Yemen, which has little oil of its own but controls a strategic passage way for oil tankers queuing up to enter the Strait of Hormuz through which around 17m barrels per day of crude is shipped, is effectively in a state of anarchy. The government has collapsed and Saudi Arabia and its Sunni allies appear to have no viable plan to restore the deposed president Abdu Rabbu Mansour Hadi.
The conflict has led to the resurgence of Al Qaeda on the Arabian Peninsula (AQAP), which has strengthened its position in Yemen’s interior amid the chaos caused by Saudi coalition strikes against the Houthis. Now the only thing separating AQAP from infiltrating the kingdom is the historically impenetrable barrier of the Rub al-Kali desert, also known as the Empty Quarter. In the summer, this vast expanse of sand where dunes tower over 100 feet high cannot be normally crossed but AQAP fighters are already thought to be gaining footholds there.
The danger for Saudi Arabia and potentially world markets is that they cross the sands and launch attacks in the kingdom, which is the world’s largest exporter of crude. Earlier this week Saudi’s interior ministry warned of the possibility that oil installations and shopping malls may be attacked by terrorists, while the last few weeks has seen a spate of shootings around the capital Riyadh.
Were terrorists to succeed in a major assault on Saudi Arabia’s well-protected oil infrastructure the price of a barrel of crude would skyrocket back to $100 in a heartbeat. Despite America becoming increasingly confident in its own shale oil industry it cannot be considered a global swing producer as it does not posses any spare capacity to immediately adjust production. Only Saudi Arabia has the reserves to be able to increase output to as much as 12.5m barrels per day if required. Even with an apparent 1.5m to 2m barrels of excess supply that has been the real reason behind lower oil prices the world cannot compensate for a prolonged outage in supplies of crude from the kingdom.
Archive for the 'General' Category
Integrated circuits will lead to such wonders as home computers — or at least terminals connected to a central computer — automatic controls for automobiles, and personal portable communications equipment. The electronic wristwatch needs only a display to be feasible today.
Intel: “If automobiles improved at the rate of Moore’s law, they would go nearly 300,000 miles per hour, get 2 million miles to the gallon, and cost only 4 cents. They’d also be the size of ants.”
SCMP: “Measuring from December 1978, when the Chinese Communist Party ‘shifted its centre of gravity from propagandising class struggle and organising political campaigns to economic construction’, China is now in its 37th year of economic expansion.” BTW, this morning we saw up close and personal something resembling this. On balance we think they have a good shot at getting past the current problems, but it’s a drama such that no one can predict Act V with any certainty. A decade ago, we saw the past with some clarity, but didn’t know that within a few years billions of people would be walking around with tiny supercomputers. Live and (hopefully) learn.
Tuesday’s trading helped cap off a torrid run which has seen more than 50pc wiped off the value of Greece’s lenders since the start of the year.
Just a reminder or two. This drama has been playing out for more than three years now. One of the questions asked half a decade ago is who’s next? Perhaps we’ll fine out soon whether any of these concerns and questions are still relevant.
Well, we took a look at the Steyn book on the plane, and the downside is it numbs the mind with numbers and equations and history lessons and so forth. The upside is that sales of popcorn should be up nicely for the Mann trial. Steyn’s list of defense and rebuttal witnesses will be impressive. There is no way he will go for any settlement now, since this should make a pretty good movie if handled correctly.
The early days of CAGW must have seemed magical. After all, there really was a correlation of CO2 increases on the one hand, and some modest temperature increases on the other. It’s not surprising that some would see correlation as causation, and it certainly didn’t hurt that there was a pot of gold at the end of that road. Moreover, causation fits in nicely with the West’s current need for self-flagellation as payment for the sin of prosperity. All well and good.
So it must have been panic and madness inducing when some of the data stopped fitting that which had been ordained from on high. Our favorite episode of the madness is when the Medieval Warm Period suddenly vanished, in order to make current results all the more dramatic. Freud had a nice phrase for it. Anyway, we’re on our way to Asia today, where India and China may say a little political blah-blah, but don’t participate in the West’s idiotic madness. We’ll take a look at Steyn’s new book on the flight and report back.
Tomorrow and tomorrow and tomorrow
creeps in this petty pace from day to day
to the last syllable of recorded time.
And all our yesterdays have lighted fools
the way to dusty death.
Out, out brief candle.
Life’s but a walking shadow, a poor player
that struts and frets his hour upon the stage,
and then is heard no more.
It is a tale told by an idiot, full of sound and fury,
Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in Liberty and dedicated to the proposition that all men are created equal. Now we are engaged in a great civil war, testing whether that nation, or any nation so conceived and so dedicated, can long endure. We are met on a great battlefield of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives, that that nation might live. It is altogether fitting and proper that we should do this.
But in a larger sense, we can not dedicate, we can not consecrate, we can not hallow this ground. The brave men, living and dead, who struggled here, have consecrated it far above our poor power to add or detract. The world will little note nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us: that from these honored dead we take increased devotion to that cause for which they here gave the last full measure of devotion, that we here highly resolve that these dead shall not have died in vain, that this nation under God shall have a new birth of freedom, and that government of the people, by the people, for the people, shall not perish from the earth.
Two amazing writers, yes? BTW, where did we last see signifying nothing? Oh yeah.
On March 9, Liu Jian, a former military officer and grandson of Zhu De, one of China’s most revered revolutionary-era generals, told a state-affiliated news website that Guo Boxiong, former vice chairman of the central military commission, was responsible for the sins of his son, Guo Zhenggang. Guo Zhenggang, also a general, has come under investigations for corruption. His father had held a senior post in the People’s Liberation Army under the Hu Jintao government and was appointed by Jiang Zemin, Hu’s predecessor. Guo Boxiong’s colleague Xu Caihou was brought down in the first wave of purges against the military late last year. Liu’s comments about Guo Boxiong were widely publicized and republished in the South China Morning Post.
Arrests for corruption have been going on in China for more than a year. Given the endemic nature of corruption in the Chinese system, with its interlocking political and business relations, it is likely that corruption charges could be brought against an enormous number of officials; they have already been brought against hundreds of thousands of people since mid-2013, and that is likely just a fraction of the number of officials who could be charged. Therefore, from our point of view, the corruption campaign is as much a purge as a cleanup. A purge differs in that it takes place for political reasons — to weaken the opposition, strengthen the position of the government or, most likely, both. That raises the interesting question of who Chinese President Xi Jinping sees as his enemy, and why he is worried enough about them to purge them.
In this context, Liu’s statement is interesting. A person whose primary claim to fame is descent from a national hero has been showcased saying that in a particular corruption case, the father must be held responsible for what the son did. Put differently, Liu, whose grandfather is by definition beyond reproach, is saying that in at least this case, the son’s corruption is the father’s responsibility. The Chinese government has chosen to showcase this statement, and it must therefore be taken seriously and its meaning unraveled.
That is not easy. China has become increasingly opaque, recalling the time when Mao Zedong’s whims would be revealed in poems on wall posters for the world to scratch its heads over. We will assume that this statement is not simply directed at Guo Boxiong, but is stated as a principle of the anti-corruption drive. Otherwise Guo could simply have been arrested without this fanfare. So our best guess is that a generalizable statement is being made, and that statement is not simply about fathers and sons but the older generation of leaders and the younger.
Xi’s anti-corruption campaign is both a genuine attempt to deal with corruption and an attempt to strengthen his position, the position of the Party throughout China, and Beijing’s position as the center of China. The charge could be made that prior presidents had been lax in this. Excessively interested in economic growth and prosperity, they had let the instruments of state control atrophy and, as one outcome, permitted corruption to flourish. More important, the weakening of state control has made managing China during its economic downturn singularly difficult. It is not only an economic problem, but also a social and political problem. Xi has been put in the difficult position of managing political and social forces with weakened and corrupted instruments. Hence, the anti-corruption movement is aligned with a purge.
But obviously, corruption is systemic, and so is the weakness of state power. From Xi’s point of view, it is necessary to address these issues but also to assign blame. That blame would rest with prior Chinese administrations. In laying the blame at their feet — at the feet of the elders — Xi both weakens their residual power and strengthens his own. Jiang, who preceded Hu as president, retains substantial power, as prior presidents in China frequently do. He also presided over China’s major post-1989 economic surge, making it his primary goal. He was the dominant political figure in China during the 1990s and early 2000s and retains significant influence. He is also, according to Forbes, worth $1.7 billion. He oversaw the period of economic climax and intensifying corruption. His own wealth, if Forbes is right, likely had complex origins.
The Chinese public seems enamored with Xi and his fight to try to purify China. In an economic downturn, targeting those who became wealthy, particularly politicians, is a logical process. Xi is obviously locking horns with Jiang over these campaigns that are taking down the former president’s supporters at an accelerating pace. If this campaign were to reach its logical conclusion, then Jiang also would be a likely target.
In retrospect. the past was simple. Build factories for export, take advantage of the very low incomes in the countryside, and grow 10-15% a year. Highly successful for a long time. But that no longer works. What’s next? It’s not at all simple, and so you have dramas such as the above. Five years ago we looked at a number of the issues involved in China’s coming transitions, and the answers are no clearer today. Here’s a couple of amazing statistics for you, while we’re talking about transitions. 100 years ago, 42% of Americans lived on farms; now it’s negligible. China today is about where America was 100 years ago with over 40% on farms; what will the next century bring?
For 20 years, three presidents of both major parties proclaimed that an Iranian nuclear weapon was contrary to American and global interests—and that they were prepared to use force to prevent it. Yet negotiations that began 12 years ago as an international effort to prevent an Iranian capability to develop a nuclear arsenal are ending with an agreement that concedes this very capability…Iran has gradually turned the negotiation on its head. Iran’s centrifuges have multiplied from about 100 at the beginning of the negotiation to almost 20,000 today…the Iranian program has reached a point officially described as being within two to three months of building a nuclear weapon
Georgetown professor Kroenig:
From the beginning of the atomic era, American scientists understood that these sensitive nuclear technologies could be used to make fuel for nuclear energy or for nuclear weapons, and the United States immediately began working to close off this pathway to the bomb. The McMahon Act of 1946 made it illegal for the United States to share nuclear technologies with any country. Even countries like Britain and Canada that had helped America invent the bomb during the Manhattan Project were cut off. Later, under President Eisenhower’s Atoms for Peace program, the United States loosened restrictions on nuclear cooperation somewhat, but it always drew a bright line at uranium enrichment and plutonium reprocessing because the risk of proliferation was simply too great…we gave up the game. Iran out-negotiated us. We abandoned a clear international standard we had established in order to meet Iran halfway in its unreasonable demands. What we have to show for it is not a historic deal, but the death of a 70-year-old bipartisan pillar of American foreign policy.
The title is from Woodstock.
In the second quarter, the depth of China’s economic problems will become even clearer, with virtually every major indicator — barring, perhaps, those for services industries and household consumption — likely to show slowing or negative growth. Attention will especially focus on the housing sector slowdown’s effects on financial stability and employment in regions most directly exposed to construction-related industries, especially the rust and resource belts of northern and northeast China. Stratfor expects reports of defaults by local property developers, resource companies and building materials businesses to become more common this quarter, along with anecdotal evidence of localized economic and employment crises in provinces like Shanxi. However, thanks in part to proactive government measures to calm local financial crises and in part to China’s inherent internal economic fragmentation, these crises will remain fairly isolated within the quarter.
Economic fragmentation, in conjunction with the government’s desire to allow the economic slowdown to continue and to use the slowdown to drive economic reform and restructuring, make it highly unlikely that Beijing will reverse course and engage in large-scale economic stimulus this quarter. Further interest rate or reserve requirement ratio cuts are possible — even probable — but will serve primarily to ensure that banks have ample liquidity to manage rising non-performing loan ratios. Otherwise, Beijing likely will continue using targeted fiscal and financial measures to boost certain regions and industries — notably services, agriculture and manufacturing — rather than opt for investment and credit expansion on anything approaching the scale of the post-2008 period. In the meantime, Chinese authorities will continue the messy process of implementing long-discussed reforms such as establishing a national property registry, creating a deposit insurance scheme (as a step toward liberalizing deposit rates at state-owned banks), and expanding municipal bond pilot programs.
In the political sphere, China’s second quarter will be dominated by the ongoing anti-corruption campaign. Over the coming months, the campaign will focus on officials from the 26 state-owned enterprises publicly named as potential targets in February, with particular attention to businesses in the struggling resources and construction-related industries. China will continue expanding investment, diplomatic and overland infrastructure ties across its periphery this quarter. Beijing will pay particular attention to implementing President Xi Jinping’s much-touted Silk Road Economic Belt initiative and solidifying plans to build overland rail ties to Thailand.
So we’ve gone from a world where 8% growth in China is a recession to the possibility of something much more traditional. Times appear to have changed.
my experience has been that when it suits the ends of power, ideology can be invoked to prove that 2+2 = 5, or 3, or any other number that suits the state, and to demand that all embrace the madness. It is a truly frightening thing to interview a top-ranked nuclear scientist, or a distinguished brain surgeon, or a concert pianist, as I did in China under the sway of Mao, and to hear them, as ideological outcasts, justify with utter conviction the brutalities inflicted on them by their ideology-crazed persecutors — crushed fingers, smashed heads, broken marriages, vilification by their own families.
Elsewhere, the lunacy was of an order that invited a response of laughing mockery, if that were not potentially fatal to the system’s loyalists, or those pretending to be so. In North Korea, while Kim Il-sung was still alive, there was a brand new, high-tech hospital built in his name in Pyongyang, floor after floor laden with tens of millions of dollars in the latest American, Swiss and German equipment, but no patients to be seen. And why not? “As we have explained,” the most senior comrade-physician responded, “the Korean people’s great leader Comrade Kim Il-sung has taken such care for the health of his beloved people that none of his people gets sick.”
CNN: “that’s not how we’re supposed to run foreign policy. Regardless of who’s president or secretary of state. We can have arguments and there are legitimate arguments to be had. I understand why people might be mistrustful of Iran. I understand why people might oppose the deal, although the reason is not because this is a bad deal per se but they just don’t trust any deal with Iran and may prefer to take a military approach to it.” Okay then.
CA high speed rail to nowhere for $50-100 billion is insane; moreover, cities disappear. (Imagine if the clowns who run this operation spent the time and money on something that mattered, like, um, a reservoir or two or five!) Finally, neo-neocon shows how hard it is to change religions. Speaking of that, perhaps our colleague of many years ago, Tom Steyer, will lose his faith in magic beans one of these days.
“For more than a decade, the Smelt Working Group has been regularly meeting to make key recommendations to help the delta smelt (Hypomesus transpacificus).” Response: “these policies have resulted in the diversion of more than 300 billion gallons of water away from farmers in the Central Valley and into the San Francisco Bay in order to protect the Delta smelt, an endangered fish that environmentalists have continued to champion at the expense of Californians. This water is simply being washed out to sea.” But it’s really a very cute, fish, about the width of 4 fingers, as the first link demonstrates. Utopia, there’s nothing like it!
The Yangtze River is the key geographic, ecological, cultural and economic feature of China. Stretching 6,418 kilometers from its source in the Tibetan Plateau to its terminus in the East China Sea, the river both divides and connects the country. To its north lie the wheat fields and coal mines of the North China Plain and Loess Plateau, which unified China’s traditional political cores. Along its banks and to the south are the riverine wetlands and terraced mountain faces that historically supplied China with rice, tea, cotton and timber. The river passes through the highlands of the Yunnan-Guizhou Plateau, the fertile Sichuan Basin, the lakes and marshes of the Middle Yangtze and on to the trade hubs of the Yangtze River Delta. Its watershed touches 19 provinces and is central to the economic life of more people than the populations of Russia and the United States combined. The river’s dozens of tributaries reach from Xian, in the southern Shaanxi province, to northern Guangdong — a complex of capillaries without which China likely would never have coalesced into a single political entity…
Only after the Qin captured the Yangtze’s three primary regions — the Upper, Middle and Lower stretches — in 221 B.C., thereby gaining access to the southeast coast, did “China” as a single unit come into being. In the two millennia since, the Yangtze has continued to mark the boundary between kingdom and empire. The constant cycle between periods of unity (when one power takes the lands north and south of the Yangtze) and disunity (when that power breaks into its constituent regional parts) constitutes Chinese political history.
If the Yangtze did not exist, or if its route had veered downward into South and Southeast Asia (like most of the rivers that begin on the Tibetan Plateau), China would be an altogether different and much less significant place. Its population would be much smaller, isolated to the southeast coast, Loess Plateau and North China Plain — the only parts of Han China where economic life does not depend on the Yangtze. The provinces of central China, which today produce more rice than all of India, would be as barren as Central Asia. Regional commercial and political power bases like the Yangtze River Delta or the Sichuan Basin would never have emerged. The entire flow of Chinese history would be different.
Three regions in particular make up the bulk of the Yangtze River Basin: the Upper (encompassing present-day Sichuan and Chongqing), Middle (Hubei, Hunan and Jiangxi) and Lower Yangtze (Jiangsu and Zhejiang provinces, as well as Shanghai and parts of Anhui). Geography and time have made these regions into distinct and relatively autonomous units, each with its own history, culture and language. Each region has its own hubs — Chengdu and Chongqing for the Upper Yangtze; Wuhan, Changsha and Nanchang for the Middle Yangtze; and Suzhou, Hangzhou and Shanghai for the Lower Yangtze. Each region has its own internal market networks, and each historically is more interested in protecting its autonomy and prosperity than uniting under the north’s control. Conquering and integrating them from the outside therefore required not only overwhelming military power — historically, northern China’s advantage — but also complex bureaucratic and internal security apparatuses. Finally, it required a transport and communications infrastructure comprehensive enough to make the exercise of central authority over vast distances and diverse populations feasible…
the Yangtze River is by far the world’s busiest inland waterway for freight transport. In 2011, more than 1.6 billion metric tons of goods passed through it, representing 40 percent of the nation’s total inland waterborne cargo traffic and about 5 percent of all domestic goods transport that year — up 250 percent from 2004. Over the last decade, dramatic increases in waterway freight traffic have been seen in some provinces along the Yangtze River corridor, such as Anhui (840 percent, to 364 million tons), Chongqing (640 percent, to 117 million tons) and Hunan (500 percent, to 179 million tons). By 2011, the nine provincial capitals that sit along the Yangtze and its major tributaries had a combined gross domestic product of $1 trillion, up from $155 billion in 2001. That gives these cities a total wealth roughly comparable to the gross domestic products of South Korea and Mexico. This growth, since roughly 2003, has been underpinned by a massive expansion in centrally allocated fixed-asset investment into the interior, and specifically to those parts of the interior Beijing considers most viable as potential alternative or supplemental industrial bases to the southeast coast. Unsurprisingly, areas with ready access to the Yangtze River system have been targeted as cores of future inland urbanization…
Investment in the interior accelerated rapidly in the wake of the 2008-2009 financial crisis, when the sudden evaporation of external demand revealed just how fragile and imbalanced China’s economy had become. Thirty years of export-oriented manufacturing centered in a handful of coastal cities generated huge wealth and created hundreds of millions of jobs. But it also created an economy characterized by deep discrepancies in the geographic allocation of resources and by very little internal cohesion. By 2001, the economies of Shanghai and Shenzhen, for instance, were in many ways more connected to those of Tokyo, Seoul and Los Angeles than of the hinterlands of Sichuan and Shaanxi provinces. For most of the 1990s and 2000s, this lack of cohesion was viewed as an unfortunate but necessary and temporary byproduct of an economic model that was otherwise doing its job. After the 2008-2009 financial crisis, internal economic disunity — like the growth model it embodied — became a social and political liability.
A debt bubble helped keep things moving for a while; however, this rebalancing towards the interior seems like a more effective program over the longer term. It’s amazing that China has come this far this fast, without the massive dislocations some had forecast. (Spengler chimes in as well.)
We confess to being blindsided by the raw power of MSM narratives, despite having observed them rather closely for years. We expected their power to diminish, and instead the opposite has happened. The young don’t know anything, and between the media and the academy, they believe everything from the silly (CAGW) to the deeply pernicious. This Iran farce is something else again: it is at least 3 standard deviations from reality and yet the true believers still believe. We’ve never seen anything like it in our lives. (Sometimes the deviations from reality are funny, but not with Iran.) Still, there are cracks in the façade — witness Chuck Schumer coming over to the Dark Side. Strange world indeed.
I can think of no event since Bretton Woods comparable to the combination of China’s effort to establish a major new institution and the failure of the United States to persuade dozens of its traditional allies, starting with Britain, to stay out. This failure of strategy and tactics was a long time coming…With U.S. commitments unhonored and U.S.-backed policies blocking the kinds of finance other countries want to provide or receive through the existing institutions, the way was clear for China to establish the Asian Infrastructure Investment Bank.