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Monthly Archives: April 2022

Chart: China Overall Electricity Consumption in Q1 2022

From January to March, the electricity consumption of the whole society reached 2,042.3 TWh, a year-on-year increase of 5.0%.

In March, the overall electricity consumption was 694.4 TWh, a year-on-year increase of 3.5%.

Source : China Electricity Council

In Pictures: 1935 Auburn 851 Cabriolet

Source : Bring A Trailer

Russia Moving Closer to a Gold Standard – Official

Russian experts are working on a project to create a two-loop monetary and financial system in the country, Secretary of the Security Council Nikolay Patrushev said on Tuesday, in an interview with Rossiyskaya Gazeta.

He explained that the project involves the provision of the Russian currency with both gold and a range of goods representing a currency value. As a result, the ruble exchange rate would correspond to its real purchasing power parity, he said.

To ensure the sovereignty of any national financial system, it is necessary that its means of payment have intrinsic value and price stability, and is not tied to the dollar, Patrushev said.

Another important condition for Russian economic security is the restructuring of its economy based on modern technologies, he added.

“We are not against a market economy … but … the West allows other countries to be its partner only when it is beneficial for it,” Patrushev stressed, noting that Russia’s development should be based on its internal potential.

On March 25, the Bank of Russia announced a fixed price for buying gold with rubles. It set a price of 5,000 rubles ($59 at the time) for a gram of gold.

The security secretary also stressed that Washington was trying to solve its problems at the expense of the rest of the world, thereby creating a “human-induced global crisis.” And its European allies would be the first to suffer from those actions, Patrushev said.

While the White House is discussing a possible default by Russia, the situation is such that “it’s time for them to declare their own default,” Patrushev said, pointing out that the US’ external debt has exceeded $30 trillion.

Source : RT

Read more

Gold-backed ruble could be a game-changer (INTERVIEW) . . . . .

China’s RCEP Trade Gets Off to a Good Start

China’s trade with other countries in the Regional Comprehensive Economic Partnership (RCEP) rose 9.5% year-on-year in the first quarter after the free trade agreement came into effect for most members Jan. 1, customs data showed.

Trade between China and the 14 other RCEP countries expanded to $449.4 billion, the most for the same period in at least four years, according to Caixin calculations based on data released by the General Administration of Customs. The growth rate slowed from 31.5% a year earlier when trade was boosted by the recovery from a Covid-related slump in 2020.

Source : Caixin

China Policymakers Clash Over How to Counter Property Slump

Sun Yu and Tom Mitchell wrote . . . . . . . . .

Chinese regulators led by vice-premier Liu He are concerned that the government is underestimating the economic impact of its crackdown on the property sector and Covid-19 lockdowns in Shanghai and other cities, according to officials and policy advisers.

But other senior officials have opposed efforts by Liu, President Xi Jinping’s longtime financial and economic adviser, to ease the pressure on the real estate sector, six Beijing-based government officials and policy advisers told the Financial Times.

The policy disagreements within the Chinese government highlight the difficult choices it faces as it tries to shore up growth in the world’s second-largest economy while also pursuing a tough zero-Covid strategy and taming heavily indebted property developers.

China’s gross domestic product was up 4.8 per cent year on year in the first quarter, but a 3.5 per cent fall in retail sales in March suggested anti-Covid controls were slowing an economy already suffering from real estate market woes. On Tuesday, state media reported that Xi called for accelerated investment in a wide range of critical infrastructure sectors but did not specify an amount or timeframe for the effort.

Liu, who heads a powerful committee that co-ordinates policy between the central bank and China’s banking, securities and other regulators, has supported recent moves by many regional governments to ease restrictions on property purchases.

But according to the officials and policy advisers, two other vice-premiers — Han Zheng and Hu Chunhua — have sided with the housing ministry in wanting to maintain the pressure on developers by tightly regulating how they can use project revenues.

Chinese vice premier Liu is concerned that the government is underestimating the economic impact of its crackdown on the property sector © Saul Loeb/AFP/Getty Images
Liu’s Financial Stability and Development Committee wants to give debt-laden developers more freedom to deploy revenues from buyers who pre-pay for their homes. Over the past year, local governments have ringfenced sales revenues so they are only used to complete the relevant project.

“It is already common for lenders, be they banks or bond investors, to give repayment extensions to developers,” said a government adviser who shared Liu’s concerns. “Continued weakening of the industry may cause bad debts to spike and the entire financial sector to go under.”

An executive at Sunac, a large developer based in the port city of Tianjin, said real estate firms should be allowed to use sale proceeds from new projects to pay off debts owed on older projects to help avoid defaults.

“If we have collected Rmb1bn ($153mn) in revenue that would be spent over three years on one project, why can’t we earmark Rmb100mn of that for use elsewhere and [repay it] later on,” said the executive, who asked not to be named.

Han and Hu’s supporters argued that fears about the impact on China’s largely state-owned banking sector were overblown. “Not every bank will go under,” one of the people said. “We can always have healthy banks bail out troubled ones.”

While Liu has long been regarded as China’s most powerful economic and financial official, Han is the highest-ranking of the three vice premiers. Han sits on the Chinese Communist party’s most powerful body, the politburo standing committee, and is considered a leading candidate to replace Li Keqiang as premier next year.

Liu has also urged local governments in areas affected by Covid lockdowns to protect supply chains and help companies resume operations.

But confronted with China’s worst economic conditions and outlook since at least the beginning of the pandemic, financial policymakers have responded over recent weeks with only modest easing measures.

Their reticence stems in part from fears that stronger stimulus measures would have only limited effectiveness, especially in regions brought to a standstill by Covid containment lockdowns.

Liu and Yi Gang, governor of the People’s Bank of China and a highly respected technocrat who was appointed central bank chief at Liu’s insistence, are also wary of broad-based rate cuts. They fear these could undermine progress over the past five years at stabilising China’s overall debt-to-GDP ratio.

Liu and Yi also share growing concerns that with US interest rates now higher than China’s for the first time in years, rate cuts could weaken the renminbi and spark destabilising capital flight.

“Current economic policy may not be [aggressive] enough,” said an influential Beijing academic, who asked not to be named because he didn’t have university approval to speak with the media. “But since the US began raising rates, the renminbi has begun to depreciate. If we [cut rates] renminbi depreciation could get out of control.”

Almost every expression of policy support from the PBoC and central government’s state council over recent weeks has been qualified by caveats that they would not resort to “flood-like stimulus” and remained determined to “keep macro debt levels generally stable”.

On Tuesday, such central bank comments halted a sharp sell-off sparked by fears that harsh lockdown measures in Shanghai might be extended to Beijing.

The comments by the PBoC reiterated pledges to use “prudent” monetary policy to support small and medium-sized enterprises, which have borne the brunt of the lockdowns, while also promising to boost banks’ lending capacity.

But similar assurances by Liu in mid-March, as the benchmark CSI 300 index was poised to fall to a two-year low, had only a temporary effect. The rally quickly faded when the PBoC announced only a 25 basis-point cut in banks’ reserve requirement ratios, potentially releasing just about Rmb500bn in new lending into China’s Rmb114tn-a-year economy.

“Liu and Yi are afraid of reinflating bubbles,” said one person who has worked closely with Yi. “They want to provide liquidity to those who need it, but think they can do that [through bank reserve requirement cuts and targeted lending guidelines] rather than using broad measures.”

“Opening up the flood gates is great for other parts of the country that are not affected by lockdowns but for those that are, it’s not going to make much difference.”

Source : FT

Survival Of The Fittest: The Rise Of BA.2.12.1

William A. Haseltine wrote . . . . . . . . .

Contrary to the popular belief that Covid infections are receding universally, recent reports show that several countries are in the midst of accelerating Covid rates. This draws cause for concern with the Summer fast approaching. Recall that Summer 2021 was dominated by Delta variant infections. This Summer may be in for something similar. The current increase is almost certainly due to new members of the Omicron family of viruses.

Current estimates suggest that BA.2 variants have replication rates at least 30% greater than BA.1 variants. Two variants, BA.4 and BA.5 in Europe, were recently identified as strains to monitor by the World Health Organization. Figure two illustrates how rapidly descendants of Omicron have diversified and established themselves not only in the United States, but around the world.

One such subvariant is already causing significant case numbers in the American Northeast. In the GISAID SARS-CoV-2 database, BA.2.12.1 is attributed to roughly 2,000 sequenced infections, which suggests that the actual number of BA.2.12.1 cases is at least in the tens of thousands. A recent analysis by the CDC suggests that BA.2.12.1 comprises at least 19% of new cases while BA.2 lineages overall comprise over 90%.

As its lineage name suggests, BA.2.12.1 is a descendant of the BA.2 virus. BA.2 was the main driver of the winter wave of Omicron infections that peaked in the United States on January 14th, 2022, when the daily average was over 800,000 new infections. Part of BA.2’s viral fitness was its remarkably high transmissibility, and another was its expert evasion of the immune system, including antibodies developed from previous infections and vaccinations.

The BA.2 virus’s viral fitness is attributed to its wealth of mutations within and external to the Spike protein. The BA.2 genome contains 53 amino acid mutations, 29 of which are in the Spike protein, far outnumbering the Spike mutations of previous variants of concern and interest.

One mutation lies in the receptor-binding domain. This is a substitution of lysine for glutamine at position 452 (L452Q). This mutation is notable for two reasons. First, L452Q has been previously identified in several variants of concern, like Lambda, Delta, Delta plus, and Epsilon. Second, unlike many mutations where we must only speculate on their impact on viral fitness, L452Q was studied and found to increase escape immunity, allowing the virus to attach more strongly to human cells and avoid neutralizing antibodies.

The second mutation is more mysterious. It is a substitution from serine to leucine at position 704 (S704L). Unlike L452Q, S704L is a relatively rare mutation by way of major variants, and its exact impact on the virus is unstudied. Based on its position in the S2 region of the Spike protein, we can speculate that the mutation may affect either viral fusion or furin cleavage efficiency, but further study would be welcome.

We can say with near certainty that BA.2.12.1 is at least as transmissible and immune evasive as BA.2. It is unlikely that the two Spike mutations would decrease either of these facets of the virus strain. However, due to the wealth of BA.2 cases in previous months, the BA.2.12.1 virus may be impeded by antibodies developed from infections during that wave, which could explain why cases are low relative to the Omicron wave.

However, it is critical to remain vigilant in our surveillance of these subvariants. Recent reports from Hong Kong note that Omicron BA.2 subvariants deliver a similar fatality risk to those infected relative to earlier strains of SARS-CoV-2. This is contrary to many assumptions that Omicron is less severe than previous strains. Additionally, there are indications that Omicron is as dangerous in terms of long-term complications in children as the Delta variant of last summer.

We also note the growing danger of long Covid. As many as 30-50% of Omicron recoverees describe at least some lingering issue post-infection. This is independent of vaccination status and severity of their given infection—the rate increases for those hospitalized.

A new wave of Omicron with BA.2.12.1 or another variant yet to be identified could be as catastrophic as the wave from December to February. At the time of writing, over 1 million people died in the U.S. due to Covid-related complications. We should make every effort to keep that number from continuing to increase. One such avenue is to continue surveilling new variants to inform public health measures and aid the development of Covid-19 treatments.

Source : Forbes

Charts: China Retail Sales Fell YoY in March 2022

The first contraction since August 2020

Source : Trading Economics

Chuckles of the Day

The Old Mule

An old hillbilly farmer had a wife who nagged him unmercifully. From morning ’til night she was always complaining about something. The only time he got any relief was when he was out plowing with his old mule. He plowed a lot. One day, when he was out plowing, his wife brought him lunch in the field. He drove the old mule into the shade, sat down on a stump, and began to eat his lunch..

Immediately, his wife began nagging him again. Complain, nag, complain, nag – it just went on and on.

All of a sudden, the old mule lashed out with both hind feet, caught her smack in the back of the head. Killed her dead on the spot.

At the funeral several days later, the minister noticed something rather odd. When a woman mourner would approach the old farmer, he would listen for a minute, then nod his head in agreement; but when a man mourner approached him, he would listen for a minute, then shake his head in disagreement. This was so consistent, the minister decided to ask the old farmer about it.

So after the funeral, the minister spoke to the old farmer, and asked him why he nodded his head and agreed with the women, but always shook his head and disagreed with all the men.

The old farmer said, “Well, the women would come up and say something about how nice my wife looked, or how pretty her dress was, so I’d nod my head in agreement.”

“And what about the men?” the minister asked.

“They wanted to know if the mule was for sale.”

* * * * * * *

Did Anyone See My Face?

A hooded robber burst into a Texas Bank and forced the tellers to load a sack full of cash. On his way out the door a brave Texas customer grabbed the hood and pulled it off revealing the robber’s face.

The robber shot the customer without a moment’s hesitation. He then looked around the bank and noticed one of the tellers looking straight at him. The robber instantly shot him also. Everyone else, by now very scared, looked intently down at the floor in silence.

The Robber yelled, “Well, did anyone else see my face?”

There are a few moments of utter silence, in which everyone was plainly afraid to speak.

Then one old man tentatively raised his hand and said, “My wife got a good look at you.”

“The Richest People on the Planet are Criminals”

Felix Salmon wrote . . . . . . . . .

A secretive group of elite US Army soldiers, under the command of a senior general with access to the full panoply of NSA surveillance technology, steals $2.4 billion of cash in an audacious and bloody attempt to stage a quasi coup in the USA. The money will be used to fund the presidential election campaign of one of the team members, a violent war criminal, while the NSA information is used to gain oppo intelligence on anybody foolish enough to run against him. The path to the Oval Office is dangerous, but clear. Their plan: once elected, the president will essentially dismantle the entire US military apparatus.

That’s the premise of Undermoney, the new thriller from former hedge fund manager Jay Newman. What’s different about this thriller is, first, that group of US Army soldiers trying to buy the presidency with stolen billions? They’re the good guys. And second, this one is written not by someone with intimate knowledge of intelligence services, but instead by a person who spent decades in some of the least savoury parts of the financial world. Jay Newman is arguably the world’s most successful “vulture” — a man who made his millions in a way that’s outlandish even by Wall Street standards. Newman spent most of his career working for the most notorious vulture fund in the world — Elliott Associates, founded by Republican billionaire Paul Singer. A vulture fund buys up defaulted sovereign debt for pennies on the dollar, often from very poor countries, and then uses legal strategies in London and New York courts in an attempt to be repaid at 100 cents on the dollar or even more. Newman repeated that infamous trade multiple times in multiple countries. He’s also a person who knows first hand just how dirty the real world of finance can be. So when I heard about the book, I was interested – and once I polished it off, I gave him a ring and began with a simple question: The real financial world can’t possibly be as unscrupulous and amoral as the world depicted in his novel, right?


Let me first explain why the kinds of trades Newman became known for are twice as crazy as what a normal investor might take on. For one thing, the bonds that vulture funds buy have already defaulted. That means the bonds aren’t paying any interest payments to bondholders like Newman. That automatically puts them out of scope for most bond investors, who buy bonds for the express purpose of being able to receive interest payments.

The other complicating factor is that the debtor is a sovereign, which means the issuer is a nation, which also means there’s no higher authority to whom to appeal who might force the country to make good on its loans. If you take a country to court, the best case scenario is that you win — which means you are now in possession of a court judgment, which is a piece of paper saying that the country in question owes you a certain amount of money. Well, you had that already, and it didn’t do you much good. These difficulties are why the debt was cheap (Newman could buy it for pennies on the dollar). But it also meant that extracting any money often required decades of tireless work involving some very shadowy characters. Amazingly, eventually he often won, most famously against Peru and then against Argentina.

And it also meant he had a window into just how corrupt a lot of the world really is — indeed, Newman once even brought racketeering charges against a French bank in an attempt to collect on a Congolese debt. A different vulture investor told me once of how he was thisclose to getting paid off on a huge and elaborate scheme where he’d bought up thousands of defaulted bonds from individuals and tried to get them all paid off at once — but fell just short at the final hurdle, when the president of the country demanded a multi-million dollar kickback for signing the bill into law. Economically, paying the bribe would make a lot of sense, but also, the investor in question had a desire to stay out of jail, and the Foreign Corrupt Practices Act can apparently be a bitch that way.

“The richest people on the planet are criminals and the leaders of countries — I use that term loosely because they’re criminal enterprises that are masquerading as countries.”

The reason a guy like Newman is so well-positioned to write a thriller (and to explain the dark way the world of money actually operates in the borderless financial world) is that one of the main parts of any vulture investor’s job is to find hidden assets that can be seized by a court in London or New York. That involves learning a lot about financial secrets.

“Forbes is missing fully half of the world’s billionaires,” he tells me. “The richest people on the planet are criminals and the leaders of countries — I use that term loosely because they’re criminal enterprises that are masquerading as countries. Russia, China, Iran, most of Africa. These are not proper sovereigns, even though they might have trappings of democracy. They’re criminal enterprises. There hasn’t been a Mexican president that hasn’t been in bed with the mob.”

One of the things Newman reminds me of is that if you’re a head of state, you have no shortage of opportunities to turn your power into money. Just look at the way the oil and gas markets reacted to Russia invading Ukraine — anybody with advance knowledge of Putin’s actions could make a fortune in the markets, just like they could in the early days of the pandemic, when Putin unexpectedly raised oil production in the face of demand that had fallen off a cliff. That action sent the price of oil plunging. Sure, he might have lost money on any given barrel of exported oil, but how much might he or his cronies have made on derivatives transactions if they knew what he was going to do? Newman understands how such trades work: A lot of his book is centred on a hedge fund that positions itself to make billions when global news events move markets. Naturally, in order for such a strategy to be successful, it helps to know about the news before it happens.

“Rough arithmetic says maybe half the world’s wealth is unconstrained by the rule of law,” says Newman. “That’s a really scary prospect.” His novel is full to bursting with people who act with utter impunity and have no fear of law enforcement — old money, new money, hedge fund money, head-of-state money, even (especially) mercenary-for-hire money. Think of it as Bridgewater meets Blackwater. All of it measured in the billions: The $2.4 billion stolen at the beginning of the book starts to feel like a rounding error later on.

We real-world law-abiding chumps occasionally get a glimpse of that money, through a glass darkly. Newman pointed me, for instance, to a Financial Times report in February. Credit Suisse, the troubled Swiss banking giant, was securitizing an $80 million portfolio of loans backed by megayachts, “to offload risks associated with lending to ultra-rich oligarchs.” The securitization came just in time: One slide explained that a third of the defaults on such loans in 2017-18 were “related to US sanctions against Russian oligarchs.”

Yachts are a perfect place for billionaire outlaws to store their wealth. Not only can they (in theory) be sailed to a friendly jurisdiction at any time, they can also be monetized via banks like Credit Suisse. That kind of financial maneuver is usually cheaper than selling assets and being liable for capital gains tax. But in this case, says Newman, the oligarchs were essentially bribing Credit Suisse by taking out loans they didn’t need. The quid pro quo: If you extend to us this highly lucrative loan, we’ll happily pay you back in full just in return for your imprimatur. After all, once you’re a customer in good standing of Credit Suisse, you can move almost any amount of money anywhere you like. And if Credit Suisse does freeze your accounts, well, you just won’t pay back the loan.

For a lot of shadowy billionaires, says Newman, the one thing that it’s very hard for money to buy is a bank account at a reputable institution. A major trial recently wrapped up in New York, where Tim Leissner, a former Goldman Sachs banker — and ex-husband of Kimora Lee Simmons — testified about the way in which he got the bank involved in a multi-billion-dollar fraud scheme orchestrated by a young Malaysian hustler named Jho Low. Even after Goldman made $600 million in fees from Low’s bond deals and got a meeting with Lloyd Blankfein, the Goldman CEO, Low still couldn’t open an account with the bank. That’s why so much effort and money, as Newman shows in his book, is spent on laundering criminal money to the point at which it becomes acceptable to major international financial institutions. Maybe Jho Low should have asked Credit Suisse to finance his yacht.

In Newman’s book, it’s not necessarily the overt criminals like Jho Low who are the most terrifying. Newman is sympathetic to his coup-adjacent protagonists, who are also the most dangerous individuals in the whole novel.

Newman is self-aware enough to realize the murkiness of the waters he used to swim in, even as he proclaimed himself atop the moral high ground. One ultra-shadowy billionaire in the book has some hard-earned advice for her daughter on page 343. “People who think they have a moral claim to money are always more dangerous than people who just steal it for ordinary, venal reasons,” she says. “Thieves, I can work with. They are predictable. It’s the idealists who terrify me. They’ll stop at nothing.”

Having spent many years covering vulture funds, I can attest that nearly everybody in that world considers themselves to be on the side of truth and justice. Certainly, Jay Newman does: As far as he is concerned, he was just standing up for the rule of law. “I’ve been an enormous beneficiary of the rule of law, and I have no hesitation invoking it,” he says.

Newman’s book, however, paints a world where no one is clean. No noble intelligence officer swoops in to save the world from the dastardly plot, and the Russian mercenaries literally get away with mass murder. It’s a bleak vision. But it’s also probably closer to the truth than most of us would like to believe.

Source : Wealth Simple

Heart Risk Factors Can Be Recipe for Dementia

The faster you pile up heart disease risk factors, the greater your odds of developing dementia, a new study suggests.

Previous research has linked heart health threats such as high blood pressure, diabetes and obesity with mental decline and dementia.

Amassing those risk factors at a faster pace boosts your risk for Alzheimer’s disease and vascular dementia, according to findings published online in the journal Neurology.

“Our study suggests that having an accelerated risk of cardiovascular disease, quickly accumulating more risk factors like high blood pressure and obesity, is predictive of dementia risk and associated with the emergence of memory decline,” said study author Bryn Farnsworth von Cederwald, of Umeå University in Sweden.

“As a result, earlier interventions with people who have accelerated cardiovascular risks could be an effective way to help prevent further memory decline in the future,” he said in a journal news release.

The study included more than 1,200 people (average age: 55) who did not have heart or memory problems at the outset and were followed for up to 25 years.

By the end of the study, about 6% had developed Alzheimer’s disease and 3% developed dementia from vascular disease.

At the outset, participants’ average 10-year risk of heart disease was between 17% and 23%. As time went on, heart disease risk remained stable in 22% of participants, increased moderately in 60%, and rose rapidly in 18%.

Compared to those with a stable heart disease risk, those with an accelerated risk were three to six times more likely to develop Alzheimer’s, three to four times more likely to develop vascular dementia, and up to 1.4 times more likely to have memory decline, the study found.

“Several risk factors were elevated in people with an accelerated risk, indicating that such acceleration may come from an accumulation of damage from a combination of risk factors over time,” Farnsworth von Cederwald said.

“Therefore,” he added, “it is important to determine and address all risk factors in each person, such as reducing high blood pressure, stopping smoking and lowering BMI, rather than just address individual risk factors in an effort to prevent or slow dementia.”

Source: Healthday