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Hong Kong Police Warn City On Brink Of ‘Total Breakdown’

Hong Kong Police Warn City On Brink Of ‘Total Breakdown’

After nearly six months of protests in Hong Kong, the weekend demonstrations – which more closely resemble street skirmishes between black-clad protesters and the cops – have grown increasingly violent, people are being seriously wounded and even killed on both sides. And this week, protesters have apparently committed to another escalation: they’ve taken to the streets to disrupt HK’s public transportation during Monday and Tuesday, forcing businesses to close and schools to cancel.

Hong Kong policed warned on Tuesday that the city is now “on the brink of total collapse” after a second straight day of violence and chaos. The MTR, Hong Kong’s subway network, closed several stations and reduced the frequency of trains to cope with the demonstrations.

Some commuters were forced to walk along rail tracks to the next stop to catch a train to work. A senior police superintendent insisted that the ‘rioters’ – a term used pejoratively to describe the protesters – were pushing “our society” toward a breakdown.

“Over the past two days, our society has been pushed to the brink of a total breakdown as rioters went on a rampage,” Kong Wing-cheung, a senior police superintendent, said in a press conference.

Hong Kong Chief Executive Carrie Lam accused protesters on Tuesday of trying to “paralyze” the city. She accused demonstrators of being “extremely selfish” and said she hoped all universities in Hong Kong would encourage students not to participate in the violence.

Of course, the violence has gone both ways. Lam was speaking one day after police shot a protester and a man was set on fire in some of the most dramatic violence to arise from the protests. Lam added that the city planned to hold local elections on Nov. 24, the first test of public sentiment since the pro-democracy protests began five months ago.

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

As Hong Kong ATMs Run Out Of Cash, Central Bank Steps In To Prevent “Panic Among The Public”

As Hong Kong ATMs Run Out Of Cash, Central Bank Steps In To Prevent “Panic Among The Public”

As the violence in Hong Kong escalates with every passing week, culminating on Friday with what was effectively the passage of martial law when the local government banned the wearing of masks at public assemblies, a colonial-era law that is meant to give the authorities a green light to finally crack down on protesters at will, one aspect of Hong Kong life seemed to be surprisingly stable: no, not the local economy, as HK retail sales just suffered their biggest drop on record as the continuing violent protests halt most if not all commerce:

We are talking about the local banks, which have been remarkably resilient in the face of the continued mass protests and the ever rising threat of violent Chinese retaliation which could destroy Hong Kong’s status as the financial capital of the Pacific Rim in a heart beat, and crush the local banking system. In short: despite the perfect conditions for a bank run, the locals continued to behave as if they had not a care in the world.

Only that is now changing, because one day after a junior JPMorgan banker was beaten in broad daylight by the protest mob, a SCMP report confirms that the social upheaval has finally spilled over into the financial world: according to the HK publication, the local central bank, the Hong Kong Monetary Authority, was forced to issue a statement warning against a “malicious attempt to cause panic among the public” after rumors were spread online about the possibility of the government using emergency powers to impose foreign-exchange controls.

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

Hong King Kong

Hong King Kong

Of course the notion of addressing Hong Kong has been in my mind for a while, but it’s a bit of a moving target: things change all the time, and seemingly on the fly. However, with today’s fresh developments, it seems silly to wait any longer. Hong Kong Civic party lawmaker Dennis Kwok yesterday expressed the reason way better than I could:

As I said time and again, the use of troops in Hong Kong will be the end of Hong Kong, and I would warn against any such move on the part of the central people’s government.”

He said that before today’s arrests -and subsequent release on bail- of a handful of alleged protest leaders Joshua Wong, Andy Chan, and Agnes Chow. Who, if you read between the lines, didn’t lead much of anything; they may be figure-heads, but that’s not the same thing. The protests are either lacking leaders or everyone’s a leader, depending on who you ask. So why arrest them to begin with? You tell me.

What I did find enlightening was Reuters’ report yesterday on Beijing having rejected Hong Kong Chief Executive Carrie Lam’s (how is CEO a political function?) proposal to communicate with the protesters and perhaps allow some concessions to their demands. I know it’s only one source, but it appears quite feasible.

Carrie Lam is between a rock and a hard place, and she admits it -at least according to the Reuters piece-, though not to the protesters. Beijing is in exactly such a spot, but won’t admit it, ever. And that right there is Hong Kong’s main issue.

China Rejected Hong Kong Plan To Appease Protesters 

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

Martial Law Considered in Hong Kong to Crush Pro-Democracy Protests

Martial Law Considered in Hong Kong to Crush Pro-Democracy Protests

Could lead to “total destruction” of Hong Kong’s capitalist system.

Authorities in Hong Kong are considering whether to impose draconian martial law powers in a bid to crush pro-democracy protests.

According to a report in the South China Morning Post, Chief Executive Carrie Lam Cheng Yuet-ngor is not ruling out invoking the Emergency Regulations Ordinance for the first time in half a century.

The ordinance would grant the government sweeping powers, including authorizing the entry and search of properties, censoring the media and imposing maximum terms of life imprisonment.

Lawmaker Au Nok-hin warned that imposing emergency powers would lead to the “total destruction” of Hong Kong’s capitalist system, while law professor Simon Young of the University of Hong Kong said the ordinance meant “basically a state of martial law.”

With the government refusing to meet the five demands of the protesters, which includes withdrawing a bill that would allow suspects in Hong Kong to be extradited to China, escalation seems inevitable.

Beijing still has troops massing nearby, but experts agree that they are unlikely to be deployed inside Hong Kong.

As we previously highlighted, riot police deployed water cannons for the first time during violent demonstrations on Sunday, protesters also being hit with tear gas and rubber bullets.

How To Make Sense Of Foreign Protests, Conflicts And Uprisings

How To Make Sense Of Foreign Protests, Conflicts And Uprisings

The Australian Broadcasting Corporation, our government-funded media outlet, has published an article titled “Australian expat living in Hong Kong throws off business suit to join protest movement“. The entire story is in the headline: some random guy, who ABC keeps anonymous but for the name “Daniel”, has joined the protests in Hong Kong. That’s it. That’s the whole entire bombshell newsworthy news story.

“In Australia we have proper democracy but in Hong Kong, democracy is being slowly eroded away and I’ll try to do whatever I can to try and help the cause,” the anonymous guy told ABC.

This sort of enthusiastic empty non-story cheerleading is typical for western media coverage of the Hong Kong protests so far, while these same media outlets consistently ignore or downplay protests against the government of France, Israel, Honduras, India, Indonesia and any other region that happens to fall within the US-centralized power alliance. It’s an amazingly reliable pattern: the entire western political/media class finds protests and uprisings endlessly fascinating when they are in opposition to governments which haven’t yet been absorbed into the imperial blob like China, Russia, Iran, Venezuela, Syria, pre-collapse Libya, or then-Moscow-aligned Ukraine, but any protests or uprisings within that empire are ignored at best or demonized at worst.

If dissidents in the United States began donning yellow vests and holding aggressive demonstrations in the current media environment, you could safely bet your bottom dollar that they would be ignored for as long as possible and then smeared as fascists, antisemites and/or Russian pawns thereafter. This would happen with absolute certainty.

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

British colonialism laid the ground for the crises in Hong Kong and Kashmir

British colonialism laid the ground for the crises in Hong Kong and Kashmir

British colonialism laid the ground for the crises in Hong Kong and Kashmir
© REUTERS/Thomas Peter; © REUTERS/Mohsin Raza 

Though distance-wise Hong Kong and Kashmir may be about 4,000km (2,485 miles) apart, they have in common a history of being scarred by the crimes of British colonialism.

This history and those scars cannot be abstracted when it comes to grasping the nettle of the crises that have engulfed both places now because, without factoring this in, no serious analysis can be undertaken and no salutary lessons will be learned.

Starting with Hong Kong, when senior Conservative Party MP and former British Army officer Tom Tugendhatrecently suggested that the people of Hong Kong should be granted UK citizenship (regardless of whether they want it or not) as a form of protection from Beijing, he provided the world with an insight into the colonial mind of the British establishment.ALSO ON RT.COMHong Kong phooey! Would you like any hypocrisy with that?

In making this ludicrous suggestion, amounting to an outrageous imposition of British sovereignty over the city, Mr Tugendhat revealed that to him China should know its rightful place as a lesser power. In this he has been joined by the UK’s former governor of Hong Kong, Lord Patten of Barnes (I promise you, I’m not making this up), who with astonishing arrogance has called for a British commission of inquiry to be established to look into the unrest, with particular emphasis on the actions of the Hong Kong police.

Both Tom Tugendhat and Lore Patten could, to all intents, have been standing on the shoulders of Lord George Macartney, the man who led Britain’s first ever trade delegation to China in 1792 on the orders of King George III.

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

Tiananmen Square 2.0? Beijing Warns Hong Kong Protesters Will Be ‘Punished’ — Military Intervention Possible

Tiananmen Square 2.0? Beijing Warns Hong Kong Protesters Will Be ‘Punished’ — Military Intervention Possible 

As the situation in Hong Kong continues to deteriorate, Beijing has issued a warning that protesters would soon be punished for “criminal acts,” and has refused to rule out military force to quell ongoing anti-government demonstrations, according to The Telegraph

According to a spokesman for the Beijing-controlled Hong Kong and Macau Affairs Office, demonstrators are causing “Hong Kong to slide into a dangerous abyss,” adding “As for their punishment, it’s only a matter of time.

The Chinese government will never allow any acts that challenge national unity, sovereignty or security, he said, sternly reminding residents that the People’s Liberation Army was a “strong and reliable force that defends every inch of its territory.” 

In a jab at protesters, Mr Yang referred to their main slogan, “Reclaim Hong Kong, revolution of our times,” by reminding them Hong Kong was a part of China, saying, “I want to ask those people shouting this, ‘what of Hong Kong do you want to reclaim? Where exactly do you want to reclaim Hong Kong to?” –Telegraph

Meanwhile, over 12,000 Shenzhen police officers conducted a publicly broadcasted crowd-control drill – offering protesters a taste of what’s to come. 

“A drill will be held to increase troop morale, practise and prepare for the security of celebrations, [and] maintain national political security and social stability,” according to police. 

In live videos of the police drills shown on the Yizhibo network, officers in body armour, helmets and shields confronted groups of people in black shirts and red or yellow construction safety helmets – similar to those worn by Hong Kong protesters – who were holding flags, banners, batons and wooden boards. –SCMP

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

Hong Kong Riots Reveal A Looming Crisis At The World’s 6th Largest Bank

Hong Kong Riots Reveal A Looming Crisis At The World’s 6th Largest Bank

Earlier today, in addition to the chaos surrounding the escalation of the US-China trade and currency war, we also got news which slipped under the radar that the CEO of HSBC, one which with $2.6 trillion in assets is the largest UK bank and the 6th largest bank in the world by assets, was unexpectedly quitting and his departure would also lead to mass layoffs, with the bank set to fire 4,000 workers, or about 2% of its workforce.

And while today’s market massacre succeeded in sweeping the HSBC news under the rug, one can’t help but wonder: is HSBC, which has had almost as many run-ins with the law as one particular infamous German bank, going to be the next Deutsche Bank?

For the answer we went to one of our blogging friends who runs the Strategic Macro blog, and who conveniently took a look at some of the cockroaches in HSBC’s basement. What he found was troubling, especially in light of the ongoing turmoil in Hong Kong which at any given moment is just a few minutes away and a false flag provocation away from a Chinese invasion.

Courtesy of the Strategic Macro blog, we present:

HSBC’s exposure to Hong Kong real estate

So conventional wisdom is that post-Basel III the banks hold a lot of capital against loans and are run conservatively. And in a normalised market this is very true I think.

However when you are calculating LTVs and RWAs and PDs against bubble valuation levels, are they still appropriate? If you calculated it against replacement costs, the LTVs would go through the roof, and so would RWAs and the banks would be left with an CET tier 1 equity deficit to be covered by a rights issue. Any losses and higher RWAs on impaired loans would further cost equity.

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

China Is Extremely Angry, And They Now Consider The United States To Be Enemy #1

China Is Extremely Angry, And They Now Consider The United States To Be Enemy #1

Have relations between the United States and China finally reached the point of no return?  At this moment, it would be difficult to overstate how angry the Chinese are with the United States.  Chinese officials are firmly blaming the United States for the enormous political protests that we have witnessed in Hong Kong in recent weeks, and on Thursday President Trump slapped another round of tariffs on Chinese imports.  Sadly, most Americans aren’t even paying much attention to these developments, but over in China everyone is talking about these things.  And of course the truth is that they aren’t just talking – the Chinese are absolutely seething with anger toward the U.S., and they aren’t afraid to express it.

Let me give you a perfect example of what I am talking about.  One of the most highly respected news anchors in China, Kang Hui, actually used an expletive when referring to the United States during a news broadcast earlier this week.  Normally I would never have such language in one of my articles, but this comment made headlines all over the globe, and I think that it is very important for all of us to understand what the Chinese are saying about us.  So since this is a news item of critical importance, I have decided not to censor this quote at all.  The following comes from the New York Times

“They stir up more troubles and crave the whole world to be in chaos, acting like a shit-stirring stick,” Mr. Kang said on the usually stolid 7 p.m. national news program on CCTV, China’s state broadcaster. The expletive quickly became one of the most-searched-for phrases on Chinese social media.

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

“This Cannot Be Tolerated”: Beijing Hints It Could Send Troops Into Hong Kong If Protests Don’t Stop

“This Cannot Be Tolerated”: Beijing Hints It Could Send Troops Into Hong Kong If Protests Don’t Stop

A few days after another round of violent protests rocked Hong Kong, Beijing on Wednesday issued its harshest warning yet to the citizens of Hong Kong: It sought to remind them that Beijing has the authority to mobilize the People’s Liberation Army garrison in Hong Kong if it felt that the central government’s authority was threatened. 

The New York Times reports that the warning was part of the unveiling of the Communist Party’s new “defense strategy” which relied heavily on demonizing the western powers – an oblique reference to the US and the UK – for encouraging the protests.

Col. Wu Qian

Citing the Sunday protests, Senior Col. Wu Qian, a spokesman for China’s defense ministry, implied that the destructive behavior – protesters painted the central government’s liaison office with graffiti, the latest example of the extradition bill protests leading to the vandalism of government buildings – was swiftly straining the patience of Beijing.

“The behavior of some radical protesters challenges the central government’s authority, touching on the bottom line principle of ‘one country, two systems,'” Colonel Wu said during a news conference in Beijing where he laid out the government’s new strategy. “That absolutely cannot be tolerated.”

When pressed, Wu said that “Article 14 of the Garrison Law has clear stipulations,” and refused to elaborate, the SCMP reports.

Hong Kong’s government would need to request the garrison’s assistance, like it does during a natural disaster.

In response, a spokesman for the Hong Kong government said on Wednesday that the city was “fully capable” of dealing with its own affairs.

“There is no need to ask for assistance from the garrison,” he said.

Eric Chan Kwok-ki, director of the Chief Executive’s Office, dismissed Wu’s reference to the Garrison law, suggesting that it wasn’t a threat.

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

Two Events That Will Determine Oil Prices

Two Events That Will Determine Oil Prices

offshore rig

Two big events over the next two weeks will determine the trajectory for oil prices in the second half of the year. One of those events will take place in Japan, the other in Austria.

U.S. President Donald Trump will meet Chinese President Xi Jingping on the sidelines of the G-20 conference next week in Osaka, Japan. Nothing less than the health of the global economy hangs in the balance.

Both leaders have powerful forces pulling them in opposite directions. On the one hand, both have a domestic political constituency invested in confrontation, or, at least, in not backing down from a trade fight. Neither wants to lose face. Trump campaigned on taking on China, and at least part of his political base may be disappointed if he comes home short of victory. In Beijing, Xi is also under tremendous pressure. The protests in Hong Kong leave him little room for error, and being seen as backing down to Trump would be highly damaging.

However, both leaders are also under pressure to end the trade war. Trump has a presidential election right around the corner, and farm country has been hit hard by sinking agricultural prices related to tariffs. China’s economy has also been hit hard by American tariffs, so Xi would likely be relieved to reach a compromise.

The stakes are high. The global economy is slowing down. Manufacturing data is weak, the auto market has slumped badly, trade volumes are sharply down globally. If the talks fail and the U.S. and China decide to escalate the pressure – Trump has threatened to hike tariffs on $300 billion of Chinese goods – a full-blown recession is possible.

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

The Financial War Escalates

THE FINANCIAL WAR ESCALATES

Behind the scenes, the financial war between America and China is escalating dangerously into a war to secure global financial resources. 

At a time of growing liquidation of dollar assets by foreigners, the US Treasury’s internal analysis will highlight future government funding problems in the light of a developing US recession. This will result in an overdependency on inflationary financing, threatening to destabilise the dollar’s purchasing power. For these reasons, America needs foreign portfolios to invest in US Treasuries, at a time when China also needs them to help finance her infrastructure plans and future development. We face a battle for these funds, and the outcome will determine all our futures.

Introduction

When you see a rash, you should look beyond the skin for a cause. It has been like this with Hong Kong over the last few weeks. On the surface we see impressively organised demonstrations to stop the executive from introducing extradition laws to China. We observe that university students and others not much older are running the demonstrations with military precision. The Mainland Chinese should be impressed.

They are unlikely to see it that way. The build-up of riots against Hong Kong’s proposed extradition treaty with the Mainland started months ago, supported and driven by commentary in the Land of the Free. America is now coming out in the open as China’s adversary, no longer just a trading partner worried by the trade imbalances. And Hong Kong is the pressure point.

This happened before, in 2014. The Chinese leadership was certain the riots in Hong Kong reflected the work of American agencies. The following is an extract translated from a speech by Major-General Qiao Liang, a leading strategist for the Peoples’ Liberation Army, addressing the Chinese Communist Party’s Central Committee in 2015:

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

U.S. Gold Exports to London Surge

U.S. GOLD EXPORTS TO LONDON SURGE

As U.S. gold exports to Hong Kong and China fell 25% in the first four months of the year, London picked up the slack.  According to the USGS, U.S. gold exports to London surged more than doubled from January to April, compared to the same period last year.  Interestingly, the amount of gold exported to London during this period nearly equaled the total U.S. domestic gold mine supply.

From the data reported in the USGS Gold Mineral Industry Survey’s, U.S. gold exports to the U.K. (London) jumped to 64.3 metric tons (mt) Jan-Apr, versus 25.5 mt during the first four months last year:

Here is the breakdown of U.S. gold exports to London for each month:

Jan = 12.2 mt

Feb = 12.1 mt

Mar = 21.2 mt

Apr = 18.8 mt

Total 64.3 mt 

As I have mentioned, a lot London’s gold is exported to China and Switzerland.  And then, the majority of Switzerland’s gold is exported to Hong Kong and China.  For example, according to the statistics on GoldChartsrus, in March, the U.K. exported 16 mt of gold to China and 32 mt of gold to Switzerland.   In the very same month, Switzerland exported 80 mt of gold to Hong Kong and China.  So, most of the west’s gold still ends up in Hong Kong and China.

Here are the top three countries that received gold exports from the United States Jan-Apr 2017 versus 2018:

From Jan-Apr 2017, the United Kingdom received 25.5 mt of gold from the U.S., compared to 69 mt shipped to Hong Kong and China and 48.3 mt sent to Switzerland.  Now during the same period this year, U.S. gold exports to the U.K. jumped to 64.3 mt while Hong Kong and China fell to 50.5 mt and Switzerland declined to 40 mt:

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

Global Retirement Reality

Global Retirement Reality

Today we’ll continue to size up the bull market in governmental promises. As we do so, keep an old trader’s slogan in mind: “That which cannot go on forever, won’t.” Or we could say it differently: An unsustainable trend must eventually stop.

Lately I have focused on the trend in US public pension funds, many of which are woefully underfunded and will never be able to pay workers the promised benefits, at least without dumping a huge and unwelcome bill on taxpayers. And since taxpayers are generally voters, it’s not at all clear they will pay that bill.

Readers outside the US might have felt smug and safe reading those stories. There go those Americans again, spending wildly beyond their means. You are correct that, generally speaking, we are not exactly the thriftiest people on Earth. However, if you live outside the US, your country may be more like ours than you think. Today we’ll look at some data that will show you what I mean. This week the spotlight will be on Europe.

First, let me suggest that you read my last letter, “Build Your Economic Storm Shelter Now,” if you missed it. It has some important background for today’s discussiion, as well as a special invitation to attend my Strategic Investment Conference next March 6–9 in San Diego. With so much change occurring so quickly now, next year’s conference is an event you shouldn’t miss.

Global Shortfall

I wrote a letter last June titled “Can You Afford to Reach 100?” Your answer may well be “Yes;” but, if so, you are one of the few. The World Economic Forum study I cited in that letter looked at six developed countries (the US, UK, Netherlands, Japan, Australia, and Canada) and two emerging markets (China and India) and found that by 2050 these countries will face a total savings shortfall of $400 trillion.

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

Hong Kong Interbank Rates Spike To Highest Since Lehman

Hong Kong Interbank Rates Spike To Highest Since Lehman

For only the third time since Lehman, the price of liquidity in the Hong Kong Dollar interbank markets has exploded higher.

Overnight HKD Hibor soared over 60 basis points to 0.71407% in Monday trading – the highest since October 2008…

Note that the two previous spikes were around year-end, so this is unusual in both its velocity and size.

Of course, the narrative of a panic in Asian liquidity is not a good one for supporting risk assets and so the spike is being dismissed as a one-off due to several factors (as Bloomberg reports)…

Monday’s rise in Hong Kong dollar overnight interbank rate was due to major fund providers being more cautious in lending at month-end, and because of demand from some market players, a Hong Kong Monetary Authority spokesperson writes in an emailed reply to questions from Bloomberg. Interest rates subsided when fund providers responded by lending out more Hong Kong dollars. Relatively large movements in short- dated interest rate Monday was probably a result of thin market conditions ahead of the month-end. The market continued to function normally.

Monday’s sudden spike in HKD overnight funding cost is probably due to short-term funding activities, likely for I Squared Capital’s purchase of Hutchison Telecom’s unit and HSBC share buyback announcement, says Angus To, deputy head of research at ICBC International Research.

Rate likely to drop soon as HKD liquidity remains ample in general, To says in a phone call.

So just ignore the fact that the HKD liquidty markets just exploded due to month-end (well it hasn’t before – see chart) and some M&A (there’s been no M&A in the last 9 years?)… it’s probably nothing.

Olduvai IV: Courage
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Olduvai II: Exodus
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