The John Batchelor Show

Wednesday 12 March 2014

Air Date: 
March 12, 2014

 

Photo, above: GPS-guided parachute cargo containers. See Rick Fisher, senior Fellow, Asian Military Affairs of the International Assessment and Strategy Center, on Second Thomas Shoal "seizure" by PRC.

JOHN BATCHELOR SHOW

Co-hosts: Gordon Chang, Forbes.com; Dr. David M. Livingston, The Space Show.

Hour One

Wednesday  12 March  2014 / Hour 1, Block A: Harry Kazianis, managing editor of the National Interest and a non-resident senior Fellow at the China Policy Institute, in re: Russians have very good arms relationsh with China, but it’s cooled over the last few years; further, rumors are heating up that Russians are looking to sell China more advanced fighter jets and submarines. Russia and China could produce hypersonic weapons together, especially if they wanted to “stick it to the United States.” We have to be concerned – both sides in Crimea are hardening positions and bringing in better hardware.  

Wednesday  12 March  2014 / Hour 1, Block B: Rick Fisher, senior Fellow, Asian Military Affairs of the International Assessment and Strategy Center, in re: Second Thomas Shoal "seizure" by PRC: facts on the ground solve geopolitics.  Solutions include the US giving the Philippines GPS-guided parachute cargo containers. Filipino and Chinese relations. US has been giving hints they will follow through if China attacks Philippines. Doesn’t look like a point to go to war over – Chinese want to claim the territory in the South China Sea before discussing the possibility of sharing resources. 

Wednesday  12 March  2014 / Hour 1, Block C: Dennis Ray Wingo,  CEO, SkyCorp, in re:  Space Station &  SLS Orion (space launch system: heavy-lift & inadequately funded) – two major programs inadequately funded.  Political reality is that unless we dvp a moral and political foundation for these two, both will limp along till one or the other has a catastrophe. I think t he SLS will launch in 2017 – inadequate for upper-stage; having no money, it'll be fur years before the next launch with an upper state – and that's not even feasible. Untenable situation; see SpaceRail for a way out – if you merge the two programs, like two premature twins in a cradle where one keeps the other alive by hugging . . .  Elon Musk's dream of Falcon Heavy: it could sustain the Space Station but current presidential politics preclude that.

Wednesday  12 March  2014 / Hour 1, Block D:   Michael Auslin, AEI, in re: For the first time since 2012, Chinese are blocking Filipino access to land  here, the Second Thomas Shoal because US and he West are all bolloxed up in Ukraine.  Beijing is running short-term policy; like Putin, territorially aggressive but sure to bump up against reality at some point? Wish I could share your optimism. Formerly, any agreement in SE Asia was bilateral, which displeased the SE Asian nations, who often had conflicting claims and demand multilateral agreements – which Beijing refuses.  China aims to tame Vietnam, Taiwan, Philippines – have them be afraid of China's aggression. However, these are now growing not only worried but wroth, as they begin to unite against Beijing.  MA:  They  see that in the long run they can’t win against China and fear that the US won’t be ar9und in the long run [as in, Washington bug out on allies. –ed].  "Post-1945 liberal order" is on its way out.  The fear we should have is of a return to XIXe "might makes right" – we in the US are much too cavalier about this. Our contemporary  history has been anomalous.

Hour Two

Wednesday  12 March  2014 / Hour 2, Block A: Fraser Howie, co-author of Red Capitalism: The Fragile Financial Foundation of China's Extraordinary Rise, in re: China's first bond default.   Domestic investors are suffering because of mispricing of risk.  The big question: will the [civilians] learn from this? also, why did the local/national govt allow this to collapse – the default was only on interest and was fairly small.  This is taken as a real warning by some; but many foolishly believe that Beijing – the seven  men in the Standing Committee of the Politburo who run China - can somehow manage problem so here'll be little pain.  The Kunming knife attack: at some point, citizens will stop, think. "Hang on – our interior defense budget is greater than our exterior; why can’t this govt protect me?" Over weekend, new economic figures released – weak CPI, slowing growth. China's Chao-re solar company [Shanghai Chaori Solar Energy Science & Technology Co]– not very catchy names for international investment.

Wednesday  12 March  2014 / Hour 2, Block B: Charles Ortel, managing director of Newport Value Partners, in re:  how geopolitical events are affecting the global economy, especially the commodity markets.  Copper is a twelve-month low, but not worrisome?  I'd expect stocks to drop more than they have in this [Ukraine] crisis.  I'm nervous about what Putin will do in a larger sense if we push him too hard.  Two telling stats: total debt in US is $7 trillion higher at year-end 2013 than it was in 2008.  We also haven't enough active people. In the BRIC countries, where are bright spots?  Any attempt to delimit Russia's growth will bounce back and bite us.   107,000 Ford cars to be sold in Russia this year – a lot of co's want to sell there, have no real growth prospects elsewhere; not to mention all the banks who've gone in.  Still, we need to have resolute leadership to [keep Russia fro oozing across many border].  Which means we're in a hell of a lt of trouble.  Nineteenth century?  Unh – 1914. 

Wednesday  12 March  2014 / Hour 2, Block C:  Steven Greenhouse, NYT, in re: Obama Will Seek Broad Expansion of Overtime Pay— President Obama this week will seek to force American businesses to pay more overtime to millions of workers, the latest move by his administration to confront corporations that have had soaring profits even as wages have stagnated.

On Thursday, the president will direct the Labor Department to revamp its regulations to require overtime pay for several million additional fast-food managers, loan officers, computer technicians and others whom many businesses currently classify as “executive or professional” employees to avoid paying them overtime, according to White House officials briefed on the announcement. [more]

Wednesday  12 March  2014 / Hour 2, Block D:  Joseph Sternberg, WSJ Asia editorial board, in re:  China's Quiet Lehman Moment A solar-power company's default makes investors reconsider assumptions about the government. The default of Shanghai Chao-ri Solar Energy Science & Technology Co. last week set off speculation that China has reached its "Bear Stearns moment." This is the first time a domestic bond has been allowed to default. Economists at Bank of America suggested that it will leave investors queasy about unsustainable debt levels, much as news in 2007 of mortgage-related losses at two Bear Stearns hedge funds triggered doubts about the U.S. housing market.  [more] Is this evidence that the Chinese Central Committee doesn’t trust capitalism? It's a minor company; were capitalism permitted, many would fail.  There are a lot of distressed companies in China; why have some many not yet failed?  Is the Chao-ri failure a change of heart by Beijing?  What's holding the Chinese economy together is confidence in the technocrats; if they pick and choose which firms to save, will the confidence endure?  Also, confidence of investors that they can judge risk?  shareholders's suit has been filed again Chao-ri – "we've been defrauded" – so we'll soon know who's got money in there.  Also, suggestions of dodgy corporate governance and questions on if the order of investors is being honored.  Recently, a lot of small investors were bailed out n  a wealth-management firm.  Since 2008, rate of credit expansion has been far ahead of the rate of economic growth.

Hour Three

Wednesday  12 March  2014 / Hour 3, Block A: Bill Whalen, Hoover, Advancing a Free Society,  in re: A Jolly Good Night In Florida

Wednesday  12 March  2014 / Hour 3, Block B: Seb Gorka, National Defense University, in re:  Britain pushes for sanctions on Russian MPsUkraine crisis: Angela Merkel accuses Putin of 'stealing' Crimea.   The Future Is Now?  There's no doubt that the situation in the Ukraine, where Russian political and economic interests are pitted against those of Western Europe, and by extension against those of the U.S., is the most serious confrontation with Russia since the war in Kosovo.

I am amused, however, by the dust-up during the first week in March about whether or not the U.S. intelligence community (IC) provided adequate and timely warning that Putin would insert military force into the Crimea.  A vague sense of history coupled with “breaking news stories” should have told anyone even casually following events in Kiev that once Putin’s cohor, President Viktor Yanukovych,  was pushed from power there was a strong likelihood that Russia would use military force to “stabilize” the situation in what it believes is its sphere of influence.  Russia’s modern history of military intervention in its near abroad, whether under the Brezhnev Doctrine or otherwise, is long and undistinguished:  Hungary (1956), Czechoslovakia (1968), Poland (1980) Afghanistan (1979), Chechnya (1994 & 2000), and Georgia (2008). Don’t get me wrong: I'm not saying that the IC didn’t warn; to the contrary, I agree completely with DNI Clapper’s observation that . . .   [more]

Wednesday  12 March  2014 / Hour 3, Block C:  John Nicolson, Scottish journalist, in re: Scottish independence: balancing the books.   Independent Scotland would lose UK's AAA rating, warns Citigroup  Banking giant says an independent Scotland "would have a relatively weak and risky fiscal position"  The economic viability of an independent Scotland has been questioned by one of the world’s biggest banks — joining the growing number of businesses voicing concerns over the prospect of Edinburgh breaking away from the UK. Analysts at Citigroup, America’s third-largest lender, have said that if Scotland was deprived of a formal currency union, it would qualify for only a single-A credit rating — two notches lower than the “gold-plated” grade given to the UK by S&P. Other countries with a single-A rating include Botswana and Trinidad & Tobago.

A lower credit rating could lead to Scotland paying more to finance its debts, and make it harder for Edinburgh to attract international capital.

“Overall, we believe an independent Scotland would have a relatively weak and risky fiscal position,” the bank said in a research note to investors on Friday. “This might well produce a sizeable borrowing premium.”  The effect of Scottish independence would be only “a modest negative” for England, Citi said.

. . . Alex Salmond unveils figures showing Scotland has a deeper deficit thanks to higher public spending and a sharp dip in oil revenues.

Wednesday  12 March  2014 / Hour 3, Block D:   Robert Zimmerman, behindtheblack.com, in re:   The Sun goes boom again!  On Monday NOAA posted its monthly update of the solar cycle, showing the sunspot activity for the Sun in January. As I do every month, I am posting it, with annotations.

January was the most active month for sunspots this entire solar cycle, exceeding the predictions of the solar scientists, an event that has been quite rare during this generally weak solar maximum. In fact, the Sun was so active that for the first time, the second peak in a double-peaked solar maximum exceeded the first peak in sunspot activity.
Read more

Most Mars meteorites found on Earth may have been blasted here from a single impact on Mars around 3 million years ago. This is a great scientific detective story. It has a lot of uncertainties, should definitely be taken with a grain of salt, but is nonetheless very convincing.

WISE’s survey of the sky in infrared has now shown that there is no large planet X orbiting beyond Pluto.  This recent study, which involved an examination of WISE data covering the entire sky in infrared light, found no object the size of Saturn or larger exists out to a distance of 10,000 astronomical units (au), and no object larger than Jupiter exists out to 26,000 au. One astronomical unit equals 93 million miles. Earth is 1 au, and Pluto about 40 au, from the sun. “The outer solar system probably does not contain a large gas giant planet, or a small, companion star,” said Kevin Luhman of the Center for Exoplanets and Habitable Worlds at Penn State University, University Park, Pa., author of a paper in the Astrophysical Journal describing the results.

The theory, popular among planetary scientists and journalists, is that this theorized distant planet would periodically disturb the orbits of comets in the Oort Cloud, sending them raining down on Earth and thus cause the periodic extinction events found in the paleontological record. It was a cute theory, but based on little data. Now we have the data, and no such planet exists. The data have found a lot of previously unknown nearby stars and brown dwarfs, which is significant in that they are close and can be studied more easily.

Hour Four

Wednesday  12 March  2014 / Hour 4, Block A: City of Ambition: FDR, LaGuardia, and the Making of Modern New York by Mason B. Williams  (1 of 4)

Wednesday  12 March  2014 / Hour 4, Block B: City of Ambition: FDR, LaGuardia, and the Making of Modern New York by Mason B. Williams  (2 of 4)

Wednesday  12 March  2014 / Hour 4, Block C: City of Ambition: FDR, LaGuardia, and the Making of Modern New York by Mason B. Williams  (3 of 4)

Wednesday  12 March  2014 / Hour 4, Block D: City of Ambition: FDR, LaGuardia, and the Making of Modern New York by Mason B. Williams  (4 of 4)

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