The Return of History

Nomura economists believe that China's property bubble has burst. “It is no longer a question of ‘if’, but rather ‘how severe’ the property market correction will be. We are convinced that the property sector has passed a turning point,” they said.

Nomura said four provinces in north China — Heilongjiang, Jilin, Inner Mongolia and Gansu — are leading indicators of the deepening problems in the real estate sector, with property investment having turned negative in the first quarter while industrial output slowed. In Heilongjiang and Jilin, property investment plunged by more than 25 per cent from the previous year.

Chinese local government authorities are trying to counter the fall by easing regulations and providing subsidies for first time home buyers. "Given slackening growth, Beijing will likely back local government efforts to support the housing market lest a collapse in prices jolts the economy and undermines its reform drive, the analysts say." Property in China is "too big to fail".

Whether Beijing will succeed or not remains to be seen. For all their recent triumphs China is not ten feet tall. Its ordinary troubles suggest there will be no near term replacement for the American hegemon, just the emergence of competing regional powers, each with their own constraints,  ambitions and imbecilities.  The world won't go from a Pax Americana to a Pax Sinitica.  It will simply become more messy.

This was exemplified by a report that Saudi Arabia may go nuclear because of Obama's Iran deal.

President Obama wants an agreement with Iran to prevent a Middle Eastern nuclear arms race, but it’s pushing Saudi Arabia toward its own nuke program.

Last month, America’s top Iran negotiator Wendy Sherman had some bad news for ambassadors from America’s Arab allies. In a meeting with envoys from Saudi Arabia, the United Arab Emirates, and other Gulf states, Sherman said that any bargain with Iran would likely leave Tehran, the Gulf states long-time enemy, with the capacity to enrich uranium, according to U.S. officials briefed on the encounter. ...

And now, one of the countries in the region without a full-blown nuclear programs—Saudi Arabia—may be changing its mind. Riyadh has a long-standing interest in nuclear power. But Western and Israeli intelligence services are starting to see signs that this interest is growing more serious, and extends into nuclear enrichment. Until recently, the pursuit of nuclear enrichment—or the fuel cycle—was considered by arms control experts as a tell-tale sign of a clandestine weapons program. Nuclear fuel is sold to all members of the Nuclear Non-Proliferation Treaty, but it’s far more costly to build the infrastructure and produce it indigenously. Saudi Arabia appears to be getting more serious about going down that path.

Will Kane has retired from Hadleyville, boarded the noonday train and left town. Now it is every man for himself, not just Saudi Arabia. There are similar impulses to re-arm in Japan and South Korea.  With regards to Europe, Secretary of Defense Chuck Hagel stated it flatly to an audience at the Wilson Center: the idea of 'permanent peace in Europe' is gone. He will be calling upon the Europeans to re-arm.

In one of his first major public speeches about the 2-month-old crisis in Ukraine and its impact on NATO, Hagel said the post-Cold War era belief that permanent peace had come to Europe is over.

“Russia’s actions in Ukraine shatter that myth and usher in bracing new realities,” Hagel said in Washington on Friday. ...

“I am therefore calling for the inclusion of finance ministers or senior budget officials at a NATO ministerial [summit] focused on defense investment. This would allow them to receive detailed briefings from alliance military leaders on the challenges we face. Leaders across our governments must understand the consequences of current trends in reduced defense spending … and help break through the fiscal impasse.”...

“Over the long term, we should expect Russia to test our alliance’s purpose, stamina and commitment. Future generations will note whether, at this moment of challenge, we summoned the will to invest in our alliance. We must not squander this opportunity or shrink from this challenge. We will be judged harshly if we do.”

It didn't take long for the Smart Diplomacy crowd to throw away Ronald Reagan's victory in the Cold War. All anyone can hope for now is that they don't go all the way back and throw away FDR's victory in World War 2.

The Washington Post bitterly reproached the Obama administration for engaging in the false economy of dismantling the standing peace without anticipating the immense costs of containing the chaos it unleashed or allowed to grow in malignancy. Referring to Libya the editorial board wrote:

The Obama administration and its NATO allies bear responsibility for this mess because, having intervened to help rebels overthrow Gaddafi, they then swiftly exited without making a serious effort to help Libyans establish security and build a new political order. Congress might usefully probe why the administration allowed a country in which it initiated military operations to slide into chaos.

As one analyst once put it, 'Khadaffy gave up his WMDs voluntarily and wound up in a meat freezer. So much for signals." Chaos in Libya may be an overstatement, but only just. Eli Lake at the Daily Beast wrote that "so many Jihadists are flocking to Libya, it's becoming ‘Scumbag Woodstock’"

Not only does al Qaeda host Ansar al-Sharia, one of the militias responsible for the Benghazi attacks that killed Ambassador Chris Stevens and three other Americans. But U.S. intelligence now assesses that leaders from at least three regional al Qaeda affiliates—al Qaeda in the Islamic Maghreb, al Qaeda in the Arabian Peninsula and members of the organization of Al-Mulathameen Brigade loyal to Algerian terrorist, Mokhtar BelMokhtar—have all established havens in the lawless regions of Libya outside the control of the central government.

One U.S. military contractor working on counter-terrorism in Africa summed up the situation in Libya today as simply, “Scumbag Woodstock.” The country has attracted that star-studded roster of notorious terrorists and fanatics seeking to wage war on the West.

And all courtesy of the US taxpayer.

The pace of catastrophe has been so rapid that rather than taking decades, history is returning a verdict on the Obama administration in just months. Things aren't working out as planned. As Obama's biographer pithily put it "the world seems to disappoint him". All that is left to the former van drivers and pitchmen turned national security wonks now is denial. "The Obama administration and House Democrats said Monday they were undecided about whether to take part in or boycott an election-year investigation by Republicans into the Benghazi attack that killed four Americans."

House Speaker John Boehner announced last week he would create a select committee to examine the response to the deadly Sept. 11, 2012, assault on the U.S. diplomatic post in Libya that killed Ambassador Chris Stevens and three other Americans. Legislative aides said a vote to authorize the panel is expected sometime this week. On Monday, Boehner said Rep. Trey Gowdy, R-S.C., would head the investigation.

The action puts President Obama’s team and House Democrats in a bind. They are concerned about what they believe will be a partisan forum for attacks on the president and his top aides ahead of crucial midterm elections in November, which could swing the Senate to GOP control. But avoiding the committee altogether means sacrificing the ability to counter Republican claims.

They think they have a choice; that if they just move the news cycle along everything will go away.  Even now president Obama is proclaiming that he will make 'climate change' the priority in his 'year of action' as if by saying that stuff he can make all the bad news vanish like a dream.

But the Hope and Change brigade put altogether too much store in spin and PR to overcome hard reality -- and reality won. The administration wouldn't have had to worry too much if they hadn't given the Republicans so much ammunition.

And the immediate threat is Benghazi. It will be ironic if Trey Gowdy, an ex-prosecutor with a first rate mind but a tenth-rate haircut picks apart the men with the first-rate haircuts and the tenth-rate minds who had put so much stock in appearances. There may be a moral in there somewhere but it's hard to venture what it might be.

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