Sunday, October 26, 2014

The 10 Biggest Energy Company Bankruptcies


Running a multi-billion dollar energy company isn’t easy. Just ask the executives in the corner suites of some of the energy companies that have gone bust over the years. Some, like Enron, were brought down because of insider malfeasance. A few, like ATP, blamed damaging government policies, while others went off the rails due to market forces that left the company and its shareholders flat-footed, deep in debt, and eventually broke. Here are the bankruptcies that will be etched into the tombstones of failed energy fortunes for time immemorial.

1.    Enron. Bankrupt December 2, 2001. Assets $65.5 billion

Enron grew from a simple pipeline company into the world’s largest energy trader by using the Internet to buy and sell natural gas and electric power to help utilities and industrial power users hedge against price fluctuations. By 2000, Enron was worth an astonishing $68 billion, but when the U.S. Securities and Exchange Commission started investigating, it was revealed that much of the money was based on shady accounting practices and un-recorded losses. In one year, Enron’s stock price plummeted from more than $90 to less than $1, resulting in $11 billion in shareholder losses. The subsequent bankruptcy remains the largest in U.S. history. CEO Kenneth Lay and fellow Enron executive Jeffrey Skilling were convicted in 2006 of fraud and conspiracy. Lay died from a heart attack while awaiting sentencing. Skilling is still in prison.

2.    Energy Future Holdings. Bankrupt April 29, 2014. Assets $36.4 billion

Energy Future Holdings became the largest power producer in Texas in 2007 after a $45 billion buyout of TXU Corp.  But the company struggled under the weight of $40 billion in debt after revenues plunged due to lower prices for natural gas and electricity. Energy Future Holdings was broken up in April under the terms of a restructuring deal.

3.    Pacific Gas & Electric Company. Bankrupt April 6, 2001. Assets $36.1 billion

California’s largest publicly-owned utility went bust after deregulation led the company to incur billions in debt. After selling its gas power plants, the company had to buy power from other energy companies. Buying at fluctuating prices and selling at fixed prices led to losses and eventual bankruptcy. But according to Time, wholesale prices eventually dropped, and the day the company emerged from bankruptcy in 2004, its stock was worth three times as much as when it filed for protection.

Related: The Biggest Energy Trading Disaster In History

4.     Texaco. Bankrupt April 12, 1987. Assets $34.9 billion

Texaco started out in 1901 as the Texas Fuel Company and was independent for 100 years before merging with Chevron in 2001. However, in the 1980s, Texaco became embroiled in a legal battle with Pennzoil, and ended up owing the company $10.5 billion. That led to Texaco filing for bankruptcy, which at the time, was the largest in U.S. history.

5.    Calpine Corporation. Bankrupt December 20, 2005. Assets $26.6 billion

In the mid-2000s, Calpine was the biggest owner of natural gas-fired plants in the U.S. But soaring fuel costs led the company to incur more than $22.5 billion in debt. The subsequent bankruptcy filing followed the ouster of top executives after they lost a fight with bondholders to use proceeds from asset sales to buy fuel. The company received $2 billion in financing to allow it to keep its plants supplying customers.

6.    ATP Oil & Gas. Bankrupt April 17, 2012. Assets $3.6 billion

In 2009, ATP Oil & Gas, an offshore oil producer, refinanced $1.5 billion in debt, with the goal of doubling its production to 50,000 barrels a day. Then came the BP Deepwater Horizon disaster. A 2010 moratorium on deepwater operations in the Gulf of Mexico meant ATP was not able to complete wells on its Titan production platform. Forced to spin off Titan and borrow $350 million, ATP spiralled downward, crushed by $2.7 billion in debt obligations. In a Forbes article, ATP’s CEO blamed the Obama Administration and “its illegal ban on deepwater drilling in the wake of the BP disaster,” for the implosion of the company.

7.    Patriot Coal. Bankrupt July 9, 2012. Assets $3.6 billion

As the largest producer of thermal coal in the eastern U.S., Patriot Coal was particularly vulnerable to low coal prices, competition from cheap natural gas, a slowing U.S. economy and tougher environmental rules. Patriot Coal lost money every year since 2010, and in 2012 recorded a loss of $198.5 million. To stay afloat during the Chapter 11 bankruptcy process, the company received $802 million from three major banks.

8.    James River Coal. Bankrupt April 8, 2014. Assets $1 billion.

Another victim of the U.S. coal downturn, James River Coal declared itself bankrupt in April, 2014, having emerged from a previous bankruptcy in 2004. The company listed $818.7 million in debt after being forced to close a dozen mines. James River Coal was granted a $110-million loan to keep operating under court protection. At the time of the bankruptcy, the company's stock was trading for 36 cents, compared to $60 a share in 2008.

Related: How Rising Interest Rates Could Spell the End of the U.S. Energy Boom

9.    OGX. Bankrupt Oct. 30, 2013. Debts $5.1 billion

Darling of Brazilian billionaire Eike Batista, OGX Petróleo e Gas Participações SA filed for bankruptcy protection after failing to reach an agreement with creditors to negotiate part of its $5.1 billion debt. The bankruptcy was the largest in Latin America. The blow to Batista’s mining and oil and gas empire came after disappointing output from offshore wells set off a crisis of investor confidence.

10.     Suntech. Bankrupt March 20, 2013. Debts $1.6 billion

The Chinese solar panel manufacturer, one of the world’s biggest, was forced into bankruptcy court after the company missed a $541 million payment to bondholders. The company’s misfortunes were blamed on a glut in the market for solar panels, which collapsed prices. Another solar industry giant, Germany’s Q-Cells, was caught in the downturn the year earlier.

Saudis Deploy the Oil Price Weapon Against Syria, Iran, Russia, and the US

Asian stock markets continued to fall today, propelled at least in part by the adverse reaction to the Saudi announcement yesterday that they would let oil prices fall to $80 a barrel. And further reports indicate that the Saudis intend to keep oil prices low enough to force a realignment of prices not just among various grades of crude, but also for intermediate and long-term substitutes.

It is critical to remember that the Saudis have no compunction about imposing costs on other nations to maximize the value of their oil resource long term and hence the power they derive from it. The 1970s oil shock produced a nasty recession in the US and most other advanced economies and gave a further impetus to inflation, which was already hard to manage and dampened growth by discouraging investment. 

The current alignment of factors gives the Saudis the opportunity to make life miserable for a long list of parties they would like to discipline, including the US. 

The sharp rise in the dollar means that lowering the price of oil in dollar terms is unlikely to leave the desert kingdom worse off in local currency terms. But it undermines US energy development, both fracking and development in the Bakken, as well as more development by the majors, who were regularly criticized by analysts for how much they were spending on exploration when the math didn’t pencil out well at over $100 a barrel. Countries whose oil is output is mainly heavy, sour crude, like Iran and Venezuela, find it hard to sell their oil when prices are below $100 a barrel (or at least when the dollar was weaker, but the $80 price point, even with a strong dollar, may be low enough to cause discomfort). 

In other words, this is a classic case of predatory pricing: set your price low enough long enough to do real damage to competitors, and reduce their market share, not just immediately, but in the middle to long term. 

Now admittedly some pet targets may not be hurt as badly as hoped. Russia will suffer more of an opportunity loss than an actual cost from the price reduction, since the ruble has fallen significantly against the dollar. The Saudis may hope to partially displace Russia as a supplier of oil to Europe (now roughly 1/3 of the total) but refineries would need to be retooled to refine the Saudi’s light crude, so it isn’t clear whether even what amounts to bargain prices will offset this cost (and readers point out that Russian crude may also produced a better mix of distillates for European use, since they are much heavier users of diesel fuel than the US).

But aside from the not-inconsiderable economic impact, the surprise Saudi step looks to be an even bigger geopolitical winner. The US and Riyadh have been at odds for over a year; the Saudis were particularly unhappy over the US failure to try to topple Assad last summer (you may recall the intensity of the Administration warmongering versus the dubious US interest; even Congress showed an unexpected amount of backbone and made its lack of support for Syrian adventurism clear). The Saudis have also long been less than happy with the US refusal to attack Iran (which is a rare case of the US acting as a responsible hegemon and curbing a putative ally with a bad case of blood lust). That unhappiness has ben compounded by the US now effectively helping the Assad regime and working in as distanced a manner as possible with Iran in targeting ISIS.

These parts of Marcy Wheeler’s analysis are spot on:
Cutting prices will make it far harder for Iraq’s Shia led government to invest in the fight against ISIL. So long as Western sanctions continue, it will destabilize Iran significantly, not only making it a lot harder for Iran to help Iraq and Syria, but also undermining the government that has chosen to deal with the US. The cuts will also destabilize Iran’s allies in Venezuela and Ecuador. Oligarchic forces have been trying to foment a coup in the former country for some time and this may well help to do so…The Saudis have been trying to undercut Russia for some time and — to the extent the ruble exchange with the dollar doesn’t shelter Russia from these changes [Update: though see Mark Adomanis on how this is hurting Russian consumers] — this price cut will hurt Russia too.

Ultimately, though, I suspect the US is just as much the target of this move as Iran and Russia are. Since the US refused to take out Assad last year and inched forward with its Iran deal, the Saudis have been worried about having Shia Iran and Iraq take over its role as the swing producer in the world, mirroring what happened in 1976 when the US replaced Iran’s Shah with the Saudis. By destabilizing the government in negotiations with the US, the price cut will make it a lot harder to achieve such a deal.

Just as importantly, the US is now a petro-state. And this price cut will make fracking (and deepwater drilling) unprofitable. We’ve been fracking largely to give ourselves some breathing room from the Saudis; cutting the price will make it far harder for us to sustain that effort (and will make some renewables uncompetitive).

To me, then, this move looks like part of an effort to force the outcome the Saudis have been chasing for a decade and even more aggressively since the Arab Spring: to paralyze Shia governments just as the chaos of ISIL threatens to remap the Middle East.
The Saudis may well claim to be supporting our fight against ISIL, but the long-term commitment to dropping oil prices, looks more like an effort to undercut it.

And as Pam Martens and Russ Martens point out in a post today, Oil Price War Throws the Fed into Crisis Mode, the Saudi move has the effect of increasing deflationary forces, which is a nightmare for the Fed and other central banks. So just as the Saudis used their oil weapon to amp up inflation in the 1970s, so they again they look to be willing to provide more firepower to another war central bankers are losing. From their article:
It was only a matter of time until the evidence became irrefutable that the only way out of a global deflation on the order of the Great Depression was to address the fact that 571 U.S. billionaires simply don’t have enough hours in the day to spend adequate money to buy enough goods that would require the restocking of shelves, create new factory orders and thereby ramp up job hiring to keep a nation of 317 million people afloat.
A nation where the top 10 percent reaps more than 50 percent of the income is doomed to end up in the quicksand of deflation, dragging down the rich along with everyone else….
A key component that has allowed both the Fed and Congress to keep from taking strong measures to address a looming deflation has been the price of crude oil. Because oil impacts everything from transportation costs that inflate the price of food and other products to the cost of an airline ticket or heating a home, the high price of this commodity has, to a degree, masked the growing deflation threat.
Now the mask has been removed. Oil prices are in freefall and an oil price war has broken out among OPEC members, raising the specter of 1986 when oil prices fell by 50 percent in just an eight month span. A serious global slowdown has effectively turned the oil cartel, OPEC, into a beggar thy neighbor band of go-it-alone dealmakers who hope to sign individual contracts with customers and grab market share before prices decline further…
In other words, a sudden, sharp drop in inflation expectations caused by an oil price war raging around the globe was not present in the Fed’s crystal ball just a month ago. But it should have been: other commodity prices have been sending up red flags for some time now…
The market has delivered epiphanies to the Fed on multiple fronts – some of them blazing with sirens – but the Fed seems to have had its head in the sand just as securely as it did heading into the 2008 crisis.
Yves again. As much as central bankers detest inflation, they fear deflation even more, particularly when debt loads are high. I differ with the Martens as to the Saudi cuts being driven by desperation; oil market analysts expected them to hold the line at $90 a barrel. But whether this move is informed opportunism or aggressively defensive is moot. It throws a massive wrench into the global geopolitical and economic equations, both of which were already looking plenty rocky. 

As much as I am no fan of Riyadh, it’s hard not to admire their strategy. The Saudis look to have executed a masterstroke. They come out winners on many fronts that are critical to them and appear to at least hold their ground on others. And I have a sneaking suspicion that the neocons, who have US energy independence as one of their core assumptions, were caught flat footed by this audacious move.

DAVID EINHORN: Long Greece, Short France

David Einhorn just finished presenting at the annual Robin Hood Investor Conference, and he recommended a Europe trade — long Greece, short France.

Einhorn recommended going long Greek banks, Alpha Bank an
d Piraeus Bank using warrants, our source says. 

Last week investors in Greece got absolutely demolished. The Athens Stock Exchange fell 7.3% before staging a big rally on Friday. Bank stocks were the brightest spot that day, gaining 6.4%.
There were two main reasons why Greece got clobbered, both were political. First, the market got uneasy about the rising popularity of Syriza, an anti-austerity radical political party. Second, the country’s Prime Minister, Antonis Samaras, said he wanted to end the Greek bailout early without taking over $8 billion more dollars available.

France was no picnic last week either. The country has a serious demand issue — as in there isn’t enough. Unemployment is high. Deflation is at 0.4% with core inflation at 0. It’s got a big debt problem, and the country’s economy simply isn’t growing.

The CEO of UK retailer John Lewis recently said the country was “finished.”
To change all of this, France would have to implement serious reform. Greece, on the other hand, needs to stay the bailout course to stabilize, at least relatively. 

It isn’t hard to see why the latter may be more likely than the former.

China is again slowly turning in on itself

New Communist Party slogans in China are stressing "traditional" culture and values. Above, Tiananmen Gate. (STR / AFP/Getty Images)
By Carl Minzner

In China, a return of purges, closed doors to outside influences and isolationism
A whiff of a personality cult has emerged again in China
Deng Xiaoping is back … but only on television.

This year — the 110th anniversary of his birth — Beijing is sparing no expense to commemorate the former leader who launched China's modern reform era in the late 1970s, bringing decades of blazing economic growth and steady resurgence as a world power.

Unsurprisingly, Deng's mantle is being deployed for political ends. A new 48-episode documentary on his life airing on state networks draws a thinly veiled analogy between Deng and Xi Jinping, China's current top leader. The suggestion is clear. Xi is a new Deng. And when top Communist Party leaders assemble at their annual conference this week, China will witness a revival of the spirit of reform.

But China's reform era is over. A different — and more unstable — one is dawning.
In a nation with a history of revolution and where just 1% of the population controls one-third of the wealth, [the leader sees] a latent threat to the stability of his regime. -  
Ideologically, Deng decisively broke with Maoist isolationism in the late 1970s. China opened up. Students flowed out; outside influences flowed in. When other party leaders criticized such policies for allowing dangerous foreign influences to circulate, Deng famously responded, “If you open the window for fresh air, you have to expect some flies to blow in.”
The West gets the blame, but it's China that Hong
              Kong and Taiwan fear
Now, China is again slowly turning in on itself. New party slogans stress “traditional” culture and values. The language of Confucianism is increasingly being invoked to legitimize a new dynasty of red emperors. Windows are being shut. State researchers are being warned against foreign collaboration. Archives previously open to Western scholars are being closed off. And Beijing is reaching for a fly swatter — or a hammer — to deal with influences it perceives as threats. Liberal public interest lawyers are being subjected to a chilling crackdown; Christian churches in Zhejiang province to a selective demolition campaign; Hong Kong pro-democracy media to increasing intimidation.

Economically, the decades of double-digit growth rates that marked the reform period have ended. The infrastructure and real estate booms driving China's economy since the 1990s have peaked. Even the state media now speaks of adjusting to the “new normal.”

Attitudes to foreign investors are shifting as well. Since the early 2000s, the rise of state industrial policies has favored the growth of domestic “national champions.” The announcement in August that China plans to launch a homegrown operating system to replace Windows and Android is simply the latest reflection of these trends. And a spate of state actions — jailing of corporate investigators, aggressive antitrust raids on firms that included Mercedes and Microsoft — have left expat managers nervously seeking transfers.

Most important, Chinese elite politics are shifting dramatically.
Op-Ed The hard-line China of Tiananmen Square, on a
                global scale
With Deng's rise, key elements that marked Maoist rule during the 1950s and '60s vanished. Gone were the all-powerful supreme leader, the frenzied cult of personality and the regular purges of the top ranks. Deng and his successors settled into a low-key style of collective governance marked by a search for consensus. Elite politics became institutionalized. Sure, periodic campaigns occasionally ensnared mid-level cadres. But unwritten rules guaranteed that the very top echelon was immune, untouchable.

Now, these norms are steadily being broken.
Since 2012, Xi has concentrated an astounding array of power in his hands. Special leadership groups on economic reform, on domestic security, on media propaganda now report to him. A whiff of a personality cult has emerged.
  • The bottom line is the West can't maintain the absurd imbalance of payments with China. It was made sense when China needed to be pulled up out of the morass, but $30 billion a month just with the USA? It is nice to see their corruption at least being discussed, but odd when your they park...
    Big Jim Slade
    at 8:42 AM October 20, 2014
And Chinese elite politics has suddenly become very interesting again. A sweeping anti-corruption campaign is shaking the bureaucracy. Retired leaders once regarded as untouchable are falling left and right. These waves are even beginning to lap around the Shanghai power base of China's former top leader, Jiang Zemin, who not only remained a power broker long after he left office, but even facilitated Xi's rise.

What does this all mean?

At a deep level, China is experiencing a backlash against many of the economic, ideological and political winners of the reform era. The last three decades saw the world's most rapid accumulation of economic wealth fuse with an unreformed authoritarian political system. The result: a generation of well-heeled “red capitalists,” furiously texting on their iPhones as chauffeur-driven Audis sped their children past migrant shantytowns to English cram schools in preparation for studies overseas.
Op-Ed China's planned urban growth bodes ill for
Such things might have seemed the very epitome of success to an earlier generation of Chinese leaders ruling over a country just emerging from crushing poverty and Maoist isolation. But they look very different now. To a new leader worried about maintaining one-party rule in a nation with a history of revolution, and where just 1% of the population controls one-third of the wealth, this is not just an image problem. It is a latent threat to the stability of his regime.

In Xi's eyes, the legacy of the reform era poses other challenges too. Entrenched political and economic interests built up since the 1990s hamper his efforts to solidify personal control over the apparatus of governance. Decades of dependence on foreign software expose China to cyber threats from abroad. Cultural imports — Hollywood films or “The Big Bang Theory” — challenge his dream of nationalist revival.

This is precisely why these are all under attack. And it resonates with ordinary citizens, particularly those who feel they missed out on China's go-go years. For them, the sight of cadres who once sped past them in limos being humbled by Xi's disciplinary teams is no small source of pleasure. Unsurprisingly, Xi's popularity has soared.

Nor are these policies necessarily wrong. Corruption must be contained. And if party authorities actually follow through with plans to increase the number of college spots for poor students (presumably at the expense of the urban elite), that would represent a real step toward redressing the education inequality gap that has grown since the reform period.

However, tackling the problems facing China today requires addressing the core political factors behind them. Excessive, unchecked power in the hands of a few has fueled the viral growth of a long list of social and economic problems. Indeed, Xi himself has flagged the need to restrict power in a “cage of regulations.”

But in the years since 1989, party leaders have systematically stymied the gradual evolution of positive local experiments with the kinds of institutions — an independent judiciary, meaningful legislatures, bottom-up electoral participation — that might help seriously curtail these problems.
Instead, Chinese leaders are falling back on what they know. And what they know are tactics drawn from the 1950s and '60s — ones being used now: party rectification movements, politicized anticorruption purges, televised self-confessions by social media celebrities, foreign corporate investigators and alleged terrorists.

And this is dangerous, because it risks taking China backward. And not to the Deng era, but to far more unstable ones that preceded him.

Carl Minzner is a professor at Fordham Law School, specializing in Chinese law and politics.
Is China Abusing History?

China’s mix of historical and legal claims in the South China Sea are inconsistent, says Frank Ching. Beijing can’t have its cake and eat it.

US scholar Lucian Pye once famously said that China was not a country but ‘a civilization pretending to be a state.’ That may have been apt at one time, but today’s China has been transformed into a modern state that plays an active role in international forums.

However, China also tries to capitalize on its long history when pressing its case in international disputes. Nowhere is this more clear than in the current South China Sea territorial dispute, which pits China against several of its neighbours. Also embroiled in the various rows are the United States, India and, increasingly, Japan. It’s a potent mix.

In 1996, Beijing ratified the UN Convention on the Law of the Sea (UNCLOS) and publicly embraced the treaty’s provision that ‘China shall enjoy sovereign rights and jurisdiction over an exclusive economic zone of 200 nautical miles and the continental shelf’ – a hitherto unknown concept.

At the same time, however, it reaffirmed its claim over the islets, rocks and reefs in the South China Sea on historical grounds—grounds that aren’t recognized by the convention. That is to say, China claims all the rights granted under international law today and, in addition, claims rights that aren’t generally recognized because its civilization can be traced back several thousand years.

Historically, China was the dominant power in East Asia and considered lesser powers as its tributaries. By insisting now on territorial claims that reflect a historical relationship that vanished hundreds of years ago with the rise of the West, Beijing is, in a sense, attempting to revive and legitimize a situation where it was the unchallenged hegemony.

The ambiguity about what parts of international law China recognizes and which bits it doesn’t gives rise to the current dispute, which directly involves Vietnam, the Philippines, Malaysia and Brunei, and indirectly involves the interests of many other nations.

The claims made by Southeast Asian countries rest primarily on the provisions of the Law of the Sea. China, however, is taking the position that its sovereignty over the territories concerned precedes the enactment of the Law of the Sea, and so the law doesn’t apply. History trumps law.

In 2009, China submitted a map to the UN Commission on the Law of the Sea in support of its claims to ‘indisputable sovereignty over the islands of the South China Sea and the adjacent waters’ as well as ‘the seabed and subsoil thereof.’

The map featured a U-shaped dotted line that encompassed virtually the entire South China Sea and hugged the coasts of neighbouring countries including Vietnam, Malaysia and the Philippines. This was the first time China had submitted a map to the United Nations in support of its territorial claims, but there was no explanation given as to whether it claimed all the waters as well as the islands enclosed by the dotted line.

This was a radical departure from the position China took when it ratified the treaty. Back then, China said that it would hold consultations ‘with the states with coasts opposite or adjacent to China respectively on the basis of international law and in accordance with the principle of equitability.’

Significantly, especially for the United States, China’s position on UNCLOS has also shifted in another respect. In 1996, it took the position that foreign warships required its approval in order to pass through China’s territorial waters. Now, China says that foreign warships must obtain its approval before they can pass through its exclusive economic zone – a much wider area that isn’t part of its sovereign waters.

The United States disputes that position, maintaining that waters in a country’s EEZ are part of the high seas and that naval vessels are free to enter them and even conduct operations without any need for approval.

This difference in opinion between China and the United States (as well as most developed countries) has led to confrontations between the two countries, with US naval surveillance vessels carrying out information-gathering missions in China’s EEZ and being challenged by the Chinese.

China’s resort to history is a relatively new development in international law, although it isn’t completely unprecedented. For example, coastal states have been allowed to claim extended jurisdiction over waters, especially bays or islands, when those claims have been open and long-standing, exclusive, and widely accepted by other states.

In China’s case, however, its claims are evidently neither exclusive nor widely accepted by other states since they are being openly contested. Still, Chinese officials and scholars have attempted to buttress their arguments by appealing to historical records.

For example, Li Guoqiang, a research scholar with the Research Center for Chinese Borderland History and Geography of the Chinese Academy of Social Sciences wrote in July in the China Daily: ‘Historical evidence shows that Chinese people discovered the islands in the South China Sea during the Qin (221-206 BC) and Han (206 BC-AD 220) dynasties.’ China’s maritime boundary, he asserts, was established by the Qing dynasty (1644-1911).

‘In contrast,’ he wrote, ‘Vietnam, Malaysia and the Philippines hardly knew anything about the islands in the South China Sea before China’s Qing Dynasty.’

Vietnam, in pressing its case, has cited maps and geography attesting to its ‘historical sovereignty’ over the Paracel and Spratly islands going back to the 17th century. This doesn’t match the antiquity of China’s claims, but, at the very least, it shows that Chinese claims have been contested for centuries, and that China didn’t enjoy exclusive and continuous jurisdiction over these islands.

And, if history is to be the criterion, which period of history should be decisive? After all, if the Qin or Han dynasty is to be taken as the benchmark, then China’s territory today would be much smaller, since at the time it had not yet acquired Tibet, Xinjiang or Manchuria, now known as the northeast.

One compromise that China has offered to its neighbours is to shelve the territorial disputes and engage in joint development of natural resources. This was proposed by President Hu Jintao as recently as August 31, when he met the Philippine President Benigno Aquino.

However, there are serious problems. Just what does China mean by this policy?

The Chinese Foreign Ministry website explains: ‘The concept of “setting aside dispute and pursuing joint development” has the following four elements:

‘1. The sovereignty of the territories concerned belongs to China.

‘2. When conditions are not ripe to bring about a thorough solution to territorial dispute, discussion on the issue of sovereignty may be postponed so that the dispute is set aside. To set aside dispute does not mean giving up sovereignty. It is just to leave the dispute aside for the time being.

‘3. The territories under dispute may be developed in a joint way.

‘4. The purpose of joint development is to enhance mutual understanding through cooperation and create conditions for the eventual resolution of territorial ownership.’

These four points make it clear that instead of shelving the territorial disputes, the idea of joint development is China’s way of imposing its claims of sovereignty over the other party. Chinese sovereignty is the stated desired outcome of any joint development. No wonder that no country has taken China up on its proposal.

Perhaps because of the conflict between historical claims and the UNCLOS, other Chinese scholars are now calling for a review of the Law of the Sea.

Li Jinming, a professor at the Center for Southeast Asia Studies at Xiamen University, says that there are ‘shortcomings’ in UNCLOS and, as a result, ‘China should consider its own situation before enforcing UNCLOS.’ That is to say, even though China has ratified the treaty, which has been in effect for 17 years, Beijing shouldn’t abide by its provisions unless the convention is somehow revised to support China’s territorial claims.

Beijing, it appears, wants to be made an exception in international law. It wants to have its cake and eat it. But law is law. What is the point of having international law when it is no longer international, and when it is no longer law?
Sex and  HSBC

According to lawsuits by two of her former subordinates, during her time as a senior vice-president and head of business development for North America, Eileen Hedges told another one of her subordinates, 27 year-old “Jane Doe,” to:
  • Dress provocatively on the job
  • “…have sex with male HSBC executives and clients at company-sponsored events”
  • Specifically, “have sex with an unnamed senior executive at the bank’s Mexico unit”
The boss of the year also allegedly:
  • “…falsely told co-workers that Doe was having sex with clients when they traveled to bank functions outside the U.S.”
  • “…told Doe about her own alleged extramarital affairs with HSBC executives.”1
  • “… attempted to pull down Doe’s blouse and expose her breasts in the presence of male HSBC employees.”
And the reason we now know all this is because, naturally, the subordinates who filed the lawsuits were (supposedly!) retaliated against by Hedges after complaining that her demeanor on the job was slightly less than professional.

The previously unreported suits, filed June 20 and Aug. 14, claim that Eileen Hedges, formerly the senior vice president and head of business development for the bank’s North American unit, repeatedly harassed an unnamed 27-year-old subordinate referred to as Jane Doe. The complaints say Hedges inappropriately touched Doe, encouraged her to dress provocatively and pressured her to have sex with male HSBC executives and clients at company-sponsored events. The retaliation claims were filed by Michael Picarella, a current HSBC employee who was supervised by Hedges, and James Rist, a former employee who says he dated Doe and personally witnessed some of the alleged harassment. Picarella says he was effectively demoted after reporting Hedges’ conduct to bank officials, while Rist claims his yearly bonus was cut by more than 60 percent. HSBC said in a Sept. 12 court filing that it had fired Hedges following an investigation, though the bank denied engaging in retaliation. During a brief hearing in Manhattan federal court Tuesday, U.S. District Judge Andrew Carter said he was “extremely unlikely” to dismiss the litigation at the current stage, and encouraged the parties to engage in settlement discussions.

伟大祖国崛起 有形没格

联合国就中国对埃博拉反应公开表 示不满

关注的中国新闻中包括联合国对中国和中国的亿万富翁未能尽力支持全球抗击埃博拉行动公开表示不满,以及香港特首梁振英的 “普选会导致穷人主导香港政治”的理论。
大力投资 少量捐款

联合国在继续指责富裕国家没有全力援助全球抗击埃博拉运动的同时,批评中国的亿万富翁也没有给予足够的 支持。
对于中国和中国“一夜暴富”的亿万富翁在西非爆发埃博拉后的反应,联合国世界粮食计划 署WFP的官员公开表示不满。

文章引述世界粮食计划署在中国的代表的话说,现在应该是中国的亿万富翁表现他们影响力的 时刻,但是这些富豪却一点没有表示。
中国看到了通过大型商业项目来扩大自己在非洲的影响的潜力,但是无论中国政府还是私营部门,对于运用自己的经济实力来支 持非洲抗击埃博拉,反应却很缓慢。
到目前为止,中国政府只向联合国最主要的埃博拉援助基金捐献了约830万美元, 而英国的捐款是1880万美元,美国则多至2亿美元。


北京政府承诺,将向联合国的这一埃博拉基金再捐3400万美元,但是这笔钱至今没有到 位
在联合国人道事务协调办公室OHCA的援助资金中,现在美国的捐款占了三分之一,但中 国的捐款却不到2%

的无可奈何,一个多星期来,他一直在打电话试图说服各国领导人,希望筹集更多捐 款。

Former Cream Bassist Jack Bruce Dies of Liver Disease

North Sea Jazz Festival 2012 - Day 1 Jack Bruce performs on stage during North Sea Jazz Festival at Ahoy on July 6, 2012 in Rotterdam, Netherlands. R

The 71-year-old former bassist for Cream co-wrote unforgettable hits including "Sunshine of Your Love" and "White Room"

Jack Bruce, Cream’s former bassist, songwriter and singer, has died of liver disease at the age of 71.
“It is with great sadness that we, Jack’s family, announce the passing of our beloved Jack: husband, father, granddad, and all round legend,” his family said in a statement, according to The Guardian. “The world of music will be a poorer place without him but he lives on in his music and forever in our hearts.”

Bruce was the principal singer and songwriter in Cream, co-writing hits including “White Room” and “Sunshine of Your Love” with lyricist Pete Brown. He had an ongoing rivalry with drummer Ginger Baker that guitarist Eric Clapton was often helpless to stop. Bruce struggled with drug addiction and financial troubles in the 1970s after Cream’s breakup, but continued to play as a session musician and as part of small groups. In 2003 he underwent a liver transplant after being diagnosed with cancer, and played with a reunited Cream for a series of shows in 2005.

Yoko Irie常来清扫这栋房屋外人行道上秋天的落叶。不过,
他们甚至可能已不在人世。目前,日本大地上散布着逾800万户无人居住的空置房屋。部分房屋已被弃 置,部分由于荒废而长满杂草。也有部分房屋则像61岁的Irie女士的房子一样,处于精心打理之下,配备着地暖和榻榻米房间。
这一方面反映了人口的减少,另一方面则反映了被一位分析师称为是一种“房子坏了就盖新的”心 理。2008年,日本人口达到顶峰,并在此后一路下滑。由于日本的生育率是平均每位妇女只生养1.4名子女,移民所占比例也极低,这种人口减少的 态势不太可能出现逆转。
根据野村综合研究所(Nomura Research Institute)房地产部门Wataru Sakakibara的说法,上世纪80年代,
典型的日本房屋都是木质结构,设计寿命大约是30年。2000年以后,日本房屋的设计寿命增加了不止一倍, 达到大约70年。不过,相对欧洲标准来说,这也只是一眨眼的功夫。
而日本面临的却是如何填满(或拆除)现存房屋的问题。日本政府估计,如果不采取任何措 施,到2050年,20%的居民区将成为鬼城。而根据野村证券(Nomura)的估计,到2023年五分之一的房屋将会空置。
日本必须克服诸多体制性障碍。对于房主来说,拆掉旧房成本高昂——估计花费在50万日元到100万日 元之间(合4670美元到9340美元)。此外,这么做还会让屋主的土地税猛涨五倍。
按土地征收的固定资产税将会降低。到目前为止,曾有人多次试图逆转这一政策,都没有取 得成功。
日本曾以全球最昂贵的房地产价格而自豪。然而自1992年的峰值过后,日本房价进入了或快或慢地下跌状态。住 房本身已成为一种迅速贬值的资产:据Sakakibara计算,只要20年,物业的价值就跌得只剩土地价值了。
2008年日本购房交易中只有13.5%的交易出自二手市场。相比之下,2009年美国这一比例是 90%,2010年英国这一比例是84%。二手房占比偏低的同时,新的住房和公寓不断还在不断被修建。

通过向部分最大敌手出售石油,“伊拉克和黎凡特伊斯兰国”(Isis)每天能获得高达100万美元的利润。 这些购买ISIS石油的人们包括来自土耳其、伊拉克库尔德人社区和巴沙尔•阿萨德(Bashar al- Assad)政权的中间人。
科恩(David Cohen)在卡内基国际和平研究院(Carnegie Endowment For International Peace)的一个讲话中发表的,它很可能会引发该地区人们的不快。在当地,已经有人对土耳其政府抗击ISIS的决心提出了质疑。与此同时,在叙利亚的科 巴尼镇,库尔德武装力量正在激烈战斗,以避免被这些圣战分子赶出该镇。
土耳其外交部发言人坦茹•比尔吉奇(Tanju Bilgiç)表示:“对于这个问题,
我们已非常明确地表达了我们的立场。土耳其外交部长梅夫吕特•恰武什奥卢(Mevlüt Çavuşoğlu)和能源部长塔内尔•耶尔德兹(Taner Yıldız)都曾反复重申,土耳其并未购买过(ISIS的)石油。”
库尔德斯坦地区政府(KRG)议员埃塞特•萨比尔(Eizzat Sabir)表示:“我们从来没听到过有关(政府)曾参与此事的指控。KRG从未从任何人手里购买石油——我们是出售石油的。我们每天会生产大约15万桶 石油,我们提炼的石油更多。”
科恩的说法差不多是官方对ISIS经济实力的公开评估中最具细节的一个。也从一个方面表明了ISIS的务实程度,他们用十分实用的方 式扩充其拥有的资源,提升其影响力,并为其野蛮的狂热行为保驾护航。
FCPO -  Can Bulls Do It This Time ? - 10/27/2014

Displaying OD FCPO D.png
The market has flashed a new buy signal on last Thursday after coming back from a holiday. Price closed above the bottom band with the Stochastic turning positive. I bought on the next day. The MACD is trying to turn around but it remains negative. The DMI has turned positive but with the D+ and D- stuck within the 20/30 signal line. The ADX also remains flat and stays below the 20's signal line. Both these 2 are telling me that the market is lacking a trend. I would place my stop at the prior day low and see how the market goes . My thinking would be to keep my stop as tight as possible because I also notice the Bollinger Band continues to get tighter. The tightening usually mean there will be an explosive move ahead.

But if price can go further and closed above the top band, then it would warrant a new review. Since the ADX is low and flat, use the Stochastic to trade.

Displaying OD FCPO W.png 

The weekly chart stays almost same as the previous. Both the MACD and Stochastic stay positive and continue to rise. The DMI stays negative with the D- falling again. But then the D+ also is not rising. This means the sellers are chicken out again but the buyers are still staying aside. The ADX stays flat, so there is no new trend yet. The weekly Japanese Candlestick is a white body candlestick but as it did not break anything , so there is no signal from here. I continue to monitor the bottom band support of 2064 as if it is broken, then another new round of correction may  kick in.

As I mentioned last week, if price can go a bit upward or even stay around here, it would continue to add more "power" to a longer term bull cycle. It is not yet there yet, but it is continuing to head for that direction, though subtly.
FKLI - A Technical Rebound So Don't Get Too Carried Away -10/27/2014

Displaying OD FKLI D.png 
The market continues to retrace and hit the bottom band on last Monday which effectivel closed off my prior shorts positions. The market continued to improve and triggered a new buy signal as price stays above the bottom band with the Stochastic crossing above its 20's signal line so I bought in again. As I mentioned here last week, though I do not believe the correction is over yet, but I would still have to obey the new signal and bought.
The MACD has already crossed up and turned positive. The Stochastic continues to rise toward the 50's signal line. The DMI remains negative with the D- continues to fall from its extremity. This is confirming that the sellers have been closing out their positions. The D+ has been rising from below the 20's , this confirms the buyers' strength. The ADX has begun to fall as it confirms the end of the prior trend. Price continues to rise and may go test the middle band next. I would watch 1826 resistance level as it has been tested several times in the recent past. If that level can be taken out, then this market may be shaking off the bearish cycle again.

Displaying OD FKLI W.png

The weekly chart's extreme D- forewarned a correction last week. Price has stopped falling and instead has made a 24 points retracement but it has not able to close back above the bottom band. The Stochastic has turned positive while the MACD continues to fall. The ADX is still rising so it means the trend is still intact.
The short term chart is favoring a upward move but the longer time parameter charts seem to be confirming bigger bear coming. With the presence of bearish divergences written all over them, I continue to biased in a super bear market thinking over any bullish one. Fundamentally I fear our economy may be heading for a stagflation and I think the charts are merely reflecting what is about to hit us.

Wednesday, October 22, 2014

5 Of The 10 Deadliest Wars Began In China

The horrors of war have affected nearly every part of the globe throughout history, but China has seen more than its share of bloody combat. 

Of the 10 most damaging wars in history based on combatant and civilian deaths, five started in China. This does not even include the horrors that China faced during World War II, when parts of China suffered under an incredibly brutal Japanese occupation.

China wars often stemmed from internal revolts and might have influenced modern China’s heavy-handed approach to internal dissent. Indeed, Beijing’s heavy emphasis on order and societal peace in particular could shed light on the current tumult in Hong Kong, where protesters have demonstrated against the central government’s attempts to strip the territory’s autonomy. 
Below are the five deadliest conflicts that started in China, in descending order of estimated death toll.  

1. The Qing Dynasty Conquest Of The Ming Dynasty


1618 to 1683, with an estimated 25 million casualties

The Qing conquest of the Ming dynasty was a period of extreme political turmoil in China. The conquest started with a rebellion against Chinese imperial authority in Manchuria, in far northeastern China. As the rebellion gained speed and approached Beijing, a series of smaller peasant revolts broke out through the rest of China. 

By 1644, the Qing were in control of Beijing. However, southern China and Taiwan rebelled against Qing authority and sided with Ming loyalists.

It took until 1683 — nearly another 40 years — for the Qing to establish their authority throughout China. During this time, almost 25 million people died in the hostilities.  

2. The Taiping Rebellion 

Taiping Rebellion
1850 to 1864, with an estimated 20 million casualties

The Taiping Rebellion was a Christian millenarian movement aimed at unseating the Qing Dynasty. The rebellion, led by Hong Xiuquan, took the major Chinese city of Nanjing as its capital. At the height of the rebellion, Hong and his Taiping Heavenly Kingdom ruled over 30 million people. 

The rebellion focused on social reform, demanding the abolition of foot-binding and land socialization and opposing strict gender separation. Hong also claimed he was Jesus’ little brother. His army, which was made of largely irregular forces, scored a number of victories through brutal methods and religious zeal.

The rebellion took an estimated 20 million lives, and the French and British eventually had to intervene to help the Qing restore order.

3. The An Lushan Rebellion 

                china painting
755–763, with casualties estimated at 13 million
The An Lushan Rebellion was sparked when General An Lushan declared himself emperor of Northern Chinawhich was directly opposed to the leading Tang DynastyThis conflict lasted through the reigns of three Tang emperors before ending in 763 with the fall of the Yan Dynasty that An Lushan had created.
The war had a lasting impact on the economic and social systems, and a million people died from the mass starvation and diseases the conflict triggered.

4. The Dungan Revolt

Dungan Revolt
1862-1877, with an estimated 10 million casualties
The Dungan Revolt, also referred to as the “Hui Minorities’ War” and the “Muslim Rebellion,” was a mainly religious uprising that overlapped with the Taiping Rebellion by two years.
The main goal of this war was to establish a Muslim country near the western bank of the Yellow River. When the revolt failed, there was a mass exodus of Dungan people into Imperial Russia.

5. The Chinese Civil War 

Chinese Civil War
1927–1950, with casualties estimated at 7.5 million
Without a signed peace treaty, there is still some debate about whether the Chinese Civil War between the Republic of China and the Communist Party of China ever legally ended because the nationalist forces fled to Taiwan and established a competing government.

Lasting more than 20 years, the conflict led to the creation of the Republic of China (in Taiwan) and the People’s Republic of China (in mainland China), with both claiming to be the sole legitimate government of China. 

Meanwhile, as the US prepared to entered the Korean War, President Harry Truman announced goals for a “strong, united, and democratic China” and ordered the Navy’s Seventh Fleet into the region. But by 1954, opposing armies disbanded and the Chinese Civil War began to fade.

中国怕得罪美帝 对俄“握紧钱包”

try Medvedev)开始 会谈,预计双方将签署50多项协议。俄罗斯政府期望,李克强的访问将再次证明, 在俄罗斯的银行和企业因美欧制裁而无缘获得西方新资 金之际,中国却在伸出援手。
据多名高管和 银行家透露,中国的银行和投资者都在采取拖延战术,不愿大举提供俄方 迫切需 要的资金,生怕得罪西方。
望的,”中国银 行(Bank of China)在莫斯科的一名负责人表示。“本行当然要发展俄罗斯业务,但 我们也要考虑风险。”
很不愿意向他 们提供资金。”
气集团公司(CNPC)今年5 月达成的4000亿美元天然气供应协议,似乎也不能 逃脱这种窘境。这一协议曾被 视为俄罗斯总统弗拉基米尔•普京(Vladimir Putin)的一大胜利。一笔250亿美元的 预付款(Gazprom称其为协议的一部分)尚未支付到位,Gazprom副总裁亚历山大• 梅德韦杰夫 (Alexander Medvedev)近日表示,这笔款项的问题仍“悬而未决”。
它们不能给人 留下帮助俄罗斯绕过美国和欧盟制裁的印象。与俄罗斯企业合作的一名中 国律师 表示,自7月以来,他已两次遇到中资银行退出与俄罗斯客户的贷款谈判,理由是 政府的政策是不冒犯华盛顿方面。
对俄罗斯的企业贷款 仅为33.5亿卢布(合8300万美元)。
CCB)贷给俄罗斯企 业的未偿还贷款仅13亿卢布。
外债(主要是向美国和 欧洲的银行),中资银行对俄放贷总额相形见绌。
更加活跃,但 这需要时间,它们需要熟悉俄罗斯,”俄罗斯第二大银行、已被美国和欧 盟列入制 裁名单的俄罗斯外贸银行(VTB)的一名高管表示。
长期活跃于俄罗斯的投资银行家、美银美林(Bank of America Merrill Lynch)前 莫斯科主管伯纳德•舒谢(Bernard Sucher)透露,今年早些时候美欧宣布第一轮制 裁后不久,他提供咨询的一家俄罗斯企业派出一个小组到中国争取投
,也对自己可能 从俄罗斯获得的新业务的价值兴趣不大。”
方面转向中资 银行寻求帮助。
转账不涉及被 西方列为制裁对象的公司或寡头。俄罗斯新闻社上月曾报道,中国几家商 业银行 拒绝通过离岸账户转移俄罗斯客户的资金。
,因为这些国 家可能受到美国和其他国家的制裁,”平安银行(Ping An Bank)客户服务中心的一 名代表最近表示。

Temptations - Hear to Tempt You / Bare Back (2014 reissue)

              to Tempt You/Bare Back
Click on CD cover 
to listen or purchase
The year was 1977 and The Temptations were a mess. Yes, THE Temptations, the act that nearly defined soul music in the 60s and early 70s. But the loss of Dennis Edwards and Eddie Kendricks, combined with a series of mediocre, uninspired albums on Motown in the mid-decade left them increasingly irrelevant on R&B radio. Blaming much of the problem on dysfunction at Motown in the years following its relocation to So Cal, the quintet joined former labelmates The Four Tops, Gladys Knight and The Spinners in bolting for a new recording home. For the Tempts, it was Atlantic Records, the iconic label that made The Spinners and Aretha Franklin stars, but which by 1977 was not showing the kind of commitment to R&B radio that The Tempts had enjoyed during their decade and a half at Motown.
With the change, founding members Otis Williams and Melvin Franklin wanted to make a statement that The Temptations were a contemporary force, so they teamed with hot Philadelphia producers Baker, Harris and Young (Philly's other Big Three after Gamble, Huff and Bell) for the label debut, Hear To Tempt You, now being reissued along with the Atlantic follow-up, Bare Back, on a new Soul Music Records 2-for-1 set.
As the excellent liner notes by Kevin Goins detail, Hear to Tempt You was not an intimate collaboration between artist and producer. The Temptations, trying to assimilate new lead singer Louis Price and falsetto lead Glenn Leonard, arrived at the recording studio in New York to find the album's nine tracks completed, simply awaiting the vocals. For a group that was, itself, in a bit of disarray, this was not an ideal experience. Part of the greatness of the Motown machine was in the competitive matching of songs with groups -- and vocalists within groups -- and following with dynamic recording sessions on Grand Boulevard in Detroit.  Hear To Tempt You was clearly less tailored in its approach, and it showed in the results. Baker, Harris and Young were best known for their work with the Trammps, and parts of Hear to Tempt You sound like outtakes from a Trammps session, even though the two groups were markedly different acts.
Newcomer Leonard showed himself to be a near perfect fit for The Tempts sound, as he glided through the album's first single, "In A Lifetime," a Latin-tinged disco song, the upbeat nature of which belied the sad confession of a man to his betrayed lover ("I could never find another love like yours in a lifetime"). It was a rougher go for Price, a talented Chicago baritone who was still finding his voice (he was just 24) when he was thrust into the spotlight. So it wasn't surprising that the ballads "Can We Come And Share In Love" and "Let's Live In Peace" fell flat, in part because of Price's lack of early vocal chemistry with the group and in part because the songs just weren't very good. Fortunately, Price redeemed himself, strutting his vocal chops beautifully on "It's Time For Love," a quintessential Philly "let's all get along" dance number. The remaining group members, Richard Street, Williams and Franklin, also all had leads (unusual for a Temptations album), with Otis drawing the long straw on "Read Between The Lines," another fine dance number. As on their albums with the Trammps, the BHY production team here proved far more adept at delivering upbeat material. Nearly all the memorable cuts were disco songs -- driven by Young's legendary drum work -- with the remaining ballads being far more generic and tending to drag down the affair. 
Atlantic didn't really know what to do with the new Temptations sound, and Hear to Tempt You disappeared from radio almost as quickly as it came, dying an undeserved death that prevented even "In A Lifetime" from hitting the R&B top 10. So, for the follow up album, Bare Back, the Temptations moved to the familiar, bringing in former Motown hitmakers Brian and Eddie Holland. Unfortunately the Holland brothers of 1978 were not Holland-Dozier-Holland of 1968, and the resulting product proved - despite strong vocal performances - to be one of the more forgettable Temptations albums
Radio gave some notice to Bare Back's first single, "Ever Ready Love," a melodic ballad that sparkled with the sweet lead vocal of Leonard, who was increasingly proving to be a great asset to the group. The Hollands also leaned heavily on the always-brilliant Richard Street, and his empassioned vocals on cuts like "Touch Me Again" and the title track brought the maximum life to fairly mediocre underlying material. Conversely, Louis Price was largely placed in the background for Bare Back, getting the full lead only on "That's When You Need Love" -- a really fine vocal performance that showed much better chemistry with the group than his work on Hear....  One hidden gem late on the album was "I See My Child," a string-filled ballad that is at times a bit saccharine, but which includes simply beautiful group harmonies that make it the mostly likely "keeper" on the album. 
The failure of Bare Back to win -- or even keep -- the longtime fans of The Temptations, led the group to return, successfully, to Motown in 1980 for Power, a fine album to which Berry Gordy personally attached his name as producer and which thrust The Tempts back into the top 10.  
In the end, Hear to Tempt You and Bare Back are unusual historical artifacts.  They mark the most confused period in the history of the greatest male vocal group of all time.  That confusion certainly seeped into the music, which was both uneven and even occasionally unrecognizable as belonging to the Temptations. But, as with any period in The Temptations recorded history, this 2-for-1 collection has enough high points to make it an interesting find for the group's millions of fans.  While the albums, long unavailable in any form, are on the whole certainly not essential, they include enough rare, fine performances to make them hard for classic soul music fans - or devoted Tempations fans like this reviewer - to resist. Selectively Recommended.
By Chris Rizik