Wednesday 18 May 2016
Photo, left: Chinese Shenyang J-11B fighter intercepting an American P-8. The photo was taken by the crew of the P-8.
JOHN BATCHELOR SHOW
Co-hosts: Gordon Chang, Forbes.com & Daily Beast.
Hour One
Wednesday 18 May 2016 / Hour 1, Block A: Harry Kazianis, senior Fellow for Defense Policy at the Center for the National Interest, in re: J-11 Shenyang harassed a US Orion [Here Is the Chinese Fighter Jet that Harassed a U.S. Surveillance Plane] – flew within 509 feet! Directed from the top of the Chinese political system. Recall the “Guam-killer.” China is very upset at Freedom of Navigation in South China Sea. Nine-Dash Line: China says “This is our sea.’ Philippines do not agree. Whence did these Chinese planes depart – a bogus island that’s been [wholly illegally] militarized? If you were Pacific commander, what would you do? I think we need first to be more vocal; and I’d be speaking with my political counterparts to explain this whole anti-access denial of ____ program; soon will have anti-ship missiles all around there making the area vastly too dangerous -0 tremendous losses of American ships and sailors. . . . Second Island Chain; DF26: caught a lot of open-source mil by surprise – this missile was paraded down the Beijing boulevards, described as an antiship weapon with 2,500-mi range. ALCMs, and other sources of devastating strikes by China on a US aircraft carrier. Countermeasures: malware, et al.; also chaff/smokescreen to [confuse] the missile as it arrives. . . . There are ways to beat this, but we’ll have to watch and see. http://thehill.com/policy/defense/280009-pentagon-report-on-chinese-military-angers-beijing
Wednesday 18 May 2016 / Hour 1, Block B: Andrew Collier, managing director of Orient Capital Research in Hong Kong, in re: China’s economy. In 1997, the rest of the world were doing well and bough t a lot of Chinese exports, pulling China out of a tight spot. If the West cannot do that next year, then Chia will have to increase its debt load, which already is extremely high. On the third hand, they have a close capital count – can't move money in and out of China very easily; their real problem isn't intl purchasing but zombie firms. . . . No plan B. Need to reduce debt without collapsing the economy, and get rid of zombie banks. They haven't been able to do this over years; can they now? Barry Eichengreen (Berkeley). . . . Debt bubble will be a problem. Bloomberg: 247%? 350% (from Davos)? Look at overall size of debt OR the growth of debt over time – if your debt has been half od your salary then suddenly jumps to three-quarters, it ‘s that that’d be alarming. China is creating debt 4X faster than nominal GDP; eventually will have to face economic reality. . . . It's thought that Xi Jinping may have published anonymous letters in Ren Min Jr Bao (China Daily) saying, “Get real.” What if the property bubble collapses – hundreds of billions of losses in a moment? http://www.bloomberg.com/news/articles/2016-05-17/blackrock-s-fink-says-we-all-have-to-worry-about-china-s-debt
Wednesday 18 May 2016 / Hour 1, Block C: Gregory Copley, StrategicStudies director; editor, GIS/Defense & Foreign Affairs; & author, UnCivilization, in re: fall of BRICSA, Game of Ports.
South African GDP faring poorly; Sierra Leonean decreased by 24% last year; seeing the growth of a new economic zone/trading region emerge in the Levant and the red Sea area. Nigeria, inter al., has not dealt with the decline of resource demand. China, unlike African states’s former colonial partners, feels no need to provide social relief. Africans see they get no emotional/social support of the sort they’re used to getting from Europe and US. China intends to buy resources and land. Are putting Chinese workers in to build infrastructure; much resented locally; those Chinese workers are unwelcome back in China and are causing trouble in Ethiopia for example. Europe’s only interest in Africa is to buy off govts to stop the flow of immigrants. US wont put any money in, esp Obama Adm – which is angry that African hasn't embraced the moral values of the Obama Administration. So China has no competition there. US has one base in Djibouti and another in southern Ethiopia; may install a third one (not in Nigeria).
.. .. ..
Brazilian Pres. Dilma Vana Rousseff’s impeachment on May 12, 2016, was clearly due to consistent missteps by the president and her colleagues, but the underlying contribution to the Brazilian crisis — and crises in other countries — of the slowdown in the People’s Republic of China cannot be overstated. Brazil’s economy has been in significant decline since the second quarter of 2014, with the exception of a minor (one-tenth of one per cent) rise in last quarter of that year. All 2015 and early 2016 saw the Brazilian gross domestic product decline. Overall 2015 contraction was 3.8 per cent, the worst annual performance since 1991.
Much of this is due to the contraction of PRC mineral resource requirements from its major supplier nations, coupled with (and inducing) a reduction in commodity pricing due to the lower demand. Along with this was the global collapse of oil and gas prices (and rising availability), which affected the fortunes of the Brazilian State energy company, Petrobras. Pres. Rousseff, in the face of this, was unwilling to cut spending — or corruption — and had committed Brazil to major high-profile, high-budget projects, such as the football World Cup and the 2016 Summer Olympics.
Adding to the concerns for Brazil was the emergence of the mosquito-borne Zika virus, which has deterred tourism to the country, leading up to the Olympics.
If the collapse of demand for commodities, spurred by the PRC, was of profound concern to major economies such as Brazil and Australia, it has had an even great impact on many African economies, including South Africa, Nigeria, and Sierra Leone. Sierra Leone’s GDP grew in 2014 by 7.1 per cent overall, and only by one percent after iron ore production was taken out of the equation. The GDP contracted by an estimated 21 per cent in 2015, of which declining iron ore exports accounted for 20 per cent. None of the countries which were overwhelmingly dependent on the PRC market has taken significant steps either to cut spending or to build compensatory economic mechanisms — or, indeed to stabilize social unrest and voter anger.
Wednesday 18 May 2016 / Hour 1, Block D: Gregory Copley, StrategicStudies director; GIS/Defense & Foreign Affairs; & author, UnCivilization, in re: Berbera within Somaliland within Somalia. [Somaliland, officially the Republic of Somaliland, is a self-declared state internationally recognized as an autonomous region of Somalia. Map: Somaliland is the peach-gray upper segment; Somalia is the whole country http://www.ethanzuckerman.com/blog/wp-content/somaliamap.jpg] Djibouti now has a US military base (a port), and soon also will have a very nearby Chinese military port. Berbera is Somaliland’s main port. US had a major air base, later taken over by the USSR. Fell into desuetude. DubaiWorld was in charge, left it now to China; instead are pumping money into Berbera. Huge rivlary ‘twixt Dubai and Djibouti. Gulf Cooperation Council Berbera (Dubai World and UAE and Saudis) and Egyptian officials there looing to mount ops. Everybody developing ports well into Eritrea. Can China sustain this – is it possibly overreach? Saw this in Brazil, Venezuela, and throughout Africa. In the Horn of Africa and down into Kenya (Lamu Island – Chinese commercial port) . . . European powers had trade following the flag; Chinese do the reverse; first trade, then the flag after profitable commercial enterprises. . . . Djibouti: A Hong Kong company, China Merchants Holding, taking over management; links with Chinese-built rail from Djibouti or Addis, then down to Lamu. Billions invested in all this, becoming money-making endeavors and linked to Pakistan and its road and rail links into China.
“…Meanwhile, it was becoming clear why Djibouti had opted to move the port management from Dubai World to the PRC. The day after his swearing-in (and the same day that DW was signing the agreement on Berbera), Pres. Guelleh met with Justin Yifu Lin, a former Deputy President of the World Bank, who currently headed Peking University's Center for New Structural Economics. Lin was accompanied by a large delegation, and handed over to Pres. Guelleh a report on the megaproject dubbed ‘Djibouti Free Trade Zone.’ The report concerned Djibouti's plans to construct a new $7-billion industrial zone entirely funded by a Chinese company, China Merchants Holding.
“Apart from this project, and the implicitly-related, $3-billion 656km (408 mile) Djibouti-Addis Ababa rail link (due to open in 2016), the PRC has a very strategic link into the Djibouti-Ethiopia framework, with logistic links further into Africa. But the PRC, too, is working to cement strategic relations with Egypt because of the importance of the Mediterranean-Suez-Red Sea sea line to China. Even so, Beijing refrains from calling its new naval base, being built in Obock, Djibouti, a ‘military base’ . . . ”
Hour Two
Wednesday 18 May 2016 / Hour 2, Block A: Christian Whiton, president of the Hamilton Foundation, in re: Pres Obama's trip to Vietnam and Japan. Note history: Japan badly defeated by US; and not quite the same for Vietnam, yet both now look to welcome the president of the US, who apparently wants to continue his apology tour, initially in the Muslim world; here, apologizing for the US in Hiroshima for the bomb, in Vietnam for Agent Orange. It’d be good diplomacy to offer these apologies in exchange for, for example, human rights improvement in in Vietnam. Greater East Asia Co-Prosperity Sphere. This will all be seen as another proof that the US is weak. China buzzes US aircraft; can Pres Obama change this in conversations with Abe? Note new Filipino president, their own Trump. A strong entrepreneurship from Commander Harris and SecDef Carter: pushback on China, FON, condemn the unsafe intercept today. The question is, does th White House [try to undercut this?]. Abe’s “third arrow”(structural reform) has never occurred; is in fact a Keynesian [sigh].
Wednesday 18 May 2016 / Hour 2, Block B: Mike Davis, professor at Hong Kong University Law School, in re: update on the Hong Kong booksellers. Also: Zhang Dejiang commented on Hong Kong [rebellion], discounted it. Made us worry about the rule of law: judges should toe the line. Will refuseniks/independentistas be annoyed or emboldened? Concerning Zhang Dejiang, they snooze. As Hong Kong is being abused, are Hong Kong citizens depressed? Yes – they’ve been lining up for passports. I personally have a Hong Kong ID card and can enter at will; this is the first time I’ve used my US passport because I want US consular cover. AS Beijing snatches booksellers off the street, all Hong Kong residents who have a foreign citizenship are bringing that front and center, with formal declarations, as protection. Zhang Dejiang’s speech: two – one on HK, one on China’s one belt/one road (trying to buy off the HK community with a lot of money). https://www.hongkongfp.com/2016/05/18/chinas-zhang-deijiang-slams-hong-kongs-localism-and-independence-movements/
Zhang Dejiang (born 4 November 1946) is a Chinese politician and a high-ranking official in the Communist Party of China. He currently serves as Chairman of the Standing Committee of the National People's Congress, roughly the equivalent of a speaker of parliament in other countries. He is also a third ranked member of the Politburo Standing Committee of the Communist Party of China, deputy head of the National Security Commission and the top official responsible for Hong Kong and Macau affairs.
“China’s Zhang Dejiang slams localism and Hong Kong independence movement” https://www.hongkongfp.com/2016/05/18/chinas-zhang-deijiang-slams-hong-k...
Wednesday 18 May 2016 / Hour 2, Block C: Josh Rogin, Bloomberg View, in re: http://www.thedailybeast.com/articles/2016/05/18/kim-jong-un-would-eat-trump-s-lunch-and-beijing-would-laugh.html
Wednesday 18 May 2016 / Hour 2, Block D: David Feith, WSJ editorial, in re: Philippines
Hour Three
Wednesday 18 May 2016 / Hour 3, Block A: Monica Crowley, Fox, & Washington Times Online opinion editor; in re: http://thehill.com/blogs/ballot-box/presidential-races/fox-news-poll-bernie-sanders-donald-trump-hillary-clinton
Wednesday 18 May 2016 / Hour 3, Block B: Monica Crowley, Fox, & Washington Times Online opinion editor; in re: http://thehill.com/blogs/ballot-box/presidential-races/280381-trump-unveils-list-of-11-potential-supreme-court-nominees
Wednesday 18 May 2016 / Hour 3, Block C: Monica Crowley, Fox, & Washington Times Online opinion editor; in re: http://thehill.com/homenews/campaign/280432-biden-no-fundamental-split-among-dems
Wednesday 18 May 2016 / Hour 3, Block D: Monica Crowley, Fox, & Washington Times Online opinion editor; in re: http://thehill.com/homenews/campaign/280432-biden-no-fundamental-split-among-dems
Hour Four
Wednesday 18 May 2016 / Hour 4, Block A: James Taranto, Wall Street Journal editorial board; in re:
Bern, Baby, Burn A major American political party faces disarray, even violence.
Can Hillary Win? It’s hard to see how, unless she can’t lose. (1 of 2)
Wednesday 18 May 2016 / Hour 4, Block B: James Taranto, Wall Street Journal editorial board; in re: Bern, Baby, Burn A major American political party faces disarray, even violence.
Can Hillary Win? It’s hard to see how, unless she can’t lose. (2 of 2)
Wednesday 18 May 2016 / Hour 4, Block C: Mary Anastasia O’Grady, Walls Street Journal, in re: Venezuela
Wednesday 18 May 2016 / Hour 4, Block D: Liya Palagashvili, Mercatus Center, on overtime hours: article on how this rule will impact tech startups: https://readplaintext.com/here-s-how-the-new-overtime-regulations-could-harm-silicon-valley-20f87f566906#.68zmk0b5e
Liya Palagashvili is a Mercatus scholar and assistant professor of economics at NYU. She just released the paper on the overtime rule and a corresponding op-ed in the WSJ.
