Wednesday, 31 May 2017

Why “America First.” Cadilac v Beamer.

Baltic Dry Index. 900 -12    Brent Crude 51.63

Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out!

President Andrew Jackson.

From the original minutes of the Philadelphia committee of citizens sent to meet with President Jackson, February 1834. (President Trump is a mere pussycat.)

Below, what part of President Trump’s “America First” policy, doesn’t Mrs. Merkel and her band of German trade pirates get? Mr Trump must get elected and stay elected by American voters, not free riding European voters. Germany the scourge of Greece screams when it gets “Greecefied” itself. In picking a war with America, Chancellor Merkel heads up a fractious, European polyglot “army,” already at war with itself.

How globalization sunk many Americans deeper in debt

Published: May 30, 2017 5:20 a.m. ET
Even as U.S. policymakers continue to debate the relative advantages and drawbacks of globalization, it’s abundantly clear that international trade is not the benevolent force it was once thought.

For all its promise of boosting incomes and strengthening growth, trade has had a disproportionately damaging impact on regions of the U.S. that have long depended on manufacturing. Recent data shows that these communities have suffered a great deal of economic distress, including high rates of underemployment and joblessness.

These communities have also become much more indebted compared with the rest of the nation, according to my latest research. During the years 2000 to 2007 — also known as the runup to the Great Recession — overall American household debt doubled. That debt peaked in 2008, at almost $13 trillion. This leverage, however, was not shared equitably. Household debt in regions of the country where manufacturing jobs had shifted overseas grew an additional 20-30% over that period. In other words, nearly a third of American household debt during that timeframe can be attributed to import competition with China and other low-wage countries.

Why does this matter? For starters, the research — which I undertook with my colleagues Jean-Noel Barrot of MIT, Matthew Plosser of the New York Federal Reserve, and Julien Sauvagnat of Bocconi University — shifts the narrative on what fueled the credit bubble that preceded the Great Recession. To date, most of the economic literature has focused on the supply side and the private sector’s drive for short-term profit. Greedy banks sold unsuspecting customer risky loan products. Money-hungry private lenders made mortgages too easy to get. And fund managers sought new investments through high-yield mortgage-backed securities.

But our study shows that the demand for debt was also a big contributing factor. Perhaps more importantly, our study suggests that a great deal of this household debt can be tied directly to globalization.

It’s not difficult to piece together what happened. As factories shut down and manufacturing jobs were shipped overseas, many Americans — especially blue-collar laborers without a college degree — found themselves without a paycheck. So they borrowed to make ends meet. This borrowing often came in the form of home equity loans or mortgage refinancing. (In fact, we found that the rise in household debt was strongest in areas where house prices had appreciated the most.)

In theory, this is how financial markets ought to work. People should be able to borrow money when they need it — and it makes sense to use a home as collateral, particularly when the value of that home has increased.

In hindsight, though, we know better. When house prices collapsed, many Americans were so overly burdened with household debt that they couldn’t afford to maintain their spending. They had already tapped into their homes for equity to pay for everyday spending and without any income, that debt load became untenable. Millions of Americans defaulted on their mortgages.

It wasn't so long ago that economists thought that international trade was uniformly positive for global growth. While it’s true that free-trade practices can open markets and lead to broader economic development, this carries real costs, and in certain regions these costs have been overwhelming. Many Americans have seen their jobs and incomes disappear; they’ve lost their homes and gone deeply into debt.

The lesson for policymakers is clear: globalization has winners and losers. We must not pretend otherwise.

Erik Loualiche is an assistant professor of finance at the MIT Sloan School of Management.

Trump Blasts Germany Again as Merkel, Modi Cite Mutual Values

by Patrick Donahue and Arne Delfs
30 May 2017, 12:18 GMT+1 30 May 2017, 14:28 GMT+1
President Donald Trump blasted Germany anew over trade and defense, ratcheting up a dispute with Chancellor Angela Merkel that risks getting personal and undermining a trans-Atlantic bond that is the bedrock of U.S.-European relations.

Trump’s comments came in an early-morning tweet on Tuesday issued just as Merkel hosted Indian Prime Minister Narendra Modi in Berlin, where they held a joint cabinet meeting and signed cooperation agreements. Modi suggested that India will adhere to the Paris climate accords, while Trump makes up his mind.

“We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military,” the U.S. president posted on Twitter. “This will change.”

The message came minutes after Merkel and Modi held a joint press conference in which the German leader called India a “reliable partner with respect to big projects.” That contrasted with her comments in Munich on Sunday that dependable trans-Atlantic ties that formed the basis of German foreign policy since World War II “are to some extent over.”

Trump’s tweet showed the deterioration of links with a key NATO ally, yet his timing also highlighted Germany’s web of relations with international partners who broadly share Merkel’s free-trade outlook and conviction on combating climate change. After hosting Modi, Merkel is due to meet with Chinese Premier Li Keqiang on Thursday.

In a speech to a German-Indian business forum later on Tuesday, Merkel took another tilt at a president elected on a ticket of “America First,” referring to “a whole series of protectionist tendencies” emerging worldwide. She said “it’s necessary to be open to achieve fair trade conditions.”

While it’s unclear whether Merkel has deliberately picked a fight with Trump or misspoken and bitten off more than she can chew, challenging his stance is popular in Germany.

In better business news, finally some good news from Asia. But remember in China’s case, these are just China’s official scripted figures.

China's manufacturing beats forecast, stays steady

Published: May 30, 2017 11:24 p.m. ET
BEIJING--A gauge of manufacturing activity in China held steady in May as the property market remained buoyant, signaling stronger-than-expected economic momentum in the second quarter.

China's official manufacturing purchasing managers index was 51.2 in May, unchanged from April, according to the China Federation of Logistics and Purchasing, which releases the data with the National Bureau of Statistics. The May reading released Wednesday beat a median of 51.0 forecast by economists polled by The Wall Street Journal.

The index, closely watched as a gauge of business sentiment, has remained above the 50 mark that separates expansion from contraction for 10 consecutive months. May subindexes were mixed, with export activity slightly up, new orders holding steady and production edging down from April levels.

Economists said the May manufacturing PMI points to an economy slowing less rapidly than expected. "The first quarter was the peak, and April declined only slightly," said Mizuho Securities Asia Ltd. economist Jianguang Shen, who expects China's growth to weaken significantly in the second half of the year. "The government is trying to tighten the housing bubble, but it's been careful not to overtighten."

Beijing's strategy in recent months of imposing strict administrative restrictions on property sales in China's largest cities while trying to encourage sales in smaller, overbuilt cities is paying early dividends, economists said, allowing the economy to weaken at a gradual pace.

May's stronger-than-expected PMI data also suggests that recent regulatory tightening hasn't yet affected the real economy, said Zhang Yiping, an analyst with China Merchants Securities Co. He predicts second-quarter growth will slow to around 6.7%, from 6.9% in the first quarter. "But it won't be as bad as many expected," he said.

By the second half, however, higher interest rates, tighter restrictions on local government spending, weaker infrastructure outlays and a weaker property market are expected to result in a more significant, if still measured, slowdown, economists said.

----Those likely to feel the slowdown first include commodities, steel, cement, glass and related sectors, economists said. Profits in the mining, chemicals and building materials industries already started slipping in April.

Baotou Julong Group, a private mining company based in the northern city of Baotou, said prices for its iron ore have declined 10% since their March peak, denting the company's bottom line.

"If prices drop further, we'll have to cut investment spending. And if they fall below our costs, we could stop producing altogether," said company Vice President Huang Zhiguo. "With slumping demand, many of our workers could lose their jobs, and up to 700 families could face real trouble."

China's official nonmanufacturing PMI, which includes services and other activity away from the factory floor, ticked up to 54.5 in May from 54.0 in April as consumption remained strong.

Japan industrial output posts best gain in 6 years

Published: May 30, 2017 11:22 p.m. ET
TOKYO--Japanese industrial production rose 4.0% on month in April, government data showed Wednesday, posting the biggest jump in nearly six years.

Output of cars and semiconductor production equipment buoyed the figures for the biggest percentage gain since June 2011, when industrial production jumped 4.2% in the aftermath of the massive earthquake and tsunami that struck Japan earlier that year.

Still, the gain was lower than a 4.5% rise forecast by economists polled by the Nikkei.

The figure has been volatile in recent months. In March, industrial production fell 2.1%, after rising 3.2% in February.

A survey included in the report suggests that volatility could continue in coming months. Manufacturers expect output to fall 2.5% in May, before increasing 1.8% in June.

The Ministry of Economy, Trade and Industry kept its assessment of production unchanged, saying that production was picking up.

“Why, sometimes I've believed as many as six impossible things before breakfast.”

President Xi, with apologies to Lewis Carroll.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today whaling JP Morgan style. The SEC all at sea and fishy. And Bruno’s French revenge. Don’t you just love 21st century banksterism. It’s about as close to banking as Pluto is to the sun.
I dreamed once that I was going to be hanged; but I was not at all surprised about it. Nobody was. My relations came to see me off, I thought, and to wish me "Good-by!" They all came, and were all very pleasant; but they were not in the least astonished—not one of them. Everybody appeared to regard the coming tragedy as one of the most-naturally-to-be-expected things in the world.
Ebenezer Squid, with apologies to Jerome K. Jerome.

‘London Whale’ case at risk of collapse

Bruno Iksil faces questions over a book he has written that allegedly contradicts the SEC's version of events

By Lucy McNulty  May 30, 2017 Updated: 1:28 p.m. GMT
The US government’s case against two former JP Morgan staff embroiled in the $6.2bn ‘London Whale’ losses is at risk of collapse, with the key witness Bruno Iksil facing questions over a book he has written about the saga.

Lawyers defending Iksil’s boss, Javier Martin-Artajo, and the team’s junior trader, Julien Grout, plan to file a motion asking former JP Morgan trader Iksil to be questioned over a 400-page book that disagrees with the Securities and Exchange Commission’s version of events, according to a person familiar with the matter.
Edward Little, a partner at US law firm Hughes Hubbard & Reed, and Grout’s legal representative, told a New York court in February that there are “numerous spots” in Iksil’s book that contradict the SEC's findings.

The SEC alleges Martin-Artajo and Grout fraudulently mismarked investments in the multibillion-dollar portfolio they managed in order to conceal “hundreds of millions of dollars” in losses. In an enforcement notice published in 2013, the SEC said the mismarking began in March 2012 and continued until JP Morgan discovered the full extent of the losses in April that year.

However, according to a transcript of court proceedings seen by Financial News, Little said Iksil’s account of the London Whale saga undermined the SEC’s case. He said the book included allegations that there was “no fraud” in terms of how traders behaved. According to the book, the difference in marking techniques was known to senior management and that the real fraud came from those above Martin-Artajo and Grout.

Little described the discovery of the Frenchman’s memoirs as “a shocking development” and said it was “something that has to be addressed further”.

Lawyers for Martin-Artajo and Grout hope their motion to cross-examine Iksil will force the SEC to resolve its case against the pair outside of court, according to a person familiar with their thinking.

An SEC spokeswoman declined to comment.

Iksil, who acquired his 'Whale' nickname for the size of his bets in the credit markets, has been helping the SEC with its investigation into the losses. He gave evidence against Martin-Artajo and Grout via a formal deposition in New York in September 2016 as part of a non-prosecution deal he signed with the US Justice Department in 2013. Criminal charges against Martin-Artajo and Grout have stalled as both have avoided extradition to the US.
Ambitious people are the leaven which raises it into wholesome bread. Without ambitious people the world would never get up. They are busybodies who are about early in the morning, hammering, shouting, and rattling the fire-irons, and rendering it generally impossible for the rest of the house to remain in bed.
Jerome K. Jerome. "On Getting on in the World".
Technology 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?

When man plays God, some unintended consequences.

CRISPR gene-editing tool causes unintended genetic mutations

Rich Haridy May 29, 2017
It's not hyperbolic to say that the CRISPR-Cas9 gene-editing technique has been a revolutionary breakthrough, allowing scientists the ability to quickly, easily and precisely edit sections of DNA. But questions over how precise the CRISPR tool is have been raised in a new study from Columbia University Medical Center, which shows this gene-editing technology can introduce hundreds of unintended mutations into the genome.

CRISPR has sparked a flurry of new avenues of research around the world, from targeting cancer to HIV, with the first human trials involving CRISPR-edited cells already underway in China and a US trial slated for 2018. But this new study urges caution moving forward, suggesting we are still yet to understand the greater genomic effects of the tool.

The team of scientists involved in the study had previously been working with the CRISPR tool to treat a serious eye disease called retinitis pigmentosa, which leads to blindness. They decided to examine the entire genome of the CRISPR-treated mice from their previous experiments, looking for any potential mutations, even those that altered just a single nucleotide.

Generally, when scientists are trying to identify whether a CRISPR edit has resulted in an off-target mutation or deletion they use computer algorithms to identify areas most likely to be affected and focus their attention on those.

"These predictive algorithms seem to do a good job when CRISPR is performed in cells or tissues in a dish," says co-author of the study, Professor Alexander Bassuk, "but whole genome sequencing has not been employed to look for all off-target effects in living animals."

In examining the entire genome from the CRISPR-treated mice, they found that the tool had successfully corrected the specific gene they were targeting, but it also potentially caused a great deal of other genetic changes. In two CRISPR-treated animals, more than 100 large gene deletions or insertions and over 1,500 single-nucleotide mutations were identified.

Most significantly, all of these identified mutations were not picked up by the general computer algorithms most researchers use to look at the off-target effects of CRISPR-editing. There were no obvious or immediately deleterious effects in the animals from these unexpected mutations, but it is unknown what longer term effects the altered genes could have.

"Researchers who aren't using whole genome sequencing to find off-target effects may be missing potentially important mutations," says co-author Dr. Stephen Tsang. "Even a single nucleotide change can have a huge impact."

The team is still upbeat about CRISPR technology, but they caution other scientists to more closely study the off-target effects of any gene-editing that is undertaken. They especially note that whole-genome sequencing is vital in developing more accurate ways of using the CRISPR tool.

In Graphene news:

Graphene and Quantum Dots put in motion a CMOS-integrated camera that can see the invisible

CFO develops the first graphene-quantum dot based CMOS integrated camera, capable of imaging visible and infrared light at the same time. Over the past 40 years, microelectronics has advanced by leaps and bounds thanks to silicon and CMOS (Complementary metal-oxide semiconductors) technology, making possible computing, smartphones, compact and low-cost digital cameras, as well as most of the electronic gadgets we rely on today. However, the diversification of this platform into applications other than microcircuits and visible light cameras has been impeded by the difficulty to combine semiconductors other than silicon with CMOS.

This obstacle has now been overcome. ICFO researchers have shown for the first time the monolithic integration of a CMOS integrated circuit with graphene, resulting in a high-resolution image sensor consisting of hundreds of thousands of photodetectors based on graphene and quantum dots (QD). They operated it as a digital camera that is highly sensitive to UV, visible and infrared light at the same time. This has never been achieved before with existing imaging sensors. In general, this demonstration of monolithic integration of graphene with CMOS enables a wide range of optoelectronic applications, such as low-power optical data communications and compact and ultra sensitive sensing systems.

The monthly Coppock Indicators finished April

DJIA: 20,941 +149 Up. NASDAQ:  6,048 +190 Up. SP500: 2,384 +152 Up.

Tuesday, 30 May 2017

NATO, G-7, The Fallout.

Baltic Dry Index. 912  Friday     Brent Crude 52.19

The quickest way of ending a war is to lose it.

George Orwell.

We open today with the continuing fallout from the recent NATO meeting and G-7 meeting. Compare and contrast below the anti-Trump, American Bloomberg spin, with a chart that clearly highlights just how right President Trump’s claim of European NATO freeloading is, (Germany spends just 45.1 billion on defence, compared with a NATO commitment of 74.9 billion, Italy just 23.1 billion v 41.4 billion,) with Germany’s Der Spiegel, already having misgivings that Chancellor Merkel just made a German election campaign blunder of epic proportions.

Either way the damage is done, it’s already water under the bridge. A massive gift to the far left that wants to see NATO weakened, and the west indecisive and split.

Will Washington ever swap Tallinn, or Riga, or Berlin, or Warsaw, for Manhattan? Would America ever have? After Chancellor Merkel’s blunt speech in a Munich beer tent on Sunday, all of NATO has just had its Wizard of Oz moment.

Below, continental Europe in disarray.

“I think we agree, the past is over.”

President George W. Bush.

Old World Order Is Alive But Unwell After Four Months of Trump

by Marc Champion and Margaret Talev
30 May 2017, 00:00 GMT+1
Four months into Donald Trump’s presidency, the sky has not fallen in on the system of global governance the U.S. did so much to construct since World War II. It is, however, in deep trouble.

Trump has not followed through on pre-election threats to declare the North Atlantic Treaty Organization obsolete, abandon the North American Free Trade Agreement, accept Russia’s annexation of Crimea or declare China a currency manipulator.

And yet, as he flew back to Washington at the weekend, Trump’s meetings with traditional U.S. allies during his nine-day tour of the Middle East and Europe appeared to leave them more, rather than less worried about the inventory of issues that caused such concern last November.

They emerged unsure of his commitment to NATO’s collective-defense principle, unclear as to his stance toward Russia, deeply concerned about his distrust of free-trade agreements and in suspense as to whether he’ll withdraw the U.S. from the 2015 Paris Agreement to slow climate change. Trump said in on Twitter he’d make the decision this week.

“We are not in good shape at all,’’ said Francois Heisbourg, a veteran analyst of the trans-Atlantic alliance and chairman of the International Institute for Strategic Studies. “In some ways it’s worse than I thought.’’ He described those as issues of Trump’s impetuous character and governance style.

-----However, the alliances and institutions the U.S. built with like-minded democracies fared less well.

“On the alliance front, we’re having to engage in permanent damage limitation. There clearly isn’t much we can do together,’’ said Heisbourg, dismissing Trump’s success last week in getting agreement to focus the alliance more on counter-terrorism. “NATO is as equipped to deal with counter-terrorism as the Vatican.’’

At NATO, Trump omitted to clearly state his commitment to the alliance’s pledge of collective defense, known as Article 5, in a speech to commemorate it. While White House officials said the speech should be read as re-affirming his support, the encounter left allies still uncertain whether the U.S. would come to their aid if attacked.

----As he watched footage of Trump’s meeting with Merkel, Japanese Prime Minister Shinzo Abe and other G-7 leaders in Sicily while on Bloomberg television, Ian Bremmer, president of the risk consultancy Eurasia Group said he was witnessing “the first ever formal meeting of the G-zero.’’

That’s a reference to Bremmer’s forecast that the familiar institutions of the liberal world order built by the U.S. and other democracies since World War II -- the G-7 and G-20, NATO, the WTO and the European Union -- will become dysfunctional and irrelevant.

A Trans-Atlantic Turning Point What Was Merkel Thinking?

An historical turning point or mere campaign bluster? Chancellor Angela Merkel's Sunday speech on relations with Donald Trump's America has raised eyebrows the world over. What did she mean?
By Annett Meiritz, Anna Reimann and Severin Weiland May 29, 2017  05:19 PM
A "potentially seismic shift" wrote the New York Times . A "new chapter in U.S.-European relations," proclaimed the Washington Post. German Chancellor Angela Merkel's comments made in a beer tent in Munich on Sunday have made headlines around the world. It was the kind of appearance the likes of which she will make hundreds of times ahead of Sept. 24 parliamentary elections in Germany. But in this speech, she clearly distanced herself from U.S. President Donald Trump. And she urged Europe to prepare for a future in which it has to be much more self-reliant.

"The times in which we could completely rely on others are over to a certain extent. That is what I experienced in the last few days," Merkel said. "That is why I can only say: We Europeans must really take our fate into our own hands."

She went on to say: "Of course in friendship with the United States of America." She emphasized friendship with the U.S. on a few other occasions in her remarks as well. But then said: "We have to fight for our own future, as Europeans, for our destiny."

Merkel's comments were unusual on several levels. It's not just what she had to say that was interesting, but also why and when: at a folk festival following a series of summits during which she spent extensive amounts of time with Trump. The chancellor made direct reference to her strenuous week, during which the U.S. president managed to alienate his partners on several occasions.

Despite the directness of Merkel's Sunday speech, however, there are several open questions that need to be answered:

In market news, with China closed for a second day, Asian markets slipped lower. There’s still two days left for the old Wall Street adage, “sell in May, go away.”

Asia Stocks Slip, Euro Falls on Draghi Comments: Markets Wrap

by Garfield Clinton Reynolds
29 May 2017, 23:44 GMT+1
Asian equities fell in thin trading and the euro slipped with emerging currencies after Mario Draghi’s dovish message to the European Parliament and as investors assessed the path for higher U.S. borrowing costs.
Stocks in Japan retreated as the yen strengthened. Hong Kong is on holiday Tuesday and markets in China are shut for a second day after the U.K. and U.S. were closed Monday, depressing volumes and limiting price movements. The euro dropped for a fourth straight day. South Africa’s rand extended losses after President Jacob Zuma survived a bid by some members of his party to oust him.

The key challenge for investors remains gauging the ability of the world’s economy to withstand rising borrowing costs. Despite the record highs posted by global equities, the rally in bond markets suggests traders are cautious. Donald Trump’s ability to come through with reform policies also remains an issue. Fed Bank of St. Louis President James Bullard said the new administration will need to fulfill the expectations that have driven the stock market higher.

“Washington does have to deliver at some point,” Bullard said in an interview on Bloomberg TV in Tokyo. “I think that is a concern going forward, whether the honeymoon period would end at some point and maybe the reality of American politics would settle in.”

He also said the dollar recently has weakened slightly because of “changes in perceptions of policies of other central banks in tandem with U.S. monetary policy.” European Central Bank President Draghi, speaking in Brussels, signaled there’s little urgency to start unwinding the central bank’s 2.3 trillion-euro ($2.6 trillion) bond-purchase program at the next policy meeting on June 8.

Sell In May And Go Away

Sell in May and go away is a well-known trading adage that warns investors to sell their stock holdings in May to avoid a seasonal decline in equity markets. The sell-in-May-and-go-away strategy is where an investor sells his stock holdings in May and gets back into the equity market in November, thereby avoiding the typically volatile May-October period. Some investors find this strategy more rewarding than staying in the equity markets throughout the year. (Learn more about the old adage in The Truth About 'Sell in May and Go Away.')

Oh, well don't get technical at a time like this.

President Trump, with apologies to Cary Grant.  His Girl Friday 1940.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, Catalonia threatens Spain with default. Things are starting to get ugly in Spain, and in the rest of the rump-EU. An unreformed Spain, along with unreformed Italy and France, threatens the continued existance of the unreformed rump-EUSSR. But is anyone in Europe's political class up for reform?
“This sucker could go down.”
Prime Minister Mariano Rajoy, with apologies to George W. Bush.

Catalonia Threatens Spain with “Financial Bloodbath”

by Don Quijones • May 24, 2017 

Catalonia’s independence would set off Spain’s debt time-bomb.

On Monday El Pais published leaked excerpts from what it claims to be the Catalonian regional government’s road map to independence. The secret document includes a plan for the region to unilaterally break away from Spain should its citizens be prevented from holding a referendum on independence in the fall.

It provoked a fierce backlash from Madrid. “This proposal is an unacceptable attempt to blackmail the state,” Spain’s Prime Minister Mariano Rajoy said in a hastily convened press conference. Spain’s defense minister María Dolores de Cospedal likened the plot to a coup d’état. In the meantime, Madrid continues to refuse to even entertain the idea of allowing a referendum on Catalan independence, despite the fact that in just about every survey of the last few years 80% of Catalans, including many unionists, have requested one.

It would mean the loss of 25-30% of Spain’s gross domestic product (GDP), says Spain’s Minister of the Economy, Luis de Guindos. And that’s something the government “will never let happen.”

But Catalonia knows it has a card up its sleeves: its tick-tocking debt bomb. Catalonia can no longer issue its own debt and depends on the central government’s national liquidity fund (FLA, for its Spanish acronym) for about 60% of its funds. As ratings agency Fitch warned in April last year when it sent Catalonian debt even deeper into junk territory, the region has grave liquidity problems that will require “proactive management” and “close collaboration with the central state ” — something that’s clearly not on the cards any time soon.

At the same time, Spain’s public debt continues to grow, recently bursting through 100% of GDP. Even with historically low interest rates (gracie, Signor Draghi), the price of servicing government debt can spiral out of control. Between 2011 and 2015 Spain’s central government spent €121 billion – the equivalent of 12% of annual GDP – on interest payments.

---- In other words, Spain’s deficit, already one of the largest in Europe, is going to remain high for the foreseeable future, despite all the threats of multi billion-euro fines emanating from Brussels. As the widely renowned Columbia University Professor of Economics (and fervent Catalan separatist) Xavier Sala i Marti recently pointed in an interview on Catalan television, all of the debt, including the debt owed by the Catalan regional government, is in the name of the King of Spain:

It’s (Spain’s) debt. They already have a debt load of 100% of GDP. If Catalonia declared independence tomorrow, and Spain were to say “you’re going to be kicked out of the EU for three generations” and everything else they threaten us with, we’d just say to them, “well, these little papers of debt (bonds), you can have them for the next three generations.” All of a sudden, they’d have a much smaller GDP and a much larger debt overhang (around 125%)… A debt-to-GDP ratio of 125% would not be feasible. Spain would not be able to pay the debt they owe the Spanish banks, the biggest holders of Spanish bonds. And that would ruin them, triggering a financial bloodbath.

Such an outcome has also been postulated by the U.S. rating agency Moody’s: in effect, any default on Catalonia’s debt would be interpreted by the markets as a Spanish default. In other words, whence goeth Catalonia, goeth Spain.
Technology 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?

Toward mass-producible quantum computers

Process for positioning quantum bits in diamond optical circuits could work at large scales

Date: May 26, 2017

Source: Massachusetts Institute of Technology

Summary: Mass-producible quantum computers are closer than ever, thanks to new research. This process for positioning quantum bits in diamond optical circuits could work at large scales, say scientists.

Quantum computers are experimental devices that offer large speedups on some computational problems. One promising approach to building them involves harnessing nanometer-scale atomic defects in diamond materials.
But practical, diamond-based quantum computing devices will require the ability to position those defects at precise locations in complex diamond structures, where the defects can function as qubits, the basic units of information in quantum computing. In Nature Communications, a team of researchers from MIT, Harvard University, and Sandia National Laboratories reports a new technique for creating targeted defects, which is simpler and more precise than its predecessors.
In experiments, the defects produced by the technique were, on average, within 50 nanometers of their ideal locations.
"The dream scenario in quantum information processing is to make an optical circuit to shuttle photonic qubits and then position a quantum memory wherever you need it," says Dirk Englund, an associate professor of electrical engineering and computer science who led the MIT team. "We're almost there with this. These emitters are almost perfect."
The new paper has 15 co-authors. Seven are from MIT, including Englund and first author Tim Schröder, who was a postdoc in Englund's lab when the work was done and is now an assistant professor at the University of Copenhagen's Niels Bohr Institute. Edward Bielejec led the Sandia team, and physics professor Mikhail Lukin led the Harvard team.
Appealing defects
Quantum computers, which are still largely hypothetical, exploit the phenomenon of quantum "superposition," or the counterintuitive ability of small particles to inhabit contradictory physical states at the same time. An electron, for instance, can be said to be in more than one location simultaneously, or to have both of two opposed magnetic orientations.
Where a bit in a conventional computer can represent zero or one, a "qubit," or quantum bit, can represent zero, one, or both at the same time. It's the ability of strings of qubits to, in some sense, simultaneously explore multiple solutions to a problem that promises computational speedups.

The monthly Coppock Indicators finished April

DJIA: 20,941 +149 Up. NASDAQ:  6,048 +190 Up. SP500: 2,384 +152 Up.