Tuesday 6 September 2016

G-20 The Aftermath.



Baltic Dry Index. 724  +04     Brent Crude 47.79

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

Life is full of misery, loneliness, and suffering - and it's all over much too soon.

President Obama, with apologies to Woody Allen


They came, they met, they bickered and dithered, then left. At the end of the two day meeting, essentially nothing but a photo op was accomplished. President Xi issued platitudes and was embarrassed by the democracy in Hong Kong and the malinvestment state of the Chinese economy, typified by the massive over capacity in steel. Lame duck President Obama was snubbed at the airport and largely irrelevant as everyone awaits his successor. Everyone else from Prime Ministers Turnbull, May, and Trudeau played to the home audience. President Putin flirted with Japan and played hardball with America over Syria. With new best ally Turkey having entered the game, Russia could sit back and watch NATO member Turkey pit the US backed Free Syrian Army against the US backed Kurdish forces.

Though no one expects much from G-20 summits, this one exceeded all expectations.

G20 a success for China, but hard issues kicked down the road

Tue Sep 6, 2016 12:41am EDT
China is lauding its successful hosting of the G20 summit in scenic Hangzhou, with open confrontation largely avoided and broad consensus reached over the fragile state of the global economy and the need for a wide range of policies to fix it.

There was even a joint announcement by China and United States that they would ratify the Paris climate change agreement, a significant step for the world's two biggest emitters of greenhouse gases.

But scratch beneath the surface, and the gathering of the world's most powerful leaders was not all plain sailing - from the distraction of a North Korean missile test to the failure of the United States and Russia to reach agreement over Syria, and diplomatic faux pas to double speak over protectionism.

Chinese state media, while largely basking in the glory of a summit that happened without being too overshadowed by disputes such as the South China Sea, also let slip Beijing's frustrations at what it sees as Western efforts to stymie its economic ambitions.

"For the world's major developed economies, they should curb rising protectionism and dismantle anti-trade measures as economic isolationism is not a solution to sluggish growth," China's official Xinhua news agency said late on Monday.

"In order to build an inclusive, rule-based and open world economy, protectionism must be prevented from eroding the foundation for a faster and healthier economic recovery."

In the run-up to G20, China has been particularly upset by what it sees as unwarranted suspicion of its overseas investment agenda smacking of protectionism and paranoia.

A few weeks before the summit, Australia blocked the A$10 billion ($7.63 billion) sale of the country's biggest energy grid to Chinese bidders, while Britain delayed a $24 billion Chinese-invested nuclear project.

Behind the scenes, Western countries have been accusing China of not sticking to its own goals.

Before the summit, European G20-sources doubted that the Chinese agenda would mark a real new chapter to create more sustainable growth for the global economy.

---- "But actions speak louder than words and the ball is in China's court to implement its own needed domestic reforms and to provide greater market access for foreign goods, services and technology."

And calls to utilize innovation as an economic driver should reflect policies that encourage an environment promoting fair and market-driven innovation that is open to all participants, and not just a few domestic champions, Zimmerman said.

Several diplomats familiar with the summit said China had resisted the idea of putting steel on the final communique, though it did make an appearance in the end with G20 leaders pledging to work together to address excess steel capacity.
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Xi told Britain's May he is open to bilateral trade deal: UK official

Mon Sep 5, 2016 11:05am EDT
Chinese President Xi Jinping told British Prime Minister Theresa May he was open to a bilateral trade agreement between the two countries, a British official told reporters at the G20.

"Xi said that they wanted to look at how we could strengthen our trading and economic relationship and that China was open to a bilateral trade arrangement with the UK," the official, who spoke on condition of anonymity, said.

The official also said Xi had told May that China would remain patient while her government gets to grips with decisions taken by her predecessor.

Since taking office, May has delayed a decision on whether to back a nuclear project at Hinkley Point that is being partly financed by the Chinese.

"He recognized the new government would need to take some time before reaching decisions on some agreements pushed by the last government. President Xi said that they had the patience to wait for a resolution on those issues."
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China Is About to Get Serious With Bad Debt

September 4, 2016 — 8:00 PM BST Updated on September 5, 2016 — 4:19 AM BST
China’s banks, which dialed down fundraising efforts this year even as bad debts swelled, are making up for lost time.

Both lenders and the companies set up to acquire their delinquent assets are bolstering their finances. China Citic Bank Corp. last month announced plans to raise as much as 40 billion yuan ($6 billion), while Agricultural Bank of China Ltd., Industrial Bank Co. and China Zheshang Bank Co. are also boosting capital. China Cinda Asset Management Co. and China Huarong Asset Management Co. are poised to tap investors.

"Chinese banks are preemptively raising capital while pricing remains favorable in order to tackle higher loan impairments,” said Nicholas Yap, a credit analyst at Mitsubishi UFJ Securities HK Ltd. in Hong Kong. “Additionally, the mid- and small-sized lenders also need to boost their capital levels as they have been growing their asset bases rapidly, largely through their investment receivables portfolios."

Chinese banks have strained their finances with the busiest first-half lending spree on record, despite having the highest amount of bad debt in 11 years. Still, completed offerings of hybrid capital declined 38 percent after two consecutive years of record fundraising. A rule change in April that requires lenders to make full provisions for loan rights they have transferred is also encouraging the fundraising. BNP Paribas SA said Chinese lenders may be assessing the right time to approach investors.

----China Zheshang Bank said it would raise 15 billion yuan selling offshore preference shares, securities with equity-like characteristics that count as Additional Tier-1 capital. In July, Industrial Bank said it plans to raise as much as 26 billion yuan in a private stock placement to replenish its highest-ranked buffer. Agricultural Bank will sell as much as 80 billion yuan of securities over three years for supplementary Tier-2 capital, the lender said in August.

“Much of the fundraising is also to support their balance sheet growth,” said Liao Qiang, banking analyst at S&P Global Ratings in Beijing. “This is also the reason why asset management companies are engaging in fundraising right now. They need more capital to support more purchases of bad loans.”
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Radical democrats gain foothold in Hong Kong poll likely to rile China

Mon Sep 5, 2016 8:41am EDT
Several pro-independence candidates won seats in Hong Kong's legislative election which saw a record turnout in the Chinese-controlled city on Sunday, a result likely to further strain ties with Communist Party rulers in Beijing.
Hong Kong's pro-democracy opposition also kept its crucial one-third veto bloc in the 70-seat Legislative Council over major legislation and public funding that has helped check China's influence.
The vote, which ushered in a new crop of legislators including a 23-year-old former protest leader who vowed to "fight" the Chinese Communist Party, underscores growing frustration with how Beijing has handled its "special administrative region" and marks a significant turning point.
The former British colony was handed back to China in 1997 under a "one country, two systems" agreement that promised to maintain the global financial hub's freedoms and separate laws for at least 50 years, but gave ultimate control to Beijing.
Beijing officials have repeatedly warned Hong Kong not to stray too far.
In a brief statement carried by the official Xinhua news agency, China's Hong Kong and Macao Affairs Office said it was "resolutely opposed" to any kind of Hong Kong independence activities in the territory's legislature.
Hong Kong independence is contrary to China's constitution, harms national sovereignty and security and will harm Hong Kong's prosperity and stability, it added.
Despite the disqualification of six pro-democracy election candidates from the election in July on the grounds that they backed independence, at least five "localists" and younger democratic newcomers won seats, including Nathan Law, one of the leaders of mass democracy protests in 2014.
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The Mad Hatters China Tea Party over, about half those attending flew off to Vientiane, Laos, for a three day ASEAN summit. Not much is expected here either, though the summit got off to a particularly spectacularly bad start.  Thankfully most Americans were off celebrating Labor Day, and few following events have any idea where Laos is, nor why any US president should go there. What could they possibly have in Laos, that President Obama needs?

Obama cancels meeting with Philippines' Duterte after insult

Tue Sep 6, 2016 12:47am EDT
U.S. President Barack Obama canceled what would have been his first meeting with Filipino President Rodrigo Duterte, a White House spokesman said on Tuesday, after Duterte described Obama as a "son of a bitch".

Duterte, a plain-spoken populist known for his colorful remarks and his campaign against illegal drugs in which thousands of people have died, used the term in front of reporters on Monday, a day ahead of the planned meeting in Laos, where Southeast Asian leaders are meeting for annual summits.

Obama learned about the insult as he emerged from the Group of 20 summit in Hangzhou, China. At a news conference, he said he had told his aides to speak with Philippine officials "to find out is this, in fact, a time where we can have some constructive, productive conversations," signaling clearly that the meeting would not proceed as planned.

"I always want to make sure that if I'm having a meeting, that it's actually productive and we're getting something done,” Obama told reporters.

Instead, Obama now plans to meet South Korean President Park Geun-hye on Tuesday, said Ned Price, spokesman for the White House National Security Council - a meeting where the response to North Korea's latest missile tests is expected to be on the agenda.

Obama arrived in Vientiane just before midnight on Monday, for the first visit by a sitting U.S. president to Laos, where he wants to begin to address the legacy of U.S. bombing during the Vietnam War.

He was set to give an address on the importance he has placed on Southeast Asia in his foreign and economic policy during his two terms in office, which will end on Jan. 20, setting the stage for three days of meetings with regional leaders.

The White House had earlier said Obama did not plan to pull any punches on his concerns about human rights abuses in the Philippines, its treaty ally, when meeting Duterte.

Duterte won the presidency in May as he promised to suppress crime and wipe out drugs and drug dealers. At least 2,400 people have been killed since he took office on July 1, including 900 in police operations against drug pushers.

The rest are "deaths under investigation", a term human rights activists in the Philippines say is a euphemism for vigilante and extrajudicial killings.

Duterte said it would be "rude" for Obama to raise the human rights issue and told reporters such a conversation would prompt him to curse at Obama, using a Filipino phrase "putang ina" which can mean "son of a bitch" or "son of a whore".
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Seeking smoother summit, ASEAN to skirt mention of South China Sea ruling

Mon Sep 5, 2016 12:10pm EDT
Southeast Asian leaders are set to avoid references to a recent arbitration ruling that undermined China's claims to the South China Sea, after omitting it from a joint statement at a summit this week over which Beijing's influence looms large.

A draft communique of the Association of South East Asian Nations (ASEAN) seen by Reuters on Monday listed eight points related to the South China Sea, but made no mention of a high-profile July ruling by the Permanent Court of Arbitration, which invalidated Beijing's territorial claims.

The decision to exclude reference to the ruling represents a diplomatic victory for China, following ASEAN's decision at its last meeting in July to turn down a U.S.-backed proposal to include the landmark ruling in the text.

China refuses to recognize the case brought by the Philippines in 2013. Its outrage over the verdict has created regional concerns that Beijing might take a tougher line in future disputes.

Soon after the ruling in The Hague, the Philippines lobbied strongly at an ASEAN foreign ministers' meeting for the verdict to be included in the text of the communique, only for Cambodia, a China ally, to oppose it.
Beijing publicly thanked Phnom Penh for its support.

China has been accused of pressuring some countries in the consensus-led, 10-nation bloc to stymie what it sees as unfavorable proposals.

ASEAN does not include China, but leaders and senior representatives from China, the United States and other regional powers are attending the Laos summit.

Experts say that China's approach makes it harder for Southeast Asian states to form a unified front to counter Beijing's assertiveness over the strategic waterway.
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In EU news, the migrant crisis manages to go from worse to worser.

Number of migrants claiming benefits in Germany surges by 169 percent

Mon Sep 5, 2016 6:19am EDT
The number of migrants claiming German welfare benefits soared by 169 percent last year, data showed on Monday, a figure likely to further boost anti-immigrant groups such as the Alternative for Germany (AfD), which performed well in a weekend election.

Around 975,000 migrants were receiving benefits in accordance with the Act on Benefits for Asylum Seekers at the end of 2015, the Federal Statistics Office said. That marked the sixth consecutive yearly rise and compared with 363,000 in 2014.

The leap followed Chancellor Angela Merkel's decision a year ago to open Germany's door to refugees fleeing war in Syria and elsewhere. Germany took in more than one million people, though the inflow has fallen sharply in recent months due to tighter European border controls and a repatriation deal with Turkey.

Monday's data include migrants with temporary residence permits and those who cannot be deported for the time being. They do not include those with refugee status or those entitled to asylum, who receive social benefits if they need help.
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French truckers demanding migrant camp closure block Calais traffic

Mon Sep 5, 2016 3:54pm EDT
Truck drivers and farmers blocked traffic on the motorway approach to France's northern port of Calais for part of Monday, demanding the closure of a migrants camp they blame for mounting insecurity and an ailing local economy.

The protest had looked set to resume on Tuesday after senior officials of the FNTR national truck drivers' federation - the organization spearheading the action - said it should continue until the government committed to a date for the camp's dismantling.

But that appeared uncertain late on Monday after the federation's president called for the go-slow to end.
Dubbed the "jungle", the squalid camp is a half-way house for thousands of migrants fleeing war and poverty who dream of crossing the English Channel to Britain. It currently houses between 7,000 and 9,000.

Repeated efforts by its residents to force their way through the Channel Tunnel or stow away aboard trucks passing through the port have disrupted traffic across the busy link between France and Britain, while locals say the violent shanty town is strangling the economy.

"More and more of us want to sell our licenses. But it's dead here, no one comes into Calais anymore," said one 46-year-old taxi driver who gave his name as Raymond.

Under steady drizzle on Monday, some protesters wore high visibility jackets while others showed up in T-shirts with the inscription "J'aime Calais".

Frederic Van Gansbeke, head of an umbrella group of local businesses, said the government had ignored pleas by local people in a town that has become a flashpoint in Europe's migrant crisis.
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Italy says 15 boat migrants died, 2,700 saved

Mon Sep 5, 2016 2:08pm EDT
Fifteen bodies were recovered and more than 2,700 boat migrants rescued off the coast of Libya on Monday, the Italian coastguard said, in another day of mass departures from north Africa.

Italy's navy and coastguard, ships patrolling on a European Union anti-smuggling mission, vessels run by humanitarian groups, and a commercial tug boat aided in the rescues.

Earlier in the day, the Italian Navy said six bodies had been found after migrants fell out of a leaking rubber boat. The coastguard gave no further details.

The migrants were saved from 19 dangerously overcrowded rubber boats and four small boats, the coastguard said. People smugglers operate freely in Libya, cashing in on migrants desperate to reach Europe.

Last week calmer seas and Libya's lawlessness opened the way for smugglers to ship 13,000 migrants across the Mediterranean Sea in just four days.

Europe's worst migrant crisis since World War Two is now focused on Italy, at Europe's southern frontier, where some 93,000 people had arrived by the end of August, according to Italy's Interior Ministry.
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It seemed the world was divided into good and bad people. The good ones slept better while the bad ones seemed to enjoy the waking hours much more.

Woody Allen

At the Comex silver depositories Friday final figures were: Registered 26.07 Moz, Eligible 136.12 Moz, Total 162.19 Moz.  US markets were closed on Monday.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, pot calls kettle black. Do as I say, not as I do. Presented without need for further comment.  China blames Uncle Sam for the POTUS fracas at the airport.
Life is divided into the horrible and the miserable.

Woody Allen

US howls over Apple's tax ruling sit ill with its own actions

Ben Marlow4 September 2016 • 8:56pm
There was something almost entertaining about the torrent of outrage from Washington last week which greeted the EU’s controversial ruling that Apple must pay €13bn in back taxes.
The announcement that the tech giant was being hit with a record penalty for paying substantially less than other businesses in Ireland prompted widespread criticism in the US, including a predictable barrage of rhetoric from some of its feistier politicians.
The US Treasury said that such tax investigations were “unfair” and undermined the tax rules of individual states, while Apple’s boss, Tim Cook, called it “total political crap”. Charles Schumer, a senior Democrat senator, said Brussels had made “a cheap money grab” for US revenues.
Americans were right to be outraged. The EU’s decision to retrospectively tear up its own rules and meddle in the affairs of a sovereign nation was a travesty.
But there was something seriously disingenuous about seeing the US get on its high horse over the way its companies are being treated overseas.
There is no doubt that global regulators have been waging a fierce war on tax avoidance over the past few years, slowly closing the big loopholes that enable corporations and individuals to lower their tax bills by routing revenues through a complex web of offshore vehicles around the world. However, few countries have clamped down on such schemes as severely as the Obama administration, including against its own biggest companies.
The US Treasury has aggressively gone after home-grown corporations that have attempted to wriggle out of its own punitive 40pc corporation tax rate by shifting their tax base to a more benign foreign jurisdiction.
The change in the rules earlier this year, thwarted a proposed $200bn mega-merger of the drug-making goliaths Pfizer and Allergan, leaving Pfizer scrabbling around for a partner to help combat a serious slowdown in growth. It is not only over tax that Obama has adopted a strong interventionist stance.
The Justice Department has blocked a succession of proposed tie-ups including a $45bn (£31bn) deal to combine the media giants Comcast and Time Warner Cable and an $8.9bn marriage of the food distributors Sysco and US Foods.
Elsewhere, Chinese companies have come in for particularly rough treatment from the Committee on Foreign Investment in the United States, a powerful but secretive interagency US government panel which reviews takeovers that raise possible national security concerns. CFIUS has blocked a series of Chinese bids for American companies, some of them on fairly spurious grounds.
Nor have European companies escaped Washington’s tough stance, with some of the continent’s biggest banks, including HSBC, Deutsche Bank, Standard Chartered and BNP Paribas, handed crushing fines for breaking US trade sanctions against some of its biggest enemies.
Brussels’s fine against Apple marks a new low in US-EU relations amid a worrying rise in protectionism around the world. But it is Washington that has set the sombre mood.

China blames United States, journalists for Obama airport fiasco

Mon Sep 5, 2016 7:28am EDT
China on Monday leveled responsibility at the United States and journalists for a fracas at a Chinese airport, in which officials of both countries exchanged heated remarks as President Barack Obama disembarked from his aircraft.
The comments by a foreign ministry spokeswoman were in response to questions whether China, which is hosting a G20 summit meeting in its eastern city of Hangzhou, intentionally failed to provide Obama's plane with a staircase, an event that has fueled speculation it was a diplomatic snub.
"I think if only the American group had respected the working arrangements first made with China then this wouldn't have occurred," Hua Chunying told reporters in Beijing on Monday.
"You saw that all the other country leaders all used the stairs that China provided. So why was it only the United States that didn't? These were the stairs the United States requested."
Hua questioned why China would intentionally create trouble for the United States, adding that the incident was not a high-level issue, echoing comments made by Obama on Sunday.
A Chinese security official had also blocked National Security Adviser Susan Rice on the tarmac and yelled at another U.S. official trying to help journalists get closer to Obama.
Hua criticized the media for not respecting China's rules on where to stand to capture images of the Obama leaving the plane, adding that other countries' reporters were fine.
 “If you want a picture of the future, imagine a boot stamping on a human face—forever.”

George Orwell 1984.

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?

Solar Power Does Work, Even Better Than Expected

September 2nd, 2016 by Giles Parkinson
Originally published on RenewEconomy.

One of the prices we have to pay for our ideological divide on renewable energy is that we have to read headlines like this, particularly in the Murdoch media: “Solar and wind power simply don’t work, not here, not anywhere”. It was written by the former chairman of a coal mining company, in case you were wondering.

Solar doesn’t work? New analysis of Australia’s first large-scale solar farms shows that solar actually does work, and rather better than expected. And the findings should make it a lot easier for future projects to get the backing of equity investors and bankers, if not the owners of coal fired generators desperately protecting their turf.

The research has been produced by US-based solar module manufacturer First Solar, whose panels have been used for around three quarters of the large-scale solar projects built in Australia to date, by capacity.

Its study shows that at all the solar farms built by First Solar – in western NSW, north Queensland and Western Australia – the output has been higher than forecast. Collectively, the Australian solar plants using First Solar thin-film PV modules are performing above expectations by an average of 3.2 per cent.

The solar farm with the longest record to date, the 10.2MW Greenough River solar facility near Geraldton, in WA, shows that over four years it has produced an average 1.2 per cent above forecast.

The best result has been produced by Broken Hill, the 53MW plant built near the iconic mining town in western NSW, which is so far delivering 4.2 per cent above expectations.

----Now, this might not sound like ground-breaking news – forecast production broken by a few percentage points.

But people in suits are very conservative types, and investment in renewable energy in Australia, both in wind and solar, has been hampered by the fact that bankers won’t finance investments unless they can actually touch, feel and watch the technology, and have proof that it actually works.
This data, Curtis says, is proof that the projects are, indeed, bankable. And that’s more important than it might sound.
Curtis says that even though large-scale solar has been proved in many international locations, local investors still wanted proof that it would work in Australia, even though it does have some of the best solar conditions in the world. Such, perhaps, is the insular nature and/or inherent conservatism of Australia’s banking system.
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The monthly Coppock Indicators finished August.

DJIA: 18401  +18 Up NASDAQ:  5213 +16 Up. SP500: 2171 +18 Up.

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