Guest Post: When the Weakest Critical Part Fails, the Machine Breaks Down

Zero Hedge.  Excerpts:

Consumer spending is the bedrock of the global economy, and consumer spending depends on expanding debt and leverage. Once that subsystem fails, consumerism and the global economy grind to a halt.


The failure of any critical subsystem in an organism triggers a catastrophic, fatal decline. It doesn't matter if the rest of the critical subsystems are functioning at optimum levels; the failure of even one essential "part" leads to death.

The metaphor is easily extended to machines, where a perfectly sound engine will fail once the oil pump ceases functioning.

The cliche is that a chain is only as strong as its weakest link. The conventional wisdom is that the U.S. economy is so large and diverse that the failure of any one part will have only limited consequences on the economy as a whole.

But this belief was undermined by the financial crisis of 2008, in which the apparently "limited" implosion of subprime mortgage debt dominoed into a full-blown global financial crisis.
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When financialization fails, the consumerist economy dies. This is what is happening in Greece, and is starting to happen in Spain and Italy.


The central banks and Central States are attempting resuscitation by issuing credit that is freed from the constraints of collateral. The basic idea here is that if credit based on collateral has failed, then let's replace it with credit backed by phantom assets, i.e. illusory collateral.

In essence, the financialization system has shifted to the realm of fantasy, where we (taxpayers, people who took out student loans, homeowners continuing to make payments on underwater mortgages, etc.) are paying very real interest on illusory debt backed by nothing.

Once this flimsy con unravels, the credibility of all institutions that participated in the con will be irrevocably destroyed. This includes the European Central Bank (ECB), the Federal Reserve, the E.U., "too big to fail" banks, and so on down the financialization line of dominoes.

Once credit ceases to expand, asset bubbles pop and consumerism grinds to a halt. And since ever-expanding consumption is the bedrock of the global economy, the global economy will also grind to a halt.

The "flimsy con" is almost fully exposed, and the entire process continues to accelerate.

Gigantic Planet Next To Sun Dismissed As Lens Flare..

Huge Object Next to Sun Today From China.  Video from You Tube. Oh, ultra-violet filters, is there anything you can't screen and/or see?

Second Sun?  Dark Twin?  Nibiru?  Planet X, Tyche? Mothership?

If this is real, it explains the actions and reactions of the Japanese government and TEPCO and other governments worldwide.  Nuclear Extinction Event?  Get in Line!  Global financial collapse?  Snore!  Deepwater Horizon?  Who cares? 

It comes, and it's almost here.

This video also comes just in time to cross promote the new Steve Carrell movie, "Seeking a Friend For The End Of The World," which is nice..  I always enjoyed Mr. Carrell's work on "The Daily Show," but not so much on "The Office."  Mr. Carrell, for your sake, I hope the coming Apocalypse is hilarious; My eternal impression of you depends on it.

China builds scores of dams in earthquake hazard zones

Look on the bright side:  At least they're not nuclear plants!  The Extinction Protocol.  Excerpts:

More than 130 large dams built, under construction, or proposed in western China’s seismic hazard zones could trigger disastrous environmental consequences such as earthquakes and giant waves, finds a new report from the Canadian watchdog group Probe International. The report shows that 98.6 percent of the dams being constructed in western China are located in high to moderate seismic hazard zones. The location of large dams near clusters of recorded earthquakes with magnitudes greater than 4.9, and especially when the earthquake focal points are also close to the surface, “is cause for grave concern,” said the report’s author geologist “John Jackson.”
And:
In a worst-case scenario, Jackson reports, dams could collapse, creating a giant wave that would inundate everything in its path, including downstream dams, causing great loss of life and property.

Bright side, China..  Bright side..

Chinese TV Host Says Regime Nearly Bankrupt

The Epoch Times.  Holy shit; This guy's as good as dead.  Excerpts:

China’s economy has a reputation for being strong and prosperous, but according to a well-known Chinese television personality the country’s Gross Domestic Product is going in reverse.



Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis—on the brink of bankruptcy. In his memorable formulation: every province in China is Greece.


The restrictions Lang placed on the Oct. 22 speech in Shenyang City, in northern China’s Liaoning Province, included no audio or video recording, and no media. He can be heard saying that people should not post his speech online, or “everyone will look bad,” in the audio that is now on Youtube.

In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures. “What I’m about to say is all true. But under this system, we are not allowed to speak the truth,” he said.
And:
Lang’s assessment that the regime is bankrupt was based on five conjectures.


Firstly, that the regime’s debt sits at about 36 trillion yuan (US$5.68 trillion). This calculation is arrived at by adding up Chinese local government debt (between 16 trillion and 19.5 trillion yuan, or US$2.5 trillion and US$3 trillion), and the debt owed by state-owned enterprises (another 16 trillion, he said). But with interest of two trillion per year, he thinks things will unravel quickly.


Secondly, that the regime’s officially published inflation rate of 6.2 percent is fabricated. The real inflation rate is 16 percent, according to Lang.


Thirdly, that there is serious excess capacity in the economy, and that private consumption is only 30 percent of economic activity. Lang said that beginning this July, the Purchasing Managers Index, a measure of the manufacturing industry, plunged to a new low of 50.7. This is an indication, in his view, that China’s economy is in recession.


Fourthly, that the regime’s officially published GDP of 9 percent is also fabricated. According to Lang’s data, China’s GDP has decreased 10 percent. He said that the bloated figures come from the dramatic increase in infrastructure construction, including real estate development, railways, and highways each year (accounting for up to 70 percent of GDP in 2010).


Fifthly, that taxes are too high. Last year, the taxes on Chinese businesses (including direct and indirect taxes) were at 70 percent of earnings. The individual tax rate sits at 81.6 percent, Lang said.

Once the “economic tsunami” starts, the regime will lose credibility and China will become the poorest country in the world, Lang said.

It looks like the Global Economic Collapse will now just come down to sequence:  Who collapses when, and Who starts the process.  Oh, and Who has it worse. 

Global Economic Collapse: Omens and Intrigues..

A Guide to: Black Monday?  Urban Survival puts the pieces together..

NYSE Announces Third-Quarter 2011 Circuit-Breaker Levels  NYSE via Godlike Productions.  Excerpts:

The New York Stock Exchange will implement new circuit-breaker collar trigger levels for third-quarter 2011 effective Friday, July 1, 2011.

Circuit-breaker points represent the thresholds at which trading is halted marketwide for single-day declines in the Dow Jones Industrial Average (DJIA). Circuit-breaker levels are set quarterly as 10, 20 and 30 percent of the DJIA average closing values of the previous month, rounded to the nearest 50 points.

In third-quarter 2011, the 10-, 20- and 30-percent decline levels, respectively, in the DJIA will be as follows:

Level 1 Halt

A 1,200-point drop in the DJIA before 2 p.m. will halt trading for one hour; for 30 minutes if between 2 p.m. and 2:30 p.m.; and have no effect if at 2:30 p.m. or later unless there is a level 2 halt.

Level 2 Halt
A 2,400-point drop in the DJIA before 1:00 p.m. will halt trading for two hours; for one hour if between 1:00 p.m. and 2:00 p.m.; and for the remainder of the day if at 2:00 p.m. or later.

Level 3 Halt

A 3,650-point drop will halt trading for the remainder of the day regardless of when the decline occurs.

Gulp..

Police raid Milan offices of Moody's and Standard & Poor's  Guardian UK.  Excerpts:

Carlo Maria Capistro – chief prosecutor of Trani, a small Adriatic port – told Reuters that his office was checking to see whether the rating agencies "respect regulations as they carry out their work". The raids took place on Wednesday as Italy's prime minister, Silvio Berlusconi, addressed parliament on the mounting crisis.

He and other leading Italian politicians often cite speculation as a cause of market storms that involve a run on the country's shares or bonds. And the media habitually depicts sell-offs as attacks on Italy.

S&P, which along with other rating agencies has been strongly criticised in Europe for downgrading countries such as Greece, said in a statement it believed the Trani inquiry "has no foundation". It added: "We shall strenuously defend our work, our reputation and that of our analysts."

 

The masses are really gonna go manshit when they figure out they're all guilty..

S&P head: Agency may downgrade U.S. again  Raw Story.  Excerpts:

The head of Standard & Poor's sovereign ratings said Sunday that the agency may downgrade the U.S. again.

"Given the economic and political situation in the U.S., which will we see, an upgrading back to AAA or further downgrades?" Fox News' Chris Wallace asked David Beers.

"We have a negative outlook on the rating and that means we think that the risk currently for the rating are to the downside," Beers said.

While explaining what the U.S. could do to get its AAA rating back, the S&P official mentioned entitlement cuts but ignored the agency's call to raise revenues.

"Does any compromise have to have entitlement reform and revenue increases to be credible?" Wallace wondered.

"The key thing is, yes, entitlement reform is important because entitlement is the biggest -- are the biggest component of spending and they are the part of spending where the cost pressures are greatest," Beers replied.

Omen Alert:  Dollar to Be 'Discarded' by World: China Rating Agency  CNBC.  Uhhh  Huhh.  Excerpts:

The man who leads one of China’s top rating agencies says the greenback’s status as the world’s reserve currency is set to wane as the world’s most powerful policy makers convene to examine the implication of S&P’s decision to strip the United States of its triple “A” rating.

In comments emailed to CNBC, Guan Jianzhong, chairman of Dagong Global Credit Rating, said the currency is “gradually discarded by the world,” and the “process will be irreversible.”

Dagong made headlines last week when it became the first rating agency to cut its U.S. credit rating from “A+” to “A” after policymakers in Washington failed to act in a timely manner to lift its debt celing.

However, the announcement failed to register in the markets as investors have yet to decide whether to take the Beijing-based company seriously.

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But Guan’s observation—made just before S&P slashed its ratings on the world’s biggest economy—now seems strangely prescient.

Happy Monday, everyone.  Here's The Happy Mondays...

Next Stop: Black Monday.

The deal goes down starting Sunday night.  Here's the roundup.  Good luck to you in the coming weeks and months.

US loses AAA credit rating after S&P downgrade  BBC.  Excerpts:

One of the world's leading credit rating agencies, Standard & Poor's, has downgraded the United States' top-notch AAA rating for the first time ever.

S&P cut the long-term US rating by one notch to AA+ with a negative outlook, citing concerns about budget deficits.

Correspondents say the downgrade could erode investors' confidence in the world's largest economy.  Could=Will

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The downgrade is a major embarrassment for the administration of President Barack Obama and could raise the cost of US government borrowing.  Again; Could=Will

Investment guru Warren Buffett says US downgrade ‘doesn’t make sense’  From Raw Story.  Excerpts:

Investing guru Warren Buffett criticized the Standard & Poor's downgrade of the long-term US credit rating, saying it "doesn't make sense" and would have a limited impact on markets. 

"I don't get it," the highly-respected founder and chairman of Berkshire Hathaway told Fox Business News late Friday, saying his Omaha, Nebraska-based company would hold onto its considerable trove of US Treasury bills.

And:

The billionaire investment wizard brushed off fears that the downgrade will roil world markets.

"If nothing else takes place, meaning, if all other variables hold and there isn't say, a new problem in Europe, it won't make any difference," he said, referring to the growing eurozone debt crisis.

"The US, to my knowledge, owes no money in currency other than the US dollar, which it can print at will. Now if you're talking about inflation, that's a different question," he added.

But there are already "problems" popping up in Europe..

ECB-crisis meeting  MMNews via Google Translate.  Found it on Godlike Productions.  Excerpts:

The ECB will hold on Sunday afternoon, a crisis meeting. This was arranged by ECB chief Trichet. With this key representatives of G7 finance ministers and the Euro zone. The Reuters news agency reported.

Consequently, the central bankers fear violent turmoil in the financial markets on Monday. The crisis in the PIIGS bonds could continue to worsen, triggered by the U.S. downgrade by S & P. On the agenda is likely to be the opinion of observers from the purchase of Italy and Spain bonds. The yield on these bonds rose on Friday on a 14-year high.

The Beginning of the End  MMNews via Google Translate.  Excerpts:

The U.S. is losing its top rating, outlook negative. - The last week was dramatic on the financial markets. But it was probably just a taste of what's to come: the total erosion in the confidence of the monetary system. The crash of the stock markets as a harbinger of the total bankruptcy of all Western industrialized nations. A currency reform is more likely.

Growing up in the federal government, meanwhile, doubts whether Italy could be rescued by the European rescue EFSF, even if he tripled - Der Spiegel reports in its latest issue. An economy like Italy wasnot to support, to being too large, it is said to justify. The financial needs of the country is too huge. Also a guarantee of the entire Italian public debt of over € 1.8 trillion, after assessment of government experts from other partner countries, not to be lifted. By then the markets would suspect that Germany was overwhelmed.

AAA-rmageddon: S&P downgrade knocks off US credit crown  Story and video from Russia Today.

Is the Chinese Economy Sputtering for the Same Reasons as the American Economy?

From Washington's Blog.  Excerpts:

It was tempting to believe that China was different.

With its command and control economy with some of the trappings of free market capitalism, trillions in reserves, and abundant natural resources, many thought that China would "decouple" from the Western world's problems and sail into a prosperous future.
However, despite its long history, exotic names and seemingly strong position, China cannot avoid the rules of economics which have applied to all countries throughout history.
And:
The Telegraph noted last June:



China's chief auditor has warned that high levels of local government debt could derail the country's economy, with some observers suggesting that a number of Chinese provinces are even more fiscally-troubled than Greece.
 
Few countries will come through unscathed when the global economy tanks.  And I do think China looks stronger than it actually is..

Is The Pakistan/India Crisis Re-heating?

Pakistan troops along LoC put on high alert  From The Times of India.  Excerpts:

NEW DELHI: An embattled Pakistan Army has put its troops along the Line of Control (LoC) on a high state of alert as it scrambles to emerge from the embarrassment of having been caught unawares by the US troops, who raided the cantonment town of Abbottabad to take out Osama bin Laden.

According to authoritative sources, all units of Pakistani Army along the entire 740-kilometer LoC and the 110-km Actual Ground Position Line in Siachen were on Friday put on a "higher state of alert". Accordingly, "active deployment" has been beefed up along forward posts, said a senior official of Indian Army.

The officer said Indian Army has been careful not to respond to the high state of alert by Pakistan and "would not respond to it." Traditionally, the two sides are used to tit-for-tat responses to military actions.

Pakistan Army's move came a day after its corps commanders met with Army chief General Pervez Kayani to warn India against any misadventure. The statement was meant to be retaliation for remarks of Indian Army and Air Force chiefs that India has the capability to carry out an operation like the one executed by the US Seals in Pakistan

Great.  World War Three has a better than 50 percent chance of being started by shit talkin'.

Pork that ‘glows,’ beans with cancer chems among China’s latest poison foods

From Raw Story:  Disgusting.  Excerpts:

A wave of tainted-food scares has renewed fears in China over continued product-safety problems despite a government promise to clean up the food industry following a deadly 2008 milk scandal.

Tainted pork, toxic milk, dyed buns and other dodgy foods have surfaced in recent weeks, sickening consumers and highlighting the government's apparent inability to oversee China's huge and under-regulated food industry.
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Recent scandals have included pork found on the market so loaded with bacteria that it glowed in the dark, according to a state press report.

Authorities have discovered bean sprouts laced with cancer-causing nitrates, steamed buns with banned chemical preservatives, and rice laced with heavy metals, to name just a few.
And:
"The causes of food safety problems in China are many," Bao Chengsheng, a professor at the Shanghai University of Political Science and Law told AFP.

"One aspect is that China's legal system is incomplete. A lot of regulations are unclear... causing legal loopholes."
He added that underfunded regulators struggle to keep tabs on China's countless small food producers and retailers, setting the stage for lax oversight and corruption.
For example, "pig brokers" often bribe food safety inspectors to turn a blind eye to tainted meat, the state-controlled Global Times said.
Such practices have fueled a market for the carcasses of pigs that have died from disease and whose meat should be destroyed but instead finds its way into the food chain, the paper said.
Tainted meat from the carcasses of between 20 to 30 million diseased pigs enters Chinese markets each year, it said, citing experts.

This is, again, standard practice in countries with little or no regulatory oversight.  NON Regulation is the End Point AND Continued Goal of DE-Regulation.  Anyone who supports and aggressively touts government food de-regulation is almost assuredly a greed-fueled, vested-interest asshole, shill, crazy, or all three.

This Week In Korea Conflict.

South Korea and Japan discuss first-ever military agreements

Pentagon Chief Huddles With Allies About NKorea

U.S. Recruits Japan As Global Military Partner

North Korea Threatens America with Long-Range Missiles

North Korea calls for unconditional talks with South Korea

North Korea's military: a bad hand played well

So, things are pretty much the same: Gigantic powderkeg, no real spark -- yet.

WikiLeaks: China's Doing What We Thought China's Doing..

Meh. WikiLeaks: China Hiding Military Buildup, Intentions Excerpts:

The public line out of Beijing has always been simple: China's military is for the defense of the homeland.

The reality, however, may be more complicated. Newly released leaked U.S. diplomatic cables claim China is probably hiding both the size of its military buildup, as well as, on occasion, its intentions.

Australia's national intelligence agency conducted a strategic assessment of China's military spending, and concluded that the communist countries military buildup "threatens regional stability," reports the Australian daily The Age.

A leaked cable states that the agency found that China spent $90 billion on its military in 2006 - double the $45 billion budget publicly announced by Beijing, The Age reports.

While this is just a fraction of the nearly $500 billion the U.S. spends annually on its military, it is still noticeable for the fact that they were probably not publicly forthright about their military spending.

Allow me to respond to the four highlighted passages: 1, 2, and 3: Duh: Ya think? And 4: But America is?

C'mon.. If we've learned anything about how large government/ corporations/ entities work, NONE OF THEM are remotely close to transparent! To think the average citizen in the U.S. (as opposed to any other average citizen in any other country)has more knowledge of our military's black ops or secret spending or the second, third, or fourth set of books involved in how the entire operation(any operation) functions is naive, bordering on stupid/insane. I'm not knocking WikiLeaks for releasing this, nor am I knocking the military for operating in this manner; It's just the way things have always been done. Not that that makes current operations all right, but if we don't have a realistic assessment of systems function, we cannot fix given system without crippling it.

Thank you, WikiLeaks, for the confirmation, however un-necessary, and to CBS News: For God's sake, step it up and give me some real news, please..

While We Were Bird Watching..

North Korea made some peaceful gestures to end the latest Korean crisis, but South Korea's not buying it.. Excerpts:

North Korea called Wednesday for "unconditional and early'' talks with rival South Korea to put an end to months of tensions. Seoul quickly dismissed the offer as insincere and said it's waiting for an apology for two deadly attacks blamed on Pyongyang.
It's rare for North Korea to issue such a statement addressed to South Korea and it came as the U.S. envoy on the North was in the region to discuss the standoff. Earlier in the day, Stephen Bosworth sought to calm fears of conflict on the peninsula.
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But the North has made some conciliatory moves recently. On New Year's Day, the government issued a lengthy statement calling for warmer ties and the resumption of joint projects with South Korea. Pyongyang, eager for food and fuel assistance, has said it wants stalled international aid-for-nuclear-disarmament talks to restart. Washington and Seoul have said the North must first fulfill past nuclear disarmament commitments.
On Monday, South Korean President Lee Myung-bak vowed to increase his country's defenses but made clear the door was open for talks with Pyongyang and was willing to enhance economic cooperation between the rivals. On Wednesday, North Korean officials responded with their own call for negotiations.
"We are ready to meet anyone anytime and anywhere, letting bygones be bygones, if he or she is willing to go hands in hands with us,'' said a statement carried by the North's official Korean Central News Agency. It added that history has shown that such confrontations can only lead to an "armed clash and war.''
South Korea's Unification Ministry immediately rebuffed the overtures late Wednesday.
"We don't consider it as a sincere offer of dialogue,'' ministry spokeswoman Lee Jong-joo said. North Korea first must apologize for the two attacks and take "sincere'' steps toward nuclear disarmament, she said.

It would be a real shame if the final diplomatic straw that starts World War Three is "Your apology wasn't sincere enough." I realize the South is pulling an Alpha bluff, and that it's consistent with their "take no shit" philosophical stance towards the North, but at some point, this will backfire when North decides to not back down. Then, the whole peninsula will light up, and quick. There has to be a better solution to a potentially global nuclear conflict than the equivalent of two bullies staging intermittent pissing contests.

Korean Update, New Year's Eve Edition..

S Korea: N Korea Builds Up Special Forces  Excerpts:

North Korea has faster, more powerful tanks prowling the world's most heavily armed border and 200,000 special forces poised to carry out assassinations and cause havoc in South Korea, a major military review said Thursday.

Seoul's Defense Ministry report, released every two years, signals that the North's military threat has expanded..

The new document says the North intends to rely on its nuclear program, special forces, long-range artillery, submarines and cyber warfare forces as a counterweight to South Korea's high-tech conventional military.

North Korea has 200,000 special operations forces, the report says, an increase from 180,000 in the ministry's last assessment in 2008. Those forces are aimed at carrying out assassinations and infiltrating and disrupting key facilities in South Korea, it said.

So, while nothing has changed and no one has backed down, there seems to be a perception that, since no action has occurred, tension has decreased.  I disagree.  Looking at this conflict in terms of, say, a puzzle, more pieces keep sliding into place, and with each connected piece, a larger, clearer view of the situation emerges.  If a match does indeed drop onto this powderkeg, the explosion will be remarkable.

DPRK says its army and people ready for all-out war

From Xinhuanet dot com..   Excerpts:

The Democratic People's Republic of Korea (DPRK) said its army and people were ready for escalated conflicts and all-out war that would not be confined to the peninsula, the official news agency KCNA reported Saturday.

According to the KCNA, a spokesman for the National Peace Committee of Korea said in the statement released Saturday that the recent moves of the U.S. indicated that it was fully joining in South Korea's moves for a war of aggression against the DPRK after "throwing away the disguise of a hypocrite".

It was clear that if the South Korean army mobilized all flying corps, warships and missiles for a war against the DPRK and the U.S. joined them with the latest weapons, it would develop into an all-out war, not a local war, he said.
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It was ridiculous for the south to talk about a "right to self-defence". It was no more than "war servants and colonial stooges" of the U.S., he said.

The level of regional (and correspondingly international-by-proxy) tension is not leveling off or decreasing.  And North Korea's sending an Ambassador to Russia is also a little unsettling(As in diplomatic pre-disclosure, "Here's when we're gonna strike" unsettling)..  While this conflict has been reported on in the American media, it's coverage is partial at best, and fails to underscore this plateau to slowly escalating tension and dread surrounding the past 19 days. 

North Korea has always been tagged with "enemy status" as long as I've been alive, and always strongly aligned with China.  These incidents have happened before, and they've always calmed down.  And statistically, that's probably what will happen.  But, at the moment, that outcome seems..  Less possible with each passing day.

I'll Take Geopolitical And Thermonuclear Trash Talk For $800 Please, Alex..

N.Korea 'will rely on nuclear might for defence'


Pyongyang will rely on nuclear might to defend itself against the United States and South Korea, North Korea's Foreign Minister Pak Ui Chun told Russia's Interfax news agency Friday.

Anyone taking this threat seriously?  Russia, I'm looking in your direction..

Moments after his comments, the Russian foreign ministry issued a statement stating that "all sides must avoid taking any actions that can escalate the situation."

Japan seems a little agitated by how this whole crisis has unfolded..

Japan's usual quiet approach to tensions with its neighbors is giving way to more military exercises, critical statements and discussions of what was once unthinkable: development of a nuclear arsenal.

In recent weeks, Japan has issued blunt positions against North Korea and China over the North's attacking of a South Korean island and China's refusal to rein in its Korean ally.

This month, Japan refused to renounce its claim to islands to its south whose waters are rich in minerals and that China says is its property. And Friday marked the eighth day of military drills with the U.S. aimed at countering a ballistic missile attack on Japan.  (If I were Japanese, I'd be more worried about China directly, rather than indirectly via North Korea.  But that's just splitting nuclear hairs..)

And, despite favorable talks between China and the U.S., no one seems ready to blink just yet..

Korean Update-Or-At Least Someone's Making Money..

Dollar Rises Against Euro on Prospect U.S. Payrolls Expanded

North Korea may attack the province that surrounds Seoul, the Tokyo Shimbun newspaper said, citing an unidentified person who quoted an official in the communist nation. South Korea will hold artillery drills on Yeonpyeong, the island shelled by the North last week, on Dec. 6, television broadcaster MBN reported today, citing government officials it didn’t identify.

Japan and the U.S. will conduct a joint military exercise from tomorrow until Dec. 10.

“Geopolitical risk appears to be returning a bit on worries that North Korea may attack the South,” said Satoshi Okagawa, head of the foreign-exchange and money trading group in Singapore at Sumitomo Mitsui Banking Corp., a unit of Japan’s third-largest banking group. “There’s some safe-haven buying of the yen and the dollar.”

And:

The won strengthened for a third day as funds based abroad bought $373 million more Korean shares than they sold yesterday, the biggest net purchases in almost three weeks, exchange data show. The Kospi index of shares posted its highest close since Nov. 10 on optimism that tensions between North and South Korea are easing.

“We haven’t seen North Korean retaliation, which they pledged to do after the attack, and the lack of negative events let risk aversion subside,” said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong. “Positive sentiment globally boosted appetite for risk assets like the Korean won.”

US, Japan begin war games; China denounces drills

In an ongoing show of force following a deadly North Korean attack on a front-line island, the U.S. and Japan began one of their biggest-ever military exercises Friday, mobilizing more than 44,000 troops, hundreds of aircraft and a U.S. supercarrier.

The drills come just after the U.S. and South Korea concluded maneuvers in the Yellow Sea. The exercises brought immediate criticism from China, which is wary of having foreign navies off its shores and has been increasingly assertive over large swaths of waters in the south and east China seas, where some of the drills would take place.
..
The Nov. 23 North Korean attack killed two South Korean marines and two civilians on Yeonpyeong Island, a tiny enclave of civilians and military bases located near a disputed maritime border.

The attack has heightened tensions in the region and renewed fears of a bigger clash breaking out that could draw in neighboring countries, including Japan, where about 50,000 U.S. troops are based under a security pact.

South Korea’s New Defense Chief Threatens Air Strikes on North

South Korea’s new defense minister vowed retaliation that would include airstrikes if North Korea makes another attack following last month’s deadly artillery bombardment.

“I will mobilize all combat capabilities available to severely punish the enemy,” Kim Kwan Jin, former chairman of the Joint Chiefs of Staff, said today at a confirmation hearing. “I will surely use planes. This is a matter of self-defense.”

This may be a sign that the crisis is cooling a bit..

“The latest tough talk seemed to be mostly aimed at deterring North Korea from further provocations,” said Kim Yong Hyun, a professor of North Korean studies at Dongguk University in Seoul. “There is only so much South Korea can do in terms of tough actions when there’s little assurance of how far North Korea will go.”

Or maybe cooling not so much..

A news report says North Korea now has more multiple-launch rockets capable of hitting Seoul.

Yonhap news agency says North Korea has increased its arsenal of rockets by 100 pieces to about 5,200. Yonhap cited an unidentified South Korean military source.

The agency says the rockets have a range of 37 miles (60 kilometers), putting Seoul within striking distance.

Double Dog Uh-Oh..

Chinese government to make 'urgent' announcement

The Chinese government said Sunday it will make an "urgent" announcement later in the day amid rising military tensions surrounding the Korean Peninsula.

Whether anyone wants to officially admit it or not, China's involved. So there will be More-To-Follow, I'm sure..

Another Lost Chapter Of History Comes To Light..

Chinese villagers 'descended from Roman soldiers'  Excerpts:

Tests found that the DNA of some villagers in Liqian, on the fringes of the Gobi Desert in north-western China, was 56 per cent Caucasian in origin.

Many of the villagers have blue or green eyes, long noses and even fair hair, prompting speculation that they have European blood.

A local man, Cai Junnian, is nicknamed by his friends and relatives Cai Luoma, or Cai the Roman, and is one of many villagers convinced that he is descended from the lost legion. (Click the link and look at that picture.  That man looks European to me..)
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The genetic tests have leant weight to the theory that Roman legionaries settled in the area in the first century BC after fleeing a disastrous battle.
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Thousands of Romans were slaughtered and Crassus himself was beheaded, but some legionaries were said to have escaped the fighting and marched east to elude the enemy.

They supposedly fought as mercenaries in a war between the Huns and the Chinese in 36BC – Chinese chroniclers refer to the capture of a "fish-scale formation" of troops, a possible reference to the "tortoise" phalanx formation perfected by legionnaries. The wandering Roman soldiers are thought to have been released and to have settled on the steppes of western China.

The theory was first put forward in the 1950s by Homer Dubs, a professor of Chinese history at Oxford University.

We are what we are, but sometimes we discover that we are more or different than we think..

This Is Most Assuredly Not Awesome..

China, Russia quit dollar.  Excerpts/Italics:

St. Petersburg, Russia - China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.

Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.
..
The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.
And:
Wen said Beijing is willing to boost cooperation with Moscow in Northeast Asia, Central Asia and the Asia-Pacific region, as well as in major international organizations and on mechanisms in pursuit of a "fair and reasonable new order" in international politics and the economy.

Sun Zhuangzhi, a senior researcher in Central Asian studies at the Chinese Academy of Social Sciences, said the new mode of trade settlement between China and Russia follows a global trend after the financial crisis exposed the faults of a dollar-dominated world financial system.

Pang Zhongying, who specializes in international politics at Renmin University of China, said the proposal is not challenging the dollar, but aimed at avoiding the risks the dollar represents.

This is some pretty dire news.  The systems and relationships propping up the Dollar-as-World-Currency are failing, one by one, and soon, it'll be too big to ignore.  But for now, take solace in Bristol Palin flaming out on Dancing With The Stars.  No need to think about a plan of action just yet, right?