Asia Faces Rapid Economic Slowdown

From the Telegraph:

The HSBC/Markit manufacturing index for China fell to 47.6 in August, the lowest since the onset of Great Recession in late 2008. Inventories are rising. The index for new export orders fell to the lowest since March 2009. “Beijing must step up policy easing to stabilise growth,” said Hongbin Qu from HSBC.

China’s official PMI manufacturing index – weighted to big companies – also fell through the contraction line of 50, though services are holding up better.

Evidence of a hard landing over the summer is becoming clearer. Rail volumes fell 8.2pc in July from a year before. The Japanese group Komatsu said its exports of hydraulic excavators to China – a proxy gauge for Chinese construction – fell 48pc in August from a year before.

The twin effect of China’s downturn and Europe’s double-dip recession has turned into a full-blown shock for much of Asia. Hong Kong and Singapore both contracted in the second quarter and are probably in technical recession.

South Korea’s exports fell 6.2pc in August, with car sales down 18.2pc. India’s exports fell 14.8pc in July, an extra blow as it grapples with its own post-boom hangover. “The coming days ahead are tough,” said Indian commerce secretary S R Rao.

Stephen Jen from SLJ Macro Patrners said we are starting to see Phase III of the global crisis as “the eye of the storm moves East”, with China and emerging markets succumbing at last to the effects of debt leverage.

Mr Jen said markets have already discounted any likely trouble in Europe and America, but have yet to “price” the mounting risks in Asia correctly. “There seems to be a big gap between the prevalent view on China, and what is likely to happen: the sanguine consensus view that China can do no wrong will likely be proven to be incorrect,” he said.

Read the whole thing.

Earthquake in China Kills 50...

...and forces 100,000 to flee their homes.

At around 11.19am local time a 5.7 magnitude quake struck on the mountainous border region between China’s Yunnan and Guizhou provinces.

In the region around Yunnan’s Yiliang town, reportedly the worst hit area, at least 43 people were killed and 20,000 houses were damaged, local officials told the state-run Xinhua news agency.

Following the initial earthquake 16 aftershocks hit the area, including a 5.6 magnitude quake, Xinhua reported.

“We felt four or 5 aftershocks,” Zhu Meilian, a 40-year-old optician from Yiliang told the Daily Telegraph by mobile phone. “All the shops are closed around here. We have all gathered outside. We think we are going to spend the night outside today.”

Mr Zhu said rumours about further aftershocks had left locals nervous. “We heard there might be another wave at around 7pm,” he said.

Late on Friday afternoon there were reports that a school had collapsed in the town of Jiaokui, near Yiliang, leaving three dead. School children were still trapped inside, according Min Yunxiao, a reporter from China Newspaper Industry.

Xinhua reported that rescue workers and relief teams were heading to the affected region, a remote area of rural China packed with craggy mountains that are prone to rockslides.

A local lawyer, who gave her name as Ms Hou, said the quake had “mainly [caused] loss of property not loss of life.”

Another Yiliang resident, an interior designer who gave his name as Mr Ye, said the situation could be more severe in rural areas.

Almost 90,000 people lost their lives and 5 million were forced from their homes following a 2008 earthquake in Sichuan, to the north of Yunnan province.

Iran Sends Military Advisors to Syria

The Telegraph reports:

Iran is intensifying its support for the regime of Bashar al-Assad by sending 150 senior Revolutionary Guards commanders to Syria to help repel opposition attempts to overthrow the government.

Western intelligence officials say that Iran's president, Mahmoud Ahmadinejad, has personally sanctioned the dispatch of the experienced officers to ensure that the Assad regime, Iran's most important regional ally, survives the threat to its survival.

In addition, Iran has shipped hundreds of tons of military equipment, including guns, rockets, and shells, to Syria through the regular air corridor that has been established between Damascus and Tehran.

Intelligence officials believe the increased Iranian support has been responsible for the growing effectiveness of the Assad regime's tactics in forcing anti-government rebel groups on the defensive.

In the past few weeks, pro-Assad forces have seized the offensive by launching a series of well-coordinated attacks against rebel strongholds in Damascus and Aleppo.

The Iranian operation to support Mr Assad is being masterminded by Qassem Suleimani, the head of the Guards' Quds force which is responsible for overseeing Iran's overseas operations. The decision to increase Iran's support for Syria was taken after the Syrian defence minister and Assad's brother-in-law were killed in a suicide bomb attack at Syria's national security headquarters in July, together with a number of other senior defence officials.

* * *

Under the Assad regime Damascus has allowed Iran to ship regular supplies of arms and equipment to southern Lebanon to enable Hizbollah to sustain its aggressive stance against Israel. The ayatollahs fear that any change of regime in Syria might cut the supply line. Intelligence officials believe that many of the Iranian commanders sent to Syria have previous experience of working in Lebanon with Hizbollah.

I'm sure that the aid is not without strings--strings which probably involve further coordination against Israel and the West.

"The Gadianton Robbers as Guerrilla Warriors" (Updated)

The Maxwell Institute has an interesting article outlining the guerrilla warfare tactics used by the Gadianton Robbers in the Book of Mormon. 

Update (April 2, 2016): old link was dead; updated link.

Putin Orders Military Upgrades

The Daily Mail reports:

Vladimir Putin has ordered the modernisation of Russia's armaments on the same scale as achieved by Stalin at the height of his reign of terror.

The Kremlin leader made clear he was tired of Western jibes about the country's outdated firepower as displayed at annual Red Square parades.

He is even thought to have reference the former dictators era as he told top security officials: 'We must modernise our defence industry as comprehensively as it was done in the 1930s.'

He rapped his defence chiefs for failing to draw up plans to meet his ambitious demands for a giant leap forward in Russia's military capability which has slipped since the end of the Cold War.

But where is he going to get the money?

Echoes of Azimov's Foundation

The New Scientist has an article entitled "Calculated Violence: Numbers that predict revolution." Mathematician Peter Turchin claims to have discovered a method of analyzing history with mathematics that has revealed regular cycles of stability and revolution. From the article:

Reasoning that the fate of an empire rests ultimately on social cohesion, he has used historical records to track the prevalence of what he calls collective violence - deaths due to political assassinations, riots and civil wars, but not international wars or ordinary crimes - in three major civilisations, the Roman Republic, medieval Europe and Tsarist Russia. Applying mathematical tools borrowed from population biology, he has found that in each case deaths from collective violence follow two superimposed cycles, one spanning two to three centuries and the other about 50 years (Secular Cycles, Princeton University Press, 2009). What's more, he thinks his data provide enough leverage to understand what drives the longer cycle.

The likeliest explanation, he says, is an idea known as demographic-structural theory, proposed two decades ago by Jack Goldstone at George Mason University in Arlington, Virginia. This argues that in a prosperous culture, population growth or advancing technology eventually leads to an oversupply of labour. That is good news for an expanding upper class who can more easily exploit an increasingly desperate labour force. Eventually, though, the society becomes so top-heavy that even some members of the elite can no longer afford the good life. Factionalism sets in as the upper classes fight among themselves, social cohesion declines, and the state begins to lose control of its citizens. Then, and only then, does widespread violence break out. Anarchy reigns until enough people fall out of the elite classes, at which point growth and prosperity can return.

A tidy story, but is it true? Fortunately for Turchin, the theory makes predictions that can be tested. In particular, it predicts that social collapse and widespread violence do not rear their heads when life first gets grim for the working classes, as you would expect if workers' misery were the catalyst. Instead, unrest should follow a generation or two later, because it takes that long to accumulate an excess of wealthy, highly educated elites. This is exactly what Turchin found when he compared the timing of collective violence with economic indicators such as wages, social inequality and population growth - a measure of labour supply - in the three civilisations. As a further test, he looked at the dates on coins in hoards unearthed by archaeologists. Coin hoards are an excellent proxy for political unrest, since their owners must have buried them in fear during dangerous times and then experienced some misfortune that prevented them from digging them up later. Again, he found that civil war lagged behind economic hardship by a generation or two. Moreover, the same pattern holds true for the US over the past 200 years, he reports in a new paper (Journal of Peace Research, vol 4, p 577 and see diagram).

Turchin is less certain about the causes of the 50-year cycle. His best guess is that people who grow up in times of strife come to crave stability, while those who grow up in stable times are more willing to rock the boat. This leads, he thinks, to a two-generation cycle of stability and violence. "It's not as well tested," he says. "Take it with a grain of salt."

So what does he predict in our near future?

Two years ago, Turchin put his reputation on the line by predicting publicly that political instability in the US and western Europe will shoot up in the coming decade (Nature, vol 463, p 608). In his new paper he provides more evidence for an impending crisis in the US, where both cycles look to be approaching a peak in 2020. Allowing for some imprecision in his calculations, Turchin says that if we make it to 2030 without major turmoil he will conclude that his prediction - and hence the underlying theory - is wrong. He doesn't think that will happen, though, and estimates that he has an 80 per cent chance of being right.

I don't know if a prediction of political instability made in 2010 really counts. It was (and is) obvious that the West had gone over a financial cliff. And critics note that his theory doesn't account for the influence of a particular leader, or black swan events like epidemics. Says the article:

Turchin's cyclic theory of history also seems to leave out any role for unique events such as changes in climate, disease outbreaks or the appearance of a remarkable, history-changing individual. "The patterns are more complex, more chaotic, than the patterns created by his model," says Preiser-Kapeller.

Second Day of Rioting in Kenya

Riots in Kenya's second largest city, Majengo:

Riots have rocked Kenya's second-largest city for a second day, again turning deadly. The violence was triggered by the killing of a Muslim cleric accused by the United States of aiding Islamist militants in Somalia.

Police battled stone-throwing youths on Tuesday, firing tear gas and warning shots as the rioters barricaded streets with burning tires in Majengo.

The district is a predominantly Muslim neighborhood in Mombasa, Kenya's second-largest city. Looting was also reported.

In support of the rioters, Islamist militant group al-Shabaab called on Kenyan Muslims to "take all necessary measures" to defend their religion.

"Muslims must take the matter into their own hands, stand united against the kuffar (unbelievers) and take all necessary measures to protect their religion, their honor, their property and their lives from the enemies of Islam," the group said in a statement posted on Twitter. Al-Shabaab is considered a terrorist organization by the European Union and the US.

* * *

The violence in Mombasa erupted after cleric Aboud Rogo Mohammed, popularly known as "Rogo," was shot dead on Monday by "unknown people," according to Kenyan police. Mohammed was on the US and UN sanctions lists for his alleged support of al-Shabaab, a Somalia-based group linked to al Qaeda, which was said to have included fundraising and helping the group recruit new members.

The preacher was driving with his wife and children when gunmen opened fire on his vehicle, riddling it with bullets. Images released by his enraged supporters showed his bloody body slumped behind the wheel. Protests then erupted, with one person hacked to death, cars torched, businesses looted and at least five churches set ablaze.

When the Mississippi Changes Course

Reading about Isaac headed up the Mississippi River Valley reminded me of this article: "Mississippi Rising: Apocalypse Now?"

There is an event coming to the Deep South that is as inevitable, and as imminent in geologic time, and as unpredictable in human time, and as dangerous to human life and enterprise, as are the Great California Earthquakes. It is as easy to say as it is hard to imagine: the Mississippi River is going to change course, and when it does will reach the sea 65 miles west of New Orleans, at Morgan City. This meandering of the great river is not at all unusual – it happens frequently in geologic time – and is the process that created the Mississippi River Delta – a 200-mile-wide, three-million-acre arc of coastal wetlands stretching roughly from Lafayette, Louisiana, east to Biloxi, Mississippi. As the river nears the Gulf of Mexico, on the flat coastal plain, the current slows, allowing its massive loads of silt to settle out, creating new wetlands and building up the river bed, which eventually becomes higher than the surrounding area. Eventually the river breaks out, seeks a new and quicker way to the Gulf until the process repeats in about a thousand years.

In the 1950s the Mississippi was ready for another change, exploring in ever greater enthusiasm the Atchafalaya River basin. But this time the river had a new enemy: money. If the river succeeded in doing what it had always done, it would leave high and dry the Port of New Orleans, devastate the city’s economy as well as that of Baton Rouge, cut off nearly 20 per cent of the country’s oil imports and 16 per cent of the nation’s fisheries harvest, and choke off a major outlet for U.S. Agricultural exports. It would leave high and dry a chain of refineries and factories stretching from Baton Rouge to New Orleans that depend for their existence on the barges and the fresh water that the river wants to give to the Atchafalaya. It was, well, unthinkable. The Congress ordered the U.S. Army Corps of Engineers to go to war with the Mississippi. “We are fighting Mother Nature,” the Corps declared in a promotional film, “It’s a battle we have to fight day by day, year by year; the health of our economy depends on victory. Our opponent could cause the United States to lose nearly all her seaborne commerce, to lose her standing as first among trading nations.”

The result of this declaration of war was named, with typical Corps hubris, the Old River Control Structures. The Old River was a natural east-west channel that had opened between the Mississippi and Atchafalaya Rivers about 200 miles above New Orleans. By the 1950s, 30 per cent of the Mississippi’s flow was roaring down the steeper, lower Atchafalaya drainage, scouring it ever deeper, getting ready to switch its course entirely. The Corps’ war on water consisted of throwing a dam across the Old River, then building, 10 miles upstream, a 560-foot-long set of 11 floodgates across an artificial channel that henceforth would bend the Father of Waters to the will of the United States Congress. That body declared it illegal for the Mississippi to yield more than 30 per cent of its flow to the Atchafalaya. That is how much it gave up in 1950, and by law, for the Mississippi, it was to be forever 1950. The implementation of the law began in 1963, when the Control Structures took over. It was all part of the Corps of Engineers’ “Mississippi River and Tributaries Project” — the war to end all floods for all time from Cairo, Illinois, to New Orleans.

Ten quiet years followed, for which the Corps took a great deal of credit. Then came a most unquiet year, when a combination of heavy rains in the fall of 1972, heavy winter snow and repeated deluges in the spring of 1973 brought massive flooding. The Corps ran up the white flag and opened all the floodgates at Old River, and still, day after day, the Father of Waters hammered on the bars of its cell, shook the structure as if it were in a Magnitude 8 earthquake, threw nine-ton boulders at it and ate away at its massive foundations. If you stopped a car on top of the control structure (yes, there’s a road – Route 15 – across what you might call the bridge to San Luis Rey, Louisiana) and opened the car door, the vibration of the structure would slam it shut. One of the massive walls that gathered the flow of the Mississippi in to the floodgates collapsed. When the whole thing was a whisker away from total failure, the waters began to recede.

Afterward, the badly frightened engineers of the Corps wondered how close it had been. As John McPhee described one of the more riveting moments in the long history of man’s war on nature:

“As soon as the water began to recede they set about learning the dimensions of the damage. The structure was obviously undermined, but how much so, and where? What was solid, what was not? What was directly below the gates and the roadway? With a diamond drill, in a central position, they bored the first of many holes in the structure. When they had penetrated to basal levels, they lowered a television camera into the hole. They saw fish.”

The Corps propped the structure up, poured more concrete, set more pilings, built even more floodgates (the so-called auxiliary structure, deployed in 1986) and saw it withstand major flooding in 1983, 1993 and 1997. But the river will win this war, and will go to Morgan City, and bring down the Control Structures and with them the economy of the United States. As a study conducted by the Water Resources Research Institute, at Louisiana State University, concluded: “It could happen next year, during the next decade, or sometime in the next thirty or forty years. But the final outcome is simply a matter of time and it is only prudent to prepare for it.”

Isaac Upgraded to Hurricane--Headed for New Orleans

The Daily Mail reports:

'Many parts of the state could see 24 to 38 hours of tropical storm-force winds,' Louisiana Governor Bobby Jindal told a news conference. 'We're going to see a lot of downed trees and power lines,' he said. 'We need people to stay safe.'

Hurricane Isaac has made landfall in southeast Louisiana with winds near 80 mph.

The U.S. National Hurricane Center says the storm's center reached land at 6:45 p.m. in Plaquemines Parish, about 90 miles southeast of New Orleans.

Brandishing automatic assault rifles to ward off any threat of looting, the troops in military vehicles took up positions on mostly deserted streets. Their arrival came as driving rain and stiff winds battered the city's famous tourist district, The French Quarter, and its boarded-up storefronts.

White-capped waves formed in Lake Pontchartrain.

Earlier, the Army Corps of Engineers closed for the first time the massive new floodgate on the largest storm-surge barrier in the world, at Lake Borgne, east of New Orleans. In other preparations, oil production in the U.S. Gulf of Mexico nearly ground to a halt, and ports and coastal refineries curtailed operations as Isaac neared.

At 5 p.m. CDT (2200 GMT), the Hurricane Center said Isaac was centered about 105 miles southeast of New Orleans with top sustained winds of 80 miles per hour.

The storm, becoming better organized as it nears land, was traveling at a relatively slow 8 mph. That pace is a concern for people in its path since slow-moving cyclones can bring higher rainfall totals.

Isaac was about 370 miles wide and due to make landfall at the mouth of the Mississippi River within the hour. Heavy rains and big storm surges were also forecast for parts of Mississippi, Alabama and the Florida Panhandle.

Isaac spared Tampa, Florida, where the Republican National Convention began on Monday. But it forced party leaders to revamp their schedule. They may have to make further revisions so as not to be seen celebrating Mitt Romney's presidential nomination while Gulf Coast residents struggle through the storm.

President Barack Obama urged Gulf Coast residents to take cover and heed warning, saying, Now was 'not the time to tempt fate.' He issued emergency declarations for Louisiana and Mississippi earlier this week because of Isaac.

The president's stern warning comes as terrified New Orleans residents fear a repeat of the devastation inflicted by Hurricane Katrina after Isaac, which has now been declared a Category 1 hurricane, veers towards the Louisiana city.

Shop owners last night boarded up their businesses and the streets of the normally-bustling French Quarter are now eerily empty amid preparations for winds of over 100mph, which are predicted to hit the Gulf coast either this evening or tomorrow morning.

Although, the storm is currently generating surface gusts of 75mph, forecasters believe Isaac could pick up wind speed before it hits land in the same spot as Katrina, meaning roofs could be plucked from homes and cause extensive power outages in the city.

The shut-down of the refineries should jack up oil prices, which will further dampen the economy. The only thing that will bring us out of the economic doldrums will be cheap energy and fuel, which is anathema to the current administration.

More Bank Woes from Spain

The Daily Mail reports:

Spain's debt-ridden region of Catalonia will seek a rescue bailout of £4billion from a central government fund, it emerged today.

The northeastern region, which has Barcelona as its capital, became the third region after Valencia and Murcia to officially ask for aid.

Many of the 17 semi-autonomous regions are struggling with the recession, the country's second in three years, following a real estate crash in 2008 that has pushed the unemployment rate to near 25 per cent.

* * *

A rush by consumers and firms to withdraw their money from Spanish banks also intensified in July, with private sector deposits falling almost five per cent, to £1.2trillion at end-July from £1.26trillion a month earlier.