December 5, 2013
- One question that will shape the next 50 years
- Did Biden back down in Beijing? Or did the Navy fly to the rescue?
- Profits from a medical research niche growing 77% a year
- The amazing disappearing Silver Eagles
- Demise by drone: The return of the feral hogs
- A sucker punch in the economic numbers… a new phase to the “blame Obama” thread in our inbox… your last chance at some of our most pathbreaking research… and more!
OK, deep breath: World War III probably won’t break out this week.
Vice President Biden met for 5½ hours yesterday with China’s President Xi Jinping. No doubt the agenda included the Air Defense Identification Zone (ADIZ) China now claims over an island cluster in the East China Sea — claimed by China but controlled by Japan. Aircraft flying over the ADIZ must notify Chinese authorities in advance and follow instructions from Chinese air-traffic controllers.
The photo op this time did not reveal how high Xi Jinping’s pants were yesterday…
So was anything settled? Not really. Before he began his trip a few days ago, Biden was demanding China take back its declaration of the zone. But by all accounts, he didn’t make that demand in person.
According to The Atlantic’s Steve Clemons, covering the talks in Beijing, “Insiders say the vice president and President Obama didn’t want to draw a red line in an already-tense mess when there are options beyond escalating it into a full-blown conflict — and especially when China would likely balk at such a demand.”
“This particular dispute was always destined to occur,” says our Byron King — “a question of when, not if.
“The Chinese goal is to alter — upset is not too strong a term — territorial arrangements that have been in place since the end of World War II. Of course, Chinese maintain that their sea and airspace grab is based on deep history. China is merely exercising a long-dormant national right, of sorts.
“Looking back to the days after World War II, mainland China didn’t have much say in how the lines got drawn offshore. The area was something of an ‘American lake’ in those halcyon postwar days. Times have changed, to be sure.”
“How Long Will China Tolerate America’s Role in Asia?” reads the headline from a blog post by Harvard prof Stephen Walt at Foreign Policy.
Mr. Walt says that’s one of the big questions that will shape the next 50 years. “The current situation is clearly anomalous,” he writes. “Historically, it is somewhat unusual for one great power [the U.S.] to have a tight set of alliances in the immediate neighborhood of another great power [China] and to maintain a lot of military force in its vicinity, without the other power having a compensating presence in close proximity to its rival.”
For the moment, it might look as if Washington is backing down. On the other hand…
Only days before Biden’s arrival in Asia, the Navy deployed brand-new “sub-killing” jets to the Pacific.
Last Friday, the Navy announced its P-8A Poseidon aircraft — first described in our virtual pages six months ago — had reached “initial operational capability.” And two of them were immediately dispatched to Japan, with four more to follow soon.
Boeing’s P-8A Poseidon “sub-killing” aircraft
National security wonks in the Twittersphere were suitably amused…
“I expect that politicians and diplomats will do what they do,” says Byron King of the Pacific airspace issue. “Meanwhile, the Navy’s new P-8A aircraft will begin operating in the area and demonstrating capabilities while providing timely intelligence information back to the ‘deciders’ of the world.
“Poseidon can operate both at high and low altitudes over the ocean. If need be, the aircraft can get down low and slow to conduct close-in searches for potentially hostile submarines or other vessels. In fact, the P-8A is designed to take on the rigors of low-altitude turbulence and even salt spray.”
As Byron explained last May, the P-8A is at the heart of next-generation anti-submarine warfare (ASW). “China is building several classes of nuclear and diesel-electric submarines, the better with which to project power out into those ‘island chains’ that the Chinese view as their natural defense barriers. Any questions on that? Ask our friends the Japanese.”
At least three of the “Big Five” defense contractors have a hand in the P-8A. The jets come off Boeing’s final assembly line in Renton, Wash. Many of the electronics and weapons systems come from Raytheon. More electronics come courtesy Northrop Grumman.
The Navy’s first order was for 117 of the P-8As. “With a price tag of about $220 million per P-8,” says Byron, “the U.S. government is upping the ante for the defense sector.
“If you’re reading between the lines, regardless of any defense sector budget cuts, big buys like that for the P-8 will continue. The Japan/China skirmish proves that much.”
[Ed. Note: Then there’s the fast-moving niche sector within the defense space — cyberwar. “Western governments,” reports the Financial Times, “are close to an agreement that would put sensitive cybersecurity technologies on the same footing as regular armaments under one of the world’s main agreements on weaponry export control.”
The U.S. government alone is on the verge of a $16.1 billion spending spree that will rain money on tiny, little-known firms. And Byron has reviewed 178 pages of Pentagon documents to help pinpoint which firms stand to get the lion’s share. You can’t buy Byron’s report anywhere… but you can learn how to obtain your own copy at this link.]
Blue chip U.S. stock indexes are sliding again today. The Dow is down to 15,831, the S&P to 1,786.
But the Nasdaq is holding its own, and small caps represented by the Russell 2000 are actually in the green. Meanwhile, traders are chewing on the following numbers…
- Third-quarter GDP: The Commerce Department’s latest guess rings in at an annualized 3.6%. Which sounds really robust (assuming you think GDP is a valid indicator; we don’t) until you look closer. It’s mostly growing inventory; if that inventory doesn’t clear during the holidays, look out below
- First-time unemployment claims: Back below 300,000, the level that indicates a “normal” recovery. That said, even the wizards at the Bureau of Labor Statistics (BLS) acknowledge a late Thanksgiving this year is throwing off their calculations.
Tomorrow, the BLS graces us with its November jobs report. We’re positively tingling with excitement…
What’s the hot area of medical research right now? Stem cells.
The World Stem Cell Summit is underway this week in San Diego, where researchers from three continents have presented a paper showing stem cell research is growing at 7% a year — more than double the rest of the medical field, at 2.9%.
And when it comes to “induced pluripotent stem cells” — an area that’s been on our radar since 2010 and which won the Nobel Prize in 2012 — that’s been growing 77% a year since 2008. Recall that iPS cells can be taken from your skin and transformed into cells for the heart — or any other organ.
Our groundbreaking research on the industry leader in iPS cells is only hours away from being taken offline. Check it out while there’s still time.
Gold popped to $1,250 yesterday afternoon, only to give it all back. At last check, the bid is $1,219. Silver’s at $19.37.
A new supply squeeze in U.S. Silver Eagles is underway. A total of 2.3 million Silver Eagles exited the U.S. Mint’s doors in November — down from October, and down from November 2012.
“The lower sales figures for November do not reflect a drop in demand for silver bullion coins,” suggests the Gold and Silver Blog, “but rather the opposite, due to the fact that the U.S. Mint has run out of coins due to unprecedented demand.”
Indeed, the Mint has consistently had trouble keeping a steady supply of blanks all year. Sales to the Mint’s dealer network were suspended for several days back in January. The last of the 2013 issues will ship out next Monday; the 2014 model won’t be available till Jan. 14.
The annual sales record for Silver Eagles was already broken a month ago; as of this morning, the year-to-date total is 41,849,500.
Gold Eagle sales look sluggish by comparison. But at 812,500 ounces, the 2013 total already surpasses 2012.
And now a mashup of two favorite 5 themes of 2013 — drones and feral hogs.
Feral hogs do about $1.5 billion of damage to crops, lawns and wildlife every year, says The Economist — putting numbers on a story that up to now was mostly anecdotal.
Enter Louisiana Hog Control, a firm launched in 2011 that uses remote-controlled aircraft equipped with a thermal-imaging camera and laser pointer.
The drones fly at 400 feet, helping locate the pigs for hunters on the ground equipped with night-vision goggles. Owner Cy Brown and his partner James Palmer figure they’ve killed about 300 wild pigs in the last six months.
Varmint control gone high-tech…
“Obviously, it’s not completely new technology,” Brown tells Fox News, “but some of the sensors and computing power has gotten to such a state to where it’s very easy to build these things, have them last a long time and for them to have a little bit of brains.”
Wait a minute, you say: Didn’t we say yesterday the FAA forbids the commercial use of drones? Yes, indeedy. But Brown gladly accepts tips for each hog, usually about $25. “The more you tip, the more we show up,” he says. “Whoever’s got the most pigs and the most money, that’s where we’ll be. Sometimes people pay us money just for showing up.”
A little ingenuity and the underground economy… Gotta love it.
“I couldn’t agree more,” a reader writes as our “bias” thread mercifully winds down, “with the Army vet who chimed in yesterday about the political commentary.
“I sometimes don’t agree with your comments, but they always make me think, and I look forward to them. I always felt your ‘bias’ was to expose the stupidity of those who opine recklessly while making no sense. Please keep it coming.”
“Oh, please,” a reader tut-tuts with a fresh salvo after watching this presentation, “don’t blame this on President Obama.
“The government has never included all unemployed in the statistics. As far as I remember, and I am closer to 66 than 65, they have not included those whose unemployment benefits have run out.
[You are correct, and we’ve long pointed that out…]
“My grandchildren are way behind what my grandparents were financially,” the reader concludes, “and it started way before Barack Obama became president. So please, don’t make any allusions. Give a year when this all started.”
The 5: You’re absolutely right; Obama simply has the misfortune of occupying the Oval Office at this moment. Who to blame? Take your pick, and this list is hardly inclusive…
- Nixon, who cut the dollar’s last tie to gold in 1971?
- FDR, who inflicted his legion of “alphabet agencies” on an unsuspecting nation?
- Wilson, who signed the infernal Federal Reserve Act 100 years ago this month?
Heck, your editor thinks Alexander Hamilton strangled the great American experiment in its crib. Feel free to drop us a line and submit your own candidate and reason. Then take a few practical steps to reclaim your freedom.
Cheers,
Dave Gonigam
The 5 Min. Forecast
P.S. “There will be alternatives to the dollar, and this might be one of them,” says Ron Paul of Bitcoin. If Bitcoin use becomes widespread, “it’ll go down in history as the destroyer of the dollar.”
Zowie. Bitcoin crashed 28% yesterday after the Chinese central bank issued a statement declaring Bitcoin has no “real meaning.” At last check, it’s fetching $1,093.
If you’re still not sure what to make of Bitcoin, or whether it’s right for you, click here and we can help you make an informed decision.
P.P.S. Our expose on the “God switch” — and its potential to make you at least 10 times your money — goes offline tonight at midnight. Here’s your last chance to review it.