Having trouble getting up in the morning?

This will solve your problem.

Personally, I'm waiting for the model that ejects a man out of his own bed and into an attractive room-mate's . . .




Peter

Avoiding potentially dangerous short URL's

I've found myself increasingly targeted by Internet spammers and a few blog commenters who provide Internet links to sites they recommend, but in a shortened URL that's unreadable and gives no hint as to where it's actually redirecting me.  Needless to say, I treat all such links as highly suspicious.

I've been pleased to discover that there are Web sites to help find out where those links are really going, before I click on them.  This article discusses several 'link expanders'.  I've tried some of those it recommends, and find they work well.

So, if you find yourself confronted with a link such as http://goo.gl/YOTQ (which takes you to the Drudge Report web site - I just set it up as an example), and you want to know what it is before you actually go there, use one of the services listed and check it out.  It might just save you from a lot of viruses, malware and scam artists.

Peter

Social Security: going bankrupt one statement at a time?

An article in National Review points out an interesting feature of the author's Social Security statements.

I saw an asterisk with the following message:

The law governing benefit amounts may change because, by 2033, the payroll taxes collected will be enough to pay only about 77 percent of scheduled benefits.

I could not believe I was seeing the equivalent of what I was just thinking, but with a new twist, “If I like my Social Security, I can keep 77 percent of it.”

With an asterisk, my beloved government was informing me that they will be unable to fulfill their part of a financial arrangement into which, as their statement attested, I had been making mandatory contributions starting in 1971 at age 16. 

This impending “benefit rationing,” reducing my future financial “security” by $492 a month, may, in fact, not be the worst of it.

Sitting in the back of my Social Security file was an earlier statement dated March 10, 2009. Again, followed by an asterisk was a sentence that read exactly like my 2015 statement except for two major differences (emphasis added):

The law governing benefit amounts may change because, by 2041, the payroll taxes collected will be enough to pay only about 78 percent of your scheduled benefits.

Clearly, in 2009, the government’s prediction — that Social Security would have to be cut to 78 percent of benefits come 2041 — was overly optimistic.

Now, in 2015, they are projecting 2033, eight years earlier, with one percentage point less of my projected benefits. The projections have steadily worsened over the past few years, helped by a much weaker economy than the federal government expected. Does anyone really expect these numbers to get better?

. . .

Meanwhile, here is the truth, as stated by the Social Security Administration in its annual Trustees Report from 2014:

Social Security is not sustainable over the long term at current benefit and tax rates. In 2010, the program paid more in benefits and expenses than it collected in taxes and other noninterest income, and the 2014 Trustees Report projects this pattern to continue for the next 75 years.

. . .

The population of retirees is projected to double in about 50 years. People are also living longer, and the birth rate is low.

. . .

Trustees project that the ratio of 2.8 workers paying Social Security taxes to each person collecting benefits in 2013 will fall to 2.1 to 1 in 2032.

. . .

So, barring some positive developments, in 18 years — or less — Washington, D.C., will be filled with aging protesters, many using walkers, wheelchairs, or scooters. They will carry signs reading, “Give me my full benefits” and “It’s my money.” Old men wearing Vietnam veteran caps will be demanding, “100 percent and no less.” By that time, it will be too late.

There's more at the link.

As we noted on Wednesday, the so-called 'Social Security trust fund' may exist in theory, but it certainly doesn't exist in practice.  Those who argue that their Social Security taxes were 'an investment' that must now be 'repaid' have no idea of reality.  Their contributions have already been squandered on other entitlement programs, by both sides of the political aisle.  Now that it's their turn, there's nothing left in the kitty - except artificially created, inflationary pseudo-dollars - to pay them . . . and they're going to suffer the consequences.

Don't bet on Social Security to fund your retirement.  It won't.  It doesn't matter whether Republicans or Democrats administer the program.  Both parties have run it into the ground.

Peter

Trying to manage the bear . . . an exercise in futility

We've discussed before how the Chinese government has attempted to, in so many words, 'take over' that country's stock markets and 'manage' the economic crisis affecting them - to no avail.  The Economist sums up why those measures haven't worked.

Why is China finding it so hard to save its stockmarket?

The short answer is that, for all the government's involvement, China's stockmarket is still a market, and there are now more sellers than buyers ... Had China's stockmarket been allowed to crash, shares would have eventually found a floor. Instead, regulators have tried to erect a floor, and investors are not sure whether it really is the low point or just another artificial bottom susceptible to collapse.

The intervention has also created new problems. By wading in so heavily, the fate of stocks now sits in the hands of officials.

. . .

Even if the government does manage to withdraw its support without causing share prices to crash, the long-term damage to China's stockmarket will be severe. At the height of the sell-off, just over half of companies suspended their shares from trading, hoping to avoid the rout. Although most have now returned to the market, the message to investors is clear: if you put your money into risky stocks, you might find them frozen at a time of crisis, just when you need to cash out. What's more, regulators have halted initial public offerings, trying to limit the supply of shares and push up the prices of those already listed on the market. Past experience suggests it could be months before they lift the ban and let companies issue new shares. Add it all up, and China is left with a stockmarket in which investors take their cues from the government. Rather than bothering to assess the value of companies, they are betting on what regulators will do next.

There's more at the link.  Bold, underlined text is my emphasis.

I think the last two sentences say it all.  By intervening in a nominally 'free' market, the Chinese government has demonstrated conclusively that it isn't 'free' at all.  That means people are no longer chasing profits.  They're chasing government edicts, and taking bets with their investments on what the next edict will be.  I imagine the potential for bribery among the officials responsible - "How much for a hint about your next decision?  Please?  Pretty please with dollars on it?" - must be on an absolutely epic scale . . .

Peter

Awwww!

This is just too cute . . . a baby wolf and a baby grizzly bear playing together.

Apparently today, six years later, they're still the best of buddies.  I was surprised at that - when it comes to African predators, the big cats can't be trusted not to 'revert to type' and eat their former friends - but in this case at least, it seems to have worked.

All together, now:  Awwww!




Peter

Revolver SCORE!

I lucked into a good deal this morning.  Last night, while idly scanning the local Armslist, I noticed a gentleman in a town not too far away had just listed three revolvers for sale, including one that I've been trying to find for years:  a Smith & Wesson Model 625-6 Mountain Gun chambered in .45 Colt.  It's basically identical to the pictures below.

The seller was asking a fair price, so I contacted him right away to say I'd take it.  It's a good thing I did - he said he had five calls within an hour, and I just squeaked in ahead of everyone else!  Miss D. and I drove down to collect it this morning, and it's on the desk next to me as I write these words.  It's one of the last of the pre-'Clinton lock' models, and in really minty condition.  The seller, a retired gentleman, said he'd only put a dozen rounds through it since he'd bought it many years ago.  After looking it over, I believe him.

I won't be shooting it right away, thanks to waiting for my kidney stone problem to be dealt with;  but as soon as I'm over that, this baby and I have a range date in store.  I think either a Dragon Leatherworks Flatjack or a Simply Rugged Sourdough Pancake holster is in its future, too;  and I must find a source for 250-260gr. LFN or WFN hard-cast gas checked bullets loaded to a velocity of 900-1,000 fps from a 4" barrel.  That should take care of anything I'm likely to have to worry about.  I have a friend who reloads, who I'm sure will be happy to put some together for me, or I might talk to Tim Sundles over at Buffalo Bore to see what he can do.  (If any other .45 Colt fans would like to come in with me on a group buy from BB, drop me a line - my e-mail address is in my blog profile.)

This Mountain Gun will make a great stablemate to my regular 4" Model 625 in .45 ACP.  Now, let's see if I can find another pre-lock Mountain Gun in .44 Magnum to complete the troika . . .

Peter

Doofus Of The Day #848

Courtesy of Wirecutter:

Miss D.'s going to laugh when she sees that.  She tells me that in Alaska, which she still regards as 'home', it gets too cold in winter for the roads to be salted to melt ice and snow.  Instead, the Anchorage municipality scrapes away what snow it can, then layers fine gravel and dirt on the ice.  By spring the city has up to a foot or more of an ice/gravel/mud mix on the roads, and as the ice melts the muck gets all over everything.  (I remember noticing that while I was flying up to Anchorage to court her.  I couldn't figure out, until she told me, why there was so much crud on the roads, and why most vehicles had a mud-brown tide mark halfway up their doors!)

Anyway, what that means in winter is that the roads are permanently hazardous (most drivers up there use studded tires, or something like Blizzaks or the equivalent).  She says with a grin that when some idiot comes flying past you in Anchorage in mid-winter, you simply sit back and smile, knowing that within a mile or two you'll pass him upside-down in a ditch, or spun out in the central median, or having met some other unkind fate thanks to his careless driving.  I noticed, too, that there are a lot of tow trucks making a circuit of the city on all the major roads.  Miss D. informed me that as soon as they see someone in a ditch, they stop and offer a quick tow back onto the road for a flat fee in cash (it was $60 when I visited).  If the driver has any sense, he'll hand it over and be on his way again in five minutes.  If he doesn't, he can wait for his insurance to send a driver, and pay a lot more than $60 (as well as have his premiums increase).  Needless to say, the tow trucks do a roaring trade during winter.  (Apparently in summer their drivers mostly switch to lawn care and garden services for three or four months, until the snow and ice return.  A man does what he can to make a living in the frozen North.)

I think the doofus depicted in the pictures above would probably make a lot of Anchorage drivers smile, and a lot of Anchorage tow truck operators very wealthy!

Peter

I'd have preferred him to aim more steadily, but . . .

. . . he still took care of business - his and theirs!

I wish more store owners were as resolute.  It'd cut way down on crimes like that.  Congratulations, Sir.

Peter

Why rising interest rates may destroy the US national budget

We've spoken many times before about the parlous state of the US government in financial terms.  Most of its programs are funded by deficit spending, borrowing money today to pay for current needs and promising to repay it out of future earnings.  Trouble is, as we've seen, future repayments never happen:  instead, the debt gets bigger, and bigger, and bigger, until . . .

The inimitable Karl Denninger has summed up the effects of such debt levels - and the impossibility of repaying them - in an article today.

You borrow $1,000,000 @ 5% interest on a one-year bond.  You must pay, at the end of one year, $1,050,000.

But you don't pay it off, you just pay the $50,000 interest.  In the meantime, over the next year, the interest rate goes down to 2.5%.

When you roll over the debt you find that your interest on the new bond is now $25,000.  Or, you can borrow another million and pay the same $50,000! 

Guess what you do?

You borrow another million, of course.

Then another year passes.  The rate is now 1.25%.  You can now borrow $4 million for the same $50,000 in interest and not pay any of it off.  Remember, you started with one million but now, you have $4 million to spend!  Huzzah!

There's a wee problem with this -- zero is a lower boundary, and a hard limit.  Therefore, your continued borrowing of more and more money, which allows you to appear to be doing quite well when in fact you are not, must end.  Even if rates don't go up and simply stay pinned near zero, you can't access any more borrowed money because doing so requires that lower and lower rates come every time you renew the bond, and mathematically that must (and now has) come to a stop.

This is why the so-called "economic prosperity" (which was fake, by the way) over the last 30 years happened.  It is particularly where the so-called "recovery" since 2008 happened, all of which was driven by an explosion of non-economic borrowing made possibly by continual rate reductions.

This has now ended and it's why "growth" has disappeared.

But -- if rates rise to, say, that former 5%, you suddenly don't owe $50,000 in interest any more.

You now owe $200,000 each and every year on a permanent basis, or one fifth of the original million you borrowed!

Worse, there is only one way to make that number smaller: You must pay back some or all of the $4 million you have out -- but you spent it!

This is the trap that The Fed, the Government and corporations now find themselves in -- a trap of their own design.

There's more at the link.  Indispensable reading, and 100% accurate.

This is why the enormous debt loads being carried by our Federal, state and local governments, and by so many of our corporations, are like millstones around our collective necks.  They're dragging us all down, as individuals, as a society, as a nation.  Sooner or later we have to deal with them.  It won't be possible to pay them off unless we deliberately 'print' so much new currency that it devalues the US dollar to an unprecedented extent, and causes rampant inflation.  The other option is to default on our debts . . . which will destroy the 'good faith and credit' of the United States.

We're in a cleft stick.  We're caught in a trap of our own devising - and because we elected politicians who pandered to their electorate, and spent all this money, and incurred all this debt, to feather their own nests and ensure their re-election, and because we failed to stop them, we're all going to suffer together.

Look at the size of Federal government debt in the graphic above.  That doesn't tell the whole story.  It doesn't account for future promises - Social Security, Medicare, Medicaid and other programs - that have been promised to us, but for which there's no money in the bank.  (The so-called 'Social Security trust fund' exists in theory but not in practice.  Anyone who tells you otherwise is deliberately lying to you.)  The Federal government's total liabilities, including those future promises, were estimated to total almost $87 trillion in 2012, and (thanks to Obamacare) have been estimated at well over $120 trillion today.  Alan Greenspan noted today that this enormous increase in entitlement spending is 'extremely dangerous'.  State and local governments and US corporations owe an incalculable amount more.  I've seen estimates ranging anywhere from $25 trillion to four or five times that.  Who knows the real numbers?  I've no idea.

How can we possibly fund such outlays?  Where can we find the money?  The answer is simple.  We can't.  There isn't enough money in the world to fund them.  That's the cold, hard fact.  If you were relying on Social Security and Medicare for your retirement, the odds are pretty good that they won't be there for you:  or, if they are, they'll be paid in deliberately inflated dollars that won't be worth anything like what you expect (which is already happening;  see Sprott Money's analysis in this article - scroll down to read it).

Hang on to your hats, folks.  It's going to be a bumpy ride . . . and it's not going to be fun.

Peter

The Lost Cause (puppy version)

The cat is amazingly patient with him, but this ten-week-old puppy ain't gettin' his bed back . . .

Peter

I need advice from travel trailer/5th wheel owners, please

Miss D. and I are considering longer-term options, including possible relocation and lengthy writing-related journeys.  As part of the process, I'm looking into travel trailers and 5th-wheel trailers.  However, both of us are complete novices in this field, so we've got a lot of research to do.  That's OK, because we're not looking to buy anything right away.  This will work out over a couple of years, I'm sure.

Unfortunately, the Internet is full of 'sponsored' information sites that are nothing more than an attempt to entice one to buy from a particular dealer or manufacturer.  Some sites even contradict each other.  It's hard to separate the wheat from the chaff.  We also want to find out which dealers are reputable and worth doing business with - again, there's an awful lot of them out there, and we've heard enough horror stories to last us a lifetime!

I'd be very grateful if those of my readers who own (or have used) travel trailers and 5th wheel trailers would please contribute advice in these areas:

1. The best Web sites to turn to for accurate, reliable information;
2. The best dealers (i.e. reliable, honest, worth doing business with), particularly if they operate over the Internet;
3. User guides, forums, etc;
4. Is it worth buying something used, or is it better to bite the price bullet and pay for a new unit?

My assessment so far (based on admittedly incomplete information) is that it's better to look for a smaller, lighter travel trailer (but not too small), so as not to need a huge towing vehicle.  A 5th wheel trailer would offer the ability to carry a significant amount of weight if we make a permanent move somewhere (in effect, it becomes a cargo trailer), but a regular travel trailer isn't quite so flexible.  I'm thinking something in the mid-20-foot range, pulled by a truck of decent but not excessive size and power, is what we want.  It will have to be 'winterized', because we'll probably drive it up north (including a trip to Alaska) in due course;  so we want a trailer that's well insulated, probably with double glass windows.  Good suspension and decent ground clearance are probably must-haves as well, given conditions on the Alcan Highway and Alaskan roads!

I don't know enough right now to ask more questions, but I'm sure some of my readers can set us straight anyway.  Please leave your advice in Comments, or e-mail me (my address is in my blog profile).

Thanks in advance.

Peter

EDITED TO ADD:  Thank you very much to everyone who's responded in Comments here or via e-mail.  You've given me a lot of food for thought.  Miss D. and I will work through it all over the next few months - we're in no hurry, as I said earlier. You've given us a very good start.

Cherry-picking anti-gun material

The latest approach of the anti-Second-Amendment and anti-gun brigade seems to be to point out how difficult it is to use a handgun appropriately and effectively.  The Washington Post reports:

The study was commissioned by the National Gun Victims Action Council, an advocacy group devoted to enacting "sensible gun laws" that "find common ground between legal gun owners and non-gun owners that minimizes gun violence in our culture." The study found that proper training and education are key to successfully using a firearm in self-defense: "carrying a gun in public does not provide self-defense unless the carrier is properly trained and maintains their skill level," the authors wrote in a statement.

They recruited 77 volunteers with varying levels of firearm experience and training, and had each of them participate in simulations of three different scenarios using the firearms training simulator at the Prince George's County Police Department in Maryland. The first scenario involved a carjacking, the second an armed robbery in a convenience store, and the third a case of suspected larceny.

They found that, perhaps unsurprisingly, people without firearms training performed poorly in the scenarios. They didn't take cover. They didn't attempt to issue commands to their assailants. Their trigger fingers were either too itchy -- they shot innocent bystanders or unarmed people, or not itchy enough -- they didn't shoot armed assailants until they were already being shot at.

There's more at the link.

It's nonsense, of course.  First the WaPo trots out the same old lying 'statistics' about 'more guns lead to more gun homicides -- not less' and 'guns are rarely used in self-defense' (all of which have been resoundingly debunked, but anti-gunners will never admit that).  Then they try to tack on claims like those above - ignoring the reality that the mere display of a weapon by the intended victim is often enough to drive away a criminal predator without a shot being fired.  What's more, there's abundant evidence from news reports and police files to prove that ordinary citizens successfully defend themselves, their loved ones and their property thousands of times every year using firearms.  The study cited above completely ignores such evidence.

Of course, I'm not opposed to everyone getting firearms training - in fact, I think it's an excellent idea.  I've been through half a dozen week-long shooting courses since coming to the USA, and learned a great deal from them (over and above what I learned during my military training and experience, and later civilian firearms training, in South Africa).  However, many people don't have the time or the money to participate in such training.  Are the authors of this latest study suggesting they should be disarmed because of that?  Why should they be penalized for something beyond their control?  The Second Amendment never speaks of qualifications at all - only a right that 'shall not be infringed'.  Any attempt to tie that right to training would, IMHO, represent an infringement.

The situation is actually very simple.  Some people believe that the thing is the problem.  They ascribe morals, motives and opportunity to an inanimate object.  It's 'the gun' that's the problem, rather than the person wielding it.  That's a lie, of course.  Consider:

• If a drunk driver runs over a pedestrian, we don't charge his vehicle with a crime - we charge him.
• If a contractor erects a shoddy building, and the facade later falls off and kills or injures someone passing below, we don't charge the fallen rubble with a crime - we charge the person or persons who caused the problem.
• If a murderer shoots someone, we don't charge his gun with a crime - we charge him.

To say that 'guns are the problem' ignores that reality.  A hammer can be a useful tool to drive a nail, or it can cave in someone's skull.  It has no moral volition of its own;  it can't choose how and when and where and for what purpose it's going to be used.  A gun is precisely the same.  It can be used to shoot targets, or be carried on the hip of a police officer to keep the peace and enforce the law, or be used to commit robbery or murder.  The gun itself is not the problem - and if it wasn't available, the criminal class would find other tools to use in their crimes (just as they did for millennia before the gun was invented).  To outlaw guns, or restrict their availability, won't outlaw or restrict crime at all.

All too often, 'sensible gun laws' morph into 'any excuse we can find to disarm law-abiding citizens'.  That's not about to happen where most of us are concerned.

Peter

An amazing set of crime statistics

Courtesy of a link at Second City Cop, we find a study of how much Chicago spent on incarcerating criminals from each block of that city in recent years.  It's mind-boggling.

In just five years, the State of Illinois dedicated more than $2.4 million to the 4800 block of West Adams Street in Austin.

But don't look for new developments or freshly paved roads on that stretch of street, because that's not where the money went. No, $2.4 million is the amount of money the state spent on incarcerating people for drug offenses from that block alone.

. . .

The 4800 block of West Adams and 4,636 other blocks in the city were the focus of Chicago's Million Dollar Blocks, a new data project published Monday. A collaboration between social justice advocates and tech company DataMade, the site features an interactive block-by-block breakdown of how much money the city spent on jailing criminals from 2005 to 2009.

. . .

"All we hear about is how the state is in billions of dollars in debt, and meanwhile we have more than a billion dollars every year pumped into a corrections system that's had a track record of failure," said Cooper, the co-director of Adler University's Institute on Social Exclusion. "We're always hearing about money being spent on development, and here you have this shadow budget pumping tons of money into taking people out of neighborhoods, instead of bringing them in."

There's more at the link.

The project's home page offers an amazing perspective on crime in the Windy City.  You can run your cursor over an interactive map of the worst-affected areas.  Each block will show you, in a window at the foot of the screen, how much was spent there on drug-related incarceration over a five-year period.  One block I picked at random showed a cost of no less than $5,138,247 - more than a million dollars per year in incarceration costs for a single city block.  (In the screen capture image below I've added the circle and line joining the block to the cost figure, for ease of reference.)

The numbers show two factors very clearly:

1. How much it costs Chicago to endure certain neighborhoods in its midst;
2. How much it costs Chicago to not clean up those neighborhoods.  I can't believe that cleaning them up would be any more expensive than policing them, and if they could keep them cleaned up, it would save a bundle in the future.

It's also sobering to think that those figures are for the high-crime area of only one city.  I'd love to see the numbers for each of the 100 largest US cities, and tally them up.  I think taxpayers across the nation might revolt if they could see the costs involved!




Peter

Quote of the day

Courtesy of The Lonely Libertarian, part of the ongoing to-and-fro between herself and Wirecutter (which has amused many of their mutual readers).

Word.

Peter

Throw rug thief

This made me smile.

Sorry about the lack of 'in-depth' content today - my pain levels are a bit too high for comfort.  More later.

Peter

China's economy: the gyre widens

I'm sure many readers are familiar with W. B. Yeats' (in)famous poem, 'The Second Coming'.  Written in the chaos and uncertainty following the First World War, it expresses the anguish of many and their loss of belief in old ways and older promises.

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world ...

That's how things seem to me in the world today, in many senses.  One of them is economic - and China's stock market, which we've visited several times this month, is showing unmistakeable symptoms of 'falling apart' because the (State-mandated and -imposed) 'center cannot hold'.  Yesterday stocks there suffered their worst one-day loss since 2007, and some analysts are predicting further losses.  This morning has seen more wild price fluctuations.  As the Telegraph noted:

The violence of the moves unnerved investors worldwide, stirring fears that the Communist Party may be losing control after stoking a series of epic bubbles in property, corporate investment and equities to keep up the blistering pace of economic growth.

. . .

Mark Williams, chief Asia strategist at Capital Economics, said the Chinese authorities appear to have been testing the waters to see what would happen if they stopped intervening. The market verdict was swift and brutal.

“They have got themselves into a very difficult situation. They have put a lot of credibility on the line to shore up prices and this credibility has been badly damaged,” he said.

. . .

The Chinese media reported on Monday night that the state regulator is ready to intervene with yet more stock purchases. It has already bought an estimated $250bn of equities and has borrowing lines for a further $450bn if necessary.

Western banks say they are coming under heavy pressure from Chinese officials to refrain from negative comments. They are effectively gagged if they wish to do business in China.

“Large parts of the market are closed, and those stocks that are still trading are selling off regardless of support measures. Clearly something very serious is happening,” said one economist.

The long-standing assumption that the Chinese authorities know what they are doing has been shattered.

The government’s heavy-handed measures include a ban on short sales and on new share issues, as well as pressure on the 300 largest companies to buy back their own stock, and forced purchases of stocks by brokerage houses.

Many investors are effectively trapped with margin debt used to buy the stocks. These liabilities cannot be covered without selling the stocks. The longer the market remains partially frozen, the more likely it will lead to extreme stress.

David Cui, from Bank of America, said $1.2 trillion of stock holdings are being carried on margin debt. This is 34pc of the free float of the Shanghai and Shenzhen stock markets. “When the market ultimately settles at a level that can be sustained on fundamental reasons, we expect that the financial system may wobble, due to high contagion risk,” he said.

“Most leveraged positions may suffer from losses ultimately, likely in trillions (of yuan). The risk is that the unwinding of the leverage will be disorderly: due to implicit guarantees behind most shadow banking products, investors could easily panic,” he said.

Mr Cui said the brokers and trusts have barely 1.6 trillion yuan ($260bn) to absorb losses and may be overrun. “Given the particularly thin front line of the financial institutions, we suspect that it’s a matter of time before banks may have to face the music,” he said.

This in turn risks setting off a “bank run” on the shadow banking system as investors lose trust in wealth management funds, fearing that their deposits in the $2.1 trillion industry no longer have an implicit guarantee.

There's more at the link.

China's economic woes are spreading around the globe, causing ripple effects that threaten major calamity to smaller markets.  From the same Telegraph report:

Brazil, Russia, South Africa and a string of commodity states face a double-barrelled stress test. The Chinese are freezing imports just as the US Federal Reserve drains worldwide dollar liquidity and prepares to raise rates, calling time on emerging markets that have together borrowed $4.5 trillion in US currency.

The Brazilian real fell to a 12-year low of 3.38 against the dollar on Monday. The South Africa rand hit a record low of 12.69. The Russian rouble flirted with the danger line of 60. It was the same story across much of the emerging market nexus.

“One by one the dominoes are starting to fall,” said Societe Generale.

The trouble is, no-one seems to know why the market crashed so abruptly.  Bloomberg reports that confusion reigns.

It’s days like Monday that reassure Tony Hann he was right to avoid stocks in mainland China.

The severity of an 8.5 percent drop in the Shanghai Composite Index is bad enough, but what irks him the most is not knowing why it tumbled so much. In a market where unprecedented intervention has made government money one of the biggest drivers of share prices, authorities aren’t transparent enough for investors to make informed decisions, said Hann, the head of emerging markets at Blackfriars Asset Management Ltd.

Monday’s plunge was all the more surprising because it followed a government rescue package that had helped drive a 16 percent rally since July 8. That support appeared to vanish without warning, leaving analysts guessing whether authorities shifted their policy stance or just got overwhelmed by a flood of sell orders. After the close of trading, the securities regulator denied speculation that the government has exited the stock market.

Investors “are concerned and lost,” said Alex Wong, a Hong Kong-based asset-management director at Ample Capital Ltd., which oversees about $155 million. “China’s market is distorted, so you can’t sell short very confidently and you can’t buy up very confidently either.”

. . .

The International Monetary Fund has urged China to eventually unwind its support measures, saying share prices should be allowed to settle through market forces, according to a person familiar with the matter, who asked not to be identified because the talks are private.

“The markets in China now are not really markets,” Donald Straszheim, head of China research at New York-based Evercore ISI, said on Bloomberg Television last week. “They are government operations.”

Again, more at the link.

This is what happens when governments delude themselves that they can dictate to markets.  Markets are affected by all sorts of factors, sentiment and delusion being high among them;  but at bottom, they're subject to mathematical reality.  As economist Herbert Stein famously put it, "If something cannot go on forever, it will stop."  His eponymous law applies in China just as much as it applies in the USA.  The Chinese government can demand, dictate and decree until it's blue in the face, but sooner or later economic reality is going to override the delusions of bureaucrats and politicians - just as it appears to be doing right now.

King Canute has gone down in history for demonstrating the folly of imperiousness.  One wonders whether it's time for the Chinese government to decree that his example should be studied by its bureaucrats and commissars.  The lesson might be unpalatable, but the insights it provides might be very helpful at a time like this.

Peter

Some interesting cutaways

Miss K. recently put up a series of pictures of objects that have been cut away to show their interiors.  Some are a real struggle to identify.  This one in particular caught my eye - a Leica camera lens with its insides exposed.

There are many more images at the link.  Interesting viewing.

Peter

Ow

Remember that post I did last week about pain?

Yeah.  That one.

I finally got to see a urologist this morning, three and a half weeks after the problem began, and after two visits to my own physician plus a CAT scan and an ultrasound examination.  Turns out I have a fairly substantial kidney stone, which has been causing all the pain and blood in my urine.  No fun at all.  I'll be going into hospital to have something done about it within the next week or two.

At least the urologist was able to prescribe a fairly strong painkiller.  My regular physician didn't dare do so, thanks to Tennessee's insanely convoluted pain medication laws and regulations.  I've had to make do with only semi-effective medication until this morning.  I filled the new prescription on the way home, and popped the first of them a few minutes ago.  Here's hoping it takes the edge off the pain, which has been distinctly un-funny over the past couple of days.

Anyway, so far, so good.  I've heard it said that "Pain is nature's way of telling you that you're still alive".  In that case, I'm so alive it hurts!

(There's also an alternative saying:  "Pain is nature's way of reminding you that you're only one bear attack away from being the hamburger in the bun of life".  At present, that feels about right . . . )

Peter

I'm still not sure how he made that work

This is definitely one of the hairier cross-wind landings I've seen lately.  It's a KLM Boeing 777 at Schipol Airport in Holland.

I'd say that was just a mite twitchy . . .

Of course, one of the things that makes such landings possible, rather than disasters in the making, is modern undercarriage technology.  Here's a video of a Boeing 767 making a very hard landing at Birmingham in the UK.  Note how the undercarriage absorbs the impact - it's repeated in slow motion near the end of the video to illustrate the point.

That's some pretty good engineering.

Peter

Rescuing prisoners of war in the Pacific, 1944

A bit of wandering the Web led me to a fascinating series of videos.

I found an article in the Guardian titled "From Burma to Nagasaki: the man who walked through hell".  It's the story of Jan Bras, a Dutchman who was a prisoner of Japan through most of the Second World War.  He traveled on one of the so-called "hell ships", the merchant vessels used to transport prisoners of war in truly hellish conditions.  Many of them were sunk by Allied submarines and aircraft, either because the attackers didn't know that POW's were aboard, or because the ships' cargoes included strategically important material that had to be sunk regardless.

In reading more about the subject, I came across a documentary on YouTube in five parts.  It describes the sinking of the SS Rakuyō Maru, one of the "hell ships", in September 1944 by a wolf pack of US submarines.  A few days later, two of the submarines returned to the area and realized that many of the bodies on the surface (and the few survivors still alive) were Allied POW's.  They mounted a major rescue effort, plucking 159 of the victims from the sea with the aid of two more submarines called in from hundreds of miles away to assist.  The submarines involved were USS Sealion, USS Pampanito (an account of her rescue efforts may be read here - scroll down to find the relevant section), USS Queenfish and USS Barb.

A documentary program was later made about the rescue, titled 'The Crossing'.  It's available on YouTube in five parts.  I was so taken by the story that I thought you might enjoy it too - particularly a much later reunion between two of the survivors and the submariners who rescued them.  Here it is.

An account of the rescue by one of the Australian POW's may be found here, adding more details from the victims' perspective.

To call that a "remarkable experience" is to grossly underestimate the tragedy - but at least some were saved.  May those who died rest in peace.

Peter

Doofus Of The Day #847

A few weeks ago I posted a video clip of a driver who didn't notice a drawbridge opening ahead of him.  Fortunately for him, he managed to jump the gap and suffered only minor injuries (mostly to his pride, I should think).

A Dutch man wasn't so lucky earlier this week.

He apparently got out alive, but with a few broken ribs.  I bet that'll make him more careful next time!

Peter

A pictorial definition of the word 'Kitten'

This picture defines the entire species pretty well, I'd say!

(Picture courtesy of Reddit.)




Peter

Surfing - while on fire???

I thought I'd seen it all, but Jamie O'Brien just proved me wrong.

Details at the link.

Peter

What's in a name?

Some companies' marketing departments need a reboot.  Swiftly.

Raytheon is one of three companies competing for a USAF contract to develop a replacement for the J-STARS ground surveillance and battle management system.  Flight Global reports:

As Northrop, Lockheed and Boeing battle for the prime contractor position, Raytheon is flying under the radar, so to speak, by offering its new “Skynet” radar to all sides. The company is in a non-exclusive partnership with Lockheed, but says it will offer its radar – believed to be a 16ft derivative of the Advanced Airborne Sensor (AAS) carried on the Boeing P-8 Poseidon maritime patrol aircraft – to whichever company wants it.

According to Raytheon: “Skynet incorporates the latest innovations developed for the US Navy’s stringent, wide-area surveillance requirements [and] meets or exceeds all JSTARS requirements for the lowest possible cost.”

There's more at the link.

Skynet?  SKYNET???  Could there possibly be a less appropriate name for battle management technology?




Peter

Word

Courtesy of an embedded image at Ballseye's place:

Indeed.

Peter

Ambushing a helicopter

Footage has been released of a Colombian army helicopter being blown up by guerrillas.  The Telegraph reports:

The Black Hawk helicopter exploded shortly after landing on 22 June in the Norte de Santander department about 264 miles northeast of the capital Bogota.

The military said an explosive was manually set off and the Colombian government said four soldiers were killed and six others were injured in the attack.

. . .

... guerrillas from the National Liberation Army (ELN) took responsibility for the attack on Saturday in a message posted on its Twitter account stating that eight soldiers had been killed.

There's more at the link.  Here's the video of the explosion.

The incident reminds me of one in Angola during the war years there.  It was reported that a patrol of South African Special Forces operators noticed that Angolan forces were carving a helicopter landing pad out of the bush near Cuito Cuanavale, to make helicopter resupply easier.  They waited until the work force had returned to its fire for supper that evening, then buried four Soviet TM-46 landmines in the center of the cleared area.  They wired them to explode on command, and led the wire from the detonator to the edge of the clearing, burying it carefully so it wouldn't be noticed.  When an Angolan Air Force Mil Mi-8 helicopter came in to land next morning, it went straight back up again, in pieces.  So did everyone on board.

This illustrates one of the fundamental vulnerabilities of using helicopters in warfare.  They need cleared areas in which to land.  If there aren't many around, those that exist can be booby-trapped or ambushed to destroy helicopters before those on board, or their cargo, can be unloaded.

Peter

Unions, politics and 'hit job' journalism

Regular readers of this blog will know that I support neither the Democratic nor Republican parties.  I regard both of them as inimical to US interests.  They seem far more focused on achieving their partisan political objectives than serving the country - and neither seems to give a damn about the wishes, desires and interests of the American people.

With that in mind, I'm cynically amused by the fuss over who should represent each party in next year's Presidential elections.  With very few exceptions, all of the candidates are playing to their party's base, trying to represent the party rather than the country as a whole.  Worse, most of them are simply retreading tired old political clichés rather than coming up with original ideas.  There are very few of them with a worthwhile track record of achievement, and most appear to have avoided original thought for years.

There are, however, exceptions.  When I find the supporters of one party arguing vociferously that a potential candidate for the other party is dangerous, or deluded, or whatever, that tends to get me interested.  For example, the Washington Post calls Scott Walker 'dangerous', and says of him:

“First off,” Scott Walker proclaimed, “we took on the unions, and we won. We won!”

Taking on the unions is usually first off for Walker, the Wisconsin governor and Republican presidential candidate. It is the very rationale for his candidacy.

. . .

This is the essence of Walker’s appeal — and why he is so dangerous. He is not as outrageous as Donald Trump and Sen. Ted Cruz (R-Tex.), but his technique of scapegoating unions for the nation’s ills is no less demagogic. Sixty-five years ago, another man from Wisconsin made himself a national reputation by frightening the country about the menace of communists, though the actual danger they represented was negligible. Scott Walker is not Joe McCarthy, but his technique is similar: He suggests that the nation’s ills can be cured by fighting labor unions (foremost among the “big government special interests” hurting the United States), even though unions represent just 11 percent of the U.S. workforce and have been at a low ebb.

There's more at the link.

That article encapsulates precisely why the left/progressive wing fears Scott Walker - and why the rest of us like him.  He really did trounce Big Labor, and has proved that it can be beaten.  I'd love to know how hard the unions pushed for that article to be written, and how much behind-the-scenes influence they exerted on its composition.  (If you think they had nothing to do with it, I have this bridge in Brooklyn, NYC I'd like to sell you.  Cash only, please, and in small bills.)

Unions have dominated Democratic Party (and left-wing and progressive) politics for decades.  One look at their political donations will tell you all you need to know about their alignment - and according to the Department of Labor, they spend much more than that on politically related activities.

Unions served a valid purpose in the USA for many years, and in some cases they still do.  (I was a member of a union at one time, and its support proved invaluable in resolving a situation in which I was unfairly accused.)  However, unions have become millstones around the neck of many industries.  A few examples:

• Hostess went into bankruptcy because it couldn't cope with the financial burden of its union-contract-mandated employee benefits, and the impact of a union-engineered strike.  Today, freed of those contracts, the company is profitable.
• US automakers have historically paid an enormous cost premium to build their cars, thanks to union-mandated contracts.  In 2007, Ford paid an average of $70.51 per hour in direct and indirect labor costs and benefits, GM paid $73.26, and Chrysler paid $75.86.  After the financial crisis of 2007/08, the Big Three worked hard to slash those costs, with some success.  This year FCA (successor to Chrysler) is paying $48 per hour for all benefits, Ford $57 and GM $58.  However, all three are still paying more per hour than most Japanese and Korean automakers in the US.  Those labor costs have also driven the increasing use of automation and robotics in vehicle manufacture.  It reportedly took between 13½ and 35 hours of labor to build an average family vehicle in 2008, compared to four times that a couple of decades before.  Therefore, even as automation has improved the productivity of factories in terms of output per worker, the very success of the unions in 'featherbedding' their members' contracts has reduced the number of jobs available for them.  (It's instructive to compare the costs versus benefits per worker in the USA and elsewhere.)
• Public-sector unions have almost bankrupted many cities and states, and their exercise of political power is a major influence on elected representatives.  As National Affairs points out:

New Jersey has drawn national attention as a case study, but the same scenario is playing out in state capitals from coast to coast. New York, Michigan, California, Washington, and many other states also find themselves heavily indebted, with public-sector unions at the root of their problems. In exchange, taxpayers in these states are rewarded with larger and more expensive, yet less effective, government, and with elected officials who are afraid to cross the politically powerful unions. As the Wall Street Journal put it recently, public-sector unions "may be the single biggest problem...for the U.S. economy and small-d democratic governance." They may also be the biggest challenge facing state and local officials — a challenge that, unless economic conditions dramatically improve, will dominate the politics of the decade to come.

That's precisely why I like Scott Walker as a potential Presidential candidate.  It has nothing to do with his party affiliation.  Frankly, I don't care whether he's Republican or Democrat.  It has to do with him realizing the crippling effect of unions on the bureaucracy administering his State, and being willing to take a stand and do something about it.  No wonder the unions are afraid of him, particularly given the widespread negative public perception of them.  As one openly left-wing union proponent has conceded:

... as much as it hurts to admit this, labor unions just aren’t very popular. In Gallup’s annual poll on confidence in institutions, unions score close to the bottom of the list, barely above big business and HMOs but behind banks. More Americans—42%—would like to see unions have less influence, and just 25% would like to see them have more. Despite a massive financial crisis and a dismal job market, approval of unions is close to an all-time low in the 75 years Gallup has been asking the question. A major reason for this is that twice as many people (68%) think that unions help mostly their members as think they help the broader population (34%). Amazingly, in Wisconsin, while only about 30% of union members voted for Walker, nearly half of those living in union households but not themselves union members voted for him (Union voters ≠ union households). In other words, apparently union members aren’t even able to convince their spouses that the things are worth all that much.

A major reason for the perception that unions mostly help insiders is that it’s true. Though unions sometimes help out in living wage campaigns, they’re too interested in their own wages and benefits and not the needs of the broader working class. Public sector workers rarely make common cause with the consumers of public services, be they schools, health care, or transit.

More at the link.

If Scott Walker can tap into that public perception, he'll have wide voter appeal.  That's why the hit piece in the Washington Post was written, and why we'll see more of them in the months to come.  It's also noteworthy that almost no-one else in the running for the presidency in 2016 has dared to 'make waves' where the unions are concerned.  I find that telling.  As Voltaire is said to have opined a few centuries ago, "To find out who rules over you, simply find out who you are not allowed to criticize."  Scott Walker has helped to make that clear - for which we should all be duly grateful.

Unions aren't the only issue in the forthcoming Presidential election - far from it.  However, their impact on our country and our economy is such that I tend to like anyone who will stand up to them, point out the damage they've done, and take steps to reverse it.  As far as Scott Walker is concerned, so far, so good.

Peter

Peter Schiff lays it down about our economy

Well-known financial analyst Peter Schiff offers some blunt thoughts about the state of the US and world economies, in two excerpts from a video interview he conducted with Reason magazine.

In the first, relatively short excerpt, he speaks of how the US economic situation resembles that of Greece or Puerto Rico.  Money quote:

""Once the Greek creditors began to question the solvency of Greece they demanded higher interest rates. The minute our creditors figure out we are in the same position as Greece or Puerto Rico, they're going to demand higher interest rate from us and we can't pay either."

In the second, longer excerpt, he speaks of US financial policy (or, rather, the lack thereof).  Money quote:

"The mainstream—the investors, the government, central banks—they never see a crisis until after the fact. And then they go back and they say, 'Well nobody could have possibly predicted this. This was a complete random occurrence that had nothing to do with our policy. They never understood the cause of the bubble that burst in '08. They didn't understand the Fed's role in creating it, so they don't understand that the Fed is simply exacerbating all the problems that everybody believes they solved."

Wise words . . . if not very palatable.

Peter

About that Arab-Israeli rapprochement . . .

. . . that I forecast earlier this month, and again yesterday?

Headline:  "Jordan acquires ex-Israeli Cobra attack helicopters".

Israel has transferred 16 Bell AH-1 Cobra attack helicopters to Jordan to assist its air force in the fight against Islamic State militants, US sources have confirmed.

The rotorcraft involved had been phased out of use by the Israeli air force several years ago, and were refurbished prior to being flown to Jordan, the sources add.

. . .

Foreign sources have claimed that Israel and Jordan have been cooperating in the fight against Islamic State, in most cases through joint intelligence activities. This is the first time that there has been a transfer of weapon systems between the nations, the sources add.

Israeli, Jordanian and US officials decline to comment on the move, which could only have been made with Washington's approval.

There's more at the link.  Bold, underlined text is my emphasis.

So, Israel has transferred to an Arab state - and a traditional enemy, one that's sided with the Palestinians on most issues against Israel and fought a war with that country a few decades ago - weaponry that it first refurbished, and did so with US permission.  The helicopters will, of course, be used in Jordan's campaign against ISIS in Iraq and Syria (you'll recall ISIS burned to death a Jordanian F-16 pilot earlier this year).  I'd say that's a rapprochement in spades!  (It's very Middle Eastern, though.  As the old Arab proverb says, "The enemy of my enemy is my friend".  Israel doesn't want an ISIS-dominated Syria, or Lebanon, or Gaza.  If Jordan is ISIS' enemy, Jordan has just become Israel's friend.)

There are a couple of wider geopolitical implications as well.

• I'd be interested to know who paid for the helicopters to be refurbished first.  It wouldn't surprise me to find Saudi petrodollars involved in the transaction.
• If Israel has to launch air strikes against Iran, it will almost certainly have to overfly Jordanian territory to get there.  I'd say the chances of Israel getting permission to do so - or, at least, having Jordan turn a Nelsonian blind eye to the overflights - have just improved considerably.

Peter

Doofus Of The Day #846

Today's award goes to a group of unidentified schoolchildren in England.

Children burning their books on the last day of school found themselves in hot water after the blaze reached power lines and knocked out electricity to almost 140,000 homes.

Police believe the blaze that caused buildings across east London and Essex to be without power was started by students taking part in a celebratory burning ritual.

Flames rising from blazing planners and exercise books, which were set alight in a park in Upminster, east London, torched power cables in a bridge above.

. . .

Police are investigating the cause as an arson by schoolchildren in the ritual gone wrong, sources confirmed.

A source said: "They're not yet sure whether the damage was deliberate or accidental, but officers believe they may have identified them now.

"You can imagine they are quite nervous after that little celebration."

There's more at the link.

I've heard of being on fire for learning, but this is ridiculous!




Peter

Specially for those on a cleansing diet

Today's Mallard Fillmore cartoon:

Click the image to see a full-size version at the cartoon's Web site.




Peter

Male bonding - juvenile version?

The expression on the youngster's face is priceless.

I guess that's one way to maximize father-son bonding!

Peter

Am I a prophet, or what?

Earlier this month I called the Iran deal 'a recipe for war'.  It turns out I may have been prophetic.

US Defense Secretary Ashton Carter is currently touring the region, trying to drum up support for the deal.  He's making little (if any) headway.  Earlier, Israel's Prime Minister had "not responded" to a proposal from President Obama to "upgrade the Israel Defense Forces’ offensive and defensive capabilities" in return for its support.  I have little doubt that Israel's military planners have already moved Iran's nuclear facilities to the top of their targeting list.

Israel, Saudi Arabia and the Gulf states are also growing much closer in the light of the threat from Iran.  A few months ago Israel reportedly offered its Iron Dome air defense system to Saudi Arabia to deal with missile threats from Yemen (although the Saudis turned it down).  Now Saudi Arabia has echoed Israel's concerns in discussions with Ashton Carter, and made it clear that it will support - and join - military action against Iran if necessary.  That may well include joint operations with Israel, a prospect unthinkable even a short while ago.  I discussed this in 2013, and noted last year that the various and sundry threats in the Middle East were driving an Arab-Israeli rapprochement.  Looks like that may happen a lot faster now.

As StrategyPage points out:

Saudi Arabia came out an publically agreed with Israel about what was wrong with the Iran treaty. The Israelis, Saudis and other Gulf Arabs agree that Iran is more likely to behave like North Korea or Saddam ruled Iraq rather than comply with the treaty and pull back on getting nukes. Inside Iran the new treaty is seen as a great victory and on the streets (and on the Internet) the average Iranian sees this as their well-deserved opportunity to get their nukes. Senior American military leaders are also not happy with the new treaty, some of them going so far to point out that Iran backed Islamic terrorists killed over 500 American troops in Iraq and Afghanistan since 2003. Israelis and Saudis can also point to citizens killed by Iranian terrorism. Gulf Arabs in particular are reminded regularly that Iranian propaganda still praises and encourages that sort of thing. Israel reminds everyone that Iran still holds national holidays where millions of Iranians are urged (sometimes coerced) to gather and chant their hatred for the United States and Israel and call for the destruction of these two enemy states. Many Gulf Arabs still call for the destruction of Israel, but their leaders now openly speak of Israel as a valued ally in the struggle against Iranian aggression.

There's more at the link.  Bold, underlined text is my emphasis.

StrategyPage noted in January:

While Arabs cannot speak out in support of Israel (or even cooperation with Israel against common enemies), such cooperation continues and since the 1980s has grown. Saudi Arabia has always been the major supporter of greater, and open, cooperation with Israel. It’s an open secret that this relationship exists, has existed for decades and continues to be useful for both Arabs and Israelis. This is especially true when it comes to common enemies like Islamic terrorists (especially ISIL) and Iran. Israel wants the Arab states to go public about these relationships but because of decades of anti-Israel propaganda most Arabs would violently protest against any Arab government that admitted the truth of the Arab-Israel relationship. Yet there is progress, however slow, towards openness about the Arab-Israeli cooperation.

Again, more at the link.

If the threat from Iran is great enough to overcome decades of Arab-Israeli enmity (at least at government level), then it's probably great enough to allow Israel to use air bases in Saudi Arabia and/or the Gulf States to hit Iran with air strikes.  It may even be enough to allow an Israeli submarine or two, probably equipped with nuclear-tipped cruise missiles, to be stationed in the Persian Gulf and be supported from a local port (very discreetly, of course).  This was mooted as far back as 2010, and may already have happened.  From there, the submarine's 900-mile-range Popeye Turbo missiles can hit any target in Iran.

If I were the Iranian leadership, I'd be getting more than a little worried about all this.

Peter

China's mind-boggling economic crisis

We've spoken recently about the economic crisis in China (follow those four links for more information).  Don't believe reports that it's getting better.  What you're seeing is a massive, central-government-controlled push to force discipline upon the markets by command authority, ignoring the economic reality that underpins them.  It's a frightening picture.

Just look at how the Chinese government intervened in its stock markets.  Talk about dictatorial!  Caixin Online (an authoritative source about the Chinese economy) reports:

Top executives from 21 securities firms spent the morning of Saturday July 4 pinned to government office chairs while the future of China's stock markets hung in the balance.

They'd been summoned on a day off to the Beijing office of the China Securities Regulatory Commission (CSRC) for talks aimed at pulling the Shanghai and Shenzhen stock exchanges out of a three-week tailspin.

. . .

A person who attended the meeting but asked not to be named said the securities firms' executives were told what to do – and that there would be no room for negotiating with regulators.

After the sit-down, the firms announced in a joint statement that to stabilize the stock market they would spend at least 120 billion yuan combined to buy exchange-traded funds linked to blue-chip stocks listed on the Shenzhen and Shanghai bourses. Moreover, the firms pledged to hold all stock that had been bought with their own money until the index reached at least 4,500 points.

The CSRC ordered the firms to hand over that 120 billion yuan to the China Securities Finance Corp. (CSF), a four-year-old agency co-founded by the country's major securities and commodity exchanges and clearinghouse to finance brokerage firms' margin trading and short-selling business, the person said. They were told the money would be used for stock purchases.

. . .

Then on July 8, as part of the CSRC strategy, the CSF said it would set aside 260 billion yuan to finance stock purchases by the 21 securities firms.

The Chinese government's stock market rescue campaign was under way, but far from over.

. . .

Money used by the CSF to buy shares included the 120 billion yuan handed over by 21 securities firms on July 6, those sources said. The agency also borrowed from the central bank and commercial banks. In a statement released on July 8, the central bank promised to support the CSF with adequate liquidity.

More intervention ensued. The Ministry of Finance promised not to sell any holdings in listed firms, and SASAC ordered SOEs to hold on to all their stock. Then the insurance regulator loosened rules governing investing by insurance firm by raising the percentage of premiums they can use to buy stock.

The CSRC even bent the Securities Law and its own rules by encouraging a company's major shareholders, directors and senior executives to buy the firm's shares under circumstances where the regulations say they should be punished. It also imposed a six-month ban on stock sales by them.

Meanwhile, 1,442 companies had exercised their right to suspend trading of their own stock on the Shanghai and Shenzhen exchanges as of July 9. Many of these companies, which are among the 2,781 listed on the bourses, had seen their share prices fall sharply in the previous weeks.

. . .

Regulators also clamped down on futures trading and started looking for illegal short-sellers. The CSRC and police announced a hunt for what they called "malicious" short-sellers. But as of mid-July, none had been identified.

. . .

Critics of the CFFE clampdown said the agency actually put more pressure on the stock market because some investors deprived of access to index futures during the Shanghai slump decided to simply dump their holdings.

"I wanted to short (index futures), but the tools were not working," said a securities firm trader who did not want to be named. "I had to sell all of the stock."

The trader said he was not alone. "Everyone was paranoid and rushing to protect themselves," he said.

. . .

Added an investment banker who did not want his name printed: "Market reform will never be successful if the government resorts to intervention at every a crucial moment."

There's much more at the link.

Can you imagine the uproar, the outcry, if the US government, through the Securities and Exchange Commission, ordered this country's top stockbrokers and banks to simply hand over more than $19 billion, just like that?  Yet that's what the Chinese government did . . . and its financial institutions complied.  Additional government funds were added to that amount - a lot more.  Bloomberg estimates that China has allocated no less than US $483 billion to turn its stock markets around.

China has created what amounts to a state-run margin trader with $483 billion of firepower, its latest effort to end a stock-market rout that threatens to drag down economic growth and erode confidence in President Xi Jinping’s government.

China Securities Finance Corp. can access as much as 3 trillion yuan of borrowed funds from sources including the central bank and commercial lenders, according to people familiar with the matter. The money may be used to buy shares and provide liquidity to brokerages, the people said, asking not to be named because the information wasn’t public.

While it’s unclear how much CSF will ultimately deploy into China’s $6.6 trillion equity market, the financing is up to 25 times bigger than the support fund started by Chinese brokerages earlier this month. That’s probably enough to restore confidence among China’s 90 million individual investors, says Bocom International Holdings Co. The Shanghai Composite Index jumped 3.5 percent on Friday, capping a two-week rally that’s turned it into one of the world’s best-performing equity gauges.

“It doesn’t have to use up all the money, as long as it can make the rest of the market believe that it has enough ammunition,” said Hao Hong, a China strategist at Bocom International in Hong Kong. “It is a game of chicken. For now, it seems to be working.”

Again, more at the link.

That's why you can't believe stories of a 'turnaround' or a 'recovery' in China.  The situation is being micromanaged by government bureaucrats who have no idea what they're doing.  They're throwing money and regulations at the problem, rather than trying to solve the underlying economic issues.  Sooner or later, they're doomed to fail - and it may be sooner.  Cracks are already appearing in the economic facade.

China is engineering yet another mini-boom. Credit is picking up again. The Communist Party has helpfully outlawed falling equity prices.

Economic growth will almost certainly accelerate over the next few months, giving global commodity markets a brief reprieve.

Yet the underlying picture in China is going from bad to worse. Robin Brooks at Goldman Sachs estimates that capital outflows topped $224bn in the second quarter, a level "beyond anything seen historically".

The Chinese central bank (PBOC) is being forced to run down the country's foreign reserves to defend the yuan. This intervention is becoming chronic. The volume is rising. Mr Brooks calculates that the authorities sold $48bn of bonds between March and June.

Charles Dumas at Lombard Street Research says capital outflows - when will we start calling it capital flight? - have reached $800bn over the past year. These are frighteningly large sums of money.

. . .

The squeeze earlier this year came at the worst moment, just as the country was struggling to emerge from recession. I use the term recession advisedly. Looking back, we may conclude that the world economy came within a whisker of stalling in the first half of 2015.

The Dutch CPB's world trade index shows that shipping volumes contracted by 1.2pc in May, and have been negative in four of the past five months. This is extremely rare. It would usually imply a global recession under the World Bank's definition.

The epicentre of this crunch has clearly been in China, with cascade effects through Russia, Brazil and the commodity nexus.

Chinese industry ground to a halt earlier this year. Electricity use fell. Rail freight dropped at near double-digit rates. What had begun as a deliberate policy by Beijing to rein in excess credit escaped control, escalating into a vicious balance-sheet purge.

The Chinese authorities have tried to counter the slowdown by talking up an irresponsible stock market boom in the state-controlled media. This has been a fiasco of the first order.

The equity surge had no discernable effect on GDP growth, and probably diverted spending away from the real economy. The $4 trillion crash that followed has exposed the true reflexes of President Xi Jinping.

Half the shares traded in Shanghai and Shenzhen were suspended. New floats were halted. Some 300 corporate bosses were strong-armed into buying back their own shares. Police state tactics were used hunt down short sellers.

. . .

This use of "brute force" - in the words of Peking University professor Michael Pettis - has done the trick. Equities have recovered. How could they not do so, since selling was illegal, and not to buy was also illegal?

More at the link.  Bold, underlined text is my emphasis.

To use an analogy, it's as if we were watching a levee holding back a river in flood.  We're looking at it from the river side, seeing a levee that's almost topped by the water, holding on inch by inch.  What we can't see is that on the other side of the levee, there are lots of bureaucrats desperately stacking sandbags to reinforce it.  They're even sticking their fingers into every crack or hole that appears, hoping against hope that they can stop the embankment from crumbling, allowing the floodwaters to sweep away everything.

Trouble is, those floodwaters aren't receding . . . and China's bureaucrats have almost run out of sandbags and fingers.

Peter