The John Batchelor Show

Wednesday 25 February 2015

Air Date: 
February 25, 2015

 
Photo, left: 
JOHN BATCHELOR SHOW
 
Co-hosts: Gordon Chang, Forbes.com.  Dr. David M. Livingston, The Space Show.
Hour One
Wednesday  25 February 2015   / Hour 1, Block A: Richard McGregor, Wilson Center & author, The Party: The Secret World of China's Communist Rulers, in re:   CCP expelled Ma Jian, a vice minister at the Ministry of State Security, from a high-level panel of advisors after the Communist Party announced he was under investigation for corruption, Reuters reported Feb. 25. Ma is the most senior security official facing corruption charges since former domestic security chief Zhou Yongkang was convicted of graft. The investigation against Ma could mean big changes in the powerful state security ministry, which is known for being opaque. Ma is reported to have headed China's anti-espionage operations.
In Chinese corruption charges, it’s usually political; in this case, although it’s the Party and so perforce political, this has gone much farther than anyone thought would occur.  During Lunar New Year CCTV extravaganza, had skits on corruption, on  Party officials' making out like [in fact, as] bandits. Also song, "I Give You My Heart" with skits of Xi Jinping planting trees; glorification of the leader such as we haven’t seen in decades.  Glorification of Xi. Anther all-powerful leader ruling singe-handedly: Vl. Putin. Are these two bldg cults of personality, they seem to like and admire each other. Working hard to form stronger bonds.  Russia on a back foot with falling oil prices; China engaging Russia as charmingly as possible in order to obtain military technology.  If Putin goes, will his successor make deals with China or revert to ancient mistrusts?
http://blogs.wsj.com/chinarealtime/2015/02/19/xi-jinping-the-star-in-chinas-lunar-new-year-tv-gala/  ;    http://www.washingtonpost.com/world/asia_pacific/chinese-soccer-is-terrible-and-now-xi-jinping-has-officials-jumping-to-fix-it/2015/02/21/68f24c42-a6fc-11e4-a162-121d06ca77f1_story.html
Wednesday  25 February 2015   / Hour 1, Block B: Ethan Gutmann, author of The Slaughter: Mass Killings, Organ Harvesting, and China's Secret Solution to Its Dissident Problem, in re: apparent mass-murder by organ harvesting.  The Chinese military seem t be harvesting organs for income. Well over ten witnesses have clear memories of surgeons' examining them with specifically no interest but the condition of their internal organs.  Man from Birmingham went to get a new kidney in Xian.  Since China is surveillance state, with everyone under state scrutiny, no way could a hospital do that without knowledge of the upper leadership.  This began soon after a mild demonstration by Uyghurs in Xinjiang, with cadres's entering hotel rooms in Urumchi; also went to prisons to get blood samples in advance of organ harvesting.  White House is apprised of this shocking, horrifying practice; is doing nothing.   /  Chinese Regime Pads Military’s Pockets Through Murder, Military hospitals have been the main location for forced organ harvesting  /   http://www.theepochtimes.com/n3/1232519-white-house-responds-to-petition-on-organ-harvesting-in-china/      .
 
Wednesday  25 February 2015   / Hour 1, Block C: Hotel Mars, episode n. Linda J Spilker, , in re: Cassini and the  icy moon encounters with a flyby of  Rhea (a moon of Saturn), and new tools used to get clearer views and photos of Titan. We look at Rhea for tectonic crack s and fractures; zoom in to craters in [dense] crater field.  Seems to be airless.  Images have a lot of speckles {noise"} so we use math tools to get a better image of river channels and other forms.  Seas on Titan!  Station-keeping: we don’t orbit Titan but do flybys; we orbit Saturn.    Water rocks on Titan; organic chemistry set similar to what's on Earth, simply in different proportions. Atmosphere is warm enough to keep methane liquid.  NASA considering a probe with a submarine or balloon or airplane (thick atmosphere on Titan).  Solar wind hit Titan's atmosphere. Saturn's magentosphere.  Titan is an unmagnetized body; atmosphere gets pushed around by solar wind.  Lie expectancy of Cassini:  mission sends Sept 2017; we're running low on fuel. To protect the planet [from exogenous materials], will plunge Cassini into atmosphere to burn it up; just before, will skim the top of Saturn's atmosphere to get amazing pictures of the planet.  Saturn's rings are mostly – 99% - water ice; large, mountain-sized objects – like the Himalaya. 
Wednesday  25 February 2015   / Hour 1, Block D:  Pastor William Devlin ("PB"), Redeem!, in re: has been in Gaza for eight days, esp to minister to the 1,300 Christians still in Gaza;  then to Rehanli in Turkey on the Syrian border to work in a medical clinic for Syrian refugees. Millions of refugees driven out of Syria, also Lebanon; civil war is like a disease in that respect.  ISIS and al Qaeda, Hezbollah, many groups fighting.  Am next to a huge refugee camp in Atma, Syria, people who fled from fighting farther east. Desperate people: there's a little UN help, but there are entire families, esp from Idlib province and farther east, who've got to the Turkish border. It's said that one-third of Syrian population is either internally or externally displaced It’s cold – just above freezing; most unfortunate that Assad and Da'ish have created this. Almost every Syrian family here has lost at least one family member. I'm working with expat Syrian medical groups – one Saudi, one in conjunction with Americans. Also ICRC, IRC, a few other large organizations. World Food Programme is here, all trying to help these desperate people.  If the camp is attacked, everyone will run hither and yon; there's no armed security. No organized protection from ISIS/Da'ish, or Assad; if anyone wanted to come in, he could.  I've actually worked with a physician from al Nusrah [al Qaeda] . Peope are moderately safe here right now, but who knows about tomorrow.  Turkish border police are aggressive. A small river that people want to cross either to enter Syria to visit family or head north to escape: Turkish gendarmes will shoot anyone they see trying to cross. 
Hour Two
Wednesday  25 February 2015   / Hour 2, Block A:  Nitin Gokhale, independent security analyst and author of Beyond NJ 9842: The Saichen Saga, in re: A billion people and a billion people face off over a piece of the Seventeenth Century; yet China builds a railroad there and protests India's holding on to its own territory. Mr Modi also goes to the border.  Is Mr Modi looking to rally Indian nationalism to face Chinese aggression?  Yes, "We need to be strong enough to prevent invasion."  Were there a skirmish with China or Pakistan, Modi would have huge support.  Historically, China has tried to punish India by force whenever China thought India was strong. Xi would do well with a border conflict to distract the attention of Chinese people from the failed policies at home.  India has a big plan: a Mountain Strike Corps; also, more troops are being trained to fight in the mountains, and are being acclimatized. Heading to a border war? Repeat 1962?  http://www.reuters.com/article/2015/02/21/us-china-india-territory-idUSKBN0LO1UN20150221
Wednesday  25 February 2015   / Hour 2, Block B:  Suzanne Scholte, Defense Forum Foundation and   in re:     North Korea began with a bilateral treaty with Russia to export North Korean slaves widely.  Currently, to Qatr, Kuwait, Oman, Libya, among others. Workers are sent abroad by the DPRK regime, work 14 or 16 hrs per day in horrific conditions, have one day off a month.   All the money goes to Pyongyang; more than $110 million every year straight to the Kim regime. There are sixteen countries currently known to have North Korean slave labor contracts, incl Poland, Saudi, Romania, Iraq – they definitely all know. The Czech Republic was exposed and threw the laborers out. UN has sanctions vs DPRK for chem weapons, other materiel and weapons – but money is fungible, so this sort of cash income to North Korea can easily be used for military. Further, the UN sanctions blocking luxury goods being sold to North Korea are not enforced.  Kim has just opened a ski resort with eqpt from Switzerland, Austria, others.  There's a bill in Congress, HR 757 introduced by Ed Royce and Elliot Engel, that's one important tool to cut off money from the intl banking system into DPRK – which already gains vast amounts of hard currency from intl drug trafficking, counterfeiting money, proliferation of nukes, and selling slaves.  European countries are likely to stop when they're exposed.  I'm in Seattle today and found once again at a lecture here that  people everywhere are shocked at the slave camps and the international sales.  It’s not that people are indifferent, it’s that the information is not available; that is, until we tell them, they don’t know.
Wednesday  25 February 2015   / Hour 2, Block C: Sadanand Dhume, AEI, in re:   Modi After Delhi. A humbling state-election defeat is no reason for India’s government to resort to populism. Will a crushing defeat in a high-profile state election derail Narendra Modi ’s economic reform agenda even before it has gathered steam? That’s the question India faces after the populist Aam Aadmi Party swept to power in Delhi this month with one of the largest majorities ever seen in an Indian state election.
       On the face of it, the ruling Bharatiya Janata Party has reason to abandon economically vital but potentially unpopular reforms after its rout in Delhi. With ambivalence toward markets among the party rank and file, an array of socialist and populist rivals and a media that remains largely mistrustful of private enterprise, Prime Minister Modi and Finance Minister Arun Jaitley may see the political logic of slow-playing reforms in the budget to be announced Saturday. But going slow would be a signal of weakness from a party that only won back national power last year after a decade in the wilderness. Instead of trying to be more like the AAP, the BJP should use its defeat in Delhi to define itself more sharply against its rivals on economic questions. Only by decisively pushing reform can Mr. Modi and his party fulfill the mandate that powered them to India’s first single-party parliamentary majority in 30 years. To be sure, selling sensible policies that benefit Indians in the long run will always be tougher than doling out freebies. (The AAP promised Delhi’s voters free water and cheap power.) But the BJP’s long years in opposition demonstrated that it can only win national power by distinguishing itself from its rivals.
       And yet the BJP has always been ambivalent about market-based reforms. Many in the party’s top leadership blamed economic liberalization—rather than poor communications or foolish alliances—for their shock defeat to the Congress Party in 2004. Many in the rank and file care more about stoking Hindu nationalist grievances than staunching the loss of taxpayer rupees by state-owned Air India, raising foreign-investment caps in insurance companies or easing harsh rules for industrial land acquisition.
       More than two decades after the advent of economic liberalization, Indian politics retains its populist cast. In an overwhelmingly poor country, politicians often get ahead by promising the immediate gratification of free food or electricity over the abstract benefits of a better sovereign credit rating or more foreign direct investment. Left-leaning media amplify this problem. A flurry of commentary tied the Delhi election result to the Modi government’s December executive order making it easier for the government to acquire land for infrastructure and industrial corridors. By promising protests, the opposition has made this a flash point ahead of the budget. But the BJP’s victory last year shows that populism alone doesn’t always sway Indian voters. Though Mr. Modi’s message on the stump was short on details, he effectively offered . . .   [more]
Wednesday  25 February 2015   / Hour 2, Block D: Aaron Back, The Wall Street Journal Online, in re:   JD (has its own excellent delivery system and sells its own merchandise), Baidu, Tencent Alibaba (third-party sellers).  . . .  everyone knows that here are counterfeit goods on Taobao. TMall has more legit goods, is growing fast, Alibaba can transition out of fake-goods economy; however, both Alibaba and Tencent re at 30 times earnings, whereas Baidu (a sort of Chinese Google) is much better.  It has the top maps app (Google is blocked) and has its own e-commerce plan; Baidu connects me to restaurants and gives me coupons. 
Baidu May Steal Some of Alibaba’s Limelight  At the China Internet ball, Alibaba and Tencent have been the most sought after dates, while Baidu has often been left in the corner without a dance partner. Now, an overdue change to global stock-market indexes is about to send new interest Baidu's way. MSCI Inc. said in January that it will start including so-called “foreign listed companies" in its closely-followed country indexes. This means e-commerce leader Alibaba and dominant search engine Baidu, both listed in New York, will for the first time be included in MSCI's China and emerging-markets indexes.
       Currently, the MSCI China Index is weighted heavily toward state-owned banks and energy giants. The exception is Hong Kong-listed Tencent, which had an outsize 10.3% weighting in the index. For Alibaba and Baidu, inclusion should mean a big inflow of investor funds. No figures are available for the China index, but as of June last year, the MSCI Emerging Markets Index was tracked by $228 billion of passive funds, and was the benchmark for $1.52 trillion of actively managed funds, according to MSCI.
       These active money managers have to take heed of what is included in the index since their performance is judged against it. Those who are underweight the big Chinese Internet companies may have to rethink their stance, possibly well before the index changes officially take place in November.  Most media and analyst coverage of the MSCI shift has focused on the impact for Alibaba. But Baidu could end up being an even bigger beneficiary. Under an MSCI simulation published in October, the changes would have given Alibaba a 3.1% weighting in the MSCI China Index, while Baidu would get a 6.5% weighting. That is because MSCI bases its calculations on available free float, which is significantly smaller for Alibaba despite its bigger market capitalization.
       Alibaba's weighting should rise after the expiration of some share lockups in March, which will more than double its available free float. But even with roughly equal weightings, the impact of index inclusion on Baidu's share price is likely to be stronger. Its market value is around a third as big, and amid all the hype around Alibaba, Baidu's shares have been relatively neglected.  
Alibaba's stock has been through a sharp correction recently, but is still trading 27% over the September IPO price. Tencent shares are up 8% over the same period, while Baidu's are down 8%. The search engine leader also trades at a discount to its two rivals despite a similar growth profile.
With their hands now forced, fund managers will have to start paying attention. Baidu's dance card is about to fill up.
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Alibaba, Tencent Share Cab but Not Fare  Alibaba Group Holding and Tencent Holdings may be about to call a truce in China's taxi wars. But the fight will continue for the much more significant realm of online payments and banking. Ride-hailing apps have emerged as a hot zone in the never-ending struggle for domination among China's Internet giants. Kuaidi Dache and Didi Dache, in which Alibaba and Tencent have undisclosed stakes respectively, allow users to hail and pay for taxis through their phones. Baidu entered the fray in December by forming an alliance with Uber.
       Now, Kuaidi and Didi are engaged in talks to merge, The Wall Street Journal reports. If the merger happens, it would be a rare collaboration between rivals Alibaba and Tencent.  The high cost of competing may account for the sudden change in mood.  The two apps claimed 172 million users between them at the end of last year, according to research firm Analysys International. Kuaidi has the slight edge with 57% market share, but they are closely matched, according to the firm.
       To draw in users they offer all kinds of perks, including discounted fares for passengers and tips for drivers, worth as much as $325 million in the first half of last year, Credit Suisse said, citing Analysys. Competition clearly got out of hand. At one point last year, Kuaidi was giving away free cases of beer to drivers who sign up colleagues to the service.  Alibaba and Tencent probably care less about disrupting the taxi-hailing scene than using the apps as a way to get people to use their mobile-payment services, a promising growth area where China's banks lag behind.  Each hailing service uses its respective backer's payment service.
       In a merged company, cabs might start taking both forms of payment. That would be convenient for users, but could be a disappointment to Tencent, because most riders would probably opt for Alibaba's much more popular payments service. Alipay has around 50% of the online payments market, compared with 20% for Tenpay, according to iResearch.  There still is plenty left to play for. Tencent and an Alibaba affiliate have both secured government approval to open banks that will make small loans to consumers and startup businesses. And while Baidu is behind in payments, it has a plan to grab a slice of the market by connecting users of its dominant search and map apps to nearby merchants.  Things may be going quiet on the taxi front, but it was only the first salvo in a much wider payments war.
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Baidu Still Upwardly Mobile Baidu posted disappointing earnings in the fourth quarter, but China's dominant search engine is starting to look like a bargain compared with the country's other Internet giants.  The company's revenue rose 48% from a year earlier in the fourth quarter, but net profit rose just 16%. Analysts were looking for a 24% rise. The company's guidance on revenue in the first quarter of 2015 also fell a bit short of forecasts.
       There were a couple of factors weighing on results, neither of which is unique to Baidu. One was lower monetization of mobile. Searches on smartphones exceeded those on PCs for the first time in the second half of 2014, the company said. That is welcome, but mobile traffic is harder to make money from. Advertisers aren't used to it, and the smaller screen leaves less space for ads. The same issue has contributed to slowing revenue growth at Alibaba Group Holding.
        Margins are also being compressed by aggressive spending. Sales, general and administrative expenses rose 89% from a year earlier in the December quarter, while research and development spending rose 69%. The risk is that spending becomes undisciplined. A new $300 million artificial intelligence research center in Silicon Valley could be a smart investment, or prove to be a trophy project with little commercial application.
        Still, Baidu's overall strategy looks sound. It has been more conservative than Alibaba and Tencent Holdings on acquisitions, focusing its spending on promoting mobile offerings, like a new service that connects users to local merchants. Baidu's strong position in search and maps and its Google-like predominance in China's closed-off Internet world give it a platform to capture a lot of mobile activity, such as by helping users find restaurants and shops in their area. Initiatives like these should mean that mobile traffic will eventually become more lucrative than desktop searches, the chief financial officer told analysts Thursday.
       Baidu shares were down sharply in after-hours trading. The decline could provide a good entry point. Before the results came out, analysts expected Baidu to increase its earnings at an average 31% a year over the next three years, nearly as fast as Alibaba, and substantially faster than Tencent. Those expectations may get tempered. But trading at just 26 times 2015 earnings, compared with 32 times each for its two rivals, provides plenty of upside. Investors searching for value in the Chinese Internet will find it with Baidu.
Hour Three
Wednesday  25 February 2015   / Hour 3, Block A:  Monica Crowley, Fox, & Washington Times Online opinion editor; in re: 1.  Scott Walker, "liberal enemy no. 1" says the WaPo.  The left made Scott Walker a candidate, the press is turning him into a force Increasingly, Scott Walker's influence is fraying nerves among those in the political ... Scott Walker Got Gotcha-ed  ;  3.  The Left vs. Walker  Scott Walker's economic mess: How worker wages were gutted in ...  Scott Walker of eviscerated collective bargaining protections, unions and their allies brought hundreds of thousands of workers into the streets ...  'It's Heartbreaking': Already Down, Wisconsin Unions Reckon with ...
Wednesday  25 February 2015   / Hour 3, Block B: Monica Crowley, Fox, & Washington Times Online opinion editor; in re:  2.  Walker vs the field  Scott Walker hires Iowa political operative The wordsmith and 20-year political operative Eric Woolson has signed on with the likely presidential candidate  Scott Walker's team. Walker, the ...  ;  Scott Walker hires another Iowa campaign veteran 
Milwaukee Journal Sentinel (blog)
Wednesday  25 February 2015   / Hour 3, Block C:  Richard A Epstein, Hoover Institution, Chicago Law, in re: There is only one way forward for Greece: Full steam ahead on deregulation in all markets dealing with capital and labor, which will unlock the productive capacity of the nation Deregulation does two things at once. First, it reduces the administrative costs of running a state, which in turn should allow the government to lower the tax burden needed to maintain internal order. Those savings can go to enhance both the Greek standard of living and to reduce the foreign debt. Second, deregulation increases overall output, so there is again more wealth available for debt repayment, current consumption, and the future investment that is sorely needed to return Greece to prosperity. The simple point here is that the only way to avoid the endless cycle of first incurring and then forgiving debt is to create wealth through deregulation and lower taxes. (1 of 2)
Wednesday  25 February 2015   / Hour 3, Block D: Richard A Epstein, Hoover Institution, Chicago Law, in re: There is only one way forward for Greece: Full steam ahead on deregulation in all markets dealing with capital and labor, which will unlock the productive capacity of the nation Deregulation does two things at once. First, it reduces the administrative costs of running a state, which in turn should allow the government to lower the tax burden needed to maintain internal order. Those savings can go to enhance both the Greek standard of living and to reduce the foreign debt. Second, deregulation increases overall output, so there is again more wealth available for debt repayment, current consumption, and the future investment that is sorely needed to return Greece to prosperity. The simple point here is that the only way to avoid the endless cycle of first incurring and then forgiving debt is to create wealth through deregulation and lower taxes. (2 of 2)
Hour Four
Wednesday  25 February 2015   / Hour 4, Block A:  Anna Nemtsova, Daily Beast, in re:   1. Ukraine Rebels Thank Jesus for Victory  They praise the Lord while Russia passes the ammunition. On the front lines of the worst fighting since World War II.   2. The Underground Refugees of East Ukraine.  Fighting on East Ukraine's front lines has forced desperate residents into an underground existence.     3. Ukraine Takes a Breath en Route to Hell
Wednesday  25 February 2015   / Hour 4, Block B: Anna Nemtsova, Daily Beast, in re: At the heart of the rebellion, Donetsk, people line up for ballet tickets while they resign themselves to a long, savage war.
Wednesday  25 February 2015   / Hour 4, Block C: Robert Zimmerman, behindtheblack.com, in re: Watching politics eat away at climate science Two stories today illustrate how the field of climate science is being destroyed by politics:  1.  UN IPCC climate head Rajendra Pachauri resigns amid sexual harassment allegations;  2. Smithsonian asks legal watchdog to investigate climate skeptic’s disclosure practices.
      In the first, a leading climate skeptic chortles over the resignation of Rajendra Pachauri, the man who has headed the IPCC since 2002, who has stepped down because of allegations of sexual harassment by an employee at the institute he heads in New Delhi. In the second, Willie Wei-Hock Soon, a scientist who has published numerous peer-reviewed papers raising questions about global warming science, is attacked for not fully disclosing the sources of his income. In both cases, the two sides in the global warming debate are using these allegations as ammunition to attack the believability of each side’s stance on the scientific question of global warming. And in both cases, the stories raise literally no question about the science itself that each man advocated.
I admit that I have attacked Pachauri numerous times in the past, but each time it was because he demonstrated outright ignorance of the field of climate science or had been caught making significant scientific errors. His resignation here however has nothing to do with the science published in IPCC reports, and should not be used as fodder to criticize the theory of human-caused global warming.
Similarly, none of the articles in the mainstream science press about the allegations against Soon has raised a single question about his actual results. All they've done is attack him for not revealing all of his funding sources. His research itself still appears valid. That the largest science journals, Science and Nature, have published articles attacking Soon, with the Smithsonian now piling on as well, without presenting any evidence that he had falsified any of his work, illustrates how corrupt this field has become. The science for these major science journals no longer matters. All that matters is destroying someone who was apparently successful in bursting the balloon on some global warming science. Until everyone stops playing this game and focuses instead on the data itself and what that data is really telling us, we will get no closer to truly understanding the climate of the Earth. And tragically, I see far too little effort in the climate field to do this.
Wednesday  25 February 2015   / Hour 4, Block D:   Jerry Kahn, BloombergBusinessweek, in re: $350K PIGEONS: Prices for Racing Pigeons Soar on Demand—the demand for racing pigeons, with one company conducting nine auctions since 2009 in which the total proceeds exceeded one million euros.  [more]
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