Japan Scrambles Jets In Response To Chinese Military Planes | Zero Hedge
Japan Scrambles Jets In Response To Chinese Military Planes | Zero Hedge.
Just in case the world did not have enough potential geopolitical flashpoints and near-crises, here comes old faithful – the simmering nationalist rivalry between China and Japan, which may have been pushed to the backburner in light of the grand return of Cold War 2.0, but is neither forgotten nor resolved. In fact, recent developments which have seen Japan fully back the US strategy in Ukraine while China has voiced its support for Russia, will probably only enflame the direct tension between the two Asian superpowers. Moments ago we got the latest manifestation of precisely this when Japan scrambled military jets on Sunday to counter three Chinese military planes that flew near Japanese airspace, defence officials said.
One Y-8 information gathering plane and two H-6 bombers flew over the East China Sea, travelling in international airspace between southern Japanese islands and went to the Pacific Ocean before returning towards China on the same route on Sunday morning, according to a spokesman at the Joint Staff of the Ministry of Defence.
“They flow above public seas, and there was no violation of our airspace,” he said, declining to release more details about the incident.
Japan and China are locked in a bitter territorial row over islands in the East China Sea administered by Japan as the Senkaku Islands, but which China calls the Diaoyu Islands.
Chinese government ships and planes have been seen off the disputed islands numerous times since Japan nationalised them in September 2012, sometimes within the 12 nautical-mile territorial zone.
And then there was the curious case of Libya which threatened on Saturday to bomb a North Korean-flagged tanker if it tried to ship oil from a rebel-controlled port, in a major escalation of a standoff over the country’s petroleum wealth. Because obviously the Mediterranean is far too boring with Greece and Italy now fixed.
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Japan Scrambles Jets In Response To Chinese Military Planes | Zero Hedge
Japan Scrambles Jets In Response To Chinese Military Planes | Zero Hedge.
Just in case the world did not have enough potential geopolitical flashpoints and near-crises, here comes old faithful – the simmering nationalist rivalry between China and Japan, which may have been pushed to the backburner in light of the grand return of Cold War 2.0, but is neither forgotten nor resolved. In fact, recent developments which have seen Japan fully back the US strategy in Ukraine while China has voiced its support for Russia, will probably only enflame the direct tension between the two Asian superpowers. Moments ago we got the latest manifestation of precisely this when Japan scrambled military jets on Sunday to counter three Chinese military planes that flew near Japanese airspace, defence officials said.
One Y-8 information gathering plane and two H-6 bombers flew over the East China Sea, travelling in international airspace between southern Japanese islands and went to the Pacific Ocean before returning towards China on the same route on Sunday morning, according to a spokesman at the Joint Staff of the Ministry of Defence.
“They flow above public seas, and there was no violation of our airspace,” he said, declining to release more details about the incident.
Japan and China are locked in a bitter territorial row over islands in the East China Sea administered by Japan as the Senkaku Islands, but which China calls the Diaoyu Islands.
Chinese government ships and planes have been seen off the disputed islands numerous times since Japan nationalised them in September 2012, sometimes within the 12 nautical-mile territorial zone.
And then there was the curious case of Libya which threatened on Saturday to bomb a North Korean-flagged tanker if it tried to ship oil from a rebel-controlled port, in a major escalation of a standoff over the country’s petroleum wealth. Because obviously the Mediterranean is far too boring with Greece and Italy now fixed.
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A Gift From The Collapseniks | Peak Oil News and Message Boards
A Gift From The Collapseniks | Peak Oil News and Message Boards.
Of what possible use is it to imagine the end of civilization or even of the species? Is it simply a pessimistic indulgence or can it contribute to progressive and other positive results?
When I was a child, my family’s pastor used to elbow into almost every sermon an admiring reference to “St. John languishing in exile on the rock-bound, sea-girt island of Patmos.” He was referring to the author of the grisly Book of Revelation , the dominant Western source of apocalyptic imagery.
We chuckle at cartoons of robed men on city sidewalks carrying placards that claim, “the end is nigh,” and at bumper stickers that declare, “in case of Rapture, this car will be driverless” (which sounds more dangerous than driving under the influence). Since St. John’s fiery prose, there have been many predictions of the end, including the modern cult studied by social psychologist Leon Festinger in When Prophecy Fails (1956).
Those who see danger tend to accuse others of “denial,” of “refusing to listen.” Perhaps a tincture of denial has given humans an evolutionary advantage. Speaking positively, psychologists refer to “optimism bias.” Most of us tend to imagine that things will turn out better than they do, a common mental pattern studied by such authors as Tali Sharot. While this trait arguably encourages enterprises, some of which succeed, it may also, on occasion, blind us to the possibility of avoidable loss, even terminal loss.
In A Year to Live (1997), Stephen Levine asks readers to pretend they have the awful privilege of knowing when they will die (in 52 weeks) and challenges them to review their histories honestly and to live abundantly in the remaining time. As my wife and I know, from working through Levine’s book with another couple, the result can be an enhancement of life.
During the Cold War, Joanna Macy gave us Despair and Personal Power in the Nuclear Age (1983). Before writing on ecology, on general systems theory, and on hope, Macy taught that a fuller life, including activism, could be approached through uninhibited expression of the deep feelings that led us to be concerned. More recent examples are the grief work of Carolyn Baker, author of Sacred Demise (2009) and Collapsing Consciously (2013) and of Francis Weller, author of Entering the Healing Ground (2012).
Still, it’s going against the grain to ask people to imagine extreme loss. Unlike some so-called primitive groups, our society is not set up for it, apart from isolated workshops. According to both Baker and Weller, working through grief requires the support of a community and the additional safety of a ritual container. For all its virtues, U.S. culture is based more on individuality, the frontier, and risky enterprise, than on mutual support and safe space.
Nonetheless, a growing number of observers of climate change and other trends foresee disaster. We can describe them as collapseniks, a term with a suffix derived from Russian in honor of Dmitri Orlo*, who grew up in St. Petersburg (then Leningrad) and emigrated to the U.S. An engineer, sailor, and writer, Orlov believes that his adopted country will descend into collapse, and that the U.S. is less well prepared than the country where he was raised. If we define collapsenik as an observer who is conscious of the possibility of economic, political, and social collapse and who believes collapse is worth taking seriously, then Orlov has a parade of company, of which I will give chronological highlights at the end of this piece.
There are big differences among collapsenik authors and even in a single author at different times. A spectrum exists, from those who feel we could avoid the worst of climate change by changing our ways substantially (“we’re sleepwalking toward disaster but could conceivably wake up”) to those who believe our species is doomed (“it’s already too late”). For example, scientist Guy McPherson has come to believe that, as a species, we are headed toward “near-term extinction” (niftily abbreviated as NTE).
While pessimists predict NTE, optimists envision the triumph of a progressive politics that would render climate change survivable, perhaps shifting us toward a steady-state economy, slowing the sixth extinction of species, and fostering a network of local and democratic institutions. An optimistic scenario would resonate with what Macy, expressing hope, now calls “The Great Turning.”
In contrast, McPherson argues that it’s already too late for ad equate reform: humans have inadvertently created feedback loops that will keep making the situation worse. For example, the release of methane, caused (in part) by warming of the shallow Arctic ocean and the Siberian and Canadian tundra, will cause more warming because methane is a greenhouse gas even more dangerous than CO2. And so on.
Humans don’t have a very good record of predicting the future, in spite of various divinatory schemes. Whether developments are technological, political, or economic, we have proceeded without reliable forecasts. Given the surprises inherent in complex systems and in technical development, nobody can show that we face certain demise, though we can discuss probabilities.
Could we learn to regard collapse not as a firm prediction but as a scenario worth exploring? After all, the Pentagon has contingency plans for events that are arguably less likely and less devastating.
To return to our original question, what could be the use of taking seriously a scenario of collapse, especially the views that argue that it’s already too late or that changes could help, but probably won’t be made? If we feel grief at what seems to be happening, instead of simply seeming smug in a prediction of certain doom, if we invent ways to lessen the turbulence and create the best that is possible in the new circumstances, if we live intensely instead of habitually, then the scenario of demise might seem no worse than knowing that, as individuals, we each will die. Meanwhile, what are we capable of?
According to Rebecca Solnit’s A Paradise Built in Hell (2010), disasters can bring out the best in people. If the scenario of the collapseniks plays out, we will have opportunities to discover what kind of gardens we can create in the ruins of our present society. So what is the gift? That by responding fully to the scenario, we can meanwhile live more intensely and develop the elements of a society that, under new conditions as they develop, would work.
Now here are the promised examples of recent writers who are aware of the possibility of collapse and who, in various cases, are sketching alternatives. In this century, we’ve been given Tim Flahherty’s The Weather Makers (2001), Richard Heinberg’s The Party’s Over (2003), Jared Diamond’s Collapse (2005), James Howard Kunstler’s The Long Emergency (2005), Clive Hamilton’s A Short History of Progress (2005), Elizabeth Kolbert’s Field Notes from a Catastrophe (2006), George Monbiot’s Heat (2006), another assessment report from the Intergovernmental Panel on Climate Change (IPCC, 2007), James Lovelock’s The Revenge of Gaia (2007), John Michael Greer’s The Long Descent (2008).
And in the past five years: Sharon Astyk and Aaron Newton’s A Nation of Farmers (2009), Hamilton’s Requiem for a Species (2010), Chris Martenson’sThe Crash Course (2011), Guy McPherson’s Walking Away from Empire (2011), Dmitri Orlov’s Reinventing Collapse (2011), Paul Gilding’s The Great Disruption (2012), an even more dire IPCC assessment report (2014), Elizabeth Kolbert’s The Sixth Extinction (2014), and the National Academy of Sciences and the Royal Society, Climate Change: Evidence and Causes (also this year). (With a few exceptions, I have listed only the first book in which each author shows a pervasive awareness of collapse.)
In addition, apart from the writers already listed, many of whom write blogs, you can find many provocative personal and organizational websites, some of which publish several writers, such as Arctic News (Sam Carara), Climate Progress (Joe Romm), Collapse of Industrial Civilization (xraymike 79), Collapsing into Consciousness (Gary Stamper), Culture Change (Jan Lundberg), Dark Mountain Project (Paul Kingsnorth), Grist, How to Save the World (Dave Pollard), Our Finite World (Gail Tverberg), Radio Ecoshock (hosted by Alex Smith), Speaking Truth to Power (articles gathered daily by Carolyn Baker), and Yale Environment 360 (edited by Roger Cohn Sr.).
We should of course judge not by the number of collapseniks, but by the quality of evidence these writers bring. It’s a conversation worth having.
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A Gift From The Collapseniks | Peak Oil News and Message Boards
A Gift From The Collapseniks | Peak Oil News and Message Boards.
Of what possible use is it to imagine the end of civilization or even of the species? Is it simply a pessimistic indulgence or can it contribute to progressive and other positive results?
When I was a child, my family’s pastor used to elbow into almost every sermon an admiring reference to “St. John languishing in exile on the rock-bound, sea-girt island of Patmos.” He was referring to the author of the grisly Book of Revelation , the dominant Western source of apocalyptic imagery.
We chuckle at cartoons of robed men on city sidewalks carrying placards that claim, “the end is nigh,” and at bumper stickers that declare, “in case of Rapture, this car will be driverless” (which sounds more dangerous than driving under the influence). Since St. John’s fiery prose, there have been many predictions of the end, including the modern cult studied by social psychologist Leon Festinger in When Prophecy Fails (1956).
Those who see danger tend to accuse others of “denial,” of “refusing to listen.” Perhaps a tincture of denial has given humans an evolutionary advantage. Speaking positively, psychologists refer to “optimism bias.” Most of us tend to imagine that things will turn out better than they do, a common mental pattern studied by such authors as Tali Sharot. While this trait arguably encourages enterprises, some of which succeed, it may also, on occasion, blind us to the possibility of avoidable loss, even terminal loss.
In A Year to Live (1997), Stephen Levine asks readers to pretend they have the awful privilege of knowing when they will die (in 52 weeks) and challenges them to review their histories honestly and to live abundantly in the remaining time. As my wife and I know, from working through Levine’s book with another couple, the result can be an enhancement of life.
During the Cold War, Joanna Macy gave us Despair and Personal Power in the Nuclear Age (1983). Before writing on ecology, on general systems theory, and on hope, Macy taught that a fuller life, including activism, could be approached through uninhibited expression of the deep feelings that led us to be concerned. More recent examples are the grief work of Carolyn Baker, author of Sacred Demise (2009) and Collapsing Consciously (2013) and of Francis Weller, author of Entering the Healing Ground (2012).
Still, it’s going against the grain to ask people to imagine extreme loss. Unlike some so-called primitive groups, our society is not set up for it, apart from isolated workshops. According to both Baker and Weller, working through grief requires the support of a community and the additional safety of a ritual container. For all its virtues, U.S. culture is based more on individuality, the frontier, and risky enterprise, than on mutual support and safe space.
Nonetheless, a growing number of observers of climate change and other trends foresee disaster. We can describe them as collapseniks, a term with a suffix derived from Russian in honor of Dmitri Orlo*, who grew up in St. Petersburg (then Leningrad) and emigrated to the U.S. An engineer, sailor, and writer, Orlov believes that his adopted country will descend into collapse, and that the U.S. is less well prepared than the country where he was raised. If we define collapsenik as an observer who is conscious of the possibility of economic, political, and social collapse and who believes collapse is worth taking seriously, then Orlov has a parade of company, of which I will give chronological highlights at the end of this piece.
There are big differences among collapsenik authors and even in a single author at different times. A spectrum exists, from those who feel we could avoid the worst of climate change by changing our ways substantially (“we’re sleepwalking toward disaster but could conceivably wake up”) to those who believe our species is doomed (“it’s already too late”). For example, scientist Guy McPherson has come to believe that, as a species, we are headed toward “near-term extinction” (niftily abbreviated as NTE).
While pessimists predict NTE, optimists envision the triumph of a progressive politics that would render climate change survivable, perhaps shifting us toward a steady-state economy, slowing the sixth extinction of species, and fostering a network of local and democratic institutions. An optimistic scenario would resonate with what Macy, expressing hope, now calls “The Great Turning.”
In contrast, McPherson argues that it’s already too late for ad equate reform: humans have inadvertently created feedback loops that will keep making the situation worse. For example, the release of methane, caused (in part) by warming of the shallow Arctic ocean and the Siberian and Canadian tundra, will cause more warming because methane is a greenhouse gas even more dangerous than CO2. And so on.
Humans don’t have a very good record of predicting the future, in spite of various divinatory schemes. Whether developments are technological, political, or economic, we have proceeded without reliable forecasts. Given the surprises inherent in complex systems and in technical development, nobody can show that we face certain demise, though we can discuss probabilities.
Could we learn to regard collapse not as a firm prediction but as a scenario worth exploring? After all, the Pentagon has contingency plans for events that are arguably less likely and less devastating.
To return to our original question, what could be the use of taking seriously a scenario of collapse, especially the views that argue that it’s already too late or that changes could help, but probably won’t be made? If we feel grief at what seems to be happening, instead of simply seeming smug in a prediction of certain doom, if we invent ways to lessen the turbulence and create the best that is possible in the new circumstances, if we live intensely instead of habitually, then the scenario of demise might seem no worse than knowing that, as individuals, we each will die. Meanwhile, what are we capable of?
According to Rebecca Solnit’s A Paradise Built in Hell (2010), disasters can bring out the best in people. If the scenario of the collapseniks plays out, we will have opportunities to discover what kind of gardens we can create in the ruins of our present society. So what is the gift? That by responding fully to the scenario, we can meanwhile live more intensely and develop the elements of a society that, under new conditions as they develop, would work.
Now here are the promised examples of recent writers who are aware of the possibility of collapse and who, in various cases, are sketching alternatives. In this century, we’ve been given Tim Flahherty’s The Weather Makers (2001), Richard Heinberg’s The Party’s Over (2003), Jared Diamond’s Collapse (2005), James Howard Kunstler’s The Long Emergency (2005), Clive Hamilton’s A Short History of Progress (2005), Elizabeth Kolbert’s Field Notes from a Catastrophe (2006), George Monbiot’s Heat (2006), another assessment report from the Intergovernmental Panel on Climate Change (IPCC, 2007), James Lovelock’s The Revenge of Gaia (2007), John Michael Greer’s The Long Descent (2008).
And in the past five years: Sharon Astyk and Aaron Newton’s A Nation of Farmers (2009), Hamilton’s Requiem for a Species (2010), Chris Martenson’sThe Crash Course (2011), Guy McPherson’s Walking Away from Empire (2011), Dmitri Orlov’s Reinventing Collapse (2011), Paul Gilding’s The Great Disruption (2012), an even more dire IPCC assessment report (2014), Elizabeth Kolbert’s The Sixth Extinction (2014), and the National Academy of Sciences and the Royal Society, Climate Change: Evidence and Causes (also this year). (With a few exceptions, I have listed only the first book in which each author shows a pervasive awareness of collapse.)
In addition, apart from the writers already listed, many of whom write blogs, you can find many provocative personal and organizational websites, some of which publish several writers, such as Arctic News (Sam Carara), Climate Progress (Joe Romm), Collapse of Industrial Civilization (xraymike 79), Collapsing into Consciousness (Gary Stamper), Culture Change (Jan Lundberg), Dark Mountain Project (Paul Kingsnorth), Grist, How to Save the World (Dave Pollard), Our Finite World (Gail Tverberg), Radio Ecoshock (hosted by Alex Smith), Speaking Truth to Power (articles gathered daily by Carolyn Baker), and Yale Environment 360 (edited by Roger Cohn Sr.).
We should of course judge not by the number of collapseniks, but by the quality of evidence these writers bring. It’s a conversation worth having.
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Another East-Ukraine City Falls To Pro-Russian Protesters As Ukraine Denies Sending Troops To Crimea | Zero Hedge
Despite clear evidence otherwise, presented here extensively yesterday, this morning Ukraine has denied that is has “plans to send armed forces to Crimea” and instead Ukrainian troops are performing “training exercises” in base, Interfax news agency quoted Acting Defence Minister Ihor Tenyukh as saying on Sunday. Responding to media speculation about Ukrainian military movements after Russian forces took control of Crimea, Tenyukh said the only troop movements that might be seen would be from one base to another to take part in the training exercises. “No movements, no departures for Crimea by the armed forces are foreseen. They are doing their routine work which the armed have always had,” he said. Right, and Russia just happened to launch an ICBM as a “drill” in the middle of the greatest Cold War re-escalation in 30 years.
Adding somewhat to the confusion was the statement by Pavlo Shysholin, head of country’s border guard service tells reporters in Kiev, who said that so far Ukrainian border guards denied entry to 3,500 people and that Ukraine border troops remain in Crimea, would leave only if “forced” but more importanly:
- UKRAINE BORDER TROOPS BOOST FORCES ON EAST BORDER: SHYSHOLIN
So there is an escalation in the mobilization, only not toward Crimea, which the Russians already control entirely, but the critical East, which as everyone knows, is the next target for Putin annexation once the Crimean referendum passes in one week.
Confirming just this were just released photos from another major city in east Ukraine, this time Lugansk, where pro-Russian protesters just stormed and took over the city administration building. Their demand: to be part of the March 16 referendum to become part of Russia.
A clip of the latest peaceful pro-Russian takeover via LifeNews:
Lugansk’s location in context:
And so one by one, the cities in east Ukraine are slipping away to Russia, even as Obama continues his Key Largo vacation and makes the occasional phone call.
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Another East-Ukraine City Falls To Pro-Russian Protesters As Ukraine Denies Sending Troops To Crimea | Zero Hedge
Despite clear evidence otherwise, presented here extensively yesterday, this morning Ukraine has denied that is has “plans to send armed forces to Crimea” and instead Ukrainian troops are performing “training exercises” in base, Interfax news agency quoted Acting Defence Minister Ihor Tenyukh as saying on Sunday. Responding to media speculation about Ukrainian military movements after Russian forces took control of Crimea, Tenyukh said the only troop movements that might be seen would be from one base to another to take part in the training exercises. “No movements, no departures for Crimea by the armed forces are foreseen. They are doing their routine work which the armed have always had,” he said. Right, and Russia just happened to launch an ICBM as a “drill” in the middle of the greatest Cold War re-escalation in 30 years.
Adding somewhat to the confusion was the statement by Pavlo Shysholin, head of country’s border guard service tells reporters in Kiev, who said that so far Ukrainian border guards denied entry to 3,500 people and that Ukraine border troops remain in Crimea, would leave only if “forced” but more importanly:
- UKRAINE BORDER TROOPS BOOST FORCES ON EAST BORDER: SHYSHOLIN
So there is an escalation in the mobilization, only not toward Crimea, which the Russians already control entirely, but the critical East, which as everyone knows, is the next target for Putin annexation once the Crimean referendum passes in one week.
Confirming just this were just released photos from another major city in east Ukraine, this time Lugansk, where pro-Russian protesters just stormed and took over the city administration building. Their demand: to be part of the March 16 referendum to become part of Russia.
A clip of the latest peaceful pro-Russian takeover via LifeNews:
Lugansk’s location in context:
And so one by one, the cities in east Ukraine are slipping away to Russia, even as Obama continues his Key Largo vacation and makes the occasional phone call.
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Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007; $27 Trillion Is "Foreign-Held" | Zero Hedge
While the US may be rejoicing its daily stock market all time highs day after day, it may come as a surprise to many that global equity capitalization has hardly performed as impressively compared to its previous records set in mid-2007. In fact, between the last bubble peak, and mid-2013, there has been a $3.86 trillion decline in the value of equities to $53.8 trillion over this six year time period, according to data compiled by Bloomberg. Alas, in a world in which there is no longer even hope for growth without massive debt expansion, there is a cost to keeping global equities stable (and US stocks at record highs): that cost is $30 trillion, or nearly double the GDP of the United States, which is by how much global debt has risen over the same period. Specifically, total global debt has exploded by 40% in just 6 short years from 2007 to 2013, from “only” $70 trillion to over $100 trillion as of mid-2013, according to the BIS’ just-released quarterly review.
It should come as no surprise to anyone by now, but the only reason why global stocks haven’t plummeted since the Lehman collapse is simple: governments have become the final backstop for onboarding risk, with a Central Bank stamp of approval – in other words, the very framework of the fiat system is at stake should global equity levels collapse. The BIS admits as much: “Given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers,” according to Branimir Gruic, an analyst, and Andreas Schrimpf, an economist at the BIS.
It should also come as no surprise that courtesy of ZIRP and monetization of debt by every central bank, debt has itself become money regardless of duration or maturity (although recent taper tantrums have shown what will happen once rates start rising across the curve again), explaining the mindblowing tsunami of new debt issuance, which will certainly never be repaid, and whose rolling will become impossible once interest rates rise. But of course, under central planning that is not allowed. As Bloomberg reminds us, marketable U.S. government debt outstanding has surged to a record $12 trillion, up from $4.5 trillion at the end of 2007, according to U.S. Treasury data compiled by Bloomberg. Corporate bond sales globally jumped during the period, with issuance totaling more than $21 trillion, Bloomberg data show.
And as we won’t tire of pointing out, China’s credit expansion over this period is easily the most important, and overlooked one. Which is why with China out of the epic debt issuance picture, and with the Fed tapering, all bets are slowly coming off.
Bloomberg also comments, humorously, as follows: “concerned that high debt loads would cause international investors to avoid their markets, many nations resorted to austerity measures of reduced spending and increased taxes, reining in their economies in the process as they tried to restore the fiscal order they abandoned to fight the worldwide recession.” Of course, once gross government corruption and incompetence made all attempts at austerity futile, and with even the austere nations’ debt levels continuing to breach record highs confirming there was never any actual austerity to begin with, the push to pretend to reign debt in has finally faded, and the entire world is once again engaged – at breakneck speed – in doing what caused the great financial crisis in the first place: the issuance of record amounts of unsustainable debt.
All of the above is known. What may not be known is just who is issuing, and respectively, purchasing, this global debt-funded spending spree, especially in a world in which one’s debt is another’s asset. Here is the BIS’s answer to that question:
Cross-border investments in global debt markets since the crisis
Branimir Grui? and Andreas Schrimpf
Global debt markets have grown to an estimated $100 trillion (in amounts outstanding) in mid-2013 (Graph C, left-hand panel), up from $70 trillion in mid-2007. Growth has been uneven across the main market segments. Active issuance by governments and non-financial corporations has lifted the share of domestically issued bonds, whereas more restrained activity by financial institutions has held back international issuance (Graph C, left-hand panel).
Not surprisingly, given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers (Graph C, left-hand panel). They mostly issue debt in domestic markets, where amounts outstanding reached $43 trillion in June 2013, about 80% higher than in mid-2007 (as indicated by the yellow area in Graph C, left-hand panel). Debt issuance by non-financial corporates has grown at a similar rate (albeit from a lower base). As with governments, non-financial corporations primarily issue domestically. As a result, amounts outstanding of non-financial corporate debt in domestic markets surpassed $10 trillion in mid-2013 (blue area in Graph C, left-hand panel). The substitution of traditional bank loans with bond financing may have played a role, as did investors’ appetite for assets offering a pickup to the ultra-low yields in major sovereign bond markets.
Financial sector deleveraging in the aftermath of the financial crisis has been a primary reason for the sluggish growth of international compared to domestic debt markets. Financials (mostly banks and non-bank financial corporations) have traditionally been the most significant issuers in international debt markets (grey area in Graph C, left-hand panel). That said, the amount of debt placed by financials in the international market has grown by merely 19% since mid-2007, and the outstanding amounts in domestic markets have even edged down by 5% since end-2007.
Who are the investors that have absorbed the vast amount of newly issued debt? Has the investor base been mostly domestic or have cross-border investments grown at a similar pace to global debt markets? To provide a perspective, we combine data from the BIS securities statistics with those of the IMF Coordinated Portfolio Investment Survey (CPIS). The results of the CPIS suggest that non-resident investors held around $27 trillion of global debt securities, either as reserve assets or in the form of portfolio investments (Graph C, centre panel). Investments in debt securities by non-residents thus accounted for roughly one quarter of the stock of global debt securities, with domestic investors accounting for the remaining 75%.
The global financial crisis has left a dent in cross-border portfolio investments in global debt securities. The share of debt securities held by cross-border investors either as reserve assets or via portfolio investments (as a percentage of total global debt securities markets) fell from around 29% in early 2007 to 26% in late 2012. This reversed the trend in the pre-crisis period, when it had risen by 8 percentage points from 2001 to a peak in 2007. It suggests that the process of international financial integration may have gone partly into reverse since the onset of the crisis, which is consistent with other recent findings in the literature.
This could be temporary, though. The latest IMF-CPIS data indicate that cross-border investments in debt securities recovered slightly in the second half of 2012, the most recent period for which data are available.
The contraction in the share of cross-border holdings differed across countries and regions (Graph C, right-hand panel). Cross-border holdings of debt issued by euro area residents stood at 47% of total outstanding amounts in late 2012, 10 percentage points lower than at the peak in 2006. A similar trend can be observed for the United Kingdom. This suggests that the majority of new debt issued by euro area and UK residents has been absorbed by domestic investors. Newly issued US debt securities, by contrast, were increasingly held by cross-border investors (Graph C, right-hand panel). The same is true for debt securities issued by borrowers from emerging market economies. The share of emerging market debt securities held by cross-border investors picked up to 12% in 2012, roughly twice as high as in 2008.
* * *
Source: BIS
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Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007; $27 Trillion Is “Foreign-Held” | Zero Hedge
While the US may be rejoicing its daily stock market all time highs day after day, it may come as a surprise to many that global equity capitalization has hardly performed as impressively compared to its previous records set in mid-2007. In fact, between the last bubble peak, and mid-2013, there has been a $3.86 trillion decline in the value of equities to $53.8 trillion over this six year time period, according to data compiled by Bloomberg. Alas, in a world in which there is no longer even hope for growth without massive debt expansion, there is a cost to keeping global equities stable (and US stocks at record highs): that cost is $30 trillion, or nearly double the GDP of the United States, which is by how much global debt has risen over the same period. Specifically, total global debt has exploded by 40% in just 6 short years from 2007 to 2013, from “only” $70 trillion to over $100 trillion as of mid-2013, according to the BIS’ just-released quarterly review.
It should come as no surprise to anyone by now, but the only reason why global stocks haven’t plummeted since the Lehman collapse is simple: governments have become the final backstop for onboarding risk, with a Central Bank stamp of approval – in other words, the very framework of the fiat system is at stake should global equity levels collapse. The BIS admits as much: “Given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers,” according to Branimir Gruic, an analyst, and Andreas Schrimpf, an economist at the BIS.
It should also come as no surprise that courtesy of ZIRP and monetization of debt by every central bank, debt has itself become money regardless of duration or maturity (although recent taper tantrums have shown what will happen once rates start rising across the curve again), explaining the mindblowing tsunami of new debt issuance, which will certainly never be repaid, and whose rolling will become impossible once interest rates rise. But of course, under central planning that is not allowed. As Bloomberg reminds us, marketable U.S. government debt outstanding has surged to a record $12 trillion, up from $4.5 trillion at the end of 2007, according to U.S. Treasury data compiled by Bloomberg. Corporate bond sales globally jumped during the period, with issuance totaling more than $21 trillion, Bloomberg data show.
And as we won’t tire of pointing out, China’s credit expansion over this period is easily the most important, and overlooked one. Which is why with China out of the epic debt issuance picture, and with the Fed tapering, all bets are slowly coming off.
Bloomberg also comments, humorously, as follows: “concerned that high debt loads would cause international investors to avoid their markets, many nations resorted to austerity measures of reduced spending and increased taxes, reining in their economies in the process as they tried to restore the fiscal order they abandoned to fight the worldwide recession.” Of course, once gross government corruption and incompetence made all attempts at austerity futile, and with even the austere nations’ debt levels continuing to breach record highs confirming there was never any actual austerity to begin with, the push to pretend to reign debt in has finally faded, and the entire world is once again engaged – at breakneck speed – in doing what caused the great financial crisis in the first place: the issuance of record amounts of unsustainable debt.
All of the above is known. What may not be known is just who is issuing, and respectively, purchasing, this global debt-funded spending spree, especially in a world in which one’s debt is another’s asset. Here is the BIS’s answer to that question:
Cross-border investments in global debt markets since the crisis
Branimir Grui? and Andreas Schrimpf
Global debt markets have grown to an estimated $100 trillion (in amounts outstanding) in mid-2013 (Graph C, left-hand panel), up from $70 trillion in mid-2007. Growth has been uneven across the main market segments. Active issuance by governments and non-financial corporations has lifted the share of domestically issued bonds, whereas more restrained activity by financial institutions has held back international issuance (Graph C, left-hand panel).
Not surprisingly, given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers (Graph C, left-hand panel). They mostly issue debt in domestic markets, where amounts outstanding reached $43 trillion in June 2013, about 80% higher than in mid-2007 (as indicated by the yellow area in Graph C, left-hand panel). Debt issuance by non-financial corporates has grown at a similar rate (albeit from a lower base). As with governments, non-financial corporations primarily issue domestically. As a result, amounts outstanding of non-financial corporate debt in domestic markets surpassed $10 trillion in mid-2013 (blue area in Graph C, left-hand panel). The substitution of traditional bank loans with bond financing may have played a role, as did investors’ appetite for assets offering a pickup to the ultra-low yields in major sovereign bond markets.
Financial sector deleveraging in the aftermath of the financial crisis has been a primary reason for the sluggish growth of international compared to domestic debt markets. Financials (mostly banks and non-bank financial corporations) have traditionally been the most significant issuers in international debt markets (grey area in Graph C, left-hand panel). That said, the amount of debt placed by financials in the international market has grown by merely 19% since mid-2007, and the outstanding amounts in domestic markets have even edged down by 5% since end-2007.
Who are the investors that have absorbed the vast amount of newly issued debt? Has the investor base been mostly domestic or have cross-border investments grown at a similar pace to global debt markets? To provide a perspective, we combine data from the BIS securities statistics with those of the IMF Coordinated Portfolio Investment Survey (CPIS). The results of the CPIS suggest that non-resident investors held around $27 trillion of global debt securities, either as reserve assets or in the form of portfolio investments (Graph C, centre panel). Investments in debt securities by non-residents thus accounted for roughly one quarter of the stock of global debt securities, with domestic investors accounting for the remaining 75%.
The global financial crisis has left a dent in cross-border portfolio investments in global debt securities. The share of debt securities held by cross-border investors either as reserve assets or via portfolio investments (as a percentage of total global debt securities markets) fell from around 29% in early 2007 to 26% in late 2012. This reversed the trend in the pre-crisis period, when it had risen by 8 percentage points from 2001 to a peak in 2007. It suggests that the process of international financial integration may have gone partly into reverse since the onset of the crisis, which is consistent with other recent findings in the literature.
This could be temporary, though. The latest IMF-CPIS data indicate that cross-border investments in debt securities recovered slightly in the second half of 2012, the most recent period for which data are available.
The contraction in the share of cross-border holdings differed across countries and regions (Graph C, right-hand panel). Cross-border holdings of debt issued by euro area residents stood at 47% of total outstanding amounts in late 2012, 10 percentage points lower than at the peak in 2006. A similar trend can be observed for the United Kingdom. This suggests that the majority of new debt issued by euro area and UK residents has been absorbed by domestic investors. Newly issued US debt securities, by contrast, were increasingly held by cross-border investors (Graph C, right-hand panel). The same is true for debt securities issued by borrowers from emerging market economies. The share of emerging market debt securities held by cross-border investors picked up to 12% in 2012, roughly twice as high as in 2008.
* * *
Source: BIS
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India Backs Russia’s ‘Legitimate Interests’ in Ukraine | The Diplomat
India Backs Russia’s ‘Legitimate Interests’ in Ukraine | The Diplomat.
India broke with the international community in acknowledging that Russia has legitimate interests in Ukraine.
On Thursday a senior Indian official appeared to endorse Russia’s position in Ukraine in recent days, even as Delhi urged all parties involved to seek a peaceful resolution to the diplomatic crisis.
When asked for India’s official assessment of the events in Ukraine, National Security Adviser Shivshankar Menon responded:
“We hope that whatever internal issues there are within Ukraine are settled peacefully, and the broader issues of reconciling various interests involved, and there are legitimate Russian and other interests involved…. We hope those are discussed, negotiated and that there is a satisfactory resolution to them.”
The statement was made on the same day that Crimea’s parliament voted to hold a referendum for secession from Ukraine.
Local Indian media noted that Menon’s statement about Russia’s legitimate interests in Ukraine made it the first major nation to publicly lean toward Russia. As my colleague Shannon has reported throughout the week,many of China’s public statements could be interpreted as backing Russia in Ukraine, despite Beijing’s own concerns about ethnic breakaway states and its principle of non-interference.
However, at other times, including at the UN Security Council, Beijing has appeared to be subtly rebuking Moscow by suggesting that its unilateral path threatened regional and global stability. At the very least, however, Beijing has characteristically not gone as far as the U.S. and the West in publicly scolding Vladimir Putin for the military intervention in Crimea.
Ukraine certainly appeared to interpret India’s endorsement of Russia’s legitimate interests as far more hostile than Beijing’s position on Russia’s actions. According to the Telegraph India, a Ukrainian embassy spokesperson stationed in Delhi responded to Menon’s comments by saying: “We are not sure how Russia can be seen having legitimate interests in the territory of another country. In our view, and in the view of much of the international community, this is a direct act of aggression and we cannot accept any justification for it.”
The larger question, of course, is why India decided to take such a relatively pro-Russian stance on the Ukraine issue? There are a number of possibilities.
First, India and Russia have long-standing ties and Moscow is Delhi’s top arms provider. Moreover, Russia and the former Soviet Union has been nearly alone in the international community in continue to back India during crucial moments such as following its 1974 and 1998 nuclear tests.
It’s also possible that Delhi believes Russia’s intervention offers the best chance of stabilizing Ukraine. India’s Foreign Ministry on Thursday also released a statement noting that there are “more than 5,000 Indian nationals, including about 4,000 students, in different parts of Ukraine.” At the same time, India’s overall interest in Ukraine is fairly negligible—certainly less than China’s, for instance—and thus Delhi might assess that it has more to gain by publicly sticking by Moscow at a time when it desperately needs support.
India also has plenty of interests in certain regions along its peripheral, and at certain times—such as during the Sri Lanka Civil War—has intervened to protect various societal groups with strong ties to India. Unlike China, then, India may assess it has an interest in an international precedent in which major powers can intervene in countries along their borders. At the same time, such an international precedent could be used by Pakistan to justify intervening in Kashmir.
Telegraph India offers another reason. According to the report cited above, Indian officials have toldTelegraph India that, in the newspaper’s words, Delhi is “convinced that the West’s tacit support for a series of attempted coups against democratically elected governments — in Egypt, Thailand and now Ukraine — has only weakened democratic roots in these countries.”
This rationale would be consistent with India’s long-standing, deep-seated abhorrence to anything that merely resembles Western imperialism. At the same time, India has not historically made supporting democracy abroad a central tenet of its foreign policy.
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India Backs Russia’s ‘Legitimate Interests’ in Ukraine | The Diplomat
India Backs Russia’s ‘Legitimate Interests’ in Ukraine | The Diplomat.
India broke with the international community in acknowledging that Russia has legitimate interests in Ukraine.
On Thursday a senior Indian official appeared to endorse Russia’s position in Ukraine in recent days, even as Delhi urged all parties involved to seek a peaceful resolution to the diplomatic crisis.
When asked for India’s official assessment of the events in Ukraine, National Security Adviser Shivshankar Menon responded:
“We hope that whatever internal issues there are within Ukraine are settled peacefully, and the broader issues of reconciling various interests involved, and there are legitimate Russian and other interests involved…. We hope those are discussed, negotiated and that there is a satisfactory resolution to them.”
The statement was made on the same day that Crimea’s parliament voted to hold a referendum for secession from Ukraine.
Local Indian media noted that Menon’s statement about Russia’s legitimate interests in Ukraine made it the first major nation to publicly lean toward Russia. As my colleague Shannon has reported throughout the week,many of China’s public statements could be interpreted as backing Russia in Ukraine, despite Beijing’s own concerns about ethnic breakaway states and its principle of non-interference.
However, at other times, including at the UN Security Council, Beijing has appeared to be subtly rebuking Moscow by suggesting that its unilateral path threatened regional and global stability. At the very least, however, Beijing has characteristically not gone as far as the U.S. and the West in publicly scolding Vladimir Putin for the military intervention in Crimea.
Ukraine certainly appeared to interpret India’s endorsement of Russia’s legitimate interests as far more hostile than Beijing’s position on Russia’s actions. According to the Telegraph India, a Ukrainian embassy spokesperson stationed in Delhi responded to Menon’s comments by saying: “We are not sure how Russia can be seen having legitimate interests in the territory of another country. In our view, and in the view of much of the international community, this is a direct act of aggression and we cannot accept any justification for it.”
The larger question, of course, is why India decided to take such a relatively pro-Russian stance on the Ukraine issue? There are a number of possibilities.
First, India and Russia have long-standing ties and Moscow is Delhi’s top arms provider. Moreover, Russia and the former Soviet Union has been nearly alone in the international community in continue to back India during crucial moments such as following its 1974 and 1998 nuclear tests.
It’s also possible that Delhi believes Russia’s intervention offers the best chance of stabilizing Ukraine. India’s Foreign Ministry on Thursday also released a statement noting that there are “more than 5,000 Indian nationals, including about 4,000 students, in different parts of Ukraine.” At the same time, India’s overall interest in Ukraine is fairly negligible—certainly less than China’s, for instance—and thus Delhi might assess that it has more to gain by publicly sticking by Moscow at a time when it desperately needs support.
India also has plenty of interests in certain regions along its peripheral, and at certain times—such as during the Sri Lanka Civil War—has intervened to protect various societal groups with strong ties to India. Unlike China, then, India may assess it has an interest in an international precedent in which major powers can intervene in countries along their borders. At the same time, such an international precedent could be used by Pakistan to justify intervening in Kashmir.
Telegraph India offers another reason. According to the report cited above, Indian officials have toldTelegraph India that, in the newspaper’s words, Delhi is “convinced that the West’s tacit support for a series of attempted coups against democratically elected governments — in Egypt, Thailand and now Ukraine — has only weakened democratic roots in these countries.”
This rationale would be consistent with India’s long-standing, deep-seated abhorrence to anything that merely resembles Western imperialism. At the same time, India has not historically made supporting democracy abroad a central tenet of its foreign policy.
Olduvaiblog: Musings on the coming collapse 