SUNDAY 2/16/14

Thailand’s tourism industry is taking a major hit due to the ongoing political violence. Indian businessmen and tourists would flock to Thailand as a top destination spot but now avoid this troubled country labeling it as dangerous and unstable. What is bad for Thailand is good for Malaysia, Singapore and Dubai that now see an increase in travel bookings. Venezuela’s inflation accelerates as citizens struggle to obtain even the most basic goods and supplies. Street protests in Caracas and other cities are increasing and the violence over the last couple weeks creates elevated crude oil prices. More than two dozen people are injured as riot police use tear gas and water cannons against the anti-government protestors. The growing gap between rich and poor in most countries around the world fuel more and more social unrest and violence.

The US Army has constructed a ‘fake’ city in Virginia complete with a bank, school, subway and other common structures. The site will aid the Army and other branches of the military and law enforcement in conducting practice drills for terrorism, occupations in foreign cities and perhaps most concerning, dealing with domestic social unrest.

Further NSA spying scandal details become available showing that a law firm representing Indonesia is under surveillance. The NSA simply conducts spying operations with zero accountability. France and Germany discuss plans to set up a communication network that will exclude the US so these European Allies can be assured their messages are maintained private. Big Brother’s presence increases daily in America. The government now wants to develop a vehicle-surveillance data base by installing tracking devices in all cars and also continues operating complex computer algorithms that exploit all personal information existing on the internet.

Syrian peace talks end and are in jeopardy of not continuing. 200 illegal miners are trapped in an abandoned South African gold mine. Individuals are willing to take on enormous risks to their lives hoping for quick money. The fundraising site that raises money for start-up companies, film projects, video games and other ideas, Kickstarter, reveals that the site was hacked last week. Individual phone numbers, addresses, emails and other personal information was taken. Kickstarter tells users to change passwords and says security improvements are underway as the investigation continues. The relentless winter saga continues in the States with another one foot of snow (30 cm) falling in the northeast creating ongoing travel concerns.

A bombing in Egypt kills three South Koreans and an Egyptian driver. Egypt is killing their tourism and economy just like Thailand. Thailand’s consumer confidence is the lowest in two years. Thai police try to clear protestors but fail. Parts of Bankkok are shut down and Thailand is quickly developing a negative reputation. China instructs citizens to be cautious if traveling to Thailand so many simply cancel trips and change their travel destinations. 11 of the trapped South African miners are rescued once the obstruction at the mine entrance is removed but oddly, dozens of miners do not want rescued since they fear arrest if they exit the mine.

China announces a huge jump in loans likely fueled by the New Year’s celebrations. The record new credit growth is astounding and boosts the economic outlook. Copper runs higher and optimism is created in global markets. After worries over a cash-crunch recently which would have slowed growth, instead loan growth explodes higher. The data may be a positive at first blush; however, it may actually signal that the lending is out of control at this point now culminating in the proverbial unsustainable house of cards scenario. More capital has flowed out of emerging markets this year, in less than two months, than all of last year; both numbers are at about $29 billion.

Japan Q4 GDP misses. Growth is far weaker than expected especially with the obscene stimulus program ongoing. The annualized GDP is 1% far short of the 2.8% expectation. Japan GDP was -3.2% in Q3 2012 and 0.6% in Q4 2012. For 2013, GDP is 4.5% in Q1, 3.6% Q2, 1.1% Q3 and now 1.0% in Q4. Pitiful for how the BOJ is destroying the yen with their money printing. Like the US, the Keynesian policies can provide short-term sugar highs, although the US sugar high is five years old now, but all the policies do is dig a deeper debt hole while making the rich richer that benefit from a goosed stock market. The dollar/yen drops to 101.65. The Nikkei does not sell off, however, and trades higher to begin the session. Japan takes the bad news in stride and most stocks trade higher. Japan’s consumption tax rate increase hits in April and is expected to stall the Japanese economy which will maintain ongoing concern.