The flavor of the minute in financial news seems to be the gaining traction of sentiment that China is set to surpass the US as the master elite of the planet. Not just in the news, either; why just recently a family discussion turned to the Chinese domination of resource rights in Africa.

It’s amusing, but I don’t put much stock or fret in it.

Every 30 years or so, America fears it’s about to be unseated from the top dog spot on this planet by some emergent group. We had a thing about the European Socialists for a while there in the 20’s and 30’s before we were forced into the second World War.

In the 60’s it was the newly stable, successful and exciting Soviet Union, ushering in utopian communism and equality for all. The press had our eulogy written and published.

Then it was the Japanese, who were going to dominate the planet with their superior corporate structures and buy us all out, one automotive sale at a time. Japanese land at one point was valued at (I believe) greater than all the land in the United States. Commercial land was going for $45,000 per square meter.

This has ceded to a sort of more general Asian thing – where we are obsessed that the East is going to clean our clocks.

America is a very paranoid country. It keeps us on our toes. Where would we be if we didn’t have the next guy to think about killing?

The truth is, China’s economy should be bigger than ours. They have three times as many people. But China also has some deep structural problems, including no trustworthy corporate or personal legal protections to speak of. Their government houses nearly all of the country’s millionaires and billionaires, raising red flags of plutocracy and government corruption. Their decision making process is even worse than the US Congress, if you can imagine such a thing. Take a look at their most recent high speed train fiasco – everything about its construction was politicized, to the point that it became more of a burden on the country than a boon.

And the biggest problem of all is the one child policy.

(Update: There is evidently an exemption for parents who were single children themselves. They may have two children. I had no idea; thank you Berserker for pointing that out. Population will still likely contract, but in a more controlled way, if everyone follows the policy)

By forcing a one child policy, China set itself on the path of contracting the population. That’s an issue; remember that most forms of entitlement use increasing contributions from expanding enrollment to pay benefits. It also enables politicians to overpay benefits to important voting special interest groups, writing off the bad decision against future increases to budgets. If China’s population gets smaller, what do you think the odds are that they’ve successfully managed that process?

And the population getting reduced by half is probably optimistic. Chinese culture has encouraged selection and preference of male offspring. That leaves China sitting with a skewed distribution of more males to females. Even if China reverses the policy, that leaves quite a few disaffected young men, sitting on the sidelines watching all the country’s growth and prosperity fall in the laps of a handful of elected officials, and a pressure bubble working its way through the entitlement system that would normally keep them docile.

Over all, I’m not that worried as I find fears that China is in imminent position to dominate our leadership as premature. Let’s see them pull it off first.

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It’s been long enough that I’d say I actually need to give an introduction and background here.

I’ve owned Cameco since Fukushima; literally, I bought my first round of shares at $29 while the reactor was melting down. Since then, I’ve built a position, by averaging in and trading rips, that has a cost average around $21.

My belief was that, at the time, commitments to roll back nuclear power facilities were vastly overconfident (if not totally unrealistic) and would ultimately end in retraction. So far, I haven’t seen anything to make me change my views on this. I also felt that the dangers of nuclear power and the consequences of the Japan problem were being overblown. Nuclear accidents have traditionally been forecast to be, literally, millions of times worse than they actually are.

Recent developments in the space include:

1) Japan is prepping 4 more reactors to reopen, while creating the review process to speed things up a bit
2) Tokyo Electric is getting impatient, using a subsidiary of itself to start pushing back against government agency claims that any of its reactors lie on fault lines
3) China is ramping up construction of power plants
4) They’ve also discovered Fukushima is leaking radioactive water – could stiffen the process back up
5) The forced shut down is starting to do its damage to nuclear power companies – Japan Atomic Power, for instance, will be forced into a hard bankruptcy shortly if they can’t get operations up and running or, worse, are forced to decommission any of their three reactors. This would flood the market with fire sale priced uranium fuel
6) Russia has not expressed any desire so far to extend the HEU (Megatons for Megawatts) agreement; it currently stands at over 95% completed. Although interestingly enough, Executive Order 13617 (which floods Russia with money for decommissioning nuclear weapons for fuel) has been extended by the Obama Administration under emergency decree. I’d be more inclined to think that’s an indication a new agreement is being drafted, if I didn’t know how much politicians like to fling slush fund money around to friends and enemies alike. For the moment, I’m predisposed to believing Putin will not be crafting a new agreement

Altogether, the ability of the uranium market to shore itself up depends on Japan for now. There is a visible push to get the reactors up and running, and elements of the government seem at least partially favorable to it. For the last two years, the uranium market has been frozen, as the fuel miners and electricity producers sat in a stalemate, waiting to see what would happen next.

We’re about to find out, I think.

If Japan can successfully navigate back to nuclear power, it would thaw the uranium space, encouraging power companies that have been so far waiting to see if nuclear opposition would gain more traction, or if Japan’s unspent fuel would be up for sale, back to the markets to bring their fuel cycles up to speed.

If not, Japan power companies will likely start to arrest, plunging the entire sector back into violent fluctuations. For this reason I am exclusively a holder of CCJ, and no others, because they are too small and will have trouble surviving if everything doesn’t pan out just right. This does worry me, as Japanese culture is notoriously slow and patient, almost to a fault. It is not completely out of the question that they let their power companies crash. I simply have to hope that they don’t.

Long term, the sector is ripe, with lots of new demand, and supply concerns at current production targets. However, any disruptions could easily drag out the recovery another few years.

CCJ is greater than 20% of my account.

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Since the Cyprus intervention, the euro debt markets have exhibited remarkable calm, in spite of the precedent that was set. Italian and Spanish yields are both pushing back towards the lows, and it seems that stability has won out.

Let’s gloss over the inconvenient fact that Italy hasn’t had a government for, oh, seven weeks now. According to Italy’s debt, all is well in the land shaped like a boot.

Clearly, this is a contradiction. It’s a matter of if, not when, this thing blows up.

At some point, people are going to question exactly, what business do the remnants of Italy’s last government have in collecting taxes, or administering programs. Or issuing debt at all. How can a country with no government make its payments?

I know it’s all about the northeaster countries at this moment, dictating events and how they play out. But at some point, you have to question, what is “Italy”? Seven weeks without any government is kind of a big deal. And where does this get resolved?

Yet, here we find money flooding into the country-less bonds. Why? I’ve heard a few theories, but I’m not really interested in them. More importantly, at what point do the theories become a distraction from the problems?

And when the problems become front and center, what does that mean following everything that has happened up until now?

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This is definitely amusing, watching the North Korean leadership try and play tit for tat, essentially against themselves. This is the kind of bravado that can only be fostered living in a hole in the ground. What do they think is going to happen?

The old lines of warfare have been killed out, largely thanks to the financial industry. Unprecedented levels of cooperation and mutual interests have been aligned over the last sixty years. Those aren’t going to just erase themselves.

The roots of NAFTA have sprouted a magnificent tree that is even now holding the countries together. Does North Korea think China has its back in a war against the South? South Korea and the US are far more important to China than North Korea is. I would venture that North Korea is actually a liability for China.

If markets seem unusually calm at North Korean warmongering, it’s probably because North Korea will get their clocks cleaned if they pick this fight. Any effective war against the US by the part of China would send that country screaming into a depression. They’ve come too far to see it all get ruined by old world communists.

But hey, let’s call North Korea’s bluff and find out.

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Chavez is now officially dead for real – as opposed to the fake news reports that have been making the airwaves once every few months – ironically it seems he died in Cuba’s “stellar” medical program, of a respiratory infection.

No, Cuba, you’re supposed to “clean” your instruments. “Clean”…

Well, hah! What do you expect for free?

I’d like to say this marks a turning point in Venezuelan history; a triumphant moment where a once-great culture can pull itself out of the gutter and rebuild after almost twenty years of garish incompetence.

I’d like to say that, but I’m just too smart for that sort of thing…

You see, there is nothing special about Hugo Chavez. Nothing. He was the dominant monkey to emerge from a primordial game of survival. His rise was circumstantial, charged by a sharp smile and a knack for knowing how to tell everyone, one on one, exactly what they wanted to hear. And now that he is dead, my only real satisfaction is knowing that he died young (one second early for every life he helped ruin I’d like to think).

His legacy is a power vacuum. You see, like most jackasses, Chavez believed himself irreplaceable. That is folly. Our betters come behind us, catapulted by our efforts today. Chavez belittled his people and convinced them they needed him, concentrating all power, publicity and wealth to himself – a megalomaniac of the highest order.

And now that ‘irreplaceable’ man is very dead.

The office that he left behind is unparalleled in power and has zero accountability attached to it. No culpability whatsoever – I mean, the man promised infrastructure spending back in the nineties and yet Venezuela has had rolling blackouts twice a day for a decade.

What kind of person is attracted to such a title?

And so, the next con artist is out there somewhere…preparing roaring and empty speeches…brushing up on what they think the near illiterate people want to hear…planning for all the wonderful things they’ll gift themselves from the public treasury, that grand reward for that good work they haven’t done…

Prepare yourselves. Soon to follow will be the dramatic calls from the indefensible sympathizers here in the US. Dull burdens of society like Sean Penn will soon be out and about, shining gold on Chavez great ‘legacy’ of “wanting to help people”. “Wanting to help people” is all they have – mostly because they’re too dumb to actually help people. They can’t let that go; what would be left for them?

But what should upset you is the murmur that will be coming from more sensible folks. The kind of folks who ought to know better…

They will ask the question, “is now the time to invest in Venezuela?” in much the same way they asked, “is now the time to invest in Russia?” in the early 90’s, even though it wasn’t clear that Russia was even a place (much less not-the-USSR). Chastise these men and women without delay – such baseless speculation can only bring suffering to themselves and those around them.

Even his death brings nothing for Venezuela. Because he left behind a mighty opportunity for the worst of mankind, and a population too weak, pitiful and sad to do anything about it. That is Chavez’ true legacy – that of a sycophant and a self-aggrandizer.

But there was nothing uniquely important about Chavez himself, and the banal can easily fill his shoes, if fortune and chance should allow it.

The monkey-knife-fight succession plan is about to commence…

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As the market is off a whopping fraction of a percent, commentators are literally soiling themselves on live television, trying to time the next selloff.

Oil reversed yesterday – to a flurry of publications informing us that the move higher is over with.

Bond analysts are flipping out about Europe.

Romney made some comment most everyone I hang out with agrees with – half of all American’s are lazy tits with zero self-worth – and now a few ancient and withered CNN “journalists” are creaming their pants insisting Obama now somehow has this election in the bag.

And China is thinking of crushing Japan because of some island that might have oil rights.

Folks, this is obviously a drama day. I’m checking my brain out.

Do you understand insignificant this selloff is?

Do you get how high all commodities ramped over the last three weeks as the QE announcement was obviously leaked?

Do you see that European bond yields are still lower than they’ve been all year?

Do you understand that CNN journalists all dorm together in a crawl space and haven’t made a correct prediction in the last 15 years? That the polls coming out have fluctuated consistently by 3% or more, leaving Obama and Romney (the guy supposedly nobody likes) in a virtual tie?

Do you get that Japan has nukes too?

Seriously, this is ridiculous. I’m closing the 9th floor for business early today. My things are packed. I’m closing the door behind me – the lights are flipped off as my hand slides quickly out before the latch locks tight.

Today is just too stupid to get involved with. I’ll see you tomorrow.

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