NPC Congressman John C. Schafer of Wisconsin 1924
“..Carlyle Group saw the holdings of a commodities fund it owns plummet from $2 billion to $50 million, due to bullish bets on a host of commodities.”
• Why Commodities Are Dying The Death Of 1,000 Cuts (CNBC)
Commodities are the gift that keep on not giving. The sector is in the throes of an ‘annus horribilis’, having gotten wrecked over the past few years despite massive liquidity that should have boosted their value. Bullish investor after bullish investor has tried to call a bottom, in a set of calls that now appear ill-conceived and money losing. In the past week, the S&P GSCI Commodity Index has dropped 3.4 in the past week, as crude oil plunged 7% to hit multi-month lows, and a host of metals fell alongside it. That, of course, hardly marks the first big drop for the alternative investment group. That widely watched commodity index has fallen 17% the last three months, and a whopping 42% in the past two years. It’s not just an energy issue, either.
Copper, platinum, lumber, coffee, sugar, wheat, oats and lean hogs are all down double-digit percentages this year. While each specific commodity obviously responds to its own distinct supply-and-demand dynamics, a few fundamental factors appear to be weighing on commodities as a whole. First of all, the U.S. dollar has risen nearly 8% this year against a basket of major currencies, and has rediscovered some of its strength in the past three months. A strong dollar tends to be bad for commodities, as it should mean that it takes fewer dollars to buy the same amount of a given fixed asset. And in fact, many investors bought commodities to get protection from a Federal Reserve stimulus-stoked rise in inflation that never came.
As the Fed ended its QE program—and now appears months away from raising rates—what now appears to have been a massive bubble in commodities like gold has slowly popped. But Fed fears didn’t form the only bull case for commodities. Others maintained that the global economy would heat up, leading to greater demand for industrial commodities like oil and copper. Instead, Europe has been a mess, and that great commodity consumer China has seen its economy continue to slow. The losses in the complex have been dramatic indeed. The Astenbeck commodities fund managed by famed trader Andy Hall tumbled 17% in July. And the WSJ said last week that private equity firm Carlyle Group saw the holdings of a commodities fund it owns plummet from $2 billion to $50 million, due to bullish bets on a host of commodities.
“That was not a “canary” but rather a “dodo.”
• The Canaries Continue To Drop Like Flies (Mark St.Cyr)
One would think as “canary” after “canary” falls silent either sickened with laryngitis, or worse – completely comatose, that those on Wall Street as well as the financial media itself would not only have seen, but heard, many of the warning calls that have been obvious for quite some time. Yet, history always shows; not only do they not see, but more often than not – they don’t want to see, nor hear the warning calls. Even when all the warning signs are screaming danger – not only are they ignored, they’re explained away as if those which saw or heard them, should be ignored as they’ll contend not only did one not see; but couldn’t see. What they’ll propose is: “That was not a “canary” but rather a “dodo.” After all, with a Fed that’s as interactive as this one currently is, surely what they believe they heard, or saw is impossible.
For people say they’ve spotted warning signs in these ‘markets’ for years, and none have yet produced a crisis because – they’re now extinct!” Yet, the wheezing sounds of many a Wall Street songbird has been apparent for quite a while. Again: If only one would care to look or listen. Back in April of 2014 in an article titled “The Scarlet Absence Of A Letter of Credit” I opined a few scenarios as to why this seemingly dismissed revelation by the so-called “smart crowd” should not go unnoticed. For the implications may very well portend far greater reasons too worry in the coming future. Let’s not forget this is some 16 months ago. When the financial media et al were still reciting in unison the wonders to which, “China will be the economy that leads us out of this current malaise.”
“Over the last few years since the financial melt down of 2008, we have seen what many have believed are precursors that may tip the hand of markets as to show just how unhealthy this levitating act fueled by free money has become. And yes there are always false indicators, and we all know correlation doesn’t equal causation. And even more may shrug and think, “No letter of credit, so what.” However, if there were ever a canary in a coalmine worth noting this is one not to let one’s eyes to divert from.
The issue at hand is not just the foolishness of the absence contained in a one-off LOC gamble some company would take. Far from it. It’s the desperation that could be hidden that’s a precursor one has to watch for. For the amount of desperation, or the degree that might be hidden beneath the surface to which a commodity will be sent overseas to another country, a country for all intents and purposes is using that very product as a pseudo currency to back other financial obligations without the requisite document to be paid. Is mind numbingly dangerous in its implications in my view.”
“..568 strikes and worker protests in the second quarter, raising this year’s tally to 1,218 incidents as of June..”
• China’s Hard Landing Suddenly Gets a Lot Rougher (WolfStreet)
This has become a sign of the times: Foxconn, with 1.3 million employees the world’s largest contract electronics manufacturer, making gadgets for Apple and many others, and with mega-production facilities in China, inked a memorandum of understanding on Saturday under which it would invest $5 billion over the next five years in India! In part to alleviate the impact of soaring wages in China. Meanwhile in the city of Dongguan in China, workers at toy manufacturer Ever Force Toys & Electronics were protesting angrily, demanding three months of unpaid wages. The company, which supplied Mattel, had shut down and told workers on August 3 that it was insolvent. The protests ended on Thursday; local officials offered to come up with some of the money owed these 700 folks, and police put down the labor unrest by force.
These manufacturing plant shutdowns and claims of unpaid wages are percolating through the Chinese economy. The Wall Street Journal: The number of labor protests and strikes tracked on the mainland by China Labour Bulletin, a Hong Kong-based watchdog, more than doubled in the April-June quarter from a year earlier, partly fueled by factory closures and wage arrears in the manufacturing sector. The group logged 568 strikes and worker protests in the second quarter, raising this year’s tally to 1,218 incidents as of June, compared with 1,379 incidents recorded for all of last year. The manufacturing sector is responsible for much of China’s economic growth. It accounted for 31% of GDP, according to the World Bank. And a good part of this production is exported. But that plan has now been obviated by events.
Exports plunged 8.3% in July from a year ago, disappointing once again the soothsayers surveyed by Reuters that had predicted a 1% drop. Exports to Japan plunged 13%, to Europe 12.3%. And exports to the US, which is supposed to pull the world economy out of its mire, fell 1.3%. So far this year, in yuan terms, exports are down 0.9% from the same period last year. As important as manufacturing is to China, this debacle is not exactly conducive to economic growth. The General Administration of Customs, which issued the report, added: “We could see relatively strong downward pressure on exports in the third quarter.”
Qe with an extra step built in.
• Quantitative Easing With Chinese Characteristics Takes Shape (Bloomberg)
China’s leaders are increasingly relying on the central bank to help implement government programs aimed at shoring up growth, in an adaptation of the quantitative easing policies executed by counterparts abroad. Rather than bankroll projects directly, the People’s Bank of China is pumping funds into state lenders known as policy banks to finance government-backed programs. Instead of buying shares to prop up a faltering stock market, it’s aiding a government fund that’s seeking to stabilize prices. And instead of purchasing municipal bonds in the market, it’s accepting such notes as collateral and encouraging banks to buy the debt.
QE – a monetary policy tool first deployed in modern times by Japan a decade and a half ago and since adopted by the U.S. and Europe – is being echoed in China as Premier Li Keqiang seeks to cushion a slowdown without full-blooded monetary easing that would risk spurring yet another debt surge. While the official line is a firm “no” to Federal Reserve-style QE, the PBOC is using its balance sheet as a backstop rather than a checkbook in efforts to target stimulus toward the real economy. “It’s Chinese-style quantitative easing,” said Shen Jianguang, chief Asia economist at Mizuho in Hong Kong. “But it’s not a direct central bank asset-purchase plan. China’s easing is indirect and more subtle compared with the U.S. or Japan.”[..]
While there’s been no public unveiling of the strategy, China’s leaders are putting in place plans for the central bank to finance, indirectly, a fiscal stimulus program to put a floor under the nation’s slowdown. China will sell “special” financial bonds worth trillions of yuan to fund construction projects, and the PBOC will provide funds to state banks to buy the bonds, people familiar with the matter said this month. China Development Bank and the Agricultural Development Bank of China – known as policy banks because they carry out government objectives – will issue bonds, people told Bloomberg earlier.
The Postal Savings Bank of China will buy the debt, aided by liquidity from the central bank, according to one of the people. It’s unclear whether by taking on bonds as collateral and delivering cash in return the PBOC’s official balance sheet will expand. In the U.S., the euro region and Japan, central banks have bought securities outright in secondary markets, making the quantitative easing transparent on their books.
Dollars flowing back home.
• China Slashes U.S. Debt Stake by $180 Billion – and Bonds Shrug (Bloomberg)
To get a sense of how robust demand is for U.S. Treasuries, consider that China has reduced its holdings by about $180 billion and the market barely reacted. Benchmark 10-year yields fell 0.6 percentage point even though the largest foreign holder of U.S. debt pared its stake between March 2014 and May of this year, based on the most recent data available from the Treasury Department. That’s not the doomsday scenario portrayed by those who said the size of the holdings – which peaked at $1.65 trillion in 2014 – would leave the U.S. vulnerable to China’s whims. Instead, other sources of demand are filling the void. Regulations designed to prevent another financial crisis have caused banks and similar firms to stockpile highly rated assets.
Also, mutual funds have been scooping up government debt, flush with cash from savers who are wary of stocks and want an alternative to bank deposits that pay almost nothing. It all adds up to a market in fine fettle as the Federal Reserve moves closer to raising interest rates as soon as next month. “China may be stepping away, but there is such a deep and broad buyer base for Treasuries, particularly when you have times of uncertainty,” Brandon Swensen at RBC Global Asset Management said. America has relied on foreign buyers as the Treasury market swelled to $12.7 trillion in order to finance stimulus that helped pull the economy out of recession and bail out the banking system.
Overseas investors and official institutions hold $6.13 trillion of Treasuries, up from about $2 trillion in 2006, government data show. China was a particularly voracious participant, boosting its holdings from less than $350 billion as its economy boomed and the nation bought dollars to keep the yuan from soaring. Now, the Asian nation is stepping back as it raises money to support flagging growth and a crumbling stock market, and allows its currency to trade more freely. The latest update of Treasury data and estimates by strategists suggest that China controls $1.47 trillion of Treasuries. That includes about $200 billion held through Belgium, which Nomura says is home to Chinese custodial accounts.
Da Fed.
• The Monetary Superpower Strikes Again (David Beckworth)
China’s economy has been slowing down for the past few years and many observers are worried. The conventional wisdom for why this is happening is that China’s demographic problems, its credit binge, and the related malinvestment have all come home to roost. While there is a certain appeal to these arguments, there is another explanation that I was recently reminded of by Michael T. Darda and JP Koning: the Fed’s passive tightening of monetary policy is getting exported to China via its quasi-peg to the dollar. Or, as I would put it, the monetary superpower has struck again.
The Fed as a monetary superpower is based on the fact that it controls the world’s main reserve currency and many emerging markets are formally or informally pegged to dollar. Therefore, its monetary policy is exported across the globe and makes the other two monetary powers, the ECB and Japan, mindful of U.S. monetary policy lest their currencies becomes too expensive relative to the dollar. As as result, the Fed’s monetary policy also gets exported to some degree to Japan and the Euro. This understanding lead Chris Crowe and I to call the Fed a monetary superpower, and idea further developed by Collin Gray. Interestingly, Janet Yellen implicitly endorsed this idea in a 2010 speech:
For all practical purposes, Hong Kong delegated the determination of its monetary policy to the Federal Reserve through its unilateral decision in 1983 to peg the Hong Kong dollar to the U.S. dollar in an arrangement known as a currency board. As the economist Robert Mundell showed, this delegation arises because it is impossible for any country to simultaneously have a fixed exchange rate, completely open capital markets, and an independent monetary policy. One of these must go. In Hong Kong, the choice was to forgo an independent monetary policy.
The original context of the monetary superpower argument was that the Fed was exporting its easy monetary policy to the rest of the world in the early-to-mid 2000s. Now the argument is that its normalization of monetary policy is creating a passive tightening of monetary conditions for the rest of the world, especially the dollar peggers like China.
And then the Troika can start stalling again.
• Greece Hopes to End Bailout Talks by Tuesday (Bloomberg)
The Greek government is seeking to conclude talks on a rescue program by Tuesday, leaving enough time for national parliaments to assess the deal so funds can be disbursed for an Aug. 20 payment to the ECB. The four institutions representing Greece’s creditors – the ECB, the IMF, the EC and the European Stability Mechanism – made progress over the weekend on the details of a plan that would make as much as €86 billion available to Greece, according to three people with knowledge of the discussions. Officials are optimistic an agreement will be reached, allowing Greece’s parliament to pass any new required reforms in the middle of the week and paving the way for a meeting of euro-area finance ministers at the end of the week.
The indebted nation needs a quick release of about €20 billion to create a buffer for its banks and to make loan payments. “We are trying to make swift progress in order to have a deal preferably before the 20th of August so the disbursement can be made under the new ESM program,” EC spokeswoman Mina Andreeva told reporters on Aug. 7 in Brussels. Greece and its creditors still need to decide exactly how much money will be required for the bailout, which will be the nation’s third in five years, as well as what reforms will have to be concluded before any money is released, one of the people said. The headway comes as some members of the 19-nation common currency express skepticism that a deal can work.
Finnish Foreign Minister Timo Soini said over the weekend that his government is ready to discuss a new aid plan for Greece but that “we should admit that this isn’t going to work.” Last week, Hans Michelbach, a Bavarian lawmaker who has argued against a deal with Greece, said he didn’t believe a rescue program could be reached in time and other financing arrangements would be needed. Even as the European governments are racing to cinch an agreement before Greece needs to pay €3.2 billion to the ECB on Aug. 20, the situation isn’t as dire as it was earlier this summer; if the leaders fail to disburse the funds in time, Greece could still request a short-term loan from a European fund that has about €5 billion available.
They have that in common with Tsipras. Just make sure to lay the blame where it belongs.
• Finland Throws Support Behind Greek Bailout It Says Won’t Work (Bloomberg)
A third Greek bailout won’t work and will only prolong the difficulties plaguing the euro area, according to Finnish Foreign Minister Timo Soini. But his party, the euro-skeptic the Finns, is ready to discuss another rescue package because allowing Greece to fail would only add to Europe’s costs, he said. “Truth is the strongest force,” Soini said in an interview on Saturday. “We should admit that this isn’t going to work.” Soini shares the skepticism of Greece’s ruling Syriza party, which despite its opposition to further austerity measures, is seeking €86 billion in international loans to stay afloat. Greece is struggling to strike a deal with its creditors as €3.2 billion in debt to the ECB falls due on Aug. 20.
The Finns party, which in April became part of a ruling coalition for the first time, has no choice but to support a bailout since not doing so would cause the three-party government to collapse. That would only open the door for the left-wing opposition, Soini said. “I kept my party in the opposition for four years because of this subject,” he said. “But with this government structure we can’t block the program alone and we’d be replaced.” While Finland drove a hard bargain during Greece’s second bailout, it may no longer have the clout to block a deal. Finland has already made its 1.44 billion-euro contribution to the permanent European Stability Mechanism. Should Europe decide that the future of the euro zone is at stake, a bailout won’t require unanimous backing from members; 85% is enough.
Even without an imminent bailout agreement, a European fund deployed in July to help Greece clear arrears contains about €5 billion and could be tapped again for a bridge loan. According to Soini, bridge financing will do little to solve the long-term fiscal plight Greece faces. “This bridge funding isn’t going to be final solution,” he said. “There’s no solution for this particular problem that doesn’t cost Finnish taxpayers. If Greece collapsed and Grexit would be tomorrow’s reality, we would lose €3-4 billion more or less at once. So I hope that the EU and euro zone, that in due course, we can face the facts and say enough is enough and that we must do something else.”
Replace Schäuble.
• Berlln Faces Isolation As Athens And Creditors Near €86 Billion Accord (FT)
Greece and its creditors are close to reaching an outline deal this week on the debt-laden country’s €86bn rescue programme, amid signs of growing German isolation over its tough stance towards Athens. Significant concessions by Alexis Tsipras and his negotiators in the past month have encouraged other hawkish eurozone members such as Finland to break with Berlin, which wants to hold out longer to squeeze more reforms from Athens. Even previously sceptical EU diplomats now say that a full agreement could be reached by the August 20 deadline, when Athens must make a €3.2bn debt repayment to the ECB. The cautious optimism contrasts sharply with the acrimony at last month’s eurozone summit, which came close to ushering Greece out of the currency bloc before agreeing to negotiate a deal.
The main elements of the proposed deal include spending cuts, administrative reform and privatisations. Remaining sticking points between Athens and its creditors include details of a €50bn privatisation plan and proposals for raising the planned budget surplus, excluding debt interest, to 3.5 per cent of gross domestic product in 2018 from zero this year. Officials in Brussels said an early deal was “ambitious but feasible”. But they emphasised that while this was the “preferable” way forward, the option of a €5bn bridging loan to give negotiators more time, championed by Berlin, was still on the table. As often in the past, Greek officials were the most positive about the likelihood of a breakthrough, expressing confidence that an outline deal could come by Tuesday and be approved by the Athens parliament later this week, despite political divisions and public anger over the terms.
Eurogroup finance ministers would then meet on Friday to approve the deal, leaving time next week for national parliaments in Germany, and the other creditor countries which must vote on the plan, to do so before August 20. One Greek official said: ”If there aren’t any last-minute obstacles raised by our partners, we can wrap up a deal this week.” However, Germany, the biggest creditor, was late last week still holding out for more reforms from Athens, arguing that a two- or three-week bridging loan was better than hurriedly striking an inadequate three-year deal. Jens Spahn, deputy finance minister, tweeted on Friday: “It is better done thoroughly than hastily.” An EU official said that even if Wolfgang Schäuble, Berlin’s hawkish finance minister, dug in his heels, chancellor Angela Merkel would not want Berlin isolated.
Didn’t we pass that point a while back?
• Democracy At The Heart Of Fight For Greece (FT)
The biggest question raised by Syriza’s election victory last January was not about Greece. It was whether any national population that has adopted the euro can meaningfully express a democratic choice. This is a test case of the euro itself. If monetary union and democracy are incompatible, even the euro’s most committed friends need to choose the latter. Fortunately, they are not incompatible. But European policy is premised on the opposite view. Without a change in approach, it must lead to failure. The list of pressures on Greeks’ self-determination is uniquely long. It includes, first, the extraordinary micromanagement of policy by creditors.
Second, the shameless intervention in Greek elections by European leaders who both in 2012 and in 2015 made abundantly clear they wanted Greeks to re-elect the same discredited elites. Third, the huge efforts made to avoid any plebiscitary upset, or even support, of the eurozone’s policy programme. In November 2011, Angela Merkel, the German chancellor, and Nicolas Sarkozy, France’s then-president, bullied Prime Minister George Papandreou out of an attempt to establish Greek ownership of the second rescue loan (and the attached conditions) through a referendum. While the eurozone failed to scare Syriza off from holding a ballot this June, it was not for the lack of trying. Why this astonishingly prickly attitude to letting people make a choice?
The answer is as obvious as it is worrying: Europe’s leaders fear that the people will make the wrong choice. In Greece, opinion polls have been remarkably consistent about two things: most Greeks want to keep the euro as their currency, and most also reject the policies imposed by the creditor institutions previously known as the troika. That is what the “no” landslide this summer meant; and it is what Mr Papandreou’s referendum would also have shown had it not been aborted. It is the expression of this particular preference — keep the euro, but with different policies — that the eurozone political elite has done everything it can to prevent.
Nice study. Translation could be better. The Press Project tries to give Greece an actual news outlet.
• Analysis: Varoufakis Vs Media Manipulation (Press Project)
There comes a point in any crisis where we have to look at all the players involved and ask who ultimately is responsible, in other words, where does the buck stop? In the case of Greece it’s rather muddled, there are more villains than a Tarantino movie. But it appears that the former Finance minister, Yiannis Varoufakis, has found himself with the finger of blame pointing squarely at him. The “revelation” that Varoufakis had a contingency plan for Grexit after all has led to the filing of two lawsuits, one by the Mayor of Stylida and the other by the head of a new political party Teleia – which translates as ‘full-stop’ (yes really). At the moment Varoufakis is protected by political immunity and will not have to face trial unless the Greek Parliament decrees otherwise.
But as talk of ‘treason’ gains traction it’s important to remember what our frame of reference for all of these events is – the media. Everything we think we know about this crisis, every opinion we have formed and our knowledge of the people involved, including Varoufakis, starts with what we read and watch and how we then process that narrative or ‘story.’ It’s important to grasp that news narratives come with an array of potential variables that might influence how we see them, the cultural experiences of the author for example or the pre held-prejudices of the reader. The question then is how those involved, whether it’s the IMF, Greece or the EU, can push the public to accept their version of the narrative because capturing the public’s much coveted validation provides a cloak of legitimization for decisions.
The answer is media manipulation. The systematic warping of news narratives happens everyday almost everywhere. To demonstrate this we can start by doing what governments and institutions such as the EU do daily – analyze the media output. In the run-up to the Greek elections in January, when it was looking likely that Syriza would win, global news related to ‘corruption’ in Greece skyrocketed and has maintained relatively high levels until now. Yet, during the same period no major corruption scandals came to light. Syriza as a virgin government can claim to be untainted at that time. So why with the arrival of Syriza is there a corruption narrative flooding the airwaves and printing presses and sticking there? The media monitoring software reveals that this ‘corruption related to Greece’ news is present overwhelmingly in the IMF’s homeland – America. It’s important to point out here that stories starting in the US impact massively because they are regurgitated far and wide.
Calling Troika!
• Portugal Cautioned By IMF Over Debt Sustainability (FT)
Even if they had been compiled by his own spin-doctors, Portugal’s latest unemployment figures could hardly have been better for Pedro Passos Coelho, the country’s centre-right prime minister. The last batch of labour market numbers to be published before a general election in October showed the biggest quarterly drop in the country’s jobless rate for at least 17 years — falling by 1.8 percentage points in the second quarter to 11.9%. This is the lowest level since 2010, before painful austerity measures imposed under an international bailout saw unemployment soar to a record 17.5% in 2013.
Mr Passos Coelho’s ruling coalition welcomed the figures as “historic” – trumpeting them as proof that punishing spending cuts and tax increases have turned around a struggling economy and put Portugal definitively on a path towards export-led growth and sustained debt-reduction. But the day after the National Statistics Institute released the jobless figures last week, the euphoria was dashed by a series of sobering warnings from the IMF over the country’s heavy debt burden and a slackening pace of reform. Particularly stinging for the prime minister’s two-party coalition, which is neck-and-neck in the polls with the moderately anti-austerity opposition Socialists, was the IMF’s view that the government faced a “tangible risk” of failing to bring this year’s budget deficit below 3% of national output, as required under EU rules.
Government election pledges to ease austerity, partly by phasing out extraordinary tax charges introduced during the €78bn bailout, would have to be postponed or partially cancelled if insufficient spending cuts were put in place or revenues fell lower than forecast, the IMF warned. João Galamba, a Socialist politician, said that despite Mr Passos Coelho’s “long romance” with the IMF, the Fund’s latest assessment of the Portuguese economy showed that it no longer trusted the government’s forecasts and had been “surprised by its electioneering”.
Why Spain still has bankcs that are going concerns?!
• In Southern Europe, Bank Share Sales Can Hit Depositors Hard (WSJ)
When Spain’s Banco de Sabadell needed to raise nearly $2 billion for its takeover of a British bank this year, it instructed branch employees to sell shares directly to retail customers. One customer said his banker called him several times to entice him to purchase shares. Later, at the branch, the banker placed a 10-by-10-inch box of Nestlé chocolates next to a document and urged him to sign, ceding to Sabadell’s management the right to vote his shares at the annual meeting. The customer, who declined to be named, said he signed and took the chocolates. In southern Europe, which has a tradition of mutually owned or unlisted savings banks, it is a legal and long-standing practice for branch employees to sell stocks and bonds issued by the bank to people who have deposits and loans with the bank.
Sometimes, customers are encouraged to cede their shareholder voting rights to the bank, too. But the practice cost customers dearly during Europe’s financial crisis and is coming under fire anew as an inherent conflict of interest that prioritizes banks’ balance sheets over investors’ pocketbooks. In Portugal, clerks of the now collapsed Banco Espírito Santo sold €550 million ($603 million) in debt from the bank’s parent to retail customers in late 2013. The parent was already in trouble and has since gone bankrupt. Many clients have lost their entire savings. Spanish bank customers were saddled with around €3 billion of paper losses after they bought €7 billion of complex bonds from Banco Santander in 2007. Five years later, the bonds converted into shares that had plummeted in value.
Around 300,000 Bankia depositors also lost millions after they purchased shares in the lender’s ill-fated 2011 initial public offering. Bankia was bailed out in 2012. “The bank should always act in good faith and in the interest of the client,” said Fernando Herrero, spokesman for Spanish consumer association Adicae. But when a bank sells its own securities, he said, “the interest that is going to take priority is the bank’s interest in obtaining financing.”
Might want to hold that next independence vote soon.
• Scotland To Issue Formal Ban On GMO Crops (Guardian)
Scottish ministers are planning to formally ban genetically modified crops from being grown in Scotland, widening a policy divide with the Tory government in London. Ministers in Edinburgh are to apply to use recent EU powers which allow devolved administrations to opt out entirely from a more relaxed regime which is expected to see far more commercial use of GM crops around the EU. The move will reinforce a long-standing moratorium on planting GM crops in Scotland and allow the Scottish National party to further distance itself from the UK government.
Backed by agribusiness, scientific bodies and the National Farmers Union, ministers in London have already signalled that they plan to allow commercial cultivation of GM crops such as maize and oilseed rape in England, despite significant consumer resistance and opposition from environmental groups. The Scottish government announcement on Sunday was silent on whether this new legal power would extend to a ban on scientific and experimental research, but a spokeswoman confirmed that laboratory research on GMOs would continue. Scottish scientists, including those at the James Hutton Institute and the Rowett Institute, have taken a leading role in GM research. The Scottish government’s former chief scientific officer, Dame Anne Glover, who became the EC’s chief scientific adviser before the position was abolished, is a keen advocate of GM crops.[..]
Richard Dixon, director of Friends of the Earth Scotland, said: “The Scottish government has been making anti-GM noises for some time, but the new Tory government has been trying to take us in the direction of GM being used in the UK, so it is very good news that Scottish ministers are taking that stance. “If you are a whisky producer or breeding high-quality beef, you ought to be worried if you don’t want GM but it is going to come to a field near you and you were worried that there was going to be some contamination. It is certainly in Scotland’s interests to keep GM out of Scotland.”
This has long ceased being a rational discussion. Not sure trying to make it one will fly.
• Good For Migrants, Good For Britain (Philippe Legrain)
The chaos in Calais is a nightmare, not least for the 3,000 or so migrants scraping by in makeshift camps. It’s not fun for the 75,000 people of Calais either. And it’s a big disruption for British hauliers and holidaymakers who are delayed, and for people in Kent whose roads are jammed. With £200 billion worth of UK trade transiting between Dover and Calais each year, the Financial Times estimates that the lost trade, including wider costs such as retailers having to write off spoiled food and manufacturers not receiving crucial goods in time, amounts to (a surprisingly large) £250 million a day. Perhaps it would be cheaper to let the migrants come work here instead.
The poor people squatting in squalid conditions in the Jungle outside Calais have risked life and limb to get there from war-torn and repressive places such as Syria, Afghanistan and Eritrea. Now they are again risking death to try to reach Britain through the Channel Tunnel. Such brave, enterprising people are surely just the kind that an open, dynamic country would want to welcome. While the disruption they are causing is large, their numbers are small. The 3,000 in Calais are a tiny fraction of the 219,000 migrants who crossed the Mediterranean Sea to Europe last year. They pale into insignificance compared to the 1.2 million Syrian refugees in Lebanon (local population: 4.4 million). Overall, Britain received only 31,400 asylum applications last year – and most are rejected.
Sweden, with a seventh of our population, received 75,100. The total number of refugees in the UK at the end of 2014 was 117,161: 0.18% of the population. What attracts desperate people to Britain is not the measly benefits for asylum seekers. People don’t spend thousands of pounds risking their lives crossing the Mediterranean to get £36.95 a week in benefits. If welfare was their priority, they’d stay in France. Most asylum seekers wouldn’t need to claim benefits at all if they were allowed to work. But in a futile attempt to deter “economic migrants”, Britain bans asylum seekers from working.
Not a rational discussion, but a sliding scale into dark days not unlik the 1930s.
• ‘Marauding’ Migrants Threaten Standard Of Living: Foreign Secretary (Guardian)
The foreign secretary, Philip Hammond, has weighed in to the debate over migration with some of the government’s strongest language yet, claiming millions of marauding African migrants pose a threat to the EU’s standard of living and social structure. Senior Labour figures responded by accusing Hammond of scaremongering after he claimed Europe “can’t protect itself” if it has to take in millions of migrants from Africa. Speaking to the BBC while visiting Singapore on Sunday, Hammond said: “The gap in standards of living between Europe and Africa means there will always be millions of Africans with the economic motivation to try to get to Europe.”
He said: “So long as there are large numbers of pretty desperate migrants marauding around the area, there always will be a threat to the tunnel security. We’ve got to resolve this problem ultimately by being able to return those who are not entitled to claim asylum back to their countries of origin.” Hammond said EU laws meant migrants could be “pretty confident” that after setting foot on EU soil they would not be returned to their country of origin. “Now that is not a sustainable situation because Europe can’t protect itself, preserve its standard of living and social infrastructure if it has to absorb millions of migrants from Africa.”
Three of the candidates to be Labour’s next leader condemned Hammond’s use of language. Shadow home secretary, Yvette Cooper, described it as “alarmist and unhelpful”, and Liz Kendall said there should be no place for dehumanising language in the debate. Jeremy Corbyn said Hammond’s comments were part of a pattern of language designed to whip up prejudice and hostility.
Or do we think that sliding scale is scarier when it applies to Germany?
• Germany Has a Refugee Problem, and the Problem Is the Germans (FP)
Anti-refugee sentiment has touched a nerve at a time when record numbers of people are seeking shelter in Germany. The government received nearly 203,000 asylum applications last year – more than twice as many as any other country in the EU.The government received nearly 203,000 asylum applications last year – more than twice as many as any other country in the EU. And that number is expected to double by the end of this year. Hundreds of thousands of people fleeing war and persecution, from Syria to Eritrea, are appealing to Berlin for protection. Many receive it. Of the more than 34,000 Syrians who submitted asylum applications in the first half of this year, only seven were denied permission to stay according to data from the Federal Office for Migration and Refugees.
That comes as the European Union is wrangling over a contentious plan to overhaul its immigration system. A recent proposal would see Europe distribute asylum-seekers according to a quota system, based on a country’s size, economy, and other factors. Britain and a host of Eastern European nations have refused. Germany, which stands to take in the most asylum-seekers under the new proposal (18.4%), supports the plan: It would help regulate how many migrants Berlin is expected to shelter as waves of asylum-seekers continue to arrive. Authorities here have been unprepared for the influx. Aydan Özoguz, the Federal Commissioner for Migration, Refugees and Integration, said the government has just approved 2,000 new positions to help work through a backlog of over 240,000 asylum applications.
The responsibility for housing refugees falls on states, and they have hastily arranged makeshift reception facilities in gyms and tents. Chancellor Angela Merkel’s government committed an additional 1 billion euros for support. But refugee groups say Berlin has consistently underestimated the amount of time and funds needed. “The [federal] government has reacted far too slowly in allocating more money towards shelters for asylum-seekers — that would help relieve the burden on states,” said Marei Pelzer of Pro Asyl, a refugee organization based in Frankfurt. “A lot has been discussed and announced but very little has been implemented.” “It’s still not a lot of people for such a large and rich country like Germany,” she added.
The commissioner, Aydan Özoguz, says the government has instituted some important changes – freeing up asylum-seekers to find jobs while they wait for their applications to be processed, for example. The rest takes time. “I find it a bit dishonest when people say we could have been better prepared — you can’t just create an apartment building in one year, not in the amount we need,” she said. “I think we’re doing a really good job.”
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