- Support For Trump Impeachment Now Higher Than Nixon
More Americans want to see U.S. President Donald Trump impeached than Richard Nixon amid the Watergate scandal, a new poll has revealed.
You will find more statistics at Statista
According to Monmouth University, 24 percent of the U.S. public wanted Richard Nixon to leave the White House six months into his second term back in 1973.
Currently, as Statista's Niall McCarthy notes, the appetite for removing Donald Trump is significantly higher with 41 percent of the U.S. public in favor of impeachment compared to 53 percent who are against it.
- A Coup In The House Of Saud?
Authored by Pepe Escobar via The Asia Times,
The secret is out: the ascension of Mohammad bin Salman, displacing CIA favorite Mohammad bin Nayef as Crown Prince, was in fact a white coup…
What has been an open secret across the Arab world is not a secret anymore even in the US: What happened last month in the deep recesses of the House of Saud with the ascension of Crown Prince Mohammad bin Salman, aka MBS, was in fact a white coup.
Nearly a month ago, as I’ve written elsewhere, a top Middle East source close to the House of Saud told me:
“The CIA is very displeased with the firing of [former Crown Prince] Mohammad bin Nayef. Mohammad bin Salman is regarded as sponsoring terrorism. In April 2014 the entire royal families of the UAE and Saudi Arabia were to be ousted by the US over terrorism. A compromise was worked out that Nayef would take over running the kingdom to stop it.”
The source also referred to an insistent narrative then pervading selected Middle East geopolitical circles, according to which US intel, “indirectly”, had stopped another coup against the young Emir of Qatar, Sheikh Tamim al-Thani, orchestrated by Mohammed bin Zayed, Crown Prince of Abu Dhabi, with help from Blackwater/Academi’s Eric Prince’s army of mercenaries in the United Arab Emirates. Zayed, crucially, happens to be MBS’s mentor.But instead of a coup in Doha, what happened was actually a coup in Riyadh. According to the source,
“the CIA blocked the coup in Qatar and the Saudis reacted by dumping the CIA-selected Mohammed bin Nayef, who was to be the next king. The Saudis are scared. The monarchy is in trouble, as the CIA can move the army in Saudi Arabia against the king. This was a defensive move by MBS.”
Now, almost a month later, confirmation of the white coup/regime change in Riyadh has been splashed on the front page of The New York Times, attributed mainly to the proverbial “current and former United States officials”.
That, in essence, is code for the US deep state, and confirms how the Central Intelligence Agency is extremely annoyed by the ouster of Nayef, a trusted partner and former counterterrorism czar. The CIA on the other hand simply does not trust arrogant, inexperienced and hubristic MBS.
Warrior Prince MBS has been responsible for conducting the war on Yemen – which not only killed thousands of civilians but also spawned a tragic famine/humanitarian crisis. If that was not enough, MBS was the architect of the blockade of Qatar, followed by the UAE, Bahrain and Egypt, and now totally discredited as Doha has refused to concede to outlandish “demands” in essence concocted in Riyadh and Abu Dhabi.
Nayef, crucially, was opposed to the blockade of Qatar.
It’s no wonder the House of Saud and the UAE are already backtracking on Qatar, not so much because of pressure recently applied by US Secretary of State Rex Tillerson on the ground, but mostly because of shadow play: the US deep state making sure its interests in the Gulf – starting with the Al-Udeid base in Qatar – should not be messed with.
A reckless ‘gambler’
MBS, although treated with (velvet) kid gloves across the Beltway because of the same old “Saudi Arabia is our ally” meme, is for all practical purposes the most dangerous man in the Middle East.
That’s exactly what the famous December 2015 memo by the BND – German intelligence – was already stating:
The young “gambler” was poised to cause a lot of trouble. Financial circles in the European Union are absolutely terrified that his geopolitical gambles may end up sending millions of retirement accounts into the dust.
The BND memo crucially detailed how the House of Saud, in Syria, had bankrolled the creation of the Army of Conquest – basically a revamp of Jabhat al-Nusra, aka al-Qaeda in Syria – as well as ideological sister outfit Ahrar al-Sham.
That amounted to the House of Saud aiding, abetting and weaponizing Salafi-jihadi terrorism. And this from a regime that, after seducing US President Donald Trump to star in an embarrassing sword dance, felt it was free to accuse Qatar of being a terrorist nation.
MBS’s blockade of Qatar has nothing to do with silencing al-Jazeera; it relates to the Saudi defeat in Syria, and the fact that Doha abandoned the “Assad must go” dead-ender to the benefit of allying itself with Tehran to sell liquefied natural gas to Europe out of their jointly owned North Dome/South Pars giant gas field.
MBS – as well as his ailing dad – skipped the Group of 20 Summit in Hamburg; the Qatar embarrassment was too much of a burden, considering for instance Doha’s position as a powerful investor in both France and the UK. Still, all eyes are on him; MBS has promised to turbocharge the vicious Sunni/Shiite confrontation, taking the war “inside Iran”.
And further on down the road, there’s the question of how MBS is going to handle the fraught-with-risk Aramco initial public offering.
It ain’t over till the (abaya-clad) fat lady sings.
- College Awards $100,000 Prize To "Innovator For Social Justice"
Authored by Toni Airaksinen via CampusReform.org,
- Grinnell College awards a $100,000 prize each year to an “Innovator for Social Justice,” and recently began accepting nominations for the 2018 recipient.
- The "Innovator for Social Justice Prize" is the largest award given by a U.S. college for efforts to promote social justice, and has disbursed at least $1.5 million since 2011.
Grinnell College awards a $100,000 prize each year to an “Innovator for Social Justice,” according to a nomination form that went live on Sunday.
The “Grinnell College Innovator for Social Justice Prize” is the largest award given by a U.S college to promote social justice. Half of the money is awarded directly to the winner, while the other half goes to the organization that the winner represents.
“With the creation of the Grinnell Prize, the College is extending its educational mission beyond the campus and alumni community to individuals anywhere who believe innovative social justice programs create a better world,” the school boasts on its website, noting that students and staff members are offered the chance to work with prize-winners and their organizations through “student internships and staff fellowships.”
Funded with “discretionary funds from the College’s endowment,” the school has awarded at least $1.5 million dollars since the prize was launched in 2011. Three prizes were awarded in each of the first two years, after which the number was reduced to two until 2017, when only one recipient was selected.
The nomination form encourages people to nominate individuals, including current students and alumni, who are “a force for social justice,” noting that nominees “should have identified a concrete social justice need, designed creative and socially just solutions to address that need, and made a substantive impact through their hard work and dedication.”
The school asserts that there is not “one specific definition of social justice,” saying the concept should be “interpreted broadly” and that it’s up to the person who makes the nomination “to make the case as to how his or her nominee effects positive social change.”
Grinnell College President Raynard S. Kington defended the creation of the expensive award in a statement to the college community in 2011, acknowledging that “some people have asked me why the College is undertaking an expensive new initiative now, in such challenging financial times,” but vowing that the expenditure would not adversely impact the school’s budget or financial aid commitments.
“We decided we’d rather offer a prize that advances useful work and contributes more to the mission of the College than do other equally expensive things to build our prestige,” Kington explained, calling the prize “a creative way to achieve many of the College’s goals even in a time of tight money.”
- Iran Rejects Trump's Warning; Foreign Minister Slams "Saudis Involvement In 94% Of Terrorist Attacks In The World"
The US president warned that Iran would face ‘new and serious consequences’ if the detained Americans were not released.
But now, as MiddleEastEye reports, Iran demanded on Saturday that the United States release Iranians detained there, a day after US President Donald Trump called on the Islamic Republic to release three US citizens.
“America should quickly release Iranian prisoners in the country,” foreign ministry spokesman Bahram Ghasemi said, according to the Iranian Students’ News Agency (ISNA).
On Friday, Trump urged Tehran to return Robert Levinson, an American former law enforcement officer who disappeared in Iran more than a decade ago, and to release businessman Siamak Namazi and his father, Baquer, both jailed on espionage charges.
Trump warned that Iran would face “new and serious consequences” if the three men were not released.
Trump warns Iran over detained Americans: White House https://t.co/u0fQ8kAo6q
— Late Night Watch (@LateNightWatch) July 22, 2017
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“The judiciary, courts and judges in Iran are completely independent, as in any other country,” Ghasemi said in a statement.
“Any interventionist and threatening statement by American officials and institutions has no effect on the will and determination of the country’s judicial system to try and punish criminals and violators of the country’s laws and national security.”
The statement capped a week of US rhetoric against Tehran, which announced last Sunday that another US citizen, Xiyue Wang, a graduate student from Princeton University, had been sentenced to 10 years in jail on spying charges.
On Tuesday, Washington slapped new economic sanctions on Iran over its ballistic missile programme and said Tehran’s “malign activities” in the Middle East undercut any “positive contributions” coming from the 2015 nuclear accord.
Last October, an Iranian court sentenced 46-year-old Siamak Namazi and his father, Baquer Namazi, 80, to 10 years in prison on charges of spying and cooperating with the US.
Iran’s Islamic Revolutionary Guard Corps detained Siamak in October 2015 while he was visiting his family in Tehran, and Baquer, a former Iranian provincial governor and ex-UNICEF official, in February last year, family members said.
Levinson, a former agent for the Federal Bureau of Investigation and for the Drug Enforcement Administration, disappeared in Iran in 2007. The US government has a $5m reward for information leading to his safe return.
Levinson left Iran years ago and the Islamic Republic has no information about his whereabouts, Ghasemi said on Saturday.
“The statements of the White House, as usual, are an example of interference in Iran’s internal affairs and the demands are unacceptable and rejected,” Ghasemi said, according to ISNA.
And then, as The American Herald Tribune reports, the Islamic Republic of Iran's Foreign Minister, Mohammad Javad Zarif, told The National Interest.
"We don’t see the situation in our region as a winning or losing battle. It’s a situation where the initial U.S. invasion of Iraq has led everybody to lose.
Because we believe that the situation in today’s world is so interconnected that we cannot have winners and losers; we either win together or lose together,."
Zarif also said that Shias, Sunnis and Kurds are all important segment of Iraqi society with whom Iran needs to have relations.
“Iran has rushed to the aid of the Iraqis, not just the Shias, but everybody. For us, the Shias, the Sunnis, the Kurds—all of them are an important segment of Iraqi society with whom we need to have relations.”
Citing an example of Iran’s help to Iraqis when Daesh invaded Iraq in 2014, the foreign minister said, “We went to the support of the Kurds: when they had been invaded by ISIS, we were the first to go to Erbil to secure it and to rescue it, basically, from a Daesh occupation.”
He added there are certain countries in the Middle East who have been “consistently” supporting terrorism.
“You have countries in the region who have consistently supported extremists…
Some countries consistently supported the wrong groups – these are the same countries from whose nationals, almost 94 percent of those engaged in acts of terror, came – so we are talking about a consistent record on their side and a consistent record on the Iranian side.”
He added that Iran does not seek to exclude Saudi Arabia from the security calculus of the Middle East region.
“We believe that Saudi Arabia is an important part of that security, as we believe that other countries in the region should be an important part of that security understanding.”
- Five Pieces Of Tech Nostalgia That Shaped The Future
Although many of the devices listed below may be confined to your garages or dusty drawers, as Visual Capitalist's Chris Matei notes, the influence they had on modern technology is pretty much unsurpassed.
Today’s infographic from Safe Company is a throwback to the 1980s and 1990s, making us nostalgic for the heyday of these popular gadgets.
Courtesy of: Visual CapitalistTECH GOES MOBILE
The gadgets of the 80s and 90s were all about taking existing technology and making it more enjoyable while on the go, rather than solely being useful in the home or office. Even if that meant devices that were “portable” in name only, it was a huge step forward.
Devices like the Game Boy, Walkman, early Nokia phones, and other mobile technologies helped lead engineers to solve the problems that would lay the ground for today’s “world in the palm of your hand”. Improving power consumption efficiency, developing new battery types, reducing size, creating screens that were readable in a variety of light conditions, and even opening up the demand for aftermarket accessories were among these advancements.
BROADENING MEDIA ACCESS
The latter 20th century will be remembered for democratizing access to all kinds of information, both for work and for play. Technologies of the 90s set a precedent for the bite-sized span of modern digital attention. Microsoft’s Encarta encyclopedia suite allowed comprehensive keyword search before the optimization of online alternatives. Simply type a word, and get every piece of information related to it – without the need to purchase updated versions including new data each year. It sounds almost comical to tout these as features in the age of Google, but compare Encarta to the alternative: carrying around a set of Encyclopedias!
On the leisure side, the wildly faddish Tamagotchi feels like a forebear of 2010-era mobile games – cleverly designed to create a cycle of short, addictive bursts of play with a low cost of access. The ever beeping, cutesy reward loop of caring for your Tamagotchi may have annoyed a generation of parents, but it inspired a whole genre of bite-size digital entertainment.
Even the Walkman launched a new frontier of access to media through the creative possibilities of mixtape-making, bootlegging, and sharing tapes. I’m sure anyone who grew up in the 80s and 90s had a shoebox full of favorite tracks taped from radio and vinyl… or was that just me?
OLD TECH, LASTING IMPACT
Though it is easy to downplay the quaint technologies that came nearly thirty years ago, we can’t ignore that its influence is in the DNA of the devices and digital interactions we encounter every day. Go back through your closets, dig out your Game Boy, and take a trip back in time to remember the curiosities and comforts of old-school tech!
- Strip-Mining The World
Authored by Robert Gore via StraightLineLogic.com,
The richest vein in the history of predatory mining is just about played out.
A gigantic mine engages in every conceivable destructive practice—strip mining, heap leaching, tailings dams and ponds and so on. It pays such low wages its workers only make ends meet by borrowing from the company at usurious rates. The mine has befouled the air and poisoned the water. Many workers are chronically sick and their children are afflicted with birth defects. The mine’s absentee owners know that the mine is played out and the tailings dam is structurally unsound. They close the mine, count their profits, and move on. A month later the dam gives way. A deluge of noxious sludge inundates the town below the dam, sparing no one and rendering the area uninhabitable.
The government is a strip mining operation, plundering the dwindling residual value of a once wealthy America. Forget ostensible justifications, policy is crafted to allow those who control the government to maximize their take and put the costs on their victims, leaving devastation in their wake.
Wars are no longer about defending the country or even making the world safe for democracy. They are about appropriations, not to be won, but profitably prolonged. The Middle East and Northern Africa have been a mother lode. You would think their sixteen-year war in backward and impoverished Afghanistan would be a shameful disgrace for the military and the intelligence agencies. It’s not. They’ve milked that conflict for all its worth, and now brazenly talk about a “generational war”: many more years of more of the same.
We can also look forward to generational wars in Iraq, Syria, Libya, and Yemen. The strip miners are agitating for an Iranian foray. That’s got Into The 22nd Century written all over it, a rich, multi-generational vein, perhaps America’s first 100-year war.
The only rival for richest mother lode is medicine. Health care is around 28 percent of the federal budget, defense 21 percent. Medical spending no longer cures the sick; it’s the take for insurance, pharmaceutical, and hospital rackets. The US spends more per capita on health care than any other nation (36 percent more than second-place Switzerland) but quality of care ranks well down the list.
In education there is the same gap between per capita spending (the US ranks at or near the top) and value received, in this instance as measured by student performance. What’s paid is out of all proportion to what’s received, especially at a time when computer and communications technology should be driving down the costs of education across the board.
Indoctrination factories formerly known as schools, colleges, and universities dispense approved propaganda. For students, higher education is now on the government-sponsored installment plan. There’s a litany of excuses why Johnny, Joan, Juan, Juanita, Jamal and Jasmine can’t read, compute, or think, but lack of funding and student loans don’t wash. Education dollars fund teachers’ unions, their pensions, administrators, and edifice complexes; learning is an afterthought. This vein will play out as the pensions funds, and the governments that have swapped promises to fund them for educators’ votes, go bankrupt. Probably around the same time as the student loan bubble pops.
Money itself has become a faith-based construct, a strip mining operation jointly owned by the government, the central bank, and the banking cartel it supports. Replacing gold with paper promises, monetizing debt, interest rate suppression, inflation of the money supply and the central bank’s balance sheet, macroeconomic meddling, maintenance of a bankers’ cartel, and insider dealing within the cartel have immeasurably increased the wealth and power of the entire banking complex.
Twenty trillion dollars in debt, two-hundred-plus trillion in unfunded liabilities, and an economy that has barely cruised above stall speed for eight years are core samples indicating the mine is exhausted. The tailings dam has sprung visible leaks. However, the townspeople below the dam remain willfully oblivious to the danger.
Recognizing reality and doing something about it are hallmarks of mental toughness, once considered a virtue. Now, in various tangible and virtual sanctuaries against facts and logic, the demand is made for reality to conform to the delusions of those who refuse to confront it. In the safe space between their ears, the only danger is someone warning of danger.
Lower even than the level of mental fortitude is physical toughness. When the dam breaks, the obese, opiated, otiose endomorphs resting their girths on couches across America will have no chance of escaping the sludge, even with their motorized carts. President Kennedy christened the President’s Council on Physical Fitness to address what he saw as a soft and flabby America. Fifty years later, America is exponentially softer and flabbier—physically, intellectually, and spiritually. Most Americans are in no condition to handle the emotional and physical stresses crises will bring.
It’s viciously ironic that many of them will look to the strip miners for salvation. A captive government that has turned America into a field of rackets, its string-pullers extracting power and wealth while ordinary people have seen their incomes stagnate, their meager savings dwindle, and opportunities shrink, is somehow going to make financial and economic catastrophe all better.
In one sense Hillary Clinton’s use of the term “deplorable” was unfortunate, in that it implies that the strip miners care enough about the townspeople to deprecate them. They don’t. The townspeople have had their uses, but they’re expendable once the mine is played out. Let someone else worry about pulling them from the sludge, or just leave them buried. The strip miners chose America first because it had the richest vein, now exhausted. The strip miners will move on to other, albeit less lucrative, lodes. That is what is meant by globalization.
- Russell Clark Speaks In RealVision's "Most Requested Interview Ever"
According to RealVision, he’s one of the greatest investors you’ve never heard of. According to us, he ran what was (formerly) the world’s most bearish hedge fund, although at the end of 2016, after suffering substantial losses, he capitulated and went flat, after closing much of his short book.
To be sure, Russell Clark, and his Horseman Global (which after phenomenal returns for much in the post-crisis period, closed 2016 with a thud, dropping 24% and down another 8% YTD, isn’t a household name. But in investment circles, he’s known as one of the world’s most aggresive, and better, short sellers.
In a rare camera appearance, Russell Clark sat down with Real Vision TV’s Raoul Pal in what has been dubbed as “one of RealVision’s most requested interviews ever”, to discuss investing and share his approach to markets.
In one part of the interview, Clark says that one reason for his success is his focus on currencies. While for many investors the risk and reward of currencies is an afterthought, it forms the base of Clark’s investment worldview. “What we try and do is invert the process,” Clark says. “So, we’d put currencies at the beginning of the investment process rather than at the end. And that’s really been the heart of how I look at things…”
Next, as we conveniently laid out just yesterday in “Why Horseman Global Is Aggressively Shorting Shale“, Clark touches on his short shale thesis, telling Pal that shale oil is “an industry that shouldn’t exist.”
As we discussed yesterday, Clark has once again emerged from his recent “neutral” position and is shorting shale oil stocks. According to Clark, shale oil companies “never make any money,” and the industry only exists because borrowing costs are so low.
He compares U.S. shale today to China’s steel industry in 2012 – just before it crashed. For those who missed it, here are more details on his latest short bet from his latest letter to Horseman investors:
I had shorted shale producers and the related MLP stocks before, and I knew there was something wrong with the industry, but I failed to find the trigger for the US shale industry to fail. And like most other investors I was continually swayed by the statements from the US shale drillers that they have managed to cut breakeven prices even further. However, I have taken a closer look at the data from EIA and from the company presentations. The rising decline rates of major US shale basins, and the increasing incidents of frac hits (also a cause of rising decline rates) have convinced me that US shale producers are not only losing competitiveness against other oil drillers, but they will find it hard to make money. If US rates continue to stay low, then it is possible that the high yield markets may continue to supply these drillers with capital, but I think that this is unlikely. More likely is that at some point debt investors start to worry that they will not get their capital back and cut lending to the industry. Even a small reduction in capital, would likely lead to a steep fall in US oil production. If new drilling stopped today, daily US oil production would fall by 350 thousand barrels a day over the next month (Source: EIA).
What I also find extraordinary, is that it seems to me shale drilling is a very unprofitable industry, and becoming more so. And yet, many businesses in the US have expended large amounts of capital on the basis that US oil will always be cheap and plentiful. I am thinking of pipelines, refineries, LNG exporters, chemical plants to name the most obvious. Even more amazing is that other oil sources have become more cost competitive but have been starved of resources. If US oil production declines, the rest of the world will struggle to increase output. An oil squeeze looks more likely to me. A broader commodity squeeze also looks likely to me.
More on Clark’s latest shale bet in the excerpt below.
Among the other topics covered, is Clark’s take on how investing relates to poker… including why a seemingly inferior hand can actually make much more money than a hidden pair of aces.
The full interview can be found here, along with a free 7 day trial.
- "It Feels Like An Avalanche": China's Crackdown On Conglomerates Has Sent A "Shock Wave" Across Markets
The first to suffer Beijing’s crackdown against China’s private merger-crazy conglomerates, wave was the acquisitive “insurance” behemoth, Anbang, whose CEO Wu Xiaohui briefly disappeared as the Politburo made it clear that the “old way” of money laundering – via offshore deals – is no longer tolerated. Then, several weeks later and shortly after the stocks of the “famous four” Chinese conglomerates plunged after China officially launched a crackdown on foreign acquirers amid concerns of “systemic risk“, it was HNA’s turn, which as we described last week, risks becoming a “reverse rollup from hell“, as HNA’s stock tumbled, sending the LTV of billions in loans collateralized by the company’s shares soaring and in danger of unleashing an catastrophic margin call among the company’s lenders.
Then Beijing’s attention shifted to the biggest conglomerate of them all: billionaire Wang Jianlin’s Dalian Wanda Group, which as the WSJ and Bloomberg reported was being “punished” by Beijing, and would see its funding cutoff after China “concluded the conglomerate breached restrictions for overseas investments.”
The scrutiny could rein in Wang’s ambitious attempt to create a global entertainment empire, including Hollywood production companies and a giant cinema chain he’s built up through acquisitions from the U.S. to the U.K. Six investments, such as the purchases of Nordic Cinema Group Holding AB and Carmike Cinemas Inc., were found to have violations, said the people, who asked not to be identified discussing a private matter. The retaliatory measures will include banning banks from providing Wanda with financial support linked to these projects and barring the company from selling those assets to any local companies, the people said.
The move is an unprecedented setback for the country’s second-richest man, who has announced more than $20 billion of deals since the beginning of 2016. By targeting one of the nation’s top businessmen, the government is escalating its broader crackdown on capital outflows and further chilling the prospects of overseas acquisitions during a politically sensitive year in China.
Summarizing the abrupt shift in sentiment in China was Castor Pang, head of research at Core-Pacific Yamaichi, who said that “to investors, political risk is now the biggest concern when investing in Chinese companies. Not only Wanda, every Chinese company won’t find it easy anymore to acquire assets overseas. Stabilizing the yuan is the top priority for Beijing now.”
While it is not exactly clear just why Beijing so quickly soured on foreign transactions – as we explained back in 2015, it was abundantly clear back then these were nothing more than a less than sophisticated way to launder money offshore – unless of course the capital flight out of China is far worse than what Beijing would disclose, what has become quite clear is that Wanda was among the conglomerates including Fosun International, HNA Group and Anbang Insurance whose loans are under government scrutiny after China’s banking regulator asked some lenders to provide information on overseas loans to the companies.
In other words, the foreign merger party is over. In fact, for some of the above listed 4 conglomerates, the party may be over, period.
And now as the WSJ reported over the weekend, it has become clear that China’s government reined in one of its brashest conglomerates with the explicit approval of President Xi Jinping, “according to people with knowledge of the action—a mark that the broader government clampdown on large private companies comes right from the top of China’s leadership.”
The measures, with President Xi’s previously unreported approval last month, bar state-owned banks from making new loans to property giant Dalian Wanda Group to help fuel its foreign expansion.
The cutoff in bank financing for the company’s foreign investments highlights Beijing’s changing view of a series of Wanda’s recent overseas acquisitions as irrational and overpriced. In short, and as noted above, Yuan stability above all.
For the local market, the shift in Beijing’s strategy is nothing short of a seismic shift:
“It feels like an avalanche,” said Jingzhou Tao, a lawyer at Dechert LLP in Beijing, who does mergers and acquisitions work. “This is sending a shock wave through the business community.”
* * *
Regular readers are aware of what, until recently, was China’s unquenchable thirst for foreign money laundering transactions, something we first pointed out at the start of 2016, and which had – until recently – grown exponentially. Since 2015, the four companies completed a combined $55 billion in overseas acquisitions, 18% of Chinese companies’ total. In recent days, however, as reported here 2 weeks ago, Wanda’s billionaire founder Wang Jianlin has been shrinking his empire by selling off assets and paying back the company’s bank loans.
What is surprising about the sudden shift, is that Beijing had for years been encouraged Chinese companies to scour the globe for deals. Now, in a dramatic U-turn, it is reining in some of its highest-profile private entrepreneurs in what officials say is growing unease with their high leverage and growing influence. As the WSJ notes, “the measures serve as a stern warning for other big companies that loaded up on debt to buy overseas assets, officials and analysts say.”
How does the president fit into all of this? According to the WSJ, “Xi acted after China’s cabinet set the government machinery in gear by directing financial regulators, the economic planning agency and other bureaucracies to take a hard look at foreign acquisitions, once seen as a means for China to showcase its economic might.”
And, as previously reported, the crackdown started at Anbang and HNA, when Chinese banking regulators first ordered banks to scrutinize loans to Anbang in June, and other highfliers including airlines-and-hotels conglomerate HNA Group, which has pulled back on overseas investments. HNA said in a statement it continues to take a “disciplined approach” to identifying “strategic acquisitions across our core areas of focus.”
Discussing the government’s crackdown on conglomerates, officials at Fosun said the firm has “overseas funds and other stable financing channels,” including a fund of around U.S. $1 billion to invest, but emphasized it “fully respects the government regulations both in China and overseas markets.” Fosun has a listed unit in Hong Kong, and its strategy to invest in health care and technology “adheres to China’s global investment strategy,” said a spokesman, Chen Bo.
In any case, the most likely outcome is that in the future China’s private companies will have trouble getting capital, which would help shift financial clout further in favor of big state-owned enterprises, which may also explain President Xi’s change in opinion. Beijing’s sterner line comes as big private businesses and others have been amassing capital and influence that challenge the authoritarian Chinese leadership’s firm hold on the economy.
Its grip has been tested over a bumpy few years. After a 2015 stock market meltdown and a botched government rescue, a gush of money flowed out of the country looking for better returns. That in turn put pressure on China’s tightly controlled yuan and foreign-exchange reserves, both seen by Beijing as barometers of confidence in the economy. It has also led to a chilling effect on Chinese outbound investment which has crashed as shown in the chart below.
Putting the foreign merger spree in context, Chinese firms completed $187 billion in outbound deals last year, according to Dealogic, as private companies snapped up trophy properties, soccer clubs and hotels, while Chinese with means bought homes and pushed up real-estate prices from Texas to Sydney.
The private sector’s share of overseas spending shot up from barely above zero about a decade ago to nearly half of China’s total overseas investments in 2016, before slipping back to 36.9% in the first half of 2017, according to Derek Scissors, a China expert at the American Enterprise Institute.
But the most important factor, and among the main reasons for the current crackdown, is that amid the rush of investments, Beijing burned through nearly a trillion dollars in foreign-exchange reserves trying to steady the yuan. That ultimately led government regulators to clamp controls on money exiting the country and to scrutinize all proposed major offshore investments.
Just as we predicted over a year ago would happen, once the government finally realized that all that M&A is nothing more than capital flight.
As the WSJ puts it, “the latest scrutiny is a watershed moment in the Communist government’s relations with a private sector it has never been comfortable with. Though some senior leaders, particularly Premier Li Keqiang, are urging a new culture of startups and small businesses, Mr. Xi has promoted plans to make already-large state enterprises larger and strengthen their sway over the economy.”
There are other reasons for the crackdown too: one is the still fresh memory of what happened in Japan when it did the exact same thing. China is acutely aware that as Japan rose to economic prominence in the 1980s, its companies splurged on American real estate and other trophy assets, resulting in losses that cascaded through Japan’s banking sector.
But mostly, it is about power and control:
Mr. Tao, the Beijing lawyer, says the government’s new aggressive posture is driven in large measure by a need for control. “State-owned assets, whether in China or abroad, are still state assets,” he said. “But when private entrepreneurs take their money out, it’s gone. It’s no longer something that China can benefit from or the Chinese government can get a handle on.”
And since in any power struggle between Chinese companies and Beijing in general, and Xi Jinping in particular, the latter will always win, the market’s reaction was to violently selloff any big Chinese conglomerate stocks. An early sign of government discomfort with overseas spending was Anbang’s unsuccessful $14 billion bid for Starwood Hotels & Resorts Worldwide Inc. in 2016. Authorities expressed displeasure with the bold move, believing that Anbang had offered too much, according to a person with knowledge of the situation.
Anbang, which had appeared unstoppable in 2014 when it struck a $2 billion deal to buy the U.S. Waldorf Astoria hotel, fell deeper in trouble. This past June, special government investigators looking into economic crimes detained Anbang’s chairman, Wu Xiaohui, who hasn’t appeared in public since.
Separately, in the case of Wanda, regulators acted in the belief the company overpaid in efforts to expand beyond shopping centers and hotels and into entertainment, according to the people with knowledge of the action.
Its largest such acquisition was of Legendary Entertainment, the Hollywood producer and financier behind films including “Jurassic World” and “The Dark Knight.” Wanda spent $3.5 billion to buy Legendary in 2016; In Hollywood, industry insiders widely believed the company paid too much. Legendary said this week that it is well-capitalized, operating normally and able to fund its film and television productions.
As for HNA, recall that it was the stealthy buyer of Anthony Scaramucci’s SkyBridge Capital, another deal which will soon fall under tremendous scrutiny, and which could be unwound in the coming weeks if concerns about conflicts of interest emerge again, only this time not between the US and Russia – especially once the “Russia collusion” story is finally over – but the White House and Beijing.
- Fukushima's "Swimming Robot" Captures First Images Of 'Massive Deposits' Of Melted Nuclear Fuel
The “Little Sunfish,” the swimming robot that TEPCO is using to capture images of the containment vessel in the Unit 3 reactor of the ruined Fukushima power plant, has brought back the goods.
A trove of new images captured in the past few days show what is likely to be melted nuclear fuel from inside the reactor, what Bloomberg describes as a “potential milestone” in the cleanup of one of the worst atomic disasters in history.
The pictures show what looks to be the melted nuclear fuel that caused the worst-ever nuclear disaster when northeastern Japan was hit by a massive earthquake and tsunami in March 2011. If confirmed, these would be the first discovery of the fuel, which is being sought by TEPCO as part of the cleanup effort.
“Tokyo Electric Power Co. Holdings Inc., Japan’s biggest utility, released images on Saturday of mounds of black rock and sand-like substances at the bottom of the No. 3 reactor containment vessel at Fukushima, which is likely to contain melted fuel, according to Takahiro Kimoto, an official at the company. A survey on Friday found black icicles hanging from the above pressure vessel, which was “highly likely” to contain melted fuel. Kimoto noted it would take time to confirm whether this debris contains melted fuel.
'The pictures that we have gained will assist us in devising a plan for removing the melted fuel,' Kimoto told reporters Saturday night in Tokyo. 'Taking pictures of how debris scattered inside of the reactor was a big accomplishment.'
If confirmed, these pictures would be the first discovery of the fuel that melted during the triple reactor accident at Fukushima six years ago. For Tokyo Electric, which bears most of the cleanup costs, the discovery would help the utility design a way to remove the highly-radioactive material.”
The pictures were taken by the “Little Sunfish,” the Toshiba-designed robot the company sent into the destroyed reactors to explore the inside of the reactor for the first time from July 19. The robot, 30 centimeters (12 inches) long that can swim in the flooded unit, was tasked with surveying the damage inside and also finding the location of corium, which is a mixture of the atomic fuel rods and other structural materials that forms after a meltdown.
“It is important to know the exact locations and the physical, chemical, radiological forms of the corium to develop the necessary engineering defueling plans for the safe removal of the radioactive materials,” said Lake Barrett, a former official at the U.S. Nuclear Regulatory Commission who was involved with the cleanup at the Three Mile Island nuclear power plant in the U.S.
“The recent investigation results are significant early signs of progress on the long road ahead.”
Until now, TEPCO hasn’t managed to find the melted fuel, presenting a major obstacle in the cleanup effort, where the removal of the fuel is considered one of the most difficult steps. Sightings of what was believed to be the destroyed fuel in reactors No. 1 and No.2 proved to be inaccurate.
“Similar to the latest findings in the No. 3 reactor, Tepco took photographs in January of what appeared to be black residue covering a grate under the Fukushima Dai-Ichi No. 2 reactor, which was speculated to have been melted fuel. However, a follow-up survey by another Toshiba-designed robot in February failed to confirm the location of any melted fuel in the reactor after it got stuck in debris.
A robot designed by Hitachi-GE Nuclear Energy Ltd. also failed to find any melted fuel during its probe of the No. 1 reactor in March.”
The significance of the recent finding “might be evidence that the robots used by TEPCO can now deal with the higher radiation levels, at least for periods of time that allow them to search parts of the reactor that are more likely to contain fuel debris,” M.V. Ramana, professor at the Liu Institute for Global Issues at the University of British Columbia, said by email.
“If some of these fragments can be brought out of the reactor and studied, it would allow nuclear engineers and scientists to better model what happened during the accident.”
According to Bloomberg, because of the high radioactivity levels inside the reactor, only specially designed robots can probe the unit. And the unprecedented nature of the Fukushima disaster means that the utility is pinning its efforts on technology not yet invented to get the melted fuel out of the reactors.
The budget for the cleanup, which is still running behind schedule, has more than doubled to a whopping $188 billion last year. TEPCO has also not been able to decide on what to do with the 777,000 tons of water contaminated with tritium when it was used to cool down the plant’s cores, and has petitioned Japan’s government to allow it to dump some of the water into the Pacific. According to the officials, tritium is not harmful in small doses. It’s believed that the decommissioning of the reactors will cost 8 trillion yen ($72 billion), according to an estimate in December from the Ministry of Economy, Trade and Industry, and take as long as 40 years.
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