Nouriel Roubini thinks China will suffer a "hard landing"

 

 

"Beijing's Empty Bullet Trains"

"Dr. Doom", professor Nouriel Roubini, is joining the group of economists, who think the China bubble will burst:

The problem, of course, is that no country can be productive enough to reinvest 50 percent of GDP in new capital stock without eventually facing immense overcapacity and a staggering nonperforming loan problem. China is rife with overinvestment in physical capital, infrastructure, and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns, and brand-new aluminum smelters kept closed to prevent global prices from plunging.
Commercial and high-end residential investment has been excessive, automobile capacity has outstripped even the recent surge in sales, and overcapacity in steel, cement, and other manufacturing sectors is increasing further. In the short run, the investment boom will fuel inflation, owing to the highly resource-intensive character of growth. But overcapacity will lead inevitably to serious deflationary pressures, starting with the manufacturing and real-estate sectors.
Eventually, most likely after 2013, China will suffer a hard landing. All historical episodes of excessive investment—including East Asia in the 1990s—have ended with a financial crisis and/or a long period of slow growth. To avoid this fate, China needs to save less, reduce fixed investment, cut net exports as a share of GDP, and boost the share of consumption.

The trouble is that the reasons the Chinese save so much and consume so little are structural. It will take two decades of reforms to change the incentive to overinvest.

Read the entire article here

Planning of the UN multibillion dollar climate money machine to start

At the UN climate change meeting in Cancun the leaders of the "developed" countries committed their countries to "a goal of mobilizing jointly USD 100 billion per year by 2020" to "developing" countries, all in the name of fighting imaginary human induced "climate change".

The countries on the receiving end - and of course the UN climate change bureaucracy - are now pressing full steam ahead in order to organize the massive money transfer, which could be a real bonanza for many of the world´s less than democratic governments and dictators.

The UNFCCC has proudly announced the names of the 40 people, who will start planning the bureaucracy needed for the money transfers:

Parties to the United Nations Framework Convention on Climate Change (UNFCCC) have agreed the selection of the forty members who will be entrusted with the task of designing the Green Climate Fund, the new institution which will manage long-term finance mobilized to enable developing countries to address climate change.

The by far greatest future payer, the US, has chosen Assistant Secretary for International Markets and Development, Marisa Lago as its representative in the Green Fund planning group. She will have the pleasant duty to locate the billions annually to be paid from the Treasury´s empty coffers.

PS
The good news:
It is almost certain that the developing countries are in for a great disappointment. It is higly unlikely that they will receive the annual 100 billions from 2020 on; even the UN press release talks about the "goal" of 100 billion per year. As we all know, a "goal" is not a firm commitment. But even 10 billions would be a waste of taxpayers´ money!

Daniel Hannan: Europe can never be democratic

British tory MEP Daniel Hannan has again in a speech pointed out, why the European Union is not - and will not be - democratic:

EU´s Rehn bullish about the euro

Olli Rehn, EU commissioner in charge of Economic and Monetary Affairs, speaking at the Brookings Institute in Washington DC, was very upbeat about the euro:

While I cannot yet say "mission accomplished", I am increasingly confident that we are entering into the endgame of the crisis management phase.

The European financial stability mechanism and facility are in force until mid-2013. After that they will be replaced by a permanent European Stability Mechanism (ESM), which will safeguard financial stability in the euro area. It will contain three elements: financial assistance, an adjustment programme and a possibility for private sector involvement, based on an analysis of debt sustainability.

What has been achieved with these arrangements? By providing conditional financial assistance to soon three EU Member States, we have prevented financial chaos in Europe, which could have had potentially serious global repercussions. Preventing a European Lehman has not been a simple task, with 27 fiscal authorities and 11 central banks – we never had the genius of Alexander Hamilton to draw on, like you did, unless you count Jacques Delors for this too – but the task has nevertheless been accomplished.
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But let me be clear, the euro is not on the list of problems. Instead, it is an essential part of the solution. It contributes to growth by enhancing cross-border economic activity and competition, and is essential for macro-economic stability.
Lastly, let me recall that the euro is not just a technical monetary arrangement, but rather the core political project of the European Union.  As such, it is a symbol of our political will and determination to work together for our common good.
That is a further reason why it is worth taking Europe seriously when we say that we are ready to do whatever it takes to defend the euro and financial stability in Europe.

Read the entire speech here

Rehn´s bullishness is not shared by everybody:

Also speaking in the US capital at the annual spring joint meeting of the IMF and the World Bank, the president of the international lender, Dominique Strauss-Kahn said that the world should not be complacent and that the European response to the crisis is insufficient.
"We are arguing here in the IMF for at least six months that there is a need for a more comprehensive plan on the European side. The piecemeal approach, dealing with interest rates one day and something else another day, is not working well," he said.
He warned that bailed out countries needed to stick to their agreed austerity plans and that European banks still require recapitalisation.

Read the entire article here

The Wall Street Journal reports:

The majority of euro-zone countries believe a restructuring of Greek debt is inevitable and could happen next year, two senior euro-zone government officials familiar with the matter said Thursday

"There is widespread belief inside the euro zone that a Greek debt restructuring will happen some time next year. The European Central Bank and the International Monetary Fund believe the same," said one of the officials, who is directly involved in talks with the European Union and the IMF.

The markets did not either share Mr. Rehn´s bullishness:

The euro fell the most since November against the yen and dropped from a 15-month high versus the dollar on concern a bailout for Greece may fail to prevent the first default by a country in the 17-nation currency region.

Germany’s Zeit newspaper reported April 14 that a restructuring of Greek sovereign debt may involve imposing losses of 50 to 70 percent on investors. Ireland’s credit rating was cut two levels by Moody’s Investors Service to the lowest investment grade as the government struggles to lower the budget deficit and restore economic growth.

Read the entire article here

PS
It is, of course, part of Mr. Rehn´s job to try to prop up the euro, but he does not increase his own - and the euro´s - credibility by painting a much too rosy picture. To boast that the mission (task) "has  nevertheless been accomplished" was not very wise. He may have to eat his words in the not too distant future.

Russians welcome a second term for Obama

Already in July 2009 Obama showed why the the representatives of the corrupted regime of Russian ruler Vladimir Putin have reason to support him.

Russian politicians and commentators would welcome a second term for Obama, the Moscow Times reports. Sergej Markov, a deputy for Putin´s ruling party, United Russia explains why:

"We should support Obama because he softened support for anti-Russian regimes in our neighborhood, like that of [Georgian President Mikheil] Saakashvili,"

PS
Not very much to be proud of for Obama!

Another mass grave found in Iraq

Christopher Hitchens about another of the mass graves in Iraq

The BBC reports about another mass grave found in Iraq:

Iraqi officials have found a mass grave containing the bodies of more than 800 people thought to have been executed during Saddam Hussein's rule.

"There were shots to the head, there were men, women and children," said Human Rights Minister Mohammed Sudani.
The grave was found in Iraq's western Anbar province. The remains are thought to be from the 1980-88 Iraq-Iran war.
Rights groups say there are hundreds of graves in Iraq with the bodies of up to 300,000 people killed under Saddam.
"This mass grave represents one of the ugliest crimes of the former regime and a huge violation of human rights," said Mr Sudani of the latest find in Anbar.

PS
Saddam Hussein was, if possible, an even more bloodthirsty dictator than Libya´s Gaddafi. President George W. Bush was right when he decided to get rid of Hussein, in spite of the fact that the war was not sanctioned by the UN Security Council, mainly because of French and German opposition for (opportunistic) reasons of  domestic policy and trade. Nobody denies that serious mistakes were made after first succesful operations, but still Bush was right to intervene, even if no weapons of mass destruction were not found (later). With the active support and participation of France and Germany, the task in Iraq would have been much easier.

William Jefferson "Bill" Clinton in denial of reality

Bill Clinton, April 13, 2011 (The New York Oberserver):

"Now, there is almost nobody in denial about the reality of climate change,"

Gallup,  March 11, 2011:

"In a sharp turnaround from what Gallup found as recently as three years ago, Americans are now almost evenly split in their views of the cause of increases in the Earth's temperature over the last century."

PRINCETON, NJ -- Gallup's annual update on Americans' attitudes toward the environment shows a public that over the last two years has become less worried about the threat of global warming, less convinced that its effects are already happening, and more likely to believe that scientists themselves are uncertain about its occurrence. In response to one key question, 48% of Americans now believe that the seriousness of global warming is generally exaggerated, up from 41% in 2009 and 31% in 1997, when Gallup first asked the question.

PS
How is it possible that the former president is so ill-informed? Does he not read newspapers ? Does he not have any advisers, who keep him informed?  Or has his economic situation become so bad, that he cannot afford to buy newspapers and keep advisers?

Or could this be another case for Steve Van Aperen?