Generational Dynamics World View News

[John]

** 06-Aug-2019 World View: Is China panicking?

> Just as Chinese goods are getting around tariffs by
> goods-laundering via 3rd party nations, they are getting our
> ag-goods via proxy. You can change the market numbers all you
> want, but a billion people still have to eat.

> BTW, now might be a good time to start retiring some of that debt
> - at the new lower price. Thanks, China

> Yes, the food supply globally is not looking good.
> From the Daily Telegraph( I have a paid subscription):

>> “The worry is that a break beyond 7 could send the Chinese
>> currency into a vicious circle in which selling leads to more
>> selling,” said Ke Baili from Caixin.

>> Kyle Bass, a long-time China bear at Hayman Capital, said a “mass
>> exodus” of capital is already underway as political protest in
>> Hong Kong reaches crisis point and China’s debt-driven growth
>> model reaches the limits. “The collapse has just begun,” he
>> tweeted.

>> Most analysts say the move by the PBOC is a deliberate choice, but
>> that is hardly more reassuring for investors. It means that the
>> Chinese Communist Party is willing to risk a full-blown conflict
>> with Washington on every economic front. Beijing has reportedly
>> ordered state bodies to halt purchases of farm products from the
>> US at the same time.

> China needs huge amounts of food, and with half their pigs dead
> from disease this summer, they need to get protein from
> somewhere. Also, food prices are soaring higher due to shortages
> and plunging currency f/x. It's as if China wants their citizens
> to riot.

> I can't believe how quickly things have escalated between the US
> and the UK and South Korea and Japan in the last two weeks. All we
> need now is for the North Koreans to do something stupid.

> Talking to a good friend in Asia a few hours ago, he told me he
> has just cancelled all clothing orders in China and diverted them
> to Sri Lanka. 90% of his products are made in Asia for the US
> markets.

> He told me the Chinese manufacturers are going crazy and tens of
> thousands will be layed off within the next few weeks. Riding the
> Chinese wave for the last twenty years, many Chinese are mortgaged
> to the hilt as they have bought property for pension purposes.

> China has huge debt payments due in USD so that spells
> trouble. They must reckon that the one party state is better
> insulated from an angry populace whereas they see Trump as more
> exposed and up for re-election. It's a mistake in judgement that
> will backfire.

I've had a growing feeling from some time that the Chinese Communist
Party (CCP) is approaching a state of total panic. And I'm using the
word "panic" in the Generational Dynamics sense of a financial panic,
or a "let's bomb Pearl Harbor" type of panic.

This is just a "feeling," but the events of the last week have made me
"feel" that this panic is reaching a fever pitch.

The nature of this panic comes from the fact that the CCP is
suddenly facing several existential crises that it has no
idea how to handle:

• The US-China trade dispute is having effects well beyond
  increased costs, especially because the Huawei restrictions are
  affecting the entire region. The result could be a chain of
  bankruptcies and social unrest.
• The Huawei restrictions are forcing the Chinese military
  off their game plan of intalling 5G around the world and controlling
  the entire internet.
• The Hong Kong riots have gone on for nine weeks, and show
  no signs of stopping. The CCP has issued warning after warning,
  and they won't tolerate the riots much longer, but they're restrained
  because a violent intervention would cause enormous blowback,
  financially and geopolitically.

Each of these crises is existential in the sense that a bad outcome
would threaten the collapse of the CCP (something like the Soviet
communist party collapse in 1991, which haunts CCP officials every
day).

These are all ongoing crises. What's changed in the past few days,
and this is why I'm getting this "feeling" of panic, was the
devaluation of the yuan currency, which is a very big deal, and then
the quick revaluation, along with the usual accusations directed at
the US. The "feeling" I'm getting is one of desperation, that the CCP
doesn't know what to do next.

Add to that the fact that North Korea keeps launching short-range
missiles (and I don't buy the claim that this being done under orders
from Xi Jinping). Also there was a sharp global stock market
semi-crash.

All of this is just a "feeling" of panic. It might all disappear
tomorrow. But the problems listed above will not go away, and the CCP
has no solution for any of them.

[John]

** 06-Aug-2019 World View: China-Cambodia and the South China Sea

• China is building a massive deep-water seaport project in
  Cambodia's Koh Kong province along the Gulf of Thailand

> A new Chinese naval base in Cambodia has also crossed a red line
> in the Asia Pacific region. US medium range missiles will be going
> into South-east Asia and maybe Australia.

> The obvious targets (to begin with) are Hong Kong and Taiwan. It
> will be easy for the PLA to send in the tanks into Causeway,
> Central and Kowloon but will spell the end of HK as the gateway
> for western capital into China.

> Taiwan will be a trickier proposition but the PLA's strategy is
> plain to see - block off the South China Sea completely to
> everyone else and block off entry points to the northern
> Pacific. The pieces in the picture are falling into place. The
> South China Sea is populated with and ringed by opposing naval and
> missile bases and leading to an inevitable confrontation. The
> question is not if but when.

> The only way to stop Chinese militarisation and aggression is for
> the US and the West and their allies to cease doing any business,
> trade, investment etc with fascist China. Today, Uighur
> concentration camps and territorial invasions in Asia - tomorrow,
> in the rest of the world. Boycott 'Made In China'. Stop appeasing
> fascist China.

I've come to the view in the last year that the "China dream"
of world hegemony is complete fantasy, and is not something
that even the Chinese military wants, since China is unable
to govern itself, let alone govern the world.

The conclusion that I reached is that China is pursuing a war of
revenge against Japan and a war of annexation against Taiwan. That's
why the book that I wrote ended up with the title "Was Between China
and Japan."

So my view is increasingly that China wasting a lot of money
and resources with the Belt and Road Initiative (BRI) and
things like a naval base in Djibouti, since these will not
support their primary objectives of Japan and Taiwan.

At any rate, if China is building a naval base in Cambodia, then as
you say it will probably be used to prevent defense of Hong Kong,
Taiwan and Japan through the South China Sea.

---- Sources:

-- Cambodia is the US-China rivalry’s latest front, as talk of base
access alarms Washington
https://www.scmp.com/comment/opinion/ar ... ess-alarms
(South China Morning Post, Hong Kong, 5-Aug-2019)

-- China's Cambodian invasion
https://www.japantimes.co.jp/opinion/20 ... Un2yXspB_B
(Japan Times, 5-Aug-2019)

-- Why a New China Naval Outpost in Cambodia Would Matter
https://thediplomat.com/2019/07/why-a-n ... ld-matter/
(Diplomat, 23-Jul-2019)

-- Chinese construction boom in Cambodian town raises fears of secret
military pact
https://www.abc.net.au/news/2019-07-26/ ... s/11345410
(Australia Broadcasting, 26-Jul-2019)


---- Related:


** 16-Dec-18 World View -- Cambodia denies major China-funded seaport project is a military base
** http://www.generationaldynamics.com/pg/ ... tm#e181216



** 17-Jan-19 World View -- Cambodia's Hun Sen threatens to kill opposition politicians if EU ends preferences
** http://www.generationaldynamics.com/pg/ ... tm#e190117

[FishbellykanakaDude]

...

All of this is just a "feeling" of panic. It might all disappear
tomorrow. But the problems listed above will not go away, and the CCP
has no solution for any of them.

(( My opinion follows. I really shouldn't need to say that, but too many people these days think that everything anyone says is stated as a "fact" that is meant to incite FURY in those who disagree with it which must be met with "counter facts" stated in highly emotional and hostile hyperbole. NOTHING anyone proffers in the "public realm" is fact. It is always and only opinion. If you find that opinion INFURIATING, then thanks for illustrating my point. ))

There seems to be a weird similarity between China's (or more properly the CCP's) "panic" and the "panic" exhibited by the recent "US Civil Race War" promoters who have shot up crowds recently (as well as those who "tolerate"/sympathize with them).

Both see existential threats that aren't actual existential threats.

They both WANT there to be existential threats because that is how they "justify" their pitiful raison d'être, which is the "total control of the evil and inferior other", who just happens to be anyone disagreeing with them, so as to maintain a homogeneous and stable society.

They are totalitarians, and wanna-be totalitarians, who long for absolute state power wielded by "themselves", where "the righteous" are allowed their "ubermensch rights", such as possessing "slaves" [the various grades of untermensch], a hierarchical social order composed of allowing upper-level slaves to "own" lower lever slaves in a cascading manner [a variety of a "social pyramid scheme" or rigid caste system], and having firearm rights.

They tell us precisely what they want to create. This is no surprise.

The reason for their "panic" is because they see their "new world" slipping away from them.

The CCP feels the generational "Pre-Crisis War Period" anxiety building, which by definition means they feel "under-prepared", and press to control what they can and bluster when they can't control some issue.

The "IDist Supremacists" feel the same world-wide mounting anxiety, and act out in their own way, trying to megalomaniacally incite an "uprising" through their "noble and righteous personal example".

Both (or all) of these impotent asshats can strike out as they will, but their "solutions" are utopian solutions to hallucinations of their creation that solve nothing.

Both inevitable actions, the Chinese initiation of WW3 and Supremacist Mass Murder (which are essentially the same thing), are consequences of "the times" and are not "solvable" per se.

Anyone saying they have a "solution" to the "problems of these times" is one variety or another of an IDist Supremacist. Period.

That is the point of this rant.

Beware and starve out "Solution Bringers". Treat only symptoms and do so in the bright light of day.

..and prepare to personally psychologically (and physically) survive the inevitabilities.

[Guest]

The biggest problem facing China is the food supply. It doesn't have enough to feed its largely already undernourished population.

How is China feeding its population of 1.4 billion?

In 2012, China paid out $165 billion in agricultural subsidies. The next highest governments that supported agriculture through subsidies were Japan at $65 billion and the United States at $30 billion. Notwithstanding these efforts, China’s agricultural development leaves much to be desired, as it continues to tackle inefficiency and substandard-quality issues. For instance, farmers have been encouraged to grow on unsuitable land and have been subsidized to produce food that would be cheaper to import.

The twin challenges of maintaining economic growth while feeding its growing urban population with a countryside that features only 0.19 acres of arable land per capita has come at a heavy cost. The Economist Intelligence Unit ranked China 17th out of 25 in the sustainable agriculture category of its Food Sustainability Index. In the same index Germany ranked first and India ranked last.

China’s industrialization has also resulted in significant environmental damage, which greatly limits domestic production capacity. Industrial pollution has tainted as many as 13 million tons of crops with heavy metals. It is estimated that almost one-sixth of China’s land has been affected by soil contamination due to toxic runoff. Water scarcity is also a concern, as the government reported in 2014 that nearly 60 percent of China’s underground water is polluted and unfit for drinking without treatment. In 2013, widespread contamination of soil, especially in areas like Henan province, prompted the government to prohibit the farming of 8 million acres of contaminated agricultural land until it can be rehabilitated.

Such issues exacerbate the Chinese public’s suspicion towards the government’s agricultural regulation. The Global Food Security Index ranked China as 40th out of 113 countries in terms of food quality and safety. By comparison, the United States and Australia ranked first and fourth, respectively. Although India and China both have similar large populations and household food expenditure rates, India was ranked much lower at 80th in food quality and safety. The top ten in this category were all OECD economies.

Food safety incidents, such as the 2008 melamine-laced milk scandal and incidents of cadmium-laden rice, have further sowed distrust. In 2014, a Chinese survey revealed that 80 percent of respondents were upset about food safety. These issues have caused residents to pay a premium for alternatives such as organic or imported foods.

A look at food security in China

Today, China feeds 20% of the world’s population on 7% of the world’s farmlands.2,3 To accomplish this feat, China paid a heavy price. China’s excessive and inefficient use of chemical fertilizers, increasing 3-fold in the past three decades, efficiencies averaging at 32% compared to world average of 55%,2 contributed to its current harmful state of environmental pollution.

Similarly, China’s water situation is problematic with low efficiency, poor quality and unequal distribution throughout the country. China’s available water supply per person is only 2050 m3 or 25% of the world’s per capita average. Irrigation of rural crops accounts for 60% of China’s total water demand with inefficient delivery of the order of 30–40%, compared to 70–80% for developed countries. In some regions of northern China, where water is scarce, excessive amounts of groundwater are being directed to agriculture.

[Tom Mazanec]

I wonder what Strauss would have thought of all this and 2019. Shame he is dead.

[John]

** 07-Aug-2019 World View: Bond yields falling

There are very long faces on CNBC this morning, at 8:40 am ET, because
10 year Treasury yields fell from 1.72% to 1.63% in the last two
hours.

If bond yields are falling rapidly, it means that a lot of investors
are suddenly buying bonds (as a "safe haven") and selling stocks, and
this matches a 300 point fall in DJIA futures when the market opens at
9:30 am ET.

Steve Liesman on CNBC just rattled off a list of "shocking" things
from the last 12 hours:

• India announces a larger than expected 35 basis point
  cut. (This means that the Royal Bank of India has reduced
  interest rates, making then 0.35% lower.)
• New Zealand, larger than expected 50 basis point cut. (0.5%
  reduction in interest rates)
• Thailand, completely unexpected cut of 25 basis points.
• Horrific Germany production data.

German bond yields just fell 4 basis points, with 10-year bund yields
at a record low of -0.58%. (That means that when you buy a German
bond, you don't get all your money back.)


https://www.forexlive.com/news/!/anothe ... s-20190807

All of these figures are signs of a deflationary spiral and a currency
war. (A country can boost its exports by devaluing the currency,
since that makes the country's export prices lower, compared to other
currencies. When all countries do the same thing, it's called "a race
to the bottom.")

Yesterday, I wrote about a "feeling" of panic that I've been
having. This morning's events extend that "feeling" of panic
for another day.

[JCP]

Trump should hint at refusing to sell China food in the future and watch food prices spike in China even faster. (Even if Trump is bluffing, a threatened embargo on food going to China would panic the Chinese and led to hording, thus exacerbating the food crisis in China.)

[Guest]

China cannot feed or fuel itself. The laws of nature cannot be papered over.

[Tom Mazanec]

China cannot feed or fuel itself. The laws of nature cannot be papered over.

No country can feed and/or feed itself. That is what international trade has done.

[Tom Mazanec]

Pakistan warns of war:
https://www.npr.org/2019/08/07/74895787 ... ead-to-war
Pakistan downgrades ties with India:
https://www.bbc.com/news/amp/world-asia-49267912
What an Indo-Pak war would mean (even if it doesn't go global):
https://www.thedrive.com/the-war-zone/2 ... r-exchange