Saturday, 14 May 2016

Weekend Update 14/05/2016 – Brexit, A Modest Proposal.

Brexit Countdown Clock.

Brexit Quote of the Day.
Who are we? Where are we? Why are we?
Dodgy Dave Cameron.

Lenin is said to have declared that the best way to destroy the Capitalistic System was to debauch the currency. . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose.
J. M. Keynes.

We open with yet more reason to Brexit. With apologies to Jonathan Swift.


A Modest Proposal

For Preventing The Children of Poor People in Great Britain
From Being A burden to Their Parents or Country, the EUSSR, the Bilderbergers, and President Barry Kenya of the USSA, and For Making Them Beneficial to The EUSSR Public and the American state.

By Lord Mandyoil of Pouffe, Whisky Juncker, and Dodgy Dave Cameron, of hopefully soon to be of no fixed abode.
It is a melancholy object to those who walk through these great EU towns or travel in the EUSSR country, when they see the streets, the roads, and cabin doors, crowded with beggars of the British persuasion, followed by three, four, or six children, all in rags and importuning every EUSSR passenger for an alms. These un-European Brits, instead of being able to work for their honest livelihood, are forced to employ all their time in strolling to beg sustenance for their helpless infants: who as they grow up either turn thieves for want of work, or leave their dear native country to fight for the USA in Afghanistan, Iraq, Libya or Syria or sell themselves to the Barbarians purveyors of filth and extreme violence of Hollywood, LA.

We think it is agreed by all parties that this prodigious number of children in the arms, or on the backs, or at the heels of the English and Welsh, and frequently of the Scots, is in the present deplorable state of the kingdom a very great additional EUSSR grievance; and, therefore, whoever could find out a fair, cheap, and easy method of making these vagabonds sound, useful members of the EUSSR and of America prosperity, would deserve so well of the public as to have their statue set up for a preserver of the EUSSR.

But our intention is very far from being confined to provide only for the vagabonds of professed British EUSSR beggars; it is of a much greater extent, and shall take in the whole number of infants at a certain age who are born of parents in effect as little able to support them as those who demand our EUSSR charity in the streets.

As to our part, having turned our thoughts for many years upon this important subject, and maturely weighed the several schemes of other projectors, we have always found them grossly mistaken in the computation. It is true, a child just dropped from its useless Brit dam may be supported by her milk for a solar year, with little other nourishment; at most not above the value of 200 euro., which the mother may certainly get, or the value in scraps, by their lawful occupation of begging; and it is exactly at one year old that we propose to provide for them in such a manner as instead of being a charge upon their parents or the parish, or EUSSR or Barry Kenya ,wanting food and raiment for the rest of their lives, they shall on the contrary contribute to the feeding, and partly to the clothing, of many EUSSR thousands of peace loving alien migrants.

There is likewise another great advantage of our scheme, that it will prevent those voluntary abortions, and that horrid practice of Brits murdering their bastard children, alas! too frequent among them! sacrificing the poor innocent babes we doubt more to avoid the expense than the shame, which would move tears and pity in the most savage and inhuman breast.

The number of souls in this kingdom being usually reckoned sixty million and a half, of these we calculate there may be about twenty million whose wives are breeders; from which number we subtract three million couples who are able to maintain their own children, although we apprehend there cannot be so many, under the present distresses of the EUSSR; but this being granted, there will remain  17 million potential breeders.
We again subtract two million for those women who miscarry, or whose children die by accident or disease within the year. There only remains 15 million children of poor Brit parents annually born. The question therefore is, how this number shall be reared and provided for, which, as we have already said, under the present situation of affairs, is utterly impossible by all the methods hitherto proposed. For we can neither employ them in handicraft or agriculture; we neither build houses (I mean in the country) nor cultivate land: they can very seldom pick up a livelihood by stealing, till they arrive at six years old, except where they are of towardly parts, although we confess they learn the rudiments much earlier, during which time, they can however be properly looked upon only as probationers, as we have been informed by a principal gentleman in the country of Belgium, who protested to us that he never knew above one or two instances under the age of six, even in a part of the kingdom so renowned for the quickest proficiency in that art.

---- We are assured by our merchants, that a boy or a girl before twelve years old is no salable commodity; and even when they come to this age they will not yield above three euros, or three euros and a half at most on the exchange; which cannot turn to account either to the parents or kingdom, the charge of nutriment and rags having been at least four times that value.

We shall now therefore humbly propose ou own thoughts, which we hope will not be liable to the least objection.

We have been assured by a very knowing American of Washington recently of our acquaintance visiting London, that a young healthy child well nursed is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled; and we make no doubt that it will equally serve in a fricassee or a ragout.

---- That the remaining few million may, at a year old, be offered in the sale to the persons of quality and fortune through the EUSSR; always advising the mother to let them suck plentifully in the last month, so as to render them plump and fat for a good table. A child will make two dishes at an entertainment for friends; and when the family dines alone, the fore or hind quarter will make a reasonable dish, and seasoned with a little pepper or salt will be very good boiled on the fourth day, especially in winter.

---- We profess, in the sincerity of our hearts, that we have not the least personal interest in endeavoring to promote this necessary work, having no other motive than the public good of the EUSSR, by advancing our trade, providing for infants, relieving the poor, and giving some pleasure to the rich.

In other news, in China the Great Wobble is turning into a full blown bust. The easy-come, easy-go fiat money of the Great Nixonian Error of fiat money, is now increasingly going wrong all around the planet. Stay long fully paid up physical gold and silver against this century’s coming monetary disaster.
If all else fails, immortality can always be assured by spectacular error.

J. K. Galbraith.

Once a Billionaire, Miao Is Latest Humbled China Solar King

May 12, 2016 — 5:00 PM BST Updated on May 13, 2016 — 7:23 AM BST
More than two decades ago in China, Miao Liansheng made a first tentative step toward harnessing the sun to produce power -- eventually becoming a billionaire.

For a time, it worked, making his Yingli Green Energy Holding Co. the world’s biggest solar panel maker. Then in an all-too-familiar scene for clean energy producers, reality took hold for the 60-year-old former soldier in the People’s Liberation Army.

Miao’s push to dominate photovoltaics lies in pieces after Yingli missed repayment on 1.76 billion yuan ($270 million) of debt and said it’s talking with creditors about refinancing. It’s teetering is starting to look like the collapse of Shi Zhengrong’s Suntech Power Holdings Co. in 2013 -- global aspirations, the amassing of billions of dollars in debt, plunging prices, overcapacity and then retreat.

“It wasn’t easy for Miao to make the company so big," said Zhang Sen, deputy secretary-general of the photovoltaic production unit at the China Chamber of Commerce for Import and Export of Machinery and Electronic Products. “Big companies are sometimes more fragile, especially when the market isn’t good.”

In his only public comment on the matter, Miao maintained that Yingli is working to negotiate a resolution on its debt issues. On a conference call on Wednesday, he said the Baoding-based company is seeking to sell assets and line up new investors. A statement on Thursday said no creditors have moved to push the Yingli into insolvency.

“Our major creditors have been helpful,” Miao said on the call. “We strongly believe that we will achieve a successful transition.”

----After leaving the military, Miao became a long-distance bus driver. By the 1980s, he had started his own business, eventually selling everything from cosmetics to vegetables and treated water for drinking. In 1993, he began importing a production line of lamps powered by solar energy from Japan, according Wang.

As Yingli’s founder and chairman and largest shareholder, the panel maker’s initial public offering in 2007 helped make Miao for a time the 41st richest man in China with an estimated wealth of 14 billion yuan ($2.15 billion), according to a ranking that year of the richest people in China by the Hurun Report.

Today, Miao’s roughly 30 percent stake in the solar company is valued at about $17.7 million. Yingli’s American Depository Receipts traded in the U.S. have declined 25 percent since the beginning of the year after plunging 81 percent in 2015.

It’s a dramatic fall for a man who, employees say, can be found standing outside the company’s headquarters each day at 7 a.m., when he isn’t traveling, so that he can offer a morning welcome to his workers. It’s also a breakdown that has ensnared more than Miao and Yingli.

The past decade has been marked by booms, busts and failures in clean energy -- and solar in particular. The list of once-leading companies that went bankrupt include Q-Cells SE, SunEdison Inc. and Suntech. Shi, who led Suntech until three years ago when eight Chinese banks pushed it into insolvency, was once China’s richest man until his company was brought down. Shi built his empire from scratch, like Miao.

----Yingli’s debt burden is a result of “errors in decision-making including large-scale expansion along the whole value chain and spending on marketing and branding,” said Wang Xiaoting, an analyst at Bloomberg New Energy Finance in Hong Kong. Between 2013 and the first quarter of 2015, more than half of Yingli’s net losses were from interest expenses on debt raised for expansion, according to Bloomberg data.

Chinese firms are struggling with record debt redemption this year as Premier Li Keqiang seeks to wipe out zombie corporations amid the country’s weakest economic expansion in a quarter-century. At least nine firms, including Yingli, have missed local note payments so far this year, exceeding the tally for the whole of 2015.

Chinese solar manufacturers such as Yingli sold about $5 billion of shares from 2005 to 2010, wresting control of the market from companies in the U.S., Germany and Japan. The added capacity led to a global oversupply and pummelled panel prices, tipping at least 30 companies into bankruptcy.

Oil at $45 a Barrel Proving No Savior as Bankruptcies Pile Up

May 12, 2016 — 11:51 PM BST Updated on May 13, 2016 — 5:01 AM BST
Three bankruptcies this week shows that $45 a barrel oil isn’t enough to rescue energy companies on the verge of collapse.

Since the start of 2015, 130 North American oil and gas producers and service companies have filed for bankruptcy owing almost $44 billion, according to law firm Haynes & Boone. The tally doesn’t include Chaparral Energy Inc., Penn Virginia Corp. and Linn Energy LLC, which filed for bankruptcy this week owing more than $11 billion combined.

At least four more oil and gas companies owing more than $8 billion are nearing default, including Breitburn Energy Partners LP and SandRidge Energy Inc. Bankruptcies have accelerated as cash-starved companies find it almost impossible to raise capital. Energy companies have been virtually shut out of the high-yield bond markets, banks are cutting credit lines and asset sales have slowed.

"I don’t think the E&P model in North America is economic and I don’t think it was real economic even at $80 and $100 oil," Jim Chanos, Kynikos Associates founder and president, said in an Bloomberg TV interview Thursday. "It’s certainly not economic at $45 oil."

Several more are struggling to sustain crippling debt loads. SandRidge Energy, which owes $4.13 billion, said in its annual financial report that auditors have raised doubts about its ability to stay in business. It delayed releasing its first-quarter results, citing ongoing discussions with creditors on a “potential comprehensive restructuring transaction.” Breitburn, which owes $3 billion, missed interest payments in April and is in talks with creditors.

W&T Offshore Inc. owes almost $1.5 billion and is overdrawn on its credit line, which was cut to $150 million from $350 million in March. The company has said it will pay off the loan in three monthly installments. Connacher Oil and Gas Ltd. has told creditors it’s making preparations to file for bankruptcy as it continues to search for a way to stave off default, according to two people familiar with the matter.

Vancouver mansion sold by Canaccord founder for record $31.1 million now owned by ‘student,’ records show

Cassidy Olivier, Postmedia News Thursday, May 12, 2016
The majority owner of a Point Grey mansion that was sold earlier this year by Canaccord founder Peter Brown for a record $31.1 million is a “student,” property records show.

Land title documents list Tian Yu Zhou as having a 99-per-cent interest in the five-bedroom, eight-bathroom, 14,600 square-foot mansion on a 1.7-acre lot at 4833 Belmont Ave.

Zhou’s occupation is listed as a “student.” The other owner of the property, which boasts sweeping views of the North Shore mountains and Vancouver, is listed as Cuie Feng, a “businesswoman.”

Feng has a one-per-cent interest in the property, which was assessed this year as having a total value of about $25.6 million, records show.

Efforts to reach Zhou and Feng through the lawyer listed on the land title documents were not successful, and realtor Cherry Xu, who reportedly served as the buyer’s agent, did not want to comment on the sale, citing privacy considerations.

NDP housing critic David Eby said the fact that a student was able to buy one of the most expensive homes in the city contradicts the government’s messaging that “everything is under control in the Vancouver real estate market.”

Eby said it also links to a theme uncovered in a 2015 study by Andy Yan, an adjunct professor at the University of B.C., which found homemakers and, to a lesser extent, students, are often the listed occupations of the owners of many newly purchased multi-million dollar Vancouver properties.

“It’s incredibly strange that a student would be able to afford such a luxurious and multi-million-dollar property,” said Eby. “This is part of a trend of homemakers and students mass-buying property. I don’t know how that can be possible with the income of homemakers and students typically have, which is close to zero.”

Mortgage documents attached to the land title papers show that a mortgage of $9.9 million was taken out by Zhou and Feng from the Canadian Imperial Bank of Commerce on April 28. The bi-weekly payments are listed as $17,079.41.

Eby said the government’s messaging and slow response to the housing crisis in Metro Vancouver could be because party donors, like Brown, are directly benefiting from the red-hot market.

According to financial records, Brown has donated $62,500 to the B.C. Liberal Party in the past two years, and Eby further noted that Brown is a longtime Liberal fundraiser.

Below, it’s amazing how people who helped create the present predicament, can keep coming up with right analysis and wrong solutions. Below yesterday’s man thinks yet more malinvestment unrepayable debt, is the answer to the failing Great Nixonian Error of fiat money, malinvestment unrepayable debt problem. Build more roads and bridges to nowhere and they will come he avers. But no they won’t. Roads and bridges to nowhere are just that. Building them on yet more unrepayable debt just ensures a vastly bigger problem when the monetary system collapses. We are already deep into the final act of the Great Nixonian Error of fiat money, just ask the Brazilians, where the nuts come from.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.

John Kenneth Galbraith

How to Pull the World Economy Out of Its Rut

Larry Summers warns of “secular stagnation,” a term from the Great Depression.

May 12, 2016 — 11:00 AM BST
Crazy things are happening in the world economy. In Europe and Japan, interest rates have turned negative, something long thought impossible. In the U.S., workers’ productivity is improving at the feeblest five-year rate since 1982. China is a confusing welter of slumping growth and asset bubbles.

Through it all, Federal Reserve Chair Janet Yellen practices the central banker’s art of draining the drama from any situation. She insists that conditions are returning to normal, albeit slowly. Her favored approach, “data dependence,” is nonpredictive and noncommittal, like finding your way in the dark by pointing a flashlight at your toes.

Lawrence Summers, the Harvard economist who almost got Yellen’s job, has no patience for such patience. Since losing out to Yellen in 2013, he’s been jetting around the world—from Santiago to St. Louis to Florence, Italy—to argue that the world economy is in much worse shape than central bankers understand. Focusing on monetary policy alone, he says, they’re doomed to fall short of reviving growth. They need to reach out to the governments they work for, he argues, and insist on strong fiscal stimulus in the form of infrastructure spending and the like. As an intellectual brawler from way back, he’s in his element.

----For economic policymakers, the most disturbing question is why global growth remains paltry and uneven. The annual growth rate of gross domestic product in the U.S. in the January-March quarter was just 0.5 percent. The euro zone was stronger than the U.S., at 2.2 percent; Japan, which has been flipping in and out of recessions for a quarter century, shrank 1.1 percent. Deflation once seemed to be a strictly Japanese problem—now it’s a worldwide threat. Pessimism about growth prospects is reflected in low forecasts for long-term interest rates. The annual yield on German 10-year notes is only 0.13 percent.

It wasn’t obvious in the summer of 2013, when President Obama was choosing between Yellen and Summers, that Summers would turn out to have such out-of-the-box ideas. Obama said that “when it comes down to their basic philosophy on the future of the Fed,” the differences between the candidates were so small “you couldn’t slide a paper between them,” according to Democratic Senator Dick Durbin of Illinois, who attended a meeting with the president.

This is the risk keeping U.S. executives awake at night

Published: May 13, 2016 4:44 p.m. ET
The one political risk squarely on the minds’ of U.S. executives isn’t the U.K. bailing from the European Union or even a Donald Trump presidency. It’s the impeachment drama in Brazil, according to a Goldman Sachs report.

“Managements discussed the implications of Brexit, U.S. policies, and the crisis in Brazil. The effects of the Brazilian political uncertainty coupled with the nation’s economic slowdown were felt most acutely,” said economists at Goldman in a research note Friday.

Brazil is posing a significant challenge on various fronts and is among the most discussed topics by executives who occupy corner offices, as the following excerpts from earnings calls highlighted by the economists indicate:

General Motors Co. GM, -2.12%
“…Political uncertainty continues in Brazil where industry volumes were down 29% in the first quarter.”

PepsiCo Inc. PEP, -1.81%  
“Brazil is a tough, tough, tough market. It’s fundamentally a good market…But recently in the last I’d say 12 to 18 months, there have been a lot of self-induced problems in Brazil.”

Since March 15, S&P 500 company executives have referenced Brazil 109 times, according to a review by FactSet of 444 earnings calls commissioned by MarketWatch. Comparatively, the potential for Britain to exit the European Union, referred to commonly as Brexit, was mentioned 22 times and presumptive Republican presidential nominee Trump was referred to once.

It’s worth noting that China, the world’s second-largest economy and a region that has been among the most pressing concerns for investors over the past year, was mentioned 188 times, according to FactSet.

Once a shining example of emerging-market’s potential, Brazil has been hammered as the demand for commodities—most notably oil CLM6, -0.71% —dried up in the wake of slower global growth. Its gross domestic product shrank 3.9% in 2015 following a 0.1% expansion in 2014.

There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

John Kenneth Galbraith.

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