Baltic Dry Index. 1063 +08 Brent Crude 48.60
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Around 700 tonnes of sodium cyanide was being stored
at the warehouse where the blasts took place, He Shushan, a Tianjin vice mayor,
told a news conference at the hotel Monday.
We open today with China. Just how competent is the Communist Party of
China to run 21st century China? And if not competent, how many more
Tianjin’s are there? And just how safe is their nuclear power industry? What
happens in China if the masses lose faith in the competence and abilities of
the CPC? Since 2009, the CPC has triggered a massive over building boom, now
turning into a bust, especially a housing bust. Mishandled the future Hong Kong
elections. Triggered a massive stock market bubble, encouraging the masses into
stocks, only for the bubble to burst last month triggering 3 to 4 trillion of
loses in less than three weeks. Apparently damaging, if not wrecking the shadow
banking system.
Sprung a surprise Yuan devaluation on an unprepared domestic and
international community, while at the same time trying to rig the collapsed
stock market higher by banning selling among many other rigs. But for every
buyer there has to be a seller! Who wants to buy into a roach motel where you
can’t sell out at a profit?
But the final straw for me was last week’s spectacularly incompetent
explosion and aftermath in the port of Tianjin. Can anything the authorities
say about this disaster be believed?
Sadly, I have to conclude that it can’t be. On this performance the Yuan is simply not
ready for reserve status. The port of Tianjin simply did not have a Haz-Mat
plan, nor it appears, a Haz-Mat team. The people of Tianjin and China surely
deserve better than that! That buck stops squarely in one party Beijing. If the
CPC doesn’t find some new competence fast, will the CPC even be running China
in 2025? And if not, what of the future of China and the world?
In the
democratic west, we get some spectacularly incompetent governments too, think
of Nixon, and Bush the lesser, Eden and Suez, and the incompetent Harold Wilson. But
the democratic west has a safety valve. The voters can vote out the governing
party and the government. China has no such safety valve. The CPC is living on
borrowed time. One Chernobyl, Tianjin, economic disaster away from the end of
China as we’ve come to know it.
China moves to contain cyanide after blasts kill 114
Tianjin
(China) (AFP) - Rescuers trying to contain vast amounts of toxic cyanide at a
Chinese industrial site combed Monday through thousands of shipping containers
crushed in giant explosions, as state-run media lambasted local authorities' response
to the disaster that killed at least 114 people.
The August 12 explosions at the hazardous goods storage facility in the
port of Tianjin set off a giant fireball, devastated a vast area and raised
fears over potentially highly dangerous contamination of the local environment.
Officials have insisted the city's air and water are safe, but locals
and victims' relatives have voiced scepticism, while international environment
group Greenpeace has also urged transparency.
Residents demonstrated outside a Tianjin hotel Monday, demanding
government compensation for their badly damaged apartments.
Around 700 tonnes of sodium cyanide was being stored at the warehouse
where the blasts took place, He Shushan, a Tianjin vice mayor, told a news
conference at the hotel Monday.
Sodium cyanide, which has a variety of industrial uses including gold
mining, is a toxic white crystal or powder. It can release hydrogen cyanide
gas, used in gas chamber executions in the US.
A huge, "very complicated and difficult" clean-up was under
way, said He, made harder by the presence of more than 18,000 shipping
containers, and amid fears rain could spread the substance.
Authorities had built sand and earth barriers around the blasts'
100,000-square-metre (120,000-square-yard) "core area" to prevent any
pollutant leakage, said He.
Personnel including military, police, and chemical experts were combing
their way through the mountains of mangled containers to remove toxic
materials, and had drawn up a painstaking plan to test the core area
"point by point".
The closest water test point to the blast site revealed cyanide levels
27.4 times standards on Sunday, officials said without specifying the quantity,
but said they were within limits beyond the cordoned-off area.
Sodium cyanide had been found as far as around one kilometre (0.6 miles)
from the blast site, they said, and the official Xinhua news agency reported
cyanide traces had been detected in seawater near the port.
----Prosecutors
said Sunday they had launched an investigation into whether there had been any
"abuse of power or dereliction of duty", according to Xinhua.
And state-run media lambasted officials for withholding information over
the explosions, largely echoing public frustrations.
"During the first dozens of hours after the blasts, there was scant
information offered by Tianjin authorities," the Global Times tabloid said
in an editorial.
"Tianjin is not an exceptional case in terms of the inadequate
disaster-response work," said the paper, which has close ties to the
ruling Communist Party.
----The Beijing News, citing storage
plans it had seen, said the warehouse was only authorised to hold 24 tonnes of
the sodium cyanide -- meaning it had nearly 30 times its permitted quantity on
the site.
Chinese media reports on Monday said the son of a former police chief of
Tianjin port was a major shareholder in the warehouse owner, Rui Hai
International Logistics.
More
Edward Chancellor: The cost of China’s devaluation
By Edward Chancellor August 17, 2015
Financial markets, like religions, are faith-based networks. The complex
structures of assets and liabilities that comprise markets are held together by
a set of underlying beliefs. Unlike religions, however, financial dogmas are
occasionally shown to be false. We experienced such a moment last week, when
the Chinese authorities chose to devalue their currency.
For years, the consensus view has been that as China’s economy outgrew
the developed world, its currency would inevitably appreciate. True, the yuan’s
value was pegged to the dollar, but Beijing in the past had allowed it to
gradually rise. The decision by the People’s Bank of China to relax the peg and
depreciate the currency thus took the market by surprise. The significance of
this move is not that it will set off another round of currency wars or that it
will exacerbate global deflation – although both these outcomes are possible.
Rather, the true danger comes from the adverse impact this unexpected
devaluation may have on China’s dysfunctional financial system.
The era of ultra-low U.S. dollar interest rates has lured global carry
traders to China. It’s easy to see why. Chinese banks paid better deposit rates
than their U.S. counterparts and yields were even higher in the country’s
shadow banking system. In addition, carry traders could expect to earn a few
percentage points from currency appreciation each year. To many foreigners,
lending in China with an expected annual return of around 10 percent must have
seemed a one-way bet.
The inclination of Chinese borrowers to avail themselves of foreign
loans has been driven by need as much as greed. Of course, it has been cheaper
to borrow abroad and the rising yuan shrunk the size of outstanding
liabilities. More to the point, as the country’s credit boom continued, China’s
financial system has strained to keep up with demand. Foreign lenders have
filled the gap.
Furthermore, as China’s non-financial debt has climbed above 250 percent
of GDP, the costs of servicing these obligations has become extremely
burdensome. Two years ago, Fitch estimated that Chinese corporate interest
payments were 11 percent of GDP and rising rapidly. Foreign loans reduced this
burden.
The result has been a surge in Chinese overseas borrowing, much of it
from foreign banks. The Bank for International Settlements records that global
banks’ net U.S. dollar lending to China rose from around $100 billion in late
2012 to nearly $650 billion by mid-2014. The BIS also notes that Chinese
corporations have increasingly taken to borrowing abroad through their overseas
affiliates – a type of borrowing misleadingly recorded in the national accounts
as foreign direct investment.
Trade credit has provided yet another source of foreign currency
borrowing. Chinese corporations betting on the continued appreciation of the
renminbi have got around the country’s capital controls by faking export
invoices, which enabled them to bring dollars into the mainland. The practice,
which is known as export preconversion, has been mainly conducted with Hong
Kong counterparties. In recent years, the value of exports to Hong Kong as
reported by Beijing has regularly exceeded Hong Kong’s own record of imports
from the mainland by a wide margin. In the late 1980s, Japanese companies
likewise boosted their profits with complex financial transactions known as
zaitech.
The result is that China now has vast foreign debts. Although the
country is still a net foreign creditor, its gross foreign liabilities have
climbed to nearly $5 trillion, according to Macro Strategy Partnership, an
independent research company – a figure that even exceeds China’s $3.7 trillion
pile of foreign exchange reserves.
In recent months, China has experienced large capital outflows,
estimated by Goldman Sachs to have reached some $224 billion in the second
quarter. As the global carry trade retreats, foreign bank lending to China has
collapsed – it’s down by around $250 billion over the last year, according
to the BIS. While Beijing was maintaining its currency peg, these outflows
forced the PBOC to sell foreign exchange reserves and buy renminbi.
The trouble is that when a central bank swaps foreign exchange
for its own currency domestic liquidity tightens, something that China’s
cash-strapped corporates can ill afford.
More
Why China currency moves may spell end of Greenspan ‘conundrum’
Published: Aug 17, 2015 3:19 p.m. ET
Former Federal Reserve Chairman Alan Greenspan noticed a decade ago what he called a conundrum:
The central bank would lift interest rates, but long-term yields wouldn’t move
much.Why would that be the case? Well, the theory went, because foreigners, notably China, would recycle the vast foreign-currency reserves they had accumulated into U.S. government debt, so as to keep their domestic currency weak.
Now, according to Michala Marcussen, global head of economics at Societe Generale, that story may have run its course.
“Global FX reserve accumulation has for some time been declining in dollar terms and our expectation is the China will have to engage further intervention to defend the CNY, thus running down some of it FX reserves,” she wrote in a note to clients.
“The interesting test, however, will come further down the road when one day the dollar again comes under downward pressure. If China continues on the path to a free floating currency, at that time the CNY would be allowed to appreciate against the dollar and as such, China should not step in to ramp up U.S. Treasury purchases. That will indeed spend the end of the Greenspan conundrum.”
"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
Antony C. Sutton
At the Comex silver depositories Monday
final figures were: Registered 55.94 Moz, Eligible 115.71 Moz, Total 171.75
Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Not enough cash, or just trapped in a rigid monetary system like
Greece with no way out but a German austerity straightjacket? No problem. Try e-cash the South American
Ecuadoran way. What could possibly go wrong in the hands of our corrupt 21st
century central banksters and bent politicians?
For the record, Ecuador promises, cross their heart and hope to die,
that they have no funny business in mind."Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
William F. Rickenbacker
Ecuador’s new virtual currency is a source of pride, worry
August 12, 2015
QUITO,
Ecuador Jaime Rojas keeps his antiquated cellphone on the dashboard of his
taxi. He can’t use it to play games or check Facebook, but his “dumb phone” has
recently become a powerful tool: He can use it to buy gas, receive fares and
send money to family.
Mobile banking has been around for a decade, but this tiny Andean nation recently became the first country in the world to create its own virtual currency. Unlike Bitcoin, Ripple or Peercoin — crypto-currencies with no central bank backing — Ecuador’s dinero electrónico is legal tender, trading alongside the U.S. dollar, which has been the official currency since 2000.
Authorities say the mobile money scheme is a way to offer financial services to those in remote areas where banks are scarce and to help jump-start small businesses. Skeptics, however, fear the system opens up a backdoor for the cash-strapped administration to shed the restrictions of its dollarized economy and, just perhaps, “print” its own digital currency.
Rojas, 55, is among the 47,456 people who have opened mobile accounts since the system went live in December. He says he primarily uses it to buy gas. And while he rarely encounters customers with e-money, he’s grateful when he does.
“This way you don’t have to struggle to find the exact change,” he said, as he plowed his yellow cab down a busy street. “And it’s safer than carrying cash — because of the risk of getting robbed and all that business.”
The government’s control of the virtual currency market (all others are illegal, including Bitcoin) has its advantages. Within a few minutes, anyone with a cellphone on any carrier can open up a mobile account — and money can be added at any bank or other registered outlet.
Growth in the system, however, has been slow. There’s only $645,669 worth of digital cash in circulation and less than 1 percent of the country’s 17 million cellphones are registered to the service, according to Central Bank figures.
But it’s the potential for government abuse that worries many.
While mobile money is commonplace throughout Africa and in countries like Haiti and Paraguay, “this is the first time that [electronic money] has been created as a monopoly by a state,” said Abelardo Pachano, who was the head of Ecuador’s Central Bank on two occasions. “In the event that its use becomes widespread, it could generate profound distortions and call into question the viability of our monetary system.”
On the surface, the innovation seems benign: To receive a digital
dollar, a customer has to turn in a physical greenback. But Pachano and others
worry that the central bank has too much leeway over the use of those physical
dollars, including financing the national debt by buying government bonds.
“That initial liquidity that backs the whole system could be turned into
non-liquid assets that could cause economic problems under certain
circumstances,” he said. In short, if e-money became widespread, and there was
ever a mass rush to redeem the currency, it could collapse the system.
Others imagine a future where the indebted administration begins paying
public salaries or servicing domestic debt in virtual currency — essentially
pumping new, unsupported money into the market and fueling inflation.
Ecuador’s Central Bank insists that safeguards are in place and that no
such moves are in the works.
Read more
here: http://www.miamiherald.com/news/nation-world/world/americas/article30968391.html#storylink=cpy
F. A. von Hayek
Solar & Related Update.
With events
happening fast in the development of solar power, I’ve added this new section.
Updates as they get reported. Is converting sunlight to usable cheap AC energy
mankind’s future from the 21st century onwards? DC? A quantum
computer next?
JA Solar Released New Double-glass Modules
SHANGHAI, Aug. 17, 2015 /PRNewswire/ -- JA Solar Holdings Co., Ltd. (Nasdaq: JASO) (JA Solar), one of the world's largest manufacturers of high-performance solar power products, today announced that its standard 60-cell double-glass modules successfully passed all the reliability tests required by IEC61215 and IEC61730 standards and obtained at TUV SUD certifications, as well as the launch of mass production of the double-glass modules for global market.Recently, as the installation of solar electricity generation grows at an unprecedented pace world-widely and the performance of PV products gets improved steadily, the demand for PV modules of high quality and reliability that can operate in the harsh environment without rapid degradation has greatly increased. To meet the demand, JA Solar has successfully completed the development of double-glass PV modules and started mass producing the modules from the beginning of August 2015. JA's standard 60-cell multi-Si modules are encapsulated using 2.5-mm thick high strength tempered glass on both sides with a frameless design.
Compared to regular PV modules with glass only covering front side, the double-glass modules are proven to be much more reliable and endurable, as well as weather proof for deployment in the extreme environments of high-temperature, high-humidity, windy, salty, or arid conditions such as coastal fronts, fish farms, and deserts. Moreover, JA's double glass modules are designed based on IEC standard for 1500V system with a 30-year performance warranty, namely, of no greater than 2.5% power degradation in the first year followed by a linear annual degradation rate of 0.5%. At the end of this warranty, the performance level of such a double glass module will still be 85% of its initial rated power.
Mr. Jian Xie, JA Solar's Executive President, commented, "The successful pass of the IEC61215 and IEC61730 standard tests at TUV SUD and the start of mass production of the double glass modules for global market once again demonstrate the JA Solar's tradition of providing our customers high-performance PV products with high quality and reliability, as well as our commitment to meet the ever increased the worldwide demand for clean energy, through technological innovation and continuous performance improvement."
http://www.prnewswire.com/news-releases/ja-solar-released-new-double-glass-modules-300128688.html
The monthly Coppock Indicators finished July
DJIA: +88 Down. NASDAQ:
+189 Down. SP500: +116 Down.
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