Friday, 12 May 2023

Financial Russian Roulette.

Baltic Dry Index. 1608 -32      Brent Crude 74.60

Spot Gold 2012            US 2 Year Yield 3.89  -0.01

Coronavirus Cases 01/04/20 World 1,000,000

Deaths 53,103

Coronavirus Cases 12/05/23 World 688,141,754

Deaths 6,873,514

You will find that the State is the kind of organization which, though it does big things badly, does small things badly, too.

John Kenneth Galbraith.

In the Asian stock casinos, good news is ignored as the prospect of a US debt default becomes the main concern.

Few actually expect a US debt default to happen, but if President Biden won’t negotiate with the Republican leadership, what if the USA blunders itself into what would quickly become an international financial panic?

With only about two to three weeks to go before Uncle Scam runs out of cash to pay his bills, according to US Treasury Secretary Yellin, President Biden and the Republicans are now playing a high stakes version of financial Russian roulette.

Asia markets trade mixed as U.S. inflation shows more signs of easing

UPDATED THU, MAY 11 2023 11:51 PM EDT

Asia-Pacific markets are trading mixed after the U.S. posted more data that showed inflation was easing.

The producer price index for April, posted a year-on-year increase of 0.2%, against a Dow Jones estimate for 0.3% and after declining 0.4% in March. Excluding food and energy, core PPI also rose 0.2%.

Australia’s S&P/ASX 200 was lower and slipped 0.2%, along with South Korean markets. The Kospi lost 0.62% and the Kosdaq saw a smaller loss of 0.25%.

In Hong Kong, the Hang Seng index fell 0.39% ahead of its first-quarter GDP figures, while mainland Chinese markets were all lower. The Shanghai Composite fell 0.68%, and the Shenzhen Component inched down 0.41%.

Japan’s Nikkei 225 bucked regional trend rose 0.8%. The Topix also climbed 0.56% led by health care and utilities stocks.

Overnight in the U.S., stocks ended mixed, with the Dow Jones Industrial Average and S&P 500 slipping 0.66% and 0.17% respectively as Disney shares fell more than 8% the day after the media giant released its fiscal second-quarter results.

Concerns around regional banks persisted as investors further digested economic data releases. In contrast, the Nasdaq Composite posted a gain of 0.18% as Alphabet shares gained near their highest level since August.

Asia markets trade mixed as U.S. inflation shows more signs of easing (

Biden, McCarthy debt ceiling meeting postponed, spending cuts on table

WASHINGTON, May 11 (Reuters) - A debt limit meeting between U.S. President Joe Biden and top lawmakers that had been scheduled for Friday has been postponed, and the leaders agreed to meet early next week, a White House spokesperson said on Thursday.

Aides from both sides have started to discuss ways to limit federal spending, as talks on raising the government's $31.4 trillion debt ceiling to avoid a catastrophic default creep forward, people familiar with the discussions said.

"Staff will continue working and all the principals agreed to meet early next week," the spokesperson said.

The aides to Biden, Republican House Speaker Kevin McCarthy, Democratic Senate Majority Leader Chuck Schumer, top Senate Republican Mitch McConnell and top House Democrat Hakeem Jeffries and met Wednesday and Thursday to discuss raising the debt ceiling, the White House said earlier.

McCarthy told reporters at the Capitol that the delay was not a sign of trouble in the talks but that he believed the staff negotiators who had been meeting this week needed to continue to talk before the principals met again.

"I don't think there's enough progress for the leaders to get back together," he said. He also said one of the Congress members wasn't able to make the Friday meeting.

White House officials acknowledge that they must accept some spending cuts or strict caps on future spending if they are to strike a deal, two sources said, while insisting they must preserve Biden's signature climate legislation that passed along party lines last year.

---- The two sides are also debating how long to push out the next potential debt ceiling showdown, sources said. Biden and Democrats would prefer a two-year window, pushing any legislative action beyond the 2024 presidential election, but they may have to accept larger spending cuts or stricter caps to get more time, the sources said.


Biden, McCarthy debt ceiling meeting postponed, spending cuts on table | Reuters

Jamie Dimon warns panic will overtake markets as U.S. approaches debt default

JPMorgan Chase CEO Jamie Dimon said Thursday that markets will be gripped by panic as the U.S. approaches a possible default on its sovereign debt.

An actual default would be “potentially catastrophic” for the country, Dimon told Bloomberg in a televised interview. Dimon said he expects that worst-case scenario will be avoided, however, because lawmakers will be forced to respond to growing concern.

“The closer you get to it, you will have panic” in the form of stock market volatility and upheaval in Treasurys, he said.

Dimon joined a host of business figures and administration officials making dire predictions about the consequences of failing to raise or suspend the U.S. debt limit and allowing the world’s largest economy to default on its bonds. Treasury Secretary Janet Yellen has said the idea that the country could default should be “unthinkable” and would lead to economic disaster.

“If it gets to that panic point, people have to react, we’ve seen that before,” Dimon said.

But “it’s a really bad idea, because panic becomes something that is not good,” he added. “It could affect other markets around the world.”

War room

JPMorgan, the biggest U.S. bank with about $3.7 trillion in assets, has been preparing for the risk of an American default, Dimon said.

Such an event would ripple through the financial world, impacting “contracts, collateral, clearing houses, and affect clients definitely around the world,” he said.

The bank’s so-called war room has been gathering once weekly, a rate that will shift to daily meetings around May 21 and then three meetings daily after that, he said.

He exhorted politicians from both major U.S. parties to compromise and avoid a ruinous outcome.

“Please negotiate a deal,” Dimon said.


JPM's Jamie Dimon warns of market panic as U.S. nears default (

German minister calls for maturity on U.S. debt ceiling talks: ‘We have to avoid further risks’


German Finance Minister Christian Lindner hopes American lawmakers will be “mature” over the debt ceiling negotiations to avoid further headwinds for the global economy.

U.S. Congress is trying to find a compromise on the debt limit — which refers to the maximum amount of money that the two chambers allow the federal government to borrow. Democratic leaders want the limit to be raised but Republican lawmakers have called for spending cuts to be agreed before anything is approved.

Time is running out for an agreement, with U.S. Treasury Secretary Janet Yellen warning earlier this month that without a deal, the largest economy in the world could default by June 1.

“There is a high level of uncertainty, we have to stabilize the economic development, we have to further fight inflation and in this situation everyone has to be responsible, we have to avoid further risks, especially risks which are in our hands to decide on,” Christian Lindner, the German finance minister, said at the sidelines of a G-7 meeting in Japan.

“I cannot comment on domestic politics in other countries, but I hope everyone is mature in this situation and avoids further risks for the global economic development,” he told CNBC’s Martin Soong.

Speaking earlier Thursday at a press conference, also at the G-7 meeting, Yellen said a U.S. default would threaten the global economy. U.S. President Joe Biden had previously warned that differences with the Republican Party over the debt ceiling risk a recession.


US needs to be 'mature' over debt ceiling negotiations, Germany's Lindner says at G-7 (

Yellen warns US default would threaten global economy, undermine US leadership

NIIGATA, Japan, May 11 (Reuters) - U.S. Treasury Secretary Janet Yellen on Thursday urged Congress to raise the $31.4 trillion federal debt limit and avert an unprecedented default that would trigger a global economic downturn and risk undermining U.S. global economic leadership.

Yellen issued the latest in a series of increasingly stark warnings in remarks prepared for a press conference ahead of a meeting in Japan with her counterparts from the Group of Seven (G7) rich nations, as well as India, Indonesia and Brazil.

"A default would threaten the gains that we've worked so hard to make over the past few years in our pandemic recovery. And it would spark a global downturn that would set us back much further," she said. "It would also risk undermining U.S. global economic leadership and raise questions about our ability to defend our national security interests."

U.S. President Joe Biden on Wednesday said failure by Congress to act before Treasury runs out of money to pay the government's bills - something that could happen as early as June 1 - risked throwing the U.S. economy into a recession.

Yellen said Republican brinkmanship on the issue amounted to a "crisis of our own making" and that just the threat of a default could lead to a downgrade of the U.S. government's credit rating, as occurred during a debt ceiling fight in 2011.

It could drive interest rates higher on mortgages, auto payments and credit cards, Yellen said, noting that rates were already spiking on debt due around June 1.

Biden, a Democrat, insists that Congress has a constitutional duty to raise the debt ceiling, which reflects previously spent federal money, without conditions, but Republicans who control the House of Representatives have tied any increase in the debt limit to sweeping budget cuts.

Unlike most developed countries, the U.S. sets a ceiling on how much it can borrow. Because the government spends more than it takes in, lawmakers must periodically raise that cap.


Yellen warns US default would threaten global economy, undermine US leadership | Reuters

“It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale."

John Kenneth Galbraith. The Great Crash: 1929.

Global Inflation/Stagflation/Recession Watch.

Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.

Bank of England ditches any threat of recession in biggest GDP upgrade since 1997 independence

May 11, 2023

Any threat of a recession in Britain this year and over the medium term has today been scrapped by the Bank of England in what was the largest upgrade to the central bank’s GDP projections since it was made independent in 1997.

The UK economy is now tipped to broadly flatline this year and start growing in the final six months, leading the Bank to raise its 2023 GDP projections 0.7 percentage points compared to February.

Output growth was also hiked to 0.9 per cent next year from a 0.3 per cent contraction and to 0.7 per cent from 0.2 per cent in 2025.

While still pretty bleak, the Bank’s forecasts now project no quarter of negative growth over the next three years, a sharp turnaround from the fifteen straight months of contraction it outlined in November.

“The improved outlook reflects stronger global growth, lower energy prices, the fiscal support in the Spring Budget, and the possibility that a tight labour market leads to lower precautionary saving by households,” the Bank said.

Inflation though is poised to be higher and stick around for longer than the Bank previously expected, mainly due to surging food prices and accelerating wages.

It reckoned back in February the rate of price increases would slim to 3.9 per cent by the end of the year. That figure has been bumped up to around 5.2 per cent.

“Almost all of the upside news in CPI inflation data since the February Report has been accounted for by developments in food and other goods,” the central bank said in its monetary policy report.

Food prices have surged around 19 per cent over the last year, according to the Office for National Statistics, the fastest increase in about four decades.

Inflation doesn’t return to near the Bank’s two per cent target until the start of 2025 and then remains below that level, possibly opening the door to Governor Andrew Bailey and co cutting rates toward the back end of next year to stimulate demand.

Inflation in March reached 10.1 per cent in March, shocking experts, despite the Bank raising interest rates 415 basis points at that time, the fastest tightening cycle since the 1980s.

Today it backed a twelfth straight increase, lifting borrowing costs 25 basis points to 4.5 per cent, their highest level since October 2008.

Unemployment has also been slashed in response to the much better-than-feared GDP outlook, with the rate staying below four per cent for the whole of this year and peaking at 4.54 per cent in the middle of 2026.

A sharp reduction in energy bills, compounded by decent pay growth, means UK households are poised to dodge the severe living standards shock the Bank thought was coming down the road.

Bank of England ditches any threat of recession in biggest GDP upgrade since 1997 independence (

Covid-19 Corner

This section will continue until it becomes unneeded.

Editorial: The COVID-19 pandemic emergency is over, but virus is still here

May 11, 2023

After three long and difficult years, the federal COVID-19 public health emergency ends Thursday. The World Health Organization declared the coronavirus emergency was over globally the week before, and earlier this year California ended its pandemic state of emergency.

But make no mistake: The emergency response may have ended, but COVID-19 is still with us. The virus that has officially killed about 7 million people worldwide (and very likely many more unofficially), and more than 1.1 million people in the United States, is still sickening thousands every day. People are still dying. Millions are still suffering from the loss of loved ones, opportunities and finances. A new, more infectious Omicron subvariant, Arcturus, is circulating in Los Angeles, along with a brand-new symptom: pink eye.

Now we are shifting into the next phase, in which we manage the waves of infection that are likely to continue for the foreseeable future, while seeking new medications and therapies to reduce transmission, treat infection and help the many people still suffering from infections they contracted months, even years earlier.

It's not certain how many people have the condition known as long COVID, though health experts estimate it may be in the millions. A study by the Centers for Disease Control and Prevention last year found that nearly one-fifth of Americans who had COVID over the previous two years were still experiencing symptoms, which include fever, dizziness, cognitive dysfunction and heart palpitations.


Editorial: The COVID-19 pandemic emergency is over, but virus is still here (

Some other useful Covid links.

Johns Hopkins Coronavirus resource centre

Centers for Disease Control Coronavirus

The Spectator Covid-19 data tracker (UK)

Technology Update.

With events happening fast in the development of solar power and graphene, among other things, I’ve added this section. Updates as they get reported.

Graphene-based conductive hydrogels show promise for implantable bioelectrodes

10 May 2023

Researchers in South Korea have developed graphene-based conductive hydrogels possessing injectability and tuneable degradability, an advance claimed to further the design and development of advanced implantable bioelectrodes.

Implantable bioelectrodes are electronic devices that can monitor or stimulate biological activity by transmitting signals to and from living biological systems. Such devices can be fabricated using various materials and techniques, and selection of the right material for performance and biocompatibility is crucial. To date, conventional metal-based bioelectrodes are associated with painful incision, tissue inflammation, inefficient signal transduction, and uncontrolled stability in living biological systems.

Conductible hydrogels have gained traction due to their flexibility, compatibility, and excellent interaction ability, but the absence of injectability and degradability has limited their convenience of use and performance in biological systems.

Now, a team led by Professor Jae Young Lee from the Gwangju Institute of Science and Technology (GIST) has developed graphene-based injectable conductive hydrogels (ICHs) that overcome these challenges. The team’s findings are detailed in Small.

In a statement, Prof Lee said: “Traditional implantable electrodes frequently cause several problems, such as large incision for implantation and uncontrolled stability in the body. In contrast, conductive hydrogel materials allow minimally invasive delivery and control over the bioelectrode’s functional in vivo lifespan and are thus highly desired.”

To synthesize the ICHs, the researchers used thiol-functionalised reduced graphene oxide (F-rGO) as the conductive component due to its large surface area and desirable electrical and mechanical properties. They selected dimaleimide (PEG-2Mal)- and diacrylate (PEG-2Ac)-functionalised polyethylene glycol as prepolymers to facilitate the development of ICHs that are stable and hydrolysable, respectively. These prepolymers were then subjected to thiol-ene reactions with poly (ethylene glycol)-tetrathiol (PEG-4SH) and F-rGO.


The Engineer - Graphene-based conductive hydrogels show promise for implantable bioelectrodes (1)

Another weekend and another weekend closer to debt default by Pakistan and just possibly President Biden’s Uncle Scam!

While I consider a US default highly unlikely, Pakistan avoiding a debt default is equally highly unlikely.

While Pakistan’s default will greatly damage Pakistan and the south Asian economy to a lesser extent, a US debt default would be like a severe earthquake to the global economy.

For that reason I think some sort of US debt ceiling raise compromise is more likely, but with Washington politics so bitter and extreme at present, the chance for spectacular error can’t be entirely ruled out.

If all else fails, immortality can always be assured by spectacular error.

John Kenneth Galbraith.


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