Baltic Dry Index. 1155 +17 Brent Crude 50.79
“The
world is a place that’s gone from being flat to round to crooked.”
Mad
Magazine.
While global stock markets stabilise for now, confident that
President Trump is just a “big hat but no cattle,” over war with North Korea, in the new trade
wars it’s time to let the games begin.
President Trump opens up with fronts against China and
NAFTA. China and NAFTA are less than pleased. How it all ends, nobody knows,
but not all participants can end up winners. While not quite a zero sum game,
it’s close. Making America Great Again, involves stamping on great many toes.
This week that stamping is just beginning.
A whole lot of German and European toes comes next, though probably not
until after the German election.
But first this, Chancellor Merkel honours Nazi Germany’s SS
war dead. Well no, that would immediately, correctly set off an international,
righteous indignation storm, but that’s the equivalent of what Japanese Prime
Minister Abe just did earlier today, despite begging China’s help over North
Korea. End the double standard, President Trump, time to disinvite Japan to the
next G-7, and G-20 meetings.
August 15, 2017 / 1:11 AM
Japan PM sends ritual offering to war dead shrine on WW2 surrender anniversary
TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe sent a ritual
offering to a controversial shrine to war dead on Tuesday, the anniversary of
Japan's World War Two surrender, but did not visit in person in an apparent
effort to avoid increasing regional tensions.
Masahiko Shibayama, a lawmaker who made the offering on Abe's behalf,
said he did so to express condolences for those who died in the war and to pray
for peace. He added that Abe said he was sorry he could not visit the Yasukuni
shrine.
Past visits by Japanese leaders to Yasukuni have outraged Beijing and
Seoul because it honours 14 Japanese leaders convicted by an Allied tribunal as
war criminals, along with other war dead. Abe himself has only visited once
since becoming prime minister again in 2012.
Maintaining harmony with China and Seoul is now more important than ever
amid heightened tensions in Asia in the wake of North Korean missile tests,
threats from Pyongyang to strike the area around the U.S. Pacific territory of
Guam and U.S. President Donald Trump warning of retaliation.
More
Now back to the opening skirmishes of our new 21st
century trade wars.
"It's strange that men should take up crime when there are
so many legal ways to be dishonest. “
Al
Capone.
August 14, 2017 / 8:30 PM
Trump orders probe of China's intellectual property practices
WASHINGTON (Reuters) - President Donald Trump on Monday authorized an
inquiry into China's alleged theft of intellectual property in the first direct
trade measure by his administration against Beijing, but one that is unlikely
to prompt near-term change.
Trump broke from his 17-day vacation in New Jersey to sign the memo in
the White House at a time of heightened tensions between Washington and Beijing
over North Korea's nuclear ambitions.
The investigation is likely to cast a shadow over relations with China,
the largest U.S. trading partner, just as Trump is asking Beijing to step up
pressure against Pyongyang.
U.S. Trade Representative Robert Lighthizer will have a year to look
into whether to launch a formal investigation of China's trade policies on
intellectual property, which the White House and U.S. industry lobby groups say
are harming U.S. businesses and jobs.
----Experts on China trade policy said the long lead time could allow Beijing to discuss some of the issues raised by Washington without being seen to cave to pressure under the threat of reprisals.
Although Trump repeatedly criticized China's trade practices on the
campaign trail, his administration has not taken any significant action.
Despite threats to do so, it has declined to name China a currency manipulator
and delayed broader national security probes into imports of foreign steel and
aluminium that could indirectly affect China.
China repeatedly rebuffed attempts by previous U.S. administrations to
take action on its IP practices.
More
August 15, 2017 / 4:14 AM
China says it will defend interests if U.S. harms trade ties
BEIJING (Reuters) - China will take action to defend its interests if
the United States damages trade ties, the Ministry of Commerce said on Tuesday,
after U.S. President Donald Trump authorized an inquiry into China's alleged
theft of intellectual property.
Trump's move, the first direct trade measure by his administration against
China, comes at a time of heightened tension over North Korea's nuclear
ambitions, though it is unlikely to prompt near-term change in commercial ties.
U.S. Trade Representative Robert Lighthizer will have a year to look
into whether to launch a formal investigation of China's policies on
intellectual property, which the White House and U.S. industry groups say are
harming U.S. businesses and jobs.
The United States should respect objective facts, act prudently, abide
by its World Trade Organization pledges, and not destroy principles of
multilateralism, an unidentified spokesman of China's Ministry of Commerce said
in a statement.
"If the U.S. side ignores the facts, and disrespects multilateral
trade principles in taking actions that harms both sides trade interests, China
will absolutely not sit by and watch, will inevitably adopt all appropriate
measures, and resolutely safeguard China's lawful rights."
The ministry said the United States should "treasure" the
cooperation and favorable state of China-U.S. trade relations, and warned that
any U.S. action to damage ties would "harm both sides trade relations and
companies".
China was continuously strengthening its administrative and judicial
protections for intellectual property, the ministry added.
China's policy of forcing foreign companies to turn over technology to
Chinese joint venture partners and failure to crack down on intellectual
property theft have been longstanding problems for several U.S.
administrations.
Trump administration officials have estimated that theft of intellectual
property by China could be worth as much as $600 billion.
More
What to Expect From Nafta 2.0 Negotiations: QuickTake Scorecard
ByGreg Quinn and Eric MartinPartnership, several of that deal’s features are on the U.S.’s Nafta agenda. Here are some of the major sticking points:
1. The Big Prize for Trump
The U.S.’s small goods-and-services trade surplus with Mexico before Nafta turned into a deficit of $63 billion last year, which Trump says is evidence that Nafta has been a bad deal for the U.S. Seeking a big win after recent setbacks on health care and immigration, Trump wants the Nafta talks to deliver the prize he most desires, a lower trade deficit with Mexico. When it comes to Canada, Trump has said he can live with “tweaks,” probably because the U.S. had a $7.7 billion surplus with Canada last year and dozens of U.S. states count their northern neighbor as their biggest export market.
More
These Are Trump’s Nafta Deal Makers — and the A Team Across the Table
Leading the U.S. charge to cut the trade deficit is a group
of trade chiefs who don’t take no for an answer. But check who’s showing up for
Mexico and Canada.
By Eric Martin and Josh Wingrove
14 August 2017, 05:01 GMT+1
President Donald
Trump has set the terms for revamping the North American Free Trade
Agreement: Cut the U.S. trade deficit or he’ll walk away. That could entail
convincing Mexico and Canada to commit to buy more American products.
The White House will have its work cut out for it, but leading the charge is an aggressive group of trade players who aren’t used to taking no for an answer. Billionaire Commerce Secretary Wilbur Ross built his fortune investing in distressed companies, while U.S. Trade Representative Robert Lighthizer served as a negotiator in the Reagan administration during its trade battles against Japan in the 1980s.
The White House will have its work cut out for it, but leading the charge is an aggressive group of trade players who aren’t used to taking no for an answer. Billionaire Commerce Secretary Wilbur Ross built his fortune investing in distressed companies, while U.S. Trade Representative Robert Lighthizer served as a negotiator in the Reagan administration during its trade battles against Japan in the 1980s.
Mexico and Canada are bringing out their A-game too, with trade teams
that can boast recent successes. Canada just sealed an accord with the European
Union, while Mexico has reached 11 such agreements with 44 countries since
Nafta took effect more than two decades ago. Will they replicate those wins
with an updated Nafta pact? Only time will tell.
Some of the U.S. negotiating objectives could put them on a collision
course, if there are shifts in areas ranging from the auto sector to dispute
settlement systems. With official three-way talks starting on Aug. 16, we’ll
see if the U.S. will find its goals out of reach or whether Mexico and Canada
are willing to budge on key issues to save the trading relationship.
Let’s look at a few of the key government negotiators.
More
August 14, 2017 / 6:12 AM
Trump's NAFTA autos goals to collide with industry as talks start
WASHINGTON (Reuters) - The Trump administration has set a collision
course with the auto industry as it launches renegotiations of the 23-year-old
NAFTA trade pact this week, aiming to shrink a growing trade deficit with
Mexico and tighten the rules of origin for cars and parts.
More than any other industry, autos have been the focus of U.S.
President Donald Trump's anger over the North American Free Trade Agreement,
which he blames for taking car factories and jobs away from America to low-wage
Mexico.
The United States had a $74 billion trade deficit with Mexico in autos
and auto parts last year, the dominant component of an overall $64 billion U.S.
deficit, according to U.S. Census Bureau data.
"The Trump administration has framed their NAFTA negotiating
objectives around reducing the trade deficit with Mexico," said Caroline
Freund, a senior trade fellow at the Peterson Institute for International
Economics. "If they don't touch autos, there's no way of getting at what
they want."
Among tools that U.S. Trade Representative Robert Lighthizer may seek to
boost auto employment in the U.S. is strengthening the rules of origin to shut
out more parts from Asia, and possibly an unprecedented U.S.-specific content
requirement for Mexican vehicles.
Lighthizer's negotiating objectives for NAFTA seek to "ensure the
rules of origin incentivize the sourcing of goods and materials from the United
States and North America," which has raised concerns among auto industry
executives and trade groups that he will seek a deal that guarantees a certain
percentage of production for the United States.
The industry is opposed to such a carve-out or to increasing the
percentage of a vehicle's value that must come from the region above the
current 62.5 percent - already the highest of any global trade bloc.
They say this would raise costs and disrupt a complex supply chain that
sees parts crisscrossing NAFTA borders and has made North American car
production competitive with Asia and Europe.
More
And in Brussels run sclerotic Euroland, why is this not a
surprise. No chance that May’s figure was scripted? In Italy’s bankrupt banks,
business as usual. Brexit now before this whole rotten to the core,
unreformable, house of cards, collapses.
August 14, 2017 / 10:07 AM
Euro zone June industry output drops by more than expected
BRUSSELS (Reuters) - Industrial output in the 19 countries sharing the
euro currency fell by more than expected in June, as the production of capital
and durable goods fell following sharp increases in the previous month,
European statistics office Eurostat said on Monday.
Factory output fell most in Ireland and Malta, while the euro zone's two
largest economies, Germany and France also showed a decline. Italy and the
Netherlands showed an increase in monthly output, however.
Overall, industrial production in the euro area fell by 0.6 percent in
June but still increased by 2.6 percent on an annual basis, staying below the
0.5 percent drop forecast in a Reuters poll of 32 economists.
After a 2.2 percent monthly rise in May, the production of capital
goods, such as machinery, fell by 1.9 percent. The output of durable consumer
goods declined 1.2 percent in June following a 1.4 percent rise in May.
For May, Eurostat revised its overall estimates downwards by 10 basis
points, to 1.2 percent for the monthly and 3.9 percent for the annual
August 14, 2017 / 8:05 PM
Veneto banks had failed ECB capital tests since 2014 - documents
FRANKFURT (Reuters) - Failed Italian banks Banca Popolare di Vicenza and Veneto Banca had fallen short of the European Central Bank's capital demands since the ECB became their supervisor in late 2014, documents showed on Monday.
The ECB has attracted criticism for failing to take quick
and incisive action on some of the ailing banks on its watch, such as the two
lenders from Italy's Veneto region and larger peer Banca Monte dei Paschi di
Siena (BMPS.MI).
For Veneto and Vicenza, the issue came to a head in June
when efforts to orchestrate a recapitalisation by the Italian government failed
and the lenders were declared "failing or likely to fail" by the ECB.
In a redacted version of its assessment, the ECB said the
banks had been unable to meet its capital requirements since Frankfurt took
over the supervision of large euro zone banks in November 2014.
"The Supervised Entity has, since the set-up of the
Single Supervisory Mechanism on 4 November 2014 ... demonstrated its incapacity
to steadily comply with the capital requirements," the ECB said in the
documents, which are similar for Veneto and Vicenza.
It emphasised that the banks' successive capital injections,
partly financed by loans-for-shares schemes with clients, were invariably
depleted, showing the "inadequacy" of the firms' business models.
Veneto and Vicenza's best assets were eventually handed over
to larger rival Intesa Sanpaolo (ISP.MI), while their soured
debts were transferred to a bad bank.
Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.
Italy, with apologies to Cary Grant. To Catch A Thief.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Below, yet another red flag in the US economy. Ignore the bankster and
political hype, in the real world, the US economy is already struggling. It may
not be quite “as goes General Motors, so goesAmerica,” anymore, but the US auto
sector has been signalling rising distress all year. At some point ahead, ICE
autos are headed for a massive pile up. Red flags, like deficits, don’t matter
until suddenly one day they do.
From America, through Eur-Asia, we have nothing but a sea of fluttering
red flags in the real economy, where most of us live. Only the banksterland, fantasy
debt world of ZIRP, NIRP, and global QE, keeps a semblance of business as usual
in play. But banksterland is no more real than the pot of gold at the end of
the rainbow. Unrepayable debt, remains unrepayable debt.
True, governments can reduce the rate of interest in the short
run, issue additional paper currency, open the way to credit expansion by the
banks. They can thus create an artificial boom and the appearance of
prosperity. But such a boom is bound to collapse soon or late and to bring
about a depression.
Ludwig
von Mises.
Sales-Hungry U.S. Car Dealers Cut Prices Most Since 2009
Vehicles cost 0.6 percent less in
July than a year ago, the biggest drop in over eight years
By Vince Golle
Desperate to
rev up sales, U.S. dealers have cut prices on new cars and trucks by the most
since the last recession. Friday’s government report on consumer
prices
showed vehicles cost 0.6 percent less in July than a year ago, the
biggest decrease since March 2009. The decline, combined with a 4.1 percent
slump in used car prices, led to a record 1.7 percent yearly drop in the
broader index of transportation goods minus fuel.
There is no means of avoiding
the final collapse of a boom brought about by credit expansion. The alternative
is only whether the crisis should come sooner as the result of a voluntary
abandonment of further credit expansion, or later as a final and total
catastrophe of the currency system involved.
Ludwig
von Mises.
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?
Space agencies track trajectory of approaching asteroid
Michael
Irving August 13, 2017
Asteroid 2012 TC4 hasn't been seen since its last brush
with our planet five years ago, but calculations of its trajectory told
astronomers that it would return in October 2017. Right on cue, the
building-sized rock has now emerged from the darkness of space as it hurtles
towards the Earth. NASA and the ESA plan to use it as a test run for the international Planetary Defense network, and have now been
able to calculate its trajectory.With asteroids grazing past Earth with worrying regularity, it would definitely pay to have some forewarning if any were on a collision course. The Chelyabinsk meteor is a perfect example of a hazardous space rock sneaking up on us, causing widespread damage and injury when it exploded over Russia in 2013. To help prevent a disaster like that (or worse) from occurring again, NASA has established the Planetary Defense Coordination Office to detect and track near-Earth objects.
Knowing exactly when TC4 would return makes it a perfect candidate for testing the equipment and infrastructure of that system, and NASA, ESA and other institutions set up the 2012 TC4 Observing Campaign to determine its orbit more precisely. Previous calculations could only be sure that it would pass within a window of 4,200 to 170,000 miles (6,760 to 274,000 km) of Earth, and its size couldn't be precisely pinned down.
This time around, the asteroid was spotted on July 27 by ESA astronomers using the Very Large Telescope Observatory in Chile, before further observations on July 31 and August 5 confirmed its identity as TC4. Its brightness at this distance tells the team that its diameter is about 15 m (49 ft).
Based on these observations, the astronomers have determined that TC4 will pass within 50,100 km (31,130 miles) of Earth at 5:41 Universal Time on October 12, 2017. That's 13 percent of the distance between the Earth and the Moon.
Astronomers report that viewing conditions will remain clear over the next few months as TC4 approaches, allowing them to gather more data for this and other near-Earth objects. Then, like last time, it should vanish into the darkness again almost immediately after it passes.
Sources: NASA, University of Maryland
Are we alone? Statistical analysis suggests that if we are typical, then the answer is probably yes
David
Szondy August 13, 2017
If
there are other
civilizations in the Universe, then why, after 60 years of listening
and looking, haven't we found any evidence of their existence? According to
Daniel Whitmire, retired astrophysicist at the University of Arkansas, this may
be because there's no one out there to find. Using statistical analysis,
Whitmire concludes that, if Earth is typical, then it isn't possible for any
other technological civilizations to exist at the same time as us.
There are 1024 stars in the Universe with who knows how many
planets revolving about them. With so many worlds where life might evolve to
choose and with over 13 billion years to do the evolving, it seems reasonable
that there must be many other civilizations out there that are far more
advanced than ours.
The trouble is, there isn't a single piece of solid evidence that they
exist. In the 1950s, the Italian physicist Enrico Fermi did some back of the
envelope sums and asked, "Where is everybody?" Fermi used some
extremely conservative assumptions about hypothetical ETs and calculated that
even the most lackadaisical and outright lazy civilization would have long ago
not only contacted, but reached and colonized every inhabitable planet in the
galaxy.
For over six decades, the Fermi Paradox has puzzled scientists, with
SETI researchers referring to it as the Great Silence. Why the silence? Over
the years, many reasons have been given, ranging from the idea that no one is
interested in contacting us to paranoid conspiracy theories that earthbound or
cosmic authorities are engaged in a massive cover up.
However, the simplest explanation is that the reason we can't find other
civilizations is that they aren't there. Whitmire's position that if the
statistical concept called the principle of mediocrity is applied to Fermi's
Paradox, this produces the reason we are alone, which is that we are a typical
civilization and will go extinct soon now that we are capable of interstellar
communications.
The principle of mediocrity is one of the basic assumptions of modern
physics and cosmology in particular. Basically, it states that there is nothing
special about our corner of the universe, our planet, or our species. This
means that we can, for example, look at how gravity works here and assume that
it works exactly the same 10 billion light years away.
Whitmire's argument is that the view that we are an unusually young and
unusually primitive technological species is wrong. But we are the first technological
species to appear on Earth, taking 60 million years to evolve from the
proto-primates with no evidence of any preceding tech species. Since the Earth
will be able to support life for another billion years, that means that the
planet could, potentially, produce 23 more species like us.
The important point is that we've only been capable of sending messages
to the stars for a little over a century after the invention of radio. Whitmire
found that if he assumed that humans are typical rather than exceptional, then
the bell curve produced by statistical analysis places us in the middle of 95
percent of all civilizations and that ones that are millions of years old are
statistical outliers with a very low probability of existence.
In other words, if the human race is typical, then because we are a
young technological species that's the first on our planet and have only been
around for about a century, then the same is typical of all other
civilizations. Worse, if we are to remain typical, the human race will probably
die out and soon.
More
“I
think we agree, the past is over.”
President
George W. Bush.
The monthly Coppock Indicators finished July
DJIA: 21,891 +207 Up. NASDAQ: 6,348 +250 Up. SP500: 2,470 +171 Up.
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