repercussions for already stressed world financial markets, desperate for safe havens and hedged to the hilt?China's property bubble is set to implode, and when it does, the Chinese economy will cool far more than anyone thinks, taking commodities along for the ride. Commodity producers like Australia and Canada are at extreme risk as well. _Mish
Not just Australia and Canada are at extreme risk. Two BRICs -- notably Russia and Brasil -- are gambling on continued high commodity prices into the indefinite future. Corruption in all of the BRICs is hampering genuine market-based growth, but economic dependence on raw commodities prices is particularly bad in Russia.

When commodity prices dive, Russia may well grow desperate.
Prime Minister Vladimir Putin, the country's uncrowned czar, has linked his legitimacy to the economy's performance by offering the Russian people a grand bargain: submit to his increasingly autocratic rule and the state will compensate with economic goodies like higher incomes and hefty social-welfare spending. Now that the economy is faltering, Putin is under intensifying pressure from a discontented public to restore Russian democracy, potentially destabilizing Russian politics. He has already faced protests in Moscow against his rule amid the economic downturn. There's also a risk that leaders in Moscow will resort to nationalistic appeals to distract the public from problems at home, escalating tension with Russia's neighbors, the rest of Europe and the U.S. _Time

Russia's ongoing demographic collapse, and the threat of losing much of Eastern Siberia to Chinese influence, is not helping the mood in Moscow. But without the clout that comes from high energy prices, Russia becomes an angry dancing toy bear with nuclear weapons.

Venezuela, Iran, the Arab states of MENA, Mexico, and many countries in tribal Africa and Asia, are also pathologically dependent on high commodity prices, due to internal corruption having squeezed natural markets to death. How will their people deal with the many difficulties and hardships they will face when their governments cannot feed, clothe, house, or water them?

Even the US is vulnerable to a fall in commodities prices. The US is the world's third largest oil producer. The recent boom in US shale oil & gas production is one of the few bright lights in an otherwise dim Obama economy. And although the jobs, housing, manufacturing, and other sectors in the US economy continue to sag, Obama has not had enough time to entirely destroy the US private sector.

Few readers of this blog understand the precarious state of China's economic house of cards. That is because almost all of the economic information coming out of China is closely controlled, and coated with a shiny facade. But it is time for readers to begin asking themselves about the global repercussions of a more sustained commodities price slump than they have seen.

Taken from an earlier article at Al Fin

Warfare Between Generations Still Largely Covert

2011-09-17T18:29:00.001+01:00

...young Japanese and Italians pursue increasingly cautious lifestyles. Nearly 80 per cent of unmarried Japanese between the ages of 18 and 35 live with their parents. The ratio is nearly as high in Italy.

Such unadventurous living means people do not grow up, and do not take risks – such as having children or starting a business. _WRM

Italy and Japan are the leading edge of this global demographic transition within developed countries. Russia is experiencing much of the same phenomenon, as is much of Europe, North America, and Oceania.
In Italy and Japan, companies are reluctant to hire young people on what American universities call “tenure track”; unsure about their future needs and resources they don’t want high cost employees that can’t be fired. The older workers are too powerful to dislodge — just as in American universities the tenured professors are too powerful to give up tenure. So younger workers increasingly are hired if at all on temporary contracts, with lower benefits and fewer prospects for promotion. _WRM

The problem is the most dire in countries and regions which have transferred power from the individual and the private sector to the public sector. This willful concentration of power reduces opportunity for newcomers.
To succeed today, many young people need to recognize that no job will be waiting for them when they finish studying. They are going to have to create their own opportunities. It is a good time for creative entrepreneurs. _WRM
Unfortunately, in such aging societies there is little opportunity for entrepreneurial initiative. Paralysing taxes, regulations, and public debt leave little room for meeting the real needs of a healthy population.

The welfare state grows and grows, concentrating on meeting the needs of the weak, the old, the diseased, the dispossessed, and the illegal alien outsider. Meanwhile, the young and gifted are shunted aside, unwelcome. People with new ideas and new ways of solving problems are an unwelcome distraction and threat to the political class, and must be struck down and removed from the public stage.

This is happening routinely in Russia, and other dictatorships. But it is also happening less overtly in Canada, the US, and other developed democracies.

The war between the generations -- and between styles of thinking -- remains mostly covert. But that could change quickly. If you do not want your nation to flare up in outright inter-generational warfare, consider changing the way your government solves problems.

Europe and America: Demographics and Dumbing Down

2011-09-16T17:59:00.004+01:00

The gravity of Europe’s demographic situation became clear at a conference I attended in Singapore last year. Dieter Salomon, the green mayor of the environmentally correct Freiburg, Germany, was speaking about the future of cities. When asked what Germany’s future would be like in 30 years, he answered, with a little smile, ”There won’t be a future.”

Herr Mayor was not exaggerating. For decades, Europe has experienced some of the world’s slowest population growth rates. Fertility rates have dropped well below replacement rates, and are roughly 50% lower than those in the U.S. Over time these demographic trends will have catastrophic economic consequences. By 2050, Europe, now home to 730 million people, will shrink by 75 million to 100 million and its workforce will be 25% smaller than in 2000._JoelKotkin_Forbes

When a welfare state is in the throes of a shrinking demographic, the implications are extremely dire. Guarantees of benefits in these nations is based upon a pyramid scheme, with the older pensioners near the apex and the younger taxpayers near the base. If the positions are reversed due to a collapsing demographic, national debt tends to grow to massive proportions rather quickly.
The fiscal costs of this process are already evident. Countries like Spain, Italy and Greece, which rank among the most rapidly aging populations in the world, are teetering on the verge of bankruptcy. One reason has to do with the lack enough productive workers to pay for generous pensions and other welfare-state provisions.

Germany, the über-economy of the continent, has little hope of avoiding the demographic winter either. By 2030 Germany will have about 53 retirees for every 100 people in its workforce; by comparison the U.S. ratio will be closer to 30. As a result, Germany will face a giant debt crisis, as social costs for the aging eat away its currently frugal and productive economy. According to the American Enterprise Institute’s Nick Eberstadt, by 2020 Germany debt service compared to GDP will rise to twice that currently suffered by Greece. _Forbes_Kotkin

The United States under Obama has been trying to imitate the European style of government -- a designed expansion of the public sector at the expense of the private sector. Fortunately for Obama -- in one sense -- the US is not suffering the same demographic collapse as Europe. The US is instead still growing demographically, due to immigration and due to higher birthrates among immigrants.
But in another sense, the US population growth is not as fortunate as it appears. The new replacement populations coming into the US are, on average, of lower aptitude in a cognitive sense. Average IQ of the US population is almost certain to drop as a result, and US global comptetiveness will be strained, consequently.

Trends in SAT test scores are an early warning of this very phenomenon:"The scores are disappointing, and it seems to be a trend over the last five to six years, with drops across the board," said Jim Hull, senior policy analyst for the National School Board Association's Center for Public Education.

He called 10 points "a pretty significant change."

"It raises a red flag," he said. _WashingtonExaminer

Test score drops will be blamed on a number of factors, but the studiously ignored central cause of this trend is the lowered cognitive potential of modern students. And it is only likely to get worse. And the repercussions of this cognitive decline will spread throughout society -- and will be magnified tenfold by affirmative action policies.

The SAT has already been "dumbed down," perhaps in anticipation of this very phenomenon, but apparently it was not dumbed down enough. It will probably not be long before the ACT follows suit, in politically correct fashion. More: Steve Sailer takes a closer look at changes in SAT scores over the past several years, with stratification of scores by race.

A dumber population will place greater demands on governmental infrastructure. Law enforcement, welfare, education, housing, food subsidies, etc. will all have to grow more productive to compensate for a population of lower cognitive aptitudes.

National debt will increase even faster than at present, as the underlying society grows less capable of repaying their own debt on top of the debt of previous generations. Economic hardship will increase.

Multicultural societies are low-trust societies, which require much larger police forces to maintain order. As police forces are downsized due to the exponential growth in public sector union pensions and benefits, civil disorder will expand to fill the void.

Youth gangs made up almost entirely of immigrants, children of immigrants, and "minority" populations, will range the landscape virtually unimpeded by a law enforcement infrastructure that will grow more corrupt as it takes on the multi-cultural form of the new dominant populations of society. The initiation ritual for many of these gangs is likely to be an act of violence against the shrinking population of the formerly dominant, European descended people.

Can you and yours find a place of safety in this coming world? That depends upon what you do between now and then.

Hope for the best. Prepare for the worst.

Willpower and Stupidity

2011-09-09T19:04:00.000+01:00

Is the ancient virtue of willpower still relevant in the modern age?
We eat, drink, smoke and gamble too much, max out our credit cards, fall into dangerous liaisons and become addicted to heroin, cocaine and e-mail.

...In experiments beginning in the late 1960s, the psychologist Walter Mischel tormented preschoolers with the agonizing choice of one marshmallow now or two marshmallows 15 minutes from now. When he followed up decades later, he found that the 4-year-olds who waited for two marshmallows turned into adults who were better adjusted, were less likely to abuse drugs, had higher self-esteem, had better relationships, were better at handling stress, obtained higher degrees and earned more money. _NYT

A more scientific term for willpower is executive function (EF), coordinated in the prefrontal lobes of the brain. Together with intelligence (IQ), levels of EF powerfully determine life success over the years. EF can be improved by training in children, but such training should occur between the ages of 4 and 7 for maximum benefit.

The interaction of willpower and stupidity is more complex than most people understand. First, what do we mean by "stupidity?""A stupid person is a person who causes losses to another person or to a group of persons while himself deriving no gain and even possibly incurring losses."

"Always and inevitably everyone underestimates the number of stupid individuals in circulation."

"Non-stupid people always underestimate the damaging power of stupid individuals. In particular non-stupid people constantly forget that at all times and places and under any circumstances to deal and/or associate with stupid people always turns out to be a costly mistake."

"Our daily life is mostly, made of cases in which we lose money and/or time and/or energy and/or appetite, cheerfulness and good health because of the improbable action of some preposterous creature who has nothing to gain and indeed gains nothing from causing us embarrassment, difficulties or harm. Nobody knows, understands or can possibly explain why that preposterous creature does what he does. In fact there is no explanation - or better there is only one explanation: the person in question is stupid." _Science20

Stupidity arises from multiple causes. Low intelligence, spite, ignorance, laziness (lack of willpower), miscalculation, and unavoidable constraint propagation (bad luck) are just a few of the many causes of stupidity and stupid people.

In the United States, stupidity has become concentrated near seats of power such as Washington DC, New York City, Los Angeles, Chicago, etc. Government is one obvious host and purveyor of mass stupidity, along with all other institutions which are closely involved with government -- such as labour unions, news media, education, financial and economic institutions, law enforcement, the courts etc. Even the military -- which believe it or not is the most competent branch of government -- has been infiltrated by politically correct stupidity via social promotion of PC-favoured officers and the enforcement of politically correct policies.

Labour unions have become the seat of stupidity in a particular way recently, thanks to the union-friendly Obama regime. A violent storming, vandalism, and assault of a port in Washington state goes unpunished by government officials. While warming up a crowd for President Obama, Jimmy Hoffa Jr. tells Obama to "take out the son of a bitches," referring to Tea Party members and Republicans, and neither Hoffa nor the Obama White House will apologise for this rather blatant lapse of civility in the midst of an official Obama event. AFL-CIO head Richard Trumka dictates to Obama what he needs to say in his jobs speech before a joint session of congress -- encouraging the president to "go to the mat" -- and is rewarded for his presumption by being seated next to Michelle Obama for the president's speech.

These are all examples of stupidity by labour union officials and thugs. But many more similar examples occur on a regular basis. If the general public were to become widely aware of this stupidity, the political fortunes of Mr. Obama and those close to him would deteriorate even more quickly than at present. But for now, the news media continues to overlook and cover up the mistakes of Obama and his friends.

Mr. Obama's stupidity is not only in his friends and hangers on, but is engrained in every policy that he has pursued since being inaugurated. His war against the private sector, his war against energy, his promotion of a bankrupting "green jobs agenda," his vilifying of national allies and his cozying up with national antagonists, his diverting of scarce national assets into the purses of political cronies, his irreversible expansion of government mandate and government debt, his unprecedentedly divisive effect on society -- all of these evidences of stupidity and more should be enough to portray Obama's administration as "the stupid regime."

It should be obvious that willpower is not a simple antidote to stupidity. In fact, stupid people often pursue their stupid agendas with the utmost will.

It is true that if the masses had exerted more willpower in their oversight of government and government officials, that this massive clusterfuck could have never grown so bad so quickly. But that was then, and this is now. What do we do now?

Can the example problem -- the rise of stupidity in US government and society -- be solved within the political and societal structure, or will entirely new structures and forms of organisation be necessary?

This question will be explored in future articles.

Cross-posted from Al Fin blog