From The Caucasus To The Balkans, China"s Silk Roads Are Rising

Authored by Pepe Escobar via The Asia Times,

With its focus on Central Asia and Eastern Europe, the Belt and Road Initiative can be seen as fulfilling a strategy of challenging the West that can be traced back to Mao...

The 19th Chinese Communist Party Congress made it clear that the New Silk Roads – aka, the Belt and Road Initiative (BRI) – launched by President Xi Jinping just four years ago, provides the concept around which all Chinese foreign policy is to revolve for the foreseeable future. Up until the symbolic 100th anniversary of the People’s Republic of China, in 2049, in fact.

Virtually every nook and cranny of the Chinese administration is invested in making the BRI Grand Strategy a success: economic actors, financial players, state-owned enterprises (SOEs), the private sector, the diplomatic machine, think tanks, and – of course – the media, are all on board.

It’s under this long-term framework that sundry BRI projects should be examined. And their reach, let’s be clear, involves most of Eurasia – including everything from the Central Asian steppes to the Caucasus and the Western Balkans.

Representatives of no fewer than 50 nations are currently gathered in Tbilisi, Georgia, for yet another BRI-related summit. The BRI masterplan details six major economic “corridors,” and one of these is the Central Asia-West Asia Economic Corridor. That’s where Georgia fits in, alongside neighboring Azerbaijan: both are vying to position themselves as the key Caucasus transit hub between Western China and the European Union.

On the first day of the summit, Georgia’s Prime Minister Giorgi Kvirikashvili extolled the drive to “strengthen the economic and civilizational ties between Europe and Asia.” In practice, that translates into a push to build an economic free zone, in accordance with the memorandum of understanding signed by the Chinese and Georgian economic ministers.

Add in the recently inaugurated Baku-Tblisi-Kars railway and a new deep-sea port to be built in Anaklia, in the Black Sea, with Chinese investment, and we have Georgia as a key logistical hub in China-EU connectivity. It helps that, thanks to the Baku-Tblisi-Ceyhan (BTC) gas pipeline out of the Caspian Sea, Georgia has already been positioned for years as an energy transportation hub.

Crucially, Georgia has signed free trade agreements with both the EU and China, with the latter coming into effect at the start of 2018. It is also maneuvering itself to profit from the interconnection of BRI with the Russian-led Eurasia Economic Union (EAEU). Beijing and Moscow formally signed the BRI/EAEU partnership in June last year – although it will take time for that to translate into actual trade and economic cooperation projects, possibly starting in the Russian Far East.

Mao revisited

The action in the Caucasus was mirrored in Europe earlier in the week as Chinese Premier Li Keqiang and Hungary’s Prime Minister Viktor Orban opened the sixth “16+1” summit, involving China and 16 Central and Eastern European nations, in Budapest.

“16+1” is yet another of those trademark Chinese diplomatic “away wins.” Some of these nations are part of the EU, some part of NATO, some neither.

From Beijing’s point of view, what matters is the relentless BRI infrastructure and connectivity drive. Beijing may have invested as much as US$8 billion so far in Central and Eastern Europe.

China is having a ball in the Western Balkans – especially in Serbia, in Montenegro, and in Bosnia and Herzegovina, where EU financial muscle is absent. China has invested in multiple connectivity and energy projects in Serbia – including the much-debated Belgrade-Budapest high-speed rail link. Construction of the Serbian stretch started this week, with 85% of the total cost (roughly€2.4 billion) coming from the Export-Import Bank of China.

The European Commission (EC) in Brussels predictably objected – claiming the tender process might not have complied with EU rules.

The strategic trade importance of Belgrade-Budapest cannot be overestimated. Think container fleets of Chinese merchandise arriving in Piraeus in Greece – a key hub of the so-called Maritime Silk Road – and then being shipped to the EU via Serbia.

In the midst of this frenzy of connectivity, it’s easy to overlook a significant historical point: that it was all anticipated by Mao Zedong.

Scholar Chen Gang has stressed how most BRI-participating nations are not as developed, economically, as China. And they are “not just limited to the Eurasian continent, but will eventually cover all the ‘middle zone’ and ‘third world’ put forward by Mao in his ‘Three Worlds Theory.’”

Flashback to 1974. That’s when Mao described the world as being divided between superpowers (the US and USSR); intermediate powers (Japan, Europe, Canada); and exploited nations in Africa, Latin America and Asia, which Mao praised as constituting the forces against First World hegemony. Mao placed China in the third world – as Deng Xiaoping told the UN.

What’s fascinating is how Chen Gang interprets BRI not only as a sequel to China’s historical ties with the Third World, but also as opening a “new era of China’s Third World strategy.” He correctly states that US and EU elites worry that BRI will bring about “the erosion of their global influence and overseas interests.”

Chen Gang’s analysis touches on what, by now, is obvious: “The international game around BRI has just begun.” And it goes almost without saying that Beijing’s BRI-driven foreign policy strategy, by turbo-charging China’s cooperation with the ‘Global South,’ is leaving the US, at best, marginalized.

This Cycle: It"s Not The Economy, It"s China, Stupid!

Authored by Kevin Muir via The Macro Tourist blog,

I know everything is fan-freaking-tastic - with the tax reform bill and global synchronized expansion and all. I figure the last thing you need is some nattering naysayer throwing cold water on this unbelievable party, so I won’t. At least not for the short run.

This rally will end when it ends. Maybe tomorrow, maybe next week, maybe next month, maybe next year. I don’t know and every time I try to guess, I just end up looking foolish.

But I recently listened to this terrific Bloomberg Masters in Business interview of the legendary hedge fund manager, Felix Zulauf, and he articulated such a compelling argument for the timing of the next slowdown, I felt like Felix was my Spirit Bear.

I have always enjoyed Felix’s viewpoint, but Barry Ritholtz did such a great job during this interview, that I have a new found appreciation for Felix’s career, and more importantly, his market calls. I had mistakenly assumed Felix was always bearish, but the truth of the matter is that he definitely switches from side to side, and is not the pro-typical Swiss hard money uber-bear. I didn’t agree with all of his economic philosophy by any means, but his market (and political) analysis was some of the most compelling dialog I have listened to in quite some time. If you haven’t heard it, then give it a listen.

If you don’t want to take the time, don’t fret - I have transcribed the most important part for you.

Felix: China I believe is in an interesting position right now. You heard President Xi’s speech last week, and in 2021 there is the 100th anniversary of the Chinese Communist party and it’s very clear that they want to have a strong economy at that time. If you want to have a strong economy in 2021, you stimulate in 2020. And they are central planners. So that’s means they have to take their foot off the pedal in 2018, 2019. I think in ‘18 and ‘19, they will address the imbalances in the financial sector and that will slow down the Chinese economy in ‘18 and ‘19, which will also slow down the rest of the world.

 

So we are entering a period where sometime in ‘18, I would say the peak of the market will be in the first half, the peak in the economy is probably from mid-2018 on, and then we slow down into 2020.

 

And 2022 is the next Chinese Congress, and President Xi is probably the first leader who tries to run for a third time. So he wants to have a very good economy in 2021 and 2022. That means he has to first slow things down, restructure some of the imbalances in the system because if he tries to carry through, it could backfire on him. It could be the worst of all worlds. Namely a completely overheated situation, with high inflation rates, etc…

 

That’s why I think the leader of this cycle, China, is going to slow down next year.

 

Barry: So the whole global economy is dependent on President Xi’s re-election desires in 2022?

 

Felix: As I said before, you always need to figure out what is the leading theme in the market cycle. In the last cycle, it was real estate, in this cycle it is China. And that’s why China is so important. China is the second largest economy, and in 10 or 15 years, it will be the largest economy of the world.

Longtime readers will instantly see why Felix’s theory appealed to me. I have long argued that China’s fiscal and monetary policy might be the most two important variables when it comes to forecasting the global economy. And here was Felix making the case that the entire global economic cycle is being driven by China. Felix - you had me at hello.

Now, make no mistake. This is a longer-term call. It’s not going to affect market prices next week, and probably not even next month. But in the coming quarters, it has the potential to be the most important determinant of financial asset performance.

I will take a little more nuanced approach to Felix’s theory, but in broad strokes, I completely agree with his analysis. The Chinese government will not allow their 100th anniversary be anything less than a rocking success. And President Xi is smart enough to know that he can’t just keep the pedal to the metal for the next four years and hope that the economic expansion lasts.

China’s performance over the past year

Remember all the dire warnings from your favourite star hedge fund managers about China’s coming collapse? Well, I don’t want to be prematurely counting any chickens, but it looks like Xi & Co. have managed to successfully navigate another year without the end of the world financial Armageddon scenario coming to fruition.

And it’s not like this has been achieved through growth-at-any-cost with super easy monetary policy. In fact, during the past year, both interest rates and the Chinese Yuan have risen.

It appears as if, bit-by-bit, China has slowly tightened monetary policy. And I suspect that trend will not only continue, but even accelerate from now. President Xi will continue strangling the excesses out of the Chinese financial economy through tighter monetary policy. The PBOC won’t plunge China into a recession, but instead slowly choke off the speculative froth.

But there’s more to the story

Now here is where I will expand on Felix’s theory. China is in the midst of a massive infrastructure spending program with their One-Belt-One-Road initiative. The program is massive, and entails many complicated and extensive transportation system upgrades in all parts of their country. This sort of development is not something that you easily turn on and off. And nor should it be. This is true investment in the future of China. Much like Eisenhower’s interstate highway program that set up America to become an economic powerhouse for decades to come, China’s OBOR initiative is a crucial step for China’s development. Xi will not alter this plan. The course is set, and the money will be spent.

In fact, it’s already happening. And it’s causing China to run the greatest fiscal stimulus in history. Have a look at this chart from the world’s most charming and well-spoken China bear, Kyle Bass:

Yup, that’s crazy. China is running a fiscal deficit of 14% of GDP. Any wonder why the global economy is cruising along so nicely? It sure helps when you have this sort of fiscal stimulus wind in our sails.

Will Xi tap this back? Sure, he might try to trim around the edges, but the reality is that he will not make any meaningful cuts to the OBOR policy.

Therefore, China will be running a hot fiscal policy for years to come, and the only way to counteract its effect, will be by tightening on the monetary side. This will also have the added benefit of causing the financial economy to slow. In fact, we are already seeing this play out in the housing market.

While I was thinking about this situation, I was reminded of a passage in the Market Wizards book where Stanley Druckenmiller spoke about his trade surrounding the unification of East and West Germany:

Everything started to come together at that time. Not only was I trading on my own without any interference, but that same eastern European situation led to my first truly major trade for Soros’s Quantum Fund. I never had more conviction about any trade than I did about the long side of the Deutsche mark when the Berlin wall came down. One of the reasons I was so bullish on the Deutsche mark was a radical currency theory proposed by George Soros in his book, The Alchemy of Finance. His theory was that if a huge deficit were accompanied by an expansionary fiscal policy and tight monetary policy, the country’s currency would actually rise. The dollar provided a perfect test case in the 1981-84 period. At the time, the general consensus was that the dollar would decline because of the huge budget deficit. However, because money was attracted into the country by a tight monetary policy, the dollar actually went sharply higher.

 

When the Berlin wall came down, it was one of those situations that I could see as clear as day. West Germany was about to run up a huge budget deficit to finance the rebuilding of East Germany. At the same time, the Bundesbank was not going to tolerate any inflation. I went headlong into the Deutsche mark. It turned out to be a terrific trade.

Now I know this isn’t the perfect analogy, but I can’t help but wonder if it will be more correct than all the Yuan bears who are predicting a China collapse.

Putting it all together

We have a Chinese President who wants to be re-elected shortly after his party’s 100th anniversary celebration in 2021. Therefore, it will be important that the Chinese economy is humming along at full speed at that time. To do that, he needs to stimulate in 2020, but the problem is, if he doesn’t tap the brakes now, he might risk overheating before then. President Xi will therefore take the hit, and get the pain over with in 2018 and 2019. Yet the story is further complicated by the fact that China’s long run infrastructure program is causing a hot fiscal policy. All of these factors add up to a much tighter PBOC for the next couple of years.

Call me an idiot, but I am tempted to take the long Yuan trade. I know that seems insane - all those really smart hedge fund managers are all forecasting a China collapse. But buying Yuan is probably better than betting on stocks going down because of the tight Chinese monetary policy. Not convinced it’s the best trade, and not even sure if I am going to do it in any real size, but I have often found the hardest trades, are often the best trades.

Either way, be aware of this multi-year seasonal Chinese economic timing dynamic. Maybe Felix just laid out a timetable for the market to finally roll over, albeit still many months away. That’s probably good because it certainly feels like it will be that long before we get any meaningful correction…

 

Kyle Bass Warns: Xi Has "Built The Chinese Economy On A Foundation Of Sand"

Earlier this week, Chinese leader Xi Jinping became the third ruler in the communist country’s history to have his named enshrined in its constitution – and the first to receive this honor while still alive. But as China celebrates its most popular, and most powerful, leader since at least Deng Xiaoping, Kyle Bass, hedge fund manager and noted China bear, told Bloomberg the Communist Party will one day regret standing idly by as Xi consolidated his power.

“Today Xi is celebrated in media reports, but when future historians look back, he will be blamed for recklessly building the Chinese economy on a foundation of sand,” Bass, founder of Hayman Capital Management, said in an email Wednesday.

“Xi desperately seeks credibility, but true developed economies do not impose severe capital controls or move short-term rates hundreds of basis points overnight in attempts to manipulate their own currency.”

Xi, who launched the twice-a-decade National Party Congress last week with a three-hour speech where he laid out his vision for “communism with Chinese characteristics in a new era,” the philosophy that was enshrined in the country’s constitution by a unanimous vote. In a move that seemingly confirms suspicions that Xi plans to break with precedent and seek a third term after his second ends in 22, Xi appointed five new members to the Politburo,

China’s most powerful body, all of whom are too old to be viewed as credible heirs. Typically, Chinese leaders have pointed to a successor or possible successors by the time they begin their second term, ensuring that there’s a clear path of leadership transition.

Of course, Bass and others have been highly critical of the Communist Party’s heavy handed tactics. For example, the PBOC and the Chinese ‘National Team’, which exert powerful influence over the company’s financial market, have successfully tamped down equity market trading volume and volatility in the runup to the Congress, while guiding the yuan higher against the dollar.

However, China’s closed financial system and manipulated markets aren’t the only target of Bass’s criticism. He also pointed to China’s ever-growing pile of debt. Borrowing has swelled to 260 percent of gross domestic product at the end of 2016, Bloomberg Intelligence data show. Earlier this year, the country’s soaring debt burden inspired Moody’s Investors Service and S&P Global Ratings to downgrade the country’s sovereign credit rating.

In an interview earlier this month, Bass, who has called for a 30% drop in the Chinese yuan, said he expects the government to relax its grasp on the exchange rate after the National Party Congress. He said he believed once Xi consolidates power, he’ll allow natural economic forces to reassert themselves in the country’s banking system.

Since the yuan joined the IMF’s Special Drawing Rights basket a year ago, China has made little progress in making its currency more convertible and accessible. To wit, the yuan remains a secondary currency for settling global payments.

“China remains an emerging backwater when it comes to global currency settlements,” he said Wednesday.

As Bloomberg pointed out, Bass, who made a fortune betting against U.S. subprime mortgages, said in early 2016 that losses in Chinese banks could be four times bigger than those suffered by American lenders during the global financial crisis. He has said that crucial figures, like the share of non-performing loans, have been understated.

“Recklessly growing a banking system in pursuit of global economic growth and respect will cause severe financial instability in the years to come,” he said on Wednesday.

 

“The dangerous $40 trillion credit experiment with Chinese characteristics will run its course.”

As reported earlier this month, Bass has stuck to his pessimistic views on China (though he has moderated his view a bit, pushing back his expected timeline for signs of instability in the country’s debt market to emerge) while other noted bears reversed their positions as the next big yuan devaluation failed to materialize.

While China bears have underestimated the nation’s unique ability to control its market, the sheer pace and volume of credit creation can’t possibly be sustained forever, Bass said.
 

China Orders No Market Turbulence Ahead Of Party Congress

The most important event in China in five years is about to take place, and Beijing isn"t taking any chances.

Ahead of the Communist Party’s twice-a-decade congress - an event so massive that according to Bloomberg "nothing escapes its pull" - which is slated to start on October 18 in Beijing, regulators have made it clear to the nation’s top brokers, bankers and financiers that they don’t want to see any major turbulence in markets.

In a repeat of the fiasco that followed the bursting of China"s equity bubble in the summer of 2015 when Beijing effectively nationalized the stock market, and went so far as to throw prominent hedge fund managers and assorted "speculators" in prison, the China Securities Regulatory Commission has ordered local brokerages to "mitigate risks" and ensure stable markets before and during the Communist Party’s leadership congress next month, according to Bloomberg. Additionally, to leave virtually nothing to chance - and to have ready scapegoats in case someone does in fact sell - the CSRC also banned brokerage bosses from taking holidays or leaving the country from Oct. 11 until the congress ends.

Brokerage bosses were told to avoid travel of any kind from Oct. 11 until the congress ends, including business trips.

Luckily for them, China’s national day holidays are coming up in the first week of October. Local markets will be shut for an entire week, providing plenty of time to recharge for the congress.

Since the congress, which is expected to replace about half of China’s top leadership, is of paramount importance to President Xi Jinping who will use it as a foundation to cement his influence into the next decade, nothing is allowed to spoil the optics of supreme control at this critical moment.

And while China routinely takes steps to reduce market swings during key political gatherings, the travel ban on brokerage chiefs illustrates how seriously regulators are taking next month’s meeting, according to Bloomberg.

Still, the news will hardly come as a surprise to most market participants, and explains why Chinese markets have already rallied significantly this year amid expectations of government support, while equity volatility has tumbled to the lowest level in over 2 decades. The Shanghai Composite Index touched a 20-month high on Tuesday, while the yuan has strengthened 6.4% against the dollar this year.

In addition to the travel ban, China"s regulator told brokerages and futures companies to check for risks in their liquidity, operations and financial health, effectively warning that it does not want to see any selling. The regulator also ordered firms to assess their information system security and credit risks and report their findings before October, Bloomberg"s sources added.

Of course, with so much focus on how effective China will be at keeping its equity markets growing at a steady, controlled pace and avoiding turbulence ahead of the critical summit, anyone hoping to make a political statement against the Xi regime - whether domestically or offshore - could do so simply by causing even a modest market correction sometime in mid-October, especially since even the smallest spike in volatility could lead to a panicked selloff in light of such an unexpected move.

China Unveils Emergency Drill To "Shut Down Harmful Websites"

China"s 19th National Congress of the Communist Party - the quinquennial confab where the party selects new members of the Politburo, its ruling council - is expected to begin this fall (official dates have not yet been publicly announced). And in an effort to guarantee that the leadership reshuffle goes off without a hitch, President Xi Jinping is tightening the government’s grip on the internet to help protect the official narrative that Xi"s "Chinese Dream" remains intact.

According to Reuters, China held a drill on Thursday with internet service providers to practice taking down websites deemed harmful.

“Internet data centers (IDC) and cloud companies - which host website servers - were ordered to participate in a three-hour drill to hone their "emergency response" skills, according to at least four participants that included the operator of Microsoft"s cloud service in China.

China"s Ministry of Public Security called for the drill "in order to step up online security for the 19th Party Congress and tackle the problem of smaller websites illegally disseminating harmful information", according to a document circulating online attributed to a cyber police unit in Guangzhou.”

The Communist Party “protects” China’s 1.4 billion citizens from the influence of subversive foreign using nationwide system of internet censorship known as the “Great Firewall.” But as the country’s financial regulators grow increasingly concerned about the country’s dangerously overleveraged economy, which is threatening to sink the country’s fragile stock market, it’s likely that the government sees local business media as a threat. Two years ago, following the spectacular runup and collapse of the Shanghai Composite, authorities arrested one of China’s most respected financial journalist and forced him to make an on air “apology” after the government blamed his reporting for triggering the crash.

Earlier this year, authorities began a crackdown on VPNs like the Tor network which can allow mainland residents to circumvent the “great firewall.”

“China has been tightening its grip on the internet, including a recent drive to crack down on the usage of VPNs to bypass internet censorship, enlisting the help of state-owned telecommunication service providers to upgrade the so-called Great Firewall.

Apple last week removed VPN apps from its app store, while Amazon"s China partner warned users not to use VPNs.”

During the drill, the country’s internet data centers were asked to practice shutting down target web pages and report relevant details to the police, including the affected websites" contact details, IP address and server location, according to Reuters. With five of the seven Politburo members retiring, this year’s National Congress presents President Xi with his best opportunity yet to consolidate power. And as tensions escalate between China and several of its geopolitical rivals (notably the US, which is theatening a trade war, and India, which could instigate a real war), expect the crackdown to continue.

US-China Agree On Need For "Complete, Irreversible" Korean Denuclearization

After terse public exchanges this week, each proclaiming the other is not working hard enough on "solving" the Kim Jong Un "situation", Chinese state media said on Saturday, reporting the results of high level talks in Washington this week, that China and the United States agreed that efforts to denuclearize the Korean Peninsula should be "complete, verifiable and irreversible."

The week started off tense, with the President tweeting that "while I greatly appreciate the efforts of President Xi & China to help with North Korea, it has not worked out. At least I know China tried!"

While I greatly appreciate the efforts of President Xi & China to help with North Korea, it has not worked out. At least I know China tried!

— Donald J. Trump (@realDonaldTrump) June 20, 2017

Which received a quick response from China...  

China has “played an important and constructive role” in seeking peace on the Korean peninsula, Foreign Ministry spokesman Geng Shuang told reporters in Beijing.

China strictly implements United Nations Security Council resolutions and isn’t the crux of the North Korean issue, he said.

But now, as Reuters reports,US and China have agreed on a path forward after high-level talks. U.S. Secretary of State Rex Tillerson had said on Thursday that the United States pressed China to ramp up economic and political pressure on North Korea, during his meeting with top Chinese diplomats and defense chiefs. China"s top diplomat Yang Jiechi and General Fang Fenghui met Tillerson and Defense Secretary Jim Mattis during the talks. Yang later met with U.S. President Donald Trump in the White House, where they also discussed North Korea, Xinhua reported.

"Both sides reaffirm that they will strive for the complete, verifiable and irreversible denuclearization of the Korean Peninsula," a consensus document released by the official Xinhua news agency said.

The consensus document also highlighted the need to fully and strictly hold to U.N. Security Council resolutions and push for dialogue and negotiation, which has long been China"s position on the issue.

Military-to-military exchanges should also be upgraded and mechanisms of notification established in order to cut the risks of "judgment errors" between the Chinese and U.S. militaries, the statement also said.

Chinese state media described the talks, the first of their kind with the Trump administration, as an upgrade in dialogue mechanisms between China and the United States, following on from President Xi Jinping"s meeting with Trump in Florida in April.

Alibaba's Jack Ma Sees "Decades Of Pain Ahead" Thanks To Internet Disruption

"Adapt or die miserable" appears to be the message from Chinese billionaire Jack Ma.

The Alibaba founder warned that people should prepare for decades of social upheaval and pain as the internet disrupts the global economy.

“In the next 30 years, the world’s pain will be much greater than its happiness,” Ma said at an entrepreneurial conference in Zhengzhou, China. “Social conflicts over the next 30 years will hugely impact every industry.”

As RT reports, Ma says the world must radically change the way people are taught and establish how to work with robots to help soften the blow caused by automation and the internet economy.

“Machines should only do what humans cannot,” Ma said, adding “only in this way can we have the opportunities to keep machines as working partners with humans, rather than as replacements.”

The founder of the e-trading platform Alibaba said he had tried to warn people in the early days of e-commerce it would disrupt traditional retailers but few listened. This time he wants to caution against the impact of new technologies, so no one will be surprised.

“Fifteen years ago I gave speeches 200 or 300 times reminding everyone the internet will impact all industries, but people didn’t listen because I was nobody," he said.

Ironic then that the world appears set on dismissing the UBI/Welfare-supporting leftist/socialist movements (see USA, Holland, and now France) when, if Ma is right, we"re all going to need "assistance".

'Terrified' CTO of Uber, Thuan Pham, Compares Trump to Tragedies in Darfur, Does Not Accept Him as His Leader

If I had to craft a satirical letter about a butthurt mega rich silicon valley executive complaining over the Trump victory, I could not have done a better job than the real letter the CTO from Uber, Thuan Pham, sent to his fellow employees.

In what could only be described as a rift at Uber, in light of their CEO, Travis Kalanick,  agreeing to join Trump"s select group of business advisers, Mr. Pham has made it clear that he does not agree with his CEO, and he most certainly does not accept America"s democratically elected leader, Donald J. Trump.

Here is the email Pham sent out to his employees, which is now spreading across the internet like an infectious form of cancer.
 

Likewise, I could hardly sleep at night. I am still shocked and numbed from the absolutely illogical outcomes of this election. When the election outcome certifies the dumbing down of America, the racist, divisive and hateful attitudes, the politics of obstruction and destruction, our country has taken a huge step backward that might take decades to course correct (especially when it comes to the make up of the Supreme Court justices and the issues that will come before them).
 
It is absolutely illogical and insane to believe that we can solve the hardest diplomatic, policy, and societal problems by putting in charge a person who doesn"t know much about any such thing. How can we sleep peaceful at night for the next 4 years knowing that the biggest societal problems rests on his lack of intellectual curiosity, judgment and temperament? It is indeed terrifying! This is an emperor with no clothe [sic], and things will get very ugly before his reign is over.
 
We can weep at this momentary loss, but we cannot allow ourselves to wallow in misery for long. We need to call up our inner resolve to get back up and keep fighting for a better world. The fight will be hard and long, but we just have to do it. In two years, all the people who were conned into voting for this person will see the harm he will have done and there will be an opening to move the Senate toward the blue side to check his power. And then we"ll have to work hard to make sure the next president in 4 years will be a Democrat and wins in a landslide.
 
Unless this ignoramus triggers a nuclear holocaust that wipes out civilization as we know it, the long arc of history will continue to bend toward more social justice and equality and a better lives [sic] for people around the world. We are already living in a far more tolerant and inclusive world today than 50 years ago, than 100 years ago, etc... And the quality of life and comfort for an average person today already far exceeds the Kings and Queens just a few centuries ago (we have telephone, electricity, modern medicines, car & plane transportation, etc.). But we all need to keep charging forward to create and fight for the future that we want, technologically and socially.
 
Occasionally, the world takes a step backward with such things as world wars, Mao Tse-dong, Khmer Rouge, Darfur, W. Bush and his wars, etc., and now this. But I am optimistic that the world will correct itself, even if [sic] takes another catastrophe for American [sic] to usher in the next Obama as our president. In the mean time, for the next four years, I will not even utter the name of this deplorable person because I do not accept him as my leader. I will instead do everything I can to help defeat him and his destructive agenda over the next few years.
 
Time to put on our Champion"s Mindset and pick ourselves off the floor. There is much work that we can do to help make this world a better place, through what we do here at work and in our society.

/Thuan

 
In case you"re wondering, yes Thuan Pham did just compare the deaths of over 500,000 people in Darfur to the most heinous event of Donald Trump being democratically elected President of the United States. Or, even better, Pham, in his infinite wisdom, put Mao Tse-dong, a man responsible for the deaths of at least 45 million people during the Chinese civil war, on the same playing field as both George W. Bush and Donald Trump -- whose only crime, hitherto, was getting elected President of the United States with the promise to make America great again.

You cannot make this stuff up.

During the last UberExchange program, Pham offered this advice to aspiring entrepreneurs.

1. Money will come when you do something that impacts a lot of people. If you chase only money, you will be really unhappy.


2. Building something that can impact and change people’s lives across the world will always keep you motivated.


3. Don’t take yourself too seriously and you will not hesitate to take bold risks in life. Have fun along the way.


4. Give back. Developing people will really make you satisfied at the end of it. Developing young ones in your teams who can lead and impact hundreds of lives – even after you’re gone – will leave you satisfied.

 
Great advice, especially #3.

Content originally generated at iBankCoin.com

China Orders No Market Selloffs During President's Davos Trip

As we observed in yesterday morning"s market wrap, while US traders took the day off for the MLK holiday, China was busy defending an accelerating selloff across its stock markets.

During Monday trading, having traded quietly lower for the past few days, Chinese stocks tumbled in early trading on the mainland and in Hong Kong’s offshore market amid weakness in Asian equities. The Shanghai Composite Index dropped as much as 2.2% to head for its fifth loss in as many days, its longest losing streak since Aug. 2015.However a sudden bout of late afternoon buying sent the loss down to just -0.3%, on speculation China"s national team was once again back in the markets.

The exact same pattern emerged overnight as well:

Very much like the previous day, China"s CSI 300 Index climbed 0.2% on Tuesday, after earlier losing as much as 0.8%. On Monday, the index recovered from an intraday drop of 1.7% to close little changed, with some traders speculating the afternoon rally was caused by state buying.

We now have confirmation that, indeed, after a long hiatus, it was precisely the "national team" that had made an appearance, and was propping up stocks with an explicit directive: don"t let stocks drop during Xi Jinping"s trip to Davos. It is almost as if it is a rite of passage for Davos participants to demonstrate how effective they are at manipulating their stock market.

As Bloomberg reports today, China has taken "steps" to support its stock market this week - by which it means ordered various central bank conduits to buy stocks during selloffs - "according to people familiar with the matter, as President Xi Jinping’s appearance at the World Economic Forum in Davos puts Asia’s largest economy in the global spotlight."

Apparently China did not question what it would look like once it emerged that it is manipulating its market to give the false impression of stability at a time when Xi was addressing Davos, and expounding on the glorious benefits of globalization and liberalization... if not so much for asset price discovery or the yuan, of course.

State-owned investors bought shares to steady the market on Monday, while some funds were guided on Tuesday not to sell holdings with big weightings in benchmark indexes, the people said, asking not to be identified because they aren’t authorized to discuss the matter publicly. China’s securities regulators asked funds and brokerages to trade prudently this week and directed exchanges to report any abnormal transactions, the people said.

To be sure, Chinese authorities have traditionally intervened in markets before and during events of political significance, with government funds stepping in to boost stocks before a key meeting of the National People’s Congress last year and before a 2015 military parade celebrating the 70th anniversary of the World War II victory over Japan.

"China is doing this probably because it wants to paint an image of positivity as President Xi attends Davos," said Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore. Stocks will continue to be volatile as the nation’s monetary conditions tighten, Xie said.

Earlier today, taking the role of the world"s globalist savior and free trade savior, and the "free world"s" foil to the protectionist Trump, Xi - in the first visit by a Chinese leader to the World Economic Forum - told a Davos audience that “protectionism is like locking yourself in a dark room, which would seem to escape wind and rain, but also block out the sunshine. No one is a winner in a trade war.”

His audience was delighted to lap it up, despite the glaring contradictions of China"s firewall, pervasive government subsidies of exporters, and constant WTO regime violations. Oh, and zero freedom of speech or human rights, of course.

Which may explain why China is engaging in outright market manipulation merely to show how "strong" its market (and thus economy) is. After all, such interventions are nothing more than a sleight of hand and an indication of how little the Communist Party thinks of the intelligence of its counterparties: surely one has to be very obtuse to be fooled by such a glaring intervention that "all is well." Yet the message sent by Xi to the world"s "smartest and most powerful" people is that according to the Chinese president, they are on the same intellectual level as a few dozen million daytrading housewives.

We are confident all of this will be lost on the "Davos elite."