Wednesday, 31 August 2016

Politics 21st Century Style.



Baltic Dry Index. 715  -05      Brent Crude 48.42

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

It is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything.

President Putin, attributed by Hillary Clinton, with apologies to Uncle Jo Stalin.

We open with a warning from the past about stocks in September. Statistically, US stocks usually slide in September, a record stretching all the way back to the 1890s. A weak September often sets up the crash of October, although in a US Presidential election year everyone expects the Fedster’s, New York City Plunge Protection Team of fixers and rig-its, to work overtime to prevent an October stock market crash ahead of the early November election. 

But this year, according to the Democrats, the US media, the BBC, and the Hillary Huffington Post, everyone from President Putin down to that eight year old computer nerd who lives round the corner, has hacked into all American computers of any importance, together with the voting machines Americans use to vote, so we can expect an October full of devastating black swan surprises, and a landslide win for Putin’s Manchurian Candidate, Donald Trump. No really, this is what passes for adult American politics in the 21st century.

We are 90+ months in to our QE, ZIRP and NIRP virtual non-recovery, meaning this “recovery” is already long in the tooth and about to enter the next recession, but why worry about economic reality when our mass media has Russian phantoms to chase down.

Opinion: September is the worst month for U.S. stocks, and no one knows why

Published: Aug 30, 2016 8:34 a.m. ET

The Dow has fallen by an average of 1.1% since the late 1890s

CHAPEL HILL, N.C. (MarketWatch) — September is an awful month for the U.S. stock market, regardless of how you slice and dice the data.

Since the Dow Jones Industrial Average was created in the late 1890s, September has produced an average loss of 1.1%. The 11 other months of the calendar, in contrast, have produced an average gain of 0.8%.

Furthermore, September’s awful record can’t be traced to just one or two terrible years. On the contrary, the month has an impressively consistent record at or near the bottom of the rankings.

In fact, as you can see from the accompanying chart, September was a below-average performer in all but one of the dozen decades since the late 1800s. And in more than half of those decades, it was in 11th or 12th place in a ranking of monthly average performance.

----(These are the most popular hypotheses: 1. Investors are more prone to sell stocks when they return from summer vacation; 2. Many mutual funds have fiscal years that end Sept. 30, leading them to engage in “window-dressing” during the month; and 3. Investors are forced to sell equities in September to pay the sky-high tuition bills they’ve just received from their kids’ private schools and colleges.)
More
http://www.marketwatch.com/story/september-is-the-worst-month-for-us-stocks-and-no-one-knows-why-2016-08-30

In other news, Apple gets an unexpected nasty tax bill. Ireland gets a windfall it doesn’t want, but would allow it to repay its UK bailout loan. The EUSSR declares open season on mostly giant trans-Atlantic tax cheats. A drop in new oil field discoveries, suggest big trouble ahead next decade. Everyone is betting on a Yuan devaluation after the G-20 meeting and before the Yuan joins the IMF’s basket of currencies next year.

Next week’s G-20 Great Leader’s summit in China gets frostier by the day.

EU’s Vestager: We can win any Apple appeal

Published: Aug 30, 2016 2:09 p.m. ET

EU attracts sharp criticism from White House, Treasury after Apple ruling

Apple and Ireland were Tuesday quick to announce plans to appeal the European Commission’s $14.5 billion tax ruling against the tech giant, but they shouldn’t forget who they are up against.

Margrethe Vestager, the EU’s hard-hitting competition commissioner, also known as “the Iron Lady of Denmark” for taking on corporate giants in antitrust cases, is determined in upholding the state-aid decision on Apple AAPL, -0.77% remaining confident the case can stand up to any appeal.

“We have of course structured the case in a way that it’ll be upheld if it goes to court. That’s why it sometimes takes a long time to finish these investigations,” she said in an interview with MarketWatch.

 “This probe has been three years under way to make sure we really have a solid case, which I firmly believe we do,” she added.

The EU commission ruled on Tuesday that Apple’s tax arrangement with Ireland constituted illegal state-aid, ordering the Irish government to recover as much as €13 billion in taxes from the iPhone maker. The decision prompted criticism from many corners, with critics arguing the ruling will make Europe less attractive for foreign investment and that Apple hadn’t done anything wrong.

----Similarly, Irish finance minister Michael Noonan said he “profoundly” disagrees with the commission, stressing it’s “important that we send a strong message that Ireland remains an attractive and stable location of choice for long-term substantive investment.”

Even the U.S. Treasury and White House got involved. A spokesperson said the Treasury was “disappointed” with the EU’s decision and that it could threaten “the important spirit of economic partnership between the U.S. and the EU.”

But Vestager was unfazed.

“If that’s how the Treasury feels, then that’s their experience and we can’t take that away from them. All I can say is that we didn’t open this case to upset you,” she said. “ We did it to make sure we have fair competition on Europe.”

The EU’s antitrust investigation concluded that almost all Apple profits recorded by the company’s Irish incorporated entities were internally transferred to a so-called head office that existed only on paper. That arrangement allowed Apple to effectively only pay 1% in taxes on its European profits in 2003 and as little as 0.005% in 2014, way below Ireland’s corporate tax rate of 12.5%.

“Ireland already has a very attractive corporate tax regime compared to other European countries, so it’s hard for me to understand that it’s fair to allow individual companies to receive state aid in the form of lower taxes,” Vestager said.

Apple’s Irish tax deal also meant the company avoided taxation on almost all profits from sales of its products in the EU single market, as the sales were recorded in Ireland rather than in the country where the transaction took place. That structure doesn’t fall under the state-aid oversight, but Vestager hopes this case will prompt EU member states to revisit their own tax rules and review how they treated Apple.

If a country finds Apple should have paid taxes where their products were sold, they can now recover it under Tuesday’s ruling. This would be subtracted from the up to €13 billion to be recovered from Ireland.

But Vestager isn’t done in her sweeping inquiry into sweetheart tax deals in the EU. In Tuesday’s press conference she reminded that the commission is still investigating Amazon.com Inc. AMZN, -0.48% and McDonald’s Corp. MCD, +0.73% for their tax agreements with Luxembourg.
More
http://www.marketwatch.com/story/eus-vestager-we-can-win-any-apple-appeal-2016-08-30

Oil Discoveries at 70-Year Low Signal Supply Shortfall Ahead

August 30, 2016 — 12:00 AM BST Updated on August 30, 2016 — 2:17 PM BST
Explorers in 2015 discovered only about a tenth as much oil as they have annually on average since 1960. This year, they’ll probably find even less, spurring new fears about their ability to meet future demand.

With oil prices down by more than half since the price collapse two years ago, drillers have cut their exploration budgets to the bone. The result: Just 2.7 billion barrels of new supply was discovered in 2015, the smallest amount since 1947, according to figures from Edinburgh-based consulting firm Wood Mackenzie Ltd. This year, drillers found just 736 million barrels of conventional crude as of the end of last month.

That’s a concern for the industry at a time when the U.S. Energy Information Administration estimates that global oil demand will grow from 94.8 million barrels a day this year to 105.3 million barrels in 2026. While the U.S. shale boom could potentially make up the difference, prices locked in below $50 a barrel have undercut any substantial growth there.

New discoveries from conventional drilling, meanwhile, are “at rock bottom,” said Nils-Henrik Bjurstroem, a senior project manager at Oslo-based consultants Rystad Energy AS. “There will definitely be a strong impact on oil and gas supply, and especially oil.”

Global inventories have been buoyed by full-throttle output from Russia and OPEC, which have flooded the world with oil despite depressed prices as they defend market share. But years of under-investment will be felt as soon as 2025, Bjurstroem said. Producers will replace little more than one in 20 of the barrels consumed this year, he said.
More http://www.bloomberg.com/news/articles/2016-08-29/oil-discoveries-at-a-70-year-low-signal-a-supply-shortfall-ahead

Yuan Bears Emerge From Hibernation as Fed Imperils G-20 Calm

August 29, 2016 — 5:00 PM BST Updated on August 30, 2016 — 10:23 AM BST
The yuan’s recent stability may be coming to an end.
Derivative markets are pointing to renewed bets on yuan depreciation, with a three-month measure of expected price swings poised for the biggest monthly increase since January. Other indicators, such as the premium on options to sell the yuan over those to buy and the discount of forward contracts over the spot rate, have also climbed, indicating rising expectations for declines.
The increased pessimism comes after a period of calm that sent the measures to the lowest in at least nine months as the Federal Reserve held off on raising interest rates and investors bet that China would steady the yuan before it hosts a Group of 20 meeting in September. Traders are probing the People’s Bank of China’s willingness to allow the yuan to fall between the G-20 gathering and the currency’s entry into the International Monetary Fund’s Special Drawing Rights on Oct. 1, especially with the chances of Fed action increasing.
"After G-20 ends next Monday, the market may want to test how much yuan depreciation the PBOC can tolerate," said Gao Qi, a strategist at Scotiabank in Singapore. "China doesn’t want the yuan to move too much during G-20 and become a topic of discussion. SDR’s impact will be smaller than G-20."
Some weakness in the yuan wouldn’t be negative for China, which is trying to invigorate an economy growing at the slowest pace in more than 20 years. Data on exports, industrial production and retail sales all fell short of economists’ estimates in July. The median forecast in a Bloomberg survey is for the yuan to decline 1.1 percent the rest of this year.
The dollar rallied the most since June on Friday after Fed Chair Janet Yellen said the case for raising U.S. borrowing costs is getting stronger and Fed Vice Chairman Stanley Fischer indicated an increase in September is possible. Fed funds futures are now pricing in a 36 percent chance of tightening next month, and 61 percent for an increase by year-end.
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Ideas are more powerful than guns. We would not let our enemies have guns, why should we let them have ideas.

President Putin, attributed by Hillary Clinton, with apologies to Uncle Jo Stalin.

At the Comex silver depositories Tuesday final figures were: Registered 26.07 Moz, Eligible 136.12 Moz, Total 162.19 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today poor Massachusetts. In winter it’s cold, and dark, and snowy. Now they are thinking of changing time zones, although that might be a little hard to live with if Maine and New Hampshire don’t switch at the same time. An alternative Canadian solution is just to all go down to Florida for the winter, but kind of “how ya going to keep ’em down on the farm,” some of them might not ever come back, after they’ve seen Florida’s “Paree.”
“You look out the window and it shoots your day,” says Sahil Bhaiwala, 21, a Boston University mathematics and economy major headed into his senior year. “All you feel like doing is going home, making dinner and going to bed.”

Massachusetts Could Swap Time Zones for Later Winter Sunsets

August 29, 2016 — 10:00 AM BST
Of all the major cities on America’s eastern seaboard, none is as far north or east as Boston. Which creates a slight problem in winter: The sun sets really early. As in, for most of December, well before happy hour.
The state, it appears, might do something about that. Governor Charles Baker recently signed a bill ordering a study of the wisdom of moving its 10,555 square miles into a time zone that would brighten the end of the day in the months the Northern Hemisphere tilts away from the sun. The idea came from Quincy resident Tom Emswiler, who worries Massachusetts is losing college grads to sunnier climes. On Dec. 9 last year, the sun went down in Boston at 4:11 p.m., only 22 minutes later than in the Yukon.
There is indeed dissatisfaction among young people with a city that can go dark about three hours after lunch. “You look out the window and it shoots your day,” says Sahil Bhaiwala, 21, a Boston University mathematics and economy major headed into his senior year. “All you feel like doing is going home, making dinner and going to bed.”
To keep the likes of Bhaiwala from running off to Silicon Valley, Emswiler says, Massachusetts should throw in with those who live in the Atlantic Time Zone, which covers eastern Canada, the Caribbean and parts of South America, and do away with changing the clocks in spring and summer. From November through March, the sun would set an hour later than it does now, and those brutish winter days would lose some of their sting.
The sun would rise an hour later too, but the thinking is that darkness in the morning is less depressing than darkness at the end of the day.

Emswiler, a 36-year-old health-care administrator, first suggested the time-zone switch two years ago in a Boston Globe op-ed, to which he says reader feedback was voluminous and enthusiastic. His piece outlined the physiological costs of going on and off daylight saving time -- medical research has pointed to more heart attacks in the three days following clocks being moved forward in spring -- and argued sticking to one time would be economically and psychologically beneficial.

In making his case, he also cited a 2013 Boston Federal Reserve study that showed New England had the lowest retention rate of college graduates than all other parts of the country, with only about 63 percent of the class of 2008 still in Massachusetts a year after earning diplomas.

----Of course, as Emswiler acknowledges, people may quit Massachusetts for any number of reasons, everything from the high cost of living in Boston to the other difficulty with winter, which involves often large amounts of snow and wind-chill factors.
The legislative commission that will probe the matter was established as part of an economic development measure, and must report its findings by next July. Time changes have been under discussion in other states, though none have recently taken the step. California’s legislature actually studied for a while a bill that would have effectively accomplished the opposite of what Massachusetts is considering: The proposal to quit daylight saving time would have brought darkness earlier in the evening during much of the year. California, it should be noted, has less of a sunshine shortage issue to worry about than Massachusetts.
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Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

The Price of Solar Is Declining to Unprecedented Lows

Despite already low costs, the installed price of solar fell by 5 to 12 percent in 2015
By Robert Fares on August 27, 2016
The installed price of solar energy has declined significantly in recent years as policy and market forces have driven more and more solar installations.

Now, the latest data show that the continued decrease in solar prices is unlikely to slow down anytime soon, with total installed prices dropping by 5 percent for rooftop residential systems, and 12 percent for larger utility-scale solar farms. With solar already achieving record-low prices, the cost decline observed in 2015 indicates that the coming years will likely see utility-scale solar become cost competitive with conventional forms of electricity generation.

A full analysis of the ongoing decline in solar prices can be found in two separate Lawrence Berkeley National Laboratory Reports: Tracking the Sun IX focuses on installed pricing trends in the distributed rooftop solar market while Utility-Scale Solar 2015 focuses on large-scale solar farms that sell bulk power to the grid.

Put together, the reports show that all categories of solar have seen significantly declining costs since 2010. Furthermore, larger solar installations consistently beat out their smaller counterparts when it comes to the installed cost per rated Watt of solar generating capacity (or $/WDC).

The installed cost includes everything needed to get a solar power system up and running: the panels, the power electronics, the mounting hardware, and the installation itself. The continued decline in total installed cost is noteworthy considering the fact that the price of the solar panels (or modules) themselves has remained relatively flat since 2012. This means that the decline in installed cost observed since 2012 was largely caused by a decline in the cost of the inverters that convert the DC power produced by solar panels to AC power for the grid and other “soft” costs such as customer acquisition, system design, installation, and permitting.

---- Perhaps the most interesting piece of data to come out in the latest Lawrence Berkeley National Lab reports is the trend in the price of solar power purchase agreements or PPAs. These prices reflect the price paid for long-term contracts for the bulk purchase of solar electricity. The latest data show that the 2015 solar PPA price fell below $50 per megawatt-hour (or 5 cents per kilowatt-hour) in 4 of the 5 regions analyzed. In the power industry, the rule of thumb for the average market price of electricity is about $30 to $40 per megawatt-hour—so solar is poised to match the price of conventional power generation if prices continue to decline.
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Everyone imposes his own system as far as his army can reach.

President Putin, attributed by Hillary Clinton, with apologies to Uncle Jo Stalin.

The monthly Coppock Indicators finished July

DJIA: 18432  +03 Up NASDAQ:  5162 +10 Up. SP500: 2173 +01 Up.

Tuesday, 30 August 2016

China’s Impending Bust.



Baltic Dry Index. 720 Friday        Brent Crude 49.38

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

“Orthodoxy means not thinking–not needing to think. Orthodoxy is unconsciousness.”

George Orwell. 1984.

Has China’s Great Wobble already turned into the start of a bust? Recent developments in the copper markets suggest that if it hasn’t happened already, a great restructuring of China’s electric vehicle manufacturing sector, put it on the cards for 2017.

Below, things go from bad to worse in the world’s second largest economy, though still the world’s leading Ponzi economy. Officially China’s GDP will grow by 6.7 percent in 2016. Your guess is as good as mine at what the reality is, but  the growing turmoil in the global copper market from China dumping copper suggests its economy is growing at nothing like 6.7 percent.

Adding to the Asian gloom this morning, Hanjin Shipping Co., South Korea’s largest container shipping line is rumoured to be about to file for court protection.  Not that any of this will disturb our central bank levitated stock markets. That is, until one day, for no apparent reason, it does.

Opinion: Global growth depends upon successful Chinese makeover

Published: Aug 29, 2016 10:19 p.m. ET

Hard landing in China would push world economy into recession, Stephen Roach says

NEW HAVEN, Conn. (Project Syndicate) — Despite all the hand-wringing over the vaunted China slowdown, the Chinese economy remains the single largest contributor to world economic growth. For a global economy limping along at stall speed — and most likely unable to withstand a significant shock without toppling into renewed recession — that contribution is all the more important.

A few numbers bear this out. If Chinese gross domestic product growth reaches 6.7% in 2016 — in line with the government’s official target and only slightly above the International Monetary Fund’s latest prediction (6.6%) — China would account for 1.2 percentage points of world GDP growth. With the IMF currently expecting only 3.1% global growth this year, China would contribute nearly 39% of the total.

That share dwarfs the contribution of other major economies. For example, while the United States is widely praised for a solid recovery, its GDP is expected to grow by just 2.2% in 2016 — enough to contribute just 0.3 percentage points to overall world GDP growth, or only about one-fourth of the contribution made by China.

A sclerotic European economy is expected to add a mere 0.2 percentage points to world growth, and Japan not even 0.1 percentage point. China’s contribution to global growth is, in fact, 50% larger than the combined 0.8-percentage-point contribution likely to be made by all of the so-called advanced economies.

Moreover, no developing economy comes close to China’s contribution to global growth. India’s GDP is expected to grow by 7.4% this year, or 0.8 percentage points faster than China. But the Chinese economy accounts for fully 18% of world output (measured on a purchasing-power-parity basis) — more than double India’s 7.6% share. That means India’s contribution to global GDP growth is likely to be just 0.6 percentage points this year — only half the 1.2-percentage-point boost expected from China.

More broadly, China is expected to account for fully 73% of total growth of the so-called BRICS grouping of large developing economies.
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Chile's Codelco in 'fragile' situation as it makes loss

World no. 1 copper miner Codelco produced more copper in the first half of 2016 than a year ago, but made a financial loss, and the chief executive said on Friday that the company position was "extremely fragile."

The Chilean state-owned firm produced 843,000  tonnes of copper in the first half, up 1.4 percent, and made a pretax loss of $97 million, it reported Friday. Even though direct cash costs fell 9 percent to $1.275 per pound of copper compared to a year ago, the copperprice is down over 20 percent, continuing a slide sparked by cooling demand in top buyer China.

That has complicated the scenario enormously for Codelco, which gives all its profits back to the state and relies on capitalization and some debt issuance to fund its operations.

"We are playing on the edge," Chief Executive Nelson Pizarro said at a press conference following the release of results. Earlier this week he raised eyebrows in Chile after he said at a mining forum that "there is no money, not one damn peso."

In order to maintain output at its tapped-out mines, Codelco has been betting on multi-billion dollar expansion projects, but the economic scenario has forced it to scale back some of those plans.

Two of those projects - to take century-old Chuquicamata underground and build a new crushing plant at Andina - were progressing according to plan, said Pizarro on Friday.
But another plan, to expand Radomiro Tomic, was being redesigned, as it was not as profitable as the other projects, he added.
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LME ARRIVALS VS CHINESE EXPORTS

It's not unusual for LME copper stocks to trend higher during the dog-days of northern hemisphere summer as manufacturing activity drops a gear.

And, conforming with that pattern, warranting of metal has taken place at a wide variety of LME good delivery points, including Hull in Britain, Bilbao in Spain and several U.S. locations.

But the real stand-out has been the accelerated flows at Singapore, which has received almost 95,000 tonnes since the start of June, and South Korea, which has taken in 103,000 tonnes.

Both countries have also featured prominently in China's export profile over the same period of time.

Customs data shows exports of 89,000 tonnes to Singapore and 76,000 tonnes to South Korea since March, when China's exports first started accelerating. Between them Singapore and South Korea have accounted for almost 60 percent of all outbound flows.

The correspondence between Chinese exports and LME arrivals isn't perfect (see the chart above) but the broad picture is one of metal leaving China and turning up in the most easily shippable LME locations.

The question is whether this metal is being pushed or pulled.

----So if China is pushing out surplus copper, or at least exerting a lesser magnetic pull than that offered by LME warehousers, what does it say about the health or otherwise of Chinese demand?

Not as much as you might think. China's apparent consumption, a back-of-the-envelope calculation factoring in production, imports and visible stocks movements, jumped by 11 percent in the first half of this year.

Not even the most exuberant bull would argue that real consumption growth was anywhere near that level. The spectrum of estimates is a wide one but the middle ground would be around three percent. The implication is that there has been significant stocks build, possibly on the mainland, possibly in bonded warehouses and most probably a combination of the two.

China, in other words, is full of copper. And getting fuller, because the other dimension to this mass stocks relocation is China's own production of refined metal, up almost 10 percent in July and up by around eight percent over the year to date.
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Red Ponzi Ticking—-China And The Dark Side Of The Global Bubble, Part 3

by David Stockman • August 26, 2016
----A Potemkin Economy Buried In Cement
No wonder the Red Ponzi consumed more cement during three years (2011-2013) than did the US during the entire twentieth century. Enabled by an endless flow of credit from its state controlled banking apparatus and its shadow banking affiliates, China went berserk building factories, warehouses, ports, office towers, malls, apartments, roads, airports, train stations, high speed railways, stadiums, monumental public buildings and much more.
If you want an analogy, the 6.6 gigatons of cement consumed by China during 2011-2013 was the equivalent of 14.5 trillion pounds. By comparison, the Hoover dam used about 1.8 billion pounds of cement.
So in 3 years China consumed enough cement to build the Hoover dam 8,000 times over—-160 of them for every state in the union!
Having spent recent time in China,  we can well and truly say that the Middle Kingdom is back. But its leitmotif is the very opposite to the splendor of the Forbidden City.
The Middle Kingdom has been reborn in towers of preformed concrete. They rise in their tens of thousands in every direction on the horizon. They are connected with ribbons of highways which are scalloped and molded to wind through the endless forest of concrete verticals. Some of them are occupied. A lot, not.
----Today’s Pudong district does look spectacular—–presumably a 21st century rendition of the glory of the Qing, the Ming, the Soong, the Tang and the Han—all rolled into one.
But to conclude that would be to be deceived. The apparent prosperity is not that of a sustainable economic miracle; it’s the front street of the greatest Potemkin village in world history.
The heart of the matter is that output measured by Keynesian GDP accounting—-especially China’s blatantly massaged variety— isn’t sustainable wealth if it is not rooted in real savings, efficient capital allocation and future productivity growth. Nor does construction and investment which does not earn back its cost of capital over time contribute to the accumulation of real wealth.
Needless to say, China’s construction and “investment” binge manifestly does not meet these criteria in the slightest. It was funded with credit manufactured by state controlled banks and their shadow affiliates, not real savings.
It was driven by state initiated growth plans and GDP targets. These were cascaded from the top down to the province, county and local government levels—–an economic process which is the opposite of entrepreneurial at-risk assessments of future market based demand and profits.
China’s own GDP statistics are the smoking gun. During the last 15 years fixed asset investment—–in private business, state companies, households and the “public sector” combined—–has averaged 50% of GDP. That’s per se crazy.
Even in the heyday of its 1960s and 1970s boom, Japan’s fixed asset investment never reached more than 30% of GDP. Moreover, even that was not sustained year in and year out (they had three recessions), and Japan had at least a semblance of market pricing and capital allocation—unlike China’s virtual command and control economy.
A Credit Driven Madhouse
The reason that Wall Street analysts and fellow-traveling Keynesian economists miss the latter point entirely is because China’s state-driven economy works through credit allocation rather than by tonnage toting commissars.
The gosplan is implemented by the banking system and, increasingly, through China’s mushrooming and metastasizing shadow banking sector. The latter amounts to trillions of credit potted in entities which have sprung up to evade the belated growth controls that the regulators have imposed on the formal banking system.
For example, Beijing tried to cool down the residential real estate boom by requiring 30% down payments on first mortgages and by virtually eliminating mortgage finance on second homes and investment properties. So between 2013 and the present more than 2,500 on-line peer-to-peer lending outfits (P2P) materialized—-mostly funded or sponsored by the banking system—– and these entities have advanced more than $2 trillion of new credit.
That’s right. A new $2 trillion credit channel erected virtually overnight.
The overwhelming share went into meeting “downpayments” and other real estate speculations. On the one hand, that reignited the real estate bubble——especially in the Tier I cities were prices have risen by 20% to 60% during the last year.
At the same time, this P2P credit eruption in the shadow banking system has encouraged the construction of even more excess housing stock in an economy that already has upwards of 65 million empty units.
In short, China has become a credit-driven economic madhouse. The 50% of GDP attributable to fixed asset investment actually constitutes the most spectacular spree of malinvestment and waste in recorded history. It is the footprint of a future depression, not evidence of sustainable growth and prosperity.
More.

95% of China's Electric Vehicle Startups Face Wipeout

Bloomberg News August 28, 2016 — 11:00 PM BST
China’s electric-vehicle industry, with 200-plus companies backed by a raft of billionaires, verges on a massive shakeout as the government imposes stricter technology standards on fledgling manufacturers and considers limiting their number to only 10.

Any curbs would be aimed at weeding out the weak, said a senior executive with the state-backed auto manufacturers’ association, and they may push as many as 90 percent of EV startups toward extinction, a government-linked newspaper said. So far, only two ventures have obtained approval to build cars, based on a review of National Development and Reform Commission documents. Three others say they plan to apply for permits.

Jack Ma, Terry Gou, Li Ka-shing and Jia Yueting are among the investors who’ve poured at least $2 billion into building alternative-energy vehicles as China tries to combat the smog choking its cities. Generous subsidies helped cultivate a gold-rush mentality, prompting concerns the industry is plagued by too many companies lacking the technical know-how to make electric or hybrid cars that measure up to those from Tesla Motors Inc. or General Motors Co.

“There are too many entrants in the sector, and some of them are just speculators,” said Yin Chengliang, a professor at Shanghai Jiao Tong University’s Institute of Automotive Engineering. “The government has to raise the threshold. It’s bad to see irrational investments in projects with low technology levels.”

The potential cap on EV startups comes as the world’s biggest auto industry grapples with overcapacity and high inventories. Carmakers are seeing pressure on their profit margins with the spread of cheap models, while stringent fuel-economy and emissions targets are set to raise costs.

China surpassed the U.S. last year to become the world’s biggest market for new-energy vehicles -- comprising electric vehicles, plug-in hybrids and fuel-cell cars. Domestic automakers sold 331,092 units in 2015, according to the China Association of Automobile Manufacturers.

The government’s sales target is 3 million units a year by 2025 -- a 10-fold increase -- and it’s offering subsidies that can total 60 percent of an electric-car’s sticker price. There currently are about 4,000 new-energy vehicle, or NEV, models in development.

“It’s true we’re emphasizing support to develop new-energy vehicles, but should we allow everyone to go ahead?” said Dong Yang, executive vice chairman of the manufacturers’ association.

The Ministry of Industry and Information Technology is considering restricting the number of startup EV makers to a maximum of 10, said Dong, who meets regularly with its officials. That count won’t include traditional carmakers such as SAIC Motor Corp. and BYD Co. that are developing NEVs.

The MIIT didn’t respond to a faxed request for comment.
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“You are a slow learner, reader."
"How can I help it? How can I help but see what is in front of my eyes? Two and two are four."
"Sometimes, reader. Sometimes they are five. Sometimes they are three. Sometimes they are all of them at once. You must try harder.

Ebenezer Squid, With apologies to George Orwell 1984.
At the Comex silver depositories Monday final figures were: Registered 26.07 Moz, Eligible 135.28 Moz, Total 161.35 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, why the EUSSR was always destined to fail. With Germany’s export bubble to China now meeting its pin, continental Europe’s paymaster is about to get very tight with its cash.

The secret history of the EU, written on an Italian prison island, reveals why the project is doomed 

Christopher Booker27 August 2016 • 3:00pm
As we know, the great dream that has been shaping the political integration of Europe for 60 years is today facing what is called an “existential crisis” – one so profound as to call into question its continued existence.

The seemingly insoluble problems the European Union has brought upon itself crowd in from all directions: the slow-motion catastrophe of the euro, the unending flood of refugees; the deadly plague of terrorism; the approaching energy crunch. And now, amid that growing resentment right across Europe of all the EU stands for, it is also faced with the vote of one of its largest members to leave it altogether.

As a measure of just how desperately the EU has lost its way, it is worth taking a closer look at the symbolism of the venue chosen for last week’s meeting of the leaders of Germany, France and Italy, to discuss what they can do next about it all.
We were coyly told that the little island of Ventotene off Naples was where, in 1941, a prisoner of Mussolini’s had written the visionary manifesto that looked forward to building, after the war, a “United States of Europe”. What somehow got omitted was that Altiero Spinelli was a Communist (the Today programme merely described him on air as a “Fascist prisoner”, although, lest this be misunderstood, that was edited out of their online report).
We were not told that Spinelli’s Ventotene Manifesto proposed that his future government of Europe should be quietly assembled by its supporters over many years; and that only when all its pieces were in place would those supporters summon a convention to draw up a “Constitution for Europe”, which would finally reveal to the European people just what they had been up to.
What we were also not told – and this is seemingly one of the best-kept secrets of the whole story – is that many years later, when Spinelli was elected as a Communist MEP in 1979, he became the second most influential person, after Jean Monnet, in shaping “Europe” as we know it today.

At a time when the integration process had stalled, it was he – as I and my co-author, Richard North, were first able to explain in our book The Great Deception – who persuaded the European Parliament to vote for a “Draft Treaty on European Union”.

And it was this, taken up by Jacques Delors, which led directly to the next two major treaties, the Single European Act and Maastricht, transforming the European Community into the European Union, complete with its own currency, foreign policy and much else besides.

It was an astonishing achievement, which is why one of the largest office blocks in Brussels, the headquarters of the European Parliament, is called the Altiero Spinelli Building. But if you stop any of the hundreds who work there, you will scarcely find one who could tell you why it bears his name.
The point is that, exactly as envisioned in their different ways by Spinelli and Monnet, the “project” has only ever had one real agenda in all it has done: to promote a supranational government for Europe, based on eliminating national self-interest: what Monnet called “national egoism”. There could only ever be one direction of travel: ever more integration; whatever the question, the answer is always “more Europe”.
In the end, their great dream simply over-reached itself, as we see in every one of those crises piling in on it today. And how telling it was that, when Angela Merkel, Fran├žois Hollande and Matteo Renzi met off Ventotene, all they could come up with, their wish to “relaunch the European ideals of unity and peace, freedom and dreams”, was just those same familiar old dead mantras.
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"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."

Hans F. Sennholz

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

Graphene under pressure

Date: August 25, 2016

Source: University of Manchester

Summary: Small balloons made from one-atom-thick material graphene can withstand enormous pressures, much higher than those at the bottom of the deepest ocean, scientists at the University of Manchester report.
This is due to graphene's incredible strength -- 200 times stronger than steel.
The graphene balloons routinely form when placing graphene on flat substrates and are usually considered a nuisance and therefore ignored. The Manchester researchers, led by Professor Irina Grigorieva, took a closer look at the nano-bubbles and revealed their fascinating properties.
These bubbles could be created intentionally to make tiny pressure machines capable of withstanding enormous pressures. This could be a significant step towards rapidly detecting how molecules react under extreme pressure.
Writing in Nature Communications, the scientists found that the shape and dimensions of the nano-bubbles provide straightforward information about both graphene's elastic strength and its interaction with the underlying substrate.
The researchers found such balloons can also be created with other two-dimensional crystals such as single layers of molybdenum disulfide (MoS2) or boron nitride.
They were able to directly measure the pressure exerted by graphene on a material trapped inside the balloons, or vice versa.
To do this, the team indented bubbles made by graphene, monolayer MoS2 and monolayer boron nitride using a tip of an atomic force microscope and measured the force that was necessary to make a dent of a certain size.
These measurements revealed that graphene enclosing bubbles of a micron size creates pressures as high as 200 megapascals, or 2,000 atmospheres. Even higher pressures are expected for smaller bubbles.
Ekaterina Khestanova, a PhD student who carried out the experiments, said: "Such pressures are enough to modify the properties of a material trapped inside the bubbles and, for example, can force crystallization of a liquid well above its normal freezing temperature'.
Sir Andre Geim, a co-author of the paper, added: "Those balloons are ubiquitous. One can now start thinking about creating them intentionally to change enclosed materials or study the properties of atomically thin membranes under high strain and pressure."

"If you don't trust gold, do you trust the logic of taking a beautiful pine tree, worth about $4,000 - $5,000, cutting it up, turning it into pulp and then paper, putting some ink on it and then calling it one billion dollars?"

Kenneth J. Gerbino

The monthly Coppock Indicators finished July

DJIA: 18432  +03 Up NASDAQ:  5162 +10 Up. SP500: 2173 +01 Up.