Nov 042020
 


Pablo Picasso Etude Pour Mercure 1924

 

The Democrats and the Presstitutes Will Not Admit a Trump Win (PCR)
Trump: Presidency Has Been ‘Mean’ And Filled With ‘Horrible People’ (Pol.)
How Violence Became A Forecastable Event In America (Turley)
Field Evaluation Of A Rapid Antigen Test For The Diagnosis Of COVID19 (medrxiv)
Radio Host Crushes Leading UK Epidemiologist’s Credibility (ZH)
No Matter Who Wins (Nate Hagens)
China Halts Ant Group’s Mega IPO (R.)
Jack Ma: Traditional Banks Are Operating With A ‘Pawn Shop’ Mentality (TC)
US Pushes Greece To Stop Acting As China’s ‘Dragon’s Head’ Into Europe (SCMP)
Refugee from Moria Camp Signs Professional Football Contract in Greece (GR)

 

 

Been following election news bits for hours now, and still nothing is sure. Both sides claim a win, both sides accuse the other of cheating.

I’d say Trump won, but then I just get more people claiming I’m a Trump supporter. Got another mail from an “ex-reader” asking me why I changed so much. Never occurs to these people that maybe they’re the ones who changed, not me. Sure, I’m not anti-Trump, but why should I? Everytime such mails come in, and the frequency has increased, there’s also always generous donations coming in. Balance.

Trump is doing much better then most of the pollsters said, but we’ll have to wait. There certainly is no landslide for either side. Some states just stopped counting mid-way in, and some counters took the ballots home with them.

I’ll cover this is a series of tweets I picked up along the way. I know it looks crap in mailing lists, but I still haven’t figured out why the tweets stopped appearing in mails. Something to do with javascript, but they did use to appear.

 

 

Trump wins in all demographics except white men.

 

 

@joelpollak “And so we have the anticipated scenario: on Election Night, it looks like a Trump victory based on votes counted so far, but there are enough uncounted states that Biden can tell his supporters that he will win. Media, lawyers, tech companies, and protesters will try to help him.”

 

 

Greenwald Biden Landslide

McEnany Rustbelt

@PpollingNumbers

Tucker zero credibility

Biden

 

 

Paul Craig Roberts from October 29. The documentary The Plot Against the President is no longer available on YouTube.

The Democrats and the Presstitutes Will Not Admit a Trump Win (PCR)

If Trump wins the election, unless it is an overwhelming victory that cannot be challenged, the Democrats and the American media will not admit that Trump won. The plan in place is to blame Trump’s win on fraud and to use the tactics of the “Maidan Revolution” in Ukraine, recently employed again in Belarus, to prevent Trump’s inauguration. The documentary, The Plot Against the President, explains the “Russiagate” plot by the FBI, the Democrats, and the media to remove President Trump from office. The venality and corruption of FBI Director Comey, the American media, and Democrats, such as Adam Schiff, is scary. That such an obvious plot against American democracy involving the country’s security agencies and one of the two ruling political parties could go on for three years without a single question by the media proves that the Establishment will not tolerate a non-establishment President or those who support him and that the media dares not cross the Establishment.

The fact that Comey is not in prison testifies to the power of the Deep State. Had it not been for US Rep. Devin Nunes of the House Intelligence Committee the coup would have succeeded. The coup attempt is not over. The documentary, which consists of the testimony of members of the House Intelligence Committee, National Security officials, and outside experts, shows that both Democrats, especially Adam Schiff, and the US media simply denied that Independent Prosecutor Mueller and the House Intelligence Committee failed to find any evidence of the Russiagate charges. Adam Schiff stood before the American media and lied time and time again. The media knew he was lying and never called him on his lies. Not even once. The undeniable fact that Russiagate was a three-year hoax, an orchestrated deception to foreclose the Trump agenda, has not been admitted by Democrats or the presstitutes.

In other words, nothing is true unless the media admits it. And they don’t admit the truth. The Elite use the presstitutes to control the explanations and to keep the population in a false reality. As our Founding Fathers said, without a free and independent media, there is no liberty. The United States does not have a free and independent media. It has a propaganda ministry for the ruling Elite. Be sure you comprehend the implications, because you are about to see it again. If Trump wins the election, the media and the Democrat Party are not going to acknowledge the fact that Trump won–unless Trump’s win is so overwhelming that it cannot be challenged.

Virginia vote count stops, counters take ballots home with them.
https://twitter.com/JusticeMAGA/status/1323856601858494464

Read more …

Well, he’s been fair game for 5 years.

Trump: Presidency Has Been ‘Mean’ And Filled With ‘Horrible People’ (Pol.)

President Donald Trump on Tuesday offered a bitter assessment of his tenure in the White House, saying the experience has been “mean” and marked by “horrible people.” The comments came in an Election Day interview on “Fox & Friends,” after co-host Ainsley Earhardt asked Trump whether he has enjoyed being president and if the job has been “worth it.” “Well, it’s been mean. It’s been — you’ve dealt with horrible people,” Trump replied, adding: “You deal with people that are very deceptive.” Trump, who participated in five campaign rallies Monday, sounded noticeably hoarse throughout his phone interview Tuesday, and seemed relatively despondent compared with his previous appearances on his preferred cable morning news show.


Reflecting further on his time in office, Trump said that his friends “used to call me Donald, [but] now they call me president,” and he argued that the United States itself was more “difficult to deal with” than America’s international adversaries. “They’ll go, ‘Mr. President, tell me, who’s the country that’s most difficult to deal with? Is it Russia? Is it China? Is it North Korea? Sir, is it North Korea?’” Trump said. “And I go, ‘No. Well, by far, the most difficult country to deal with is the U.S. It’s not even close,’” he continued. “And they all say, ‘You’ve got to be kidding.’ And I say, ‘No, I’m actually probably not kidding.’ We have very, very deceptive people.”

Read more …

So far so good. But then, both sides still think they can win.

How Violence Became A Forecastable Event In America (Turley)

Driving around Washington, D.C. a couple days ago was a shocking experience. Block after block of businesses are boarded up and anything throwable or movable has been removed from the streets. In the meantime, faculty, staff, and students at George Washington University (where I teach) have been told to stockpile medicine and food “as you normally would for a hurricane or a snowstorm.” The reason? We are about to have a democratic election. The expectation is that is, unless it is a landslide for Biden, there will be rioting and arson in Washington and other cities. A warm front moving in with “possible election related disruptions” is being reported like an electoral meteorological event.

When exactly did election rioting become as forecastable as inclement weather? The forecast for rioting with a chance of passing looting and arson is being repeated across the country as if it is now an inconvenient truth of the political version of global warming. The most likely disruption would come a close election or Trump lead. That risk is heightened after Democratic leaders like House Majority Whip James Clyburn, D-S.C. declared on Sunday that the only way Democrat Joe Biden could lose the election would be “for voter suppression to be successful.” Thus, if Trump is close or winning on election night, it can only be due to unlawful conduct. When President Trump made such statements about stealing the election, the media went into full alert over his laying the foundation for a coup.

Yet, the media seems entirely comfortable with Clyburn’s pre-election declaration that either Biden wins or the election is invalid. The fact is that the odds are against President Trump. However, the current polling shows a tightening of the race in critical states. The country remains sharply divided with even the best Biden polls still showing a solid 45 percent for Trump. Yet, Democratic members like Clyburn are already stating that either Biden wins or the election is stolen. No wonder officials are declaring a violent front moving into major cities with political doppler readings with developing protest vortexes and political depressions. Yet, rioting is not an act of God, but the criminal acts of those who only embrace democratic elections to the extent that they result in the “right” outcomes.

Read more …

“NEW terrific study on rapid tests The importance of this figure canNOT be overstated! Rapid tests caught 80% of PCR positives but all missed had very low viral loads. Thus, as expected it will successfully capture ppl most likely to be contagious.”

Field Evaluation Of A Rapid Antigen Test For The Diagnosis Of COVID19 (medrxiv)

Previous studies evaluating SARS-CoV-2 rapid antigen test (RAD), tests either used retrieved specimens, which had been cryopreserved for a wide range of times, were conducted at central laboratories or both [3-7]. To our knowledge this is the first report on the performance of a RAD assay conducted at POC. As such, it may provide a realistic view of how implementation of RAD tests in clinical practice can contribute to the management and control of the COVID-19 pandemics. When compared to RT-PCR, the Panbio™ COVID-19 AG Rapid Test Device assay yielded an excellent specificity and a fairly good overall sensitivity (79.6%); the latter slightly improved when the time to testing was less than 5 days since the onset of symptoms (80.6%).

This figure is less impressive than that claimed by the manufacturer (93%); however it is close (86.5%) to that reported by Linares and colleagues [3] in a mixed cohort including patients attended at the Emergency Department or primary healthcare centers and centralized testing at the hospital laboratory. Sensitivity of SARS-CoV-2 RAD assays has been reported to vary between 45%-97% [3-7]; yet, direct comparison between studies is hampered by relevant dissimilarities regarding clinical characteristics and age of patients, site of testing, type of specimen processed, and time to testing, among others. Interestingly, the sensitivity was higher in adults (82.6%) than in pediatric patients (62.5%). Previous studies found no age-related differences in SARS-CoV-2 RNA load in the upper respiratory tract [8]. Although speculative, dating the accurate onset of symptoms could have been less reliable in children than in adults.

[..] In summary, we found the Panbio™ COVID-19 AG Rapid Test Device to perform well as a POC for early diagnosis of COVID-19 in primary healthcare centers. More importantly, our data suggested that patients with RT-PCR-proven COVID-19 testing negative by RAD are unlikely to be infectious. Further studies are warranted to confirm this assumption. The inconsequentiality of false negative RAD results, from a public health perspective [12], would support the implementation of a laboratory diagnostic approach which excluded confirmatory RT-PCR testing for negative RAD tests in non hospitalized patients, even when the pretest probability is high. This would certainly alleviate laboratory workloads while dealing with RT-PCR supply shortages.

Read more …

The costs and risks of having a lockdown vs NOT having a lockdown. Nobody’s done the math. They didn’t even try.

From John Day, TAE resident physician, a few days ago: “COVID-19 is here to stay [..] It has become endemic. It’s never going away. There is no way to make it go away. Immunity lasts something like 6 months, though some reinfections occur before that. A good vaccine will always be 6 months away. Then you will need another, different one in 6 more months, but the first one is still 6 months away. “

Radio Host Crushes Leading UK Epidemiologist’s Credibility (ZH)

In the most thorough demolition of an ‘expert’ epidemiologist who unabashedly advised the UK government of the desperate need for a second lockdown to “suppress” the virus, Independent SAGE member Professor Gabriel Scally was completely unable to respond when LBC’s Maajid Nawaz cornered him on how severely a lockdown would cost the nation. As LBC’s Seán Hickey reports, Maajid asked whether the member of the Independent SAGE considers “the potential cost and deaths from having a lockdown and weigh them up.” Professor Scally insisted that “you can’t have a response to this virus that doesn’t take into account the economic factors, social factors and the psychological factors” and his department would definitely take these factors into consideration.

He reiterated the over-used mantra that the bottom line is that “we have to stop the virus – we have to stop it spreading,” and a second national lockdown is the best way to do so. However, when pushed on the cost, Scally told Maajid he hasn’t seen it, to which Maajid asked the epidemiologist after explaining that the sum is £2.4billion a day whether such funds could be spent elsewhere. “I would imagine as a public health expert you would have some idea,” Maajid noted. And that’s when Scally lost all ‘science’ credibility and barked back at Maajid: “Oh, don’t be silly, you are really now being stupid…” Which Maajid did not take kindly to the President of Epidemiology & Public Health at the Royal Society of Medicine’s response.

“Is the scientific evidence for why we need to go into lockdown being compared with the scientific evidence for what happens if we don’t and then the death that can come from lockdown versus the death that can come from not locking down compared and the costs compared so we can have a holistic approach to it. Have you done that work?” “I would have done that work if I was a member of cabinet,” Professor Scally said, when Maajid Nawaz turned the screw.

Read more …

Long from my old friend Nate.

No Matter Who Wins (Nate Hagens)

Humans – during periods of growth – and contraction – self-organize around energy. Oil is central but our entire energy balance sheet is going to be a critical issue in the coming decade. Under a Biden win, various Green New Deal schemes will massively scale renewable energy. In many ways this is good news, because it will be good for GDP, it will create jobs, and grow our supply of low carbon energy. But there are many problems with this because it won’t be approached systemically. Briefly: 1) renewable energy isn’t renewable, it’s rebuildable, 2) only 20% of (current) energy mix is electricity which is the type of energy produced from most renewables 3) the higher % of RE in our mix the more important back up (NG and coal) become – and the US is facing an impending gas shortage as US drilling has plummeted. (the largest growth component of supply was the associated gas from tight oil production), 4) the full system cost of integrating RE into the grid is higher than consumers currently pay, weighing on the economy 5) all RE plans expect a LARGER economy in the future when (see above) most realistic scenarios using systemic inputs point to a smaller economy.

Still, renewables are our only hope – they are mature, robust and inexpensive vis-à-vis even a decade ago. The problem will be how to ‘add renewables to a smaller and more complex system’. No matter who wins the election, we will have to face a more complex and less certain energy future. One of the silver linings (if you will) of the pandemic is that now a great number of people personally are aware US GDP/ 330 million does not represent how well we are doing as individuals or as a nation. The constant media reminders that the SP500 and Dow Jones just made all-time highs is incongruous with most peoples real lived experience (and most of whom have zero money in the stock market).

Whether one understands or agrees with the risks of climate change, energy depletion or limits to growth, tens of millions of people are now hungry for living a decent life with access to basic needs, while doing something good. The coming decades – by definition but also by desire – are going to be more about well-being than they are about growing our consumption of stuff. No matter who wins the election, our nation needs to embark on a deep conversation about what our cultural goal is – we are going to need complementary metrics to the econometric measures quantifying how much energy we burned. What is all this energy for is a question that should be part of our national discourse.

Read more …

And people thought the US would do it.

China Halts Ant Group’s Mega IPO (R.)

China suspended Ant Group’s $37 billion stock market listing on Tuesday, thwarting the world’s largest IPO with just days to go, in a dramatic move that left investors and bankers scrambling for answers.

Fraser Howie, independent commentator and author of several books about china’s financial system: “It is embarrassing for Ant Group, it also looks bad for sponsors and the exchange and regulators.The SSE (Shanghai Stock Exchange) says the suspension is based on changes of structure which breach the listing disclosure rules. How could this happen? No excuse at all for such failings around disclosure. Or perhaps this is really politics at play, the state is reining in the private sector in the most embarrassing of ways but that I think is somewhat foolish an approach. Ant Group should be regulated as a financial company but China has made a major push to open its markets and welcome foreigners and then this happens. The world’s largest IPO, China’s most famous tech group and this mess. Everyone looks foolish.”

Dave Wang, portfolio manager, Nuvest Capital, Singapore: “For now, markets will sell off Alibaba and likely Tencent as well as other relevant exposures like HSCEI Tech due to anticipation of Ant’s listing. Chinese banks may be a beneficiary and given they are underowned, we could see a rally. More details will come and if this is an isolated incident to Ant, then the new economy stocks that have done well so far should be fine, which is the base case now. If not, markets may start to price in uncertainty on tighter regulations on private enterprises and we could see a significant pull back on Chinese growth stocks.”

Francis Lun, CEO of Geo Securities : “The Communist Party has shown the tycoons who’s boss. Jack Ma might be the richest man in the world but that doesn’t mean a thing. This has gone from the deal of the century to the shock of the century. Jack Ma got ahead of himself by criticising the commercial banks and the regulatory regime.”

Read more …

Some background to the Ant Group IPO fail.

Jack Ma: Traditional Banks Are Operating With A ‘Pawn Shop’ Mentality (TC)

Whenever Alibaba founder Jack Ma makes a speech, it often becomes a hot topic. This past week, the Chinese internet has been abuzz with a speech of his. This time though, he seems to have gotten more brickbats than praise. At the Bund Summit in Shanghai last weekend, while Ma self-deprecatingly said that he was an unofficial and non-professional member of the financial sector, he nonetheless criticised the financial supervision system in front of top financial leaders like Zhou Xiaochuan, former governor of the People’s Bank of China, and Yi Gang, current governor of the People’s Bank of China. His fiery speech quickly made the rounds on the internet and sparked debate in the financial circle.


In his speech, Ma referred to the Basel Accords – a set of internationally agreed banking supervision regulations – as a “club for the elderly” and stated that these regulations should not apply to China, which does not have a mature financial ecosystem yet. He also claimed that the world now “only focuses on risk control, not on development”. As a representative figure of innovation in China’s financial industry, Ma believes that innovation comes with a price. He said: “Risk-free innovations stifle innovation.” He also added this blunt criticism: “Your risk-free departments are putting the entire economy at the risk of non-development.” Ma further criticised traditional banks for operating with a “pawn shop” mentality, saying that they will be unable to support the financial needs of the future world.

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Still can’t read the name “Geoffrey Pyatt” without getting nauseous.

US Pushes Greece To Stop Acting As China’s ‘Dragon’s Head’ Into Europe (SCMP)

As Europe was fighting a seemingly unmanageable Covid-19 outbreak in September, Greece’s Prime Minister Kyriakos Mitsotakis rolled out the red carpet for an inconspicuous foreign guest. Neither a state leader nor a health expert called in to fight the virus, Adam Boehler heads the US International Development Finance Corporation, created last year and hailed by Washington as an alternative to China’s Belt and Road Initiative, the multibillion-dollar Beijing plan to fund infrastructure projects and expand trade ties around the world. Fresh in his job, Boehler’s visit – quickly followed by US Secretary of State Mike Pompeo – was a clear signal of Washington’s concern over China’s expanding interest and influence in Europe, especially Greece.

The country is home to one of the most iconic belt and road projects: the port of Piraeus, among Europe’s biggest and now controlled by China’s state-owned shipping giant Cosco. Greece may be on the fringe of the European Union geographically, but it has become a key focus in the intensifying scramble for global influence between the US and China, which has spilled over into Europe, Southeast Asia, Africa and Latin America. “China itself has identified [Greece] as the dragon’s head of the Belt and Road Initiative in Europe,” the US ambassador to Greece, Geoffrey Pyatt, told local newspaper I Kathimerini earlier this year. “We’re going to have a debate in terms of how we get the balance right in dealing with the challenge that China presents. China’s not going to go away.”

Boehler’s specific goal was to convince Mitsotakis that Greece’s second-largest but near-bankrupt shipyard in Elefsina – just 13km west of Piraeus – should accept investment from the US body, lest it “fall into the wrong hands”, according to a diplomatic source briefed on the matter, who declined to be identified. US companies are reportedly interested in buying controlling stakes in Alexandroupoli port, according to local media. Alexandroupoli is being privatised by the Greek state and, while much smaller than Piraeus, is strategically located near the border with Turkey. Washington has piled the pressure on Greece regarding the future of Piraeus, said to be the oldest port in Europe and just 12km (7 miles) from the capital Athens. That showed when Cosco found itself struggling to get approval from Greek authorities to build a fourth container terminal in the port.

The Chinese shipping giant has said it will invest 600 million euros (US$698 million) in the Piraeus port to make it the biggest commercial shipping hub in Europe. This would also allow it to boost its stake in the port to 67 per cent from the 51 per cent it bought in 2016 for 280.5 million euros under a deal with HRADF, Greece’s privatisation agency. Greek officials have reassured Beijing that the delay in expansion approval was caused by local opposition based on archaeological and environmental concerns, not global politics.

Read more …

Let’s end with some good news.

Refugee from Moria Camp Signs Professional Football Contract in Greece (GR)

The Historic Greek football club Panionios announced on Tuesday that a refugee from the West African nation of Guinea signed a contract to play with the team in late October. Twenty-two-year-old Alia Camara came to Greece on a boat from Turkey when he was just 17 years of age. He traveled to Turkey from his home country after he was promised a contract with a football team there. Since it had been Camara’s dream to play football, naturally he eagerly accepted the deal — which turned out to be a scam which left the teenager penniless. Upon arriving in Greece, Camara was sent to Moria, Greece’s notoriously overcrowded refugee camp, the largest in Europe, which burned down after a series of fires in September.

While in the camp, located on the Greek island of Lesvos, Camara explained his situation to everyone he could — including his love for football, the scam he fell victim to in Turkey, and his desire to play the sport in Greece. With the help of a Greek couple, whom he calls his parents, who heard his story, Camara was able to submit his papers to legally reside in Greece, and was put in contact with Panionios, the historic Greek football club. Panionios, the oldest such club in Greece, was founded in 1890 in Smyrna, in what is now Turkey. After the destruction of the city in 1922, the surviving Greek residents of the city, including the entire club, were forced to relocate to Greece as refugees.

Panionios, along with many refugees from Smyrna, found a new home in the Athenian suburb of Nea Smyrni (New Smyrna). The connection between Camara’s refugee status and the club’s history moved the owners of Panionios, who offered the talented young player a contract to play for the team.

Read more …

 

 

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Greenwald Corbyn

Panda dogs

Fish crossing road

 

 

 

 

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Dec 072019
 
 December 7, 2019  Posted by at 10:26 am Finance Tagged with: , , , , , , , , , , ,  12 Responses »


Dorothea Lange Homeless mother and child walking from Phoenix to Imperial County CA Feb 1939

 

Donald Trump and Jerome Powell Can ‘Take Another Victory Lap’ (Y!)
Abenomics has Failed Japan. Financial Times Wants to Make it Global. (Lacalle)
What the ‘Expert’ Panel Should Have Told You About Impeachment (ET)
A Fraught Moment (Kunstler)
Strzok and Page Did Real Damage (Cortese)
Pelosi Puts A Brave Face On A Doomed Mission (Tucker Carlson)
Bloomberg On His Democratic Rivals: ‘Trump Would Eat ‘Em Up’ (R.)
Kamala Harris, Michael Bloomberg, and a Supreme Court Decision (IC)
Musk’s Defamation Win May Reset Legal Landscape For Social Media (R.)
Saudi Arabia Retreats From The Troubles Its Clown Prince Caused (MoA)

 

 

If you look only at jobs, and not even the quality of those jobs, things may appear shiny. We get it.

Donald Trump and Jerome Powell Can ‘Take Another Victory Lap’ (Y!)

The November jobs report crushed expectations on Friday, sending the stock market surging. “Jerome Powell and Donald Trump can take another victory lap,” said Danielle DiMartino Booth, a former Federal Reserve advisor and CEO of Quill Intelligence. The economy added 266,000 jobs in November, according to a report released Friday by the Bureau of Labor Statistics. The prior two months of job gains were revised higher pushing the three month average of job adds to 205,000. “In stark contrast to just about every other source of economic data, the jobs data insists the U.S. economy is strong, and that is all markets care about as it is the most visible and most quoted,” Booth said. “The reaction in the dollar and bond yields speaks volumes to how surprised markets were to this data.”


[..] As for Fed Chair Jerome Powell, he has steered a Federal Reserve that cut interest rates three times so far this year in an effort to reverse the hawkishness of Fed policy last year, which included four rate hikes, and to get ahead of any economic weakness sparked by the ongoing trade tensions between the U.S. and China. The Federal Reserve meets again next week, and most market participants aren’t expecting any changes to rates. “Despite the strengthening trend, this [jobs report] will not change anything at the Fed aside from what officials say publicly,” Booth said.

Read more …

Abe and the BOJ looked only at deflation. And the harder they tried to make them spend, the more fearful of spending the Japanse people became.

Abenomics has Failed Japan. Financial Times Wants to Make it Global. (Lacalle)

A recent article in the Financial Times, “Abenomics provides a lesson for the rich world,” mentioned that the experiment started by Prime Minister Shinzo Abe in the early 2010s should serve as an important warning for rich countries. Unfortunately, the article’s “lessons” were rather disappointing. These were mainly that the central bank can do a lot more than the ECB and the Fed are doing, and that Japan is not doing so badly. I disagree. The failure of Abenomics has been phenomenal. The balance sheet of the Central Bank of Japan has ballooned to more than 100% of the country’s GDP, the central bank owns almost 70% of the country’s ETFs and is one of the top 10 shareholders in the majority of the largest companies of the Nikkei index.

Government debt to GDP has swelled to 236%, and despite the record-low cost of debt, the government spends almost 22% of the budget on interest expenses. All of this to achieve what? None of the results that were expected from the massive monetary experiment, inventively called QQE (quantitative and qualitative easing) have been achieved, even remotely. Growth is expected to be one of the weakest in the world in 2020, according to the IMF, and the country has consistently missed both its inflation and economic growth targets, while the balance sheet of the central banks and the country’s debt soared. Real wages have been stagnant for years, and economic activity continues to be as poor as it was in the previous two decades of constant stimulus.

[..] The wrong diagnosis will lead to worsening outcomes. When the government is surrounded by economists that tell them that the problem of the economy is that there are too many savings, the government will decide to raise taxes and create a larger problem attacking consumption. With private debt at 221% of GDP. Japan has many issues, none of them being a “savings glut.” If you abandon structural reforms, the results will be worse. The QQE program was based on three “arrows”: monetary policy, government spending, and structural reforms. Guess which arrow they forgot to implement? Exactly. Structural reforms never happened, and when they did, they came in the form of higher taxes and more interventionism, the opposite of what the economy needed.

Read more …

Back to the 18th century we go.

What the ‘Expert’ Panel Should Have Told You About Impeachment (ET)

Many phrases in the Constitution—such as “necessary and proper,” “Privileges and Immunities,” and “Convention for proposing Amendments”—carry specialized 18th century meanings not obvious to the modern reader. Recall that most of the leading Founders were lawyers and the Constitution is a legal document. Some of these phrases derive from 18th century law. Therefore, to understand them you have to consult 18th century legal materials in addition to better-known sources such as the 1787 convention debates or the Federalist Papers. Unfortunately, most of the scholars called by the House Judiciary Committee to address the meaning of “high Crimes and Misdemeanors” were not able to do so accurately.

According to the authoritative Westlaw database, two of the three Democratically appointed witnesses have published no scholarly work on impeachment: Their specialties are in other areas. None showed any familiarity with 18th century fiduciary standards—which (as explained below) are part of the law of impeachment. All of the witnesses voted against President Trump, and several have been involved in anti-Trump activity. It’s not surprising, therefore, that, except for professor Jonathan Turley’s heavily footnoted 53-page written statement, the testimony was biased and superficial. [..] The core of the case against President Trump is that he used his political position to seek re-election assistance from a foreign government. Although there’s dark talk of crimes committed, the principal charge is fiduciary rather than criminal. In other words, a “high … Misdemeanor.”

House Democrats have struggled to define Trump’s alleged offense. Initially, they described it as “quid pro quo.” Then they employed the term “bribery.” The legally correct designation is “self-dealing.” Self-dealing is betraying your employer’s interests to enrich yourself. It’s a violation of the fiduciary duty of loyalty. We can assume the president might benefit from a Ukrainian investigation, but that doesn’t mean asking for an investigation was self-dealing as defined by fiduciary, and therefore by impeachment, law. There’s nothing unusual or improper about a president asking a recipient of U.S. foreign aid to address corruption. As for seeking political advantage: If we punished every politician who did that, they would all be swinging from the yardarm.

This is as true in foreign as in domestic affairs. When President Barack Obama told the Russian president he would have more flexibility after his re-election, he was saying (1) an agreement now would benefit both Russia and the United States, but (2) I’m going to sacrifice our mutual interests for the present because such an agreement might hurt my re-election campaign. Was this impeachable self-dealing? Almost certainly not. So where is the divide between “normal” conduct and impeachable conduct? To answer this, we need to weigh at least three factors: impeachment precedent, the national interest, and the practice of other presidents.

Read more …

The Horowitz report is due on Monday. He’s scheduled to testify on Wednesday.

A Fraught Moment (Kunstler)

The IG has no real law enforcement powers. He can only refer or recommend further action. Nevertheless, a great miasma of anxiety oppresses the Democratic Party now as it awaits whatever Mr. Horowitz has to say about these matters. The party’s propaganda arms at The New York Times, the WashPo, and cable news networks worked up a frenzy of distractions and ruses this past week — for instance the “bombshell” that International-Man-of-Mystery Joseph Mifsud was not a hireling of the FBI. Of course, nobody ever claimed he was. Rather, he is suspected of being an agent of the Italian intel service with links to British intel, both used by the CIA as beards for its nefarious activities around its own election meddling of 2016.


House Speaker Nancy Pelosi’s Democratic caucus has been busy with ersatz impeachment proceedings, which are invidiously scheduled to continue next week as a smokescreen to conceal the Horowitz findings. It’s been a frantic campaign for them at a fraught moment in this long saga — but the odor of desperation is thick and rank. Of course, behind the Horowitz report loom the specters of Barr & Durham. Whatever they’ve been up to has been hermetically sealed in a globe of silence even more oppressive and nightmarish for the Dems than the IG’s inquiry. Barr & Durham are able to make things stick, most crucially genuine criminal culpability for the entire RussiaGate fiasco and all of its offshoots, including the most recent “Whistleblower” caper — a patently treasonous scheme. Who knows if and when indictments start raining down, but there’s a chance that it will be a very hard rain indeed.

Read more …

Jeff Cortese, a financial crimes manager in the private sector, is the former acting chief of the FBI’s Public Corruption Unit.

Strzok and Page Did Real Damage (Cortese)

Strzok and Page were employed by what was the world’s leading law enforcement agency. The integrity of their work and the work of their FBI peers was paramount to maintaining stability and confidence in the country and its law enforcement. It’s not news that the FBI’s reputation has taken a hit in recent years, but the extent of the impact from the imprudence of Strzok and Page is likely not fully understood by most people. Their obvious improprieties created a level of widespread distrust in the FBI not previously seen. Recruiting assets and sources, finding willing participants for interviews, and even trial success can all be adversely impacted by the decline in the FBI’s reputation.

Former colleagues have told me they recently lost otherwise strong cases because lone jurors claimed after trial they refused to convict anyone investigated by the FBI. Criminals are literally walking the streets because the FBI has lost the confidence of the American people. And that decline is directly linked to the famously poor judgment made by two senior FBI employees who knew better. This is precisely why the FBI teaches its agents never to engage in activity on FBI phones or in a public forum that reveals personal bias. The risk to the Agency is too significant. The work of all the great men and women in the FBI should not be jeopardized by the actions of one, or two, of its people.

As Americans we have a soft spot for stories of redemption. We are a country of second chances, and that is a good thing. The idea that anyone could find pleasure in someone’s downfall is abhorrent, even if they hold opposing political views. That is not to say Peter Strzok and Lisa Page did not do this to themselves. They did. They made themselves political talking points that will be used by politicians and pundits until the next election, and perhaps beyond.

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“The framers, Pelosi tells us, worried that corrupt Americans might take money from foreign powers to do their bidding. And that, class, is why we need to impeach Donald Trump. Get it? Wait a second. Trump didn’t take money from Ukraine; Hunter Biden did.”

Pelosi Puts A Brave Face On A Doomed Mission (Tucker Carlson)

Nancy Pelosi, Speaker of the House: “Let us begin where our Founders began in 1776: “When in the course of human events it becomes necessary for one people to dissolve the political bonds which have connected them with another.” With those words, our founders courageously began our Declaration of Independence, from an oppressive monarch, for among other grievances, the king’s refusal to follow rightfully passed laws. In the course of today’s events, it becomes necessary for us to address, among other grievances, the president’s failure to faithfully execute the law.” It’s just mesmerizing on many levels. But what did it mean exactly? Well, it was a metaphor. Trump is a slightly more orange version of King George III.

Democrats are the patriots plotting to overthrow him with violence. If that strikes you as alarming, Pelosi has a few words of comfort. A group of 18th-century slaveholders, she assures us, would have been completely in favor of what she’s doing. Pelosi: “James Madison, the architect of the Constitution, warned that the president might betray his trust to foreign powers, which might prove fatal to the republic. Another Founder, Gouverneur Morris, feared that a president may be bribed by a greater interest to betray his trust. He emphasized that this magistrate is not the king. The people are the king.” So, James Madison has given Nancy Pelosi his personal seal of approval. Remember that the next time Pelosi’s acolytes try to pull Madison’s statue off its pedestal for crimes against progressive orthodoxy.

For a brief moment, the Founders of our country are useful to the left, so they’re being presented as heroes. Enjoy it while it lasts. The framers, Pelosi tells us, worried that corrupt Americans might take money from foreign powers to do their bidding. And that, class, is why we need to impeach Donald Trump.Get it? Wait a second. Trump didn’t take money from Ukraine; Hunter Biden did. Trump just pointed that out. He was on James Madison side on that score, vigilantly policing bribery by a hostile foreign power. And for that, he must be removed from office.

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But not him?

Bloomberg On His Democratic Rivals: ‘Trump Would Eat ‘Em Up’ (R.)

Democratic presidential contender Michael Bloomberg said on Friday that Donald Trump would easily defeat any of his Democratic White House rivals in next year’s election, bluntly declaring: “Donald Trump would eat ‘em up.” Bloomberg, 77, a billionaire media mogul and former New York mayor, was a late entry into the race last month. He has been privately disparaging of his Democratic presidential rivals but this was the first time he had been so critical of them in public. In an interview on CBS’s “This Morning,” Bloomberg said: “I looked at our national government getting worse, the way we’re behaving overseas and domestically, led by our president.”


“I said back in 2016, ‘He is the wrong person for the job. He doesn’t have the temperament or the ethics or the intellect to do the job.’” Bloomberg added: “And I said, ‘We just can’t have another four years of this.’ And then I watched all the candidates. And I just thought to myself: ‘Donald Trump would eat ‘em up’.” Bloomberg, a former Republican and independent, fears that liberal candidates such as U.S. Senators Elizabeth Warren and Bernie Sanders, and their proposed costly expansion of government programs, will alienate voters in battleground states.

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I wouldn’t want to create the impression that Kamala due to a lack of money.

Kamala Harris, Michael Bloomberg, and a Supreme Court Decision (IC)

Democratic Sen. Kamala Harris of California suspended her presidential campaign on Tuesday. Why? Because, she said, she did not “have the financial resources we need to continue. I’m not a billionaire. I can’t fund my own campaign.” Meanwhile, former New York Mayor Michael Bloomberg, who definitely is a billionaire, has spent at least $57 million of his own money since he jumped into the race on November 24. Harris, by contrast, raised $36 million as of her last campaign filing in October. Of that, she’d spent almost $26 million since she announced her campaign last January 21. The divergence in the fates of the two candidates can be traced back to a Supreme Court decision on the constitutionality of campaign finance law.

But the case involved is not Citizens United v. Federal Election Commission, from 2010. It’s a far less famous one: Buckley v. Valeo, from 1976. The decision opened the door for billionaires — and, more generally, the ultra-rich — to spend as much as they want on their own political campaigns. The divergence in the fates of Harris and Bloomberg can be traced back to a Supreme Court decision — not from Citizens United in 2010, but Buckley v. Valeo in 1976. One of the main forces behind the case was a young Republican lawyer named John Bolton, later to become President Donald Trump’s national security adviser for a time. In Bolton’s memoir, he proudly states that “Everyone knew the decision in Buckley v. Valeo could determine … the future shape of American politics.” Bolton was right — and his long-ago efforts continue to bear fruit today.

Watergate was, among other things, a scandal about money in politics. President Richard Nixon’s 1972 reelection campaign had accepted bribes, including $200,000 from the chairman of the board of McDonald’s in return for permission from the federal government to raise the price of their Quarter Pounder cheeseburger. Soon after Nixon resigned in 1974, Congress responded with significant amendments to the Federal Election Campaign Act. This included a new limit of $50,000 per calendar year on what presidential candidates could spend of their own money on their campaign. Adjusting for inflation, that’s about $275,000 today.

Just two years later, however, the Supreme Court struck that limit down in the Buckley case. Those running for political office could now spend any amount of their own fortune they wanted. In fact, the court stated, it could be good for the wealthy to self-fund runs for office, because “the use of personal funds reduces the candidate’s dependence on outside contributions and thereby counteracts the coercive pressures and attendant risks of abuse.”

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Are we now all free to call each other whatever we want?

Musk’s Defamation Win May Reset Legal Landscape For Social Media (R.)

Elon Musk’s daring has left its mark on electric cars and rockets, and now experts say the entrepreneur may have reshaped U.S. defamation law with his willingness to defend at a high-stakes trial a lawsuit over an off-the-cuff tweet. The victory by Tesla Inc’s outspoken chief executive over a Twitter message describing a British cave explorer as “pedo guy” has raised the bar for what amounts to libel online, according to some legal experts. Musk defended his comments as trivial taunts made on a social media platform that he argued everyone views as a world of unfiltered opinion, which is protected as free speech, rather than statements of fact.

“I think this verdict reflects that there is a feeling that internet tweets and chats are more like casual conversation whether you call it opinion or rhetoric or hyperbole and should not be punished in a lawsuit,” said Chip Babcock, a lawyer who defends against defamation lawsuits. Several other attorneys who specialize in defamation cases privately expressed surprise at the outcome of what they viewed as a strong case for the cave explorer, Vernon Unsworth. They attributed it to Musk’s fame and the perceived youthfulness of the jury. But they also agreed it would shift the legal landscape, undercutting the cases that would have seemed viable before the trial while defendants would use it to try to reduce possible settlement values.

Musk’s court papers cast his comments as part of the rough-and-tumble world of Twitter, which rewards and encourages emotional outbursts and sucks in readers worldwide but that no one takes seriously. Mark Sableman, a lawyer who defends defamation cases, said the freewheeling nature of social media has inevitably changed the understanding of language and what amounts to defamatory factual statements, versus opinion. “I think defendants in modern defamation cases are likely to point to the vitriolic no-holes-barred nature of modern social media, cable TV, and political discourse, in contending that many words and accusations formerly considered defamatory are now understood only as mere opinions, not factual assertions,” he said.

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“..some $25.6 billion will be taken out of the left Saudi trouser pocket to be put into the right one.”

Saudi Arabia Retreats From The Troubles Its Clown Prince Caused (MoA)

Iran has enabled the Houthi to resist throughout the 5 years of war the Saudis waged on them. Drones and missiles parts provided by Iran to the Houthi allowed them to compel the Saudis to file for peace. It is thereby highly unlikely that the Houthi will dissociate themselves from Iran. They will agree to end their attacks on Saudi Arabia if the Saudis end their attacks on Yemen and pay for the damage their war has caused. If the Saudis do not agree to that more of their helicopters will come down in flames and more of their oil installations will be set on fire. The war on Yemen was started by clown prince Muhammad bin Salman who was then Defense Minister of Saudi Arabia.

He had hoped for a fast victory but the well equipped Saudi military proved to be incapable of defeating barefoot Houthi in the mountains of north Yemen. The war costs the Saudis several billions per month and threatened to ruin the state. Muhammad Bin Salman’s other projects did not go any better. He had planned to sell shares of Saudi Aramco at international stock exchanges and at a total valuation of 2 trillion dollar. The move was supposed to bring in $100 billion to finance a further industrialization of the Saudi economy. After many delays Saudi Aramco is now finally making its initial public offering. The shares will start trading on December 11. But the stock will only be listed at the Saudi Tadawul exchange.

The initial share price offer puts the value of the company at $1.7 trillion which is higher than the $1.5 trillion estimate international banks had published. Today the Saudis announced a large cut in their oil output to increase the global oil prices and the company’s valuation. That might attract more urgently needed buyers to the IPO. But the stocks will still be sold to mainly domestic entities, if needed with some pressure. Instead of attracting $100 billion of fresh money from abroad some $25.6 billion will be taken out of the left Saudi trouser pocket to be put into the right one. The economic benefit for the country is dubious.

Two and a half years ago the clown prince tried to attack and occupy Qatar. The given ideological reason was the Qatari support for the Muslim Brotherhood. But the real reason was the Saudi need for more money which MbS tried to gain through a real estate and resource grab. The project failed when Turkish troops came to Qatar’s aid.

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Dec 082018
 


Getty Vigil in front of White House on the evening after Pearl Harbor attack Dec. 7 1941

 

France Braced For ‘Ultra-Violent’ Protests (BBC)
S&P 500 Closes In An Official ‘Death Cross’ (CNBC)
A Death Cross For The S&P 500 Highlights A Stock Market In Tatters (MW)
Dow Down Over 500 Points, Wipes Out 2018 Gains In Wild Week On Wall Street (CNBC)
George H. W. Bush, Wimp (Matt Taibbi)
Five Eyes Against Huawei (Voltaire)
Russia Ready To Switch Off Visa & Mastercard Ahead Of Tougher Sanctions (RT)
UK Ministers Warn No-Deal Brexit Chaos May Last Six Months (Ind.)
EU Support For Austerity Opens Door To Far Right – Corbyn (G.)
Capture the Flag (Kunstler)
Uber Files Confidential IPO Paperwork (R.)
The Column I Didn’t Want To Write About Julian Assange (SMH)
Media Is Giving The US Cover To Extradite Assange (Hrafnsson)
97% Decline In Monarch Butterflies (G.)

 

 

The French government goes about this so wrong you’d think they want the violence. Macron hasn’t been seen in many days, he left public displays up to his PM and left his country alone. Now they say there will be only 10,000 protesters, a ridiculously low number, and solemnly proclaim “10,000 is not the people, it’s not France.”

In fact, a large majority of people support the protests. Not the violence, but that’s not the core of this. Moreover, the students, who were not taking part last week, have now joined the yellow vests. And the government’s suggesting they -and the other protesters- are not really French.

Tear gas is being employed already on Saturday morning. Paris is under siege. And not from the protesters.

France Braced For ‘Ultra-Violent’ Protests (BBC)

France is braced for renewed anti-government protests, with nearly 90,000 security personnel on the streets. Some 8,000 officers and 12 armoured vehicles will be deployed in Paris alone, where shops have been boarded up and sites like the Eiffel Tower closed. The “yellow vest” movement began three weeks ago in opposition to a rise in fuel tax but ministers say it has been hijacked by “ultra-violent” protesters. Last week saw hundreds arrested and scores injured in violence in Paris. They were some of the worst street clashes seen in the capital for decades. The authorities are certainly not underestimating the threat. There were 65,000 security officers across the country last weekend and that has been increased to 89,000, even though Interior Minister Christophe Castaner said he expected fewer protesters than last weekend, perhaps about 10,000 nationwide. He said: “10,000 is not the people, it’s not France.”

The security forces will want to prevent a repeat in the capital, where the Arc de Triomphe was vandalised, police were attacked and cars overturned and burned last weekend. Mr Castaner has vowed “zero tolerance” towards violence. He said: “According to the information we have, some radicalised and rebellious people will try to get mobilised. Some ultra-violent people want to take part.” The barricade-smashing armoured vehicles have not been seen in the Paris area since riots erupted in poor suburbs in 2005. Mr Castaner added: “These past three weeks have seen the birth of a monster that has escaped its creators.”

[..] The government has said it is scrapping the unpopular fuel tax increases in its budget and has frozen electricity and gas prices for 2019. The problem is that protests have erupted over other issues. Granting concessions in some areas may not placate all the protesters, some of whom are calling for higher wages, lower taxes, better pensions, easier university requirements and even the resignation of the president. He has been called by some “the president of the rich”.

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“It’s almost confirming what could be a change in trend to the downside.”

S&P 500 Closes In An Official ‘Death Cross’ (CNBC)

The chart of the S&P 500 Index is flashing a warning of more selling ahead. A pattern, called the ‘death cross,’ appeared on the chart on Friday as stocks plunged. The S&P 500’s average price of the last 50 days, dropped below the 200-day moving average, a sign of negative momentum and possible change in trend, according to technical analysts. “It just means you’re lower for longer, meaning there’s no real bounce, which is a sign of real selling.” said Scott Redler, partner with T3Live.com. “Sometimes you break moving averages and you get some kind of quick fast recovery…but when you stay down longer, all of a sudden it’s showing real selling. That’s why people don’t like the death cross. It’s almost confirming what could be a change in trend to the downside.”

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It highlights a stock market that doesn’t exist.

A Death Cross For The S&P 500 Highlights A Stock Market In Tatters (MW)

The S&P 500 index on Friday has joined the ranks of market benchmarks forming that dreaded Wall Street chart pattern: the death cross. A death cross has materialized in the S&P 500 with the 50-day moving average at 2,759.28.02, below the 200-day moving average of 2,762.02, according to FactSet data. A death cross is what chart watchers refer to as the point where the 50-day — a short-term trend tracker — crosses below the 200-day, which is used to define the longer-term trend. Many believe the cross marks the point where a shorter-term decline graduates to a longer-term downtrend.

S&P 500’s Thursday action— falling in tandem with the Dow Jones Industrial Average (and briefly with the Nasdaq Composite)— helped deliver a breach for the large-cap index’s short-term trend line beneath the 200-day. The formation marks the first time the 50-day MA was below the 200-day for the S&P 500 since April 22, 2016, according to Dow Jones Market Data. However, the last time that a death cross formed was in January of 2016. The move for the benchmark comes amid a series of bearish patterns that have cropped up in equities and fixed-income markets, highlighting growing concerns about the durability of a bull run in stocks that has lasted about a decade as the economy’s vital signs have also been strong, in a long-running, if measured, rebound from the 2007-09 financial crisis.

[..] the ominous formation also is a sign of how viciously equity markets have unraveled in the past several weeks. More than half of the S&P 500’s 11 sectors have seen death crosses, and a chunk of the index’s constituents are in bear markets, having declined at least 20% from a recent peak. Both the S&P 500 and the Nasdaq are in correction, usually defined as a 10% drop from a peak, while the Russell 2000 is 15% beneath its recent peak.

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Without functioning markets, wild swings are guaranteed.

Dow Down Over 500 Points, Wipes Out 2018 Gains In Wild Week On Wall Street (CNBC)

Stocks dropped sharply on Friday, concluding what has been a wild week for Wall Street. A weaker-than-expected jobs report and China-U.S. trade tensions sent the Dow Jones Industrial Average lower by 558.72 points to 24,388.95 and erased its gains for the year. At one point, the Dow was up more than 8 percent for 2018. The S&P 500 pulled back 2.3 percent to 2,633.08 and also turned negative for the year. The Nasdaq Composite dropped 3.05 percent to close at 6,969.25. Shares of large-cap tech companies led the way lower. Facebook, Amazon, Netflix and Google-parent Alphabet all traded lower. Apple’s stock also fell 3.6 percent — erasing its gains for the year — after Morgan Stanley cut its price target on the tech giant’s shares, citing weakening iPhone sales.

For the week, the major indexes all dropped more than 4 percent. Thursday’s session included a violent drop of nearly 800 points, followed by a strong rebound from those levels. This week was also the worst for the indexes since March. Indexes fell to their lows of the day after the Wall Street Journal reported federal prosecutors are expected to bring charges against Chinese hackers allegedly trying to break into technology service providers in the U.S., another negative headline amid tense trade talks between the two countries. [..] “You’ve gone from a period of zero sensitivity to headlines to a period of hypersensitivity,” said James Athey, senior investment manager at Aberdeen Standard Investments. “We’re now in a world where no one knows which way is up and which way is down.”

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Delightful from Taibbi on among other things the years-long feud between HW and Doonesbury’s Garry Trudeau. Do read¡

I’ve left the HW story alone, overkill. But I was thinking all the time: if there’s one thing HW was not, it was a leader. I’m not the only one.

George H. W. Bush, Wimp (Matt Taibbi)

For most of his political life, George Herbert Walker Bush was basically the unimaginative proxy for other powerful interests. He was always the front man for the fellas at the club, be it Skull and Bones or the CIA (he retains the dubious distinction of being the only spy head to become president). He excelled in this brute-behind-the-scenes role. But once fashioning himself as something other than Ronald Reagan’s wingman, politics demanded he offer the national public glimpses of his personality. Sadly, he was president before he found out he didn’t really have one. This would have been fine, if he’d been a more confident person.

But Bush was not satisfied to be remembered as a dull imperial steward, and his flailing efforts to carve out a macho personal myth on par with Reagan or Kennedy marred both his presidency and large swaths of the planet. Unable to let insults stand, he dreamed up stunt after stunt in an attempt to counter Heathers-style media taunts that grew out of inside jokes circulated in Washington during the Reagan years. His presidency turned into an endless cycle: Bush would do something goofy/out of touch, the press would bash his brains in for it and he’d overreact, often by having someone bombed or jailed.

[..] In December 1989, Bush invaded Panama, ostensibly to capture former American client/human rights monster Manuel Noriega. The New York Times cheered Bush for going through the “rite of passage” of the presidency, which involved “a need to demonstrate the willingness to shed blood.” The paper was one of many to describe the invasion as a triumph over both Newsweek and Doonesbury: “For President Bush… a man still portrayed in the Doonesbury comic strip as the invisible President – showing his steel had a particular significance.”

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Encryption. Wonder how many people will get a Huawei phone now, and be safe from spying.

Five Eyes Against Huawei (Voltaire)

Washington has asked Ottawa to arrest Meng Wanzhou and to extradite her. This young woman is the financial director and daughter of the founder of Huawei, the Chinese Telecom Giant. She was arrested on 6 December in Canada. The motive for the war undertaken by Washington against Huawei is deep-rooted and spurious are the justifications. The heart of the problem is that the Chinese firm uses a system of encryption that prevents the NSA from intercepting its communications. A number of governments and secret services in the non-Western world have begun to equip themselves exclusively with Huawei materials, and are doing so to protect the confidentiality of their communications.

The covers/excuses for this war are theft of intellectual property or in the alternative, trade with Iran and North Korea, and violating rules of competition by benefitting from national subsidies. The Five Eyes is a system of electronic espionage by Australia, Canada, the United States, New Zealand and the United Kingdom. They have begun to exclude Huawei from their auctions.

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Sure, it’s uncomfortable, but Russia is well prepared.

Russia Ready To Switch Off Visa & Mastercard Ahead Of Tougher Sanctions (RT)

Moscow faces prospects of harsher sanctions this coming January as the US Congress is set to discuss a new package of anti-Russian penalties. The Russian central bank has warned the country’s lenders over potential risks.
The regulator has recommended that Russian financial institutions take the necessary preventive steps in case their partner-banks are forced to stop providing connection to services by the world’s two most used payment systems – Visa and Mastercard, reports Russian business daily Vedomosti. The list of Russia’s banking majors that are currently working as an intermediary include Credit Union “Payment Center,” one of Russia’s largest private lenders Uralsib, Rosbank that operates as a Russian subsidiary of the international financial group Societe Generale, Russia’s second biggest bank VTB and privately owned Promsvyazbank.

VTB and Promsvyazbank have already been included in the Countering America’s Adversaries Through Sanctions Act (CAATSA), approved by US Congress last summer. The legislation allows Washington to introduce penalties against enterprises and individuals that are seen as hostile towards the US or loyal to regimes that are hostile to the US. The Central Bank of Russia advises that Russian banks should look for an alternative sponsor that will be able substitute a current provider of Visa and MasterCard services, seal a maintenance service contract and test an opportunity of integrating.

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May’s cabinet now warns of chaos unless her Brexit plan is executed. Ignoring that if such chaos erupts, it’s their own fault; the government must prepare. So essentially they’re saying: we haven’t prepared the country, so you must support us.

UK Ministers Warn No-Deal Brexit Chaos May Last Six Months (Ind.)

Emergency plans to fly in medical supplies have been laid to ensure hospitals remain stocked amid six months of expected chaos at Britain’s channel ports after a no-deal Brexit. Critical supplies could also be diverted away from channel routes and some drugs may even be rationed to ensure stocks do not run out. The plans were published as a government assessment suggested a no-deal departure from the EU could mean severe disruption until the end of September 2019 to shipping between Dover and Calais and traffic using the Channel Tunnel.

Ministers continued to put up a defiant front on Friday, saying they were determined to push ahead with the House of Commons vote on Theresa May’s Brexit deal, though Downing Street insiders indicated it could still be pulled if efforts to turn rebels fall flat at the weekend. While MPs secured measures this week that make a no-deal scenario less likely, it is still possible if Ms May’s deal is rejected and parliament fails to opt for any alternative course before 29 March. Ministers had already told drug manufacturers to build six-week stockpiles in anticipation of Brexit customs disruption, but after the new assessment indicated Brexit disorder could last six months, further measures were deemed necessary.

In a letter to pharmaceutical firms, health secretary Matt Hancock said: “The revised cross-government planning assumptions show that there will be significantly reduced access across the short straits, for up to six months. “This is very much a worst-case scenario; however, as a responsible government, we have a duty to plan for all scenarios. “Whilst the six-week medicines stockpiling activities remain a critical part of our UK-wide contingency plan, it is clear that in light of the changed border assumptions described above this will now need to be supplemented with additional action.”

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True enough, but declaring yourself ‘internationalist’ and ‘socialist’ may not be the smartest meassage at this point.

EU Support For Austerity Opens Door To Far Right – Corbyn (G.)

Jeremy Corbyn has told an audience of European socialists that EU support for austerity has caused hardship for ordinary people, and that unless something changes there is a risk that “the fake populists of the far right will fill the vacuum”. Speaking at the Congress of European Socialists in Lisbon, the Labour leader also said his party respected the result of the Brexit referendum and it was the duty of the left in the UK to “shape what comes next”. Corbyn argued that Labour would be internationalist whether the UK was inside or outside the EU, and promised that the party would “work together to help build a real social Europe” by protecting workers’ and consumers’ rights. He said: “EU support for austerity and failed neoliberal policies have caused serious hardship for working people across Europe.”

It had “damaged the credibility of European social democratic parties and played a significant role in the vote for Brexit”. However, he promised that under his leadership Labour would take a different approach, and he added a stark warning: “If the European political establishment carries on with business as usual, the fake populists of the far right will fill the vacuum. European socialists have to fight for a different kind of Europe.” In a speech on the first day of the two-day event attended by Labour’s sister parties around Europe, Corbyn said of Brexit: “In a country where a million families are using food banks, over 4 million children are living in poverty, and real wages are lower today than they were in 2010, the British people voted to leave the EU. We respect that decision; it’s our job to shape what comes next.”

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What’s the difference between analysis and propaganda? It’s very unclear in America these days.

Capture the Flag (Kunstler)

It’s obvious that the Obama White House, along with CIA director John Brennan, and Director of National intel James Clapper, used the FBI and the DOJ (with support from the nation’s two leading newspapers), and help from Britain’s MI6 intel shop, to run illegal operations against Mr. Trump during the 2016 election, and then persisted in acts to delegitimize him after Jan 20, 2017. All this, of course, is apart from whether you like Mr. Trump or approve of his policies. It’s well documented elsewhere that Robert Mueller’s mission to detect election “collusion” between Russia and Mr. Trump was a bust, and that all he has to show for it is a roll of contrived convictions for lying to federal prosecutors and the FBI.

The case of General Flynn lies at the center because he served as Mr. Obama’s Director of the Defense Intelligence Agency (DIA) and he knew too much about US shenanigans around the notorious Iran nuclear deal and other shady doings. They were alarmed when he went over to Mr. Trump’s campaign, and determined to disable him. Once Mr. Trump appointed Gen. Flynn Director of National Security, Mr. Obama engineered an “incident” in late December of 2016 (confiscating Russian properties in Maryland over alleged election meddling and laying down new sanctions), that prompted Russian ambassador Sergey Kislyak to phone Gen. Flynn, the incoming DNS. US Intel was prepared for that set-up and recorded the call, which required the illegal “unmasking” of Flynn, a nicety of spycraft.

Thus, the FBI had a transcript of the phone call and were easily able to entrap Flynn in mis-remembering the particulars of the call. Where is that transcript? The predicate for this operation was completely dishonest: that incoming senior government officials are forbidden to speak to foreign ambassadors. In fact it is their duty to consult with foreign officials, especially in Mr. Flynn’s job, and a long-established tradition of every presidential transition. The coup cadres of the Deep State used The New York Times and The Washington Post to persuade the public that Gen. Flynn had done something treasonous, when it was nothing more than routine transition business.

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The IPO to end all IPO’s?!

Uber Files Confidential IPO Paperwork (R.)

Uber Technologies Inc has filed paperwork for an initial public offering, according to three people with knowledge of the matter, taking a step closer to a key milestone for one of the most closely watched and controversial companies in Silicon Valley. The ride-hailing company filed the confidential paperwork on Thursday, in lock-step with its smaller U.S. rival, Lyft Inc, which also announced on Thursday it had filed for an IPO, setting the stage for one of the biggest technology listings ever. The simultaneous filings extend the protracted battle between Uber and Lyft, which as fierce competitors have often rolled out identical services and matched each other’s prices.

Uber’s most recent valuation was $76 billion, and could be worth $120 billion in an IPO. Its listing next year would be the largest in what is expected to be a string of public debuts by highly valued Silicon Valley companies, including apartment-renting company Airbnb and workplace messaging firm Slack. Uber’s debut will be a test of investor tolerance for legal and workplace controversies, which embroiled Uber for most of last year..

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For some reason, people think it’s very normal to hate Assange. They don’t explain why, though, it’s presented as a given.

The Column I Didn’t Want To Write About Julian Assange (SMH)

We don’t like Julian Assange. That much is clear. Back in 2010, after the original Iraq leak, he seemed a reasonable imitation of a public-spirited whistleblower. By the time I met him in 2012 he was already obsessed by how the leftist media had abandoned him, blaming a conspiracy among Oxbridge PPE (Politics, Philosophy, Economics) graduates. That struck me as narcissistic paranoia although it is, I suppose, remotely possible that such a cabal existed. Now, the question of why the left “hates” Assange occupies his few remaining supporters almost exclusively. Personally I think hate is too strong. Most people just consider Assange a spoilt-brat egomaniac with murky motives, a limelight habit and some profoundly questionable political affiliations.

As further allegations emerge (from Robert Mueller’s ongoing investigations) as to his working with Russia to destabilise Clinton, perhaps in return for being rescued from London (allegations which Assange denies), many hold Assange responsible for Trump. So yes, the dislike is legit. But if egomania and dumb politics were a crime half the population would be in porridge. You don’t abandon someone to a system of revenge indictments, secret trials and solitary confinement because they’re arrogant, or even arrogant and wrong. So it’s not the emotion we need to analyse but the leap from “I’m no longer sympathetic” to “throw away the key”.

[..] Back in 2011 a grand jury was convened in Virginia to determine whether Assange was indictable. Grand jury proceedings are inherently secret. Involving neither judge nor jury they are prosecutor-led, with no defendant right to a defence, attendance or even knowledge. Their findings too are secret. Thus, despite years of enduring rumours of a “sealed indictment” against Assange we know only that last month, US prosecutors inadvertently revealed that secret charges had been laid against Assange. Put it together. An old arrest warrant for skipping bail on a charge that was always feeble and has since been dropped, a refusal to deny extradition intentions, secret charges emerging from a secret court over an act that may not even be illegal and for which the principal culprit has already been pardoned. Does anyone really think such a system could produce a fair trial?

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The Guardian piece is way overexposed, but okay, here’s WikiLeaks new editor-in-chief, Kristinn Hrafnsson.

Media Is Giving The US Cover To Extradite Assange (Hrafnsson)

The Guardian’s attack on Assange came only days after it was confirmed that he has been indicted some time ago, under seal, and that the U.S. will seek his extradition from the U.K. The story was published just hours before a hearing brought by media groups trying to stop the U.S. government from keeping its attempts to extradite Assange secret. The story went viral, repeated uncritically by many media outlets around the world, including Newsweek. This falsely cast Assange into the center of a conspiracy between Putin and Trump. The Guardian even had the gall to post a call to its readers to donate to protect “independent journalism when factual, trustworthy reporting is under threat.”

[..] This is part of a series of stories from The Guardian, such as its recent claim of a “Russia escape plot” to enable Assange to flee the embassy, which is not true. What do these stories have in common? They all give the U.K. and Ecuador political cover to arrest Assange and for the U.S. to extradite him. Any journalists worth their salt should be investigating who is involved in these plots.

[..] Numerous commentators have criticized The Guardian for its coverage of Assange. Glenn Greenwald, former columnist for The Guardian, writes that the paper has “…such a pervasive and unprofessionally personal hatred for Julian Assange that it has frequently dispensed with all journalistic standards in order to malign him.” Another former Guardian journalist, Jonathan Cook, writes: “The propaganda function of the piece is patent. It is intended to provide evidence for long-standing allegations that Assange conspired with Trump, and Trump’s supposed backers in the Kremlin, to damage Hillary Clinton during the 2016 presidential race.”

Hours before The Guardian published its article, WikiLeaks received knowledge of the story and “outed” it, with a denial, to its 5.4 million Twitter followers. The story then made the front page, and The Guardian asserted they had not received a denial prior to publication—as they had failed to contact the correct person. A simple retraction and apology will not be enough. This persecution of Assange is one of the most serious attacks on journalism in recent times.

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Really, guys? Blame it all on climate change? I wouldn’t.

97% Decline In Monarch Butterflies (G.)

In the 1980s, roughly 4.5 million monarchs wintered in California, but at last count, there may be as few as 30,000. The hillside groves of eucalyptus trees that tower over the Santa Cruz shoreline would, not so long ago, be teeming with monarch butterflies at this time of year. Boughs would be bent under the weight of black and orange clusters, as hundreds of thousands of the magical invertebrates nestled into the leaves, waiting out the frost on the California coast before returning north. Now, on a sunny December afternoon the boardwalk that weaves through the monarch preserve, at Natural Bridges State Beach, is filled with school children craning necks and straining eyes to catch a glimpse. The monarchs are there – but they are harder to spot.

Just two years ago, 8,000 overwintered here, but these days, just more than a thousand are fluttering amidst the Santa Cruz trees. It’s part of a troubling trend: over the last two decades monarch numbers in the West have declined by roughly 97%. “It is a sad reality of climate change,” said Anthony Dutierrez, a volunteer guide at the park and biology student at the University of California, Santa Cruz, as he takes a break from guiding school children through a tour. “For every little thing that changes there’s not just one consequence – it’s a whole chain reaction.” According to the Xerces Society, a conservation organization, in the 1980s between 10 million and 4.5 million monarchs spent the winter in California. The last count, conducted annually by volunteers each November, showed that in 2018 there may be as few as 30,000 across the state – a number that’s 87% lower than just the year before.

“We had a lot of reason to suspect that it was going to be a bad year, but we were shocked at just how bad,” said Xerces Society Conservation biologist Emma Pelton. She said that year-to-year fluctuations can be expected, but this kind of continuous drop-off is cause for concern. “It is in the context that the population has already declined 97%. So, it’s OK if you have millions of butterflies and they drop down a little bit – that’s not a huge deal. But if you have 200,000 butterflies to begin with and you have a bad year? Now we only have 30,000 left.”


Photograph: Michael Yang / Rex Features

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Dec 072018
 


Claude Monet Camille on the Beach at Trouville 1870

 

Russia Seeks To ‘Feed The Whole Planet’ – PM (RT)
Markets Are Going Haywire, Sudden Moves Are Here To Stay (CNBC)
Did The Market Miss Powell’s Real Message? (Roberts)
Fed’s QE Unwind Reaches $374 Billion (WS)
The Fed Finally Broke Something (Muir)
Oil Drops As OPEC Makes Supply Cut Dependent On Russia (CNBC)
Bitcoin Plunges 10% As December Rout Continues (CNBC)
France To Deploy 90,000 Police Over Weekend Riot Fears (Ind.)
Chinese Giant Huawei Faces Catastrophe (G.)
White House, Trudeau Seek To Distance Themselves From Huawei Move (R.)
Lyft Races To Leave Uber Behind In IPO Chase (R.)
Mueller To Give Details On Russia Probe With Filings On Former Trump Aides (R.)
Mueller’s Gift to Obama (Kim Strassel)
Julian Assange Rejects UK-Ecuador Deal For Him To Leave The Embassy (Tel.)

 

 

Medvedev is funny, with a serious twist. Note that this has all happened because of US sanctions. Russian grain exports have surged more than 54% this year. Funny that Ukraine fed much of Europe not that long ago (100 years?!) because of its highly fertile back earth.

Russia Seeks To ‘Feed The Whole Planet’ – PM (RT)

Russia seeks to expand its agricultural exports, ultimately seeking to feed the whole planet, Prime Minister Dmitry Medvedev said. The PM’s statement comes as the country enjoys a record surge in grain exports. “Our country is, as they say, destined by the heavens to feed the whole planet. And we’ll try and do that,” Medvedev told journalists of Russian TV channels in a major interview aired on Thursday. Apart from being the country’s “destiny,” the foods plainly make “nice export goods,” the prime minister added. Russia’s agriculture has expanded greatly over the past few years, becoming a solid and profitable industry, unlike the way it was a couple decades ago.

“Back in 1990s, the agriculture was called a ‘black hole’, where one should not invest, we were told we should not feed ourselves since we can purchase everything elsewhere,” Medvedev said. “Now, it feeds our whole country. We’ve reached the main goals regarding food security and we’re exporting grains, other goods to the world market.” This year, Russia has enjoyed vast growth of its agricultural exports, becoming the world’s top exporter of wheat. From January through September of 2018, exports of Russia’s wheat and meslin flour expanded by 54.3% compared to the previous year. The amount of food which the county imports, in its turn, continued to shrink. Imports of grains to Russia dropped by 11.1% during the same period. Imports of barley have suffered an enormous decline, dropping a whopping 94%.

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The logical consequences of central banks strangling price discovery.

Markets Are Going Haywire, Sudden Moves Are Here To Stay (CNBC)

Wherever Mark Connors looks at markets, from stocks to currencies to oil, he sees signs of the unknown. Equity investors got whipsawed this week during two rough and volatile sessions, but Connors, global head of risk advisory at Credit Suisse, had seen worrying signs long before that. A key technical measure he tracks, the correlation between the price of stocks and currencies, had broken down starting in April. That, along with sharp drops in the price of oil, point to one thing, he says: Uncertainty about the future as central banks around the world unwind programs that bought trillions of dollars of assets.

“We’re seeing two of the biggest asset classes, stocks and currencies, exhibit a degree of uncertainty in their relationship in 2018 that we’ve never seen before,” Connors said. “Crude just exhibited something very unusual in the context of the last 40 years.” The unwinding of central banks’ programs a decade after the financial crisis brought economies to the brink is known as quantitative tightening. J.P. Morgan Chase CEO Jamie Dimon said in July that one of his biggest fears is around how markets would behave as central banks removed their unprecedented stimulus. “If quantitative tightening continues, guess what’s going to happen? More of this,” Connor said, referring to unusually violent moves across markets.

Another factor in the speed of recent declines is the result of several important changes that have happened since the last financial crisis. Automated trading strategies from quant hedge funds and the massive shift to passive investing have helped to remove liquidity from the system in times of panic, according to Marko Kolanovic, J.P. Morgan’s global head of macro quantitative and derivatives research. He said in a September note that index and quant funds made up two-thirds of assets under management globally and the majority of daily trading. So when investors begin to sell, as they did on Tuesday amid concerns over the state of U.S. trade talks with China, the moves were probably amplified by computerized trading strategies.

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You’d have to have a -functioning- market for it to miss anything.

Did The Market Miss Powell’s Real Message? (Roberts)

[..] With the Fed Funds rate running at near 2%, if the Fed now believes such is close to a ‘neutral rate,’ it would suggest that expectations of economic growth will slow in the quarters ahead from nearly 6.0% in Q2 of 2018 to roughly 2.5% in 2019.” [..] the bond market has picked up on that realization as the yield has flattened considerably over the last few days as the 10-year interest rate broke back below the 3% mark. The chart below shows the difference between the 2-year and the 10-year interest rate.

Now, there are many who continue to suggest “this time is different” and an inverted yield curve is not signaling a recession, and Jerome Powell’s recent comments are “in line” with a “Goldilocks economy.” Maybe. But historically speaking, while an inversion of the yield curve may not “immediately” coincide with a recessionary onset, given its relationship to economic activity it is likely a “foolish bet” to suggest it won’t. A quick trip though the Fed’s rate hiking history and “soft landing” scenarios give you some clue as to their success.

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Useful to remember that this is -mostly- an irreversible process.

Fed’s QE Unwind Reaches $374 Billion (WS)

The Federal Reserve shed $54 billion in assets over the five weekly balance sheet periods that encompass the calendar month of November. This reduced the assets on its balance sheet to $4,086 billion, the lowest since January 15, 2014, according to the Fed’s balance sheet for the week ended December 5, released this afternoon. Since the beginning of the QE unwind — or “balance sheet normalization,” as the Fed calls it — in October 2017, the Fed has now shed $374 billion. The Fed holds a variety of assets, including the Treasury securities and mortgage-backed securities (MBS) that it had acquired as part of QE. Between the end of QE in late 2014 and the beginning of the QE unwind in October 2017, the Fed replaced maturing securities with new securities to keep their levels roughly the same. Starting in October 2017, the Fed has been shedding Treasury securities and MBS.

[..] Treasury Securities Until October, the QE unwind had been in ramp-up mode. In October, it reached cruising speed, according to the Fed’s plan. In the cruising-speed phase, the Fed is scheduled to shed “up to” $30 billion in Treasuries and “up to” $20 billion in MBS a month, for a total of “up to” $50 billion a month. So how did it go in November? From November 1 through December 5, the Fed’s holdings of Treasury Securities fell by $30 billion to $2,241 billion, the lowest since January 22, 2014. Since the beginning of the QE-Unwind, the Fed has shed $225 billion in Treasuries:

Mortgage-Backed Securities (MBS) Under QE, the Fed also acquired residential MBS that were issued and guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. Holders of residential MBS receive principal payments as the underlying mortgages are paid down or are paid off. At maturity, the remaining principal is paid off. To keep the balance of MBS from declining after QE ended, the New York Fed’s Open Market Operations kept buying MBS in the market. The Fed books the trades at settlement, which lags the trade by two to three months. Due to this lag, the amount of MBS on today’s balance sheet reflects trades in August and September when the cap for shedding MBS was $16 billion a month. And this is how it panned out. From November 1 through today’s balance sheet, the balance of MBS fell by $16 billion, to $1,653 billion, the lowest since May 7, 2014.

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There’s a lot of -often contradictory- talk about yield conversion. Kevin Muir picks out a nice detail: “..we will not see the same degree of yield curve inversion that we have in past cycles. There is simply too much debt out there..

The Fed Finally Broke Something (Muir)

[..] an inversion of the yield curve has traditionally been one of the best indicators presaging a recession. There has been tons of studies and even more conclusions drawn from the data, so you probably don’t need me to rehash them all. Yet I think it’s amusing to hear all the yield-curve-apologists (a term coined by my colourful pal, Janney’s Guy LeBas in this article) once again claiming that yield curve inversions don’t matter. Whether it’s the fact that we need to wait for the 3-month / 5-year to invert, or whether it is the long lead time between the 2-10-year spread inverting and the actual recession, there are plenty of excuses being offered up about why the yield curve inversion doesn’t matter.

Yeah, let me get this straight. The largest, most liquid market in the world is sending a signal that has consistently been one of the most reliable indicators that a recession is near and somehow it makes sense to fade it? As a trader who cut his eye-teeth in the equity market, I can tell you unequivocally, bond traders are smarter. They just are. Denying it is like trying to argue that people in Malibu are no better looking than any other big U.S. suburb. So when the yield curve starts inverting, you better believe I am paying attention. However, as usual, there is a catch. Market cycles are similar, but never exactly the same.

In the post-GFC era we will not see the same degree of yield curve inversion that we have in past cycles. There is simply too much debt out there. The global economy cannot handle the same amount of tightening as in past cycles. I know the crowd who believes that “Powell is different than all the other Fed Chairs” will cry out in anguish at this proclamation, but last week’s dovish shift shows his stomach to handle any sort of market disruption is way lower than previously believed. Powell will be no different than all the other Fed Chairs. At the end of the day, he will be loose.

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How about US shale? Won’t they cut production to help MbS?

Oil Drops As OPEC Makes Supply Cut Dependent On Russia (CNBC)

Oil prices fell on Friday, pulled down by OPEC’s decision to delay a final decision on output cuts, awaiting support from non-OPEC heavyweight Russia. International Brent crude oil futures fell below $60 per barrel early in the session, trading at $59.50 per barrel at 0144 GMT, down 56 cents, or 0.9% from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $51.24 per barrel, down 25 cents, or 0.5%. The declines came after crude slumped by almost 3% the previous day, with OPEC ending a meeting at its headquarters in Vienna, Austria, on Thursday without announcing a decision to cut crude supply, instead preparing to debate the matter on Friday.

“OPEC has decided to meet Friday again…(as) Russia remains the sticking point,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore. Analysts still expect some form of supply reduction to be decided. “We are beginning to witness the outline of the next iteration of production cuts, with OPEC conforming to cut its own production by around 1 million barrels per day, with the cartel lobbying non-OPEC members to contribute more,” Japanese bank MUFG said in a note.

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Relentless.

Bitcoin Plunges 10% As December Rout Continues (CNBC)

As of Asia’s Friday afternoon trade, bitcoin had fallen nearly 10% against the U.S. dollar in 24 hours, marking another recent plunge for the world’s largest cryptocurrency. It’s been a rough December for the digital token: Its price dropped 8% on the first day of the month. Bitcoin traded at $3,337.32 as of 12:28 p.m. HK/SIN (11:28 p.m. ET on Thursday), falling 9.88% over the last 24 hours, according to data from industry site Coindesk. Meanwhile, prices for the second and third largest cryptocurrencies by market value, XRP and Ether, also saw sharp declines in the 24 hour period. XRP fell by 10.62% and Ether dropped 15.90%, according to Coindesk.

This calendar year has generally been unkind to cryptocurrency prices, with the industry seeing its entire market cap falling almost 87.09% from its highs in January, according to data from Coinmarketcap. 24-hour trading volumes have also plunged about 61.65% since then. In recent industry related news, the U.S. Securities and Exchange Commission (SEC) posted an update on Thursday regarding the approval process for a rule change proposal for the allowance of a bitcoin exchange traded fund (ETF).

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The worst thing Macron could have done: “In a move questioned by both critics and supporters, the president has recently disappeared from public view.” And now his police are going to fire on protesters tomorrow?

France To Deploy 90,000 Police Over Weekend Riot Fears (Ind.)

French authorities are bracing for the possibility of more riots and violence at planned anti-government protests this weekend. The government is deploying tens of thousands of police and security forces across the country, while in Paris, museums, theatres and shops announced they would close on Saturday as a precaution – including the iconic Eiffel Tower. Police unions and city authorities held emergency meetings to decide how to handle the protests, which are being held despite Emmanuel Macron’s surrender to marchers demanding the scrapping of a planned fuel tax hike. Prime minister Edouard Philippe told senators on Thursday the government would deploy “exceptional” security measures for the protests in Paris and elsewhere.

Speaking on TF1 television, Mr Philippe said 89,000 police officers will be deployed on Saturday across France – up from 65,000 last weekend. In Paris alone, 8,000 police officers will be mobilised. They will be equipped with a dozen armoured vehicles – a first in a French urban area since 2005. Some “yellow vest” protesters, French union officials and prominent politicians across the political spectrum called for calm on Thursday after the worst rioting in Paris in decades last weekend. Mr Macron agreed to abandon the fuel tax hike, part of his plans to combat global warming, but protesters’ demands have now expanded to other issues hurting French workers, retirees and students. In a move questioned by both critics and supporters, the president has recently disappeared from public view.

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If this is true, US Big Tech will face the same.

Chinese Giant Huawei Faces Catastrophe (G.)

The arrest in Canada of the chief financial officer of the Chinese mobile network and handset tech firm Huawei marks a new stage in a technological cold war between western spy agencies and Beijing. This development could be catastrophic for Huawei: according to reports, the US suspects it broke sanctions by selling telecoms equipment to Iran. If that is proven, the response could exclude Huawei from many of the world’s most valuable markets. That quiet war of words had already begun to ramp up this week when first the head of the UK’s secret service, Alex Younger, said in a speech that “we need to have a conversation” about Huawei’s involvement in the UK’s telecoms network.

Then on Wednesday, BT revealed it is stripping out Huawei’s networking kit from parts of the EE mobile network. Huawei has been the world’s largest telecoms network equipment company since 2015, ahead of European rivals Ericsson and Nokia, and far above domestic competitor ZTE and South Korea’s Samsung. But the company has for years struggled against suspicions that it has bowed to pressure from the Chinese government to tap or disrupt telecoms systems in foreign countries. That has seen it banned from selling its profitable network equipment to the US, Australia and New Zealand – three of the “Five Eyes” group of intelligence-sharing countries (the other two being the UK and Canada).

But Meng Wanzhou’s arrest on a federal warrant in Canada is a dramatic escalation. As well as being the CFO and deputy chairwoman of one of the world’s largest makers of telecoms networking equipment that is essential to phone, smartphone and internet traffic, she is also the daughter of Huawei’s 74-year-old founder Ren Zhengfei. Ren attracted suspicion from western agencies because of his role working in IT for the Red Army before he set up the firm in 1987.

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Even Bolton has -belatedly- denied involvement.

White House, Trudeau Seek To Distance Themselves From Huawei Move (R.)

President Donald Trump did not know about plans to arrest a top executive at Chinese telecoms giant Huawei in Canada, two U.S. officials said on Thursday, in an apparent attempt to stop the incident from impeding crucial trade talks with Beijing. Huawei’s CFO, Meng Wanzhou, the 46-year-old daughter of the company’s founder, was detained in Canada on Dec. 1, the same day Trump and Chinese President Xi Jinping dined together at the G20 summit in Buenos Aires. A White House official told Reuters Trump did not know about a U.S. request for her extradition from Canada before he met Xi and agreed to a 90-day truce in the brewing trade war.

Meng’s arrest during a stopover in Vancouver, announced by the Canadian authorities on Wednesday, pummeled stock markets already nervous about tensions between the world’s two largest economies on fears the move could derail the planned trade talks. [..] Meng’s detention also raised concerns about potential retaliation from Beijing in Canada, where Prime Minister Justin Trudeau sought to distance himself from the arrest. “The appropriate authorities took the decisions in this case without any political involvement or interference … we were advised by them with a few days’ notice that this was in the works,” Trudeau told reporters in Montreal in televised remarks.

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Top of the Bubble to you!

Lyft Races To Leave Uber Behind In IPO Chase (R.)

Ride-hailing company Lyft Inc beat bigger rival Uber Technologies Inc in filing for an initial public offering (IPO) on Thursday, defying the recent market jitters and taking the lead on a string of billion-dollar-plus tech companies expected to join Wall Street next year. Lyft’s IPO will test investors’ appetite for the most highly valued Silicon Valley companies and for the ride-hailing business, which has become a wildly popular service but remains unprofitable and has an uncertain future with the advance of self-driving cars. San Francisco-based Lyft, last valued at about $15 billion in a private fundraising round, did not specify the number of shares it was selling or the price range in a confidential filing with the SEC.

Lyft could go public as early as the first quarter of 2019, based on how quickly the SEC reviews its filing, people familiar with the matter said. Lyft’s valuation is likely to end up between $20 billion and $30 billion, one source added. The ride service was set up in 2012 by entrepreneurs John Zimmer and Logan Green and has raised close to $5 billion from investors. While it continues to grow faster than its larger competitor, Uber, it is also losing money. Lyft would follow a string of high-profile IPOs of technology companies valued at more than $1 billion this year, such as Dropbox and Spotify.

However, market turmoil fueled by the escalating trade tensions between the United States and China could dampen enthusiasm for the debuts of other 2019 hopefuls like apartment-rental service Airbnb, analytics firm Palantir. and Stripe Inc, a digital payment company. Including Lyft, these round out four of the top-10 most highly valued, venture-backed tech companies. “Market declines mean that the offer price will be lower than otherwise. But there’s a danger of waiting to go public as well. Markets could go even lower, and the companies could raise less money if they waited longer,” said Jay Ritter, an IPO expert and professor at the University of Florida.

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Later today. But forget about collusion. Not going to happen.

Mueller To Give Details On Russia Probe With Filings On Former Trump Aides (R.)

U.S. Special Counsel Robert Mueller will provide new details on Friday on how two of President Donald Trump’s closest former aides have helped or hindered his investigation into possible collusion between Russia and Trump’s 2016 election campaign. Mueller last month accused Trump’s former campaign chairman Paul Manafort of breaching a plea bargain deal by lying to prosecutors, and he will submit information on those alleged lies in a filing to a federal court in Washington. That could include shedding new light on Manafort’s business dealings or his consulting for pro-Kremlin interests in Ukraine.

Manafort, who maintains he has been truthful with Mueller, managed Trump’s campaign for three months in 2016. Also on Friday, Mueller’s office and the Southern District of New York are to file sentencing memos on Michael Cohen, Trump’s former private lawyer. Cohen pleaded guilty to financial crimes in a New York court in August, and last week to lying to Congress in a Mueller case. Sentencing for both of those cases will be handled by one judge. Attention will focus on whether Mueller discloses new information to supplement Cohen’s admission last week that he sought help from the Kremlin for a Trump skyscraper in Moscow late into the 2016 campaign.

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Kimberley Strassel is still a lone(ly) in the US mainstream.

Mueller’s Gift to Obama (Kim Strassel)

[..] what about the potential crimes that put Mr. Flynn in Mr. Mueller’s crosshairs to begin with? On Jan. 2, 2017, the Obama White House learned about Mr. Flynn’s conversations with Mr. Kislyak. The U.S. monitors phone calls of foreign officials, but under law they are supposed to “minimize” the names of any Americans caught up in such eavesdropping. In the Flynn case, someone in the prior administration either failed to minimize or purposely “unmasked” Mr. Flynn. The latter could itself be a felony. Ten days later someone in that administration leaked to the Washington Post that Mr. Flynn had called Mr. Kislyak on Dec. 29, 2016. On Feb. 9, 2017, someone leaked to the Post and the New York Times highly detailed and classified information about the Flynn-Kislyak conversation.

House Intelligence Committee Chairman Devin Nunes has called this leak the most destructive to national security that he seen in his time in Washington. Disclosing classified information is a felony punishable by up to 10 years in federal prison. The Post has bragged that its story was sourced by nine separate officials. The Mueller team has justified its legal wanderings into money laundering (Paul Manafort) and campaign contributions (Michael Cohen) on grounds that it has an obligation to follow up on any evidence of crimes, no matter how disconnected from its Russia mandate. Mr. Flynn’s being caught up in the probe is related to a glaring potential crime of disclosing classified material, yet Mr. Mueller appears to have undertaken no investigation of that. Is this selective justice, or something worse?

Don’t forget Mr. Mueller stacked his team with Democrats, some of whom worked at the highest levels of the Obama administration, including at the time of the possible Flynn unmasking and the first leak. The Flynn sentencing document, meanwhile, contained yet another outrageous gift to Obama alumni. In laying out the “serious” nature of Mr. Flynn’s crimes, the document asserts that one of the questions about the Flynn-Kislyak discussion was whether “the defendant’s actions violated the Logan Act,” a 1799 statute that criminalizes negotiation by unauthorized persons with foreign governments that are in dispute with the U.S. Only two defendants have ever been charged under the Logan Act, the more recent one in 1852, and neither was convicted.

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We have to turn to the Telegraph of all sources, since we -obviously- can’t trust info from the Guardian, which does run a piece on this. That piece was written by Dan Collyns in Quito. Thought for all those who’ve been feeding on the Guardian smear piece for well over a week: investigate instead the link between the paper and the Ecuador government., especially how it changes and intensified around teh time Moreno became president. But don’t forget that the Guardian already had people in the country in at least 2014.

Julian Assange Rejects UK-Ecuador Deal For Him To Leave The Embassy (Tel.)

Julian Assange’s lawyer has rejected an agreement announced by Ecuador’s president to see him leave the Ecuadorean embassy in London, after six years inside. Lenin Moreno, the president of Ecuador, has made no secret of his wish to be rid of the WikiLeaks founder, who sought asylum inside the embassy in June 2012 and has not left since. On Thursday Mr Moreno announced that a deal had been reached between London and Quito to allow Mr Assange, 47, to be released. “The way has been cleared for Mr Assange to take the decision to leave in near-liberty,” said Mr Moreno. He did not specify what “near liberty” meant.

[..] Mr Moreno added that Britain had guaranteed that the Australian would not be extradited to any country where his life is in danger. But Mr Assange’s lawyer, Barry Pollack, told The Telegraph that the deal was not acceptable. The legal team have long argued that they will not accept any agreement which risks his being extradited to the United States. In November a filing error revealed that Mr Assange faced charges in the US – although it was not clear what those charges were. Many speculate they would be connected to the release of classified information, and Mr Assange fears a long prison sentence in the US for what his supporters say is publishing information in the public interest.

“The suggestion that as long as the death penalty is off the table, Mr Assange need not fear persecution is obviously wrong,” said Mr Pollack. “No one should have to face criminal charges for publishing truthful information. “Since such charges appear to have been brought against Mr Assange in the United States, Ecuador should continue to provide him asylum.”

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Aug 232018
 
 August 23, 2018  Posted by at 9:28 am Finance Tagged with: , , , , , , , , , ,  6 Responses »


Pablo Picasso Seated woman 1903

 

 

 

The Weaponization of the Dollar (Lebowitz)
Turkey’s Lira Crisis Was Written In Istanbul’s Skyline (G.)
U.S.-China Trade War Escalates As New Tariffs Kick In (R.)
Shooting War With China More Likely Than You Think (Rickards)
Wall Street Marks Longest-Ever ‘Bull Market’ (AFP)
Saudi Energy Minister Denies Aramco IPO Will Be Called Off (R.)
Australia In Crisis As Prime Minister Faces Down Political Coup Attempt (G.)
Trump Says He’s Considering Pardon For Manafort (R.)
Making Plans For A New World Order (Heiko Maas)
Italian Prosecutors Investigate Salvini’s Bar On Ship Arrivals (G.)

 

 

“..the true all-in cost of borrowing was not 5% but 54%.”

The Weaponization of the Dollar (Lebowitz)

China, Turkey, and Iran are all classified as emerging markets. While the classification is broad and includes a diverse group of countries, these countries have many things in common. One is that their currencies, for the most part, are not liquid or highly valued. Thus, they heavily rely on the world’s reserve currency, the U.S. dollar, to conduct international trade. As an example, when Pakistan buys oil from Qatar, they transact in U.S. dollars, not rupees or riyals. To facilitate trade efficiently, these countries must hold excess dollars in reserve. In almost all cases, emerging market nations rely on U.S. dollar-denominated debt for their transactional needs.

Dollar-denominated debt is currently the cause of much economic pain for Turkey. To understand why, we present a simplified example. Suppose on January 1, 2018, a Turkish corporation borrowed $100 million U.S. dollars with an agreement to pay it back with interest of 5% on August 15th, 2018. The company, as is typical, converts the loaned dollars to Turkish Lira. On August 15, 2018, the company will convert the Lira back to dollars in order to pay the principal and interest due on the loan. The following graph charts the Turkish Lira versus the Dollar over the life of the loan.

On January 1, 2018, one U.S. Dollar was worth 3.79 Lira. Over the next eight months, the U.S dollar appreciated significantly versus the Lira such that one U.S. dollar was worth approximately 5.81 Lira. As such, the company will now need 5.81 Lira to purchase each dollar it needs to repay the loan. Due to the strengthening of the U.S. dollar versus the Lira over the time period of the outstanding loan, the company would need 584,282,000 Lira to pay back what was originally a 378,750,000 Lira loan. In other words, the true all-in cost of borrowing was not 5% but 54%.

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“90% of the credit in Turkish real estate companies came from loans in foreign currencies.”

Turkey’s Lira Crisis Was Written In Istanbul’s Skyline (G.)

From a distance, Esenyurt, a newly built up neighbourhood on the edges of Istanbul, looks a bit like Hong Kong or Dubai, with a bustling downtown of shiny skyscrapers. Upon closer examination, however, you notice that tower after tower stands incomplete, lacking windows or furnishings; others are only half-occupied, their windows dark after nightfall. “In the residential areas, 100% of the construction has stopped,” says Mohamed Karman, a local estate agent, from his small office in the central square of Esenyurt. “Do you know why? The materials. Everything is in dollars, you pay in dollars.” The crash of the Turkish lira last week after two years of steady decline spooked global markets – but anyone looking at Istanbul’s skyline would have been far from surprised.

Everywhere you look in the city, evidence of a debt-fuelled construction boom abounds: new skyscrapers frame the horizon, huge shopping malls dot the streets and among several megaprojects is a new airport, set to be the world’s largest. Funding for this construction frenzy has been at the heart of Turkey’s economy, accounting for up to 20% of the country’s GDP growth in recent years, and employing around two million people. In a parallel to the 2008 financial crash, the boom was funded by low-interest loans and ballooning debt. Property developers funded their buildings with cheap loans in foreign currencies – and will be struck particularly hard by the lira’s collapse, as those loans grow harder to repay every day. According to government statistics, at the end of 2016 nearly 90% of the credit in Turkish real estate companies came from loans in foreign currencies.

[..] The Istanbul Sapphire – one of the tallest buildings in Europe when completed in 2011 – was financed through loans worth 164m lira in 2013, 154m of which was in US dollars. That loan would now cost around 539m lira.

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Is this the best they can do?

U.S.-China Trade War Escalates As New Tariffs Kick In (R.)

The United States and China escalated their acrimonious trade war on Thursday, implementing punitive 25 percent tariffs on $16 billion worth of each other’s goods, even as mid-level officials from both sides resumed talks in Washington. The world’s two largest economies have now slapped tit-for-tat tariffs on a combined $100 billion of products since early July, with more in the pipeline, adding to risks to global economic growth. China’s Commerce Ministry said Washington was “remaining obstinate” by implementing the latest tariffs, which kicked-in on both sides as scheduled at 12:01 p.m. in Beijing (0401 GMT). “China resolutely opposes this, and will continue to take necessary countermeasures,” it said in a brief statement.

“At the same time, to safeguard free trade and multilateral systems, and defend its own lawful interests, China will file suit regarding these tariff measures under the WTO dispute resolution mechanism,” it said. President Donald Trump has threatened to put duties on almost all of the more than $500 billion of Chinese goods exported to the United States annually unless Beijing agrees to sweeping changes to its intellectual property practices, industrial subsidy programs and tariff structures, and buys more U.S. goods. That figure would be far more than China imports from the United States, raising concerns that Beijing could consider other forms of retaliation, such as making life more difficult for American firms in China or allowing its yuan currency to weaken further to support its exporters.

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“The U.S. will win this trade war because Xi does not want to lose his throne.”

Shooting War With China More Likely Than You Think (Rickards)

The mainstream media narrative about the U.S.-China trade war implies that Trump is on a highly damaging ego trip and China holds all the cards. The exact opposite is true. Trump has ample financial warfare weapons including tariffs, penalties, bans on direct investment, improved cybersecurity, forced divestiture and freezing of assets. Meanwhile, China has almost run out of room to impose tariffs. Further, they will invite retribution if they try to devalue their currency further. China’s vulnerabilities run deeper than that. The U.S.-China trade war comes in the aftermath of a Chinese Communist Party conference that made Xi Jinping dictator for life and enshrined his doctrines on the same level as Mao Zedong.

Once Xi got these powers, he proceeded on a disastrous policy course that has resulted in a slowdown of the Chinese economy, higher debt defaults, lost investment opportunities in the U.S. and declining hard currency reserves. The knives are now out in Beijing. Reports are circulating that Xi’s opponents are questioning his judgment and the wisdom of expanding his powers at such a critical time. Many are starting to blame Xi for the trade war almost as much as they blame Trump. Xi still has torture, firing squads and concentration camps at his disposal, but the notion of a unified, coherent leadership structure in Beijing is now seen to be a myth. Trump will keep up the pressure; he never backs off and always doubles down.

It will be up to Xi to blink and acquiesce in many U.S. demands. The U.S. will win this trade war because Xi does not want to lose his throne. Yet there will still be material damage to the global economy and lasting animosity between Xi and Trump.

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Party.

Wall Street Marks Longest-Ever ‘Bull Market’ (AFP)

Wall Street graduated to the longest-ever “bull market” Wednesday, a run that began amid extraordinary crisis-era monetary policy and which experts think could persist at least a while longer. US President Donald Trump cheered the news after the S&P 500 closed for the 3,453rd straight time without a drop of 20 percent over the more than nine-year stretch. “Longest bull run in the history of the stock market. congratulations America!” Trump said on Twitter shortly after the closing bell. The marathon run comes amid signs the US economy has accelerated this year after a long period of slow but steady growth. Experts say trade wars and higher interest rates are among potential threats to the persistence of the bull run.

Market watchers liken the landmark to other stock market records, such as when the Dow hit 25,000 points for the first time. Investing in stocks remains concentrated among the wealthiest, with many Americans still hesitant to buy stocks following the 2008 financial crisis. While financial experts are well aware of the durability of the current stock market cycle, the record is “news more to Main Street than to Wall Street,” according to Art Hogan, chief market strategist at B. Riley FBR. The S&P 500 finished the day down less than 0.1 percent at 2,861.82. When stocks fall at least 20 percent below their previous record, they enter a “bear market.”

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But several people insist it is. it’s just that it can’t be announced right now.

Saudi Energy Minister Denies Aramco IPO Will Be Called Off (R.)

Saudi Arabia’s energy minister denied a Reuters report that state oil giant Aramco’s initial public offering will be called off, in a statement issued early on Thursday. “The government remains committed to the initial public offering of Saudi Aramco, in accordance with the appropriate circumstances and appropriate time chosen by the Government,” Energy Minister Khalid al-Falih said in a statement released on Saudi Press Agency. Reuters reported on Wednesday that four senior industry sources said Saudi Arabia has called off both the domestic and international stock listing of Aramco.

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Oz politics is so bad it’s not even funny.

Australia In Crisis As Prime Minister Faces Down Political Coup Attempt (G.)

Australia is on the brink of having its sixth prime minister in a decade after a chaotic, internecine coup attempted, but failed, to topple the incumbent Malcolm Turnbull on Thursday. In a media conference during which he refused to resign, Turnbull called on his challengers to prove he had lost the confidence of his own party, and made a thinly veiled swipe at influences “outside the parliament”. The reference was widely interpreted as an attack on the power of Rupert Murdoch’s News Corporation newspapers and TV channels, which have consistently campaigned against him. “The reality is that a minority in the party room supported by others outside the parliament have sought to bully, intimidate others into making this change of leadership that they’re seeking,” Turnbull said.

The leadership brawl stalled political business on Thursday morning when the government voted to shut down the House of Representatives until 10 September, unsure it would be able to command a majority on the floor of the House, and unwilling to face questions from the opposition after at least 13 ministers tendered their resignations. Since 2007, no Australian prime minister has served a full term in office, with four cut down by their own parties while in office, earning Canberra the title of “coup capital of the Pacific”. Turnbull survived Thursday, but appears almost certain to lose the prime ministership to a party room vote, likely as soon as Friday.

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But not today, for sure.

Trump Says He’s Considering Pardon For Manafort (R.)

U.S. President Donald Trump said he would consider pardoning his former campaign chairman Paul Manafort, who was convicted on Tuesday of bank and tax fraud, according to a Fox News reporter who interviewed Trump. Fox News reporter Ainsley Earhardt said Trump told her in an interview on Wednesday that “he would consider” pardoning Manafort.“I think he feels bad for Manafort. They were friends,” Earhardt said in an appearance on Fox News’ “Hannity” program on Wednesday night.

Fox News has been airing excerpts of the interview with Trump, which is scheduled to be shown in its entirety on Thursday morning. The excerpts have not included a clip of Trump saying he would consider pardoning Manafort. Manafort was convicted on Tuesday of two counts of bank fraud, five counts of tax fraud and one charge of failing to disclose foreign bank accounts. In a tweet on Wednesday about the verdict, Trump called Manafort a “brave man” and said, “I feel very badly for Paul Manafort and his wonderful family.”

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Maas is the new German foreign minister. His proposal for an alternative SWIFT system launched a debate. But really, “new world order”?

Making Plans For A New World Order (Heiko Maas)

It starts with us exposing fake news. Like this: If the current account balance of Europe and the US includes more than just trade in goods, then it is not the US that has a deficit, it’s Europe. One reason is the billions in profits that European subsidiaries of Internet giants such as Apple, Facebook and Google transfer to the US every year. So when we talk about fair rules, we must also talk about the fair taxation of profits like that. It is also important to correct fake news because it can quickly result in the wrong policies. As Europeans, we have made it clear to the Americans that we consider the withdrawal from the nuclear agreement with Iran to be a mistake. Meanwhile, the first US sanctions have come back into force.

In this situation, it is of strategic importance that we make it clear to Washington that we want to work together. But also: That we will not allow you to go over our heads, and at our expense. That is why it was right to protect European companies legally from sanctions. It is therefore essential that we strengthen European autonomy by establishing payment channels independent of the US, a European monetary fund and an independent SWIFT [payments] system. The devil is in thousands of details. But every day that the Iran agreement lasts, is better than the potentially explosive crisis that threatens the Middle East otherwise.

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Let the courts decide.

Italian Prosecutors Investigate Salvini’s Bar On Ship Arrivals (G.)

Italian prosecutors have opened an investigation into the illegal detention of 177 migrants onboard a coastguard vessel that the minister of the interior, Matteo Salvini, refuses to allow to land. The Ubaldo Diciotti has been docked for 48 hours at the port of Catania, Sicily, but the migrants have not been allowed to disembark without having certainties from Brussels on their distribution to other countries. The investigation, conducted by the prosecutor of the city of Agrigento, was launched against “unknowns” but it is clear that if the magistrates were to go ahead with a judicial proceeding, Salvini would end up under investigation, being the only one responsible for the landing ban.

“I heard that the prosecutor’s office in Agrigento has opened an investigation,” said Salvini in a recent video on Facebook Live. “I also heard that the suspects are ‘unknown’ at the moment. But I’m not unknown. My name is Matteo Salvini, I’m the minister of the interior. Come on, try me too, I’m here.” The Ubaldo Diciotti docked on Monday night in the port of Catania but the migrants, including 29 unaccompanied minors, were refused authorisation to disembark. The ship picked up 190 people on 15 August from an overcrowded boat about 17 nautical miles from the Italian island of Lampedusa. Thirteen of them were evacuated for emergency medical treatment.

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Mar 032017
 
 March 3, 2017  Posted by at 8:48 am Finance Tagged with: , , , , , , , , , ,  1 Response »


DPC North approach, Pedro Miguel Lock, Panama Canal 1915

 

EU Votes To Suspend Visa-Free Travel To Europe For Americans (Tel.)
Snap IPO “The Ultimate Example Of Bubble Trouble” (CNBC)
Snap IPO: A Shareholding Monarchy (G.)
What If The 1980-Secular Bull Is Still Running? (Roberts)
Global Banks Have Paid $321 Billion In Fines Since Financial Crisis (BBG)
Home Ownership In England At A 30-Year Low (G.)
More Than Half Of New-Build Homes In England ‘Have Major Faults’ (G.)
China’s Parliament Is Chock Full Of Billionaires (CNBC)
The Tyranny Of A Cashless Society (Simpson)
A Goat Would Beat Le Pen In France’s Presidential Election (CNBC)
Elephants Are The Shortest Sleeping Mammal (BBC)
Dishwasher Becomes Co-Owner Of World-Famous Restaurant (G.)
Lake Once Worshipped As Birthplace Of The Sun Now A Deadly Garbage Dump (AP)
Greece Requests Loan From World Bank (K.)
Greece’s ‘Desperate Households’ (K.)
EU Threatens Members With Legal Action Over Refugees (K.)
Calais Mayor Bans Distribution Of Food To Refugees (G.)

 

 

Sure, make life harder for your own citizens.

EU Votes To Suspend Visa-Free Travel To Europe For Americans (Tel.)

Americans should be forced to apply for visas to travel to Europe, the European Parliament has said, in response to Washington refusing to allow all Europeans to travel to the States visa-free. The vote by show of hands is the latest in the ongoing “visa war” between Brussels and the US capital, which now looks set to come to a head after MEPs today agreed that US nationals crossing the Atlantic should require additional travel documents as long as citizens from five EU countries (Bulgaria, Croatia, Cyprus, Poland and Romania) are kept from entering America without a visa. A European Parliament source told Telegraph Travel this was a “serious negative step in the EU-USA visa war”.

The EU Commission now has two months to reintroduce visas for Americans wishing to travel to Europe, after MEPs agreed the EU is now “legally obliged” to suspend the Visa Waiver Programme (VWP) with the US for a year after the US administration failed to meet a deadline to respond something called visa reciprocity. Parliament and the European Council will have the chance to object to anything put forward by the Commission. The need to apply for a visa to travel to a country is widely seen as a turn-off to potential visitors, given the extra cost and time an application requires. A country looking to boost its tourism industry will often look at loosening any existing visa requirements. The resolution was passed despite warnings from the European Travel Commission (ETC) of the damage a visa war with the US might have on the continent’s tourism industry.

“We fully understand and respect the visa waiver reciprocity mechanism embedded in European legislation to ensure that all nationals of Member States part of Schengen can benefit on equal terms from exemption of visa requirement,” said Eduardo Santander, executive director of the ETC, in a joint letter with Michael de Blust, secretariat of the Network for the European Private Sector in Tourism, to MEPs. “However, we are very concerned about the economic and political impact of a suspension of visa waiver for US nationals. “Making it more difficult for US citizens to travel to Europe would certainly deprive the European travel and tourism sector of essential revenue, and put thousands of European jobs at stake in one of the few sectors which experiences a strong growth in employment.”

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“Morgan Stanley and Goldman should hang their heads in shame here.”

Snap IPO “The Ultimate Example Of Bubble Trouble” (CNBC)

Top investment banks behind the Snap Inc public listing are being slammed for the lack of voting rights that investors in the stock will receive. Snap Inc priced its initial public offering above its target range at $17 per share on Wednesday, valuing the company at $24 billion when staff stock and deal bonuses are included. The holding company, which owns social media phenomenon Snapchat, will debut on the New York Stock Exchange Thursday but investors have bought shares with no voting power. Stephen Isaacs, chairman of the investment committee at Alvine Capital, says the major investment banks behind Snap’s public debut are pushing through an unusual move that takes liberties with investors’ rights. “Morgan Stanley and Goldman should hang their heads in shame here. I mean not about the valuation but non-voting shares?

“Isn’t that the ultimate example of bubble trouble? So I say we are in a bubble, there is no value and investors should take a lot of risk off the table,” he said Thursday.Isaacs says the Snap Inc IPO could come to symbolize something bigger than just the deal itself as markets continue to bloat ever higher. “There are two views; the Warren Buffett view is that he market isn’t that expensive, the American economy is doing well and the long-term investor should always be engaged. And in the end he’s done a pretty good job of managing other people’s money. “The other view which I’m afraid I agree with is that we are in a cycle, we are at the top of the cycle, valuations show absolutely no value and then Snap comes along,” Isaacs said. “Sometimes a deal at the top of the market can be something that crystallizes the insanity”, he added.

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“They could retire to an ashram in India or spend the rest of their lives writing haikus. No matter, they will still make every major decision for Snap..”

Snap IPO: A Shareholding Monarchy (G.)

It is a paradox that a country that sought freedom from a king, the United States, is today happy to crown monarchs in commerce. Snap, which calls itself a camera company but is in fact a Silicon Valley firm behind a mobile messaging app, floated on the US stock exchange making billionaires of its two under-30 founders. True, 158 million people open the Snapchat app an average 18 times a day. But money and influence are not the only issues here. It’s also about unaccountable power. Snap’s initial public offering marks a turning point in US capitalism: it is the first time that the only shares on offer are those with no voting rights.

This form of techno-aristocratic capitalism means that the founders, 26-year-old Evan Spiegel and 28-year-old Bobby Murphy, will alone make the big decisions about Snap and maintain control over the social media phenomenon even if their employment is terminated. They could retire to an ashram in India or spend the rest of their lives writing haikus. No matter, they will still make every major decision for Snap, from appointing board members to a possible future sale. Only death will release the company from their control. Or if both sell more than 70% of their stock. It’s bizarre that in a country founded on a repudiation of old-world aristocracy, investors are pouring money into creating a nouveau US version of an ancien regime European aristocracy in business, replicating its extravagant and unaccountable wealth.

Snap is the worst example of this trend. Silicon Valley is now dominated by companies with weak or passive public shareholders. Many investors have been silly enough to hand over cash for little say in the running of tech titans such as Google, Facebook and Alibaba. Given how quickly today’s heroes are tomorrow’s zeros in technology, it seems foolhardy to cede control to listed companies that sometimes never make a profit or where incumbent managers cannot be fired to make way for new blood. Are investors so gullible that they believe the guff about new gods who see further than anyone else from Olympian-high pedestals – and are happy to get no dividends from their stock?

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Multiple trends coverging.

What If The 1980-Secular Bull Is Still Running? (Roberts)

[..] I have created the following thought experiment of examining the psychological cycle overlaid on each of the three full-cycle periods in the market.

The first full-market cycle lasted 63-years from 1871 through 1934. This period ended with the crash of 1929 and the beginning of the “Great Depression.” 

The second full-market cycle lasted 45-years from 1935-1980. This cycle ended with the demise of the “Nifty-Fifty” stocks and the “Black Bear Market” of 1974. While not as economically devastating to the overall economy as the 1929-crash, it did greatly impair the investment psychology of those in the market.

The current full-market cycle is only 37-years in the making. Given the 2nd highest valuation levels in history, corporate, consumer and margin debt near historical highs, and average economic growth rates running at historical lows, it is worth questioning whether the current full-market cycle has been completed or not.

The idea the “bull market” which begin in 1980 is still intact is not a new one. As shown below a chart of the market from 1980 to present, suggests the same.

The long-term bullish trend line remains and the cycle-oscillator is only half-way through a long-term cycle. Furthermore, on a Fibonacci-retracement basis, a 61.8% retracement would current intersect with the long-term bullish trend-line around 1000 suggesting the next downturn could indeed be a nasty one. But again, this is only based on the assumption the long-term full market cycle has not been completed as of yet.I am NOT suggesting this is the case. This is just a thought-experiment about the potential outcome from the collision of weak economics, high levels of debt, and valuations and “irrational exuberance.”

Yes, this time could entirely be different.

It just never has been before.

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The amount of fraud some people can engage in without doing time or losing a dime is stunning.

Global Banks Have Paid $321 Billion In Fines Since Financial Crisis (BBG)

Banks globally have paid $321bn in fines since 2008 for an abundance of regulatory failings from money laundering to market manipulation and terrorist financing, according to data from Boston Consulting Group. That tally is set to increase in the coming years as European and Asian regulators catch up with their more aggressive US peers, who have levied the majority of charges to date, BCG said in its seventh annual study of the industry published on Thursday. Banks paid $42bn in fines in 2016 alone, a 68 per cent rise on the previous year, the data showed. “As conduct-based regulations evolve, fines and penalties, along with related legal and litigation expenses, will remain a cost of doing business,” analysts led by Gerold Grasshoff wrote. “Managing those costs will continue to be a major task for banks.”

The era of ever-increasing regulatory requirements is here to stay, BCG said, despite President Donald Trump’s pledge to roll back the 2010 Dodd-Frank Act that reshaped US banking in the aftermath of the collapse of Lehman Brothers. The number of rule changes that banks must track on a daily basis has tripled since 2011, to an average of 200 revisions a day, according to the report. “Regulation must be considered a permanent rise in sea level – not just a flowing tide that will ebb or even a cresting tsunami that will recede,” the authors wrote. “We expect this theme to hold despite recent political developments in the US.” Almost 10 years after the onset of the financial crisis, the banking industry still hasn’t completely recovered from the losses it suffered by one measure, BCG said.

While finance firms created so-called economic profit of €159bn in 2015, a fifth annual increase, the industry remains €9bn in the red on a cumulative basis for the years 2009 to 2015, the data show. BCG calculated economic profit by taking a bank’s operating results and incorporating its cost of capital.

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Boy, what a mess. They’re going to have to reboot the entire country. Seriously.

Home Ownership In England At A 30-Year Low (G.)

Home ownership in England has fallen to its lowest level for 30 years, while the number of people privately renting is now higher than in the early 1960s, according to official figures. Government data reveals that the private rented sector has doubled in size since 2004, with almost half of all people in England aged 25 to 34 paying a private landlord for their accommodation. Ministers recently admitted England’s housing market was “broken”, with home ownership a distant dream for millions. Labour claimed the figures showed that the government was “out of ideas” and had no long-term plan to fix the housing crisis. The Generation Rent campaign group said runaway house price inflation and the difficulty of saving a deposit had trapped millions in private rented housing, “even more [people] than in the days of slum landlords like Rachman”.

The latest English Housing Survey, produced by the Department for Communities and Local Government (DCLG), found that of the estimated 22.8m households in England, 14.3m – or 62.9% – were owner-occupiers in 2015-16. It stated that owner-occupation rates “remain unchanged for the third year in a row” – but Labour and others were quick to seize on an accompanying table, which showed that the rate had slipped from 63.6% the previous year. This is down from a peak of 70.9% in 2003 and is the lowest figure since 1985, when it was 62.4%. By contrast, the private rented sector has ballooned in size and now accounted for just over 4.5m households – double the 2.3m in 2004. The new figure represents 20% of the total, whereas in 2002 it was 10%.

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No surprise whatsoever.

More Than Half Of New-Build Homes In England ‘Have Major Faults’ (G.)

More than half of the buyers of new homes have experienced major problems with their properties, according to research, which comes after Bovis Homes agreed to pay £7m compensation to customers for poorly built houses. A YouGov survey for the housing charity Shelter found that 51% of homeowners of recent new builds in England said they had experienced major problems including issues with construction, unfinished fittings and faults with utilities. The survey, which polled 4,341 UK adults online, was published alongside a Shelter report that concluded that the housebuilding sector is rigged in favour of big developers and land traders rather than families looking for homes.

The current speculative system of housebuilding is failing families by producing expensive, yet poor-quality homes, according to the report, published after the government branded the housing market “broken” in its recent housing white paper. Eight in 10 working families who are renting privately cannot afford to buy a newly built home – even if they use the government’s Help to Buy scheme, Shelter said. The West Midlands ranked as the worst region, with 93% of families unable to purchase an average-priced new home. In the report, titled New Civic Housebuilding, the charity calls for a return to building good-quality, affordable homes like the model villages for Cadbury workers at Bournville, the red brick developments of the Peabody and Guinness estates, the Victorian and Georgian terraces in Edinburgh and Bath, and the garden cities of Letchworth and Welwyn.

The YouGov poll showed 41% of homeowners disagreed with the statement “I would prefer to live in a new home rather than an older one”; 29% agreed, and 26% neither agreed nor disagreed. And 45% disagreed with the statement “New homes are built to a higher standard than older homes”; 22% agreed and 23% were neutral.

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Communist Party.

China’s Parliament Is Chock Full Of Billionaires (CNBC)

Want to rub elbows with the rich? Go to China, where the country’s parliament could pass for an elite club of the world’s richest, where about 100 delegates are U.S. dollar billionaires. They made their fortune in everything from property to energy, according to data from the Hurun Report, which publishes the China Rich List. A bunch of tech entrepreneurs sit at the top of the list, including Pony Ma of Tencent, Robin Li of Baidu and Lei Jun of Xiaomi. The names are among delegates gathering for their annual meeting in Beijing starting on Friday, a roughly weeklong affair that’s big on posturing, but small on legislating. Delegates always vote to approve proposals from the ruling Communist Party. Here’s another fun fact: The richest 209 parliament delegates are each worth more than 2 billion yuan ($300 million) – their combined wealth is equivalent to the annual GDPs of Belgium and Sweden, using World Bank figures on GDP for those countries.

By comparison, the U.S. doesn’t have a single billionaire in Congress. The wealthiest member, California Republican Darrell Issa, is worth around $440 million, according to the Center for Responsive Politics. President Donald Trump claims he is a billionaire, though he has refused to release his income taxes to prove it – breaking with a practice followed by U.S. leaders since Richard Nixon. Still, China’s parliament – made up of the National People’s Congress and the Chinese People’s Political Consultative Conference – includes delegates from a wide variety of backgrounds, including those who benefited handsomely as China’s economy has grown into the world’s second largest. But there’s another reason to show up – these sessions of China’s “rubber stamp” parliament are a chance to see and be seen. In a country where business and commerce are tightly restricted, a chance to rub elbows with top Communist Party brass could mean the difference between boom and bust.

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“If the minds behind a cashless society are allowed to have their way, America would become little more than a monumental ant farm..”

The Tyranny Of A Cashless Society (Simpson)

Like many people, I am a careful person when it comes to digital commerce, yet nonetheless I had two of my credit cards hacked (twice in the last four years) — one time by a supposedly reliable online retail company, another time when I rented a trailer. And both times, it required an incredible amount of time, police reports, phone calls, etc., just to get back to square one and get my money back. But my experience was not unusual. Nearly 18 million Americans suffered from some form of identity theft in 2014 alone. Digital commerce and credit cards are very problematic and are not the panacea that companies and the government want the public to believe.

Looking to a future in which governments abolish cash in useful denominations, it follows that they will then focus on eliminating personal and commercial commerce through the use of compact high-value commodities such as gold and silver, a natural progression if $100 bills are taken out of circulation in the United States. People today who are living in the legacy of the Barack Obama economy already need a fistful of $20 bills just to buy a week’s supply of groceries. And it’s easy to spend $400 a week on fresh groceries for two people, especially if you buy premium products and organic. If we consider the increasing trend where banks, institutions and big retailers are regularly hacked, combined with identity theft, digital commerce and credit cards aren’t all they’re cracked up to be, and in reality are posing an ever-increasing level of liability on all levels through their use.

The relatively few people who may ultimately control all of the digital wealth of Americans will virtually have control of all the people in a cashless society. This results in a definite loss of freedom and liberty. There are many, many other ways for law enforcement to hammer criminals and curtail their enterprises, if that is truly the goal. But any method that inhibits or erodes the freedoms of Americans in any way, including limiting or infringing upon person-to-person commerce and personal privacy in any manner, is to be shunned and runs counter to the intents and spirit of our beloved U.S. Constitution. Digital currency transactions in lieu of cash would allow virtually 100% tracking of all Americans, including law-abiding citizens and all that we do.

We have already learned over the past eight years of the Obama-led government that governments don’t necessarily work for or even represent the will of the people. So how can anyone justify giving the government this much power over Americans? There is no such justification. The vast majority of Americans are not criminals, and therefore any action by government that affects or targets the vast majority of people in order to deal with a small factional percentage of criminals in the population is manifestly unfair. Politicians simply need to do the jobs they are being paid to do, and come up with anti-criminal tactics that strictly focus upon the bad actors, not the majority of law-abiding Americans.

If the minds behind a cashless society are allowed to have their way, America would become little more than a monumental ant farm, where the elitist class studies Americans to a much greater extent than ever before — how we move around and what we do, use, eat, watch and listen to — and then uses this deeply insightful personal information, potentially to plot how to control everyone. Things like if we’re allowed to be born (abortions already control this to some extent), how long we get to live, and what we are allowed to do in between. Orwellian, yes, but possible nonetheless.

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“I want to be perfectly clear for foreigners and for investors in particular, a goat, literally a goat, at the second round against Marine Le Pen, the goat is elected.”

A Goat Would Beat Le Pen In France’s Presidential Election (CNBC)

Those concerned that far-right leader Marine Le Pen will become France’s next president might be worrying too much, according to one political analyst. Thomas Guénolé from the Paris-based institute Sciences Po told CNBC Thursday: “I want to be perfectly clear for foreigners and for investors in particular, a goat, literally a goat, at the second round against Marine Le Pen, the goat is elected.” Guénolé added that there are many French voters who are “allergic” to the far right and would unite in the second round of the election to prevent Le Pen from winning. Le Pen is currently ahead in projections for the first round scheduled for April 23. But she is seen losing the second round to the centrist candidate Emmanuel Macron. “Basically the ideology of Mr Macron is opportunism,” Guénolé said. “He waited as long as possible before telling us what his platform is.”

Macron is due to outline his manifesto Thursday morning. This comes after French authorities decided to formally investigate the conservative candidate Francois Fillon for misusing public funds. Fillon who, until the scandal emerged, was well-placed to become the next president, announced Wednesday he is not stepping out of the race, despite previously saying he would if formal investigations were pursued. According to Guénolé, Macron has more to win from Fillon’s downfall than Le Pen. “I don’t think Marine Le Pen will benefit from this because in fact those who are right-wing voters and think Marine Le Pen is better already want to vote for Marine Le Pen. So I don’t think she’s going to win extra voters, but Emmanuel Macron can be an alternative for those who are right-wing voters and do not want to become far-right voters,” he said.

[..] Laura Slimani, spokesperson for the socialist candidate Benoit Hamon, told CNBC on Thursday that Fillon’s scandal “puts a lot of discredit on politics.” The socialist spokesperson said that all candidates to the presidential seat should disclose who’s funding their campaigns, as sentiment surrounding corruption seems to grow. “Who is today financing the campaign of Emmanuel Macron?,” Slimani said. “We know he is supported by big names in finance, in the business industry, so we want to know who is financing his campaign because this will have an impact on what kind of policies he will lead afterwards, at least it will have an impact on whether he will be a free president, if elected,” she added.

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Elephants have strong memories. But they sleep just two hours a night. Given how important we think (REM) sleep is for memory, that poses some major questions.

Elephants Are The Shortest Sleeping Mammal (BBC)

Wild African elephants sleep for the shortest time of any mammal, according to a study. Scientists tracked two elephants in Botswana to find out more about the animals’ natural sleep patterns. Elephants in zoos sleep for four to six hours a day, but in their natural surroundings the elephants rested for only two hours, mainly at night. The elephants, both matriarchs of the herd, sometimes stayed awake for several days. During this time, they travelled long distances, perhaps to escape lions or poachers. They only went into rapid eye movement (REM, or dreaming sleep, at least in humans) every three or four days, when they slept lying down rather than on their feet. Prof Paul Manger of the University of the Witwatersrand, South Africa, said this makes elephant sleep unique. “Elephants are the shortest sleeping mammal – that seems to be related to their large body size,” he told BBC News.

“It seems like elephants only dream every three to four days. Given the well-known memory of the elephant this calls into question theories associating REM sleep with memory consolidation.” Elephants living in captivity have been widely studied. To find out more about their sleeping habits in the wild, Prof Manger and his research team fitted the scientific equivalent of a fitness tracker under the skin of the animals’ trunks. The device was used to record when the elephants were sleeping, based on their trunk staying still for five minutes or more. The two elephants were also fitted with a gyroscope to assess their sleeping position. Both elephants were followed for five weeks, giving new insights into their natural sleep patterns. “We had the idea that elephants should be the shortest sleeping mammal because they’re the largest,” said Prof Manger. “Why this occurs, we’re not really sure. Sleep is one of those really unusual mysteries of biology, that along with eating and reproduction, it’s one of the biological imperatives. We must sleep to survive.”

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Forgot this yesterday. Feel good news for today then.

Dishwasher Becomes Co-Owner Of World-Famous Restaurant (G.)

A dishwasher described as the “heart and soul” of the world-class Danish restaurant Noma has been made a co-owner of the establishment he has worked in for 14 years. The decision to promote Ali Sonko, who has toiled in the Noma kitchen since it first opened in 2003, was announced at a party in Copenhagen to mark the restaurant’s last day at its waterfront location in Christianshavn. The restaurant, named the world’s best four times by Restaurant magazine and three times in the San Pellegrino World’s 50 Best, is due to move to a new location and reopen as an urban farm in December. In a Facebook post, René Redzepi, the chef who runs Noma, said it was “one of the happiest moments of my time at Noma” to announce that Ali was to become one of his new business partners, saying it was in recognition of his hard work and enduring smile.

“I don’t think people appreciate what it means to have someone like Ali in the house,” Redzepi told friends gathered for a party to mark Noma’s move. “He is all smiles, no matter how his 12 children are faring.” Sonko, 62, who moved to Denmark 34 years ago after emigrating from his native Gambia, where he worked as a farmer, described his job as “the best ever”. “I cannot describe how happy I am to work here,” he told the Danish website BT. “There are the best people to work with and I am good friends with everyone. They show enormous respect towards me and no matter what I say or ask them, they are there for me.” Redzepi, whose restaurant also has two Michelin stars, said he planned to surprise other staff “with a piece of the walls they have chosen to work so hard within”.

Alongside Sonko, Lau Richter, Noma’s service director, and James Spreadbury, an Australian who has managed the restaurant since 2009, are also to be made partners in the business. Redzepi said his father, also called Ali, had worked as a dishwasher when he arrived in Denmark as an immigrant from Macedonia.

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The Automatic Earth banner shows Lake Titicaca.

Lake Once Worshipped As Birthplace Of The Sun Now A Deadly Garbage Dump (AP)

Tucked between snow-capped mountains, Lake Titicaca was once worshipped by the Incas, who proclaimed its deep blue waters the birthplace of the sun. These days the shores of South America’s largest lake are littered with dead frogs, discarded paint buckets and bags of soggy trash. Less visible threats lurk in the water itself: toxic levels of lead and mercury. The steady deterioration of the prized tourist destination has caused a rash of health problems among the 1.3 million people in Peru and Bolivia living near Lake Titicaca’s polluted banks. Untreated sewage water drains from two dozen nearby cities and illegal gold mines high in the Andes dump up to 15 tons of mercury a year into a river leading to the lake. “If the frogs could talk they would say, ‘This is killing me,'” said Maruja Inquilla, a local environmental activist who recently showed up at the Puno governor’s house carrying plastic bags filled with hundreds of dead frogs in protest.

Increasing concern about pollution has prompted a series of scientific studies and promises of official action. The governments of Peru and Bolivia signed a pact in January 2016 to spend more than $500 million to attack the problem, though the details were vague. A year later, Peru’s new president, Pedro Pablo Kuczynski, pledged to construct 10 treatment plants around the lake, putting the cost at $437 million, “so that the most beautiful lake in the world is the cleanest lake in the world.” But details of how the plants would be funded remain unclear and promises by politicians dating back two decades have so far gone unfulfilled. Many of the more than 400,000 tourists who visit Lake Titicaca from Peru each year stop first in Juliaca, a town that produces 200 tons of trash daily, much of it winding up in a river that has turned into a conveyor belt of waste heading into the lake. Hypodermic needles, tires, old shoes and used diapers are scattered among the potato fields that line the giant lake’s shores.

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“Greece’s current creditors “are not too happy about” the fresh request for funds..”

Greece Requests Loan From World Bank (K.)

Greece has requested an unknown amount of “financial assistance” from the World Bank even as bailout talks continue amid government officials and representatives of the country’s international creditors, according to a report in Politico. “The government of Greece has asked the World Bank to provide technical and financial assistance to address pressing challenges including: long-term unemployment, economic competitiveness and growth and social protection,” Politico cited a spokesperson from the World Bank as saying in a statement. “In accordance with World Bank procedures, any final decision on providing loans would be subject to approval by the bank’s board of executive directors,” it said.

The World Bank declined to specify how much money Greece is purported to have requested, Politico reported. Greece’s current creditors “are not too happy about” the fresh request for funds, an EU official was quoted as saying. The report also cited an unnamed government source as saying that negotiations were under way but not confirming the alleged request for a loan. “Preliminary talks have taken place indeed with [the World Bank] but we cannot confirm official application,” the source was quoted as saying.

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The endless litany of bad numbers continues unabated. This is from the ECB itself.

Greece’s ‘Desperate Households’ (K.)

Greek households generally own their home and have a car; they often have a house in the village their family hails from too. However, their bank accounts are shrinking, their loans are not being serviced as promptly as they used to be and their liquidity is close to zero. Unemployment is now changing the structure of households, resulting in young and old being forced to stay under the same roof. These are the main features of Greek households during the economic crisis as recorded by the European Central Bank’s Household Finance and Consumption Survey, which covers the 2010-14 period and was presented in Greece on Thursday in the weekly bulletin of the Hellenic Federation of Enterprises (SEV).

Under the title “Desperate Households,” the bulletin highlighted that families continue to provide a safety net; however, it showed that their stamina is also running low, as is that of the friend network. The rate of Greek households that said they could seek financial support from relatives and friends dropped to 36.5% in 2014 from 59.4% in 2009. The situation is certain to have deteriorated further in the last couple of years. Few Greeks have the luxury of being able to save money: Just 13.5% of households said they added to savings on a regular basis, down from 21.9% five years earlier. This is by far the lowest rate in the European Union.

The index of liquidity as a ratio of disposable income was at just 2.8% in Greece, down from 4.9% five years earlier, and against a eurozone average of 16.7%. There was a notable decline in the rate of heads of households who are self-employed (from 18.9% to 14.4% within five years) and those who are salary workers (from 39.7% to 36.5%). In contrast, the rate of heads of households who were retired increased from 34.7% to 39.3%, and those who were out of work from 6.6 to 9.8%. Another study by the Cologne Institute for Economic Research showed on Thursday that Greece is top among European countries in terms of poverty growth, as the number of Greeks below the poverty line grew 40% from 2008 to 2015.

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Worked great so far….

EU Threatens Members With Legal Action Over Refugees (K.)

The European Commission is piling the pressure on European Union member-states that are refusing to take in asylum seekers from Greece and Italy, as they had promised in September 2015, threatening, for the first time, to take legal action if they continue to do so. Although relocations increased in February, they are a far cry from the original targets set by the Commission in 2015 when EU countries had agreed to share some 160,000 migrants and refugees who had reached Greek and Italian shores in the previous two years. Of this number, only 13,546 have since been relocated – 9,610 from Greece and 3,936 from Italy. The 2015 agreement between EU countries stipulated that there would be 3,000 relocations from Greece and 1,500 from Italy each month. In total, the agreement provided for the relocation of 63,000 from Greece by September this year.

But at the current rate achieving this target appears highly unlikely, even though Migration Commissioner Dimitris Avramopoulos said Thursday that the September target is still within reach. “There are no more excuses for the member-states not to deliver,” he said, insisting that “it is possible and feasible to relocate all those who are eligible from Italy and Greece by September.” Avramopoulos warned that if there are no tangible results by September, then the noncompliant countries will face legal action as the Commission “will not hesitate to make use of its power.” Only three EU states (Luxembourg, Malta and Finland) are close to fully meeting their obligations under the 2015 agreement. However, Hungary, Austria and Poland remain opposed to the agreement, while other countries, including the Czech Republic, Bulgaria, Croatia and Slovakia, say they are on board but will only take a limited number of asylum seekers.

With regard to the relocation of migrants and refugees from Turkey, EU countries have so far taken in 14,442 people, of whom 3,565 were Syrians. Meanwhile, the deal signed in March 2016 between Turkey and the EU to stem the flow of migrants into Europe is, so far, bearing results as the rate of daily arrivals on Greek islands has dropped significantly to about 43 per day, compared to as many as 10,000 on one day at the height of the influx in October 2015.

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Refusing to feed children, including thousands who try to reach family in Britain. Words fail.

Calais Mayor Bans Distribution Of Food To Refugees (G.)

The mayor of Calais has banned the distribution of food to migrants as part of a campaign to prevent the establishment of a new refugee camp as hundreds of people return to the port three months after the original one was demolished. Natacha Bouchart, from the centre-right Les Républicains party, said she would implement policies “to prevent the distribution of meals to migrants”, and legal documents setting out the restrictions were put up in the vicinity of the camp on Thursday. Officials have already obstructed attempts by local charities to open showers for teenage migrants in the town. Food distribution volunteers said they had been forced to do so in secret because of a heightened police presence. Refugee charities said they would ignore the ban but were taking legal advice.

The mayoral decree, dated 2 March, said the “regular, persistent and large presence of individuals distributing meals to migrants” in the area around the site of the former camp posed a threat to the peace and security of the area. It banned any “repeated, prolonged gatherings” in the area, in effect making food distribution an offence. Sarah Arrom, who has been helping to distribute food with the charity Utopia56 for the last four months, said police had fired teargas to prevent volunteers from giving breakfast to about 30 teenagers in a field near the motorway outside the city on Thursday. “They wanted to stop the distribution and they wanted to stop people from sleeping in the area,” she said. “There has never been teargas before when we’ve been trying to hand out food.”

[..] Christian Salomé, the president of the Auberge des Migrants charity, said a ban would be catastrophic for refugee children. “Adults will always find a way to buy food in the shops, but for minors it will be a real problem – they have no money at all.” He said no one had precise figures for the number of refugees around Calais. “People are arriving all the time and not many are getting through [to the UK].” Renke Meuwese, who works with Refugee Community Kitchen and Help Refugees, said the kitchens were making about 400 meals a day, up from about 50 last month. He said police seemed to be particularly concerned about reducing the visibility of refugees. “They are trying to make the refugees invisible, so they make it harder to distribute in town than the countryside. We can’t distribute at day so we have to do it at night. They are trying to push them out of sight.”

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Oct 012016
 
 October 1, 2016  Posted by at 9:26 am Finance Tagged with: , , , , , , , , , , ,  Comments Off on Debt Rattle October 1 2016


Lewis Wickes Hine Drift Mouth, Sand Lick Mine, near Grafton, West Virginia 1908

Why You Should Be Skeptical Of That $5.4 Billion Deutsche Settlement (CNBC)
A Deutsche Bank Settlement Rumor Overshadows US Equities (R.)
Deutsche Bank Takes a Lashing From the German Public (WSJ)
Trump Will Win, Unless the S&P Rallies in October (BBG)
Global Trade Crashes Back To “Very Old Normal” (ZH)
Global Corporate Default Tally By Far Highest Since 2009 (Barron’s)
US, Canadian IPOs Raise Lowest Annual Total Since 1990 (BBG)
US Consumer Spending Drops, Clouds Fed Rate Hike Outlook (R.)
China’s Yuan Joins Elite Club Of IMF Reserve Currencies (R.)
State Spending Keeps China’s Industrial Sector Humming in September (WSJ)
Has Vancouver Found The Solution To A Super-Heated Housing Market? (G.)
Bundesbank President Rejects Calls for German Stimulus (WSJ)
The “Pardon Snowden” Case Just Got Stronger (Cato)
Brexit Is A ‘Once-in-a-Generation’ Chance To Save UK’s WIldlife (Ind.)
Bees Added To US Endangered Species List For The First Time (G.)
Elephants Have Learned To Avoid Poachers By Hanging Out With Rangers (Konbini)

 

 

A planted rumor. “..if the number was correct, under German capital market rules Deutsche Bank would be required to confirm the amount by now..”

Why You Should Be Skeptical Of That $5.4 Billion Deutsche Settlement (CNBC)

Shares of Deutsche Bank were leaping in New York trade Friday on a report that it was near a settlement with the U.S. Department of Justice, but there’s reason to be skeptical about the number being cited. Shares of Deutsche Bank have extended their gains, up about 14% in afternoon trading, after an AFP report that Germany’s biggest bank is close to a $5.4-billion dollar settlement with the Justice Department over mortgage bonds. […] But if the number was correct, under German capital market rules Deutsche Bank would be required to confirm the amount by now. Its failure to do so indicates the number is not correct.

Any eventual settlement, however, would almost certainly be well below the reported $14-billion opening bid by the Department of Justice in its talks with Deutsche. Deutsche Bank is not publicly commenting on the supposed $5.4-billion figure. The capital market rules say the bank would have to react almost immediately to a report on such a settlement. That’s why two weeks ago, after The Wall Street Journal reported on the initial $14-billion figure, Deutsche Bank quickly put out a release confirming the news. “The negotiations are only just beginning,” Deutsche Bank said at the time. “The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts.”

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Far from over: “Once they come to some resolution on the difference between what they are charged, $14 billion, and what they are going to pay, call it $5 or $6 billion, the market is going to be afraid there is a problem..”

A Deutsche Bank Settlement Rumor Overshadows US Equities (R.)

Deutsche Bank will likely cast a pall over equity markets next week as the largest German lender navigates a possible multi-billion dollar settlement with the U.S. Department of Justice over the sale of mortgage-backed bonds. Deutsche shares traded in the United States hit a record low on Thursday, falling as much as 24% since the DOJ asked the bank to pay $14 billion to settle charges related to its sale of toxic mortgage bonds before the financial crisis. But the stock had its best day in five years Friday, on record volume, after news agency AFP reported that Deutsche was nearing a much-lower $5.4 billion settlement with the DOJ. Analysts at Morgan Stanley estimated Deutsche could pay about $6 billion to settle with the DOJ. Stocks on Wall Street broadly tracked Deutsche over the past few days and will likely continue to do so, analysts say.

“While it is in the headlines, it is an overhang,” said Art Hogan at Wunderlich Securities in New York. “Once they come to some resolution on the difference between what they are charged, $14 billion, and what they are going to pay, call it $5 or $6 billion, the market is going to be afraid there is a problem,” Hogan said. Deutsche’s market capitalization of near $18 billion makes it much smaller than its U.S. peers like Bank of America, at $155 billion, or Citi, at $133 billion. However its trading relationships with the world’s largest financial institutions make a potential breakdown at Deutsche a bigger risk to the wider financial system than any other global bank, the International Monetary Fund said in June. “Its world print and eurocentric role are unrivaled, so it is going to drive the narrative next week,” said Peter Kenny at Global Markets Advisory Group in New York.

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Merkel’s room to move is shrinking.

Deutsche Bank Takes a Lashing From the German Public (WSJ)

Deutsche Bank is getting rough treatment in the market. It is also having a hard time with its own public. The lender, founded in 1870, has turned from an object of patriotic pride into what critics on both sides of the political spectrum openly deride as a national embarrassment. Multibillion-dollar losses last year, investigations into misconduct around the world, concerns about its capital cushion and rich pay have made Deutsche Bank a handy target for left-leaning critics that accuse it of short-term thinking and greed. Many on the far right, meanwhile, regard Deutsche Bank as German in name only. Three out of its past four chief executives have been foreigners, including current CEO John Cryan, helping detractors tar it as the embodiment of out-of-control stateless capitalism.

The sentiment isn’t confined to political circles. A TNS Emnid poll for news magazine Focus conducted on Wednesday and released on Friday showed that 69% of respondents opposed any kind of state aid for Deutsche Bank, with only 24% in favor. “People feel it’s simply unacceptable that banks should be exempted from business risks,” said Frank Decker, politics professor at Rheinische Friedrich-Wilhelms-University in Bonn. [..] the lack of support at home, along with strict bailout rules Germany has backed for banks in the European Union, could limit the government’s room for maneuver should Deutsche Bank end up in a position that it does need help.

Despite the trauma of the financial crisis, large institutions such as Deutsche Bank haven’t learned any lessons, said Manfred Güllner, head of the Forsa polling group, making any bailout a tougher sell than in 2008. “While the returns on savings keep falling in a bottomless pit—and now into negative territory—the banks, as always, keep conducting their risky speculative businesses,” the populist Alternative for Germany party said in a Facebook post Thursday. “Whenever they get in trouble, the politicians are always there to help with taxpayers’ money.”

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“When the stock market ends up for the three-month period, the Democrat wins. When it’s negative, the Republican wins.”

Trump Will Win, Unless the S&P Rallies in October (BBG)

October is the bad boy of the stock market. The Panic of 1907, the Crash of 1929, Black Monday in 1987. It’s notable for another reason, too. The performance of Standard & Poor’s 500-stock index from July 31 to Oct. 31 has a curious way of predicting the winner of the presidential election. As with every prediction, take it with a giant grain of salt. But the pattern is solid, as shown in this chart by Sam Stovall, equity strategist for S&P Global Market Intelligence1. When the stock market ends up for the three-month period, the Democrat wins.

When it’s negative, the Republican wins. Since this July 31, the S&P is in slightly negative territory. Two times the pattern didn’t hold were in 1968 and 1980, when influential third-party candidates were in race, including George Wallace, who took about 14% of the popular vote in ’68. The pattern also failed in 1956, which Stovall says could be attributed to geopolitical events putting the markets on edge. That was the year of the Suez Crisis and the Hungarian Uprising, he noted.

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“What if the last 30 years of exuberant world trade growth was the ‘outlier’..”

Global Trade Crashes Back To “Very Old Normal” (ZH)

“Get used to it” is the message from Goldman Sachs when it comes to the collapse in global trade… What if the last 30 years of exuberant world trade growth was the ‘outlier’ and we are now reverting to the pre-Greenspan normal? As Goldman’s Goohoon Kwon explains, a low trade beta may be normal:

“Finally, another explanation for the trade slowdown is that it simply represents a return to normal. Historical trade data show that the global trade beta was slightly higher than 1 in the early 1950s before rising gradually due to a series of extraordinary events. In the 1960s-1980s, it rose to around 1.5, boosted by multilateral efforts for trade reforms, which reduced average tariffs from 35% in 1947 to 6.4% at the start of the of the Uruguay Round (1986-94) of global trade negotiations. Thereafter, the breakup of the Soviet Union enabled global trade to expand rapidly in the 1990s, and the WTO entry of China in 2001 helped sustain the trade beta at around 2 in the 2000s. There is therefore an argument that a series of largely one-off factors drove the trade beta to unusually high levels.”

And as Goldman warns, there is limited upside to global trade from here…

“Given these structural forces, the outlook for global trade remains weak in our view, though it might rebound somewhat in the short term. Asian trade is likely to recover moderately in coming years, helped by the eventual dissipation of capacity overhangs in China and reductions in internal imbalances in the economy. And further trade liberalization, including in services, presents upside for global trade. However, the restructuring of overcapacity sectors seems to be proceeding slowly so far in Asia, as reflected in low and still-falling capacity utilization in China and Korea. Moreover, the current political backdrops in the major economies suggest that another major push for trade liberalization might be off the table, at least for now.”

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By far the worst year since 2009.

Global Corporate Default Tally By Far Highest Since 2009 (Barron’s)

Three corporate defaults in the past week, two metals companies and one telecom firm, brought the total number of defaults around the world to 130. That’s a lot more than last year. Diane Vazza, head of S&P Global Fixed Income Research says: “The default tally is 60% higher than the count at this time in 2015 and has surpassed the total number of defaults recorded in full-year 2015, 113 defaults. The last time the global tally was higher at this point in the year was in 2009, when it reached 223 during the financial crisis.” Energy and commodity-related firms make up over half of the defaults; 70% are U.S. companies. Vazza notes: “As of Aug. 31, 2016, the global speculative-grade default rate for the energy and natural resources sector was 17.9%–more than seven times higher than the default rate of all other sectors.”

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How to make a pretty awful number sound good.

US, Canadian IPOs Raise Lowest Annual Total Since 1990 (BBG)

It’s been a paltry year for initial public offerings. Fewer than 135 companies have made their debuts in U.S. and Canada, putting 2016 on pace to be the slowest for IPOs since 1990, according to data compiled by Bloomberg. With $14.4 billion raised so far, we’re also on track to witness the lowest annual total on that score since 1990. For the companies that have made it to market, the dearth of activity has helped underpin demand. That’s especially true in the case of tech IPOs, where (as my colleague Shira Ovide has written) the paucity of new issues has left investors scrambling for any new listing, driving valuations to potentially unsustainable levels.

Nutanix, a tech unicorn that priced Thursday evening, will likely continue the trend, with its shares poised for a surge when they begin trading Friday. But another crop of listings – backed by private equity – has also done well out of the chute this year, and may offer the potential for more lasting gains. On average, new issues of private-equity backed companies have rallied 34.5% this year through Thursday, topping the 28.2% average return for all U.S. and Canadian IPOs during the same period, according to data compiled by Bloomberg.

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David Stockman put it like this: “They shopped till they dropped.”

US Consumer Spending Drops, Clouds Fed Rate Hike Outlook (R.)

U.S. consumer spending fell in August for the first time in seven months while inflation showed signs of accelerating, mixed signals that could keep the Federal Reserve cautious about raising interest rates. The Commerce Department said on Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, fell 0.1% last month after accounting for inflation. Analysts polled by Reuters had expected a 0.1% gain. “Consumers took a breather in August,” said Chris Christopher of IHS Global Insight. Fed Chair Janet Yellen said last week she expected the U.S. central bank would raise rates once later this year to keep the economy from eventually overheating.

Prices for fed funds futures suggest investors see almost no chance of a hike at the Fed’s next policy meeting in early November and roughly even odds of an increase at its mid-December meeting, according to CME Group. The dollar was little changed against a basket of currencies while U.S. stock prices were trading higher. Consumer spending, which has been robust in recent months, partially offset the drag from weak business investment and falling inventories in the second quarter when the economy expanded at a lackluster 1.4% annual rate.

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A mixed blessing.

China’s Yuan Joins Elite Club Of IMF Reserve Currencies (R.)

China’s yuan joins the IMF’s basket of reserve currencies on Saturday in a milestone for the government’s campaign for recognition as a global economic power. The yuan joins the U.S. dollar, the euro, the yen and British pound in the IMF’s special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans. It marks the first time a new currency has been added since the euro was launched in 1999.The IMF is adding the yuan, also known as the renminbi, or “people’s money”, on the same day that the Communist Party celebrates the founding of the People’s Republic of China in 1949.

“The inclusion into the SDR is a milestone in the internationalization of the renminbi, and is an affirmation of the success of China’s economic development and results of the reform and opening up of the financial sector,” the People’s Bank of China said in a statement. China will use this opportunity to further deepen economic reforms and open up the sector to promote global growth, the central bank added. The IMF announced last year that it would add the yuan to the basket, so actual inclusion is not expected to impact financial markets. But it puts Beijing’s often opaque economic and foreign exchange policy in the international spotlight as some central banks add yuan assets to their official reserves.

Critics argue that the move is largely symbolic and the yuan does not fully meet IMF reserve currency criteria of being freely usable, or widely used to settle trade or widely traded in financial markets. U.S. Republican presidential nominee Donald Trump has said he will formally label China a currency manipulator if he wins November’s election. China stunned investors by devaluing the currency last year and the yuan has since weakened to near six-year lows, adding to worries about already feeble global growth. Some China watchers also fear that Beijing’s commitment to further market opening and financial sector reforms will fade after its diplomatic success, despite repeated reassurances from Beijing it will continue with the process.

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Now that China has entered the IMF basket, it’ll get much harder to keep this up: “It’s very clear that this sort of continued funding of industrial overcapacity sectors is unsustainable.”

State Spending Keeps China’s Industrial Sector Humming in September (WSJ)

Activity in China’s crucial industrial sector appeared to stabilize last month, with an official index on manufacturing holding steady, buoyed by state spending on infrastructure. China’s official manufacturing purchasing managers index was unchanged at 50.4 in September compared with August, the National Bureau of Statistics reported Saturday. The gauge has remained above 50, which separates expansion from contraction, for six out of the past seven months. The September reading matched a median forecast of 50.4 by 11 economists polled by The Wall Street Journal.

Subindexes gave mixed readings. One measured new orders weakening, while another for production showed improvement; both remained above 50. The official nonmanufacturing PMI edged up to 53.7 in September from 53.5 in August. Economists said stepped-up bank lending and spending on government projects is helping to steady an economy that got off to a wobbly start to the year and has been slowing overall in recent years. “You’re seeing a bit of a credit-fueled holding pattern,” said Angus Nicholson, an analyst with IG Markets. “The question is: when does that turn around and when are they going to cut credit? It’s very clear that this sort of continued funding of industrial overcapacity sectors is unsustainable.”

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Better question: do other cities have the guts to follow suit?

Has Vancouver Found The Solution To A Super-Heated Housing Market? (G.)

There is a city which is suffering a worse property bubble than Sydney, whose residents are more priced-out than Londoners, and where there is a greater divide between the housing haves and have-nots than even San Francisco. That city is Vancouver, and in response to these mounting challenges, the west-coast Canadian metropolis recently imposed an extraordinary new tax on foreign buyers – whose impact is now being watched closely by other cities grappling with bloated property markets. On 2 August, Vancouver introduced a tax on anyone from outside Canada wanting to buy a home in its super-heated market. In future, city authorities said, if you weren’t Canadian, you would have to pay an extra 15% on the purchase price.

The impact has, by some measures, been more startling than campaigners could have hoped for. The price of the average detached home reportedly slumped by an astonishing 16.7% in August alone to C$1.47m (£856,000), according to the Real Estate Board of Greater Vancouver. Some agents are reporting that the market has gone from red hot to stone cold in a matter of weeks. British Columbia’s premier, Christy Clark, who introduced the tax, told reporters there will be no going back on it. “The prices were going up way too fast and if we helped slow that down, that’s good,” she said. In the year before the tax, prices in the city were galloping ahead at a rate of 39% a year amid widespread concern that investors, from China in particular, were pricing out local residents.

It is a concern echoed in cities across the Pacific Rim. In June, Sydney introduced a 4% stamp duty surcharge on foreigners buying homes; the following month, Melbourne hiked stamp duty rates from 3% to 7% for foreign buyers – in both cases to deter rampant property speculation. Queensland, whose capital is Brisbane, has followed suit with an extra 3% duty surcharge that will be slapped on “foreign persons” buying residential property and land from 1 October. In Auckland, New Zealand – currently the world’s frothiest property market – property investors are, as of last month, required to put down at least 40% of the purchase price in cash.

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By ignoring Germany’s role in destroying the Greek and Italian economies, Weidmann ensures the downfall of the eurozone, and thereby of Germany itself.

Bundesbank President Rejects Calls for German Stimulus (WSJ)

It’s absurd to ask Germany’s government to spend more to bolster eurozone growth, German Central Bank President Jens Weidmann said on Thursday, rejecting growing pressure on Berlin to loosen its purse strings. Speaking in the German capital, Mr. Weidmann said a fiscal stimulus program in Germany was unnecessary given the nation’s robust economy, and would have few positive effects for other countries anyway. Earlier this month, ECB President Mario Draghi joined the chorus of voices that have criticized Germany for reining in its spending at a time of weak economic growth. “Countries that have fiscal space should use it,” Mr. Draghi said at a news conference. “Germany has fiscal space.”

But Mr. Weidmann argued that Germany’s national debt was already high, and the country’s aging population “calls for lower rather than higher debts.” Mr. Draghi tempered his remarks on Wednesday after a meeting in Berlin with German lawmakers, who grilled him over the ECB’s easy-money policies and their impact on German savers and banks. “Germany does have fiscal space [but] we need to be nuanced,” Mr. Draghi said. “I never argued for irresponsible fiscal expansion.”

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It couldn’t be more obvious.

The “Pardon Snowden” Case Just Got Stronger (Cato)

Yesterday, the Department of Justice Inspector General (DoJ IG) issued a long overdue Congressionally-mandated report on FBI compliance with the PATRIOT Act’s Section 215 “business records” provision between 2012 and 2014. It is the first such report issued that covers the initial period of Edward Snowden’s revelations about widespread domestic mass surveillance by the federal government. Since his indictment for leaking the information to the press, Snowden’s lawyers have argued that he should not be prosecuted under the WW I-era Espionage Act because his revelations served the public interest. The DoJ IG report provides the clearest evidence yet that Snowden’s lawyers are correct (p. 6):

“In June 2013, information about the NSA’s bulk telephony metadata program was publicly disclosed by Edward Snowden. These disclosures revealed, among other things, that the FISA Court had approved Section 215 orders authorizing the bulk collection of call detail records. The telephony metadata collected by the NSA included information from local and long-distance telephone calls, such as the originating and terminating telephone number and the date, time, and duration of each call. The disclosures prompted widespread public discussion about the bulk telephony metadata program and the proper scope of government surveillance, and ultimately led Congress to end bulk collection by the government in the USA Freedom Act.”

Public discussion of the controversy. Very public action by Congress to change the law, addressing at least one major abuse brought to light by Snowden. And there was more (p. 33):

“An [National Security Division] Deputy Unit Chief noted that the number of business records orders reached its peak in 2012 and has declined annually since then, and that the number of [Electronic Communication Transation] requests has declined more than other types of requests. The Deputy Unit Chief said that the Snowden revelations have played a role in this decline, both in terms of the stigma attached to use of Section 215 and increased resistance from providers. The Deputy Unit Chief stated, “I think that it’s possible that folks … have decided it’s not worth pursuing [business records orders], you know, obviously things haven’t been great with providers since Snowden either.” ”

Translation: Snowden’s actions forced companies like Verizon, Yahoo and others to grow a spine and start defending the Fourth Amendment rights of their customers. Earlier this month, a group of non-governmental organizations and individuals launched a campaign to get President Obama to pardon Snowden before he leaves office. We now have the department seeking Snowden’s prosecution offering unambigous evidence that his whistleblowing actions served the public interest. Obama should direct DoJ to drop the case or he should pardon Snowden. Either approach would be in the public interest, just as Snowden’s actions were.

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if there’s anyone left claiming to be surprised by Brexit, they must be blind.

Record Numbers Left Homeless After Eviction By Private Landlords In UK (G.)

Record numbers of families are becoming homeless after being evicted by private landlords and finding themselves unable to afford a suitable alternative place to live, government figures show. The end of an assured shorthold tenancy (AST) was cited by nearly a third of the 15,170 households in England who were classed as homeless in the three months to June – a number that was up 10% on the same period last year. The problem was particularly acute in London, accounting for 41% of all homelessness acceptances in the capital during the period, according to figures from the Department for Communities and Local Government (DCLG). The end of an AST has rapidly become the single biggest cause of homelessness in recent years, triggered by spiralling rent rises and cuts to housing benefit support.

In 2010 just 11% of homeless acceptances in England were caused by the end of an AST. The government’s statistical release states: “Affordability [of housing] is an increasingly significant issue, as more households facing the end of a private tenancy are unable to find an alternative without assistance.” Bob Blackman, a Tory backbencher who has drawn up a private member’s bill seeking to require councils to do more to help households at risk of losing their homes, said: “It is a national disgrace when we have the highest number of people in employment ever, we have a low rate of unemployment, that we still have people sleeping rough. Goodness knows what will happen if there is a recession.”

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Not if and when the present political climate perseveres.

Brexit Is A ‘Once-in-a-Generation’ Chance To Save UK’s WIldlife (Ind.)

Brexit will be a “once-in-a-generation chance” to reverse the huge decline in Britain’s wildlife, according to four of the UK’s leading environmental groups. The RSPB, WWF UK, National Trust and The Wildlife Trusts said the British countryside was “key to our identity as a nation” and farmers had the ability address the “urgent challenge of restoring nature”. They called on the Government to replace the much-criticised EU Common Agricultural Policy subsidy system with a British one that pays farmers to maintain “high environmental standards”. Earlier this month, the State of Nature 2016 report – produced by more than 50 organisations – concluded the UK was one of the “most nature-depleted countries in the world”. More than one in seven species face extinction and more than half are in decline.

However, in its response to the conservation groups’ call, the Government insisted the natural environment was “cleaner and healthier than at any time since the industrial revolution”. The National Farmers Union (NFU) said its members understood “the importance of protecting the environment” and complained that some organisations were making suggestions about agricultural policy “without speaking to those the policy most affects”. In a joint statement, called A new policy for our countryside, the four conservation groups said the UK’s departure from the EU “will be one of the most defining events for farming and our environment in living memory”. “[It] provides an unprecedented opportunity to revitalise our countryside in a way that balances the needs of everyone, for generations to come,” they said.

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We have created far too great a distance between ourselves and the world that gives us life.

Bees Added To US Endangered Species List For The First Time (G.)

Seven types of bees once found in abundance in Hawaii have become the first bees to be added to the US federal list of endangered and threatened species. The listing decision, published on Friday in the Federal Register, classifies seven varieties of yellow-faced or masked bees as endangered, due to such factors as habitat loss, wildfires and the invasion of non-native plants and insects. The bees, so named for yellow-to-white facial markings, once crowded Hawaii and Maui but recent surveys found their populations have plunged in the same fashion as other types of wild bees – and some commercial ones – elsewhere in the United States, federal wildlife managers said.

Placing yellow-faced bees under federal safeguards comes just over a week since the US Fish and Wildlife Service proposed adding the imperilled rusty patched bumble bee, a prized but vanishing pollinator once found in the upper midwest and north-eastern United States, to the endangered and threatened species list. One of several wild bee species seen declining over the past two decades, the rusty patched bumble bee is the first in the continental United States formally proposed for protections. The listing of the Hawaii species followed years of study by the conservation group Xerces Society, state government officials and independent researchers. The Xerces Society said its goal was to protect nature’s pollinators and invertebrates, which play a vital role in the health of the overall ecosystem.

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Nice, but that’s just a few of them. I think we’re going to end up sending our armies, our children and grandchildren, to Africa and far beyond, to the oceans, to try and keep alive enough of what preceded us on this planet in order to guarantee our own species can survive. But I can’t say I have high hopes.

Elephants Have Learned To Avoid Poachers By Hanging Out With Rangers (Konbini)

In an effort to protect diminishing elephant herds in the Democratic Republic of Congo’s Virunga National Park, a Kenyan conservation group fitted elephants with collars so they could monitor and track them in real time. Save the Elephants claim some of the herds they track have started changing their behavior to avoid dangerous areas, which the team believes is an adaptation to poaching. “Several elephant families [were seen] clustered around ranger posts, suggesting they had learned to distinguish the heavily armed rangers as harmless,” STE founder Iain Douglas-Hamilton said. In one rebel-afflicted area, elephants had even started hanging out at ranger checkpoints where huge trucks of charcoal and hardwood rumble through every few minutes.

“Yet somehow the elephants sensed that they were safe there and walked close to the voluble rangers.” Elephants that are able to distinguish rangers from poachers represent an incredible feat of animal ingenuity, but according to experts, it’s all quite understandable. According to My Green World, these mammals are similar to gorillas, in that they’re “smart, sensitive, loyal and aware.” But while this is great news for elephants (and bad news for outsmarted poachers), there’s still the matter of curbing the ongoing colossal hunting epidemic. Africa had 1.3 million elephants in the 1970s, but today there are only 500,000. So there is still quite a way to go before elephants can be taken off the endangered species list.

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Jan 312016
 
 January 31, 2016  Posted by at 10:07 am Finance Tagged with: , , , , , , , , , ,  2 Responses »


Edwin Rosskam Shoeshine, 47th Street, Chicago’s main Negro business street 1941

A Chinese Banker Explains Why There Is No Way Out (ZH)
China GDP Growth 4.3%, Or Lower, Chinese Professor Says (WSJ)
Yuan Vs. Yen: How China Figures Into Japan’s Negative Rates (WSJ)
IPO Market Comes to a Standstill (WSJ)
Greece’s Lenders To Start Bailout Review On Monday (Reuters)
Milk Collapse Brings a 45% Pay Cut to England’s Dairy Farmers (BBG)
‘Peak Stuff’ And The Search For Happiness (Guardian)
Merkel Says Refugees Must Return Home Once War Is Over (Reuters)
10,000 Refugee Children Are Missing, Says Europol (Observer)
Aegean Sea Refugee Crossings Rise 35 Fold Year-On-Year In January (Guardian)
Greeks Worry Threatened Closure Of EU Border ‘Definition Of Dystopia’ (Guar.)
Europe’s Immigration Bind: Morals vs Votes (Guardian)
39 Greece-Bound Refugees Drown Off Turkish Coast (AP)

“It’s not difficult to issue more loans, but let’s say in a years time when the loan is due, if the borrower defaults, then I won’t just see a pay cut, I’ll be fired, and still be responsible for loan recovery.”

A Chinese Banker Explains Why There Is No Way Out (ZH)

Friday’s adoption of NIRP by Japan, which send the US Dollar soaring, has only made any upcoming future Chinese devaluation even more likely. But whether China devalued or not, one thing is certain: it is next to impossible for China – under the current socio economic and financial regime – to stop the relentless growth in NPLs, which even by conservative estimates at in the trillion(s), accounting for at least 10% of China’s GDP. Sure enough, a cursory skimming of news from China reveals that even Chinese bankers now “admit the NPL situation is dire, but will keep on lending” anyway. As the Chiecon blog notes, NPL “ratios might be closer to 10%… supported by revelations in this article, where Chinese bankers complain of missing performance targets, spiraling bad loans, and end of year pay cuts.”

“Right now, we’ve nowhere to issue new loans” said Mr. Zhang, a general manager in charge of new loans at one of the listed commercial bank branches. Zhang believes NPL ratios have yet to peak, with SME loans the worst hit area. Ironically this has forced Zhang to direct lending back to the LGFVs, property developers and conglomerates, industries which the Chinese government had previously instructed banks to restrict lending to, based on oversupply and credit risk fears.

But the main reason why China is now trapped, and on one hand is desperate to stabilize its economy and stop growing its levereage at nosebleed levels, while on the other hand it is under pressure to issue more loans while at the same time it is unwilling to write off bad loans, can be found in the following very simple explanation offered by Mr. Zhou, a junior banker at a Chinese commercial bank.

“If I don’t issue more loans, then my salary isn’t enough to repay the mortgage, and car loan. It’s not difficult to issue more loans, but let’s say in a years time when the loan is due, if the borrower defaults, then I won’t just see a pay cut, I’ll be fired, and still be responsible for loan recovery.”

And that, in under 60 words, explains why China finds itself in a no way out situation, and why despite all its recurring posturing, all its promises for reform, all its bluster for deleveraging, China’s ruling elite will never be able to achieve an internal devaluation, and why despite its recurring threats to crush, gut and destroy all the evil Yuan shorts, ultimately it will have no choice but to pursue an external devaluation of its economy by way of devaluing its currency presumably some time before its foreign reserves run out (which at a $185 billion a month burn rate may not last for even one year). However, before it does, it will make sure that it also crushes every Yuan short, doing precisely what the Fed has done with equity shorts in the US over the past 7 years.

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While still ‘assuming the official agriculture and service sector growth figures are correct’.

China GDP Growth 4.3%, Or Lower, Chinese Professor Says (WSJ)

As growth in the world’s second-largest economy slows, the spotlight has intensified over the accuracy of China’s growth figures. This week, Xu Dianqing, an economics professor at Beijing Normal University and the University of Western Ontario, joined the debate with an estimate that China’s GDP growth rate might just be between 4.3% and 5.2%. China’s official growth rate in 2015 was 6.9%, the slowest pace in more than two decades, allowing the government to hit its target of around 7%. But longstanding questions over China’s statistical methodology have spurred a cottage industry in alternate growth indicators. Many of these analyze other measures believed to be less subject to political pressure in estimating actual growth, including indices compiled by economists at Capital Economics, Barclays Bank, the Conference Board and Oxford Economics.

Most peg China’s annual growth in the 4% to 6% range. Mr. Xu told reporters at a briefing this week that the focus of his concern is the growth rate for China’s manufacturing sector, which according to official figures grew 6.0% last year and accounts for 40.5% of the economy. A closer look at underlying indicators, however, including thermal power generation, railway freight volume, and output from the iron ore, plate glass, cement and steel industries released monthly by the National Bureau of Statistics paint a different picture, he said. Of some 60 major industrial products, nearly half saw output contract in the January to November period, while railway cargo volume fell 11.9% for all of last year, according to official sources.

Given weaker industrial output in China and more than three years of industrial deflation, a 6% expansion for manufacturing in 2015 is questionable “no matter how the number is counted,” said Mr. Xu, who added that he believes it’s more probable that industry and construction grew at most by 2% last year and perhaps not at all. That translates into economic growth that tops out at 5.2% last year and perhaps something in the 4s, assuming the official agriculture and service sector growth figures are correct, he said. Mr. Xu said it’s unlikely that the service sector– sometimes cited as an explanation for growth rate discrepancies – did better than reported by authorities.

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Twins.

Yuan Vs. Yen: How China Figures Into Japan’s Negative Rates (WSJ)

Japan’s move to negative interest rates is the latest step in a dangerous dance between the world’s second and third largest economies. The problem is currencies. China’s moves to bring down the value of the yuan have rattled markets this year, sparking a flight from risky assets that has sent investors into safer havens like the yen. The stronger yen in turn has threatened to tip Japan’s economy back into deflation, which the central bank has struggled to vanquish. The rising yen has also put more pressure on corporate profits and helped push Japanese stocks into bear market territory last week. So when the Bank of Japan announced its plan to lower interest rates below zero for the first time Friday, it makes sense that Governor Haruhiko Kuroda named just one country among the risks facing its economy China.

Now it’s China s turn to sweat. The yen fell as much as 2.1% after the announcement, which will make Chinese exports more expensive relative to Japanese products. The two countries, and most of their neighbors, are struggling against a tide of money outflows and weak trade. While governments in the rest of Asia have far more room to stimulate their economies than Japan does, a decline in the yen could spur them to try to push down their own currencies. Were China to follow and the central bank has already allowed the yuan to fall it would ignite another round of fear, which could push up the yen and force the Bank of Japan to act again. So far, the yen’s ups and downs have left it about where it was a year ago, so the risk of a cycle of competitive devaluation is limited.

In addition, the drop in the yen would have been a bigger problem for China when the yuan was pegged to the dollar. The government’s recent switch to a basket of currencies that includes the yen means the move up won’t be as big. But it still will push the currency in the wrong direction for the slowing economy. There’s another reason China does’ t want the yen to fall. Right now, thousands of Chinese are planning their Lunar New Year’s holidays in Japan early next month, hoping to take advantage of the cheap yen. During the October Golden Week, China’s other big travel week of the year, Chinese tourists descended on Japan, spending more than $830 million on shopping, according to the state-run China Daily.

China is suffering an epic capital flight in which hundreds of billions of dollars are leaving the country. A weaker yen will send more Chinese into Tokyo’s department stores and further drain China’s currency reserves. The economic fates of China and Japan are closely connected. Until their economies get on stronger footing, moves to boost growth in one country could hurt the other and risk retaliation. As the world economy stays weak, the interaction between China and Japan could play an increasingly important role both in Asia and globally.

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Zero.

IPO Market Comes to a Standstill (WSJ)

A frigid January for initial public offerings is pointing to a hard winter for fledgling biotechnology firms and other private companies. There were no U.S. IPOs in January, the first such month since the eurozone crisis in September 2011, according to data provider Dealogic. Investors and analysts attribute the dearth to the global stock-market rout of the first two weeks of the year, which signaled a broad retreat from risk by investors. If sustained, the reversal threatens to send ripples through global financial markets. Many analysts and traders view a healthy IPO sector as a necessary precondition for a sustainable advance in the broad stock indexes, as dozens of private companies have built their plans around raising cash in the public markets.

In recent years, markets were “wide open and companies that wanted to raise capital could,” said Eddie Yoon, portfolio manager of the Fidelity Select Health Care Portfolio, with $9 billion in assets. But now some companies, both public and private, could face being shut out for an extended period, as many investors seek to reduce risk by focusing on firms with histories of steady profitability and revenue growth. Several new share offerings by already-public biotech companies have floundered this year, not only pricing at steep discounts, but also falling even further the session after pricing. So far this year, new-share offerings by biotech companies have dropped 15% from the time of the announcement of the deal to the end of trading after the sale, according to data from Dealogic. “If the market does reopen, it will be for higher quality companies,” said Mr. Yoon.

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France wants debt relief?!

Greece’s Lenders To Start Bailout Review On Monday (Reuters)

Greece’s official lenders will start a review on Monday of what progress the country has made in implementing the economic reforms agreed under its third bailout, a necessary step towards debt relief talks, a finance ministry official said on Saturday. Greece’s international lenders are the IMF and the euro zone bailout fund. The reforms that Greece has to implement in exchange for loans are also reviewed by the ECB and the European Commission. “The first phase will last a few days as there will be a break at the end of next week, after which the institutions will return to conclude the negotiations,” the official said, declining to be named. Athens is keen for a speedy completion of the review, which was expected to begin late last year, and hopes a positive outcome will help boost economic confidence and liquidity.

To secure a positive result from the review Athens needs to pass legislation on pension reforms to render its social security system viable, set up a new privatization fund and come up with measures to attain primary budget surpluses for 2016-2018. A successful conclusion of the performance review will open the way for debt relief talks. The head of the bailout fund, the European Stability Mechanism (ESM), has ruled out a haircut for Greece’s debt but extending debt maturities and deferring interest are options that could be used to make it more manageable. French Finance Minister Michel Sapin told Kathimerini debt relief talks must start soon to help restore Greece’s financial stability. “France’s view is that the sooner the first review is completed, the faster we will be able to tackle the issue of debt sustainability and this will be better for everyone – for Greece as well as the entire euro zone,” Sapin told the paper.

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Stories from NZ have been bad for a while now.

Milk Collapse Brings a 45% Pay Cut to England’s Dairy Farmers (BBG)

England’s dairy farmers will see income fall by almost half this year, evidence that the global milk crisis is far from over. Earnings will average 46,500 pounds ($66,500) per farm in England for the 2015-16 season that started in March, the Department for Environment, Food & Rural Affairs said in a report Thursday. That figure, which includes European Union aid payments, is 45 percent below the prior season and the lowest in 9 years. Dairy farmers across Europe are struggling with a collapse in prices after a global oversupply of milk was compounded by slowing demand in China and Russia’s ban on EU dairy in retaliation for sanctions.

Protests over low prices broke out in France this week as more than 100 farmers, many of them livestock breeders, blocked roads and used tractors and burning tires to stop access to the port city La Rochelle. “There’s too much milk in the world,” said Robbie Turner, head of European markets at Rice Dairy International, a risk management advisory firm in London. “There are people who are hard for cash,” and prices are likely to remain low for at least the next six months, he said. On Thursday, Fonterra, the world’s largest dairy exporter, cut its milk price forecast to a nine-year low. The Auckland-based company doesn’t expect a sharp recovery in Chinese demand any time soon.

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Luckily we’re maxed out.

‘Peak Stuff’ And The Search For Happiness (Guardian)

On Monday, Walmart will start paying a minimum of $10 an hour to its 1.4 million skilled staff in America – in conventional economists’ terms, a ludicrous and unnecessary transfer of income from capital to labour. But, facing the same retail environment as Apple and Ikea, Walmart wants to motivate its frontline staff into being more engaged and innovative. Consumers want some help in understanding and interpreting their particularities, help in answering the question of what, in a profound sense, their spending is for. When you have enough, what need is being served by having more?

Economists are not equipped to address such phenomena. Faltering growth in consumer demand in all western countries is understood wholly in traditional economic terms: the story is that consumers are indebted and uncertain, they lack confidence and want to rebuild their savings. Rightwing, anti-state economists, so influential in the Republican and Conservative parties, peddle tax cuts as the universal panacea. Like Pavlov’s dog, consumers will flock back to the shops once they are emboldened by a tax cut. Obviously, there would be some increase in spending, but far less than there used to be. More fundamental forces are holding back spending .

There is a quest for meaning, aided and abetted by the knowledge and information revolutions, that is not answered by traditionally scale-produced goods and services. Economist Tomas Sedlacek, who has won an international following for his book Economics of Good and Evil, insists that contemporary societies have become slaves to a defunct economistic view of the world. When western societies were poorer, it was reasonable for economics to focus on how to produce more stuff – that was what societies wanted. Now, the question is Aristotelian: how to live a happy life – or “humanomics”, as Sedlacek calls it. Aristotle was clear: happiness results from deploying our human intelligence to act creatively on nature. To inquire and successfully to quest for understanding is the root of happiness.

Yet most people today, says Sedlacek, work in jobs they do not much like, to buy goods they do not much value – the opposite of any idea of the good life, Aristotelian or otherwise. What we want is purpose and a sense of continual self-betterment, which is not served by buying another iPhone, wardrobe or a kitchen. Yet purpose and betterment need a social context: purpose is a shared endeavour and self-betterment is to act on the world better with others. An individualistic society such as our own makes it much harder to find others with whom to make common cause.

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Well, stop the war then.

Merkel Says Refugees Must Return Home Once War Is Over (Reuters)

German Chancellor Angela Merkel tried on Saturday to placate the increasingly vocal critics of her open-door policy for refugees by insisting that most refugees from Syria and Iraq would go home once the conflicts there had ended. Despite appearing increasingly isolated, Merkel has resisted pressure from some conservatives to cap the influx of refugees, or to close Germany’s borders. Support for her conservative bloc has slipped as concerns mount about how Germany will integrate the 1.1 million migrants who arrived last year, while crime and security are also in the spotlight after a wave of assaults on women in Cologne at New Year by men of north African and Arab appearance.

The influx has played into the hands of the right-wing Alternative for Germany (AfD), whose support is now in the double digits, and whose leader was quoted on Saturday saying that migrants entering illegally should, if necessary, be shot. Merkel said it was important to stress that most refugees had only been allowed to stay for a limited period. “We need … to say to people that this is a temporary residential status and we expect that, once there is peace in Syria again, once IS has been defeated in Iraq, that you go back to your home country with the knowledge that you have gained,” she told a regional meeting of her Christian Democratic Union (CDU) in the state of Mecklenburg-Western Pomerania.

Merkel said 70 percent of the refugees who fled to Germany from former Yugoslavia in the 1990s had returned. Horst Seehofer, leader of the Christian Social Union (CSU), the CDU’s Bavarian sister party, has threatened to take the government to court if the flow of asylum seekers is not cut. Merkel urged other European countries to offer more help “because the numbers need to be reduced even further and must not start to rise again, especially in spring”. Fabrice Leggeri, the head of the European Union’s border agency Frontex, said a U.N. estimate that up to a million migrants could try to come to Europe via the eastern Mediterranean and Western Balkans next year was realistic. “It would be a big achievement if we could keep the number … stable,” he told the magazine Der Spiegel.

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Europe doesn’t care for kids.

10,000 Refugee Children Are Missing, Says Europol (Observer)

At least 10,000 unaccompanied child refugees have disappeared after arriving in Europe, according to the EU’s criminal intelligence agency. Many are feared to have fallen into the hands of organised trafficking syndicates. In the first attempt by law enforcement agencies to quantify one of the most worrying aspects of the migrant crisis, Europol’s chief of staff told the Observer that thousands of vulnerable minors had vanished after registering with state authorities. Brian Donald said 5,000 children had disappeared in Italy alone, while another 1,000 were unaccounted for in Sweden. He warned that a sophisticated pan-European “criminal infrastructure” was now targeting refugees.

“It’s not unreasonable to say that we’re looking at 10,000-plus children. Not all of them will be criminally exploited; some might have been passed on to family members. We just don’t know where they are, what they’re doing or whom they are with.” The plight of unaccompanied child refugees has emerged as one of the most pressing issues in the migrant crisis. Last week it was announced that Britain would accept more unaccompanied minors from Syria and other conflict zones. According to Save the Children, an estimated 26,000 unaccompanied children entered Europe last year. Europol, which has a 900-strong force of intelligence analysts and police liaison officers, believes 27% of the million arrivals in Europe last year were minors.

“Whether they are registered or not, we’re talking about 270,000 children. Not all of those are unaccompanied, but we also have evidence that a large proportion might be,” said Donald, indicating that the 10,000 figure is likely to be a conservative estimate of the actual number of unaccompanied minors who have disappeared since entering Europe. In October, officials in Trelleborg, southern Sweden, revealed that some 1,000 unaccompanied refugee children who had arrived in the port town over the previous month had gone missing. On Tuesday a separate report, again from Sweden, warned that many unaccompanied refugees vanished and that there was “very little information about what happens after the disappearance”.

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But they think they can stop it.

Aegean Sea Refugee Crossings Rise 35 Fold Year-On-Year In January (Guardian)

More than 52,000 refugees and migrants crossed the eastern Mediterranean to reach Europe in the first four weeks of January, more than 35 times as many as attempted the crossing in the same period last year. The daily average number of people making the crossing is nearly equivalent to the total number for the whole month of January as recently as two years ago, according to the International Organisation for Migration. More than 250 people have died attempting to make the crossing this month, including at least 39 who drowned in the Aegean Sea on Saturday morning after their boat capsized between Turkey and Greece. Turkish coastguards rescued 75 others from the sea near the resort of Ayvacik on Saturday, according to the Anadolou news agency.

They had been trying to reach the Greek island of Lesbos. The eastern route into Europe, via Greece, has overtaken the previously popular central Mediterranean route from north Africa over the past year. Refugees have continued to use the route all winter, despite rough seas and strong winds. “An estimated 52,055 migrants and refugees have arrived in the Greek islands since the beginning of the year,” the IOM said. “This is close to the total recorded in the relatively safe month of July 2015, when warm weather and calm seas allowed 54,899 to make the journey.” Turkey, which is hosting at least 2.5 million refugees from the civil war in neighbouring Syria, has become the main launchpad for migrants fleeing war, persecution and poverty.

Ankara struck a deal with the EU in November to halt the flow of refugees, in return for €3bn (£2.3bn) in financial assistance to help improve the refugees’ conditions. This week the IOM reported that a survey of migrants and refugees arriving in Greece showed 90% were from Syria, Iraq or Afghanistan. People of those nationalities are allowed to leave Greece and enter Macedonia en route to western Europe as asylum seekers. But on Wednesday the Idomeni border crossing from Greece to Macedonia remained closed from midday to midnight. Macedonian officials blamed congestion at the border with Serbia.

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“Why is Greece guilty? Because it doesn’t let them drown?”

Greeks Worry Threatened Closure Of EU Border ‘Definition Of Dystopia’ (Guar.)

With Brussels contemplating drastic measures to stem the flow, calls are mounting to seal the Greek-Macedonian border, raising fears of hundreds of thousands being stranded in Greece, the country now perceived to be the continent’s weakest link. The prospect of migrants being trapped in a member state that financially is also Europe’s most fragile may once have seemed extreme, even absurd. Its economy ravaged by six years of internationally mandated austerity and record levels of unemployment, Greece’s coping strategies are markedly strained. But as EU policymakers seek ever more desperate ways to deal with what has become the largest mass movement of people since the second world war, it is an action plan being actively worked on by mandarins at the highest level.

Like so much else in the great existential crisis facing Europe, a proposed policy that was once seen as bizarre now looks like it could become real. Last week Athens was also given a three-month ultimatum to improve the way it processes arrivals and polices its borders – at nearly 8,700 miles the longest in Europe – or face suspension from the passport-free Schengen zone. Closure of the Greek-Macedonian frontier would effectively cut it out of that fraternity. Those who have watched Greece’s rollercoaster struggle to keep insolvency at bay are united in their conviction that the move would be catastrophic. “It would place a timebomb under the foundations of Greece,” says Aliki Mouriki at the National Centre of Social Research. “Hundreds of thousands of refugees trapped in a country that is bankrupt, that has serious administrative and organisational weaknesses, with a state that is unable to provide for their basic needs?”

The question hangs in the air while she searches for the right word. “What we would witness,” she adds, “would be the definition of dystopia.” Like the mayors who have been forced to deal with the emergency on Greece’s eastern Aegean isles, federal politicians believe Turkey is the root of the problem. “With all due respect for a country that is hosting 2 million refugees, it is Turkey that must do something to stop the organised crime, the smugglers working along its coast,” Yannis Mouzalas, the minister for migration policy, told the Observer. “These flows are not Greece’s fault even if, it is true, we have been slow to set up hotspots and screening was not always what it should have been,” he said. “It is Turkey that turns a blind eye to them coming here. It is Turkey that must stop them. Why is Greece guilty? Because it doesn’t let them drown?”

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Morals? Europe?

Europe’s Immigration Bind: Morals vs Votes (Guardian)

The dream of free movement within the EU has also spawned paranoia about the movement of people into the EU. The quid pro quo for Schengen has been the creation of a Fortress Europe, a citadel against immigration, watched over by a hi-tech surveillance system of satellites and drones and protected by fences and warships. When a journalist from Germany’s Der Spiegel magazine visited the control room of Frontex, the EU’s border agency, he observed that the language used was that of “defending Europe against an enemy”. Many of the policies enacted over the past year give a sense of a continent at war. In June, an emergency EU meeting came up with a 10-point plan that included the use of military force “to capture and destroy” the boats used to smuggle migrants.

Soon afterwards, Hungary and other east European countries began erecting razor-wire fences. Germany, Austria, France, Sweden and Denmark suspended Schengen rules and reintroduced border controls. In November, the EU struck a deal with Turkey, promising it up to $3.3bn in return for clamping down on its borders. This month, Denmark passed a law allowing it to seize valuables from asylum seekers to pay for their upkeep. Despite the sense that the crisis is unprecedented, there is nothing new in it or the incoherence of the EU’s response. People have been trying to enter the EU, and dying in the attempt, for a quarter of a century and more.

Until 1991, Spain had an open border with North Africa. Migrant workers would come to Spain for seasonal work and then return home. In 1986, the newly democratic Spain joined the EU. As part of its obligations as a EU member, it had to close its North African borders. Four years after it did, it was admitted into the Schengen group. The closing of the borders did not stop migrant workers trying to enter Spain. Instead, they took to small boats to cross the Mediterranean. On 19 May 1991, the first bodies of clandestine migrants were washed ashore. Since then, it is estimated that more than 20,000 people have perished in the Mediterranean while trying to enter Europe.

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Every day.

39 Greece-Bound Refugees Drown Off Turkish Coast (AP)

Turkey’s state-run news agency says at least 39 people, including five children, have drowned in the Aegean Sea after their Greece-bound boat capsized off the Turkish coast. Anadolu Agency says coast guards rescued 75 others from the sea Saturday near the resort of Ayvacik en route to the Greek island of Lesbos. The agency has identified the survivors as natives of Afghanistan, Syria and Myanmar. The International Organization for Migration says 218 people have died this year while trying to cross by sea from Turkey to Greece. Turkey is hosting an estimated 2.5 million refugees from Syria. In November, Turkey agreed to fight smuggling networks and stem the flow of migrants into Europe. In return, the EU has pledged €3 billion to help improve the refugees’ conditions.

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Sep 182015
 
 September 18, 2015  Posted by at 9:57 am Finance Tagged with: , , , , , , , ,  8 Responses »

John Vachon Assassin of Youth November 1938

The Fed Gives Growth a Chance (NY Times ed.)
Fed Delay Looks Like 2013 All Over Again-Rate Hike in December? (Bloomberg)
Fed Rate Decision Roils Emerging-Market Currencies (WSJ)
It’s a New World: How China Growth Concerns Kept the Fed on Hold (Bloomberg)
Europe Lacks Strategy to Tackle Crisis, but Refugees March On (NY Times)
Losing Control Of Refugees, Croatia Closes Serbia Border Crossings (Reuters)
Croatia’s Resources Stretched as Thousands of Refugees Arrive (Bloomberg)
OPEC Assumes Oil Price Will Recover Gradually to $80 in 2020 (Bloomberg)
Defaults Mount in Beleaguered US Energy Industry (WSJ)
Central Banks’ Lesson: Easy Money Alone Isn’t a Growth Salve (WSJ)
China Outflows Said To Surpass A Staggering $300 Billion In Just 75 Days (ZH)
China’s Top Financial Firms Get Green Light for $3 Billion IPOs (WSJ)
Here’s Why China Could Drag The US Into Recession (Fortune)
Primary Dealers Rigged Treasury Auctions, Investor Lawsuit Says (Bloomberg)
Bitcoin Is Officially a Commodity, According to US Regulator (Bloomberg)
Beppe Grillo Gets One Year Jail Sentence for “Defamation” (Tenebrarum)
Scorching Year Continues With the Hottest Summer on Record (Bloomberg)

No, this is not the Onion. But it sure is funny, and not just the headline, try this one: “..the economy shows no signs of overheating..”

The Fed Gives Growth a Chance (NY Times ed.)

The Federal Reserve did the right thing on Thursday when it opted not to begin raising interest rates. By holding steady, the Fed is acknowledging, correctly, that the economy shows no signs of overheating. Price inflation, for example, has been below the Fed’s 2% target for years and shows no signs of accelerating. The Fed also acknowledged the dampening effect global economic weakness and financial-market volatility may have on the American economy. In the past, the Fed played down those dangers, assuming they would be transitory or bearable. In the statement released after its policy-making committee meeting, it shifted, saying international and financial conditions could slow the domestic economy, making an interest-rate increase to restrain the economy unnecessary, at least for now.

In one important respect, however, the Fed appears to be doing the right thing for the wrong reasons. Judging from its statement and its economic projections, the Fed believes that the labor market has largely returned to health. That suggests it will be poised to raise rates as soon as the global headwinds abate. But the labor market is not healthy, and until it is, rate increases would be premature. Unemployment, at 5.1% in August, is still higher than it was before the recession. The share of part-time workers who need full-time jobs is still elevated, while the share of working-age adults with jobs is still well below its prerecession level. Most telling, broad wage growth — the clearest sign of labor market health — has been virtually nil during the six-year-old recovery.

The Fed is supposed to conduct policy in a way that fosters full employment, meaning rates should not be raised until jobs and wages are on a robust growth trajectory. But it seems more concerned with its mandate to fight inflation. That focus would be questionable even if there were nascent signs of inflation; in the absence of any signs, it is indefensible. In fact, inflation has been so low for so long now, it could run somewhat above the Fed’s target for an extended period without being disruptive and, in the process, allow wages to grow in line with productivity.

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Just the fact that after two years we’re still stuck in the same spot should say plenty.

Fed Delay Looks Like 2013 All Over Again-Rate Hike in December? (Bloomberg)

Federal Reserve Chair Janet Yellen shows signs of taking a page out of her predecessor’s policy playbook as she inches toward the central bank’s first interest rate increase in nine years: Delay action in September only to move in December. While the Fed on Thursday opted to keep rates pinned near zero for now, Yellen told a press conference that most policy makers still expect to raise rates this year. She highlighted the strength of the U.S. economy, tying the decision to delay liftoff to fresh uncertainty about the outlook abroad and to financial market turbulence over the past month. “I do not want to overplay the implications of these recent developments, which have not fundamentally altered our outlook,” she said. “The economy has been performing well, and we expect it to continue to do so.”

Yellen’s approach has parallels to the strategy that former Fed Chairman Ben Bernanke pursued in 2013 as officials debated whether to start scaling back bond purchases. Citing uncertainties to the outlook, Bernanke put off a move to begin tapering in September before deciding to go ahead in December. Just like today, much of the Fed’s initial reservations about acting in 2013 centered on developments in emerging markets, which had been rocked by Bernanke’s suggestion a few months earlier that a taper was on its way. Looming in the background then, as it is now, was the threat of a U.S. government shutdown. Today’s situation “lines up in so many ways” with that of 2013, said Aneta Markowska at SocGen, pointing to the upcoming fiscal showdown and emerging market concerns. “If all of that is resolved by December, my expectation is that the data will definitely support a hike.”

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No matter what the Fed does, emerging markets can’t win.

Fed Rate Decision Roils Emerging-Market Currencies (WSJ)

Many emerging-market currencies slumped against the dollar on Thursday despite the Federal Reserve’s decision to hold interest rates near zero for now. Currencies in Brazil, Turkey and South Africa, which have been among the hardest-hit by fears of a U.S. rate increase, enjoyed a short-lived reprieve after the central bank’s announcement. But they gave back all the gains within hours, as investors realized the Fed is still on track to raise interest rates later in the year. Many investors said the Fed’s reluctance to raise rates on Thursday signaled policy makers’ concerns about slowing global growth, which reflects a deepening economic malaise across emerging markets.

Many emerging countries rely on external capital flows to finance growth. The prospect of higher rates in the U.S. has led to outflows from these countries, contributing to weakening currencies and higher bond yields that drive up borrowing costs. The continuation of easy-money policies in the U.S. “buys some time for further adjustments by emerging-market economies, but this decision also confirms the fact that the U.S. economy continues to expand at a modest pace, which is not particularly emerging-market friendly,” said George Hoguet at State Street Global Advisors.

The Brazilian real took a roller-coaster ride. The currency, which was under pressure early in the day, rallied immediately upon the release of the Fed statement at 2 p.m. Eastern time, rising as much as 1.3% against the dollar. But the gains quickly dissipated. By late afternoon, the real lost 1.5% against the dollar to 3.8974, the weakest level in 13 years. Indonesia’s rupiah, after a brief rally, closed at its lowest level against the greenback since July 1998. Both the South African rand and the Turkish lira appreciated against the dollar shortly after the Fed announcement, but ended the day with losses.

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A neat excuse to hide their ignorance behind.

It’s a New World: How China Growth Concerns Kept the Fed on Hold (Bloomberg)

Here’s the latest sign of China’s arrival as a global economic power: It’s roiled financial markets enough to nudge the Federal Reserve away from raising interest rates. Fed policy makers left their benchmark rate near zero Thursday, saying the U.S. economy and inflation may be restrained by “recent global economic and financial developments.” Fed Chair Janet Yellen elaborated in a press briefing, saying the financial turmoil reflected investor concerns about risks to Chinese growth. “If it weren’t for China and all the turmoil surrounding China, I think the Fed would have hiked rates,” said Mickey Levy at Berenberg in New York, who has analyzed Fed policy for more than 30 years.

The focus on China comes after a market rout that wiped $5 trillion in value off the nation’s stocks and after a sudden move on Aug. 11 to change its exchange rate regime, a decision which triggered the yuan’s biggest depreciation in two decades and roiled global markets. The world’s second-largest economy is set to grow at its slowest pace in a quarter century this year even after five central bank interest rate cuts and fiscal stimulus. “China was an influence in this meeting, whereas in the past that would have been much less important,” said Tai Hui at JPMorgan Asset Management in Hong Kong. China affects the world more than ever before, and its influence over global markets will only increase as it approaches the U.S. economy in size. It accounted for 13.3% of global gross domestic product last year, from less than 5% a decade earlier, according to World Bank data.

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Croatia gave it their best, but they too need help.

Europe Lacks Strategy to Tackle Crisis, but Refugees March On (NY Times)

Europe’s failure to fashion even the beginnings of a unified solution to the migrant crisis is intensifying confusion and desperation all along the multicontinent trail and breeding animosity among nations extending back to the Middle East. With the volume of people leaving Syria, Afghanistan and other countries showing no signs of ebbing, the lack of governmental leadership has left thousands of individuals and families on their own and reacting day by day to changing circumstances and conflicting messages, most recently on Thursday when crowds that had been trying to enter Hungary through Serbia diverted to Croatia in search of a new route to Germany.

Despite the chaos, there were few signs that EU leaders, or the governments of other countries along the human river of people flowing from war and poverty, were close to imposing any order or even talking seriously about harmonizing their approaches and messages to the migrants. Instead, countries continue to improvise their responses, as Croatia did Thursday, and Slovenia — the next stop along the rerouted trail — is likely to do in coming days. The migrants did not shift course to Croatia on a whim. When Hungary effectively blocked their access on Tuesday with a border crackdown — which resulted in an ugly skirmish Wednesday between the police and migrants — they had few options.

And Macedonian and Serbian officials, along with many aid organizations, were urging them to circumvent a hostile Hungary and even providing maps and nonstop bus service to the Croatian frontier. Initially, Croatia’s foreign minister, Vesna Pusic, seemed to encourage them, too. “They can move freely in this period,” she said. “We will try to restore a decent face to this part of Europe.” So, since Wednesday morning, more than 11,000 migrants have entered Croatia, and officials said 20,000 more were already in Serbia, making their way to the Croatian border and likely to arrive soon — while untold tens of thousands more waited in Turkey and Greece for a clear signal about whether to follow.

But what the first arriving migrants found on the Croatian border was only more fog. The Croatian interior minister said that the country would abide by European Union rules and register all arriving asylum seekers and that they could not simply pass through the country unfettered. Then late Thursday, swamped by the crush of migrants, Croatia announced that the border would be closed altogether, indefinitely. Slovenian officials said that, no matter how many migrants Croatia lets through, they would register all arrivals and turn back any who do not qualify as refugees — a task that Hungary can attest is easier said than done.

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Dear MSM: Stop calling refugees ‘migrants’. And stop calling a meeting next week an ‘emergency’ meeting.

Losing Control Of Refugees, Croatia Closes Serbia Border Crossings (Reuters)

Croatia has closed seven of eight road border crossings with Serbia after complaining of being overwhelmed by an influx of more than 11,000 migrants who evaded police, trekked through fields and tried to sneak into Slovenia by train in a march westwards that is dividing Europe. Only the main Bajakovo crossing, on the highway between Belgrade and Zagreb, appeared to be open to traffic on Friday, while neighboring Slovenia stopped all rail traffic on the main line from Croatia after halting a train carrying migrants on the Slovenian side of the border. Migrants have been streaming into European Union member Croatia for two days, their path into the bloc via Hungary blocked by a metal fence, the threat of imprisonment and riot police who fired teargas and water cannon on Wednesday to drive back stone-throwing men.

There were desperate scenes at a railway station on Croatia’s eastern frontier with Serbia, where thousands were left stranded overnight under open skies. The EU has called an emergency summit next week to overcome disarray in the 28-nation bloc. Croatian Interior Minister Ranko Ostojic warned on Thursday that Croatia would close its border with Serbia if the flow of migrants continued at the same rate, saying his country was full to capacity. The president of Croatia told the military to be ready to join the effort to stop thousands of people criss-crossing the Western Balkans in their quest for sanctuary in the wealthy bloc. Late on Thursday, police announced they had banned all traffic at seven border crossings. “The measure is valid until further notice,” police said in a statement.

Serbia’s main highway north into Hungary is already closed by Hungarian riot police on the border. It remained unclear whether or how police would stop migrants, many of them refugees from Syria, from streaming through fields across the border away from official crossings, though their path across much of the frontier is made more difficult by the Danube river. Serbia warned its neighbors against shutting down the main arteries between them. “We want to warn Croatia and every other country that it is unacceptable to close international roads and that we will seek to protect our economic and every other interest before international courts,” Aleksandar Vulin, Serbia’s minister in charge of migration, told the Tanjug state news agency.

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And so we move from country to country and border to border, while Europe refuses to set up a meeting. To them, it’s an emergency only for refugees.

Croatia’s Resources Stretched as Thousands of Refugees Arrive (Bloomberg)

Croatia wavered in its commitment to accept a growing influx of migrants after 5,600 refugees poured into the country in one day, underscoring the massive task facing Europe as people flee war and poverty. “If migrants continued to arrive in larger numbers, Croatia would have to consider an entirely different approach,” Interior Minister Ranko Ostojic said in a statement on Thursday. Prime Minister Zoran Milanovic said Croatia will help refugees “as long as we can,” after throwing open its doors Wednesday. The people have been stranded in Serbia trying to enter the European Union through Hungary, which closed its southern frontier and fired tear gas and water cannons at migrants trying to break through a barrier on the border. Police said they used force to repel the crowd after refugees threw rocks and other projectiles.

European leaders have been at odds for weeks over how to deal with the region’s biggest refugee crisis since World War II, with Hungarian Prime Minister Viktor Orban fortifying his border to keep refugees out and German Chancellor Angela Merkel saying Europe has a moral responsibility to help. Orban has built a razor-wire fence along the border with Serbia and announced plans to extend the barrier to part of the frontier with Romania. The crisis claimed its first political casualty in Germany, with the government’s point person on the refugee crisis stepping down. The Interior Ministry announced Thursday that Manfred Schmidt, who headed the office for migration and refugees, was leaving for personal reasons.

Schmidt’s office was responsible for the initial decision to allow all Syrians entering the country to stay – a departure from an EU agreement requires refugees to be registered in the country where the arrive in the bloc and remain there to have their asylum applications processed. “The dramatically increased number of asylum seekers in Germany present the federal agency, as well as the states and municipalities, with an enormous challenge,” Interior Minister Thomas de Maiziere said in a statement thanking Schmidt for his “excellent work.” The departure comes after Merkel was criticized in recent days by some in her own coalition for her handling of the crisis as the country struggles to keep up with the influx. The chancellor has defended her decision to allow in refugees.

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What else are they going to say?

OPEC Assumes Oil Price Will Recover Gradually to $80 in 2020 (Bloomberg)

OPEC is assuming the oil price will rise gradually to $80 a barrel in 2020 as supply growth outside the group weakens, a slower recovery than several member nations have said they need. The average selling price of the Organization of Petroleum Exporting Countries’ crude will increase by about $5 annually to 2020 from $55 this year, according to an internal research report from the group seen by Bloomberg News. Iran and Venezuela said they would like to see a price of at least $70 this month and most member countries cannot balance their budgets at current prices. “It’s much harder for OPEC to lift prices” after the revolution of U.S. shale oil, said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB, which forecasts Brent crude at $73 by the end of the decade.

“Eighty dollars by 2020 is pretty close to consensus view.” The price of crude has tumbled more than 50% in the past year as OPEC followed Saudi Arabia’s strategy of defending its share of the global market against competitors like U.S. shale oil. While both OPEC and the International Energy Agency expect growth in global supply to slow as low prices bite, Goldman Sachs predicts that a persistent glut will keep crude low for the next 15 years. Production from nations outside OPEC will be 58.2 million barrels a day in 2017, 1 million lower than previously forecast, according to the internal report.

The impact low prices is “most apparent on tight oil, which is more price reactive than other liquids sources,” according to the report. “Supply reductions in U.S. and Canada from 2014 to 2016 are clearly revealed.” OPEC expects little stimulus to global demand in the medium term as a result of cheaper oil, with daily consumption growing by about 1 million barrels a year to 97.4 million in 2020, according to the report. While demand from China, Russia and OPEC members will grow more slowly than forecast a year ago, developing nations with still account for the bulk the expansion, it said.

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Debt dominoes.

Defaults Mount in Beleaguered US Energy Industry (WSJ)

The well is running dry for deeply indebted energy companies. Samson Resources became the latest, and largest, victim of an industry downturn, as it filed for chapter 11 protection late Wednesday. Industry experts say more oil-and-gas companies are poised to follow the Tulsa, Okla., company into bankruptcy as oil prices remain low following a steep drop that began last year. The default rate among U.S. energy companies has accelerated in recent months to 4.8%, the highest level since 1999 and up from 3.3% in August, according to Fitch Ratings. Within that group, exploration and production companies like Samson are defaulting at an even higher rate, 8.5%, Fitch said. Default volume for such companies is the highest it has been in five years, at $10.4 billion in debt.

The broader U.S. corporate default rate is 2.9%, according to Fitch. Meanwhile, the yield on a basket of U.S. junk-rated energy bonds has risen to 11%, just off its highest level since July 2009 and up from 5.9% a year ago, according to Barclays PLC. The increase indicates a lack of investor confidence that the bonds will be repaid in full. Yields on debt rise as prices fall. “Everything has been turned upside down,” said Marc Lasry, head of hedge- fund firm Avenue Capital Group, which recently raised $1.3 billion for an energy-focused fund. “If you’re equity it’s been total devastation. If you’re the high-yield guys you’re in total shock and you have no idea what to do,” he said, referring to investors in stocks and risky debt.

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It took 8 years to figure that one out?!

Central Banks’ Lesson: Easy Money Alone Isn’t a Growth Salve (WSJ)

Central bankers have injected roughly $8 trillion into the global economy since the financial crisis. In return, the world has remained in a low-growth rut. The Federal Reserve cited market turmoil and a weak economic picture overseas in deciding Thursday not to back off from one of the most aggressive global monetary policies in decades. Whenever the Fed moves to raise interest rates, one lesson remains: Cheap money alone can’t solve the world’s economic ills. The Fed noted positive developments at home, including increased household spending and business investment, but worried conditions overseas could restrain U.S. growth and put further downward pressure on near-term inflation.

“A lot of our focus has been on risks around China, but not just China—emerging markets more generally and how they may spill over to the U.S.,” said Fed Chairwoman Janet Yellen, noting “the significant economic and financial interconnections between the U.S. and the rest of the world.” Her unease underscores in part the limits of loose monetary policy as a singular response to economic weakness. Instead of using the breathing room of low interest rates to revamp their economies, governments around the globe have failed to enact longer-lasting policy overhauls as they try to combat an array of demographic and other challenges.

“Finance, especially as motivated by central banks, is really only a lubricant to growth,” said Raghuram Rajan, head of the Reserve Bank of India, at a recent meeting of top global finance officials. “It can’t be the underlying driver of growth.” Since the financial crisis began in 2007, the average key interest rate set by central banks has fallen by around 4 percentage points in advanced countries and 2 points in emerging markets. Central banks have also bought bonds and other assets equal to 10% of global output to stir growth in the postcrisis era.

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TEXT

China Outflows Said To Surpass A Staggering $300 Billion In Just 75 Days (ZH)

We’ve detailed the story exhaustively, so we won’t endeavor to recap it all here, but the short version is that what was billed as a move to give the market a greater role in setting the yuan’s exchange rate actually had the opposite effect – at least in the short run. That is, the PBoC used to manipulate the fix to control the spot and now they simply manipulate the spot to control the fix, but unabated devaluation pressure has forced China to intervene on a massive scale and that intervention recently moved into the offshore market as well, as Beijing scrambled to close the onshore/offshore spread. This is costing China dearly in terms of FX reserves, the liquidation of which was so massive in August as to prompt Deutsche Bank to brand it “Quantitative Tightening”, as the reserve drawdowns are effectively QE in reverse.

This is of course the same dynamic that’s been taking place in Saudi Arabia in the wake of the petrodollar’s demise and mirrors the response across EMs which are struggling to support commodity currencies as prices collapse. Attempts to quantify the scope of China’s reserve burn have become ubiquitous, as the cost of offsetting the outflows from China effectively serves as a proxy for the extent to which the Fed would, were they to hike, be “tightening into a tightening”, as we’ve put it. On Wednesday we showed that Beijing liquidated $83 billion in Treasurys in July. That, as we also noted, “is before China announced its devaluation on August 11 and before, as we also first reported, it sold another $100 billion in Treasurys in August.”

Today, we get a fresh look at the numbers courtesy of SAFE which shows that on net, banks sold $128 billion in FX to Chinese non-banks in August. Nothing too surprising there, given that we already knew positioning for FX purchases for the banking sector as a whole dropped by $115 billion for the month. As Goldman notes however, when you include banks’ forward books the picture worsens materially. An alternative gauge that we believe is a closer reflection of the underlying trend of currency demand shows a significantly larger outflow of $178bn. Today’s data at US$178bn on our preferred gauge of underlying currency demand (i.e., outright spot plus freshly-entered forward contracts) is significantly higher than any of [the previous] releases.

This means, as Goldman goes on to point out, that outflows are actually far worse than what’s indicated by simply looking at China’s reserve drawdown, as banks look to be shouldering some of the burden themselves. So between July and August (inclusive of freshly entered forwards), outflows total around $261 billion. But that’s not all. Nomura is out with an estimate of what’s taken place since the start of September. Between onshore spot intervention and offshore spot and forward intervention, the bank estimates China has spent some $47 billion month-to-date stabilizing the yuan, $25 billion of which in the offshore market, reinforcing what we said a week ago after CNH soared the most on record [..]

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What grandmas can move their savings in.

China’s Top Financial Firms Get Green Light for $3 Billion IPOs (WSJ)

China International Capital and China Reinsurance each received approval from the Hong Kong stock exchange late Thursday to hold initial public offerings worth a combined $3 billion, people familiar with the deals said, signaling a possible revival of what has been a quiet quarter for the city’s capital market. CICC, which is China’s top investment bank, and China Reinsurance, its biggest reinsurer, have yet to decide when to go public due to volatile stock markets, though they are aiming to do so this year, the people said. The turmoil in Chinese stocks is hurting investor appetite for initial public offerings in Hong Kong, the world’s top venue for listings this year. In the third quarter, IPOs in Hong Kong have raised $1.8 billion, down significantly from $5.4 billion in the same period last year..

The two IPOs would be the first major offering since China Railway Signal & Communication’s $1.4 billion Hong Kong IPO in August. Hong Kong’s Hang Seng Index, which is weighted heavily with mainland Chinese stocks, has fallen 17% in the third quarter so far, as mainland stocks have tumbled. Those declines have weighed on investor sentiment. On Monday, the short-haul carrier Hong Kong Airlines called off indefinitely a planned listing in which it had hoped to raise $500 million. The potential listing of CICC would give its shareholders, including KKR & Co. and TPG Capital, the chance to exit their investments despite turmoil in Chinese stocks. Central Huijin Investment, the domestic investment arm of China’s sovereign-wealth fund, is the largest shareholder in CICC with a 43.35% stake.

Singapore’s sovereign-wealth fund GIC Pte. Ltd. holds 16.35%, while TPG Capital owns 10.3% and KKR holds 10%, according to its annual report. CICC was formed in 1995 by Morgan Stanley and China Construction Bank. as China’s first Sino-foreign joint-venture investment bank. Morgan Stanley sold its stake in December 2010 to a consortium that included GIC; Great Eastern Holdings, the insurer controlled by Oversea-Chinese Banking; and the private-equity firms KKR and TPG Capital. CICC has played a key role in advising the Chinese government on state-owned enterprise reform and guiding the listing of the country’s major overseas IPOs.

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Investment. In productive areas, that is.

Here’s Why China Could Drag The US Into Recession (Fortune)

No one can say for sure just how bad China’s economic situation has become, but analysts in the United States have been taking comfort in the fact that U.S. trade to China, and the Pacific Rim in general, constitutes a small sliver of U.S. GDP. And while the emerging world makes up a much bigger share of the global economy than it did a generation ago, the U.S. economy is still the largest in the world. When capital flees riskier economies like Brazil or Turkey, the U.S. is where it will run to. There’s one problem. These arguments ignore the fact that economists don’t agree on what, exactly, causes recessions. True, the Asian financial crisis of 1998 didn’t lead to slower growth in the U.S. But that doesn’t mean that a recession in the emerging world will fail to drag us down this time.

David Levy, economist and chairman of The Jerome Levy Forecasting Center, has been predicting that China would suffer an economic crisis and he believes that turmoil in emerging markets can take down the U.S. economy. Levy subscribes to what he calls “the profits perspective,” which examines global profits rather than country-specific GDP for indications of economic turmoil. How can global profits help predict recessions? Profits are the main factor that guides economic activity: when profits are high, businesses will invest and hire workers, and lenders will extend credit. When profits are low, the opposite occurs.

As it turns out, the largest contributor to global profits is net investment. When firms invest in capital equipment or when an individual invests in residential real estate, this is an act of wealth creation that does not require an immediate expense, in accounting terms. On a global scale, then, when investment is rising, we should also see profits rise and the global economy expand. But when we start to see investment stagnate or decline, we should expect profits to fall, putting recessionary conditions right around the corner.

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Slap that wrist!

Primary Dealers Rigged Treasury Auctions, Investor Lawsuit Says (Bloomberg)

The same analytical technique that uncovered cheating in currency markets and the Libor rates benchmark – resulting in about $20 billion of fines – suggests the dealers who control the U.S. Treasury market rigged bond auctions for years, according to a lawsuit. The analysis was part of a 115-page lawsuit filed in Manhattan federal court on Aug. 26 by Quinn Emmanuel Urquhart & Sullivan LLP and other law firms. The plaintiffs built their case against the 22 primary dealers who serve as the backbone of Treasury trading – including Goldman Sachs JPMorgan and Morgan Stanley – using data from Rosa Abrantes-Metz, an adjunct associate professor at New York University who has provided expert testimony in rigging cases.

Her conclusion: More than two-thirds of a certain type of Treasury auction appear to have been rigged. She found issues with other auctions, too. “The only plausible explanation is that Defendants coordinated artificially to influence the results of the auctions in the primary market,” according to the complaint filed by the Cleveland Bakers and Teamsters Pension Fund and other investors. The lawsuit, which seeks unspecified damages, comes as the U.S. Justice Department probes whether information in the Treasury auction market is being shared improperly by financial institutions, three people with knowledge of the investigation said in June.

Treasury traders at some banks learn of customer demand hours before auctions, and were communicating with their counterparts at other firms via chat rooms as recently as last year, Bloomberg News reported earlier this year. Abrantes-Metz’s analysis is similar to one used in lawsuits claiming bank and broker manipulation of the London interbank offer rate, or Libor. Those cases resulted in about $9 billion in settlements from the financial firms. Banks and brokers have paid about $9.9 billion in fines to global regulators related to manipulation of currency markets as of May.

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Bitcoin, rhubarb, it’s all the same.

Bitcoin Is Officially a Commodity, According to US Regulator (Bloomberg)

Virtual money is officially a commodity, just like crude oil or wheat. So says the Commodity Futures Trading Commission (CFTC), which on Thursday announced it had filed and settled charges against a Bitcoin exchange for facilitating the trading of option contracts on its platform. “In this order, the CFTC for the first time finds that Bitcoin and other virtual currencies are properly defined as commodities,” according to the press release. While market participants have long discussed whether Bitcoin could be defined as a commodity, and the CFTC has long pondered whether the cryptocurrency falls under its jurisdiction, the implications of this move are potentially numerous.

By this action, the CFTC asserts its authority to provide oversight of the trading of cryptocurrency futures and options, which will now be subject to the agency’s regulations. In the event of wrongdoing, such as futures manipulation, the CFTC will be able to bring charges against bad actors. If a company wants to operate a trading platform for Bitcoin derivatives or futures, it will need to register as a swap execution facility or designated contract market, just like the CME Group. And Coinflip—the target of the CFTC action—is hardly the only company that provides a platform to trade Bitcoin derivatives or futures.

“While there is a lot of excitement surrounding Bitcoin and other virtual currencies, innovation does not excuse those acting in this space from following the same rules applicable to all participants in the commodity derivatives markets,” said Aitan Goelman, the CFTC’s director of enforcement, in a statement. A request for comment sent to Coinflip’s chief executive via LinkedIn was not immediately returned. Coinflip consented to the order without admitting or denying any of its findings or conclusions. Since Coinflip is not alone in providing a platform to trade Bitcoin derivatives or futures, Goelman’s words imply that other unregulated exchanges could soon attract the attention of the CFTC.

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For calling a tool a tool.

Beppe Grillo Gets One Year Jail Sentence for “Defamation” (Tenebrarum)

Former Italian prime minister Silvio Berlusconi – the cavaliere – has been successful in fighting off legal challenges ranging from sex with minors to alleged tax fraud involving humungous amounts for well over adecade. On a number of occasions, the Italian State even created new laws specifically designed to keep the cavaliere out of jail. We admittedly just loved his constant successful evasions of justice. First of all, we were deeply worried by the thought of potentially losing this unsurpassed master of political entertainment. Secondly, when the Eurocracy decided it didn’t like him anymore, he was basically putsched out of office, and we greatly dislike the meddlers administering the Moloch in Brussels. Incidentally, ever since he has lost political power, Berlusconi’s successes in evading justice have been waning rather rapidly.

What was of course also great about Berlusconi’s brushes with the law was that they demonstrated unequivocally that the concept of “equality before the law” is a basically a bad joke. They showed the hoi-polloi that the modern-day rulers of the “democratic” societies of the West are in many respects really not much different from the feudal robber barons of the past. This seemed eminently useful from an educational perspective to us. This week we have been provided with yet another interesting demonstration by Italy’s justice system. An oppositional critic of the establishment who is seen as a genuine danger to the “European project” and the structures of the State because he enjoys massive voter support can evidently not hope to evade the long arm of the law as easily as the cavaliere was able to do in his heyday.

Beppe Grillo, leader of the wildly successful “5 Star Movement” has been handed a one year jail sentence (suspended, but still – one more misstep, and he’s locked up) and has been ordered to pay altogether 51,250 euro in fines and restitution. What was his crime? Did he defraud the tax man? Did he engage in bunga-bunga with minors? Did he have truck with the mafia? Nope – his alleged crime is defamation – and it appears that the law’s definition of “defamation” is “saying something about a public personality that said person doesn’t like”. Here is what happened, according to the press:

“Ascoli Piceno, September 14 – A judge here handed a suspended sentence of one year to 5-Star Movement (M5S) leader Beppe Grillo on Monday, for defamation of university professor Franco Battaglia. Grillo publicly insulted Battaglia during a speech on nuclear energy in May 2011 in the town of San Benedetto del Tronto, over an appearance Battaglia had made on the TV program Anno Zero. Referring to Battaglia’s comments, Grillo said, “You can’t let an engineer (…) go on television and say, with nonchalance, that no one died in Chernobyl. I’ll kick your ass, I’ll throw you out of television, I’ll report you to the police and send you to jail”. Battaglia testified that his car was also vandalized and he received a “strange phone call” prior to the act of vandalism. Grillo was ordered to pay a fine of €1,250 , and Battaglia was awarded compensation of €50,000.

It is well known that Beppe Grillo doesn’t mince words, but we can be reasonably sure that he was neither the man behind the “strange phone call” (we only have Battaglia’s say-so regarding this call), and that he probably didn’t vandalize the good professor’s car either. Most press reports didn’t go into too many details though – after all, Grillo had it coming, right?

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“Are the record temperatures due to climate change or due to El Niño? The answer is yes..”

Scorching Year Continues With the Hottest Summer on Record (Bloomberg)

Last month was the hottest August on record, topping out the hottest summer on record, according to data released on Thursday by the National Oceanic and Atmospheric Administration. It was the sixth month this year to set a new record: February, March, May, June, July, and August. This has been the hottest start to a year on record and the hottest 12 months on record. It follows the hottest calendar year (2014), and the hottest decade. In 136 years of global temperature data, we are in uncharted territory. And this year’s extremes are likely to continue as a strong El Niño weather pattern in the Pacific Ocean continues to rip more heat into the atmosphere. There’s now a 97% chance that 2015 will set yet another record, according to NOAA.

Results from the world’s top monitoring agencies vary slightly. NOAA and the Japan Meteorological Agency both listed August as the hottest month. NASA rated it one degree cooler than the previous record, set last year. All three agencies agree that 2015 is on track to be the hottest yet, by a long shot. The heat was experienced differently across the world, but few places escaped it altogether. In the U.S., chances are growing that above-normal temperatures will persist in Alaska and along the West Coast, as well as in the upper Midwest and Northeast, through February. That’s in line with what can happen during a strong El Niño. “Are the record temperatures due to climate change or due to El Niño? The answer is yes,” said Deke Arndt, chief of NOAA’s climate monitoring branch in Asheville, N.C.. “Long-term climate change is like climbing a flight of stairs. El Niño is like standing on tippy toes while you are on one of those stairs.”

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