Chart: Cash-Is-King Returns

Higher deposit rates have caused yields on 6 month T-Bills surpass the S&P 500 earnings yield

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Source : Bond Vigilantes

Chart: Household Debt As a % of Disposable Income of Selected Countries

See large image . . . . . .

Source : Bond Vigilantes

Charts: Small and Medium-sized Banks Are Important to the U.S. Economy

Banks with less than $250bn in assets account for roughly 50% of US commercial and industrial lending, 60% of residential real estate lending, 80% of commercial real estate lending, and 45% of consumer lending.

Source : Federal Deposit Insurance Corporation, Goldman Sachs

Charts: CDS Market Puts Focus On Deutsche Bank

Source : Bloomberg

Humour: News in Cartoon

Mapped: Minimum Wage Around the World

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Source : Visual Capitalist

Hot Spring Baths Block Japan’s Geothermal Potential

With over 100 active volcanos, Japan has the world’s third largest geothermal resources, but also a powerful industry that has steadfastly opposed developing the sector: hot springs.

Geothermal is a renewable resource that harnesses heat from deep below the Earth’s crust — a seemingly attractive option for energy resource-poor Japan.

But the hot springs or onsens that dot Japan are a major business, beloved by locals and tourists alike, and the industry fears developing geothermal might mean water levels and temperatures drop at their facilities.

“To be honest, if possible, we want the drive for geothermal energy developments to stop,” said Yoshiyasu Sato, vice president of the Japan Onsen Association.

So the baths at Tsuchiyu Onsen, nestled between green mountains along a winding river in northeastern Japan’s Fukushima, are a rarity — they coexist with a small geothermal plant.

It was the 2011 earthquake, tsunami and nuclear disaster that triggered a change in the town, said Takayuki Kato, president of Genki Up Tsuchiyu, a local government organisation that manages the renewable energy scheme.

The town of 300 people was badly damaged by the quake and residents began exploring whether geothermal energy might help revive their fortunes.

“People here have always known the hot springs could be used for other purposes,” but they didn’t know how to do it, he explained.

Reconstruction funds were used to build the geothermal plant that opened in 2015 over a preexisting hot spring.

It lies two kilometres (1.2 miles) upstream from the town’s baths, where men and women bathe naked in separate sections.

The plant “has not changed either the quality or the quantity of the water” for onsens in the town, he said.

‘Powerful’ onsen industry

Sales of electricity from the plant now fund free local bus rides for children and seniors, and have allowed the town to renovate disused buildings and support local artisans.

And extra hot water from the plant has created a new tourist attraction — a small colony of giant freshwater prawns, which people can catch and grill.

For proponents of geothermal development, it’s a small but promising sign of what could be replicated across Japan, given sufficient will.

For now, the country produces just 0.3 percent of its electricity from geothermal, but the potential is enormous.

Japan’s reserves are estimated at 23 gigawatts, the equivalent of around 20 nuclear reactors, and behind only the United States and Indonesia, according to the national Agency for Natural Resources and Energy.

Its potential is even more enticing given the country’s dependency on imported fuels, especially after the 2011 nuclear disaster forced the shuttering of nuclear reactors.

Before the pandemic, around 2,500 people visited Tsuchiyu’s plant each year, including some in the onsen industry intrigued by its success.

But very few have been able to imitate the project, and Japan’s government has a modest target of just one percent of electricity from geothermal by 2030.

Onsen owners sometimes “refuse to even discuss” the possibility of a geothermal project in their area, said Kasumi Yasukawa, from the geothermal division of the government’s energy security agency JOGMEC.

On top of objections from the “powerful” onsen industry, high initial costs and lengthy administrative hurdles also hold back those interested in building a geothermal plant, she said.

‘We want it to stop’

The government has lifted some restrictions in recent years, allowing authorities to research options in national parks where 80 percent of geothermal resources are found.

But onsen owners are steadfast in their resistance, arguing that water sources are fragile and vulnerable to overexploitation.

The onsen association’s Sato argues geothermal should not even be considered renewable, pointing to older Japanese plants that have seen production capacity diminish over time.

JOGMEC’s Yasukawa counters that developers overestimated the potential at these sites, partly due to the lack of scientific knowledge at the time.

“It seems that the fears of onsen owners are just based on rumours”, she said, explaining that geothermal projects tap into deep rock or sediment that holds groundwater.

“There is no interference with hot spring wells,” which use water from reservoirs closer to the surface, she said.

JOGMEC hopes projects like Tsuchiyu Onsen’s plant can change minds, but there is little sign the hot spring industry will shift its position soon.

If geothermal advocates “had new scientific drilling methods that could ease our fears, that would be great. But they don’t,” said Sato.

Source : AFP

No One Really Knows How Much COVID Is Silently Spreading … Again

Katherine J. Wu wrote . . . . . . . . .

In the early days of the pandemic, one of the scariest and most surprising features of SARS-CoV-2 was its stealth. Initially assumed to transmit only from people who were actively sick—as its predecessor SARS-CoV did—the new coronavirus turned out to be a silent spreader, also spewing from the airways of people who were feeling just fine. After months of insisting that only the symptomatic had to mask, test, and isolate, officials scrambled to retool their guidance; singing, talking, laughing, even breathing in tight quarters were abruptly categorized as threats.

Three years later, the coronavirus is still silently spreading—but the fear of its covertness again seems gone. Enthusiasm for masking and testing has plummeted; isolation recommendations have been pared down, and may soon entirely disappear. “We’re just not communicating about asymptomatic transmission anymore,” says Saskia Popescu, an infectious-disease epidemiologist and infection-prevention expert at George Mason University. “People think, What’s the point? I feel fine.”

Although the concern over asymptomatic spread has dissipated, the threat itself has not. And even as our worries over the virus continue to shrink and be shunted aside, the virus—and the way it moves between us—is continuing to change. Which means that our best ideas for stopping its spread aren’t just getting forgotten; they’re going obsolete.

When SARS-CoV-2 was new to the world and hardly anyone had immunity, symptomless spread probably accounted for most of the virus’s spread—at least 50 percent or so, says Meagan Fitzpatrick, an infectious-disease transmission modeler at the University of Maryland’s School of Medicine. People wouldn’t start feeling sick until four, five, or six days, on average, after being infected. In the interim, the virus would be xeroxing itself at high speed in their airway, reaching potentially infectious levels a day or two before symptoms started. Silently infected people weren’t sneezing and coughing—symptoms that propel the virus more forcefully outward, increasing transmission efficiency. But at a time when tests were still scarce and slow to deliver results, not knowing they had the virus made them dangerous all the same. Precautionary tests were still scarce, or very slow to deliver results. So symptomless transmission became a norm, as did epic superspreading events.

Now, though, tests are more abundant, presymptomatic spread is a better-known danger, and repeated rounds of vaccination and infection have left behind layers of immunity. That protection, in particular, has slashed the severity and duration of acute symptoms, lowering the risk that people will end up in hospitals or morgues; it may even be chipping away at long COVID. At the same time, though, the addition of immunity has made the dynamics of symptomless transmission much more complex.

On an individual basis, at least, silent spread could be happening less often than it did before. One possible reason is that symptoms are now igniting sooner in people’s bodies, just three or so days, on average, after infection—a shift that roughly coincided with the rise of the first Omicron variant and could be a quirk of the virus itself. But Aubree Gordon, an infectious-disease epidemiologist at the University of Michigan, told me that faster-arriving sicknesses are probably being driven in part by speedier immune responses, primed by past exposures. That means that illness might now coincide with or even precede the peak of contagiousness, shortening the average period in which people spread the virus before they feel sick. In that one very specific sense, COVID could now be a touch more flulike. Presymptomatic transmission of the flu does seem to happen on occasion, says Seema Lakdawala, a virologist at Emory University. But in general, “people tend not to hit their highest viral levels until after they develop symptoms,” Gordon told me.

Coupled with more population-level immunity, this arrangement could be working in our favor. People might be less likely to pass the virus unwittingly to others. And thanks to the defenses we’ve collectively built up, the pathogen itself is also having more trouble exiting infected bodies and infiltrating new ones. That’s almost certainly part of the reason that this winter hasn’t been quite as bad as past ones have, COVID-wise, says Maia Majumder, an infectious-disease modeler at Harvard Medical School and Boston Children’s Hospital.

That said, a lot of people are still undoubtedly catching the coronavirus from people who aren’t feeling sick. Infection per infection, the risk of superspreading events might now be lower, but at the same time people have gotten chiller about socializing without masks and testing before gathering in groups—a behavioral change that’s bound to counteract at least some of the forward shift in symptoms. Presymptomatic spread might be less likely nowadays, but it’s nowhere near gone. Multiply a small amount of presymptomatic spread by a large number of cases, and that can still seed … another large number of cases.

There could be some newcomers to the pool of silent spreaders, too—those who are now transmitting the virus without ever developing symptoms at all. With people’s defenses higher than they were even a year and a half ago, infections that might have once been severe are now moderate or mild; ones that might have once been mild are now unnoticeable, says Seyed Moghadas, a computational epidemiologist at York University. At the same time, though, immunity has probably transformed some symptomless-yet-contagious infections into non-transmissible cases, or kept some people from getting infected at all. Milder cases are of course welcome, Fitzpatrick told me, but no one knows exactly what these changes add up to: Depending on the rate and degree of each of those shifts, totally asymptomatic transmission might now be more common, less common, or sort of a wash.

Better studies on transmission patterns would help cut through the muck; they’re just not really happening anymore. “To get this data, you need to have pretty good testing for surveillance purposes, and that basically has stopped,” says Yonatan Grad, an infectious-disease epidemiologist at Harvard’s School of Public Health.

Meanwhile, people are just straight-up testing less, and rarely reporting any of the results they get at home. For many months now, even some people who are testing have been seeing strings of negative results days into bona-fide cases of COVID—sometimes a week or more past when their symptoms start. That’s troubling on two counts: First, some legit COVID cases are probably getting missed, and keeping people from accessing test-dependent treatments such as Paxlovid. Second, the disparity muddles the start and end of isolation. Per CDC guidelines, people who don’t test positive until a few days into their illness should still count their first day of symptoms as Day 0 of isolation. But if symptoms might sometimes outpace contagiousness, “I think those positive tests should restart the isolation clock,” Popescu told me, or risk releasing people back into society too soon.

American testing guidelines, however, haven’t undergone a major overhaul in more than a year—right after Omicron blew across the nation, says Jessica Malaty Rivera, an infectious-disease epidemiologist at Boston Children’s Hospital. And even if the rules were to undergo a revamp, they wouldn’t necessarily guarantee more or better testing, which requires access and will. Testing programs have been winding down for many months; free diagnostics are once again growing scarce.

Through all of this, scientists and nonscientists alike are still wrestling with how to define silent infection in the first place. What counts as symptomless depends not just on biology, but behavior—and our vigilance. As worries over transmission continue to falter and fade, even mild infections may be mistaken for quiet ones, Grad told me, brushed off as allergies or stress. Biologically, the virus and the disease may not need to become that much more muted to spread with ease: Forgetting about silent spread may grease the wheels all on its own.

Source : MSN

A Key Plank of China’s Planned Economy Is Making a Comeback. Why?

Cai Yineng wrote . . . . . . . . .

Last October, the central province of Hubei caused a minor panic when it announced the resurrection of a once obscure relic of China’s high socialist period. Known as “grassroots supply and marketing cooperatives,” (供销社) they were once a fixture of China’s planned economy, facilitating the trade of grain, cloth, and other necessities nationwide from the 1950s to the 1990s. In an era when private enterprises were all but nonexistent, the cooperatives played a central role in the purchase and distribution of rural goods around the country.

The cooperatives faded away after the market reforms of the 1970s and ’80s, which forced them to compete with more nimble private enterprises, from supermarkets to digital platforms. So, many Chinese were taken off-guard when Hubei officials announced they had nearly doubled the total number of cooperatives in the province between 2014 and 2021. Old fears of an economic backslide resurfaced as nervous commentators wondered if the report signaled a return to a more planned economy.

Missing from many of these discussions was a nuanced understanding of what grassroots supply and marketing cooperatives actually are and why local officials in rural areas might want to revive them. According to Zhang Wenxiao, a sociologist at Beijing City University and author of a recent book-length study of the chestnut trade in a northern Chinese county, supply and marketing cooperatives never fully disappeared from the countryside, even if they fell out of favor post-marketization. As for their current restoration, she draws a sharp line between the grassroots cooperatives that dominated rural life during the Mao era and their far more limited modern counterparts.

Zhang’s book, “The Story of Chestnuts,” narrates the rise and fall of one such cooperative in the pseudonymous chestnut-producing village of Xiaodouzhuang. Although a handful of farmers began selling their produce independently as early as the late 1980s, Xiaodouzhuang’s cooperative remained dominant in local production until the mid-1990s, when a series of poor business decisions shook villager faith in its business model, causing more defections and eventually pushing the cooperative into liquidation proceedings in 2004.

But the privatization of rural trade has not been an unmitigated boon to the countryside. Supply and marketing cooperatives may have monopolized agricultural trade under the planned economy system, yet the vacuum caused by their collapse has been filled, not by a diverse, competitive market, but by regional monopolies. In Zhang’s view, the resurrection of supply and marketing cooperatives since 2015 has been less about reviving the planned economy than giving farmers increased leverage in the marketplace.

I recently sat down for an interview with Zhang on the complicated history of supply and marketing cooperative systems, their mixed legacy in rural communities, and the meaning of the current reforms. This interview has been edited for length and clarity.

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Cai Yineng: To start, what exactly were “grassroots supply and marketing cooperatives” and why were they formed in the first place?

Zhang Wenxiao: That’s a complicated question, not least because of the different connotations the term “cooperative” has in China and other countries. Basically, they were institutions set up almost immediately after the founding of the People’s Republic in 1949 to facilitate the transfer of rural goods and other necessities around the country, and especially to cities. Because the cooperatives enjoyed a de facto monopoly on rural-urban trade, they were able to set prices in line with national priorities. For decades, the Chinese state used this power to help fund the country’s industrial development, which came at a cost to the countryside, and by extension farmers. In return for accepting this system, farmers gained access to a stable channel for selling their produce.

After the market reforms, the cooperatives lost their monopoly and had to compete with alternative channels of rural-urban trade. But they were slow to adapt. The government attempted to reform them along market lines in 1995, but with the exception of a few richer cooperatives that diversified into other businesses like real estate, the vast majority were essentially defunct by the mid-2000s.

Cai: In your book, “The Story of Chestnuts,” you talk about a turning point in 1995 and 1996, when villagers in Xiaodouzhuang suddenly realized that the cooperative no longer enjoyed an implicit government guarantee. What happened, and why were villagers caught off-guard?

Zhang: The fuzziness of the nature of supply and marketing cooperatives is the product of their superposition between two very different eras. The cooperatives were established in a top-down initiative during the early years of the People’s Republic: Mao Zedong put forward the importance of the cooperative economy in the country in 1949. This was followed by the establishment of the Central Cooperative Administration in 1949 and the All-China Federation of Cooperatives in 1950, two bedrocks of the future supply and marketing system. Supply and marketing cooperatives operated according to national policies and directives, and guided production according to state preferences.

Both the nature of their rise and the way they operated led many villagers to believe that the cooperatives represented the state. But most supply and marketing cooperatives at the grassroots level, including the one in Xiaodouzhuang, were not actually state-owned. Rather, they were collectively owned by villagers. Especially after the market reform period, Chinese policy dictated that cooperatives were responsible for their own profits and losses. Yet, they still retained some functions closely related to the state, such as purchasing and selling products on behalf of state-owned trading companies. Therefore, the status of supply and marketing cooperatives was contradictory.

In Xiaodouzhuang, this came to a head in 1996. The previous year, demand for chestnuts outstripped supply, causing prices to rise. In 1996, the local supply and marketing cooperative went to its members to raise funds and shares in order to expand production. The business failed within a year, however. The cooperative lost about 3.8 million yuan (then about $450,000). All told, more than 300 families were affected. Pretty soon, more and more chestnut farmers began to operate independently. By 2004, the supply and marketing cooperative was bankrupt. The government stepped in and its assets were liquidated, but this only covered about a quarter of the losses suffered by investors — that is, the village chestnut farmers.

Crucially, the ambiguity of the cooperative’s status — was it a state organ or not? — aggravated the villagers’ confusion. As they saw it, the cooperative came to them and asked to increase production. They just did what they were told. But as far as the government is concerned, the cooperative was engaged in normal business activity. Even today, many residents have only a vague understanding of the nature of supply and marketing cooperatives.

Cai: How did villagers’ views on rural commerce change after the business failure?

Zhang: Supply and marketing cooperatives had been embedded in rural life for decades, and local chestnut farmers had formed certain beliefs around their role in the trade and circulation of agricultural products. Even though market-oriented reforms had been carried out for years prior to 1996, most chestnut farmers were still accustomed to past ways of thinking. For example, in 1996, the leaders of the Xiaodouzhuang supply and marketing cooperative eventually realized the risk of a crash and tried to stop buying chestnuts — but how could the chestnut farmers accept that? Many chestnut farmers simply tossed their chestnuts into the courtyard of the acquisition site.

After 1996, the risk awareness of chestnut farmers improved rapidly. Over the years, new sales channels also became available, including rural e-commerce. Interestingly, in Xiaodouzhuang, the loss of 1996 made some farmers wary of working with online platforms. They worried that rural e-commerce seemed too similar to the old cooperative system, as platforms wanted to purchase agricultural products comprehensively, just like the cooperatives had. Would that model cause too much risk exposure? What’s more, some e-commerce platforms, as startups, seemed less prepared organizationally than the cooperatives were. Therefore, many villagers adopted a wait-and-see attitude toward e-commerce.

Of course, outside Xiaodouzhuang, some villages went all-in on e-commerce, sometimes to the point where a whole village was supplying goods for a single e-commerce platform. E-commerce provides convenient circulation channels for some agricultural products, but as e-commerce companies established regional monopolies, farmers found themselves atomized and without bargaining power. It’s fair to say that, from the era of the planned economy to the era of marketization, farmers have always lacked a say in the marketing of their produce.

Cai: In recent years, the Chinese government has sought to revive cooperative agriculture in some regions. What role could supply and marketing cooperatives play in the future?

Zhang: The views of two Renmin University sociologists are enlightening: Guo Xinghua believes they can help rebalance the market, promote the current “internal circulation” campaign, and mitigate risks posed by the uncertainty of the international market. Zhao Xudong believes the cooperatives have symbolic implications that will allow farmers to feel that they are “united” in the face of the market.

I think we’ll see a mix of these two ideas: The ongoing transformation of supply and marketing cooperatives is not only about improving the distribution of agricultural goods, but also about forming new cooperative relations among farmers. This cooperative relationship is not purely nostalgic; it effectively improves farmers’ ability to resist risk, negotiate prices, and make choices in the market. The Chinese government has been taking aim at the “three rural issues” (agriculture, rural areas, and farmers) for more than two decades. Now it’s also emphasizing “rural revitalization.” These agendas exist not only to make farmers rich, but also to unite farmers. The two goals should promote each other, and supply and marketing cooperatives can play a role in both.

In addition, I think there is an implicit motivation for reform, which is to rebalance the urban-rural relationship. In both the planned economy and the market period, rural and urban areas have been separated from each other in many ways, and rural areas have often had to make sacrifices for the cities. Although e-commerce companies have tried to connect urban and rural areas, I found that these companies do not necessarily understand the actual situation in rural areas and have little patience for unprofitable situations. In contrast, supply and marketing cooperatives do not emphasize profit so much. They could serve as a rural commercial infrastructure that promotes the integration of urban and rural development through trade.

Cai: In an interview with the business publication Yicai, you were quoted as saying “A completely planned (system) is not conducive to the vitality of farmers, but completely following the logic of the market will render farmers powerless in the face of business giants.” Can the rural economy navigate between these two extremes?

Zhang: The most important thing is to learn from history. Neither the planned economy nor the market-oriented period has given farmers full play. In the future, we should first of all empower farmers by giving them the opportunity to receive better education and skills training, and by improving our own understanding of the agricultural produce market.

The revived cooperatives should also draw lessons from the past. On the one hand, they shouldn’t and can’t monopolize agricultural products like in the planned economy era. On the other hand, they need to be strengthened so that they can survive in a competitive market while playing a role different from for-profit businesses, all while guaranteeing farmers’ livelihoods. For example, in a pandemic or an extreme weather event, cooperatives can actively purchase agricultural products and ship them to cities, to avoid a situation where vegetables are rotting in the fields and can’t be bought at the grocery. This is particularly important because what farmers need most is confidence in the market and the circulation system. If this confidence is shaken, it can take a long time to recover.

Source : Sixth Tone

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Read also at Beijing Review

Decades-old supply and marketing cooperatives get a new lease on life . . . . .