The John Batchelor Show

Wednesday 9 December 2020

Air Date: 
December 09, 2020

JOHN BATCHELOR SHOW
Colleague: Gordon Chang, Daily Beast
 
Hour One
On the Road to Baku
Wednesday 9 December 2020 / Hour 1, Block A:  Andrew Collier, managing director of Orient Capital Research based in Hong Kong, and Gordon Chang: @GordonGChang, Daily Beast, in re: Chinese defaults.  Baku on the Caspian seashore. There’s great bad debt in China—bonds won't be paid, or will blow up. Why is Beijing allowing some companies to default? Will China implode?  Three proposed remedies. 
Some state-owned forms are defaulting; what was happening was that localities owned inefficient companies; the central government allowed default. West has about $150 billion of bonds.  This is really signaling by Beijing: You gotta stop wasting [stealing] money. Next year, if here are too many defaults, investors would stay away.  In some cases, recapitalization by banks, local state firms, etc.   Authoritarian regime with interference all over the place.  We’ve now seen orderly court defaults rise from 15,000 to 19,000. 
Private firms, incl Evergrand (enormous real estate company) in Shenzhen, had $150 billion in debt, couldn’t repay.   Some sort of recapitalization package occurred. A messy, Western-style retrieve.  The government is introducing failure, which is a form of capitalism. 
The memorandum carried by GlobalSource Partners    https://www.globalsourcepartners.com/posts/defaults-in-china/teaser
CHINA ADVISORY - Report 30 Nov 2020 by Andrew Collier
       The recent wave of defaults has raised questions about China’s support for the state sector. It is unusual for Beijing to allow state firms to default on their bond or debt obligations, which opens the possibility of a failure of the state sector, and thus a risk to the economy from a systemic collapse of bond obligations. This is an unlikely outcome. China is simultaneously increasing credit to the economy through the banks while squeezing those sectors it believes are inefficient consumers of capital as a signal to the market. Widespread defaults are unlikely to occur, but if a chain reaction begins, Beijing would step in quickly through the PBOC or state proxies and halt the increase in defaults. 
       The pressure for capital by local governments is high, however. Land sales are weakening and local debt is unsustainable. 
       We can view China’s approach to economic restructuring and the implicit government “put” as a three-part policy: 
1) Strengthen the court system to handle corporate defaults. 
2) Make known its declining support for inefficient – mainly local – state firms that are squandering credit and increasing implicit government debt, through “signalling.” 
3) Flood the banks, particularly the larger ones, with adequate liquidity to handle loans to corporates, including targeting the cash-short SMEs.

On the Road to Baku
Wednesday 9 December 2020 / Hour 1, Block B:   Mark Clifford, former editor-in-chief of the South China Morning Post and a Hong Kong resident since 1992,  and Gordon Chang: @GordonGChang, Daily Beast; in re:  The Hong Kong Protection Act.  The US has offered temporary protection status to Hong Kong residents. The people of HK welcome the attention given by the world as they're terrified of [Beijing’s predatory intrusions]. About 300, 000 people emigrated after the 1999 handover; the UK has extended a similar provision and we think maybe 100,00 will accept, and maybe another 100,00 to the US.  Will Beijing close the borders to prevent emigration? This is a real slap in the face to Beijing—the richest other country offered this is El Salvador.  Cathay Pacific used to have 35 flights a week to New York; now has three.
People are thinking, Well, sell the apartment, move to the UK, and start again. It’s to the great benefit of the US that we’ve invited many immigrants.  This will continue till Beijing closes the doors.  Jimmy Lai, 72 years old, is now in jail essentially for having abrogated a provision of a lease. It's irrational.  
On the Road to Baku
Wednesday 9 December 2020 / Hour 1, Block C:   Major General Hussein Mahmudov, Ministry of Defense, @wwwmodgovaz, in re:  All the hostilities, war activities, were on the territory of Azerbaijan. At the end of the USSR, Armenia declared independence,and supported a separatist movement, took it over, and Azerbaijan’s internal situation was complicated so we couldn't keep control.
In 1992 and 1993, we lost territory.  The first refugees we received were in 1998. In 1990we faced armed forces. By 1992, we faced open war; Armenians killed 600 civilians, genocide. Next year, we lost Nagorno-Karabakh and adjacent regions, about 20% of our territory, and we received a million refugees.  Thereafter, every so often Armenia simply fired into Azerbaijan.   In 1993, the UN Security Council called for unconditional withdrawal; and that went unimplemented for over 20 years. The Minsk Group directed its effort to maintaining the status quo, which was unacceptable from our side.  Armenia used this time to build up its military, gaining 200 tanks and about the same in artillery pieces, although they gave false witness. We destroyed tanks, military vehicles, defense systems, artillery systems, and five SU25  aircraft.   For thirty years along the Line of Control, intermittent missiles lobbed from Armenia to kill Azerbaijani civilians. The new Armenian president declared, “We have to move to active deterrence.”
On the Road to Baku
Wednesday 9 December 2020 / Hour 1, Block D:   Major General Hussein Mahmudov, Ministry of Defense,@wwwmodgovaz, in re: In late September, active hostilities began:  on 27 Sept they launched artillery shelling on our civilian on the then-frontline and that morning killed four civilians.  It was decided to put an end o these long-running hostilities, to protect tour civilians, and to create a lasting peace. On the eighth day of the offensive, we managed to liberate the first region. Thereafter, we totally controlled the situation on the ground aiming to cut lines of communication between the Armenian armed forces and Armenia. We pose d no threat to Armenia, whence came all supplies. The ceasefire was on 9 Nov. Liberating the ancient village of Shusha was very important: the highest point from which you can control all of Nagorno-Karabakh.  Armenia was compelled to sign the trilateral statement. We now exercise control over our own territory. We spilled blood—2,800 dead, many wounded, families grieving.  They not only destroyed, they pillaged and looted, you’ll find no detail left on the houses, all w as taken [that wasn’t burned down]. 
 
Hour Two
On the Road to Baku
Wednesday 9 December 2020 / Hour 2, Block A:  Hikmet Hajiyev, @HikmetHajiyev, Foreign Policy Advisor to the President of Azerbaijan, also Head of Foreign Policy Affairs Department of the Presidential Administration; in re: The conflict is resolved, still a fascination to outsiders. What does it mean to the people of Azerbaijan? They were suffering from the occupation and the military [intrusions] of Armenia. Unfortunately, Armenia did not demonstrate good will in the negotiations.  On 27 September, early in the morning, they began bombarding civilians on our side of the Line of Control. Our people rose up and said, Enough! Our armed forces demonstrated considerable professionalism, and courage, and better tactics. We avoided collateral damage.  Armenia built huge WWII-sort of barricades. Now, de-escalation can have a spillover effect and generate regional peace.  My president proposed a new __, with immense possibilities for security [and economic development}] to build a prosperous region including Iran.  The liberated regions have immense possibilities fro economic development, We organized a visit of international journalists; I’ve never seen such destruction. They destroyed everything. For thirty years, they did nothing to develop the occupied area. Urbicide. The physical infrastructure of the cities has been destroyed.  Moscow and Ankara. ...
On the Road to Baku.  
Wednesday 9 December 2020 / Hour 2, Block B:  Hikmet Hajiyev, @HikmetHajiyev, Foreign Policy Advisor to the President of Azerbaijan, also Head of Foreign Policy Affairs Department of the Presidential Administration; in re: For thirty years the UN acknowledged that Nagorno-Karabakh ‘s occupied territory belonged to Azerbaijan.  Now we're starting a comprehensive construction process, building new cities. We’re committed to protecting he cultural heritage of Armenia, including churches. Sadly the Armenian side has inflicted vast damage, but we proceed. We also intend to construct agriculture and tourism.  The exclave of Nakhchivan, next to which is Turkey.  We can drive from Baku to Paris.  Based on the philosophy of peace and development, we look forward to a bright future.  A marketplace of all peoples who live in this greater region, 5,000 years of history.
On the Road to Baku.  
Wednesday 9 December 2020 / Hour 2, Block C:   On the Road to Baku.  
New World Report.Joseph Humire @jmhumire, @securefreesoc, and Senator Maria Fernanda Cabal @MariaFdaCabal, in re: Venezuela is now firmly controlled by Maduro. As of 5 January, what will happen to Guaido? A new threat to Colombia.  Consolidates Maduro’s network across South America. The election observers were from Iran, Bolivia, Russia, and the like. Colombia needs strong cooperation from the US, on the frontiers and to monitor events. The Quds Force is very active in Venezuela, will spread its malign influence widely.
On the Road to Baku.  
Wednesday 9 December 2020 / Hour 2, Block DOn the Road to Baku.  Dr ProfessorMurbaz Gurbanli, Yeni Azerbaijan Party Secretary, in re: Pandemic.  All believers must exercise their faith at home. Catholics and Orthodox issued the same directions.  Also, holy day celebrations had to be held with a maximum of six persons.   We coordinate with Uzbekistan’s religious communities.  Religion in the time of the pandemic.
 
Hour Three
On the Road to Baku
Wednesday 9 December 2020 / Hour 3, Block A:  Andrew Collier, managing director of Orient Capital Research based in Hong Kong, and Gordon Chang: @GordonGChang, Daily Beast, in re: Chinese defaults.  Baku on the Caspian seashore. There’s great bad debt in China—bonds won't be paid, or will blow up. Why is Beijing allowing some companies to default? Will China implode?  Three proposed remedies. 
Some state-owned forms are defaulting; what was happening was that localities owned inefficient companies; the central government allowed default. West has about $150 billion of bonds.  This is really signaling by Beijing: You gotta stop wasting [stealing] money. Next year, if here are too many defaults, investors would stay away.  In some cases, recapitalization by banks, local state firms, etc.   Authoritarian regime with interference all over the place.  We’ve now seen orderly court defaults rise from 15,000 to 19,000. 
Private firms, incl Evergrand (enormous real estate company) in Shenzhen, had $150 billion in debt, couldn’t repay.   Some sort of recapitalization package occurred. A messy, Western-style retrieve.  The government is introducing failure, which is a form of capitalism. 
The memorandum carried by GlobalSource Partners    https://www.globalsourcepartners.com/posts/defaults-in-china/teaser
CHINA ADVISORY - Report 30 Nov 2020 by Andrew Collier
       The recent wave of defaults has raised questions about China’s support for the state sector. It is unusual for Beijing to allow state firms to default on their bond or debt obligations, which opens the possibility of a failure of the state sector, and thus a risk to the economy from a systemic collapse of bond obligations. This is an unlikely outcome. China is simultaneously increasing credit to the economy through the banks while squeezing those sectors it believes are inefficient consumers of capital as a signal to the market. Widespread defaults are unlikely to occur, but if a chain reaction begins, Beijing would step in quickly through the PBOC or state proxies and halt the increase in defaults. 
       The pressure for capital by local governments is high, however. Land sales are weakening and local debt is unsustainable. 
       We can view China’s approach to economic restructuring and the implicit government “put” as a three-part policy: 
1) Strengthen the court system to handle corporate defaults. 
2) Make known its declining support for inefficient – mainly local – state firms that are squandering credit and increasing implicit government debt, through “signalling.” 
3) Flood the banks, particularly the larger ones, with adequate liquidity to handle loans to corporates, including targeting the cash-short SMEs.

On the Road to Baku
Wednesday 9 December 2020 / Hour 3, Block B:   Mark Clifford, former editor-in-chief of the South China Morning Post and a Hong Kong resident since 1992,  and Gordon Chang: @GordonGChang, Daily Beast; in re:  The Hong Kong Protection Act.  The US has offered temporary protection status to Hong Kong residents. The people of HK welcome the attention given by the world as they're terrified of [Beijing’s predatory intrusions]. About 300, 000 people emigrated after the 1999 handover; the UK has extended a similar provision and we think maybe 100,00 will accept, and maybe another 100,00 to the US.  Will Beijing close the borders to prevent emigration? This is a real slap in the face to Beijing—the richest other country offered this is El Salvador.  Cathay Pacific used to have 35 flights a week to New York; now has three.
People are thinking, Well, sell the apartment, move to the UK, and start again. It’s to the great benefit of the US that we’ve invited many immigrants.  This will continue till Beijing closes the doors.  Jimmy Lai, 72 years old, is now in jail essentially for having abrogated a provision of a lease. It's irrational.  
On the Road to Baku
Wednesday 9 December 2020 / Hour 3, Block C:   Major General Hussein Mahmudov, Ministry of Defense, @wwwmodgovaz, in re:  All the hostilities, war activities, were on the territory of Azerbaijan. At the end of the USSR, Armenia declared independence,and supported a separatist movement, took it over, and Azerbaijan’s internal situation was complicated so we couldn't keep control.
In 1992 and 1993, we lost territory.  The first refugees we received were in 1998. In 1990we faced armed forces. By 1992, we faced open war; Armenians killed 600 civilians, genocide. Next year, we lost Nagorno-Karabakh and adjacent regions, about 20% of our territory, and we received a million refugees.  Thereafter, every so often Armenia simply fired into Azerbaijan.   In 1993, the UN Security Council called for unconditional withdrawal; and that went unimplemented for over 20 years. The Minsk Group directed its effort to maintaining the status quo, which was unacceptable from our side.  Armenia used this time to build up its military, gaining 200 tanks and about the same in artillery pieces, although they gave false witness. We destroyed tanks, military vehicles, defense systems, artillery systems, and five SU25  aircraft.   For thirty years along the Line of Control, intermittent missiles lobbed from Armenia to kill Azerbaijani civilians. The new Armenian president declared, “We have to move to active deterrence.”
On the Road to Baku
Wednesday 9 December 2020 / Hour 3, Block D:   Major General Hussein Mahmudov, Ministry of Defense,@wwwmodgovaz, in re: In late September, active hostilities began:  on 27 Sept they launched artillery shelling on our civilian on the then-frontline and that morning killed four civilians.  It was decided to put an end o these long-running hostilities, to protect tour civilians, and to create a lasting peace. On the eighth day of the offensive, we managed to liberate the first region. Thereafter, we totally controlled the situation on the ground aiming to cut lines of communication between the Armenian armed forces and Armenia. We pose d no threat to Armenia, whence came all supplies. The ceasefire was on 9 Nov. Liberating the ancient village of Shusha was very important: the highest point from which you can control all of Nagorno-Karabakh.  Armenia was compelled to sign the trilateral statement. We now exercise control over our own territory. We spilled blood—2,800 dead, many wounded, families grieving.  They not only destroyed, they pillaged and looted, you’ll find no detail left on the houses, all w as taken [that wasn’t burned down]. 
 
Hour Four
On the Road to Baku
Wednesday 9 December 2020 / Hour 4, Block A:  Hikmet Hajiyev, @HikmetHajiyev, Foreign Policy Advisor to the President of Azerbaijan, also Head of Foreign Policy Affairs Department of the Presidential Administration; in re: The conflict is resolved, still a fascination to outsiders. What does it mean to the people of Azerbaijan? They were suffering from the occupation and the military [intrusions] of Armenia. Unfortunately, Armenia did not demonstrate good will in the negotiations.  On 27 September, early in the morning, they began bombarding civilians on our side of the Line of Control. Our people rose up and said, Enough! Our armed forces demonstrated considerable professionalism, and courage, and better tactics. We avoided collateral damage.  Armenia built huge WWII-sort of barricades. Now, de-escalation can have a spillover effect and generate regional peace.  My president proposed a new __, with immense possibilities for security [and economic development}] to build a prosperous region including Iran.  The liberated regions have immense possibilities fro economic development, We organized a visit of international journalists; I’ve never seen such destruction. They destroyed everything. For thirty years, they did nothing to develop the occupied area. Urbicide. The physical infrastructure of the cities has been destroyed.  Moscow and Ankara. ...
On the Road to Baku.  
Wednesday 9 December 2020 / Hour 4, Block B:  Hikmet Hajiyev, @HikmetHajiyev, Foreign Policy Advisor to the President of Azerbaijan, also Head of Foreign Policy Affairs Department of the Presidential Administration; in re: For thirty years the UN acknowledged that Nagorno-Karabakh ‘s occupied territory belonged to Azerbaijan.  Now we're starting a comprehensive construction process, building new cities. We’re committed to protecting he cultural heritage of Armenia, including churches. Sadly the Armenian side has inflicted vast damage, but we proceed. We also intend to construct agriculture and tourism.  The exclave of Nakhchivan, next to which is Turkey.  We can drive from Baku to Paris.  Based on the philosophy of peace and development, we look forward to a bright future.  A marketplace of all peoples who live in this greater region, 5,000 years of history.
On the Road to Baku.  
Wednesday 9 December 2020 / Hour 4, Block C:   On the Road to Baku.  
New World Report.Joseph Humire @jmhumire, @securefreesoc, and Senator Maria Fernanda Cabal @MariaFdaCabal, in re: Venezuela is now firmly controlled by Maduro. As of 5 January, what will happen to Guaido? A new threat to Colombia.  Consolidates Maduro’s network across South America. The election observers were from Iran, Bolivia, Russia, and the like. Colombia needs strong cooperation from the US, on the frontiers and to monitor events. The Quds Force is very active in Venezuela, will spread its malign influence widely.
On the Road to Baku.  
Wednesday 9 December 2020 / Hour 4, Block DOn the Road to Baku.  Dr ProfessorMurbaz Gurbanli, Yeni Azerbaijan Party Secretary, in re: Pandemic.  All believers must exercise their faith at home. Catholics and Orthodox issued the same directions.  Also, holy day celebrations had to be held with a maximum of six persons.   We coordinate with Uzbekistan’s religious communities.  Religion in the time of the pandemic.