Category Archives: Energy

Radioactive ‘Nuclear Coffin’ May Be Leaking Into The Pacific

UN Secretary General Antonio Guterres has sounded the alarm over a giant concrete dome built 40 years ago in the Marshall Islands to contain radioactive waste from Cold War-era atomic tests.

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Runit Dome

According to Guterres, the dome – which houses approximately 73,000 cubic meters of debris on Runit island, part of the Enewetak Atoll – may be leaking radioactive material into the Pacific Ocean, as the porous ground underneath the 18″ thick dome was never lined as originally planned. It was constructed in the crater formed by the 18-kt Cactus test.

“The Pacific was victimised in the past as we all know,” Guterres told students in the island nation of Figi while on a tour of the South Pacific. “I’ve just been with the President of the Marshall Islands (Hilda Heine), who is very worried because there is a risk of leaking of radioactive materials that are contained in a kind of coffin in the area.” 

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Residents of the Islands were relocated from their ancestral lands shortly after the United States began what would become 67 nuclear weapons tests from 1946 – 1958 at Bikini and Enewetak atolls. Despite US efforts to move people to safety, thousands of islanders were exposed to radioactive fallout from above-ground tests conducted before a moratorium was enacted in 1958.

The tests included the 15 Megaton Castle Bravo on the Bikini Atoll, which was detonated on March 1, 1954. It was the most powerful ever detonated by the United States – and around 1,000 times bigger than the bomb dropped on Hiroshima just nine years before.

The effort to clean up the region in the 1970s included approximately 4,000 US servicemen in what was known as the Enewetak Radiological Support Project.

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Cracks are visible in the dome’s surface, and the sea sometimes washes over its surface during storms, according to ABC.

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“The United States Government has acknowledged that a major typhoon could break it apart and cause all of the radiation in it to disperse,” said Columbia University’s Michael Gerrard.

That said, a 2013 DoE report found that the soil outside of the dome is more contaminated than its contents – as the 1970s cleaning operation only removed an estimated 0.8 percent of the total nuclear waste in Enewetak atoll.

Guterres did not propose a solution, however he said that “a lot needs to be done in relation to the explosions that took place in French Polynesia and the Marshall Islands,” adding “This is in relation to the health consequences, the impact on communities and other aspects.”

And of course, reparations; “there are questions of compensation and mechanisms to allow these impacts to be minimised,” Guterres added.

Source: ZeroHedge

 

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Cyberattacks, Solar Storms, & EMP Weapons: US Power Grid Extremely Vulnerable, Extended Blackout Is Inevitable

A lot of Americans are mocking Venezuela right now, but the truth is that what has happened to them could also happen to us very easily. 

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(Michael Snyder) As you will see below, DARPA is so concerned about the possibility of a cyberattack taking down our power grid that they held an extended exercise recreating such a scenario late last year.  And even though scientists tell us that it is inevitable that a “solar tsunami” will absolutely devastate our power grid at some point, our leaders on the federal level refuse to spend the money that it would take to protect our basic electrical infrastructure.  In addition, Russia, China, North Korea and others have developed extremely advanced EMP weapons, and we have absolutely no protection against them.  One way or another, an extended blackout will eventually happen in the United States, and so we should try to learn some lessons from what is going on in Venezuela right now.

And without a doubt, life is hell in Venezuela at this moment.  The following comes from NPR

Signs of the crisis are everywhere you look in the Venezuelan capital. “Drive around Caracas, and you see long lines of cars waiting for hours at the few gas stations still operational,” NPR’s Philip Reeves reported from the city.

“Motorists park on highways, cell phones aloft, searching for a signal. The rich have taken refuge in luxury hotels. The poor stand in lines in the street,” Reeves added.

The power outage has affected water pumps in some Caracas neighborhoods, meaning that people are waiting to fill water bottles at public locations such as springs.

As food supplies run out, people are becoming increasingly desperate, and desperate people do desperate things.

Hundreds of stores are being looted, and the overwhelmed police are instructing store owners to fend for themselves

Looters smashed shop windows and made off with merchandise in more than 300 businesses across the state along the border with Colombia, the Zulia chapter of business organization Fedecamaras said in a statement.

“About 100 people came into the store and took all the food, the point of sale terminals,” said Maria Centeno, 29, the owner of a store selling food and furniture that was looted on Sunday. “They were people from the community. The police came by and they told me to sort it out myself.”

Of even greater concern is the fact that many people are dying from a lack of medical care.

Without power, there is little that the doctors are able to do, and one mother was forced to actually carry the body of her dead daughter through the streets to a morgue after the local hospital was unable to help her

A severely malnourished 19-year-old girl died in her mother’s arms after doctors in Venezuela were forced to turn her away because a massive blackout shut down a hospital.

Heartbroken mother Elizabeth Díaz was forced to carry her daughter’s body, which weighed just 22 pounds, through the streets to a morgue.

A lot of Americans are mocking what is going on in Venezuela, but the truth is that the exact same thing could happen here too.

Many believe that the extended blackout in Venezuela was caused by a cyberattack, and unfortunately the truth is that the U.S. power grid is also quite vulnerable if someone decided to attack us in the same manner.

Last November, DARPA held a seven day exercise that simulated what would happen if a massive cyberattack suddenly took down our grid…

The Defense Advanced Research Projects Agency exercise, which took place from Nov. 1 to Nov. 7, was fictional, but it was designed to mimic all the hurdles and uncertainty of a real-world cyberattack that took out power across the nation for weeks on end–a scenario known as a “black start.”

To add realism, the exercise took place on Plum Island, a federal research facility off the north fork of Long Island, where DARPA researchers were able to segregate a portion of the island on its own electric grid.

Over the course of the seven-day exercise, more than 100 people gathered on the island, filling every necessary role to mimic an actual black start.

Of course that is not the only way our power grid could go down for an extended period.

Our sun is capable of producing a “solar tsunami” that could absolutely cripple our electrical grid at any time.  Earlier this week, I came across an article about a gigantic solar tsunami that hit out planet approximately 2,700 years ago

Roughly 2,700 years ago, an unusually powerful solar storm swept past the Earth, scientists announced in a new study. Though it had little to no impact on people in that long ago, pre-industrial and pre-technological world, such an event today would cause widespread power outages along with potentially disastrous communication and navigation failures.

The solar storm in 660 B.C. was about 10 times stronger than any known event in the past 70 years, study lead author Raimund Muscheler said.

But we don’t have to go back that far to find the kind of solar storm that I am talking about.

In 1859, an absolutely enormous solar storm known as “the Carrington Event” hit the United States…

The solar storm of 1859 (also known as the Carrington Event)[1] was a powerful geomagnetic storm during solar cycle 10 (1855–1867). A solar coronal mass ejection (CME) hit Earth’s magnetosphere and induced one of the largest geomagnetic storms on record, September 1–2, 1859. The associated “white light flare” in the solar photosphere was observed and recorded by British astronomers Richard C. Carrington (1826–1875) and Richard Hodgson (1804–1872). The now-standard unique IAU identifier for this flare is SOL1859-09-01.

A solar storm of this magnitude occurring today would cause widespread electrical disruptions, blackouts and damage due to extended outages of the electrical grid.[2][3] The solar storm of 2012 was of similar magnitude, but it passed Earth’s orbit without striking the planet, missing by nine days.[4]

If such a storm hit us right now, electronic devices would be fried from coast to coast and the power grid would be down for the foreseeable future.  Life would dramatically change for all of us, and chaos would be unleashed all across this nation.

This is just one of the reasons why I so strongly encourage people to get prepared, because our government is most definitely not preparing for this kind of threat.

Lastly, I want to also mention that Russia, China and North Korea have been developing highly sophisticated “Super-EMP weapons” that we have no defense for.  The following is from the Washington Free Beacon

Several nations, including China and Russia, are building powerful nuclear bombs designed to produce super-electromagnetic pulse (EMP) waves capable of devastating all electronics—from computers to electric grids—for hundreds of miles, according to a newly-released congressional study.

A report by the now-defunct Commission to Assess the Threat to the United States from EMP Attack, for the first time reveals details on how nuclear EMP weapons are integrated into the military doctrines of China, Russia, North Korea, and Iran.

For much more on the threat that we are facing, please see my previous article entitled “Amerigeddon: Are You Ready For The Chaos That Will Ensue When The Power Grid Is Brought Down?”

Sadly, most Americans do not understand how vulnerable we are, and when the power suddenly goes out someday they will have no idea what is happening.

So keep a close eye on Venezuela right now, because the exact same things that are happening there will eventually happen here too.

It is just a matter of time.

Source: ZeroHedge

A Major Shift From West To East Is Occurring As The Dollar Dies. Are You Prepared?

Americans need to shake off their FUD (fear, uncertainty and doubt) and start taking real steps to protect their wealth before the $USD is no longer the world’s dominant reserve currency. This involves converting USD denominated paper assets into physical Gold, Silver and a little Cryptocurrency to preserve your purchasing power … before the multi-polar world of tomorrow arrives.  

A big part of life on the other side of this event will involve dealing with wide spread shortages (including food) that accompany the high cost of imported goods that follow a credit and currency collapse, until America’s domestic manufacturing base can be brought back up. Think decades, not months or years to fully recover. This means you should be accumulating resources necessary to more easily stretch through this period while they are relatively cheap and plentiful in today’s dollars. Otherwise, you might find yourself living like the 99% are in Venezuela today.  

Enjoy the show …

 

Obama-Backed Solar Plant Could Be Shut Down For Not Producing Enough Energy

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California regulators may force a massive solar thermal power plant in the Mojave Desert to shut down after years of under-producing electricity — not to mention the plant was blinding pilots flying over the area and incinerating birds.

The Ivanpah solar plant could be shut down if state regulators don’t give it more time to meet electricity production promises it made as part of its power purchase agreements with utilities, according to The Wall Street Journal.

Ivanpah, which got a $1.6 billion loan guarantee from the Obama administration, only produced a fraction of the power state regulators expected it would. The plant only generated 45 percent of expected power in 2014 and only 68 percent in 2015, according to government data.

And it does all this at a cost of $200 per megawatt hour — nearly six times the cost of electricity from natural gas-fired power plants. Interestingly enough, Ivanpah uses natural gas to supplement its solar production.

These disappointing results at high prices could be the solar plant’s undoing. California Energy Commission regulators hoped the plant would help the state get 33 percent of its electricity from green sources, but now the plant could be shut down for not meeting its production promises.

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Ivanpah — which is owned by BrightSource Energy, NRG Energy and Google — uses more than 170,000 large mirrors, or heliostats, to reflect sunlight towards water boilers set atop 450-foot towers that create steam to turn giant turbines and generate electricity.

The plant was financed by $1.6 billion in loan guarantees from the Department of Energy in 2011. When the solar plant opened in 2014, it was hailed as a great achievement by Energy Secretary Ernest Moniz.

“This project speaks for itself,” Moniz said when the project went online in early 2014. “Just look at the 170,000 shining heliostat mirrors and the three towers that would dwarf the Statue of Liberty.”

“Ivanpah is the largest solar thermal energy facility in the world with 392 MW of capacity — meaning it can produce enough renewable electricity to power nearly 100,000 homes,” Moniz said.

Moniz’s optimism aside, the project faced huge problems from the beginning. NRG Energy asked the federal government for a $539 million federal grant to help pay off the $1.6 billion loan it got from the Energy Department.

NRG Energy said the plant had only produced about one-quarter of its expected output in the months after it opened. The company needed an infusion of cash to help keep the project afloat.

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That was only the beginning of the company’s problems. Environmentalists quickly attacked the project for killing thousands of birds since it opened. Many birds were incinerated by the intense heat being reflected off Ivanpah’s heliostats.

The Associated Press cited statistics presented by environmentalists in 2014 that “about a thousand… to 28,000” birds are incinerated by Ivanpah’s heliostats every year.

“Forensic Lab staff observed a falcon or falcon-like bird with a plume of smoke arising from the tail as it passed through the flux field,” according to a U.S. Fish and Wildlife Service report from 2014.

“Immediately after encountering the flux, the bird exhibited a controlled loss of stability and altitude but was able to cross the perimeter fence before landing,” FWS reported.

Pilots have also reported seeing a “nearly blinding” glare emanating from Ivanpah while flying over the solar plant. The Sandia National Laboratory reported in 2014 Ivanpah was “sufficient to cause significant ocular impact (potential for after-image) up to a distance of ~6 miles.”

“At distances greater than ~6 miles (10 km), a low potential for after-image exists from the heliostat glare as a result of the reduced retinal irradiance and subtended angles,” Sandia reported. “It should be noted that two of the authors who were in the helicopter qualitatively confirmed these results after observing the glare. The pilot acknowledged that the glare was very bright, but he also stated that it did not impair his flying ability since he was aware of the glare and avoided looking in that direction when flying over [Ivanpah].”

Update: California regulators announced Thursday that Ivanpah would have until the end of July to produce more power or face shut down. 

Scenes From The Venezuela Apocalypse: “Countless Wounded” After 5,000 Loot Supermarket Looking For Food

Over the last several years we have documented with clockwork regularity Venezuela’s collapse into failed state status, which was cemented several weeks ago when news hit that “Venezuela had officially run out of money to print new money.”  At that point the best one could do was merely to step back and watch as local society and civilization turned on itself, unleashing what would ultimately turn into Venezuela’s own, sad apocalypse.

Last night we showed what Caracas, looks like this week:

As we wrote then these are simply hungry Venezuelans protesting that their children are dying from lack of food and medicine and that they do not have enough water or electricity. As AgainstCronyCapitalism added, this is a country with more oil than Saudi Arabia, and the government has stolen all the money and now they bottleneck peaceful protesters and threaten them with bombs (or haul them to prison and torture them).

As pure desperation has set in, crime has becomes inevitable. A man accused of mugging people in the streets of Caracas was surrounded by a mob of onlookers, beaten and set on fire, who published a pixeled-out but still graphic video of the man burning as mob justice is now the supreme arbiter of who lives and who dies:

“Roberto Fuentes Bernal, 42, was reportedly caught trying to mug passersby in the Venezuelan capital, and before police arrived at the scene, the crowd took the law into their own hands.” The video can be seen here.

Now, in the latest shocking development, Venezuela saw a new wave of looting this week that resulted in at least two deaths, countless wounded, and millions of dollars in losses and damages.

According to Panampost, on Wednesday morning, a crowd sacked the Maracay Wholesale Market in the central region of Venezuela.  According to the testimonies of merchants, the endless food lines that Venezuelans have been enduring to do groceries could not be organized that day.

As time went by, desperate Venezuelans grew anxious over not being able to buy food. Then they started jumping over the gates and stormed the supermarket.

“They took milk, pasta, flour, oil, and milk powder. There were 5,000 people” one witness told Venezuela outlet El Estímulo.

People from across the entire state came to the supermarket because there were rumors that some products not found anywhere else would be sold there.

As a result of the massive crowd, the authorities were unable to preserve the peace. “There were 250 people for each National Guard officer… lots of people and few soldiers. At least one officer was beat up because he tried to stop the crowd,” another source told El Estímulo.

Other food dispensaries run by the government were also looted by the people.

Far from the promised socialist paradise, as the massive group of people moved, an entrance gate collapsed under the weight of the crowd, leaving several wounded.

The image below shows a human stampede over rice.

Over the last two weeks, several provinces have hosted scenes of looting in pharmacies, shopping malls, supermarkets, and food delivery trucks. In several markets, shouts of “we are hungry!” echoed. On April 27, the Venezuelan Chamber of Food (Cavidea) reported that the country’s food producers only had 15 days left of inventory.

PanamPost adds that lootings are becoming an increasingly common occurrence in Venezuela, as the country’s food shortage resulted in yet another reported incident of violence in a supermarket — this time in the Luvebras Automarket located in the La Florida Province of Caracas.

Venezuelans lost control this week when offered small portions

Videos posted to social media showed desperate people falling over each other trying to get bags of rice. One user claimed the looting occurred because it is difficult to get cereal, and so people “broke down the doors and damaged infrastructure.”

In the central province of Carabobo, residents ransacked a corn warehouse located in the coastal city of Puerto Cabello. They reportedly broke down the gate because workers were giving away small portions.

“There’s no rice, no pasta, no flour,” resident Glerimar Yohan told La Costa, “only hunger.”

* * *

Social Collapse Is Inevitable

With the economy dead, the only thing remaining is to watch as society implodes. To that end, Oscar Meza, Director of the Documentation Center for Social Analysis (Cendas-FVM), said that measurements of scarcity and inflation in May are going to be the worst to date. “We are officially declaring May as the month that [widespread] hunger began in Venezuela,” he told Web Noticias Venezuela. … “As for March, there was an increase in yearly prices due to inflation — a 582.9 percent increase for food, while the level of scarcity of basic products remains at 41.37 percent.”


“We are officially declaring May as the month that hunger began
in Venezuela,” says an NGO that measures inflation and scarcity

Meza said the trigger for the crisis is the shortage of bread and other foods derived from wheat.

“Prices are so high that you can’t buy anything, so people don’t buy bread, they don’t buy flour. You get porridge, you see the price of chicken go up and families struggle … lunch is around 1,500 bolivars… People used to take food from home to work, but now you can’t anymore because you don’t have food at home.”

The is why, Español Ramón Muchacho, Mayor of Chacao in Caracas, said the streets of the capital of Venezuela are filled with people killing animals for food. “Muchacho reported that in Venezuela, it is a “painful reality” that people “hunt cats, dogs and pigeons” to ease their hunger.”

Subsquently, Muchacho warned that Caribbean islands and Colombia may suffer an influx of refugees from Venezuela if food shortages continue in the country.

“As hunger deepens, we could see more Venezuelans fleeing by land or sea to an island,” Muchacho said.

And that is how all socialist utopias always end.

* * *

Meanwhile, as civil war appears inevitable, as previously reported there are factions vying to oust Maduro, although we are confident the dictator will hang on for dear life (literally) and force his population to endure more of this socialist nightmare. One can only hope that these shocking scenes remain relegated to the streets of offshore socialist paradises, although Americans should always prepare for the worst in case they eventually manage to make their way into the country.

Source: ZeroHedge


Is A Venezuela Coup Imminent? An Interview With A National Guardsman

Following several very disturbing stories about the start of Venezuela’s social apocalypse, in the first case chronicling “Streets Filled With People Killing Animals For Food” and then last night documenting “Countless Wounded” After 5,000 Loot Supermarket Looking For Food, we concluded that “as civil war appears inevitable, as there are factions vying to oust Maduro, although we are confident the dictator will hang on for dear life (literally) and force his population to endure more of this socialist nightmare.”

Today, now that speculation about a coup and/or civil war is becoming ever louder, we address some of these concerns courtesy of a must-read interview with a member of Bolivarian National Guard, the country’s national guardsmen, conducted by PanAm Post, which provides a critical blueprint of the next very tragic steps in Venezuela, which unfortunately now appear certainly to conclude with a national coup.

From PanAm Post:

Venezuela Is on the Brink of Social Collapse” National Guardsman

Food Shortages Cause Daily Looting, Energy Crisis Worsens as National State of Emergency Approaches

At the moment, the armed forces’ position vis-à-vis the government is not clear. Some speculate that the Bolivarian National Guard is divided. Others claim that the regime exerts full control over the Bolivarian National Guard’s members. The only certainty is that uncertainty abounds.

The PanAm Post had the opportunity to interview a Bolivarian National Guard member of middle rank, who asked to remain anonymous since his views could expose him to danger.

Why has the state launched an offensive against criminal groups?

The situation was getting out of hand for political reasons. The state has no means to control criminal groups. The country’s jails are in chaos. The streets themselves are in chaos. The state’s security personnel are unarmed.

The Maduro regime created the Organization for the Protection and Liberation for the People (OLP) to fight organized crime. Has that organization committed illegal acts as well?

From a legal standpoint, yes. Now from the point of view of the general population, no, because they tolerate harsh methods against the criminal bands.

But do they only kill criminals?

In the majority of cases.

Is the OLP really carrying out its operations strictly to end gang violence?

That is their main purpose. But there is also a political element. The OLP’s creation was a desperate measure. The government had given liberty to the gangs to do what they please. They armed them and now they are attacking them.

Is the OLP at war with gangs and with government officials at the same time?

Yes, because they can’t control them. They have become too powerful. They are armed and they teach military strategy. These criminals used to fight against each other. Now they have a truce between them and they fight the military and other security forces. They say, “as long as we kill them, we’ll survive.”

Does the state benefit by arming gangs? What is the regime trying to achieve?

Their goal is to have armed groups on their side in case of political turmoil. That is the final goal. Disarmament laws only affect innocent people. Criminal have many more weapons than we do at the National Guard. They also have much more power. We can’t control that now. Any solution will come too late.

The economic crisis and the public health crisis are becoming uncontrollable. The security forces are competent, but the government had to realize that the criminals were killing us all before they acted against them.

How corrupt is is the National Guard?

There is corruption in the National Guard, and there always has been. The difference is that, before, the system was more efficient. The National Guard decayed when it became political. Since we started to vote and to take part in the country’s political life, there has been no peace in the ranks.

Now there is pressure on us because we have to follow the constitution, but we also have to be loyal to our higher officers even when their orders don’t correspond to the laws. If their orders contradict the laws, you can’t follow them. So there is a rift between the security forces and the other institutions.

The government has an apparatus for persecution and espionage, so you can’t make negative statements about functionaries. The security services themselves are plagued by informants. You have to watch your every word.

All of those military upheavals denouncing the government, those attempts to overthrow the government — are they real?

No, the majority are false. There won’t be any coup attempts in Venezuela.

Why not?

Right now, all elements of the armed forces are under control. A coup-d’état takes place when you reach a breaking point and someone in the higher echelons of the armed forces decides that it’s time to act against the government. Right now in Venezuela, there are political divisions within the armed forces. There is neither the necessary unity nor the necessary organization for a coup to take place. Besides, officers fear the government’s informants. Everyone is on guard.

What will result from the current discontent?

The army and the National Guard are waiting. I can assure you that we are quite unhappy. But there is an entire structure above us, so it’s not easy to act. We receive criticism from all sides. Wherever I go, I come face to face with civilians’ displeasure and complaints. I also think the opposition has failed to take advantage of its opportunities to topple the government.

How so?

For example, when they won the parliamentary elections last December, the atmosphere was tense. The entire leadership knew what would happen. So did we. Former Speaker of the House Diosdado Cabello was willing to take the armed forces to the street against the opposition, but Padrino López, the Minister of Defense, didn’t allow him to do so.

What happened exactly on December 6?

The stories are true. That day there was a strong discussion between Padrino López and Cabello. López told Cabello that, if he ordered the troops to take the streets, he was going to have the army kill him.

But did Padrino López only do it to save his own skin?

Of course. He would have been responsible if the army started to massacre people. López was not going to allow that to happen. So that day the army was ordered to guard the opposition.

On whose side does Padrino López find himself? That day, a rumor got out that he was defending Chávez’s revolution.

Padrino López is intelligent, and I don’t doubt that he’s a chavista. But all branches of the armed forces are dissatisfied with the current situation. Imagine if one day they let Diosdado Cabello commit a massacre. If something like that occurs, the army will support President Maduro.

And what has the Bolivarian National Guard done during the recent demonstrations? Why has the army remained silent?

Those are two different situations. Like I said, government intelligence is an obstacle to action. The risk of not obeying orders is very large, but there is a lot of discontent and resentment due to the measures carried out by the Bolivarian National Guard and other officials.

If discontent is so widespread, why is there no talk of a coup?

That’s already been discussed. The coup d’état, we hope, will not be repeated. We remember what happened in 2002 with Chávez and we don’t want something similar to happen in the future.

We are rather waiting for things to get truly out of hand. And that will happen in the following months. The situation is extremely unstable and the status quo can’t last. We are witnessing daily looting at supermarkets, and people are protesting.

The crisis at Guri Dam (Venezuela’s most important hydroelectric power station) will get worse. Everything will get worse and there will be an implosion.

At that moment, the country’s future will be determined. I don’t believe there’s much time left.

Are you sure that something drastic will happen soon?

Without a doubt. The Bolivarian National Guard has already discussed the matter.

The situation in Venezuela has never been as bad as it is now. The breaking point is near, but still not at hand. My recommendation is for people to prepare, to look for food and then to store it. Obviously, when the implosion occurs , it won’t last long. I believe it will last something like 10 days, but they will be difficult days.

There will be a state of emergency, and that will bring the crisis to an end.

What will happen with the recall referendum that the opposition is trying to unleash against President Maduro?

That’s not a serious option. The regime has demonstrated that it can violate the constitution without second thoughts. They are going to accept the referendum, but only if they know they can win with any method available. The situation will only come to a head when hunger and the lack of electricity force people to take direct action.

So are the Armed Forces ready for a social catastrophe to take place?

We are really willing to intervene if the country undergoes a social catastrophe. It’s as if we have water in a pot and it begins to boil very slowly. There will be a moment when, if the gas is not turned off, the water begins to overflow and disaster ensues.

Source: ZeroHedge

No End In Site For Bulk Shipping’s Perfect Economic Storm

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Off the coast of a nearly deserted island below the southern tip of Hong Kong, at least 10 massive ships that normally carry hundreds of thousands of tons of coal or iron ore lie idle near one of the world’s busiest sea routes.

These empty vessels paint a grim picture for the dry bulk shipping business that veterans of the industry say is grappling with an unprecedented crisis of too many ships and not enough cargoes. The hollow boats underscore the global economic doldrums that policymakers are struggling to overcome.

“This is the worst we have seen in recent times. We have been hit by a perfect storm – huge order books, China slowdown, the end of quantitative easing, lurking European monetary crisis, glut in oil and commodity prices,” said Kaushik Neogy, a commercial manager at Wallem Commercial Services in Hong Kong.

Shipping is a cyclical business that is often at the mercy of the ebbs and flows of the global economy. However, the dry bulk sector has been dashed upon the rocks of vessel oversupply and slowing economic growth.

The industry has suffered from large capital inflows from private equity players who invested in ships in a bet on sustained demand from emerging markets, particularly China. Instead, the world’s second-largest economy is growing at its slowest pace in 25 years, reducing the need for the coal and iron ore that fuels its manufacturing sector.

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, has lost about 98 percent of its value from a peak of 11,793 points in May 2008, marking the lowest level since records began in 1985.

“This is pretty much the worst I have seen in my career,” said Tim Huxley, chief executive officer of Hong Kong-based Wah Kwong Maritime Transport Holdings, who has been in the business for over 30 years. “For the bulk carrier industry, this is going to be a grim year and next year is not going to be any better.”

At the height of the market, dry bulk vessels could command daily fees of about $185,000 but that has dropped to about $4,000 to $6,000 a day now.

With operating costs for dry bulk ships at about $5,500 to $7,500 per day, depending on the size of the vessel, the global commodities meltdown has made it hard for many operators to cover costs.

CHINA IMPORTS DROPPING

Vessel rates are unlikely to recover soon especially as China’s voracious appetite for coal and iron ore slows.

Coal imports to China may drop eight percent this year to 152.1 million tons, according a forecast from shipping services firm Clarkson. Shipments of coal, both for power generation and steel making, have plunged since 2013 when they reached 264.9 million tons.

China’s monthly iron ore imports peaked at a record 96.27 million tons last December but then dropped 14.6 percent to 82.19 million tons in January this year, data from the General Administration of Customs showed.

The decline suggests annual imports may have peaked in 2015 at 952 million tons as production at China’s steel mills has slowed. In contrast, India imported just 15 million tons in 2015.

There are no signs of an economic pick-up any time soon. Last month, the International Monetary Fund cut its global growth forecasts for the third time in less than a year to 3.4 percent, while money managers in a Bank of America Merrill Lynch survey this week said a U.S. recession is the biggest unlikely risk they are worried about.

While demand for bulk shipping has slumped, supply has scarcely blinked. Clarkson calculate the total global fleet capacity at 1.81 billion deadweight tons with a further 300 million tons of capacity coming on line over the next three to four years, the result of a hangover of the boom years when shipping was profitable.

Wah Kwong’s Huxley believes the industry is losing up to $20 billion a year in operating costs. The losses are pushing smaller companies such as Oslo-headquartered Western Bulk to sell parts of their business while others take the merger route to create giants to grab market share.

China’s government drove the merger of former rivals China Ocean Shipping (Group) Company and China Shipping Group to create China Cosco Shipping Corporation (COSCOCS). At an event in Shanghai on Thursday, Xu Lirong, the chairman of the newly formed company, acknowledged this is the most difficult period the shipping industry is experiencing since the financial crisis.

“The merger is crucial to the development of both companies,” said Xu.

by Reuters in The Maritime Executive