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“Economics Works In Mysterious Ways”: Is China’s Wealth Effect Being Substituted?
“Economics Works In Mysterious Ways”: Is China’s Wealth Effect Being Substituted?
Is the wealth effect being substituted?
Summary
- China’s real estate market suffered heavy losses early this year while stock market investors continue to face huge uncertainty.
- This will add to the deterioration of household balances and as such could influence private domestic (consumer) demand.
- While the wealth effect predicts a deterioration of consumption, the substitution effect would predict the exact opposite.
- This paper concludes that the substitution effect is more likely in the case of real estate.
- This could be explained by the fact that housing is still expensive despite declining housing prices while at the same time wages are suppressed and youth unemployment is high.
- But more explanations (like prepayment risks) could be given for the positive correlation between housing prices and the savings ratio.
Introduction
The new year in China kicked off with turmoil on China’s stock markets. Amongst others, the decision of the court in Hong Kong to liquidate real estate giant Evergrande further undermined investors’ confidence in China’s stock market. A market that already had been battered during the last three years due to ongoing worries about China’s economic prospects, regulatory crackdowns, a changing geopolitical landscape and a real estate sector in crisis. While China’s stock markets have pared some of the most recent losses due to (expectations of) increased government support, investor sentiment will likely remain fragile for some time to come. Moreover, many of the recently imposed government regulations, such as short selling curbs, are likely to be temporary assuming China is really serious about attracting more foreign investments. This follows from the fact that a full functioning market environment includes the possibility to sell stocks short and let market forces determine market outcomes.
…click on the above link to read the rest of the article…
Houthis Warn Drone & Missile Attack Coverage Expanding To Mediterranean Sea
Houthis Warn Drone & Missile Attack Coverage Expanding To Mediterranean Sea
Yahya Saree, spokesperson for the Iranian-backed Houthi terror group, declared in a televised speech to supporters at a Friday rally in Al-Sabeen Square, Sana, that they intend to target Israel-linked ships in the eastern Mediterranean. The risk of conflict spilling over from the Red Sea and Gulf of Aden remains high.
“We will target any ship heading to Israeli ports in the Mediterranean, in any area we are able to reach,” Saree said.
Given that the eastern Mediterranean is 1,900 kilometers (1,180 miles) from Yemen, this may indicate that the conflict area is broadening, triggering a new escalation of the multi-month war.
Fernando Ferreira, energy analyst at Rapidan Energy Group, noted:
“The Houthi nuisance continues, but they are at the limit of their ability to cause disruptions. The real risk of escalation comes from Israeli retaliation on IRGC officers/assets helping the Houthis.”
This comes as Houthis have attacked dozens of Western and Israel-linked commercial vessels and military ships across the southern Red Sea, Bab al-Mandab Strait, Gulf of Aden, and even the Strait of Hormuz since last November. The group claims these maritime attacks are in solidarity with the Palestinians in Gaza.
Saree warned if the Israel Defense Forces launched an attack on the southern Gaza city of Rafah, where hundreds of thousands of Palestinians are sheltering from the seven-month-long war. They would’ve no other choice but to impose sanctions on all ships of the companies that are supplying Israel and entering Israeli ports.
What’s clear—and the West won’t like it—is that the Houthis appear to be expanding their attack coverage as numerous maritime chokepoints in the region are under constant threat.
We pointed out Thursday that Operation Prosperity Guardian, the US-led maritime coalition launched by the Biden administration earlier this year, has been largely a failure.
…click on the above link to read the rest of the article…
Matt Taibbi Uncensored: Finance Nothing More Than A ‘Street Scam’
Matt Taibbi Uncensored: Finance Nothing More Than A ‘Street Scam’
The opportunity to secure an exclusive interview with Matt Taibbi is something I thought I’d never get…but alas, here we are.
Taibbi is the head of Racket News and his reputation as a fearless investigative journalist precedes him. From his groundbreaking coverage of the 2008 financial crisis to his more recent explorations of censorship with the Twitter Files, politics, systemic inequality and the inner workings of Congress, Taibbi’s body of work reflects a deep commitment to uncovering truths and challenging conventional narratives.
To have the opportunity to pick his brain is a rare privilege that I’m happy to bring my readers.
First, I asked Matt about why more people on main street don’t know about how the Fed works. He told me: “They also do a tremendous job of keeping people like Nomi Prins or whoever else who might be trying to explain some of these issues, keeping them from the public. It was very frustrating after 2008 trying to get anyone at all to comment on, you know, what exactly QE was, you know, or give an explanation that would make sense to an ordinary person.”
He added: “You just, it’s almost like there’s been a proclamation that these issues are sort of out of bounds for the ordinary person, which is unfortunate because they have critical importance for every single person on the planet, which, I mean, as you know, it’s just very frustrating, that dichotomy.”
“And I think that’s true of a lot of sort of high finance stories. I was originally supposed to do just one story about the 2008 crash and what happened and to try to translate that for presumably a young college audience…
…click on the above link to read the rest of the article…
Russia To Seize $440 Million From JPMorgan
Russia To Seize $440 Million From JPMorgan
Seizing assets? Two can play at that game…
Just days after Washington voted to authorize the REPO Act – paving the way for the Biden administration confiscate billions in Russian sovereign assets which sit in US banks – it appears Moscow has a plan of its own (let’s call it the REVERSE REPO Act) as a Russian court has ordered the seizure of $440 million from JPMorgan.
The seizure order follows from Kremlin-run lender VTB launching legal action against the largest US bank to recoup money stuck under Washington’s sanctions regime.
As The FT reports, the order, published in the Russian court register on Wednesday, targets funds in JPMorgan’s accounts and shares in its Russian subsidiaries, according to the ruling issued by the arbitration court in St Petersburg.
The assets had been frozen by authorities in the wake of the western sanctions, and highlights some of the fallout western companies are feeling from the punitive measures against Moscow.
Specifically, The FT notes that the dispute centers on $439mn in funds that VTB held in a JPMorgan account in the US.
When Washington imposed sanctions on the Kremlin-run bank, JPMorgan had to move the funds to a separate escrow account. Under the US sanctions regime, neither VTB nor JPMorgan can access the funds.
In response, VTB last week filed a lawsuit against the New York-based group to get Russian authorities to freeze the equivalent amount in Russia, warning that JPMorgan was seeking to leave Russia and would refuse to pay any compensation.
The following day, JPMorgan filed its own lawsuit against the Russian lender in a US court to prevent a seizure of its assets, arguing that it had no way to reclaim VTB’s stranded US funds to compensate its own potential losses from the Russian lawsuit.
…click on the above link to read the rest of the article…
Houthis Launch Attack On US Cargo & Navy Ships Following Two Weeks Of Quiet
Houthis Launch Attack On US Cargo & Navy Ships Following Two Weeks Of Quiet
Yemen’s Iran-linked Houthis have announced new aggressive actions in the Gulf of Aden and Red Sea regions, saying late Wednesday that projectiles were launched against more US and Israeli-owned commercial vessels, and that a US warship was also targeted. This follows a period of relative quiet this month.
Houthi military spokesman Yahya Saree said in a video address that an antiship ballistic missile was launched against the Maersk Yorktown cargo ship in the Gulf of Aden, resulting in a direct hit.
The US military subsequently confirmed the fresh attack on the “US-flagged, owned, and operated vessel with 18 US and four Greek crew members”; however, the statement indicated no casualties or damage. The projectile may have exploded near the ship without hitting it.
“There were no injuries or damage reported by US, coalition, or commercial ships,” US Central Command (CENTCOM) said in the statement, without indicating whether there was any level of an actual direct strike on the ship. Commenting further, Maritime Executive details:
They received a report from a vessel of an explosion in the water approximately 72 nautical miles southeast of the port of Djibouti. The statement only said that there had been an explosion “at a distance,” and that the crew and vessel were reported safe.
CENTCOM further described that within hours of the attack on the Maersk Yorktown, US forces “successfully engaged and destroyed” four drones over Yemen.
The government of Greece this week also said it has been engaged in fresh counter-Houthi actions:
The Greek Ministry of National Defense said on Thursday that one of the country’s military ships serving in the European Union’s naval mission to counter the Houthis in the Red Sea intercepted two drones launched towards a commercial ship from Yemen.
…click on the above link to read the rest of the article…
Bank Failures Begin Again: Philly’s Republic First Seized By FDIC
Bank Failures Begin Again: Philly’s Republic First Seized By FDIC
Who could have seen that coming? (here, here, here, and most detailed here)
Admittedly, we were a couple of weeks off, but trouble has been brewing in the banking sector and tonight – after the close – we get the first bank failure of the year.
UK Navy Reports Two Vessels Attacked In Red Sea, One Damaged
UK Navy Reports Two Vessels Attacked In Red Sea, One Damaged
Yemen’s Iran-backed Houthi rebels may have launched attacks on two vessels transiting southwest of Mukha, a port city on the highly contested southern Red Sea.
Bloomberg says the UK Navy has confirmed two attacks on vessels in a series of headlines hitting the Terminal around 1400 ET.
- UK NAVY: REPORTS 2 ATTACKS ON VESSEL SW OF AL MUKHA, YEMEN
There are also reports that one of the vessels is “damaged.”
- UK NAVY SAYS ATTACKS RESULTED IN DAMAGE TO VESSEL
The United Kingdom Maritime Trade Operations confirmed an incident 14 nautical miles from Mukha earlier.
The Houthis, who support the Palestinian terror group Hamas, have been launching drone and missile attacks on Western vessels since November, disrupting a critical maritime chokepoint known as “Bab-el-Mandeb Strait.”
About a week ago, 16 maritime industry associations and social partners co-signed an open letter to the United Nations urging increased military patrols on heavily traveled shipping routes. This comes after commandos seized a container ship affiliated with Israel as it passed through the Strait of Hormuz two weeks ago.
We have diligently published notes highlighting how maritime chokepoints across the Middle East are under threat, including the Suez Canal, Bab-El Mandeb Strait, and Strait of Hormuz, through which a quarter of all global trade flows.
The Red Sea disruption is far from over. The United States and its allies in the West are losing the battle in defending the world’s major shipping lanes, as Biden’s Operation Prosperity Guardian has been an absolute failure.
All of this symbolizes the world fracturing into a multipolar state, one full of chaos. And it will only get worse from here, hence why military spending worldwide is in a massive bull market.
Ukrainian Drone Strikes Target Russian Oil Refineries Again Despite White House Pleas
Ukrainian Drone Strikes Target Russian Oil Refineries Again Despite White House Pleas
Just days after the Biden administration signed a new military aid package worth billions of dollars to Ukraine, Kyiv launched a series of suicide drone attacks on Russian oil refineries. Biden’s top officials have pleaded with Kyiv to stop attacks on Russia’s energy infrastructure because of the fears that turmoil in crude markets would send pump prices in the US higher ahead of the presidential elections in November.
“Our region is again under attack by Ukrainian UAVs,” Smolensk Governor Vasily Anokhin wrote in a post on Telegram on Wednesday. Kamikaze drones damaged oil facilities in western Russia.
Another drone attack hit the Lipetsk region further south, which is home to steel production plants and pharmaceutical sites, Governor Igor Artamonov said.
“The Kyiv criminal regime tried to hit infrastructure in Lipetsk industrial zone,” Artamonov said.
The Moscow Times pointed out:
A source in the Ukrainian defense sector confirmed to AFP on Wednesday that drones in the service of the Security Service of Ukraine (SBU) had carried out the attacks.
The source made no mention of the attack on Lipetsk but claimed two oil depots were destroyed in the Smolensk region.
“Rosneft lost two storage and pumping bases for fuels and lubricants in the towns of Yartsevo and Rozdorovo,” the source said, referring to the Russian state-controlled energy giant.
The Financial Times, citing unnamed US officials, recently said long-range drones have hit at least 20 energy facilities deep within Russia so far this year. Kyiv’s drone attacks on Russia’s energy complex have been frightening for the Biden administration, as Brent prices have risen to the $90/bbl level on higher war risk premiums. Higher energy costs feed into inflation as stagflation concerns mount in the US. Also, gasoline pump prices in the US are inching closer to the politically sensitive $4 level.
…click on the above link to read the rest of the article…
UK Defense Chief Says Ukraine To Increase Long-Range Strikes In Russia
UK Defense Chief Says Ukraine To Increase Long-Range Strikes In Russia
Just as President Biden was signing into effect the newly approved foreign defense package which includes $60 billion for Ukraine, the United Kingdom also rolled out its own massive aid package (though paling in comparison), first unveiled Tuesday.
Britain announced its single largest aid package for Ukraine yet, at the equivalent of $620 million (£500 million). According to UK NATO officials, the arms include Storm Shadow missiles among a total of 1,600 strike and air defense missiles, four million rounds of ammo, 60 boats, and over 400 vehicles.
Even though the White House is busy cautioning that in the coming months Russia is likely to make more gains on the front lines, according to fresh words of Jake Sullivan, British leadership is still talking about “winning”.
Defense Minister Grant Shapps, for example, had this to say about new aid: “This record package of military aid will give President Zelensky and his brave nation more of the kit they need to kick Putin out and restore peace and stability in Europe.”
“The UK was the first to provide NLAW missiles, the first to give modern tanks, and the first to send long-range missiles,” he added. “Now, we are going even further. We will never let the world forget the existential battle Ukraine is fighting, and with our enduring support, they will win.”
Britain’s military leadership is also echoing this optimism, with UK defense chief, Admiral Sir Tony Radakin, telling Financial Times that the West’s new infusion of military aid will help Ukraine increase its long-range strikes on Russian territory:
Ukraine is set to increase long-range attacks inside Russia as an influx of western military aid aims to help Kyiv shape the war “in much stronger ways”, the head of the UK military has said.
…click on the above link to read the rest of the article…
Cashless Society: WEF Boasts That 98% Of Central Banks Are Adopting CBDCs
Cashless Society: WEF Boasts That 98% Of Central Banks Are Adopting CBDCs
Whatever happened to the WEF? One minute they were everywhere in the media and now they have all but disappeared from public discourse. After the pandemic agenda was defeated and the plan to exploit public fear to create a perpetual medical autocracy was exposed, Klaus Schwab and his merry band of globalists slithered back into the woodwork. To be sure, we’ll be seeing them again one day, but for now the WEF has relegated itself away from the spotlight and into the dark recesses of the Davos echo chamber.
Much of their discussions now focus on issues like climate change or DEI (Diversity, Equity, Inclusion), but one vital subject continues to pop up in the white papers of global think tanks and it’s a program that was introduced very publicly during covid. Every person that cares about economic freedom should be wary of Central Bank Digital Currencies (CBDCs) as perhaps the biggest threat to human liberty since the attempted introduction of vaccine passports.
The WEF recently boasted in a new white paper that 98% of all central banks are now pursuing CBDC programs. The report, titled ‘Modernizing Financial Markets With Wholesale Central Bank Digital Currency’, notes:
“CeBM is ideal for systemically important transactions despite the emergence of alternative payment instruments…Wholesale central bank digital currency (wCBDC) is a form of CeBM that could unlock new economic models and integration points that are not possible today.”
The paper primarily focuses on the streamlining of crossborder transactions, an effort which the Bank for International Settlements (BIS) has been deeply involved in for the past few years…
…click on the above link to read the rest of the article…
Shipping Industry Pleads With UN For “Enhanced Military Presence” As Maritime Choke-Point Chaos Spreads
Shipping Industry Pleads With UN For “Enhanced Military Presence” As Maritime Choke-Point Chaos Spreads
Exactly one week ago, Iranian commandos seized a container ship affiliated with Israel as it passed through the Strait of Hormuz. This action sparked new fears of another maritime chokepoint becoming disrupted as the crisis in the Middle East escalated. It also prompted a plea by the international shipping industry to the United Nations, urging an increase in military patrols along key shipping routes.
First reported by the maritime news website gGaptain, an open letter co-signed by 16 maritime industry associations and social partners, calls for urgent assistance and reminds countries about their responsibilities under international law.
“However, the incident this weekend, when the vessel MSC Aries was seized by Iranian forces at 06.37 UTC – 50 nautical miles north-east of Fujairah, United Arab Emirates on Saturday 13 April, has once again highlighted the intolerable situation where shipping has become a target. This is unacceptable,” the signatories of the letter stated.
“Given the continually evolving and severe threat profile within the area, we call on you for enhanced coordinated military presence, missions and patrols in the region, to protect our seafarers against any further possible aggression,” they said, adding, “The industry associations ask that all member states be formally reminded of their responsibilities under international law. And we ask that all efforts possible are brought to bear to release the seafarers and protect the safe transit of ships.”
After the MSC Aries seizure in the Strait of Hormuz, we published a note titled “Heading For Supply Shock? Four Maritime Chokepoints Flash Red As Escalating Conflict Looms,” outlining the maritime chokepoints, including the Suez Canal, Bab-El Mandeb Strait, and Strait of Hormuz, through which a quarter of all global trade flows, that are experiencing increased conflict.
In a recent note, MUFG provided a global snapshot of the world’s maritime chokepoints.
…click on the above link to read the rest of the article…
The Purpose Of War According To George Orwell (1984)
The Purpose Of War According To George Orwell (1984)
Some food for thought from George Orwell’s ‘1984’…
Does anything really ever change? (emphasis ours)
The primary aim of modern warfare is to use up the products of the machine without raising the general standard of living.
Ever since the end of the nineteenth century, the problem of what to do with the surplus of consumption goods has been latent in industrial society. From the moment when the machine first made its appearance it was clear to all thinking people that the need for human drudgery, and therefore to a great extent for human inequality, had disappeared. If the machine were used deliberately for that end, hunger, overwork, dirt, illiteracy, and disease could be eliminated within a few generations. And in fact, without being used for any such purpose, but by a sort of automatic process — by producing wealth which it was sometimes impossible not to distribute — the machine did raise the living standards of the average human being very greatly over a period of about fifty years at the end of the nineteenth and the beginning of the twentieth centuries.
But it was also clear that an all-round increase in wealth threatened the destruction — indeed, in some sense was the destruction — of a hierarchical society. In a world in which everyone worked short hours, had enough to eat, lived in a house with a bathroom and a refrigerator, and possessed a motor-car or even an aeroplane, the most obvious and perhaps the most important form of inequality would already have disappeared. If it once became general, wealth would confer no distinction. It was possible, no doubt, to imagine a society in which wealth, in the sense of personal possessions and luxuries, should be evenly distributed, while power remained in the hands of a small privileged caste.
…click on the above link to read the rest of the article…
Did UAE’s Cloud-Seeding Operation Flood Dubai?
Did UAE’s Cloud-Seeding Operation Flood Dubai?
How it started with UAE’s cloud seeding operations:
How it’s going:
Not so well…
All inbound flights to Dubai International Airport were diverted on Tuesday evening.
“It’s certainly not just cloud seeding. The convective clouds that are associated with the sorts of stormy weather we’re facing form entirely naturally,” UAE news website What’s On said.
Perhaps the government playing God by fiddling with Mother Nature has unintended consequences…
Biden Tells Bibi: US Will Not Support A Counterattack Against Iran After Hundreds Of Drones, Missiles Sent
Biden Tells Bibi: US Will Not Support A Counterattack Against Iran After Hundreds Of Drones, Missiles Sent
Update(Midnight ET): It is just after 7am Israel local time and Israel’s military is reporting the Iranian attack has stopped, several hours after Iran said its ‘limited’ operation has “concluded” – which involved an unprecedented hundreds of suicide drones as as well as ballistic missiles sent against Israel in retaliation for the April 1st Israeli attack on Iran’s embassy in Damascus. Below is the top story from English-language Times of Israel:
Hebrew media reports claim that not a single drone or cruise missile managed to infiltrate Israeli airspace.
According to the unsourced reports, most ballistic missiles were also knocked down outside of Israeli airspace.
A report in Ynet says some 20 cruise missiles were downed short of Israel’s borders. The US, UK and Jordan helped take down many of the drones.
Israel is reporting very little damage inside the country (though previously admitting “minor damage” against at least one key airbase in the south).
After the enormous Iranian drone and missile swarm a senior Israeli official has been quoted by Israel’s Channel 12 as saying “Iran’s attack was a strategic failure.” The official added in a threatening manner, “Now they can get ready and not sleep in peace.” Israel’s war cabinet appears to be readying a military response…
Crucially, the Biden White House appears to be strongly signaling to the Netanyahu government that the attack is ‘done’ and that the United States will not back any follow-up counterattack operations against Iran:
US President Joe Biden told Prime Minister Benjamin Netanyahu that the US will not aid any Israeli counterattack on Iran, US media report, citing senior administration officials.
Axios and CNN report that message was passed during a phone call between the pair.
…click on the above link to read the rest of the article…
Middle East Crisis: Container Ship Hijacked Near Strait Of Hormuz Amid Soaring Iran Tensions
Middle East Crisis: Container Ship Hijacked Near Strait Of Hormuz Amid Soaring Iran Tensions
While Israel on Friday braced for cruise missile and suicide drone attacks, there are new reports on Saturday morning that Iranian commandos hijacked an Israeli-affiliated container ship heading towards the Strait of Hormuz.
AP News says the British military’s United Kingdom Maritime Trade Operations initially reported the hijacking of Portuguese-flagged MSC Aries, a container ship linked to London-based Zodiac Maritime. Israeli billionaire Eyal Ofer controls the international ship management company that owns and charters large vessels.
Video of the boarding has been circulating X for the past hour. However, “AP could not immediately verify the video, it corresponded to known details of the boarding, and the helicopter involved appeared to be one used by Iran’s paramilitary Revolutionary Guard, which has carried out other ship raids in the past,” the media outlet said.
According to Bloomberg data, MSC Aries was leaving a port from Dubai on Thursday and heading towards the Strait of Hormuz. The vessel’s last known position was recorded around 1256 local time on Friday off Dubai’s coast. AP noted that the ship’s transponder had been switched off.
X user Megatron called the ship’s seizure by Iran a “big game changer”:
This once again is confirming that the UAE, Saudi Arabia, Jordan and Qatar are helping Israel bypass the Houthi blockade by land route from the UAE port.
Iran is now cutting that route as well.
If Hezbollah cut the Mediterranean route with its drones, Israel could fall into a complete trade blockade.
The incident in the Strait of Hormuz is very concerning since maritime chokepoints in the region are plagued with conflict. Off of Yemen, in the Bab-El Mandeb Strait, Iran-backed Houthis have unleashed multi-month drone and missile attacks against US, UK, and Israeli vessels.
…click on the above link to read the rest of the article…
