Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.
China accuses US and Japan of ‘provocative actions’ (Demetri Sevastopulo, Financial Times) The exchange of rhetoric continued at the forum of Asian defense ministers Sunday. Wang Guanzhong, a top Chinese general replied to speeches by Japan's Prime Minister Shinzo Abe and U.S. Defense Secretary Chuck Hagel which accused China of using intimidation to assert its territorial claims. Quote from Wang after the Read more >> jump.
Gen. Wang Guanzhoug:
"The speeches by Mr Abe and Mr Hagel gave me the impression that they co-ordinated with each other, they supported each other, they encouraged each other and they took the advantage of speaking first ... and staged provocative actions and challenges against China."
Kabul's Bush Bazaar dwindles as US troops withdraw from Afghanistan (May Jeong, The Guardian) Hat tips to Roger Erickson and Chuck Spinney. There are some in Afghanistan who are disappointed that Americans are leaving. The operators of an outlet for the local black market known as the "Bush Bazaar", are being deprived of 'surplus' goods from NATO military bases. The few merchants still open there are already displaying more goods from Iran and Pakistan than from the U.S. and other NATO countries.
China is trying to build what President Xi Jinping calls 'a new model of great power relations'. To understand how this might be the aim of Beijing's actions, we have to recognise that under his 'new model', Xi wants China to wield much more power and influence in Asia than it has for the past few centuries. These things are inherently zero-sum, so for China to have more power and influence, America must have less. This is what Xi and his colleagues are trying to achieve.
Today there are 11 articles discussed 'behind the wall'.
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The Big Hoax Of The Wall Street Hype Machine (Wolf Richter, Tetosterone Pit) Corporations are issuing record amounts of debt to spend record amounts on buying back their own shares: $160 billion in the first quarter alone, according to CapitalIQ. Borrowing money to buy back shares and hyping it ceaselessly as "returning value to the shareholders" is the most effective way to manipulate up the stock, even if revenues are declining quarter after quarter. And earnings don't come close to matching the advanced estimates either. Wall Street is running a gigantic market inflation pump.
Solving China’s local government debt problem (Peter Cai, China Spectator) China is trying to move control of local government debt away from the federal government and into local government control While this is a very good direction to be going China is trying to do it after a period that has seen tremendous debt increases for local governments (up an average of 70% in three years). Local governments have become accustomed to raising more than half of local revenue from real estate sales and development. With the real estate market possibly "heading south" local governments find their budgets under severe pressure without the central government credit handouts and the real estate revenue. This is a very poor time to be making this reform, according to Cai.
Two Measures of Inflation and Fed Policy (Doug Short, Advisor Perspective) Doug Short regularly contributes to GEI. The most recent inflation numbers are moving up, getting closer to the Fed target range of 2% - 2.5% . As always Doug has spectacular graphs.
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