Wednesday 18 September 2013
Photo, above: Demonstrators march with banners and flags during a protest against the government's nuclear policy in Taipei on Sunday, May 19, 2013. Thousands of Taiwanese marched through the capital Taipei on Sunday urging the government to halt construction of a nearly completed nuclear power plant, citing the Japanese atomic crisis.
JOHN BATCHELOR SHOW
Wednesday 18 September 2013/ Hour 1, Block A: Richard Fisher, Senior Fellow, Asian Military Affairs, International Strategy and Assessment Center, in re: Mid-Harvest Festival, plotters bake secret messages in Moon Cakes. To strike a snake, strike its head.
US Navy deploying 60% of its warships to East Asia because our five treaty allies there want the US to be far more active and engaged to deter Chinese aggression. Air Force maintaining 400-500 craft – can fly in quickly, but not fast enough for an invasion.. China has purchased large USSR hovercraft d can carry hundreds of tons of cargo or personnel; US has put 22 tilt-rotor Osprey helos in Okinawa: can transport a similar amt of cargo that one hovercraft can carry – and in about on hour. Were there a race, the US might win and stand a chance of defending the Senkakus. However, China is developing its own (4-engine) tilt-rotor Osprey; may succeed by 2020 or so; that'll put pressure on US and on Japan.
Hawk Carlisle is a very good leader. He called the Chinese - among Washington euphemisms, such as "the peer competitor" – he calls them "the pacing threat. In 2012, he undertook 200 engagements with our allies and friends in Asia, from multi-craft exercises to raining doctors and working in schools. Need to do something with everyone to maintain interest an access. In 2013, the number of engagements was reduce to 40! Crates a vacuum. China is working to fill this vacuum – have their own version of the US Red Flag exercise; this year, for the first time in the history of the PRC, invited a foreign air force: Pakistan. This will grow; they'll concentrate on their Asian neighbors. In gross numbers, Chinese are challenging us: will have 1,000 fourth-gen fighters, 2-3,000 ballistic missiles, a lot of med-range, subs, multiple-aircraft battle groups, airborne strength. If they strike first, they could hold the territory. We don't have 6, 18, 24 months to mobilize.
China's Advanced Helicopter Concepts At the 2nd China Helicopter Exposition held in Tianjin from September 5 to 8, 2013, Aviation Industries of China (AVIC) revealed two advanced helicopter concepts in model form: a quad tilt rotor and high speed helicopter design. These models serve to confirm previous information released on 28 August 2013 by the China Helicopter Research and Development Institute (CHRDI), which is responsible for the design of most Chinese helicopters under the aegis of the AVIC consortium. While the unveiling of these concepts comes as some surprise for Western analysts, they are also the result of an accelerated Chinese investment in helicopter technology that aims to raise indigenous design and production capabilities to world-class levels.
. . . and what General Carlisle told the Air Force Association on Tuesday about the Air Force's future: Inside the Ring: Air Force on China threat Air Force Gen. Herbert J. “Hawk” Carlisle, commander of the Pacific Air Forces, recently outlined his service’s role in the Pentagon shift to Asia, known as both the “pivot” and Air Sea Battle, a concept to counter China’s high-tech weapons. The four-star general’s candid comments to defense reporters prompted charges in Chinese state-run media that the Pentagon is treating China as a Cold War enemy.
China is aggressively seeking military control over disputed islands in the South China Sea and pressuring Japan over its control of the Senkakus in the East China Sea, Gen. Carlisle said during a breakfast July 29. Gen. Carlisle said Chinese territorial claims increase the risk of military confrontation. In addition to the Senkakus, China is asserting its claims over other disputed islands, including the Second Thomas Shoal and other islets in the Spratly islands. China also claims to control most of the South China Sea through its declared Nine Dash Line, impinging on large areas of international waters. China is being “fairly aggressive” and as a result “runs itself the risk of creating the potential for miscalculation,” Gen. Carlisle said. The general said the maritime disputes involving China “are all ripe for challenge.”
“And that’s something we . . . [more]
Wednesday 18 September 2013/ Hour 1, Block B: Gerrit van der Wees, Formosan Association for Public Affairs, in re: Ma Ying-jeou has pushed Taiwan much closer to Mainland China and, instead of improving the Taiwanese economy has damaged it badly. Most Taiwanese really do not want to get closer to China – good relations, but not heading toward Beijing swallowing the island, which is what Ma seems to want. Ma pushing through the deeply unpopular service trade agreement. Nuclear power plant being built 26 miles from Taipei. Wang has stood in the way, Ma is purging Wang in order to press his own agenda – while his own favorable ratings polls plunge deeply. China is getting a big grip not only on the Taiwanese economy but on its politics. While Xi Jinping in Beijing now issues nostalgic Maoist nostrums, Ma pretends to ignore them. Although Ma has long espoused intimate ties with Beijing, now that China is going off the rails Ma dasn't acknowledge what's going on. [Note: for years, rumors have flown widely to the effect that Ma was shuttling from Taipei to Beijing in order to negotiate agreements on, basically, how to hand Taiwan over to Beijing; partly as a gift, and partly in exchange for rumored payments.]
KMT heavyweights scramble as rumors fly Major figures in the ruling Kuomintang (KMT) were navigating one of the party's biggest political storms in a decade while rumors fly regarding the struggle between President Ma Ying-jeou and Legislative Yuan Speaker Wang Jin-pyng. Both Taipei Mayor Hau Lung-bin and New Taipei Mayor Eric Chu yesterday reiterated their denial of the rumored conspiracy between the “four families,” of which Hua and Chu are two members, to pressure Ma to promise giving up his KMT chairmanship, with Wang as a potential replacement, should the party underperform in the 2014 mayoral elections. Hau said the rumor is absolutely not true. Chu described the rumor as “meaningless” and damaging to the nation, adding that it is more important to find the persons responsible for spreading the rumor. KMT Honorary Chairmen Wu Po-hsiung and Lien Chen, the heads of the other two purported “families,” did not comment on the rumor. Wu left the opening ceremony of a franchise industry expo at Taipei without answering reporters' questions on the issue. Lien earlier expressed his disagreement on Ma's harsh handling of Wang's alleged influence peddling, saying that Ma should not “humiliate” Wang in “such improper manner.” Taichung Mayor Jason Hu also found himself in the middle of the storm yesterday. His characterizations of the events surrounding Wang's KMT membership revocation as a “constitutional crisis” and a “misfortune for the nation” echo . . . [more]
Ma’s approval rating plunges to 9.2 percent President Ma Ying-jeou’s (馬英九) approval rating hit a new low of 9.2 percent, the first time the rating has dipped to to single-digits, in a public opinion poll released yesterday amid widespread public dissatisfaction with Ma’s role in ongoing political strife within the Chinese Nationalist Party (KMT). Only 9.2 percent of the respondents said they were satisfied with Ma’s performance in his second term, which began in May last year, while 80.5 percent of those polled disapproved of his performance and 10.3 percent declined to comment, according to the poll conducted by ERA Survey Research Center, a subsidiary of ERA Television. Asked if they have confidence about Ma’s leadership in the remainder of his term, 72 percent of the respondents said no, while 16.1 percent said yes and 11.9 percent declined to comment. In another poll, released by TVBS last week, Ma had an approval rating of 11 percent, between 2 and 6 percentage points down from his rating of between 13 and 17 percent in . . . [more]
Wednesday 18 September 2013/ Hour 1, Block C: Emily Lakdawalla, Fellow at the Planetary Society, in re: the Mars valley networks. From 3.6 t o 3.8 billion years ago: Mars's eras based on changes in geology. Mars was being heavily cratered during the Noachian Era (3.8 bil-plus years ago). Don’t know if it was continuous over time or if it peaked at 3.8 bil. Things tailed off thereafter; next, Hesperian. Waterways: from where? for how long on the surface? Rare event occurred occasionally, or did Mars have an Earth-like climate? Mars is smaller than Earth, but has about the same size of land-mass. To have rivers running on a surface, need a stable atmosphere; right now, it's too thin. . . . Volcanic activity; but the early Sun was much more active than it is now – ultraviolet radiation may have blown away Mars's atmosphere; add in volcanic activity, which may have pumped out enough volcanic gas to bld an atmosphere, but eventually the Sun may have won. heavier isotopes than expected. [more]
Mars' valley networks tell us of a dry, then wet, then dry Mars / explaining science, Mars, Curiosity (Mars Science Laboratory), geology, hydrology, weather and climate. While researching my "Water on Mars" article for Sky & Telescope, I read a couple of really important papers that I had missed when they were first published a couple of years ago: "Updated global map of Martian valley networks and implications for climate and hydrologic processes," by Brian Hynek, Michael Beach, and Monica Hoke; and "Roaming zones of precipitation on ancient Mars as recorded in valley networks," by Hynek and Hoke. They're key because they establish a subtle point about the changing style of geology on Mars that I had not realized before: there was probably rain or snow on early Mars -- but not on earliest Mars. The papers concern a type of Martian feature called valley networks. Valley networks are branching channels, hundreds of meters to 20 kilometers wide, and up to hundreds of meters deep, that have been observed and mapped since Viking.
Wednesday 18 September 2013/ Hour 1, Block D: Chris Gadomski, Bloomberg nuclear, in re: Japanese nuclear industry; turning off nuclear power. New Energy Finanace: Japan Warned U.S. of Blackouts in Appeal for LNG Supply The U.S. Department of Energy was informed by Japanese officials that the world's ... “And the phasing out of all nuclear energy in Japan.” Japan to switch off nuclear power, may be some time before it's on again
Wednesday 18 September 2013/ Hour 2, Block A: Bob Collins, former senior Pentagon analyst now based in South Korea, in re: On 31 August, 2013, white steam from a bldg in DPRK at a nuclear complex named Yongbyon. Part of the ramping-up of that generator one more time. North Koreans have a technical aspect – can restart with its secondary cooling system after the first was destroyed in 2008 – can produce 6 kg plutonium per year; and strategic aspect: DPRK's biggest problem is always money. Threatening to restart is a way to extort and gain concessions from the South. South Korea meanwhile shovels cash into the paws of dictator Kim via the manufacturing zone. Threat and shakedown. The weapons can be used by criminals for other purposes in other places: DPRK supplies chem weapons and expertise and suits to Syria – at least two chemical factories; also North Korean mil officers at the front lines of the civil war, recently seen in Aleppo. DPRK has been making money off Syria since the 1970s. Number of research facilities in North Korea far exceeds what was thought – 600 researchers at multiple site; 6,000 North Koreans scattered across the Middle East. The Pentagon is well aware of all this but thre's almost no discussion in the US. We’ve been negligent; and it's not just chem weapons – it’s nuclear reactors built by North Koreans, incl the one the Israelis blew up in Eastern Syria. Shipping vessel: 13,000 protective suits for handling chem weapons. Also 23,000 gas containers; and in South Korea, intercepted a Panamanian ship headed for Latakia (Syria)with confiscated chem weapons material. A program of long standing.
Koreas agree Kaesong industrial zone restart date North and South Korea have agreed to restart operations at the shuttered Kaesong industrial zone, Seoul says. The two sides set a date for a "trial" restart of 16 September after talks that went through the night, the South's Unification Ministry said. Work at the complex stopped in April when the North withdrew its workers amid high political tension. The zone, just inside North Korea, is home to 123 South Korean factories that employ more than 50,000 North Koreans. It is the last functioning inter-Korean joint project and a key source of revenue for Pyongyang. [more]
North Korea suspected of restarting Yongbyon nuclear reactor Satellite imagery shows reactor capable of producing plutonium for weapons is likely to be operating, says US research institute [more]
Wednesday 18 September 2013/ Hour 2, Block B: Anne Stevenson-Yang, co-founder of J Capital Research in Beijing, in re: Extraordinarily large lies: "Bonaparte went to the Moon in a balloon" isn’t a huge as what's emanating from China's economic statistics machines. Export claims are bizarre – there's more credit in the economy, but anything that looks optimistic now is based on credit. When the Party says, "we're looking for X amount of growth," people are rewarded for finding just that. Gummint wants to raise new capital for its banks. IPOs were suppressed last year, about 200 companies lined up (most won’t get through the window). Coming: massively fraudulent numbers so they can sell on the intl mkts. Goldman and J P Morgan are co-dependents. Mao-tai, high-alcohol liquor – set high monthly sales targets; distributors couldn't meet targets, so sales people held on a prices rose – then dropped while distributors are stuck with two to three years' worth of stock. Most honest numbers in material where you can’t store stuff – fast food, for example. Goal probably to keep the economy glued together through October, hang on through the Third Party Plenum. Bernanke decided not to taper today – which helped Beijing a lot.
Ann's analysis (below), and No Confidence in China Markets Inflates Housing Bubble Matthew Zhou and his wife spent 1.6 million yuan ($261,000) to buy a two-bedroom apartment last month in eastern Shanghai after seeing no potential for long-term returns in China’s financial markets. “Home prices keep rising, so I’d rather buy a place now than put the money in the stock market,” said Zhou, a 30-year-old information technology engineer at a state-controlled bank in Shanghai, who plans to leave the home empty while the couple live with her parents. Gains in equities “could never outpace the growth of home prices,” he said. The willingness of people like Zhou to shun other investments in favor of property shows why residential prices have defied a more than three-yearlong government campaign to rein them in and is among the forces crippling efforts by the central government to deal with an expanding housing bubble. New home prices in major cities, including Beijing and Shanghai, rose more than 10 percent in July from a year earlier, compared with a more than 10 percent drop in the benchmark Shanghai Composite Index (SHCOMP) during that period. “Prices have been rising because China doesn’t have developed financial markets,” Yao Wei, a China economist at Societe Generale SA, said in an interview in Hong Kong. “Now, with the economy slowing, that has worsened as other investments don’t yield good returns compared with property.” The Shanghai Stock Exchange Property Index, a gauge tracking property shares traded in Shanghai, rose 0.4 percent at the close today. The benchmark Shanghai Composite Index fell 0.2 percent. Matthew Zhou and his wife spent 1.6 million yuan ($261,000) to buy a two-bedroom apartment last month in eastern Shanghai after seeing no potential for long-term returns in China’s financial markets. “Home prices keep rising, so I’d rather buy a place now than put the money in the stock market,” said Zhou, a 30-year-old information technology engineer at a state-controlled bank in Shanghai, who plans to leave the home empty while the couple live with her parents. Gains in equities “could never outpace the growth of home prices,” he said. [more]
Treading Water by Anne Stevenson-Yang. In August, China’s economic data showed a sharp recovery, buoying the equities markets and confounding those who foretell a near-term crisis. More perplexing was the fact that Total Social Financing data showed a sharp reduction in credit into the economy in June and July. This suggested that the economy was finally able to untether itself from ever-higher infusions of credit and grow on its own. It is hard to find a business, however, with a positive outlook. Throughout the country, executives in the steel, cement, property machinery and finance sectors are beset with anxiety. Every business is losing money, and every executive spends his days worrying about cash flow. The contradiction appears to lie in flawed numbers. A deeper look at finance indicates that increases in credit continue at around 25% annually, with no slowdown since May. While prices for property and land have increased, the evidence of improvement in industrial activity is weak. Instead, it appears that better numbers may have been mandated to support other agendas of the government, most importantly, planned equity raises for banks, Asset Management Companies, and several internet and other companies lined up in the IPO queue. It is possible that the August recovery, in other words, is half stimulus and half theater. What is certain is that the fundamentals of the Chinese economy did not improve and that, without a fundamental shift, no recovery, real or phantom, will last beyond the credit surge that created it.
Recovery? Given reported 7.5% GDP growth in Q3, one might question why a recovery is needed, but the answer generally offered is that 7.5% is slower than the 7.8% reported for 2012, which was already the lowest growth claimed since 1999 and, on China’s relative scale, this counts as weakness. No matter that the nation’s premier says that the national GDP statistics are inaccurate; they are all we have, and analysts tend to rely on them “directionally.” Economic numbers across the board improved in August. Exports rose by 7.2%, industrial output by 10.4%, the PMI hit a five-month high of 51.3, and auto sales surged. Land sales rose sharply, and Soufun, the online real estate advertising service, reported that average home prices had risen by 8.6% from a year earlier. In the meantime, financing was reported down 32% in July compared with May. Bankers’ acceptances fell by 178 billion. Renminbi loans went from only 56% of financing in May to 87% of financing in July, suggesting that the formal banking system was taking control of finance away from the shadow banks. All of this seemed healthy for the financial system and supported the idea that Chinese regulators, willing to accept short-term pain in order to put the banking system on more stable footing, were implementing systemic reforms.
What Really Happened June and July were puzzling, because the gray-market bankers and property developers we continually canvas said that credit was abundant and rates had dropped, and yet bankers said they were not extending loans. Discount rates to change bankers’ acceptance notes for cash rose sharply, but the companies that depend on them heavily to make payments—steelmakers, auto manufacturers, cement companies, mines—were operating as before. And yet, in June and July recorded TSF fell by 6% YoY, compared with a 31% increase for H1 2013. Given the surge of credit in April, the April-May increase YoY had been sharper, 40%, so a net reduction would have meant a noticeable slowing of the economy. Part of the solution to the question of why liquidity seemed abundant in the face of a reduction came from the PBOC’s balance sheet. That showed a net increase in loans to financial institutionS of 445.7 billion RMB in June and July. Between the end of May and the end of August, another 1.43 trillion was scheduled to be injected via open market operations (OMO), according to PBOC statistics; through July, net injections were recorded at 1.134 trillion. Setting aside the OMO and assuming that the PBOC’s loans to the banks in June and July all went out into the market, [more]
Wednesday 18 September 2013/ Hour 2, Block C: Joseph Sternberg, WSJ Asia editorial board, in re: . . . Japanese have long found themselves in effect rather trapped on islands and so unable to – expand – culturally; are very insular, seem to remind neighbors of the abuses of the last war. As their islands's populations diminish because of the demographics – depopulation of wide swaths of Japanese territory – they aren’t allowing immigration, which is perhaps the most important reform Japan needs but no one will talk about it. Abenomics. Consumption tax; pacifist constitution. Some other Asian countries are following suit. Weighing risks and benefits, they come out against immigration: to much crime and social disruption and dislocation. Trying to boost the birth rate . . .; "labor reform." – try to increase the productivity of extant workers; Trans-Pacific Partnership; encourage merit-based promotion. Need day-care! Russia is having Valentine parties because Russia desperately needs a larger population. The US renovates itself by accident: people suffering from persecution are welcome here; small communities of Somali, Herzegovinians, etc. In Japan, there are a few Koreans from a generation ago (via Japanese depredations). Somalia, DR Congo? Not too likely. Not mentally prepared for cultural change.
Wednesday 18 September 2013/ Hour 2, Block D: Sambuddha Mitra Mustafi, India Ink, NYT, in re: India’s Electoral Politics Reignites Religious Hatreds Uttar Pradesh in northern India, most populous state with 200 million people, per capita income very low. Electoral political season just beginning for six or eight months of important natl elections, Chief minister of Gujarat now the oppo party candidate for PM next year – perhaps the violence is occurring because this fellow (not admired or accepted by US State Dept) specializes in religious violence. If he can consolidate Hindu votes behind himself, then __. India/Pakistan formed on the back of a massive genocide in 1947 – Hindu-Muslim riots. The 1950s were more peaceful. Thereafter, violence recurred; the 1990s saw a huge movement by Hindu nationalists. In UP, the nationalist Party benefits from violence, also another party that depends on Muslim votes. If votes separate on religious lines, then other UP players get marginalized. Predict that this will be the most violent election in a generation; previous was peaceful.
Wednesday 18 September 2013/ Hour 3, Block A: Gordon Chang, Forbes.com, in re: summary of the evening's discussions.
Wednesday 18 September 2013/ Hour 3, Block B: Simon Constable, WSJ.com News Hub, in re: Four Takeaways on the Fed's Economic and Rate Projections The big headline in the Fed meeting is its decision not to pull back on an $85 billion monthly bond buying program. But important details of the Fed's thinking also emerged. The Fed's decision to maintain its asset purchases at $85bn per month will, given that most commentators expected a modest reduction in the pace today, be immediately bond and equity positive. We wonder, however, whether the longer lasting reaction will be increased volatility in markets, as the Fed's communications become even more confused. In the accompanying statement, the Fed acknowledges that there has been "growing underlying strength in the broader economy", but wants to "await more evidence that progress will be sustained before adjusting the pace of its purchases." Clearly the Fed has been spooked by the extent of the surge in long-term interest rates over the past couple of months and the impact that now appears to be having on the housing market. We suspect officials are also increasingly concerned, as we are, that Congress could trigger a Federal shutdown within the next month. Looking at the Fed new forecasts, the median projection from all meeting participants puts the fed funds rate at 1.0% at end-2015 and 2.0% at end-2016. That is slightly more dovish than the futures market had priced in before the announcement. Fed funds futures had the rate at 1.15% at end-2015 and 2.0% by August 2016 (the contracts don't go as far as December 2016 yet.) Our suspicion now is that the Fed will wait until the December FOMC meeting before seriously considering again whether to begin tapering or not, which is the next time the forecasts will be updated and a press conference is scheduled . . .
Wednesday 18 September 2013/ Hour 3, Block D: Reza Kahlili, author, A Time to Betray, in re: Obama’s tone-deaf note to Iran The mullahs play for time.
Wednesday 18 September 2013/ Hour 4, Block A: Leyte, 1944: The Soldiers' Battle by Nathan N. Prefer (1 of 4)
Wednesday 18 September 2013/ Hour 4, Block B: Leyte, 1944: The Soldiers' Battle by Nathan N. Prefer (2 of 4)
Wednesday 18 September 2013/ Hour 4, Block C: Leyte, 1944: The Soldiers' Battle by Nathan N. Prefer (3 of 4)
Wednesday 18 September 2013/ Hour 4, Block D: Leyte, 1944: The Soldiers' Battle by Nathan N. Prefer (4 of 4)
.. .. ..
Hour 1: The Grey. Red Dawn. Shaolin.
Hour 2: Skyline. Shaolin. Crouching Tiger Hidden Dragon.
Hour 3: Centurion. Spartacus 1. Gears of War 2
Hour 4: The Pacific. The Pacific.