A real-world vector

The Pentagon has officially confirmed the existence of a quasi-secret program to investigate UFOs, called the Advanced Aerospace Threat Identification Program, which started in 2007 and is reportedly still ongoing (although its annual $22 million of “black money” funding was cut off in 2012).

The program, which was supported by senators Harry Reid, Ted Stevens and Daniel Inouye, collected audio and video recordings of reported UFO sightings, including this 2004 footage of an encounter with a mysterious glowing, rotating object moving at high speeds:

Another NY Times report on the same day provides more details about that encounter, which was recorded by the US Navy off the coast of San Diego:

“Well, we’ve got a real-world vector for you,” the radio operator said, according to Commander Fravor. For two weeks, the operator said, the Princeton [a Navy cruiser] had been tracking mysterious aircraft. The objects appeared suddenly at 80,000 feet, and then hurtled toward the sea, eventually stopping at 20,000 feet and hovering. Then they either dropped out of radar range or shot straight back up. […]

Then, Commander Fravor looked down to the sea. It was calm that day, but the waves were breaking over something that was just below the surface. Whatever it was, it was big enough to cause the sea to churn.

Hovering 50 feet above the churn was an aircraft of some kind — whitish — that was around 40 feet long and oval in shape. The craft was jumping around erratically, staying over the wave disturbance but not moving in any specific direction, Commander Fravor said. The disturbance looked like frothy waves and foam, as if the water were boiling.

As Popular Mechanics points out:

There are several interesting details about the sighting here. For one, there were clearly two unidentified objects. The first was a large underwater object that was “much larger than a submarine.” For reference, the U.S. Virginia-class nuclear attack submarines are 377 feet long. The object also had some passing resemblance to a “downed airliner.” This was technically a USO, or unidentified swimming object. Although much rarer than UFOs, such craft have been sighted over the years.

We know a little more about the UFO itself. It is described as “wingless, white, and shaped like an oblong pill. It was 24-30 (40 in the NYT article) feet long and had no visible markings or glass. The USS Princeton was able to faintly track the “capsule” via its SPY-1B radar system, but the fighters were not able to get a radar lock on the object. The “capsule” was not only more maneuverable than the Hornets but also much faster —for it to have reached the CAP point ahead of the Navy fighters it would have had to have flown in excess of 2,400 miles an hour. According to FighterSweep.com, which published a detailed chronicle of the event in 2015, the object did not emit hot jet exhaust typical of ordinary aircraft.

One more noteworthy detail from the Times:

A 2009 Pentagon briefing summary of the program prepared by its director at the time asserted that “what was considered science fiction is now science fact,” and that the United States was incapable of defending itself against some of the technologies discovered.

I can’t be the only person who would like to know more about that. And I can think of a plausible rationale for the Pentagon to disclose more information: the existence of super-advanced alien technologies against which we have no defense is a pretty good argument for a massive increase in military R&D…

Seems legit

An insurance agent who has been ringing alarm bells about Alibaba at his blog provides a handy roundup of salient concerns about the NYSE-listed company:

The first step in any twelve (12) step process is to admit you have a problem. Yes America, we’ve been snookered. We’ve been hosed, screwed, ripped-off, etc. once again […]

If you doubt my thesis, ask yourself the following, relatively long, drawn out, rambling “if/then” question below:

If you think my thesis is wrong, and you really, truly believe that:

  • The roughly US$8 Trillion, of rapidly expanding Caymans money, much of it Chinese, is really used for charitable, philanthropic purposes (To my knowledge Mother Theresa didn’t have any Cayman accounts), and:
  • Alibaba is a historic model of “asset lite”capital efficiency creating $87 Billion in incredible balance sheet value, most of which are “intangible” assets, in just four short years, and:
  • All of the “Jumbo Jet”, “Yacht”, “Industrial Goods”, “Loans”, “Knock-Offs” and “Busted Real-Estate” listings are legitimate “Fast Moving Consumer Goods”, and:
  • Alibaba’s “Singles Day” $25 Billion GMV (the equivalent “work” of 51 million people in one day….140,000 Sears/Kmart Employees x 365 days) is accurate/real, and:
  • Chinese Bankers have lost their competitive fire and are willing to let this golden goose procure financing exclusively off-shore, and:
  • The “On Shore CNY”/”Off Shore CNH” dual currency system, where the “Off Shore” supply is controlled as tight as a drum to create the illusion of real trade value, while the “On-Shore” supply is printed faster than the Deutsche Mark in the post WWI Wiemar Republic, is just a quirky, non-purposeful aberration of Chinese Monetary Policy, and:
  • Alibaba continually shows up on the doorstep of US Investment Banks begging for US$ when 90% of their business is transacted in RMB, and:
  • The Bookrunners (JP Morgan, Citi, Goldman, Morgan Stanley, Credit Suisse, et. al.) of the brand spanking new US$7 Billion plus Junk Bond issue (mis-priced at only 120 bpts. over US Treasuries) are selling 40 year “BABA Bonds” as an altruistic, joint, “hands across the water” gesture, without regard to compensation and fees, and:
  • The 600+ related, consolidated, entities scattered all over the planet, have nothing to do with money-laundering and are indeed the most efficient way to run this enterprise, creating millions of as yet undefined future jobs in America, and:
  • The “franchise” office of PWC Hong Kong can effectively audit and verify the financial statements of these 600+ related, consolidated entities, with a few dozen staff, for approximately the same fee that PWC US would charge to audit a large domestic, auto dealership, and:
  • Jack, Joe, Daniel and Maggie are somehow untouchable, cutting edge entrepreneurs, operating as rebellious, disruptors to the appall and chagrin of the helpless, powerless, Chinese Communist Party, and:
  • By management’s own account, Alibaba is the most profitable business in history, beyond anyone’s wildest imagination, and:
  • You believe that American Financial and Political Leadership is both smart enough and honest enough (i.e. ..they patriotically push the huge checks back across the table) to prevent any “systemic financial contagion that nobody could possibly anticipate” from ever again happening…..like it has been happening roughly every decade since I was a little boy.

Then, if all of that makes perfect sense to you, you’re telling me there’s a chance:

  • That the Chinese government […] would ever, ever, ever in a million years, want to give up HALF (80% if you count Softbank) of Alibaba, this crown jewel, the secret sauce, the cornerstone of their new Internet economy, to a bunch of ignorant American and non-Chinese Investors? Huh?….Really?…

Huh, indeed. Just the fact that Alibaba refuses to provide a breakdown (by product category, region, etc.) of the total GMV (gross merchandise volume) figures it announces with such fanfare, should suffice to raise some serious questions about what is going on behind the curtain.

Here are some bonus thoughts on Japan’s SoftBank (a major investor in Alibaba), whose boss Masayoshi Son is quite a “character,” having at one point threatened to set himself on fire during a regulatory meeting.

A controversy

Remember that time a Chinese investment proposal toppled a Western government? Neither do I.

It really happened though — in 2013:

Talks to bring in Chinese capital to a large iron ore project weren’t even ripe for a deal when the outcry over a law facilitating the use of foreign labour led to fresh elections and a new cabinet that promises to revise that legislation.

Introduced by then PM Kuupik Kleist’s Siumut party and passed last December by the Greenlandic parliament, the so-called ‘large scale law’ (storskalalov) allows for foreign workers to be paid less than the local minimum wage of $14 per hour during the construction phase of large scale projects. Greenland’s untapped mineral resources, proponents argued, could help the country achieve economic self-sufficiency and eventually independence from Denmark, but cannot be developed without a workforce not to be found among the 58 thousand local inhabitants.

A large-scale fiasco

The law raised opposition both at home and in Denmark. Kleist’s government was accused of laying the ground for an invasion of thousands of Chinese workers that would amount to “social dumping”. Such large mining projects, some argued, would bring less benefits to the local population than traditional industries like fishing, which now accounts for 90% of the country’s exports. MP Nikku Olsen called the government’s policy towards foreign investment “very shallow and not thought through”, and led a breakaway faction of the ruling Inuit Ataqatigiit party to call for a referendum on the law. This triggered fresh elections that brought back to power the social democrats from Siumut, the dominant party since the first parlamentary elections in 1979, in a coalition with Olsen’s Parti Inuit and the centre-right Atassut. New PM Aleqa Hammond’s cabinet has stressed support for developing mining into the country’s main industry, vowing at the same time to revise the ‘large-scale law’ before next year.

Greenland (population 56,186) increasingly seems like a place to watch.

Paying for all that belt and road

Is China tying its financial stability to stuff like this?

An important article by economist Christopher Balding from back in May discusses the problems with China paying for its wildly ambitious (over-hyped?) One Belt, One Road infrastructure project:

Such doubts might seem spurious, given the numbers being tossed around. China claims nearly $900 billion worth of deals are already underway, with estimates of future spending ranging from $4 trillion to $8 trillion, depending on which Chinese government agency is doing the talking. At the conference itself, Chinese President Xi Jinping pledged another $78 billion for the effort, which envisions building infrastructure to link China to Europe through Asia, the Middle East and Africa.

From no other country in the world would such pledges be remotely plausible. Yet even for China, they’ll be difficult to fulfill without clashing with the country’s other objectives.

Comrade Balding, as he styles himself, crunches the number in a bit more detail on his blog:

  1. Let’s use the $5 trillion over 5 years number reported by Nataxis (which I would highly recommend reading their research report on financing OBOR which is a link in the BV piece) but also note that other outlets like The Economist have reported similar numbers (theirs was $4 trillion). Use simple numbers for our purposes and assume it is all equally divided into equal blocks so every year sees $800b-$1t per year in overseas lending by China. That is an enormous, enormous, enormous jump in overseas lending. For thought experiment purposes, we have even extend this to 10 years. To put this in perspective, ODI from China to the ROW in 2016 after an enormous surge was $170 billion. Then ODI is down 49% YTD from 2016.
  2. Assume that all OBOR lending is done in USD, this means that either a) China is going to tap PBOC USD or b) they are going to do tap the USD bond market to fund these lendings. If China taps PBOC FX reserves to pay for this, with the numbers reported, they will have no USD left in the reserves. None. Zero. Zilch. In fact, not only will they have nothing left, they will have to begin borrowing on international USD to fund investments in such credit worthy places as Uzbekistan. For simplicity sake, assume they plan to invest $5 trillion, they use up all $3t in PBOC FX reserves and then they have to go borrow $2t on international markets. Frankly, this is a crazy financial risk by China.
  3. However, it isn’t fundamentally any better if China opts for option B to raise all the funding on international USD bond markets. If China raises the entire amount, as Nataxis noted, this raises Chinese external debt levels by about 40% of GDP and more importantly makes China exceedingly risky to any type of devaluation. Even small devaluations of the RMB would then become important. All of a sudden China becomes a very risky borrower with high levels of external debt and an increasingly risky tie to the USD. What is so crazy about this situation is that China has tied itself and its stability to the USD to Pakistani bridge repayment. Stop and wrap your mind around that for one second.

More at the link.

Balding’s conclusion in the Bloomberg article seems exactly right: “But it’s almost certain that the amount of money that makes its way into Belt-and-Road projects will be significantly lower than advertised. Grand in ambition but short on details, Xi’s sweeping initiative may be better thought of as a “philosophy” or “party line,” rather than a fixed commitment.”

China will almost certainly spend/loan a LOT of money to build the B&R, but it won’t be $5 trillion over five years (I mean, seriously). But over the long term, it will still be a lot.

Notably, the B&R doesn’t have a timeframe, which could mean either that the project is more of a marketing gimmick than a reality — or that China is simply in this for the long haul:

The only internal instructions that have come so far, have been from Zhongnanhai [China’s top leadership], and are about banning words like “project” (because the word connotes a goal and timeline, Beijing prefers the looser term “initiative”) as well as banning the publication of official maps purporting to show the scope of OBOR [One Belt, One Road].

I see what you did there

A pretty astonishing story. When Beijing Normal University set up a research base in the capital of Greenland, it forgot to mention to its local partners that the facility would double as a satellite ground station with possible military uses. Just an oversight, I’m sure:

China has ‘officially’ launched a project to set up a satellite ground station in Nuuk, although Greenland’s public and elected representatives were kept in the dark about it for months, in an attempt to avoid concerns about its likely dual-use capabilities. Last May, a ‘launching ceremony’ was held in Greenland, where speakers included the well-known polar scientist in charge of the project and a military pioneer of the Beidou system, China’s alternative to GPS. The event was attended by a public of a hundred ‘élite’ businesspeople, including, in all likelihood, a senior Navy officer, as part of a group holiday; only two Greenlandic representatives were present. While reports were immediately available in Chinese media, the project’s launch went unnoticed in Greenland until I first ‘revealed‘ it last October.

It would be a shame if something happened to that facility. What if chronic power outages or some mysterious, unfixable technical glitch put it out of commission, perhaps indefinitely? That would really be terrible. Just saying.

On a related note (report from last December):

China’s first overseas land satellite receiving ground station was put into trial operation on Thursday.

The China Remote Sensing Satellite North Polar Ground Station is above the Arctic circle, half an hour’s drive from Kiruna, a major mining town in Sweden.


They found his lack of faith disturbing

There is some irony in the fact that China’s ruling party has outlived the Forbes career of Gordan “Collapse” Chang:

When a Chinese company buys a major American magazine, does the publication censor its coverage of China? There is only one example so far, and the results are discouraging. In 2014, a Hong Kong-based investment group called Integrated Whale Media purchased a majority stake in Forbes Media, one of the United States’ best-known media companies. It’s hard to demonstrate causality in such cases. But since that purchase, there have been several instances of editorial meddling on stories involving China that raise questions about Forbes magazine’s commitment to editorial independence.

On Oct. 9, longtime China commentator and Communist Party critic Gordon Chang received an email from Avik S.A. Roy, the opinion editor at Forbes. “Due to a wide-ranging reorganization of Forbes’ content,” Roy wrote, “we are going to be concluding our official relationship with you.” Roy added, “As a result of the organization, the articles you’ve written for us will no longer be stored on the Forbes server nor appear at Forbes.com,” according to the email Chang forwarded to me at my request.

Avik Roy, instrument of Gordan Chang’s collapse

I, for one, am amused to learn that a company called Integrated Whale Media exists. Regardless, this is a creepy case that may need to be added to our growing “Thought Policing by Remote Control” file (see also here, here and here).

Note the lack of an explanation for why Chang was cut loose and his articles erased (“Due to a wide-ranging reorganization of Forbes’ content” is not an explanation), combined with strong denials that any sort of censorship occurred.