Jul 15

Today’s News 15th July 2022

  • Growing Number Of Spanish Radio Stars Bolt From Station Bought By Soros-Backed Group
    Growing Number Of Spanish Radio Stars Bolt From Station Bought By Soros-Backed Group

    Authroed by Zachary Stieber via The Epoch Times (emphasis ours),

    A growing number of hosts are leaving a Spanish-language radio station after it was bought by a group backed by billionaire leftist George Soros.

    Hungarian-born U.S. investor and philanthropist George Soros answers to questions after delivering a speech on the sidelines of the World Economic Forum (WEF) annual meeting in Davos on May 24, 2022. (Fabrice Coffrini/AFP via Getty Images)

    Nelson Rubio announced his resignation from Radio Mambi on July 12, following Dania Alexandrino and Lourdes Ubieta.

    Radio Mambi “has been the voice of the Cuban exile, the voice of conservative men and women who defend freedom, democracy, family principles, truth, and faith in God,” Rubio said during a press conference in Miami. “Many in this community have felt betrayed by the acquisition of this radio by a company financed by the left liberal extremist, George Soros.”

    Rubio and Ubieta are joining Americano Media, where Alexandrino already had a show.

    “Being faithful to my principles I couldn’t accept being part of any business associated with these leftist activists and their socialist agenda,” Alexandrino told reporters.

    Radio Mambi was one of 18 radio stations in 10 cities that was recently purchased by the Latino Media Network from Univision. The stations were said to reach about one-third of U.S. Latinos. The deal was $60 million, all cash, according to the network.

    The network, which did not respond to a request for comment, said its funding came from “leading Latino investors” and Lakestar Finance LLC, an investment entity affiliated with the Soros Fund Management, one of the many entities owned or linked to Soros.

    Lourdes Ubieta. (Courtesy of Americano Media)

    ‘Relevant Content’

    Jess Morales Rocketto, one of the network’s founders, said in a statement that the group “hope[s] to create relevant content for radio and other audio platforms with content that our community can trust and rely on” and “is going to ensure that the Latino community continues to be served with the news and information that local communities deserve.”

    Read more here…

    Tyler Durden
    Fri, 07/15/2022 – 02:00

  • What Is The "Council For Inclusive Capitalism"?
    What Is The “Council For Inclusive Capitalism”?

    Authored by Brandon Smith via Alt-Market.us,

    The idea that there is an agenda for global government among the financial and political elites of the world has long been called a “conspiracy theory” within the mainstream and the establishment media. And sadly, even when you can convince people to look at and accept the evidence that banking institutions and certain politicians work together for their own purposes, many folks will STILL not entertain the notion that the ultimate goal of these power mongers is one-world empire. They just can’t wrap their heads around such a thing.

    People will say that the establishment is driven by greed alone and that their associations are fragile and based only on individual self interest. They will say that crisis events and shifts in social and political trends are random, not the product of deliberate engineering. They will say that elitists will never be able to work together because they are too narcissistic, etc.

    All of these arguments are a coping mechanism for the public to deal with evidence they cannot otherwise refute. When the facts become concrete and the powers-that-be admit to their schemes openly, some people will revert to confused denial. They don’t want to believe that organized evil on such a scale could actually be real. If it did, then everything they thought they knew about the world might be wrong.

    For many years the agenda for global governance was only whispered about within elitist circles, but every once in a while one of them would speak aloud in public about it. Perhaps out of arrogance or perhaps because they felt the time was right to ease the populace into accepting the possibility. Whenever they did mention it, they called it the “New World Order.” World leaders from George HW Bush to Barack Obama to Joe Biden to Gordon Brown to Tony Blair and beyond have all given speeches talking about the “New World Order.” Money and political elites like George Soros and Henry Kissinger have mentioned the NWO incessantly over the years.

    One of the most revealing quotes on the agenda comes from Clinton Administration Deputy Secretary of State Strobe Talbot, who stated in Time magazine that:

    “In the next century, nations as we know it will be obsolete; all states will recognize a single, global authority… National sovereignty wasn’t such a great idea after all.”

    He adds in the same article a lesser known quote:

    “…The free world formed multilateral financial institutions that depend on member states’ willingness to give up a degree of sovereignty. The International Monetary Fund can virtually dictate fiscal policies, even including how much tax a government should levy on its citizens. The General Agreement on Tariffs and Trade regulates how much duty a nation can charge on imports. These organizations can be seen as the protoministries of trade, finance and development for a united world.”

    To understand how the agenda works, I offer a quote from globalist and Council on Foreign Relations member Richard Gardner in an article in Foreign Affairs Magazine in 1974 titled ‘The Hard Road To World Order’:

    “In short, the “house of world order” will have to be built from the bottom up rather than from the top down. It will look like a great “booming, buzzing confusion,” to use William James’ famous description of reality, but an end run around national sovereignty, eroding it piece by piece, will accomplish much more than the old-fashioned frontal assault.”

    The “NWO” has since changed names multiple times as the public grows increasingly wise to the conspiracy. It’s been called the Multilateral World Order, the 4th Industrial Revolution, the “Great Reset,” etc. The names change but the meaning is always the same.

    In the past two years in the face of extensive global crisis events the “new order” establishment globalists have been talking about has arrived, and with almost no fanfare or mention in the mainstream media. The beginnings of global government already exist, and it’s called the “Council For Inclusive Capitalism.”

    Lately, many analysts myself included have been highly focused on the World Economic Forum and their role in the global government agenda. Mainly because WEF head Klaus Schwab is such a loudmouth and he can’t help but talk about future plans for centralization.

    As I have noted in past articles, the elites within the WEF got way too excited about the covid pandemic, thinking that they had the perfect crisis to implement numerous globalist policies in the form of the Great Reset. As it turned out, covid was nowhere near as deadly as they initially predicted during Event 201, and the public was not as submissive and compliant as they had hoped we would be. The WEF let the cat out of the bag too soon.

    So, onward we go, with crisis after crisis like dominoes falling until we get to the one event that they think will drive the masses to accept world governance. And while the WEF is regularly attended by top level globalists, they are more of a high level think-tank, the Council for Inclusive Capitalism appears to be about implementation rather than theory.

    The founder of the group is Lynn Forester de Rothschild, member of the infamous Rothschild Dynasty that has long been monetarily involved in influencing governments for generations. Pope Francis and the Vatican publicly aligned with the council in 2020, and one of the primary narratives of the CIC is that all religions must unite with the leaders of capital to build a society and an economy that is “fair for all.”

    This mission statement is rather familiar, as it echoes the goals of the WEF and its concept of the “Shared Economy”: A system in which you will own nothing, have no privacy, borrow everything, be completely reliant on the government for your survival and you will “like it.”

    In other words, the purpose of “inclusive capitalism” is to con the masses into accepting a rebranded version of communism. The promise will be that you won’t have to worry anymore about your economic future, but the cost will be your freedom.

    The CIC is led by a core group of global leaders they refer to as “The Guardians” (No, I’m not joking, this is real).

    Members of the CIC have included: Mastercard, Allianz, Dupont, the UN, the Teachers Insurance and Annuity Association of America (TIAA), CalPERS, BP, Bank of America, Johnson & Johnson, Visa, the Rockefeller Foundation, the Ford Foundation, Mark Carney, the Treasurer of the State of California and many more companies around the world. The list is extensive, but what it represents is a kind of corporate led government with a congress of corporate representatives mixed with pliable political leaders.

    One of the top missions of the CIC has been to change our economic models to “promote equity and inclusion.” Hilariously, proponents of the CIC argue that “too much wealth has been accumulated into the hands of too few people and this proves that existing capitalism does not work, yet THEY are the very people that rigged the system to centralize that wealth into THEIR HANDS. They aren’t “capitalists,” they are an aristocracy. Do you really think that these people are going to build a whole new system that doesn’t continue to benefit them?

    If you have ever wondered why the Pope has been pushing woke ideology, climate alarmism and one world religion rhetoric in conflict with traditional Christian doctrine, this is why – He’s following the dictates of the CIC.

    Another mission of the CIC is to enforce carbon controls and taxation in the name of “climate change” with the purpose of reaching “net-zero” emissions. As we all know, net zero carbon will be impossible without a complete upheaval of our economy and industry, along with the deaths of billions of people in the process. It is an unattainable scenario, which is why it is perfect for the globalists. Humans are the enemy of the Earth, they claim, so we need to let the elites control our every action to ensure we don’t destroy the planet and ourselves, and the process will never end because there will always be carbon emissions to deal with.

    Members of the CIC, including the head of Bank of America, openly suggest that they don’t actually need governments to cooperate in order to meet their goals. They say corporations can implement most social engineering without political aid. In other words, it is the every definition of “shadow government” – A massive corporate cabal that works in tandem to implement social changes without any oversight. As noted, we’ve already seen this with the spread of woke ideology by hundreds if not thousands of corporations working as a hive.

    Is the CIC the final form of global government? No, probably not. But, it is the beginning of it; a government by corporations and money elites for corporations and money elites. It bypasses all political representation, all checks and balances and all voter participation. It is conglomerates and their partners making decisions for our society unilaterally and in a centralized fashion. And, since big business acts as if they are separate from government rather than partners with government, they can claim they are allowed to do whatever they please.

    However, with corporations and globalists increasingly showing their true colors and acting as if they should be in charge, the public must hold them accountable as if they are part of government. And if they are found to be authoritarian and corrupt, they must be overthrown like any other political dictatorship.

    *  *  *

    If you would like to support the work that Alt-Market does while also receiving content on advanced tactics for defeating the globalist agenda, subscribe to our exclusive newsletter The Wild Bunch Dispatch.  Learn more about it HERE.

    Tyler Durden
    Fri, 07/15/2022 – 00:00

  • Giant Sequoias In Yosemite Threatened By Wildfire
    Giant Sequoias In Yosemite Threatened By Wildfire

    More than 1,000 firefighters are battling a fast-spreading wildfire in Yosemite National Park in California that is threatening giant sequoia trees, which are thousands of years old. 

    The Washburn Fire has burned more than 4,375 acres with 23% containment as of Thursday morning and has spread into the Sierra National Forest. 

    https://platform.twitter.com/widgets.js

    Washburn Fire Map

    Fire crews are battling the blaze threatening the Mariposa Grove of Giant Sequoias. 

    “The more than 500 mature sequoias of the Mariposa Grove are adjacent to these fuels and have so far avoided serious damage from the Washburn Fire … most of these trees are over 2000 years old,” fire officials wrote in an update.

    On Thursday, temperatures in California’s Sierra Nevada mountains are hot and dry, around 90 degrees Fahrenheit, with low humidity in the 20% to 30% range. These conditions can fuel the flames and may indicate the fire has more to spread. 

    “A persistent weather pattern for the next several days will support active-to-very active fire behavior in heavy dead and down fuels.

    “Continued warming and drying over the next several days will bring additional fire growth and smoke production where control lines have yet to be constructed,” fire officials wrote.

    Garrett Dickman, a forest ecologist with Yosemite National Park, who is helping to protect the giant sequoias that tower more than 200 feet tall, told NYTimes, “the past couple years have been a real wake-up … never thought the giant sequoias would really burn.” 

    Former Abraham Lincoln first protected California’s giant sequoias in 1864 to benefit future generations. 

    In 1905, former President Theodore Roosevelt established several other national parks, monuments, and forests and established the US Forest Service. Roosevelt described the Mariposa Grove of Giant Sequoias as “a temple grander than any human architect could by any possibility build.”

    Tyler Durden
    Thu, 07/14/2022 – 23:40

  • Escobar: Russia & China Haven't Even Started ZTo Ratchet Up The Pain Dial
    Escobar: Russia & China Haven’t Even Started ZTo Ratchet Up The Pain Dial

    Authored by Pepe Escobar,

    The Suicide Spectacular Summer Show, currently on screen across Europe, proceeds in full regalia, much to the astonishment of virtually the whole Global South: a trashy, woke Gotterdammerung remake, with Wagnerian grandeur replaced by twerking.

    Decadent Roman Emperors at least exhibited some degree of pathos. Here we’re just faced by a toxic mix of hubris, abhorrent mediocrity, delusion, crude ideological sheep-think and outright irrationality wallowing in white man’s burden racist/supremacist slush – all symptoms of a profound sickness of the soul.

    To call it the Biden-Leyen-Blinken West or so would be too reductionist: after all these are puny politico/functionaries merely parroting orders. This is a historical process: physical, psychic and moral cognitive degeneration embedded in NATOstan’s manifest desperation in trying to contain Eurasia, allowing occasional tragicomic sketches such as a NATO summit proclaiming Woke War against virtually the whole non-West.

    So when President Putin addresses the collective West in front of Duma leaders and heads of political parties, it does feel like a comet striking an inert planet. It’s not even a case of “lost in translation”. “They” simply aren’t equipped to get it.

    The “You Ain’t Seen Nothin’ Yet” part was at least formulated to be understood even by simpletons:

    “Today we hear that they want to defeat us on the battlefield, well, what can I say, let them try. We have heard many times that the West wants to fight us to the last Ukrainian – this is a tragedy for the Ukrainian people. But it looks like it’s all coming to this. But everyone should know that, by and large, we haven’t really started anything yet.”

    Fact. On Operation Z, Russia is using a fraction of its military potential, resources and state of the art weapons.

    Then we come to the most probable path ahead in the war theater:

    “We do not refuse peace negotiations, but those who refuse should know that the longer it drags, the more difficult it will be for them to negotiate with us.”

    As in the pain dial will be ratcheted up, slowly but surely, on all fronts.

    Yet the meat of the matter had been delivered earlier in the speech: “ratcheting up the pain dial” applies in fact to dismantling the whole “rules-based international order” edifice. The geopolitical world has changed. Forever.

    Here’s the arguably key passage:

    “They should have understood that they have already lost from the very beginning of our special military operation, because its beginning means the beginning of a radical breakdown of the World Order in the American way. This is the beginning of the transition from liberal-globalist American egocentrism to a truly multipolar world – a world based not on selfish rules invented by someone for themselves, behind which there is nothing but the desire for hegemony, not on hypocritical double-standards, but on international law, on the true sovereignty of peoples and civilizations, on their will to live their historical destiny, their values and traditions and build cooperation on the basis of democracy, justice and equality. And we must understand that this process can no longer be stopped.”

    Meet the trifecta

    A case can be made that Putin and Russia’s Security Council are implementing a tactical trifecta that has reduced the collective West to an amorphous bunch of bio headless chickens.

    The trifecta mixes the promise of negotiations – but only when considering Russia’s steady advances on the ground in Novorossiya; the fact that Russia’s global “isolation” has been proved in practice to be nonsense; and tweaking the most visible pain dial of them all: Europe’s dependence on Russian energy.

    The main reason for the graphic, thundering failure of the G20 Foreign Ministers summit in Bali is that the G7 – or NATOstan plus American colony Japan – could not force the BRICS plus major Global South players to isolate, sanction and/or demonize Russia.

    On the contrary: multiple interpolations outside of the G20 spell out even more Eurasia-wide integration. Here are a few examples.

    The first transit of Russian products to India via the International North-South Transportation Corridor (INSTC) is now in effect, crisscrossing Eurasia from Mumbai to the Baltic via Iranian ports (Chabahar or Bandar Abbas), the Caspian Sea, and Southern and Central Russia. Crucially, the route is shorter and cheaper than going through the Suez Canal.

    In parallel, the head of the Iranian Central Bank, Ali Salehabadi, confirmed that a memorandum of interbank cooperation was signed between Tehran and Moscow.

    That means a viable alternative to SWIFT, and a direct consequence of Iran’s application to become a full BRICS member, announced at the recent summit in Beijing. The BRICS, since 2014, when the New Development Bank (NDB) was founded, have been busy building their own financial infrastructure, including the near future creation of a single reserve currency. As part of the process, the harmonization of Russian and Iranian banking systems is inevitable.

    Iran is also about to become a full member of the Shanghai Cooperation Organization (SCO) at the upcoming summit in Samarkand in September.

    In parallel, Russia and Kazakhstan are solidifying their strategic partnership: Kazakhstan is a key member of BRI, EAEU and SCO.

    India gets even closer to Russia across the whole spectrum of trade – including energy.

    And next Tuesday, Tehran will be the stage for a crucial face-to-face meeting between Putin and Erdogan.

    Isolation? Really?

    On the energy front, it’s only summer, but demented paranoia is already raging across multiple EU latitudes, especially Germany. Comic relief is provided by the fact that Gazprom can always point out to Berlin that eventual supplying problems on Nord Stream 1 – after the cliffhanger return of that notorious repaired turbine from Canada – can always be solved by implementing Nord Stream 2.

    As the whole European Suicide Spectacular Summer Show is nothing but a tawdry self-inflicted torture ordered by His Master’s Voice, the only serious question is which pain dial level will force Berlin to actually sit down and negotiate on behalf of legitimate German industrial and social interests.

    Rough and tumble will be the norm. Foreign Minister Lavrov summed it all up when commenting on the Declining Collective West Ministers striking poses like infantile brats in Bali to avoid being seen with him: that was up to “their understanding of the protocols and politeness.”

    That’s diplo-talk for “bunch of jerks”. Or worse: cultural barbarians, as they were even unable to respect the hyper-polite Indonesian hosts, who abhor confrontation.

    Lavrov preferred to extol the “joint strategic and constructive” Russian-Chinese work when faced with a very aggressive West. And that brings us to the prime masterpiece of shadowplay in Bali – complete with several layers of geopolitical fog.

    Chinese media, always flirting with the opaque, tried to put its bravest face ever depicting the over 5-hour meeting between Foreign Minister Wang Yi and Secretary Blinken as “constructive”.

    What’s fascinating here is that the Chinese ended up letting something crucial out of the bag to slip into the final draft of their report – obviously approved by the powers that be.

    Lu Xiang of the Chinese Academy of Social Sciences went through previous readouts – especially of “Yoda” Yang Jiechi routinely turning Jake Sullivan into roasted duck – and stressed that this time Wang’s “warnings” to the Americans were “the sternest one in wording”.

    That’s diplo-code for “You Better Watch Out”: Wang telling Little Blinkie, “just look at what the Russians did when they lost their patience with your antics.”

    The expression ”dead end” was recurrent during the Wang-Blinken meeting. So in the end the Global Times had to tell it like it really is:  “The two sides are close to a showdown.”

    “Showdown” is what End of Days fanatic and Tony Soprano wannabe Mike Pompeo is fervently preaching from his hate pulpit, while the combo behind the senile “leader of the free world” who literally reads teleprompters actively work for the crashing of the EU – in more ways than one.

    The combo in power in Washington actually “supports” the unification of Britain, Poland, Ukraine and The Three Baltic Midgets as a separate alliance from NATO/EU – aiming at “strengthening the defense potential.” That’s the official position of US Ambassador to NATO Julian Smith.

    So the real imperial aim is to split the already shattering EU into mini-union pieces, all of them quite fragile and evidently more “manageable”, as Brussels Eurocrats, blinded by boundless mediocrity, obviously can’t see it coming.

    What the Global South is buying

    Putin always makes it very clear that the decision to launch Operation Z – as a sort of pre-emptive “combined arms and police operation”, as defined by Andrei Martyanov – was carefully calculated, considering an array of material and socio-psychological vectors.

    Anglo-American strategy, for its part, lasers on a single obsession: damn any possible reframing of the current “rules-based international order”. No holds are barred to ensure the perpetuity of this order. This is in fact Totalen Krieg – featuring several hybrid layers, and quite worrying, with only a few seconds to midnight.

    And there’s the rub. Desolation Row is fast becoming Desperation Row, as the whole Russophobic matrix is shown to be naked, devoid of any extra ideological – and even financial – firepower to “win”, apart from shipping a collection of HIMARS to a black hole.

    Geopolitically and geoeconomically, Russia and China are in the process of eating NATOstan alive – in more ways than one. Here, for instance, is a synthetic road map of how Beijing will address the next stage of high-quality development via capital-driven industrial upgrading, focused on optimization of supply chains, import substitution of hard technologies, and “invisible champions” of industry.

    If the collective West is blinded by Russophobia, the governing success of the Chinese Communist Party – which in a matter of a few decades improved the lives of more people than anyone, anytime in History – drives it completely nuts.

    All along the Russia-China watchtower, it’s been not such a long time coming. BRI was launched by Xi Jinping in 2013. After Maidan in 2014, Putin launched the Eurasia Economic Union (EAEU) in 2015. Crucially, in May 2015, a Russia-China joint statement sealed the cooperation between BRI and EAEU, with a significant role assigned to the SCO.

    Closer integration advanced via the St. Petersburg forum in 2016 and the BRI forum in 2017. The overall target: to create a new order in Asia, and across Eurasia, according to international law while maintaining the individual development strategies of each concerned country and respecting their national sovereignty.

    That, in essence, is what most of the Global South is buying. It’s as if there’s a cross-border instinctual understanding that Russia-China, against serious odds and facing serious challenges, proceeding by trial and error, are at the vanguard of the Shock of the New, while the collective West, naked, dazed and confused, their masses completely zombified, is sucked into the maelstrom of psychological, moral and material disintegration.

    No question the pain dial will be ratcheted up, in more ways than one.

    Tyler Durden
    Thu, 07/14/2022 – 23:20

  • "The Damage Could Be Huge": Chinese Banks Tumble, Swept Up In Mortgage Nonpayment Scandal As Borrowers Revolt
    “The Damage Could Be Huge”: Chinese Banks Tumble, Swept Up In Mortgage Nonpayment Scandal As Borrowers Revolt

    On Friday, shares of China’s banks extended their slide to a two-year low amid fears widespread mortgage non-payments would spark contagion within the banking sector (see “China On Verge Of Violent Debt Jubilee As “Disgruntled” Homebuyers Refuse To Pay Their Mortgages“) even after the local banking and insurance regulator said it will maintain continuity and stability of financing policies for the real estate sector.

    China Central Television said on its WeChat page that the regulator will guide financial institutions to participate in risk disposals based on market conditions, after researcher China Real Estate Information Corp. reported that home buyers had stopped mortgage payments on at least 100 projects in more than 50 cities as of Wednesday, spurring concerns that the quality of home loans is in rapid decline and could culminate in a 2007-like credit/housing bubble blow up.

    Still, as Bloomberg Markets Live reporter Ye Xie writes, the grassroots movement of Chinese homebuyers boycotting mortgage payments isn’t exactly akin to the US subprime crisis of 2008.  That said, no matter what Beijing does to address the latest chapter in China’s housing crisis drama, banks are likely to share the burden.

    In the wake of a surging number of homebuyers who refuse to pay mortgages on construction projects that have stalled, China’s banking regulators said Thursday that they are coordinating with other agencies to support local governments in working to ensure the delivery of housing units. Separately, Bloomberg reported that policy makers held emergency meetings with banks to discuss the issue amid concern that it may worsen.

    The boycotts raise the risk of mortgage defaults, a new set of troubles for banks that are already squeezed by exposure to ailing property developers. Mortgages make up almost 20% of total bank loans outstanding, amounting to about 39 trillion yuan ($5.8 trillion).

    In a rather panicked note from Morgan Stanley economist Zhipeng Cai (available to pro subscribers), he addresses the topic of widespread mortgage nonpayment and writes that “we estimate 188mn sqm (1.7mn units) are at risk. We expect local governments will be urged to help completion, but a national bazooka solution remains difficult in near term.”

    His warning: “Non-linearity is the key to watch.”

    To others, however, such as Xie, this is an exaggeration. According to the Bloomberg reporter, “it’s reasonable to argue that this is unlikely the start of something as bad as the US subprime crisis. Unlike lending to developers, mortgages have been regarded as the safest assets on banks’ balance sheets, as Betty Wang, an economist at ANZ, pointed out. Mortgage defaults have been rare, and rising home prices over the years have increased the value of banks’ collateral.”

    Some data: the average non-performing mortgage-loan ratio of the six largest banks, which accounted for 68% of China’s total home loans, was only 0.38% in 2021, compared with an NPL ratio of 2.73% for developers, according to Wang’s calculations.

    Of course, all of this assumes that the current mortgage-boycott movement can be quickly nipped in the bud. If not, the potential damage could be huge. Nomura’s economist Lu Ting and his colleagues estimated that about 4.4 trillion yuan worth of mortgages made between the end of 2020 and March of 2022 may be tied to those home projects that have been stalled or slow in being built.

    Understandably, Chinese banks have gotten hammered in recent days. The CSI bank index fell more than 4% over the past two days to the lowest since March 2020. Their price-to-book ratio has dropped to an all-time low of 0.61, suggesting investors believe a significant part of the banking system’s assets are impaired.

    At the same time, the CSI 300 Financials Index slipped as much as 1.2% on Friday, and is set for an 11th session of declines. Of course, the worse it gets, the more likely Beijing will have no choice but to unleash a powerful releveraging bazooka, even if it has to do so kicking and screaming.

    Indeed, as Xie correctly concludes, “the government is likely to step in sooner rather than later as the mortgage boycotts start to undermine social stability. Either banks have to chip in to provide cheap funds for developers to complete projects, or they have to allow homebuyers to delay their payments. Neither is an attractive option.”

    What is the worst case scenario? Here we go back to the “non-linearity kicking in” case suggested by Morgan Stanley:

    Home-buyer confidence weakens further from a low starting point, leading to further deterioration in property sales. This may force more developers, even relatively strong ones today, to suspend unfinished projects, furthering the downtrend. In the meantime, housing prices may continue to fall, exacerbating the downward spiral. Furthermore, the stress in the housing sector could spread to the broader economy, given the extensive inter-sector linkages, while being magnified by the financial system.

    In short: a self-reinforcing downward cascade which ends in either a historical crash of the world’s largest asset…

    … or a state bailout. Here are the two most likely policy responses according to Morgan Stanley:

    • Damage control: Local governments will likely be called upon to mobilize resources on a by-project basis, possibly with the help of SOEs and LGFVs, to kick-start suspended projects, signaling to the public that housing completion is the over-arching priority. SOE developers may be encouraged to conduct M&A activities, taking over stalled projects.
    • Reining in systemic risk beyond the near term: Policy makers will likely need to send a clear and strong signal that they stand ready to be the “rescuer of the last resort” to rein in systemic risks. Plausible moves include more meaningful demand stimulus, more explicit guarantees on quality developers, or (less likely) a TARP-like program. Translation: a massive firehose of liquidity and credit is about to be unleashed.

    One final though: similar to crypto lenders which generously handed out 20% DeFi interest until it all blew up spectacularly in one giant, cross-linked ponzi scheme, so China’s 5%+ mortgage rates had been an extremely lucrative business for banks. It’s now payback time.

    Tyler Durden
    Thu, 07/14/2022 – 23:00

  • California Scheming: UCSF Prof Plans Floating Abortion Clinic In Gulf Of Mexico
    California Scheming: UCSF Prof Plans Floating Abortion Clinic In Gulf Of Mexico

    To counter a new wave of abortion restrictions in southern states following the Supreme Court’s overturning of Roe v Wade, a California professor is leading an effort to launch a floating abortion clinic in the Gulf of Mexico next year. The vessel would operate in federal waters, beyond the reach of state laws. 

    The craft would be used to perform surgical abortions up to 14 weeks, along with a variety of other services including onboard testing for sexually transmitted infections (STIs), STI treatment and vaccination, according to the project’s website, which is already soliciting donations. 

    Dr. Meg Autry’s venture is called PRROWESS—short for Protecting Reproductive Rights of Women Endangered by State Statutes. Autry is a professor of obstetrics, gynecology and gynecologic surgery at the University of California – San Francisco. 

    Dr Meg Autry of the University of California – San Francisco

    “There’s been an assault on reproductive rights in our country and I’m a lifelong advocate for reproductive health and choice. We have to create options and be thoughtful and creative to help people in restrictive states get the health care they deserve,” Autry tells The Associated Press.

    “Those in the most southern parts of Mississippi, Alabama, Louisiana, and Texas may be closer to the coast than to facilities in bordering states where abortion and reproductive health care are available,” says the PRROWESS website.

    “We need offshore drilling, not abortions,” counters a spokeswoman for Alabama governor Kay Ivey. 

    Autrey’s goal is to operate three weeks out of each month on a vessel that’s Coast Guard-inspected and equipped with a helicopter landing pad. Rather than making port calls, the plan is for the boat to be positioned in federal waters and patients transported to it, with services provided at little or no cost. 

    Autry says a realistic goal for a launch is one year, with hopes of pulling it off in six to eight months. “There’s operational, logistics, there’s the whole idea of maritime law and then there’s obviously security, there’s liability…I mean the challenges are countless,” Autry tells CBS San Francisco.  

    She thinks it will take $20 million to make her vision a reality, and has a crew of lawyers ready to navigate choppy legal waters ahead.  

    Republican Alabama state senator Chris Elliott notes that “one of the problems with trying to get around state law by going offshore is you have to come back to port. You cannot break state law and then come back to a port where you have broken the law. That would preclude most Gulf Coast areas.”

    “Part of the reason we’re working on this project so hard is because wealthy people in our country are always going to have access (to abortions), so once again it’s a time now where poor, people of color, marginalized individuals, are going to suffer – and by suffering I mean like lives lost,” Autry tells NBC Bay Area. 

    It remains to be seen if Autry’s intent to perform abortions “only” up to 14 weeks will earn the scorn of hardcore abortion supporters who think it should be available far later. 

    Tyler Durden
    Thu, 07/14/2022 – 22:40

  • Investigation Reveals Operations Of 'Powerful' Yuma County Democrat Who Admitted To Ballot Harvesting
    Investigation Reveals Operations Of ‘Powerful’ Yuma County Democrat Who Admitted To Ballot Harvesting

    Authored by Gary Bai via The Epoch Times (emphasis ours),

    An undercover video at the polls helped investigators disrupt a local ballot harvesting operation run by a Democratic operative in Arizona, in a scheme that prosecutors have described as a “modern day political machine seeking to influence the outcome” of a 2020 municipal election.

    This undated photo released by the Arizona Attorney General’s Office shows Guillermina Fuentes. (Arizona Attorney General’s Office)

    Guillermina Fuentes, a former mayor of San Luis, and her associate Alma Juarez, earlier this year both pleaded guilty to one count of ballot abuse. Fuentes admitted to illegally collecting early ballots from four persons who were not her family members during a Aug. 4, 2020, primary election in the border town of San Luis.

    Fuentes, of Yuma County, is the owner of a local construction business, a board member of the Gadsden Elementary School District, former mayor of San Luis, Arizona, and a Democratic precinct committee person.

    Investigators noted that Fuentes had apparently used her “powerful” position in the community to get locals to hand over their ballots to her or others for them to drop off at the ballot box, according to records of the Arizona attorney general office obtained by The Epoch Times through a public records request.

    Evidence

    The Arizona attorney general office’s investigation of Fuentes began after it received a notice from the Yuma County Sheriff’s Office of a potential case of voter fraud.

    During primary election day in 2020, Gary Snyder, then a GOP candidate for state senate, went undercover to record a video that seems to show Fuentes to be collecting and filling out ballots beside a polling station, according to a special investigation report dated Oct. 27, 2020 and prepared by Agent William Knuth of the Arizona attorney general’s office.

    David Lara, former vice chairman of the Yuma County GOP, told The Epoch Times that he collaborated with Synder and passed the video evidence on to the Yuma County Sheriff’s office for investigation. The Sheriff’s office worked with the Arizona attorney general’s office in a joint investigation.

    “A group of subjects, lead by Guillermina Fuentes were seen on video manning a table and appearing to be supporting particular candidates,” Knuth’s investigation report reads. “A female identified as Alma Juarez approached the table and made contact with a second female identified as Guillermina Fuentes. Fuentes is ultimately observed taking a ballot from Juarez.”

    Fuentes admitted in her guilty plea that the early ballots were later provided to Juarez. Juarez pleaded guilty in March to one count of ballot abuse, a misdemeanor with a maximum sentence of six months with probation available, according to Juarez’s plea agreement.

    “In the video, it is clear that the ballot envelope was unsealed. Fuentes was observed to pick up a pen or pencil and write on the ballot envelope. She then pulls the ballot out of the envelope and makes three marks consistent with the filling in of spaces on a ballot to make a candidate selection. Fuentes put the ballot back in the envelope and sealed it. She then retrieved several more ballot envelopes from a folder on the table and handed them to Juarez. Juarez then walks toward the polling,” the report continued.

    Agent Knuth then contacted Juan Guerrero, a Justice of the Peace in Yuma County. Guerrero said he “believed a group of influential subjects, including Fuentes, is exchanging money for the ballots of community members,” according to the report.

    ‘Powerful’ Position

    One of the people interviewed by investigators described Fuentes as a “powerful” figure in the San Luis community, a status she exploited to allegedly engage in ballot harvesting on other occasions.

    Agent Knuth interviewed Monica Corral, who said she was employed by Fuentes at Fuentes’s construction company from August 2016 to January 2017.

    “Corral stated that during the time leading up to the 2016 general election, she was given envelopes which she determined contained money. Fuentes informed her who would come to pick up the envelopes, and at the time of pick up would either leave a ballot or provide a time when Fuentes could come pick up their ballot,” Knuth’s report stated.

    “Corral stated that the majority of the envelopes dropped off at the business were unopened, as if they were just received in the mail,” the report continued, adding that Corral estimated more than fifty ballots were dropped off.

    “Testimony of Monica Corral establishes a pattern and history of collecting ballots and in some cases providing monetary compensation for those ballots. Corral’s statement also explains that Fuentes has continued to be allowed to engage in suspicious activity regarding ballots without question due to her “powerful” position in the San Luis community,” the report said.

    Agent Knuth collected statements from community members in San Luis and found that these statements “support the theory that individuals canvass neighborhoods in San Luis and solicit ballots.”

    Read more here…

    Tyler Durden
    Thu, 07/14/2022 – 22:20

  • China GDP Growth Plunges In Q2
    China GDP Growth Plunges In Q2

    China’s economic growth hit a two-year low of just +0.4% in the second quarter, with COVID lockdowns and a collapsing property market pushing expectations of the government’s target (around 5.5%) further out of reach.

    “GDP growth in 1H was only 2.5%, implying to reach 5.5% growth target, it would require average 8.5% growth in 2H, which is extremely unlikely,” explains Xiaojia Zhi, chief China economist at Credit Agricole.

    This was a big miss from the +1.2% expectations and other than the COVID lockdown collapse in Q1 2020, this is by far the weakest GDP growth for China in the modern era…

    The rest of the macro melange (for June) dropped tonight were mixed with Industrial Production picking up in June (but less than expected), Retail Sales smashed it (up 3.1% YoY vs +0.3%, notably though the YTD YoY is still down 0.7% YoY). China Fixed Asset Investment was flat on the month and Property Investment tumbled more than expected (down 5.4% YoY). The one (odd) bright light was the surveyed jobless tumbled to just 5.5% (from 5.7%)…

    The spike in retail sales is the standout, but we fear this is unsustainable as it was likely driven by the surge in pent-up demand from 10s of millions of Chinese being completely locked down for a month.

    The market is holding up on the June quarter hope. Bloomberg’s macro-based monthly forecast for China GDP (which incorporates tonight’s monthly data), suggests China GDP re-accelerating considerably in June…

    As Fiona Lim, senior FX strategist at Malayan Banking Bhd in Singapore, says:

    “Despite the weaker-than-expected 2Q GDP, the June activity data is decent with retail sales, FAI ex-rural beating expectations. Jobless rate came back down to 5.5% from previous 5.9% and that is reassuring. Yuan is probably reacting with relief that the bottoming out picture is still intact. That said, yuan bulls may not get much momentum from this set of data given the that the real estate is still under pressure.”

    However, the ongoing  COVID-Zero policy – and risk of immediate lockdowns to considerable parts of the economy – continue to make any trends undecipherable.

    And as Xiaojia Zhi, chief China economist at Credit Agricole, warns:

    “Given the ongoing Covid uncertainties and property market concerns, the risk to our growth forecast of 4.0% in 2022 could be on the downside, even taking into account those fiscal easing packages that have been announced.”

    And finally, don’t think massive credit impulses will save economic growth, it certainly didn’t help in Q2…

    But when has that ever stopped the central planners from repeating the experiment and expecting a different outcome.

    Tyler Durden
    Thu, 07/14/2022 – 22:17

  • Russia Continues To Earn More By Exporting Less Oil
    Russia Continues To Earn More By Exporting Less Oil

    Russian export revenues in June rose by $700m to the $20 billion mark, despite that oil exports fell by 250k b/d m/m to 7.4m b/d, the lowest since August 2021, Bloomberg’s Sherry Su reports citing the IEA’s latest Oil Market Report.

    Compared to a post-war peak level in April, total Russian oil exports in June were down 530k b/d, Or 7%, but export revenues were up by $2.3 billion, or 13%.

    Crude oil exports were down by 250k b/d in June to just above 5m b/d, still slightly higher than the pre-war average level according to Su. Shipments to the EU fell below 3m b/d for the first time since November 2020, bringing the EU share of Russian oil exports to 40%, compared to 49% in January-February.

    Crude oil loadings to EU destinations fell 190k b/d m/m to 1.8m b/d, partly because of lower offtake on the Druzhba pipeline due to maintenance at a Hungarian refinery in June. Meanwhile, product loadings to the European Union fell by 135k b/d to 1.13m b/d, the IEA said.

    The fall in crude oil volumes came mostly from lower loadings on the Black Sea, as Rosneft’s 240k b/d Tuapse refinery reportedly came back online in June after a three-month shutdown.

    Total product exports out of Russia were relatively unchanged in June. Diesel exports increased slightly m/m to 825k b/d, 300k b/d lower than the pre-war average. Diesel Loadings to EU countries ticked up to 650 kb/d, returning to January-February average levels.

    Tyler Durden
    Thu, 07/14/2022 – 22:00

  • Victor Davis Hanson: Gavin Newsom's Weird Idea Of 'Freedom'
    Victor Davis Hanson: Gavin Newsom’s Weird Idea Of ‘Freedom’

    Authored by Victor Davis Hanson via The Epoch Times (emphasis ours),

    In a run-up to what is likely to be a 2024 presidential bid, California Governor Gavin Newsom hit upon the bizarre idea of boasting in commercials that California is America’s true “free” state.

    California Gov. Gavin Newsom, right, attends the Opening Plenary of the IX Summit of the Americas at the Los Angeles Convention Center, in Los Angeles, Calif., on June 9, 2022. (Mario Tama/Getty Images)

    Part of his ad campaign is to attack Florida—currently run by Newsom’s possible rival, Florida Governor Ron DeSantis.

    Yet, with the most burdensome regulations and high tax rates, Newsom’s California is arguably the most unfree state in the union.

    In return for these steep costs, the state’s public institutions, infrastructure, and services are among the country’s worst.

    California’s once-vaunted freeway system is near the bottom of all state comparisons. California’s Highway 99, which runs the length of the Central Valley, is one of the deadliest roads in America based on miles driven.

    Over half the nation’s homeless crowd the state’s major cities. One-third of America’s welfare recipients have flooded into the state. A fifth of the resident population lives below the poverty line. Well over a quarter of Golden State residents were not born in the United States.

    California public school test scores consistently fall among the bottom 10 states. San Francisco has the highest per capita property crime rate in the country.

    The recently recalled San Francisco District Attorney Chesa Boudin and his soon-to-be recalled Los Angeles counterpart George Gascón have nearly ruined their cities. Both are iconic of multibillionaire George Soros’ nationwide efforts to undermine the entire criminal justice system.

    State residents are not free to drive safely because of their decrepit freeways. They are not free from filthy and toxic sidewalks or dangerous physical assault in their major cities.

    Public school children are not free to enjoy competitive educations. San Franciscans are not free to park their cars without fearing that they will be vandalized or stolen.

    The destruction of these freedoms is in direct proportion to the confiscatory taxes that the state collects—the highest bracket of income and gasoline rates in the nation, among the highest sales taxes, and property taxes that soar due to inflated assessments in spite of a 1978 state constitutional amendment.

    Currently, California faces brownouts due to the longstanding, deliberate curtailment of electrical generation plants.

    Yosemite’s historic redwood forest is currently threatened with what are now customary California summer conflagrations.

    The destructive, dirty forest fires reflect a deliberate state policy of not gleaning the forests of dead trees, but rather letting the flammable debris serve as “natural” fodder for bugs and birds.

    The state has not built a major reservoir in nearly 40 years.

    In rarer wet years, millions of acre-feet of runoff and snowmelt simply cascade to the sea. Releasing such vital water apparently enhances 19th-century riparian landscapes—and discourages its own agribusiness.

    Amid Newsom’s anti-Florida ad campaign, the governor was vacationing at the upscale digs of his Montana in-laws—escorted by his ample state-paid security detail. That is odd, given Newsom’s California labels Montana a homophobic hellhole, and will not even reimburse state employees who dare to convention there.

    Hypocrisy and elite virtue signaling, however, are now trademarks of California politicians—and illustrate how little elected officials care for the victims of their ideological agendas.

    Newsom bragged about his tough California mask mandate although it did not lower COVID-19 deaths per capita in any measurable degree than did the policies of the red states he so often trashes. He violated his own COVID mandates by dining at the upscale French Laundry restaurant and hanging out unmasked with Magic Johnson.

    Newsom has done nothing to remedy his state’s soaring gas prices, terrible schools and infrastructure, or spiking crime. But he did virtue signal about giving illegal aliens millions of state dollars in COVID relief.

    Rather than develop California’s rich gas and oil reserves, Newsom promised strapped motorists that he would send them a one-time fuel gift of $400.

    Read the rest here…

    Tyler Durden
    Thu, 07/14/2022 – 21:40

  • The Corporate Layoffs Have Started And Leftist Big Tech Is Leading The Pack
    The Corporate Layoffs Have Started And Leftist Big Tech Is Leading The Pack

    There are two major forces at work within the US economy today that pull in different directions but end up in the same place:  These forces are price inflation caused by central bank stimulus along with supply chain instability and recession triggered by rising interest rates.   Immense corporate and consumer debt also play a role, but this ties in directly with the interest rate issue.

    In other words, we are looking at a classic stagflationary scenario amplified by years of fiat dollar printing by the Federal Reserve.  The only element that has been missing is rising unemployment, until now.  

    The word “recession” is being used liberally lately and there is a good reason for this – It is vague and gives the public little to no idea of what to expect or how bad the economic downturn could get.  It is also a convenient distraction from the much more dangerous issue of rising prices.  If a “recession” is on the way, won’t this mean prices will fall?  Not necessarily, at least not anytime soon.  

    With high retail prices leading to less purchasing power among US consumers and less spending, corporations are going to have to cut costs somewhere.  They can only raise prices so high for goods and services before they will inevitably turn to mass layoffs to gain breathing room.  And, the first companies that are going to have to face the music are the most frivolous business models that don’t produce necessities (i.e. Big Tech).  

    At least 143 US tech companies have laid off around 24,000 employees this year and this is just the beginning. 

    There are the more publicized layoffs at streaming services like Netflix which fired around 500 regular workers and canceled operations with numerous contractors.  The company lost 200,000 subscribers in the first quarter of this year and expects to lose 2 million more subscribers in the near term.  It’s another case of “Get Woke, Go Broke,” but it’s also a reflection of the changing tech environment as inflation in necessities strangles consumer wallets.  There is no doubt Netflix will see continued layoffs through the rest of this year.  

    Then there are the more quietly publicized employment issues at social media giants like Facebook and Twitter.  Twitter announced mass layoffs were in the works last week as uncertainty over the company’s acquisition by Elon Musk grew.  Now that it is clear that Musk will not be buying the platform, they face serious decisions on cuts in order to remain afloat as their stock price tanks.  So far, Twitter has laid off over 30% of its talent division and announced a hiring pause. 

    In a recent leaked memo, Facebook executives have informed managers that “low performance” employees have no place at the company and will need to be cut, indicating that a philosophy of meritocracy is returning to the otherwise woke world of social media.  

    Facebook has been bleeding money for years now and in February it’s stock prices plummeted after it announced that it has lost subscribers for the first time in its 18 year history.  The shares have collapsed by 50% since February and are still dropping.  Mark Zuckerberg personally lost at least $32 billion in stock holdings in February alone. 

    Multiple Big Tech and high concept companies that rely heavily on tech have announced hiring freezes or layoffs in the past month, including Apple, Uber, Lyft, Snap, Hopin and Coinbase.  

    Financial problems at proto-news websites like Buzzfeed and Vox have been well known for months as the venture capital artificially propping up these companies has finally run out.  But extensive losses have been felt throughout the corporate media and leftist web media in particular.  Even CNN is floundering with its abrupt cancellation of streaming service CNN+ and the layoff of staffers.  Most or all of these corporations represent peripheral digital products and services that the vast majority of Americans have no use for and which serve no core purpose.

    A moderate recession might actually be useful is separating the wheat from the chaff within the current corporate climate, and with inflation rising there is the good chance that the Federal Reserve will not choose to step in to pour more stimulus dollars into dead companies that are dragging the economy down.  Just because they did it in 2008/2009 does not mean they will do it now.  However, it’s unlikely that the downturn will remain limited and merely clean out bad business.  The word “recession” is misleading; what we are really facing is a historic breakdown of the system which will affect the majority of the public.  

    If the current stagflation trend continues, layoffs will accelerate into the end of this year and into 2023, likely on a scale similar to 2009.  Yet prices on most necessities will remain high and it will be the worst of both economic worlds.  Big tech companies will only survive with extreme changes to their customer and performance models as advertising dollars dry up completely.  Either that, or they will require some kind of government assistance beyond what they have already received, though this will only expose them to more consumer scrutiny and more losses in their user numbers.

    It is perhaps the one bright spot in an otherwise dismal economic forecast; that some of these platforms which have politically abused their customers for so long will finally suffer some karma.    

    Tyler Durden
    Thu, 07/14/2022 – 21:20

  • China On Verge Of Violent Debt Jubilee As "Disgruntled" Homebuyers Refuse To Pay Their Mortgages
    China On Verge Of Violent Debt Jubilee As “Disgruntled” Homebuyers Refuse To Pay Their Mortgages

    While US snowflakes are all too happy to talk the talk (which remains free, even despite Biden’s hyperinflation), Chinese residents are increasingly walking the walk. First, it was the violent outcry against mandatory covid vaccines that put an end to Beijing’s desire to forcibly innoculate all Beijing residents in just 48 hours – a feat not all of America’s armed militias have been able to achieve, and now it’s a grassroots push for what appears to be a debt jubillee as millions of homeowners suddenly stop paying their mortgages, a shocking move that has sent shockwaves across China’s capital markets and has sparked panic within China’s political leadership circles.

    As Bloomberg reports overnight, a rapidly increasing number of “disgruntled Chinese homebuyers” are refusing to pay mortgages for unfinished construction projects, exacerbating the country’s real estate woes and stoking fears that the crisis will spread to the wider financial system as countless mortgages default.

    According to researcher China Real Estate Information, homebuyers have stopped mortgage payments on at least 100 projects in more than 50 cities as of Wednesday, up from 58 projects on Tuesday and only 28 on Monday, according to Jefferies Financial Group Inc. analysts including Shujin Chen.

    “The names on the list doubled every day in the past three days,” Chen wrote in a note published Thursday. “The incident would dampen buyer sentiment, especially for presold products offered by private developers given the higher risk on delivery, and weigh on the gradual sales recovery.”

    What’s behind this grassroot movement to halt mortgage payments altogether? Negative equity:

    Analysts believe that a drop in home values may be another driver for the refusal to meet mortgage payments. “Investors are concerned about the spread of mortgage payment snubs to buyers, simply due to lower property prices, and the impact on property sales,” Chen wrote.

    According to Citi analysts, average selling prices of properties in nearby projects in 2022 were on average 15% lower than purchase costs in the past three years. Meanwhile, it’s only getting worse as China’s home prices fell for a ninth month in May, with June figures set for release Friday.   

    The crisis engulfing Chinese developers is reaching a new phase, with a debt selloff expanding to firms once deemed safe from the cash crunch, including investment-grade names such as Country Garden Holdings, the largest builder by sales.

    The payment refusals, which come at a time when China’s economy is set to post what may be a negative GDP print due to the latest economic shutdown over Xi’s catastrophic zero covid policies, underscore how the storm engulfing China’s property sector is now affecting hundreds of thousands of average citizens, posing a threat to social stability ahead of a Communist Party Congress later this year. Chinese banks already grappling with challenges from liquidity stress among developers now also have to brace for homebuyer defaults.

    As a result of the unprecedented push for a debt jubilee, shares of China’s banks extended their recent decline Thursday, with the CSI 300 Banks Index falling as much as 3.3% before closing down 2.2%. A Bloomberg Intelligence index of Chinese developer stocks slid as much as 2.7%, even though Chinese lenders were quick to try and dispel fears that the movement could crash the economy: according to Bank of Communications, its outstanding balance of overdue mortgage loans linked to housing projects with risks of delayed delivery is 99.8 million yuan, accounting for 0.0067% of its domestic housing mortgage balance. The bank added that its housing mortgage loan quality is stable and risks are controllable, the Shanghai-based lender says in an exchange filing. At the same time, Postal Savings Bank of China says its overdue mortgage loans linked to halted housing projects is 127m yuan, and risks are controllable. Of course, it’s not like Chinese banks would ever lie, now is it?

    Which is why others remained skeptical: Nomura analysts said the refusal to pay mortgages stems from the widespread practice in China of selling homes before they’re built. Confidence that projects will be completed has weakened as developers’ cash woes intensified, according to the Japanese bank. Even before the crisis, developers only delivered around 60% of homes they presold between 2013 and 2020, while outstanding mortgage loans rose by 26.3 trillion yuan, Nomura analysts including Ting Lu wrote in a note Wednesday.

    “Presales carry mounting risks for developers, homebuyers, the financial system and the macro economy,” Ting wrote. Failure to build homes on time reduces households’ willingness to buy new properties, and rising raw material prices may mean funds from presales are insufficient to construct them.

    We are especially concerned about the financial impact of the homebuyers’ ‘stopping mortgage repayments’ movement,” Ting wrote. “China’s property downturn may finally adversely affect onshore financial institutions after hitting the offshore high-yield dollar bond market.”

    * * *

    While rising non-performing loans for Chinese banks are “manageable” for now, “more risk events are likely to come, at the backdrop of China’s growth slowdown, residents’ expectation of worse future income, and shrinking property sales,” affecting China’s social stability, Jefferies’s Chen said.

    At that point Beijing will be faced with a stark choice: inject a massive amount of liquidity into the market, or brace for the biggest fear for every Chinese politician: a middle-class insurrection. We doubt they will pick the latter.

    And while the odds are low that this latest example of testicular fortitude demonstrated by millions of increasingly desperate Chinese citizens will be imitated in the US, the last thing the flailing US economy can afford is a similar self-imposed debt jubilee, one which will see the Fed injection trillions into the economy in no time.

    Tyler Durden
    Thu, 07/14/2022 – 21:11

  • Recession Would Make Tough Oil Sanctions On Russia More Likely
    Recession Would Make Tough Oil Sanctions On Russia More Likely

    By John Kemp, senior analyst at Reuters

    Recession in the major economies is the only sure-fire way to reduce Russia’s petroleum revenues – an uncomfortable truth Western policymakers have tried to obfuscate from voters at home.

    U.S. and EU policymakers will not deliberately plunge their economies into a recession simply to intensify the economic pressure on Russia; privation is not an attractive option in electoral politics. But if their economies go into recession anyway, which currently appears possible or even probable, the likelihood of tough sanctions on Russia’s oil exports will increase significantly later this year and in 2023.

    Russia was the world’s second-largest oil producer in 2021, with output of 536 million tonnes, behind the United States with output of 711 million tonnes, but just ahead of Saudi Arabia on 515 million tonnes. On a mass-basis, Russia accounted for nearly 13% of worldwide production, behind the United States (17%) but marginally ahead of Saudi Arabia (12%), according to BP (“Statistical review of world energy”, July 2022).
     
    Saudi Arabia, the other Gulf monarchies and U.S. shale firms appear to be producing close to their current limits, with few options to raise output in the short term.

    None of these producers seems both able and willing to make up for any loss of crude and refined fuel exports from Russia, in any significant volume, despite the recent surge in prices.

    In the absence of a recession, the marginal barrel in the oil market is therefore from Russia, and the terms on which it is made available to international buyers in the Middle East and Asia set the global price.

    So far, sanctions on Russia’s petroleum exports have driven up prices for consuming countries, while boosting Russia’s earnings because prices have risen faster than volumes have fallen.

    But recession or a prolonged business cycle downturn in the major oil-consuming economies of the United States, the European Union and China would change the situation by creating spare capacity in the oil market.

    The marginal price-setting barrel would no longer be exclusively from Russia; Saudi Arabia, the rest of OPEC and U.S. shale producers would all be competing to supply stagnating or shrinking consumption.

    SELF-SANCTIONING

    Until now, energy sanctions have hurt consumers more than they have punished Russia, with the European Union and the United States headed towards a business cycle downturn in large part because of high energy and other commodity prices.

    The European Union, in particular, appears to have sanctioned itself close to a recession as soaring prices for oil, gas and electricity, as well as food products and manufactured items squeeze household and business spending.

    This should not have come as a surprise to policymakers with a sense of history (“Energy sanctions and the impact on prices for consumers”, Kemp, June 10).

    Four centuries of experience shows that energy embargoes increase prices paid by consumers significantly in the short and medium term unless there are alternative supplies readily available to make up the deficit.

    Energy boycotts are an attractive policy instrument if and only if there is excess production capacity (actual or potential) that allows energy from sanctioned sources to be replaced by non-sanctioned ones.

    Sanctions on Russia’s oil have boomeranged on consumers the same way they did when the English parliament banned coal shipments into London from royalist coal-producing areas in 1642/43 during the civil war.

    The same problem was evident when international oil companies embargoed fuel shipments from Iran between 1951 and 1954 following nationalisation of the Anglo-Iranian Oil Company, causing fuel shortages in Asia.

    RECESSION CALCULUS

    Recession or a business cycle downturn would change the circumstances and make it possible, at least in principle, to replace Russia’s petroleum exports with more barrels from other suppliers. Recession and the emergence of more spare capacity would also lead to lower prices for all producers, including Russia.

    In a recession, Russia’s revenues would be hit doubly hard by the combination of lower prices and lower volumes as its barrels were replaced by barrels from other producers.

    Understandably, senior U.S. and EU policymakers are not keen to engineer a deliberate recession to make sanctions more effective. Complicated proposals for a price cap on Russia’s oil sales are an attempt to evade this dilemma, or at least hide the policy trade offs (“Russian Oil’s Achilles Heel”, Kennedy, April 7).

    But if an unintended recession occurs in the next few months, it could create more space to toughen sanctions policies later in 2022 and in 2023. Re-emergence of spare capacity would make replacement of Russian oil practical while lower prices would mask the cost of sanctions for consumers and make them more politically acceptable to voters.

    With all producers hit by the simultaneous downturn in sales volumes and prices, there might be more interest in displacing Russian barrels from rivals, potentially weakening solidarity within the OPEC+ group.

    Russia’s invasion of Ukraine, Western sanctions on Russia’s oil exports, and the outlook for the global economic cycle have become inextricably linked.
      
    Related columns:

    Tyler Durden
    Thu, 07/14/2022 – 21:00

  • Mexican Thieves Stealing $1 Billion Of Liquefied Petroleum Gas A Year
    Mexican Thieves Stealing $1 Billion Of Liquefied Petroleum Gas A Year

    In a dangerous game of wack-a-mole, Mexico nearly eliminated rampant gasoline pipeline thefts only to now see cartels and common thieves stealing $1 billion worth of liquified petroleum gas (LPG) each year from state-owned Petroleos Mexicanos, or Pemex.

    Under Mexican President Andrés Manuel López Obrador, theft from gasoline and diesel pipelines plummeted 94% after he deployed the National Guard and military surveillance to watch over the supply arteries. The glow of that success has been dulled, however, as criminals have switched to tapping the country’s 1,000 miles of LPG pipelines. 

    Pemex found more than 2,400 illegal taps last year—up more than 10-fold in just three years. LPG is Mexico’s top source of energy for heating homes and is also used in cooking. The thieves sell directly to homeowners and food merchants, often using trucks disguised to look like legitimate delivery vehicles. 

    As Bloomberg Businessweek reports: 

    The scheme starts with a bribe; a Pemex worker is paid to tip off thieves…when LPG is running through a line and tells them where to open the valves. Then comes the dangerous part—siphoning the gas, which unlike gasoline can’t just be poured into a bucket. They must carefully connect a hose to the pipe to funnel the LPG into cylinders.

    One LPG thief profiled by Businessweek sells up to 80 cylinders of gas a day for 20 to 30% below the cost of legal fuel, netting an income that’s 40 times the average salary in his southeastern Mexican town. He’s used his earnings to buy fancy clothes, jewelry, family vacations and several plots of land. 

    Like other black markets, the illicit trade in LPG is marked by violence perpetrated by the fuel thieves, who are called huachicoleros. Security guards and police have come under attacks that are often deadly. There’s also violence among cartels and other thieves fighting to protect territory. Often, fuel theft is just one of an array of criminal enterprises pursued by criminal groups. 

    Some casualties associated with the trade are purely accidental. Residential explosions are on the rise as untrained thieves use unsafe practices in their home installations of the product.

    The taps themselves are likewise perilous. In October, an illegal LPG pipeline tap was blamed for a huge explosion that killed one person, injured eight, and damaged 180 homes in San Pablo Xochimehuacán. 

    The aftermath of an explosion caused by an illegal LPG tap in San Pablo Xochimehuacán (via Mexico News Daily)

    LPG is typically composed of a mix of propane and butane. When subjected to modest pressure or cooling, it converts to a liquid form that allows for more energy to be stored and transported in compact containers.

    The longer global fuel prices stay elevated as a result of the West’s self-destructive economic warfare, the more this trade will prosper, with bodies and rubble piling higher. 

    Tyler Durden
    Thu, 07/14/2022 – 20:40

  • 3rd Wave Of Inflation Will Be Unleashed If Fed Doesn't "Get Its Act Together": El-Erian
    3rd Wave Of Inflation Will Be Unleashed If Fed Doesn’t “Get Its Act Together”: El-Erian

    Authored by Katabella Roberts via The Epoch Times (emphasis ours),

    Economist Mohamed El-Erian has warned that a third wave of inflationary pressures is building and will be “unleashed” if the Federal Reserve doesn’t act quickly.

    Mohamed El-Erian, chief economic adviser of Allianz, at FOX Studios in New York on April 29, 2016. (Rob Kim/Getty Images)

    El-Erian, the former CEO of American investment management firm Pimco, made the comments on social media on July 13, shortly after financial markets were shocked by the U.S. annual inflation rate rising to 9.1 percent in June, marking its highest level since November 1981.

    Economists had forecast that inflation would come in at 8.8 percent in June.

    “Looking forward, inflation will come down over the next couple of months. That’s the good news,” El-Erian said on Wednesday.

    However, the expert noted that a “third wave of inflationary pressures”—the underlying causes of inflation—is building, and “will be unleashed if the Fed doesn’t get its act together quickly.”

    “With the first best policy option now long gone due to the first two stages of the ongoing Fed policy mistake, the recession risks are increasing accordingly,” El-Erian said.

    The economist added that this means that households, particularly those in the most vulnerable segments of society, are likely to take a second “big hit,” adding that he believes “much of this could have been avoided.”

    Federal Reserve officials in mid-June raised the benchmark interest rate by 0.75 percentage points, and were widely expected to raise rates by another 0.75 percentage points this month as inflation continues to soar.

    However, after Wednesday’s headline reading, experts have now increased the odds of a 100-basis-point rate hike at the Fed’s next policy meeting to 77 percent.

    ‘Not Acceptable’

    According to data released by the Bureau of Labor Statistics (BLS) on July 13, the cost of rent, food, energy, and medical care all rose in June.

    Food prices soared 10.4 percent for the 12 months ending June, marking the largest 12-month increase since the period ending February 1981, while the energy index advanced by 41.6 percent.

    Meanwhile, gasoline surged by 59.9 percent, marking the largest 12-month increase in that index since March 1980, while electricity costs jumped by 13.7 percent.

    President Joe Biden said in a statement on Twitter that the latest report served as a reminder that “inflation is too high” and that the numbers “are not acceptable,” while doubling down on his promise that fighting soaring prices is his “top economic priority.”

    However, Biden also said the inflation figures were “outdated” because gasoline prices have declined by roughly 40 cents per gallon over the past 30 days.

    The Biden administration has repeatedly downplayed fears that the U.S. economy is heading for a recession.

    El-Erian’s comments come shortly after Costco Wholesale CEO Craig Jelinek warned on July 11 that many Americans are already experiencing a recession and are struggling to make ends meet amid a volatile U.S. economy.

    Read more here…

    Tyler Durden
    Thu, 07/14/2022 – 20:20

  • Iconic Fed Analyst Calls It: Powell Will Be Forced To End QT Much Sooner Than Expected
    Iconic Fed Analyst Calls It: Powell Will Be Forced To End QT Much Sooner Than Expected

    When BofA’s top Rates strategist, and former NY Fed analyst, Marc Cabana speaks, investors, the Fed – and even his former Fed co-worker and repo guru, Zoltan Pozsar – listen. And what Cabana has to say now is extremely important.

    On Thursday morning, roughly around the time BofA’s chief equity strategist Ssavita Subramanian slashed her S&P year-end price target by a whopping 25% from 4,500 to 3,600, Cabana’s rates team published a must read note (which is also available to pro subs in the usual place), in which he wrote that the bank’s rates team “is making substantial downward revisions to our rate forecasts following our US economics team’s new call for a mild 2022 recession and lower Fed funds rate path.”

    What revisions?

    Well, as of today, in addition to sharply lowering its stock targets, BofA is also slashing its 10y Treasury end ’22 forecast from 3.50% to 2.75% and end ’23 forecast from 3.25% to 2.50%. The cuts come as BofA’s economics team yesterday also slashed its forecast to reflect a US recession in 2022 and materially lowered the Fed funds rate path with the terminal Fed funds rate lowered from 4.00-4.25% to 3.25-3.50%, as the BofA economics team now expects 100bp of Fed rate cuts between Sep ’23 and Jun ’24.

    Needless to say, the new forecasts are “very bullish” vs the forwards given the market’s expectation for Fed rate cuts in 2H23 and 1H24.

    Some more details from Cabana:

    The lower Fed rate path and rate cuts in ’23-’24 are the most relevant aspects of our US economics team changes for the US rate path. We are lowering our 10yT end ’22 forecast from 3.50% to 2.75% and end ’23 forecast from 3.25% to 2.50%. Our new forecasts are very bullish vs the forwards given the expectation for Fed rate cuts in 2H23 and 1H24 (Exhibit 4). Our prior rate forecasts initially reflected a bullish rate bias vs the forwards but these revisions make us more constructive vs the current market.

    All of the above is not really Cabana’s insight as he had no choice but to cut his rates forecast in a recession, which of course is not his call, and when the continued selloff in stocks will push investors into bonds.

    What was, however, unique in Cabana’s take is that the former Fed staffer, whose monetary forecasts always pan out correctly (he correctly predicted that the Fed would purchase corporate bonds just days before the Fed did just that), is that in his new base case for Fed cuts in 2H23 is expected to occur with an end to QT. To wit:

    We expect the Fed will stop QT with rate cuts due to the contradictory signal it sends on monetary policy and to simplify policy communications; the Fed will likely not want to be easing with rate cuts but tightening with QT.

    Cabana reminds us that the Fed has established a playbook for such an action in 2019 when the Fed cut started cutting rates in July ’19 and simultaneously announced a cessation of QT. Back then, the “QT cessation resulted in the Fed shifting MBS reinvestments up to the monthly redemption cap into USTs purchased in the secondary market.”

    To be sure, it is possible that the Fed will choose not to follow the ’19 cut and QT end playbook, but that is unlikely according to Cabana, who just in case adds a few potential arguments for not ending QT with a 2H23 rate cut:

    1. the Fed will only be “normalizing” front-end rates after a period of elevated inflation,
    2. the Fed balance sheet will likely still be far from reserve scarcity. We see the logic of each argument but believe it will be difficult to prove ex-ante. We also expect the Fed to opt for the simplest communication: stop QT when cutting rates.

    Cabana then notes that an earlier QT end would have several UST implications:

    1. reduced front-end UST cheapening pressure with more cash / less collateral in financial system,
    2. potentially more UST coupon cuts due to lower financing needs, and
    3. fewer secondary market UST dislocations due to a re-start of Fed purchases from MBS => UST reinvestment.

    Each of these would tend to bias UST-SOFR spreads wider across the curve.

    As for what happens to the Fed’s balance sheet, Cabana predicts that “Fed QT that is stopped in Sept ’23 will result in $1tn less balance sheet reduction vs our prior estimates through end ’24. Over a similar period, early QT end would result in $780b less UST financing need + $350b of additional Fed UST demand (from Fed MBS paydowns reinvested into USTs).”

    Such a large UST financing shock would result in less bill supply and eventual additional coupon cuts. The risk of early Fed QT end may also encourage the UST to continue with its current slate of coupon reductions and even larger 20yT cuts.

    Finally, while Cabana will not say it just yet, we will: or rather, we will repeat what we have been saying for a long time: after all, we called a premature end to QT several months ago. As for what happens after QT ends, well… there’s a playbook for that too, as we discussed yesterday.

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    Expect the market to take a few days (or weeks) to digest the full implications of this critical Fed pivot, but once markets realize that Cabana is once again right, high beta risk assets, currency debasement hedges like gold and bitcoin, and of course commodities will soar limit up as there will be no U-turn from this particular final Fed capitulation.

    Much more in the full must read note from Cabana, available only to professional subscribers.

    Tyler Durden
    Thu, 07/14/2022 – 20:08

  • China Could End Australia Coal Ban As Early As Late Summer, Reports Say
    China Could End Australia Coal Ban As Early As Late Summer, Reports Say

    Rumors swirl as China could reverse its unofficial ban on imports of Australian coal due to mounting supply uncertainty over the future loss of Russian energy supplies when Western-led sanctions are enacted.

    Reuters cited a Chinese news website: “Rumors of easing the ban on Australian coal imports have been circulating recently.” 

    Last week, China’s foreign minister, Wang Yi, held talks with Australian counterpart Penny Wong during an economic summit of G20 foreign ministers in Bali. 

    “There were rumors last week saying the ban was to be lifted, and now the talk is intensifying after the two parties met,” the website added.

    Bloomberg adds more color by citing people familiar with a proposal sent to Chinese leadership urging them to lift the nearly two-year ban on Australian coal. 

    The proposal will be submitted to senior leaders, with a recommendation Beijing should resume Australian imports, according to people familiar with the plan. That’s been prompted by fears European-led curbs on Russian energy will increase competition for coal from China’s main suppliers such as Indonesia. 

    Officials are looking to boost fuel supplies to avoid a repeat of last year’s power disruptions — particularly ahead of a key party congress — said the people, who requested anonymity to discuss a private matter.

    The plan will be handed to leaders who are in a position to authorize any change in policy to make a final decision, the people said. Though it remains uncertain whether a decision will ultimately be made to lift the ban, some companies are already preparing to resume imports, according to two other people. –Bloomberg 

    Chinese Foreign Ministry spokesman Wang Wenbin told reporters at a regular press conference on Thursday that Australia has the ability to “build up positive energy, and create favorable conditions for sound and steady development between China-Australia trade relations.”

    Beijing shunned coal imports from Australia in late 2020 over Canberra’s banning of Huawei Technologies Co. equipment in 5G networks. The situation worsened when former PM Scott Morrison requested an independent probe into the origins of the COVID-19 — deeply angering Beijing. 

    China’s potential reversal on the coal ban comes as the European Union and G7 countries will restrict Russian coal imports later this year. This will allow China more breathing room to procure metallurgical coal for steelmaking and power plants. 

    Today’s rumors led to a surge in Australian coal stocks:

    Firms such as Coronado Resources CRN.AX, Yancoal Australia YAL.AX, Whitehaven Coal WHC.AX and New Hope Corp NHC.AX all saw shares rise between 6% and 10% on the report. -Reuters 

    China could reverse the unofficial coal ban as soon as “August or September,” according to an Australian news outlet.  

    Tyler Durden
    Thu, 07/14/2022 – 20:00

  • The Real Cost Of Inflation For Most Americans
    The Real Cost Of Inflation For Most Americans

    Authored by Petr Svab via The Epoch Times (emphasis ours),

    The June inflation figure of 9.1 percent, up half a percentage point from last month and the highest since 1981, doesn’t tell half the story of how expensive life has become for Americans. The overall figure hides the fact that not all prices have risen uniformly and that products that have become especially expensive also happen to be the ones people usually can’t do without, such as food, fuel, and energy, according to the Consumer Price Index (CPI) data published by the Bureau of Labor Statistics (BLS).

    U.S. consumer price inflation surged 9.1 percent over the past 12 months to June, the fastest increase since November 1981, according to government data released on July 13, 2022. (Angela Weiss/AFP via Getty Images)

    Among foodstuffs, margarine and eggs prices hiked the most over the 12 months ending June, up over 34 and 33 percent respectively. Trailing behind were butter (up over 21 percent), flour (up over 19 percent), and chicken (more than 18 percent). Milk and coffee were up about 16 percent.

    Regular gasoline hiked more than 60 percent, diesel about 76 percent, and fuel oil, which many Americans use to heat their homes, nearly doubled in price. Natural gas went up over 38 percent and electricity nearly 14 percent.

    The White House, through President Joe Biden’s Twitter account, called the inflation figures “not acceptable,” but “outdated” on July 13, noting gasoline price has declined about 40 cents per gallon (about 8 percent) over the past 30 days.

    The products with the most prominent price hikes tend to also suffer supply issues. Gasoline production is constrained by the policies of the Biden administration and the financial elites more generally as part of their efforts to curb carbon emissions. Egg production has been constrained by the avian flu outbreak that cut the number of laying hens by about 8 percent in recent months. Grain production has been hit with sky-high fertilizer prices and herbicide shortages. Higher grain prices, in turn, not only show up in bakery goods and flour, but also in animal feed, which then hits meat and milk prices too.

    Normally, consumers respond to higher prices by tightening their belts—consuming less—which in turn leads prices down. But because of the lavish federal spending packages during the COVID-19 pandemic, however, consumer demand has been artificially boosted. Prices will have to go up relatively steeply for another year or two before the productivity of the economy catches up with all the newly printed money, some economists have predicted.

    Read more here…

    Tyler Durden
    Thu, 07/14/2022 – 19:40

  • White House Assured Khashoggi's Wife His Death Will Be Raised With MbS
    White House Assured Khashoggi’s Wife His Death Will Be Raised With MbS

    Joe Biden is set to be the first American president in history to fly straight from Israel to Saudi Arabia on Friday. He’s expected to meet with Saudi Crown Prince Mohammed bin Salman on Saturday, though it’s as yet unclear if this will be one-on-one or in the presence of other heads of state and officials from the region.

    On Thursday Biden refused to commit to raising the issue of the murder of Jamal Khashoggi when he meets with MbS when pressed by a reporter in a joint news conference with Israeli Prime Minister Yair Lapid.

    “I always bring up human rights,” Biden said in response, dodging the initial question on whether he’ll raise Khashoggi’s name. “But my position on Khashoggi has been so clear. If anyone doesn’t understand it, in Saudi Arabia or anywhere else, then they haven’t been around for a while.”

    As The Associated Press wrote of the exchange: 

    Biden said the purpose of his trip to Saudi Arabia is “broader” and designed to “reassert” U.S. influence in the Middle East. He’s scheduled to attend a summit of the Gulf Cooperation Council, which includes several Arab nations.

    He quickly pivoted in his comments alongside the Israeli leader to broader geopolitics and regional security: “I want to make clear that we can continue to lead in the region and not create a vacuum, a vacuum that is filled by China and or Russia, against the interests of both Israel and the United States and many other countries,” Biden said.

    Contradicting Biden’s obfuscation, Khashoggi’s widow issued a statement saying that the White House assured her that the president will bring up the murder of her husband with crown prince bin Salman.

    According to The Hill:

    The widow of murdered Washington Post columnist Jamal Khashoggi says the Biden administration promised to bring up her husband’s death during his visit to Saudi Arabia later this week. 

    Hanan Khashoggi told Spectrum News Wednesday that she’s sure the president will bring up during key meetings U.S. intelligence that Saudi Crown Prince Mohammed bin Salman approved Jamal Khashoggi’s 2018 killing, saying the administration assured her that her husband’s case would be discussed.

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    “I think we can make the best out of this visit,” she said of Biden’s impending visit to the kingdom. “I appreciate the emotion toward my husband, because he deserved it. But I think we all, together, we can make the best out of this by using the political pressure, diplomatic pressure to bring his wishes out.”

    But after Biden’s clear avoidance of committing to raising Khashoggi’s murder in the meeting, on display Thursday in the Israeli presser, it seems anything but clear whether he’s going to follow through at this point. Will the public find out either way? The New York Post suggests that Biden will be carefully shielded from the press after the MbS meeting:

    President Biden won’t hold a press conference when he travels to Saudi Arabia and meets with killer Crown Prince Mohammed bin Salman, the White House said Wednesday — days after Biden insisted in an op-ed that “fundamental freedoms are always on the agenda when I travel abroad.”

    “We don’t have a press conference for Saudi [Arabia],” press secretary Karine Jean-Pierre told reporters on Air Force One en route to Israel for the first leg of Biden’s trip.

    “But what we are trying to do is trying to make sure that you guys hear from the president in Saudi [Arabia], on the bilats [bilateral meetings], on the trip, and make sure that you guys hear directly from him,” Jean-Pierre added in the statement.

    Tyler Durden
    Thu, 07/14/2022 – 19:20

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