US STOCKS SINK ANEW AMID HONG KONG PROTESTS

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U.S. stocks went on a roller-coaster ride last week

Adam Shell and Kim Hjelmgaard 1:28 p.m. EDT September 29, 2014

U.S. stocks opened sharply lower Monday on worries over pro-democracy protests in Hong Kong. The Hang Sang Index is down nearly 2%, falling to its worst level since July. Newslook

Pro-democracy protests in Hong Kong are spooking Wall Street Monday, as U.S. stocks continued their recent run of volatility, with the Dow dropping triple digits in early trading, tracking the nearly 2% drop overnight in Hong Kong amid concerns over China’s move to limit reforms in the Asian financial hub.

Stocks pared early losses and were off their lows in afternoon trading. The Dow Jones industrial average was down about 75 points, or 0.4%, to 17,040 after being down more than 170 points in early trading.

The Standard & Poor’s 500 index dropped 0.4% and the Nasdaq composite index fell 0.3%, but both of those indexes were also well off their lows of the session.

The Hong Kong protest is the latest geopolitical flare-up to get Wall Street’s attention, and cause investors to pare back their risk-taking. U.S. stocks went on a roller-coaster ride last week and has been dogged by global uncertainty in Iraq, Syria and the Ukraine. The stock market has also been victimized by profit-taking in recent days as investors react to a market that hit fresh record highs a little more than a week ago, but which has since seen the market’s upward momentum stall.

The protests in Hong Kong drew a tough response from police who declared them “illegal” and used tear gas after pepper spray and warnings of greater force failed to disperse demonstrators trying to join a sit-in outside the government headquarters.

USATODAY
Hong Kong democracy protesters defy calls to disperse
Hong Kong’s Hang Seng index fell 449.20 points, or 1.9%, to 23,229.21. Stocks in mainland China, however, were slightly higher, with the Shanghai composite index up 0.4%. Asian stock markets were mixed elsewhere as Japan’s Nikkei 225 index rose 0.5% to 16,310.64.

The stock market, which had been a sea of calm, has suddenly turned into a scary roller-coaster ride.The Dow opened down more than 100 points today, extending its string of price moves of 100 points or more to a sixth session.

The market has been extremely volatile in the past week or so, and investors were rattled to start the week by the demonstrations in Hong Kong that began Sunday and had investors wondering if a repeat of the Tiananmen Square protests in spring 1989 was brewing.

VOLATILITY: New normal? Dow dips of 100-plus points

FLASHBACK: ’89 Tiananmen Sq. protest did not sink U.S. stocks

It is important to note that U.S. stocks were not upended by the high-profile street protests back in Beijing back in 1989. In fact the index rose 8% from the unofficial start of the Tiananmen Square uprising on April 15, 1989, until June 4, 1989, the day the government crackdown intensified and resulted in deaths, USA TODAY research shows.

If the Dow finishes down — or up — by more than 100 points today, it will mark the first triple-digit point move of six days or more since an eight-session streak from June 11 to June 20 of 2013. That decline was exacerbated by a so-called “taper tantrum,” as U.S. investors reacted negatively to the earliest hints that the Federal Reserve would begin to pare back its bond-buying program. The Fed started to pull back on asset purchases this January and are slated to phase out quantitative easing, or QE, next month.

The Hong Kong Stock Exchange is the fifth largest in the world, when measured by the market value of the companies listed on the exchange, according to the World Federation of Exchanges, citing data through the end of August. (WFE data does not include the London Stock Exchange.) The Hong Kong exchange has a market cap of $3.4 trillion. Only the New York Stock Exchange ($19.3 trillion), the Nasdaq Stock Market ($6.8 trillion), and the Japan Exchange Group and Euronext are bigger.

European shares were trading lower as Germany’s DAX index dropped 0.7% and France’s CAC 40 fell 0.8%. Britain’s FTSE index was only down 0.04%.

Friday, stocks rallied as traders reacted to news of the fastest economic growth since 2011 as the final reading on gross domestic product for the second quarter was revised up to 4.6% from the previous estimate of 4.2%.

​Illegal, but fit to serve: Pentagon to recruit undocumented immigrants

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The Pentagon is to start recruiting undocumented immigrants who came into the US as minors and possess valuable skills like speaking Persian and Chinese. The program offering the opportunity is capped at 1,500 recruits per year.

The new policy revealed by the DoD on Thursday expands the existing pilot program called Military Accessions Vital to National Interest, or MAVNI. It has been tried since 2008, offering positions in the US armed forces to foreigners living in America legally as refugees or under a temporary visa.

Starting next fiscal year, MAVNI will also apply to illegal residents who came to US with their parents before age 16, reports the Military Times. The potential recruits would be selected from those eligible for the 2012 Obama administration policy known as Deferred Action for Child Arrivals, or DACA. Getting a DACA illegal immigrant status involves a background check by the Homeland Security Department.

The Pentagon recruits some 5,000 foreigners each year, most of them ‘green card’ holders. The MAVNI program may account for up to 1,500 recruits annually, although the military services are not required to accept them. In practice the Army has been the only service to accept a significant number, while the Navy and Marine Corps are not seeking applicants under it.

A recruit must meet higher-than-usual standards and have certain skills valued by the US military to get a position. Those include medical training and language expertise. Speakers of Arabic, Chinese, Pushtu, Korean, Russian, Urdu, Hindi and Hungarian are among those in demand.

The expansion of the program to illegal residents adds between 1.2 million and 2.1 million children, teenagers and young adults to the potential talent pool. The recruits would be offered an expedited path to US citizenship as an extra incentive to serve.

But some Pentagon officials have doubt over the number of recruits who would actually qualify for the MAVNI program.

“We’re just not sure how many within that existing population of DACA would have the linguistic skills to qualify,” said one defense official familiar with the policy change. “These are kids who entered the country at a fairly young age and have basically grown up in the United States, so the limit of their language talents would probably be the language that they received at home.”

The Pentagon’s move is part of a wider effort by the Obama administration to ease pressure on immigrants and integrate them into American society. It comes amid frustration in the White House with the failure of Congress to pass a substantial immigration reform.

CHINA PLANS FOR NUKE SUBS NEAR US COAST

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China gets bolder

The following is based on translations from Chinese media:

So far there has been no news about Chinese nuclear submarine cruising near the US. There has been official confirmation from China that a Chinese nuclear submarine operated in the Indian Ocean for a short period of time.

US nuclear submarine commander Benjamin Person (transliteration from Chinese) recently laughed at China, saying that Chinese nuclear submarines had never been active near the United States. He is happy that his nuclear submarine has been active in the seas near China for a long time.

This qianzhan.com article comments on Person’s words, saying that China obviously lags behind the US, but it has been making great efforts to catch up. China has established a coastal anti-submarine network and improved and upgraded the equipment of its anti-submarine aircraft and warships.

Such efforts will soon effectively deter the activities of US nuclear submarines in the East China Sea but not the South China Sea as the latter is vast in area and complicated under water. However China’s reclamation in key areas in the South China Sea will enable China to set up naval and air bases for anti-submarine aircrafts and warships to contain US nuclear submarines. Therefore, the article believes that US nuclear submarines will not be able to cruise freely in the East and South China Seas for much longer.

The article says that when China’s new nuclear submarines have been commissioned and communication technology improved, Chinese nuclear submarines will be able to operate near the US.

Contributor’s note: My post in early August mentioned Japanese Yumiuri Shimbun’s report that a nuclear submarine of the Chinese navy successfully launched a new-type JL-3 submarine-launched ballistic missile (SLBM) in the Atlantic Ocean in late July. The missile hit its target in a desert in Xinjiang. That test proves that China’s strategic nuclear submarine can hit anywhere in the United States with its JL-3 SLBMs. Therefore, I believe it is not necessary for a Chinese strategic nuclear submarines to cruise near the US to make American people nervous.

On the other hand, what the qianzhan.com article says about keeping US attack nuclear submarines away from East and South China Seas is in fact senseless. As most major Chinese cities are located near Chinese coast, US attack nuclear submarines can hit those cities with their Tomahawk cruise missiles even if they are not in the seas near China. The missile has a range of 2,800 km. Chinese coast cities remain vulnerable to US attack even if US submarines are not in the East or South China Sea.

China has to make hard efforts to obtain the capabilities of fighting its enemy far away from its coasts to avoid damages to its homeland. That is the common views of Chinese generals.

Source: qianzhan.com “US officer laughs at China’s nuclear submarines that have so far not operated near the US” (summary by Chan Kai Yee based on the report in Chinese)

Putin breaks ground on Russia-China gas pipeline, world’s biggest

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Russian President Vladimir Putin and Chinese Vice Premier Zhang Gaoli have launched the construction of the first part of Gazprom’s Power of Siberia pipeline – which will deliver 4 trillion cubic meters of gas to China over 30 years.

“The new gas branch will significantly strengthen the economic cooperation with countries in the Asia-Pacific region and above all – our key partner China,” Putin said at the ceremony outside the city of Yakutsk – the capital of Russia’s Republic of Yakutia on Monday.

Both President Putin and Vice Premier Zhang Gaoli signed the freshly-welded pipeline in a time-honored Russian tradition. The ‘Power of Siberia’ was welded together by workers from Chayanda gas field, overseen by CEO Aleksey Miller.

“Gazprom is always a reliable supplier of gas to its customers – which also applies to the ‘Power of Siberia,” Miller said.

The 3,968 km pipeline linking gas fields in eastern Siberia to China will be the world’s largest fuel network in the world. Both Putin and Vice Premier Zhang Gaoli have called the project the world’s largest construction project, as investment from both countries will be more than $70 billion.

“The gas pipeline ‘Power of Siberia’ will increase energy security and ensure Russia’s ability to fulfill export obligations,” Putin said in the opening remarks.

Read More: Russia and China seal historic $400bn gas deal

Starting in 2019, Power of Siberia will pump gas from Siberia to China’s populous northeast region as well as to Russia’s Far East. The Chinese side will start the construction of its part of the pipeline in the first half of 2015, the Vice Premier of China said.

Last year, China consumed about 170 billion cubic meters of natural gas and expects to consume 420 billion cubic meters per year by 2020. Europe still remains Russia’s largest energy market, buying more than 160 billion meters of Russian natural gas in 2013.

Gas resources exploration and gas transmission system formation in Eastern Russia (Source: Gazprom)

Gas resources exploration and gas transmission system formation in Eastern Russia (Source: Gazprom)

“Once we create a gas pipeline network here in the Far East and Siberia, we will be able to connect European pipeline system to the East. And this, in terms of export opportunities and expanding Russia’s ‘gasification’, is very beneficial. Depending on the situation in world markets, we can more effectively implement gas flows- either more to the West or to the East,” Putin told students at North-Eastern Federal University earlier on Monday.

Running from the Chayanda gas field in the Republic of Yakutia, the cost of construction is estimated at more than $20 billion (770 billion rubles), which includes other investment in the region of $7.5 billion (283 billion rubles). Russia’s largest steel pipeline manufacturer, TMK, will provide materials for the project.

The gas pipeline will become a common transit center for gas production centers in the Yakutia and Irkutsk regions.

The first stage of the project will be to transport gas from the Chayanda deposit in Yakutia and connect to the town of Blagoveshchensk on the Chinese border. The 968 km pipeline should be completed by 2018.

September 1, 2014. Russian President Vladimir Putin, right, at the ceremony marking the joining of the first link in the Power of Siberia main gas pipeline, held at Namsky Highway near Us Khatyn village. Gazprom Board Chairman Alexei Miller, right. Vice Premier of the People’s Republic of China Zhang Gaoli, left (RIA Novosti / Alexey Nikolsky)

September 1, 2014. Russian President Vladimir Putin, right, at the ceremony marking the joining of the first link in the Power of Siberia main gas pipeline, held at Namsky Highway near Us Khatyn village. Gazprom Board Chairman Alexei Miller, right. Vice Premier of the People’s Republic of China Zhang Gaoli, left (RIA Novosti / Alexey Nikolsky)

The Chayanda field, which will begin production in 2015, is estimated to have reserves of 1.2 trillion cubic meters in gas and 93 million tons of liquid hydrocarbons. Each year the field is expected to produce up to 25 billion cubic meters of gas and at least 1.5 million tons of oil.

Putin also said that China can become a shareholder in the Vankor oil and gas fields in the Krasnoyarsk region in Eastern Siberia. China will enter into a strategic relationship with Rosneft, Russia’s largest oil company, which owns the field.

The area is estimated to hold reserves of 520 million metric tons of oil and 95 billion cubic meters of natural gas. It has been in operation since 2009 and last year produced 21.4 million tons of oil and oil condensate.

“We generally take a very careful approach to the approval of our foreign partners, but of course, for our Chinese friends there are no restrictions,” Putin said.

In May, Russia’s state-run Gazprom signed a 30-year gas deal with China’s CNPC valued at $400 billion.

SWISS MAY SOON BACK FRANC WITH GOLD

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Switzerland yet again shows that it is the most sane nation-state on Earth

The Silver Bug: Switzerland is well known for its financial savviness. Their currency, the Swiss Franc, is still considered one of the strongest in the world.

Even if the reasoning for its strength is somewhat unfounded.

For decades Switzerland was one of the last bastions of the gold standard.

Have you ever wondered how billionaires continue to get RICHER, while the rest of the world is struggling?

“I study billionaires for a living. To be more specific, I study how these investors generate such huge and consistent profits in the stock markets — year-in and year-out.”

Their refusal to move away from a partial gold backed currency, granted them the luxury of a strengthened currency, which made it the envy of the world.

This was until May, 2000, when the legal requirement that 40% of all Swiss Francs be backed by gold was removed.

Unfortunately, the mass majority of Swiss citizens carried on, none the wiser, along with the mass majority of the world.

Like the US dollar, the Swiss Franc had the “illusion” of being as “good as gold”. Until recently.

The citizens of Switzerland have taken notice.

Unlike the citizens of America, the Swiss people are not content to sit by and allow the wealth of their country to be dis-hoarded any further.

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On November 30th, the people of Switzerland will stand up and make their voices heard.

The “Swiss Gold Initiative” will be held and the people of Switzerland will once again attempt to take control of their nation’s wealth.

T. Ferguson of the TFMetals report explains this upcoming event:

Interest is beginning to build, awareness is growing and the date of the national referendum has been set. Later this year, on November 30, the good people of Switzerland will finally get an opportunity to make their voices heard. The Swiss Gold Initiative can be roughly stated in three parts:

1. The halting of all Swiss gold sales

2. The repatriation of all Swiss gold that is held in foreign vaults

3. Resume backing the Swiss Franc with gold, at a minimum level of 20%

Of course, the politicians and bankers of Switzerland are squarely against this initiative as it greatly diminishes their hold on power and restricts their ability to continue to debase the Franc. Fortunately, as one of the world’s few remaining democracies, the Swiss people have an opportunity on November 30 to directly affect a change. For their sake and for the sake of their posterity, I pray that they choose wisely.

Have you ever wondered how billionaires continue to get RICHER, while the rest of the world is struggling?

“I study billionaires for a living. To be more specific, I study how these investors generate such huge and consistent profits in the stock markets — year-in and year-out.”

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Let us hope that they succeed.

If so, this will be a major victory for those of us who wish to see the price of gold truly set free.

Sadly for the Swiss people, the gold that they have leased out is unlikely to ever get returned.

As we know, it’s sitting in Chinese and Russia vaults, never to see the light of day again.

Futuristic Chinese ‘supersonic’ sub could reach US shores in under two hours

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Traveling from Shanghai to San Francisco in under two hours may sound like a fantasy, but China believes it’s figured out how to design an underwater vehicle that can make the idea a reality.

More worryingly, though, is the possibility that the technology will be used to develop even more dangerous weaponry.

According to the South China Morning Post (SCMP), the super-fast technology was developed by scientists at the Harbin Institute of Technology, and would allow underwater submarines or torpedoes to exceed the equivalent speed of sound under water – about 3,600 miles per hour.

The idea is based on the old Soviet concept of supercavitation, which involves creating a large air bubble around an object so that it could avoid facing too much friction and travel through water quickly.

Professor Li Fengchen said that when the vessel hits the water, one of its mechanisms continuously sprays a “special liquid membrane” all over the object’s surface. This membrane eventually wears off, but by the time the vessel reaches 46 miles per hour, it’s going fast enough to enter supercavitation state and generate an air bubble capable of helping it cover previously unknown distances.

“Our method is different from any other approach, such as vector propulsion,” Li told SCMP. “By combining liquid-membrane technology with supercavitation, we can significantly reduce the launch challenges and make cruising control easier.”

In theory, this means a trip across the Pacific Ocean would take only 100 minutes, while a transatlantic voyage could be undertaken in less than an hour.

Despite the claims of progress, Li added that there are still significant hurdles scientists have to overcome, such as creating precise steering controls and an engine strong enough to power the whole operation.

Many details surrounding the technology remain unknown, since the project is still categorized as a military secret. Supercavitation could still be used to create fast-moving torpedoes and other weapons, and the US, Russia, Germany, and Iran are all working on the same issue.

Still, Li said there could be ways to use the breakthrough to benefit more than just militaries. It could pave the way for fast underwater transportation, or help create swimsuits that allow for unprecedented mobility.

“If a swimsuit can create and hold many tiny bubbles in water,” he said, “it can significantly reduce the water drag; swimming in water could be as effortless as flying in the sky.”