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Dropping It Like a Hot Potato, the Lowest level of U.S. Debt Ownership in Decades, Not Just a “China-Leaning” Countries Problem

At this point, the government is completely and totally bankrupt. It’s like Wile E. Coyote that’s walked off a cliff, but doesn’t really realize it yet.
~ Doug Casey

We just learned that China has accelerated its de-dollarization efforts with record sales of U.S. debt.

Turns out, China dumped a staggering $53.3 billion worth of U.S. Treasuries and U.S. agency bonds in the first quarter of this year.

Interestingly, the Chinese government announced the sale right after issuing a joint statement with Russia, where both nations emphasized their resolve to keep moving away from reliance on Western countries.

No doubt, this will seriously dent the appeal of U.S. debt on the international market. But let’s take a closer look to see exactly why.

Yes, It Is a Big Deal...

Now, this isn’t the first time China has unloaded a portion of the U.S. debt it owns. For example, the country sold $21 billion in U.S. Treasuries and agency bonds in late 2023.

But what makes this latest dump stand out is that it’s the first time China has shed such a big chunk of debt so quickly.

The move brings the nation’s holdings of U.S. government debt to around $767 billion. That’s the lowest level of ownership in decades.

It’s quite something when you think about it… Just a few years back, China was leading the pack in investing in U.S. debt. Things changed around 2018 though, when the trade war with the U.S. began. By 2019, China ceded the position to Japan as the biggest holder of U.S. debt.

…click on the above link to read the rest of the article…

Hoot of the Day: No One Wants Green Energy if It’s Too Cheap

May 22, 2024

Hoot of the Day: No One Wants Green Energy if It’s Too Cheap

Treasury Secretary Janet Yellen wants the EU to hike tariffs on China just as the US did.

Curbs on Cheap Chinese Exports

The Guardian reports Janet Yellen urges EU to join US in curbs on cheap Chinese exports

Janet Yellen, the US treasury secretary, has urged the EU to intervene urgently to dampen the growing export levels of Chinese cut-price green technology including solar panels and wind turbines, pushing European leaders to move to a full-scale trade war.

At the same time she urged German bank executives on Tuesday to step up efforts to comply with sanctions against Russia and shut down efforts to circumvent them to avoid potential penalties themselves that could see the US cut them off from dollar access.

Her remarks, in Frankfurt, come just hours after the European Commission president, Ursula von der Leyen, gave her strongest hint yet that the EU would join the US and impose tariffs on Chinese electric vehicles after a soon-to-be completed investigation into alleged state subsidies into the automotive industry in China.

Wind turbine manufacturers in the EU have protested that Chinese rivals are undercutting them by 50% in a move that is appealing to cash-strapped state and regional authorities facing targets in reductions of greenhouse gases.

China has signaled it will retaliate against any tariffs with potential duties on French brandy, EU wine and dairy products.

Von der Leyen said Europe would take a different approach to the US. While an increase in tariffs is expected, they are unlikely to match the rate imposed by the US.

Von der Leyen told the Financial Times that China had “massive overcapacity” that was “flooding” the EU market with “artificially cheap products”.

She said she expected the investigation into alleged Chinese state subsidies launched last September and due to be finished by 5 June, to conclude there were “excessive production subsidies”.

Wind Power

…click on the above link to read the rest of the article…

David Stockman on Why Washington DC is the War Capital Of The World

May 22, 2024

David Stockman on Why Washington DC is the War Capital Of The World

Ultimately, there is no mystery as to why the Forever Wars go on endlessly. Or why at a time when Uncle Sam is hemorrhaging red ink a large bipartisan majority saw fit to authorize $95 billion of foreign aid boondoggles that do absolutely nothing for America’s homeland security.

To wit, Washington has morphed into a freak of world history—a planetary War Capital dominated by a panoptic complex of arms merchants, paladins of foreign intervention and adventure and Warfare State nomenklatura. Never before has there been assembled and concentrated under a single state authority a hegemonic force possessing such unprecedented levels of economic resources, advanced technology and military wherewithal.

Not surprisingly, the world’s War Capital is Orwellian to the core. Its endless pursuit of war is always and everywhere described as the promotion of peace. Its jackboot of global hegemony is gussied-up in the form of alliances and treaties ostensibly designed to promote a “rules-based order” and collective security for the benefit of mankind, not simply the proper goals of peace, liberty, safety and prosperity within America’s homeland.

Unfortunately, the whole intellectual foundation of the enterprise is false. The planet is not crawling with all-powerful would-be aggressors and empire-builders who must be stopped cold at their own borders, lest they devour the freedom of all their neighbors near and far.

Nor is the DNA of nations infected with incipient butchers and tyrants like Hitler and Stalin. They were one-time accidents of history and fully distinguishable from the standard run of everyday tinpots which actually do arise periodically. But the latter mainly disturb the equipoise of their immediate neighborhoods, not the peace of the planet.

…click on the above link to read the rest of the article…

China Shock II Is Coming, the EU Will Be Hit Hard, Then the US

May 22, 2024

China Shock II Is Coming, the EU Will Be Hit Hard, Then the US

China Shock

Eurointelligence discusses China shock in its article Technology Is Why We Are Losing.

We are not sure that the effect of high tariffs on Chinese electric cars will work quite as intended. We are also skeptical of hydraulic theories of global trade flows – of Chinese goods suddenly starting to swamp European markets.

The much bigger problem at least for German industry has nothing to do with trade policy, but with China crowding in on previously monopolistic and oligopolistic markets dominated by German firms.

Handelsblatt alerts to research just published by the economics team of Allianz that in our view comes much closer to explaining the current dynamics. Previously, the partnership between Germany and China was complementary. The Germans built the factories and the Chinese made the consumer products. Or the Germans specialized in fuel-driven cars, and the Chinese in electric cars. China is now challenging Germany in areas Germany dominated previously. These are the largest parts of the German industrial economy: machines, chemical and electrical engineering. The study says that in many segments of the market, the Chinese are more successful than the Germans. Ludovic Subran, the Allianz chief economist, predicts that the China boom will be followed by a China shock.

We see this similarly. In our own research on the shifting nature of German competitiveness, we find that the most important issue is not trade, but technology. Digital technologies are encroaching on classic engineering. Apple’s latest commercial of a large steel press crushing a whole bunch of analogue devices caused a lot of criticism. Apple apologized, but the commercial is a good visualization of what is currently happening to parts of the German economy…

…click on the above link to read the rest of the article…

Truth or CONsequences?

May 21, 2024

Truth or CONsequences?

When your government cons you daily with its statistical “facts,” it’s hard to keep your balance. Conned-sumers are feeling the cognitive disconnect from reality.

For years, I’ve been saying it appears the BLS (Bureau of Lying Statistics) publishes fake labor statistics. The numbers always look like the seasonal adjustments are used by each administration to try to make the numbers look better, which means we are operating our country on delusions, not on facts. Ultimately that cannot possibly be as good for the nation as seeing reality as it is and dealing with it together.

Never, however, have the numbers looked so blatantly fake as they have under the Biden administration, and I’ve been pushing that point for months now. Then along came a major mainstream publisher (CNBC) who finally said (first I’d ever heard from the mainstream financial press), “These numbers look rigged.” And now, at last, comes a US congresswoman who tells the head of the BLS she should lose her job if she cannot come up with real numbers, pointing out, as I have for some time now, that it seems a bit too convenient that the numbers always come out initially looking great for her Boss, #NoMoJo Biden, and then get revised down to a more dismal reality later in the year when practically no one is looking … and that this happens EVERY SINGLE MONTH and ALWAYS IN THE SAME DIRECTION!

The fluctuating statistics have finally caught the attention of lawmakers in Congress. Last week, Rep. Mary Miller, R-Ill., grilled Acting Labor Secretary Julie Su about her Biden-friendly reports.

“I pressed the Biden Administration on why their jobs numbers are consistently wrong and quietly revised downward after they are announced. What is going on at BLS?…”

— Rep. Mary Miller (@RepMaryMiller) May 3, 2024

…click on the above link to read the rest of the article…

Tornadoes strike across 7 states with more severe weather on the way

May 21, 2024

Tornadoes strike across 7 states with more severe weather on the way

Severe weather is forecast for Thursday across the entire South.

The threat for tornadoes continues Thursday following an outbreak of deadly storms throughout the Midwest and South over the past few days.

As of Thursday afternoon, at least 17 tornadoes had been reported in the previous 24 hours across seven states. There have been nearly 100 reported or confirmed tornadoes across 18 states since Monday.

Over 30 million Americans, from Texas to South Carolina, are in the storm zone and can expect to see severe weather Thursday night into early Friday. The tornado threat is lower than it has been during the multiday outbreak — damaging winds and large hail will be the main threat with these storms Thursday — though a couple of tornadoes will still remain possible.

PHOTO: Severe storms remain a threat for the South. — Severe storms remain a threat for the South.

ABC News

Damaging winds up to 70 mph, scattered hail and a couple of tornadoes will all be possible as a cluster of thunderstorms with a history of producing tornadoes moves through southern Georgia, heading south and east through the evening.

A tornado watch has been issued for South Carolina, Georgia, Alabama and Florida until 9 p.m. ET Thursday. The cities located in that tornado watch include Jacksonville, Florida; Savannah, Georgia; and Charleston, South Carolina.

In Texas, a cluster of storms is expected to fire up Thursday afternoon and evening then progress west across the Gulf Coast states through the overnight hours. The main threats are significant wind gusts to 85 mph and very large hail up to 4 inches, though a couple of tornadoes cannot be ruled out.

A tornado watch has also been issued for parts of Texas, including Dallas, Waco and Abilene, through 9 p.m. CT Thursday.

PHOTO: John Bernhardt searches for his belongings outside his storm-damaged home Thursday, May 9, 2024, in Columbia, Tenn. — John Bernhardt searches for his belongings outside his storm-damaged home Thursday, May 9, 2…

George Walker IV/AP

…click on the above link to read the rest of the article…

Weekend reads: The American press gets its groove back

May 20, 2024

Weekend reads: The American press gets its groove back

U.S. media is ‘dragging itself back from the brink.’ Will Canada follow?

A story broke last weekend that I’ve been waiting a long time to see. In an interview with Ben Smith at Semafor, Joe Kahn, the executive editor of The New York Times, effectively announced the return of journalism to its pre-Trump era standards, stating that the role of the news media “is not to skew your coverage towards one candidate or the other.” Kahn pushed back on the activist ethos in newsrooms, blasted journalists that expect their work to be a reflection of personal politics, and acknowledged the Times went “too far” in 2020 and is now re-establishing norms in the wake of these “excesses.”

It was a stunning moment.

Speaking about the story on MSNBC’s Morning Joe, Ben Smith described the Grey Lady as being “focused on dragging itself back from the brink.” He said that “what’s happening inside the New York Times is a sense that, during particularly the summer of 2020, they aligned themselves too much with particularly the progressive wing of the Democratic Party.” And that Khan considers it his job to pull the institution back.

The context for Kahn’s stance is ongoing tensions between the Times and the White House (in part because the President won’t grant the paper a sit-down interview), and comments from podcaster and former Obama aide Dan Pfeiffer in particular. The Pod Save America co-host recently complained in a Substack post that the Times is “often too worried about seeming balanced to truly articulate the danger of Trump.” And that journalists “do not see their job as saving democracy or stopping an authoritarian from taking power.”

…click on the above link to read the rest of the article…

A Concise History of the Global Empire

May 20, 2024

A Concise History of the Global Empire

Like all past empires, the Global Empire has gone through its parable of growth and glory and is now starting to decline. There is not much we can do about it; we must accept that this is how the universe works.

For everything that exists, there is a reason, and that’s true also for that gigantic thing that we sometimes call “The West” or perhaps “The Global Empire.” To find that reason, we may examine its origins in an older but similar empire: the Roman one.

As someone might have said (and maybe someone did), “Geography is the mother of Empires.” So, the Romans exploited the geography of the Mediterranean basin to build an empire based on maritime transportation. Rome was the center of a hub of commerce that outcompeted every other state in the Western region of Eurasia and North Africa. It was kept together by a “Lingua Franca,” Latin, and by a financial system based on coinage, in turn based on the availability of gold and silver mined from the Empire’s mines in Spain. More than all, it was based on a powerful military system created by the Roman wealth.

Like all empires, the Roman one carried inside the seeds of its own destruction: the limited amount of its mineral resources. Roman gold and silver were used to pay not just for the legions but also for expensive commodities coming from China that the Empire couldn’t produce in its territory. As long as the Romans could keep producing precious metals, the amounts lost to China to pay for silk and spices didn’t matter so much…

…click on the above link to read the rest of the article…

The Biggest Risks of This Decade

May 20, 2024

The Biggest Risks of This Decade

Since the 2020 pandemic, many things have changed, but nothing more than geopolitics. Wars and clashes that used to be largely national have given way to more regional conflicts that threaten to upend the current world order. The Ukraine War and Israel-Iran conflicts have the potential to lead to world war.

The international arena once dominated by the United States has gradually changed into a more multipolar stage. China and India have grown in economic and military significance, and Russia and Iran have reasserted their influence. Rising world powers are increasingly challenging the over-extended leading power.

“The disintegration of the old order is visible everywhere…It is close to collapse.”

The Economist

Half of world’s nations feel that they are victims of economic and political inequality. A similar sentiment is found in the rising tide of populism—even in rich countries—because most people know that their economic situation has worsened in recent decades. At the core of both is the higher cost of energy and materials.

Figure 1 shows that oil price, inflation and interest rates rise and fall in tandem, and are considerably higher now than during the period before the Covid pandemic. The Ukraine War contributed to an energy shock that has moderated but oil prices have averaged nearly 60% higher after 2020 than they were in the six previous years. U.S. interest rates and inflation are more than three times higher.

Figure 1. U.S. inflation and oil price fell in 2023 but federal funds rate increased. Inflation was lower in Q1 2024, oil price rose and federal funds rate was marginally higher.
Source: St. Louis Federal Reserve Bank, EIA & Labyrinth Consulting Services, Inc.

French president Emmanuel Macron observed in 2022 that these changes are probably secular.

…click on the above link to read the rest of the article…

Because We’re Still Not Sufficiently Indebted…

May 19, 2024

Because We’re Still Not Sufficiently Indebted…

Now the government wants your home equity

Zero Hedge just posted a long look at how the “buy now, pay later” (BNPL) industry now accounts for about $700 billion of largely unreported “phantom debt”. This, speculates ZH, is why the economy hasn’t fallen into recession.

Now come the unintended consequences:

Pernicious effects of BNPL credit are piling up: the Harris Poll survey conducted last month, provides some crucial clues about how Americans use BNPL. For one, splitting payments into smaller chunks encourages more spending, obviously.

More than half of respondents who use BNPL said it allowed them to purchase more than they could afford, while nearly a quarter agreed with the statement that their BNPL spending was “out of control.” Harris also found that 23% of users said they couldn’t afford the majority of what they bought without splitting payments, while more than a third turned to the services after maxing out credit cards…

…In other words, not only do we not know just how big the BNPL problem is, it is actively masked by credit agencies which can’t accurately calculate the FICO score of tens of millions of Americans, and as a result their credit capacity is artificially boosted with far more debt than they can handle… and that’s why the US consumer has been so “strong” in recent years, defying all conventional credit metrics.

BNPL is obviously dangerous and stupid because the last thing working people need is another way to wrack up more unpayable debt. But it’s not the worst thing the US is considering:

Enter…Government-Funded Home Equity Loans

$3 trillion could be injected into the U.S. economy without any federal spending by tweaking this corner of the mortgage market, ‘Oracle of Wall Street’ says

…click on the above link to read the rest of the article…

Is China Dumping US Treasuries and Buying Gold? Bloomberg Says Yes, Pettis Uncertain

May 18, 2024

Is China Dumping US Treasuries and Buying Gold? Bloomberg Says Yes, Pettis Uncertain

Bloomberg reported that China is selling a record amount of US debt while buying gold. Previous reports of debt selling were false. Let’s check in with Michael Pettis at China Financial Markets for another opinion.

China Sells Record Sum of US Debt

Bloomberg reports China Sells Record Sum of US Debt Amid Signs of Diversification

China sold a record amount of Treasury and US agency bonds in the first quarter, highlighting the Asian nation’s move to diversify away from American assets as trade tensions persist.

Beijing offloaded a total of $53.3 billion of Treasuries and agency bonds combined in the first quarter, according to calculations based on the latest data from the US Department of the Treasury. Belgium, often seen as a custodian of China’s holdings, disposed of $22 billion of Treasuries during the period.

China’s investments in the US are garnering renewed investor attention amid signs that tensions between the world’s largest economies may worsen. President Joe Biden has unveiled sweeping tariff hikes on a range of Chinese imports, while his predecessor Donald Trump said he might impose a levy of more than 60% on Chinese goods if elected.

“As China is selling both despite the fact that we are closer to a Fed rate-cut cycle, there should be a clear intention of diversifying away from US dollar holdings,” said Stephen Chiu, chief Asia foreign-exchange and rates strategist at Bloomberg Intelligence. “China’s selling of US securities could speed up as US-China trade war resumes” especially if Trump returns as president, he said.

China is Buying Gold

One part of the story is not in question. That part pertains to China buying gold.

Is China Dumping US Debt?

I asked Michael Pettis that question yesterday. Pettis graciously replied with an email this morning plus a five-part Tweet.

…click on the above link to read the rest of the article…

US Power Grid May Become Unreliable This Summer, Watchdog Warns

May 18, 2024

US Power Grid May Become Unreliable This Summer, Watchdog Warns

A third of the country is facing an ‘elevated risk of blackouts’ soon, an industry expert said.

Parts of America could face difficulties in meeting electricity demand during the summer season, with renewable energy sources like wind and solar power posing a potential risk to reliable power supply, according to a report by the North American Electric Reliability Corporation (NERC).

The NERC report classifies several parts of the country as facing an “elevated” risk of summer electricity reliability for the upcoming June-September period.

Elevated risk means there is “potential for insufficient operating reserves” when the region faces above-normal demand conditions. Such regions include parts of Louisiana, Texas, New Mexico, Arizona, California, Illinois, and Iowa. The determination of elevated risk is based on various factors, including potential low wind or solar energy conditions that could lead to a lower electricity supply.

The North American power bulk power system (BPS) is made up of six regional entities—Midwest Reliability Organization (MRO), Northeast Power Coordinating Council (NPCC), ReliabilityFirst (RF), SERC Reliability Corporation (SERC), Texas Reliability Entity (Texas RE), Western Electricity Coordinating Council (WECC)—with elevated risk upcoming in certain regions.

Midcontinent Independent System Operator (MISO), which manages the electricity capacity market, operates in 15 U.S. states, including Texas, Illinois, Montana, Arkansas, and Kentucky. MISO is expected to have “sufficient resources” to meet normal summer peak demand, the NERC report said.

However, if MISO were to face above-normal peak demand conditions at a time when wind and solar output is lower than expected, it could be “challenging” for the transmission organization to meet demand.

…click on the above link to read the rest of the article…

Controversial FAA Bill Passes Senate, Promotes Digital IDs and Mobile Licenses, Facial Recognition Concerns Ignored

May 18, 2024

Controversial FAA Bill Passes Senate, Promotes Digital IDs and Mobile Licenses, Facial Recognition Concerns Ignored

The US Senate has passed the Federal Aviation Administration (FAA) reauthorization act, which enjoyed bipartisan support, with an overwhelming majority (88-4).

The legislation includes a push to introduce digital ID and digital or mobile driver’s licenses, and will be considered by the House this week – the final hurdle before, if approved, it gets signed by President Biden.

The section dealing with acceptance of digital IDs and driver’s licenses is buried and we found it on page 1,015 of the document.

We obtained a copy of the bill for you here.

It reads that the FAA administrator “shall take such actions as may be necessary to accept, in any instance where an individual is required to submit government-issued identification to the Administrator, a digital or mobile driver’s license or identification card issued to such individual by a state.”

While adopting the bill, the Senate left out an amendment drafted by Senator Jeff Merkley, meant to temporarily halt wider deployment of facial recognition tools at US airports.

The Democrat’s idea was to impose a moratorium on biometric surveillance proliferation by the Transportation Security Administration (TSA) at least over the next three years.

The reasoning behind the amendment was that the current usage of facial recognition technology lacks transparency and results in travelers being poorly, if at all, aware of their rights in this regard.

The Senate chose to ignore the amendment, which wasn’t even put up for a vote, despite it making what appears to be a reasonable demand to ensure people can make informed decisions about participation in the schemes – namely, provide “simple and clear signage, spoken announcements, or other accessible notifications” about the ability to opt-out.

…click on the above link to read the rest of the article…

Why the dollar will lose its status as the global reserve currency

May 17, 2024

Why the dollar will lose its status as the global reserve currency

By the early 400s, the Roman Empire was coming apart at the seams and in desperate need of strong, competent leadership. In theory, Honorius should have been the right man for the job.

Born into the royal household in Constantinople, Honorius had been groomed to rule, practically since birth, by the finest experts in the realm. So even as a young man, Honorius had already accumulated decades of experience.

Yet Rome’s foreign adversaries rightfully believed Honorius to be weak, out of touch, divisive, and completely inept.

He had entered into bonehead peace treaties that strengthened Rome’s enemies. He paid vast sums of money to some of their most powerful rivals and received practically nothing in return. He made virtually no attempt to secure Roman borders, leaving the empire open to be ravaged by barbarians.

Inflation was high. Taxes were high. Economic production declined. Roman military power declined. And all of Rome’s foreign adversaries were emboldened.

To a casual observer it would have almost seemed as if Honorius went out of his way to make the Empire weaker.

One of Rome’s biggest threats came in the year 408, when the barbarian king Alaric invaded Italy; imperial defenses were so non-existent at that point that ancient historians described Alaric’s march towards Rome as unopposed and leisurely, as if they were “at some festival” rather than an invasion.

Alaric and his army arrived to the city of Rome in the autumn of 408 AD and immediately positioned their forces to cut off any supplies. No food could enter the city, and before long, its residents began to starve.

Historians have passed down horrific stories of cannibalism– including women eating their own children in order to survive.

…click on the above link to read the rest of the article…

The Great Ukraine Robbery Is Not Over Yet. Ron Paul

May 17, 2024

The Great Ukraine Robbery Is Not Over Yet. Ron Paul

The ink was barely dry on President Biden’s signature transferring another $61 billion to the black hole called Ukraine, when the mainstream media broke the news that this was not the parting shot in a failed US policy. The elites have no intention of shutting down this gravy train, which transports wealth from the middle and working class to the wealthy and connected class.

Reuters wrote right after the aid bill was passed that, “Ukraine’s $61 billion lifeline is not enough.” Senate Minority Leader Mitch McConnell went on the Sunday shows after the bill was passed to say that $61 billion is “not a whole lot of money for us…” Well, that’s easy for him to say – after all it’s always easier to spend someone else’s money!

Ukraine’s foreign minister, Dmytro Kuleba, was far from grateful for the $170 billion we have shipped thus far to his country. In an interview with Foreign Policy magazine as the aid package was passed, Kuleba had the nerve to criticize the US for not producing weapons fast enough.

“If you cannot produce enough interceptors to help Ukraine win the war against the country that wants to destroy the world order, then how are you going to win in the war against perhaps an enemy who is stronger than Russia?”

How’s that for a “thank you”?

It may be understandable why the Ukrainians are frustrated. Most of this money is not going to help them fight Russia. US military aid to Ukraine has left our own stockpiles of weapons depleted, so the money is going to create new production lines to replace weapons already sent to Ukraine. It’s all about the US weapons industry. President Biden admitted as much when he said, “we are helping Ukraine while at the same time investing in our own industrial base.”

…click on the above link to read the rest of the article…

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