Sep 062022
 
 September 6, 2022  Posted by at 8:45 am Finance Tagged with: , , , , , , , , ,  45 Responses »


Man Ray Departure of summer 1914

 

Australian Artist Removes Ukraine And Russia Mural After Backlash (BBC)
Labor Day Assessment (Jim Kunstler)
Main Gas Pipeline To EU Will Be Closed Until Sanctions Lifted – Kremlin (RT)
Enforcing Russian Oil Price Cap Is Problematic – Washington Post (RT)
Deterioration Of Living Standard Inevitable – Greece Gov’t Spokesman (KTG)
Leaked Paper Shows UK Cops Preparing For Greater Civil Unrest This Winter (ZH)
Kremlin Scathing Over Truss But Kyiv Praises Britain’s New PM (G.)
Belgium Warns Citizens Of Ten ‘Difficult Winters’ Ahead (RT)
Kiev Urges Crimeans To Prepare Shelters (RT)
EU Arms Stocks Drastically Depleted – Borrell (RT)
NATO Struggling To Supply Winter Uniforms To Ukraine – Der Spiegel (RT)
Ditching Russian Gas No Way To Reach Climate Goals – Putin (RT)
Trump Medical Records, Tax Documents Seized In FBI Raid: Judge (Fox)
Biden’s Speech Had It All Backwards (Lance Morrow)

 

 

According to Bloomberg Europe has reserved $375 Billion in heating bill relief. UK’s Truss has set aside £130 billion.


Think of all the gas you could have bought with that money. Now you get nothing.

 

 

 

 

Winter will be big
https://twitter.com/i/status/1566832570775621632

 

 

 

 

The Russians have been accused for many years. Wonder how that feels?!

 

 

Take it down and tear it up

 

 

 

 

They’ve done it. War is peace.

Australian Artist Removes Ukraine And Russia Mural After Backlash (BBC)

An Australian artist has painted over a street mural showing Ukrainian and Russian soldiers hugging, after a community backlash. The Melbourne artwork advocated a “peaceful resolution” between the two countries, creator Peter Seaton says. But some have likened the three-storey mural to Russian propaganda. Seaton – known as CTO – has apologised for his work, saying it was “clumsy” and he “didn’t think it would be so badly received”. Thousands of Ukrainians have been killed and Russian forces have been accused of war crimes since they invaded in February. Critics said the work – titled Peace Before Pieces – drew a false moral equivalence between the two sides.


“What would people think if a mural featured a rapist and a victim hugging?” co-chair of the Australian Federation of Ukrainian Organisations, Stefan Romaniw, said in a statement. “Trying to be ‘even-handed’ and accepting a false narrative that ‘all we need is peace’ in this case supports evil.” Ukraine’s ambassador to Australia Vasyl Myroshnychenko said it was “utterly offensive to all Ukrainians”. An art organisation, called Art4Ukraine Australia, said it had raised concerns about the artwork before it was started, and was shocked to see it completed. Seaton said he had stayed up until 03:00 local time on Monday to paint over the mural. “The mural cost me $2,000 to $3,000… I wouldn’t do that and spend 10 days doing it if I had thought it was going to hurt people,” he told the Australian Broadcasting Corporation later on Monday.

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“Annalena Baerbock, promised last week to keep demonizing Russia to support Ukraine’s black hole of racketeering “no matter what my German voters think or how hard their life gets.”

Labor Day Assessment (Jim Kunstler)

The Great Re-Set is an emergent phenomenon. It unspools naturally out of circumstances that reality presents. It goes its own way and we have to adapt to it, like it or not. Is our climate changing? Maybe. But so what? The climate has changed many times since the Bronze Age. If preventing that is actually out of the question, which it is, then what else are you going to do? The answer is: adapt intelligently to new conditions. When you clear away all the mental resistance to that — which amounts to a titanic struggle to keep things just the way they are — you’re going to have to make changes anyway. America was, for a time, the greatest industrial society and now that appears to be over. The disorder in all the moving parts of it is probably too gross to arrest at this point.

We shoved it into disorder by making some very bad choices, like getting rid of our factories and squandering our wealth on an absurd suburban living arrangement. Shale oil was a financial stunt to keep our set-up going a little longer. It was part of the colossal debt roll-up — the steering function of finance — that was used to compensate for our actual loss of mojo, and now that gambit has hit the wall. You can’t pretend to issue more debt when everyone knows it can never be paid back. Europe, the old home-base of Western Civ, never got around to shale oil, and its financial structure was such — reckless bond issuance with no fiscal accountability whatsoever — that now it is collapsing faster and worse than America. Europe’s leadership is clearly insane and it will likely be overthrown before long.

The foreign minister of Germany, the winsome Annalena Baerbock, promised last week to keep demonizing Russia to support Ukraine’s black hole of racketeering “no matter what my German voters think or how hard their life gets.” Stand by to see how that goes over.The angst around these circumstances is expressing itself in a generalized political nervous breakdown featuring the sort of tragi-comic behavior previously confined in lunatic asylums. Have you ever seen anything more patently insane than the sexual confusion acted out in American schools? Drag Queen story hours? Litter boxes in the bathrooms for students who identify as “furries”? That was the funny part. The Covid-19 event is no joke — rather a psychopathic mass murder.

Obviously, it was no accident. We have a pretty good idea who made it, and set it loose into the world. And the “vaccine” response looks plainly malevolent at this point. Yet the Covid episode is shot through with mystery. How did all those sedulously trained doctors get so mind-fucked as to persist in saying the “vaccines” were safe-and-effective, when the vaxxes were obviously killing and maiming people? They’re still stuck in that disgraceful posture, busy punishing their colleagues who demur, and dishonoring medicine — not to mention the thousands of public health officials still pushing vaxxes and boosters to this day. We can attribute that to mass formation psychosis, but even that reeks of mystery. Maybe, as the old American hymn goes, farther along we’ll understand why….

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Problems in [gas] deliveries arose due to sanctions that have been imposed on our country and a number of companies by Western countries, including Germany and the UK. There are no other reasons behind supply issues..”

Main Gas Pipeline To EU Will Be Closed Until Sanctions Lifted – Kremlin (RT)

The technical issues with gas deliveries to Europe via the Nord Stream 1 gas pipeline will persist until the West lifts sanctions it has slapped on Russia over the ongoing Ukraine conflict, Kremlin spokesman Dmitry Peskov said on Monday. On August 31, Gazprom completely shut down gas deliveries via the pipeline. Although initially Nord Stream 1 was slated to resume gas transit on Friday, Gazprom announced that it would remain closed indefinitely due to technical issues. “Problems in [gas] deliveries arose due to sanctions that have been imposed on our country and a number of companies by Western countries, including Germany and the UK. There are no other reasons behind supply issues,” Peskov noted.

The Kremlin spokesman also claimed that it is not Gazprom’s fault that “the Europeans absolutely absurdly make a decision to refuse to service their equipment,” which they are contractually obligated to do. Peskov stressed that all Nord Stream 1 operations hinge on “one piece of equipment that needs serious maintenance.” On Sunday, his comments were echoed by Alexander Novak, Russian Deputy Prime Minister, who blamed the European Union for the problems that have prevented the resumption of gas supplies via the pipeline. “The entire problem lies precisely on [the EU’s] side, because all the conditions of the repair contract have been completely violated, along with the terms of shipping of the equipment,” he said.

On Friday, Gazprom canceled the restart of Nord Stream 1 citing an oil leak in the turbine, which was detected during a joint inspection with manufacturer Siemens Energy at the Portovaya compressor station near St. Petersburg. At the same time, the malfunction could be remedied only in Canada, which has imposed sanctions against Moscow. Despite the maintenance issues, Europe has accused Russia of weaponizing energy supplies, with European Commission President Ursula von der Leyen describing Moscow as “not a reliable partner” in terms of gas supplies.

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Not if there is no oil. Not a problem at all.

Enforcing Russian Oil Price Cap Is Problematic – Washington Post (RT)

The latest initiative to set a price ceiling for Russian crude announced by the Group of Seven nations last week may encounter significant difficulties, the Washington Post reported on Friday. The scheme pushed by the G7 (the US, Canada, the UK, Germany, France, Italy, and Japan) is aimed at solving several problems simultaneously. It aims to undercut the revenue Moscow receives from selling crude to the global market, while maintaining energy flows to the West, and also keeping global oil prices in check. The plan, which is seen as a top priority of US Treasury Secretary Janet Yellen, includes banning services such as insurance and financing to ships transporting Russian crude above an agreed price level.


Analysts polled by the media are raising concerns that the ban could be easily circumvented if countries outside the G7, such as China and India, were to keep purchasing Russian oil above the capped price before selling it back to world markets at a premium. “The devil is in the details, and few details appeared today,” Bob McNally, a former energy official in the George W. Bush administration told the Post. “This was a process announcement, moving from exploring a price cap to implementing one.” According to Simon Johnson, a professor at the Massachusetts Institute of Technology, the price cap plan, which would allow Russia to trade oil at a discount, would be less disruptive to world markets than Europe’s previous idea of severing all imports of Russian oil. Experts have also warned that Russia could retaliate by slashing shipments of natural gas to Europe more sharply, saying such a scenario would exacerbate the economic crisis already gripping many Western countries.

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Preparing the people. How about a lockdown in homes they can’t heat?

Deterioration Of Living Standard Inevitable – Greece Gov’t Spokesman (KTG)

“Deterioration of living standard for quite some time is inevitable,” government spokesman Giannis Oikonomou warned Greeks on Sunday. “Citizens’ quality of life is threatened with sharp deterioration,” the spokesman said in an interview with Skai TV and an article he published at the Sunday edition of the newspaper tovima . His warning comes a day after the Development Minister warned of “the worse winter than the one in 1942 [Greece under German Nazi occupation].despite the government cheers of a flourishing economy and tourism revenues breaking all records. Referring to “the upcoming difficult winter”, Oikonomou said that the government is fully aware that this winter the people’s strength will be tested.

“The crises imported from Europe are threatening our every day life and the standard of living of all the society and even more that of the most vulnerable groups. So we should seek for ways and answers in order to stand by the citizens” he said.He noted that the government is examining ways to support the citizens without blowing up the economy.“The energy crisis has similar characteristics with the pandemic. It is external, it is imported and was not produced here, it has significant economic repercussions as the pandemic did, so it needs economic measures and support as it happened with the pandemic”.

Oikonomou’s warnings come one day after the Development Minister urged Greeks to seek alternative ways for heating, while the government has been reassuring all summer long that it was well “shielded” against the energy crisis cheering a flourishing economy and tourism revenues breaking all records.. Inflation stood at 11.1% in August and price hikes of 7%-10% for goods of basic needs are coming in supermarkets in September as companies have already announced.

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Truss is mad enough to send in police against her own people.

Leaked Paper Shows UK Cops Preparing For Greater Civil Unrest This Winter (ZH)

New Prime Minister Liz Truss may have only weeks to deliver a confidence turnaround in the UK economy or face a surge in violent crime and breakdown in public order caused by a cost-of-living crisis. The Times revealed police chiefs fear “economic turmoil and financial instability” has the “potential to drive increases in particular crime types,” such as shoplifting, burglary, vehicle theft, and online fraud and blackmail, as Brits face one of the worst collapses in living standards in a century amid energy hyperinflation. “Prolonged and painful economic pressure” could spark “greater civil unrest,” similar to the 2011 London riots, the leaked national strategy paper read. One police chief noticed increased violent crime as inflation is stuck at multi-decade highs.

This comes as energy regulator Ofgem increased the cap on power bills to a record £3,549 ($4,189) beginning Oct. 1 from £1,971 ($2,330). That cap is expected to rise to £5,439 ($6,427) by January and £7,272 ($8,594) by spring. Besides police, energy executives warned that mass civil unrest looms as people cannot afford their heating and electricity bills this winter. About 160,000 Brits have joined a movement against skyrocketing electricity bills, vowing not to pay come Oct. 1. Last Friday, Russia’s energy giant Gazprom PJSC halted flows via Nord Stream 1 to Europe, sending EU natural gas and electricity prices soaring on Monday. This means Truss hardly has any time to deliver a coherent strategy to save households from energy poverty and businesses from failing.

The massive protest in Prague this past weekend, where tens of thousands of Czechs flooded the streets, offers a glimpse of the impending social unrest that could hit the street of the UK if power bills continue rising without government intervention. Published last week was a new report via Verisk Maplecroft, a UK-based risk consulting and intelligence firm, warning there’s a high risk of social unrest in Europe later this year due to rising inflation. Europeans are finally waking up to how bad Western sanctions on Russia have backfired, as their governments sacrificed ordinary people over NATO’s proxy fight against Russia in Ukraine. These protests could spread like wildfire across Europe, and it appears the UK is preparing for the worst-case scenario.

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The Guardian should detest Truss, but guess what?!

Kremlin Scathing Over Truss But Kyiv Praises Britain’s New PM (G.)

Liz Truss’s imminent arrival in Downing Street as British prime minister has been greeted with scorn and scarcely veiled condescension from the Kremlin, but an outpouring of praise in Ukraine. Vladimir Putin’s chief spokesperson, Dmitry Peskov, expressed concerns that relations might deteriorate in comments to reporters shortly before Truss was announced as the winner of the Tory leadership race. “I wouldn’t like to say that things can change for the worse, because it’s hard to imagine anything worse,” Peskov said when asked if Moscow expected any shift in relations with Britain. “But unfortunately, this cannot be ruled out.”

The Kremlin has openly mocked and belittled Truss since she went to Moscow in February for talks with the Russian foreign minister, Sergei Lavrov. In the meeting, a fortnight before the Russian invasion, Truss challenged Lavrov on the buildup of 100,000 troops on Ukraine’s border, which Moscow denied was preparation for an attack. Lavrov complained that her interventions were “just slogans shouted from the tribunes”. Russian government spokespeople sneered after a Russian newspaper reported that Truss had confused Russian regions with Ukrainian territory and had to be corrected by the British ambassador. The British government said she had simply misheard a question from Lavrov.

Reacting to Truss’s victory in typically bombastic style, one host on Russian state TV declared: “Stupidity has triumphed: Liz Truss has become the new prime minister … If Boris Johnson achieved Brexit, she wants to achieve something entirely different – the end of the world.” Ukrainian politicians, however, offered an exuberant welcome. The country’s president, Volodymyr Zelenskiy, said British-Ukraine ties were already “ an unprecedentedly high level”, adding: “We in Ukraine know her well – she has always been on the bright side of European politics. And I believe that together we will be able to do a lot more to protect our nations and to thwart all Russian destructive efforts. The main thing is to preserve our unity, and this will definitely be the case.”

“In Liz, we Truss” tweeted Ukrainian deputy Rustem Umerov. “Mrs Truss is a solid supporter of Ukraine. Hope for a fruitful ongoing partnership between the UK and Ukraine.” Ukraine’s former president Petro Poroshenko congratulated Truss, writing on Facebook: “I am glad that the alliance between our nations will remain strong and powerful, which is crucial for our common victory over the Russian aggressor and Putin’s regime.” Ukrainian media reported that Truss’s first call would be to the country’s president, Volodymyr Zelenskiy. Some bloggers were said to have christened Truss “the iron lady”, an epithet bound to delight the new prime minister, who has styled herself on Margaret Thatcher.

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Belgium could get very bad.

Belgium Warns Citizens Of Ten ‘Difficult Winters’ Ahead (RT)

Belgium is facing up to ten “difficult winters” but is about to leap “20 years forward” by getting rid of its dependency on fossil fuels, Prime Minister Alexander De Croo said on Sunday. He was commenting on the looming energy crisis, exacerbated by sanctions on Moscow over the Ukraine conflict and a decrease in Russian natural gas supplies. Speaking to VRT TV, De Croo claimed that the conflict in Ukraine had affected the European economy much more than the Covid pandemic “could ever have had.” However, he said that the hardships are worth it, because “this is about the stability and security of the European continent.” “When we get it under control, it will be five difficult years, it will be ten difficult years with bad policy, but I also said that we as a country and European continent can handle this if we get all noses in the same direction,” De Croo pointed out.


He argued that the current situation has a bright side. “We can also jump 20 years forward, in terms of detaching from fossil fuels and breaking away from countries that we don’t like to trade with…,” the prime minister noted. Last week, the Belgian government published a plan to combat soaring energy prices. It set out measures to decrease energy consumption, such as lowering the temperature in government buildings to 19 degrees, limiting use of air conditioning to a maximum of 27 degrees and ordering to switch off lighting in federal properties and monuments between 7pm and 6am. According to the paper, the country “should be able to get through the winter without any major problems” and might even be able to help its neighbors.

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“..the active de-occupation.”

Kiev Urges Crimeans To Prepare Shelters (RT)

Kiev has issued a warning to people living in what it called “occupied territories,” including the Crimean peninsula, to prepare shelter and stock up on supplies. The appeal was shared to Twitter on Monday by an adviser to Ukrainian President Vladimir Zelensky. Mikhail Podolyak urged “residents of the occupied territories, including the Crimean peninsula, to follow the officials’ recommendations during de-occupation measures.” Furthermore, people should “prepare a bomb shelter, stock up on a sufficient amount of water and charge power banks right now.” Podolyak concluded his warning with the line “Everything will be Ukraine.” The warning comes after Podolyak announced last week that Ukrainian authorities are developing evacuation routes for Ukrainians living in Crimea “who want to leave the island during the active de-occupation.”


Kiev has repeatedly insisted that it considers Crimea, which became part of Russia following a referendum in 2014, to be an “occupied territory” and has vowed to seize the peninsula “by any means necessary.” The US-led NATO alliance also considers Crimea to be “illegally annexed” Ukrainian territory, and has demanded that Moscow return the region to Ukrainian control. A US official told Politico last month that Washington had given Ukraine its blessing to strike targets of its choosing in Crimea. Kiev’s warning to Crimeans comes as the Ukrainian government has been talking about a counteroffensive in the south of the country for several months now, vowing to reclaim the whole of Donbass, parts of the Zaporozhye and Kharkov regions currently held by Russian forces, as well as Crimea.

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“Hungarian Foreign Minister Peter Szijjarto argued that each state should be allowed to make its own decision on the issue..”

EU Arms Stocks Drastically Depleted – Borrell (RT)

Stocks of weapons within the European Union are greatly depleted as member states continue to supply arms and ammunition to Ukraine for use in its conflict with Russia, EU foreign policy chief Josep Borrell said on Monday.“The military stocks of most member states have been, I wouldn’t say exhausted, but depleted in a high proportion, because we have been providing a lot of capacity to the Ukrainians,” Borrell said during a debate with lawmakers in the European Parliament, adding that the arsenal will “have to be refilled.”The top diplomat said EU member states must start coordinating their military spending to avoid too many duplications and a waste of money.

If countries don’t coordinate properly, “the result will be a big waste of money, because this is not a way of canceling our duplications – there are a lot of them – or filling our gaps.”EU countries have been sending weapons to Ukraine since Russia launched its military operation in the neighboring country in February – and Borrell has since discussed launching a bloc-wide training mission for Ukrainian troops.On Monday, the chief diplomat said Brussels should have responded more quickly to requests for training Ukrainian troops a year ago.“Unhappily we didn’t, and today we regret it. We regret that last August we were not following this request, fulfilling this request,” he said, adding that “we would be in a better situation” if the EU had acted at the time.

The US and UK are already training Ukrainian troops in urban combat and instructing them on how to use Western-supplied weapons.Some EU nations are also already hosting training for Ukrainian troops, but no coordinated bloc-wide, EU-level program has yet been implemented – and some countries have voiced concerns over the idea. Luxembourg Defense Minister Francois Bausch told AFP last week that he was “not convinced” this would be the best way to help Kiev. Meanwhile, Hungarian Foreign Minister Peter Szijjarto argued that each state should be allowed to make its own decision on the issue, telling Politico that it “should not be done at a European Union level.”

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“..the German military is “quite critical” of the idea of handing over its equipment to Ukraine..”

NATO Struggling To Supply Winter Uniforms To Ukraine – Der Spiegel (RT)

NATO members have been scraping the barrel in their efforts to supply Ukraine with sufficient winter uniforms and field camp equipment, Germany’s Der Spiegel magazine reported on Monday. Kiev has apparently called on the bloc to urgently provide the necessary equipment before the cold weather sets in. According to Der Spiegel, Ukrainian Defense Minister Aleksey Reznikov wrote a letter to NATO Secretary General Jens Stoltenberg back in late July, calling on the military alliance to provide cold-proof field tents along with clothing for as many as 200,000 Ukrainian soldiers. The uniforms and equipment should be delivered as quickly as possible, the minister added, according to the magazine.

Several NATO nations have since been searching their warehouses for the needed supplies. The organization confirmed to Der Spiegel that it is in contact with member states on the issue. According to reports cited by Der Spiegel, so far the US and Canada, as well as Sweden and Finland, which are yet to join the military grouping, have together promised deliveries that could cover up to 50% of Ukraine’s demands.Military officials from various NATO members argue, though, that most of their nations’ stocks are reserved for the national armies, Der Spiegel says. The defense alliance has reportedly offered to replace the uniforms and equipment member states hand over to Kiev, using the so-called NATO trust fund, amounting to $40 million.

Germany also reportedly plans to join the effort, although it had earlier struggled to equip its own troops with the necessary gear, Der Spiegel says. By sending winter clothing and field camp equipment, Berlin could make “an important contribution” to Ukraine’s defense ahead of the approaching winter, Defense Minister Christine Lambrecht said. According to Der Spiegel, the German military is “quite critical” of the idea of handing over its equipment to Ukraine. Lambrecht herself repeatedly stated earlier that the German Armed Forces – the Bundeswehr – are about to reach the limits of what they can give away when it comes to weapons.

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Because you end up burning everything else.

Ditching Russian Gas No Way To Reach Climate Goals – Putin (RT)

Europe’s decision to slash natural gas imports while trying to reach climate goals was a mistake, President Vladimir Putin said on Monday during an environmental forum in Kamchatka in Russia’s Far East. “First, they (EU) jumped ahead, and then, after cutting off Russian gas supplies, returned everything that was reviled,” Putin stated. He emphasized that all nations are in favor of reducing emissions into the atmosphere, noting however that everything should be done in a timely manner. “And if you jump ahead, get cheap Russian gas, and then cut off the supply of this gas yourself and immediately switch back to everything that was previously condemned, including coal-fired generation, this, of course, is not the best option for solving global problems,” the Russian president said.


Under the REPowerEU plan, published in May, the European Union plans to phase out Russian fossil fuels by 2027 and boost its renewable energy production. However, skyrocketing gas prices in Europe, which some analysts believe could lead to an energy catastrophe this winter, have forced some states to fire up coal plants and expand nuclear power use.

Putin history

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“It is also not clear why investigators seized items labeled “Article of Clothing/Gift Item.”

Trump Medical Records, Tax Documents Seized In FBI Raid: Judge (Fox)

A federal judge revealed Monday that former President Trump’s medical records and documents related to his accounting information and taxes were seized during the FBI’s raid of his Mar-a-Lago home. U.S. District Judge from the Southern District of Florida Judge Aileen M. Cannon ordered Monday that an independent special master be appointed to review Trump’s records for attorney-client and executive privilege. The judge also ordered the Justice Department stop its own review of the material for investigative purposes. In the order, Cannon revealed the types of documents that had been seized during the raid. “According to the Privilege Review Team’s Report, the seized materials include medical documents, correspondence related to taxes, and accounting information,” Cannon wrote.

A source familiar told Fox News that the FBI seized 40 years of Trump’s medical records from Mar-a-Lago during the search. Congressional Democrats have been seeking Trump’s tax returns since 2019. Last month, a federal appeals court paved the way for the House Ways and Means Committee to finally obtain Trump’s tax returns from the Internal Revenue Service, under a law that permits the disclosure of an individual’s tax returns to the congressional committee. Trump may seek emergency intervention measures from the Supreme Court in an attempt to temporarily block any release of those tax records to the committee. [..] Last week, the Justice Department—after Cannon’s order—filed a more detailed list of documents taken in its raid of Mar-a-Lago, including dozens of classified documents and folders with classified markings.


Also included was a wide assortment of other items, including over 1,000 documents that did not have classified markings, several “Article of Clothing/Gift Item” entries and hundreds of printed news articles. It is also not clear why investigators seized items labeled “Article of Clothing/Gift Item.” In all, the DOJ said it took 18 such items. Meanwhile, Cannon’s order Monday halted the Justice Department’s “taint” or “filter” team’s review of seized records. “Furthermore, in natural conjunction with that appointment, and consistent with the value and sequence of special master procedures, the Court also temporarily enjoins the Government from reviewing and using the seized materials for investigative purposes pending completion of the special master’s review or further Court order.”

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In the WSJ, no less. Mr. Morrow is a senior fellow at the Ethics and Public Policy Center. His latest book is “The Noise of Typewriters: Remembering Journalism,” forthcoming in January.

Biden’s Speech Had It All Backwards (Lance Morrow)

Donald Trump isn’t a fascist, or even a semi-fascist, in President Biden’s term. Mr. Trump is an opportunist. His ideology is coextensive with his temperament: In both, he is an anarcho-narcissist. He is Elmer Gantry, or the Music Man, if Harold Hill had been trained in the black arts by Roy Cohn. He is what you might get by crossing the Wizard of Oz with Willie Sutton, who explained that he robbed banks because “that’s where the money is.” As for Mr. Trump’s followers, they belong to the Church of American Nostalgia. They are Norman Rockwellians, or Eisenhowerites. They regard themselves, not without reason, as the last sane Americans. You might think of them as American masculinity in exile; like James Fenimore Cooper’s Natty Bumppo, living in the forest has made their manners rough.

If there are fascists in America these days, they are apt to be found among the tribes of the left. They are Mr. Biden and his people (including the lion’s share of the media), whose opinions have, since Jan. 6, 2021, hardened into absolute faith that any party or political belief system except their own is illegitimate—impermissible, inhuman, monstrous and (a nice touch) a threat to democracy. The evolution of their overprivileged emotions—their sentimentality gone fanatic—has led them, in 2022, to embrace Mussolini’s formula: “All within the state, nothing outside the state, nothing against the state.” Or against the party. (People forget, if they ever knew it, that both Hitler and Mussolini began as socialists). The state and the Democratic Party must speak and act as one, suppressing all dissent.

America must conform to the orthodoxy—to the Chinese finger-traps of diversity-or-else and open borders—and rejoice in mandatory drag shows and all such theater of “gender.” Meantime, their man in the White House invokes emergency powers to forgive student debt and their thinkers wonder whether the Constitution and the separation of powers are all they’re cracked up to be. Mr. Trump and his followers, believe it or not, are essentially antifascists: They want the state to stand aside, to impose the least possible interference and allow market forces and entrepreneurial energies to work. Freedom isn’t fascism. Mr. Biden and his vast tribe are essentially enemies of freedom, although most of them haven’t thought the matter through. Freedom, the essential American value, isn’t on their minds. They desire maximum—that is, total—state or party control of all aspects of American life, including what people say and think.

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Paris

 

 

What is man’s influence?

 

 

 

 

 

 


A storm is brewing – Adam Kyle Jackson

 

 

Support the Automatic Earth in virustime with Paypal, Bitcoin and Patreon.

 

 

 

Sep 052022
 
 September 5, 2022  Posted by at 8:41 am Finance Tagged with: , , , , , , ,  89 Responses »


Marc Chagall Blue lovers 1914

 

‘Better To Negotiate Now Than Later’ For Ukraine, Retired US General Says (RT)
West And Russia Will Eventually Strike A Deal – Kremlin (RT)
Russia Is Unreliable Energy Partner – Germany (RT)
Germany Announces €65 Billion Inflation Relief Package Amid Energy Crisis (F24)
Greece Unfazed By European Energy Concerns (K.)
Greek Power Subsidy Cap As Of 2023 (K.)
Turkey Likely To Face Bankruptcy, Report Claims (K.)
Full Gas Storage Not Enough For EU To Last Through Winter – Reuters (RT)
UK Police Preparing For Unrest This Winter – Times (RT)
Kiev Spreading ‘Propaganda By Fear’ – French Ex-presidential Candidate (RT)
Mayor Of Antwerp: ‘Belgium Is Bankrupt, We Are The New Greece’ (AD)
The Truth About Carbon-Based Fuels (Denninger)
Biden’s Use of the Marines Violated Federal Policies and Regulations (Turley)
‘Never Seen’ Before: Embalmers Find Numerous Long, Fibrous Clots (ET)

 

 

Euro declines below 99 US cents for the first time in two decades.


Europe wholesale natural gas price up 30% just this morning.

 

 

 

 

 

 

George Webb $12 million a month to Zelensky

 

 


Note the date

 

 

Cologne

 

 

 

 

 

 

This should be in the MSM, not just RT. This guy is a hawk, but sees the west cannot win.

‘Better To Negotiate Now Than Later’ For Ukraine, Retired US General Says (RT)

Sustaining the conflict in Ukraine is becoming increasingly difficult for NATO, so Kiev must think about negotiating with Moscow, retired US Army brigadier general Mark T. Kimmitt has said in an opinion piece for the Wall Street Journal. Washington’s latest military aid package to Kiev last month included “older and less advanced”systems, which “may indicate that battlefield consumption rates have outpaced production to a point where excess inventories provided to Ukraine are nearly exhausted,” Kimmitt pointed out in his article on Thursday. Dealing with “dwindling stocks of leading-edge weapon systems” in NATO countries would likely mean a prolonged conflict between Ukraine and Russia. Such a scenario could result in “more pressure from supporting nations, sustained inflation, less heating gas, and falling popular support” in the West, he wrote.

Kimmitt, who served as assistant secretary of state for political-military affairs in 2008-09, suggested four ways to speed up the resolution of the conflict, which has now been underway for six months. The first option is to “dig deeper” into NATO stockpiles and send arms to Kiev that have so far been withheld by members due to their own national defense requirements, the retired general suggested. That’s something EU countries may be willing to do as it’s “better to use these weapons in Kherson than Krakow,” he added. The US and its European allies could also try ramping up production of the systems that are required by the Zelensky government, Kimmitt said, acknowledging that such a move would unlikely have an immediate effect on the situation on the ground.

The third option is “to step up the conflict” by providing Ukraine with longer-range systems, such as ATACM missiles, F-16 jets, and Patriots, and “broaden the rules of engagement to attack targets in Crimea and possibly Russia,” he wrote. However, the retired general warned that such escalation would definitely face a “response from Moscow” and create the risk of conflict spilling into Europe. The final available solution, according to Kimmitt, is for Ukraine to “push for an interim diplomatic resolution without (or with) territorial concessions.” “There is little incentive to negotiate” at the moment, but Ukrainian President Vladimir Zelensky “must recognize that diminishing resupplies would have a disastrous effect on his army, not merely for battlefield operations but for the message of declining outside support it would send to the people of Ukraine,” he insisted. “Beginning the diplomatic resolution would be distasteful, and perhaps seen as defeatist, but as there is little chance of climbing out of the current morass, it may be better to negotiate now than later,” the retired general said.

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“Russia has acquired “priceless experience” of dealing with the West in recent years and will use it to “conduct dialogue… in such a way that our interests are by no means hurt.”

West And Russia Will Eventually Strike A Deal – Kremlin (RT)

The crisis between Russia and the West will inevitably be resolved at the negotiating table, according to Kremlin spokesman Dmitry Peskov. He warned, however, that Moscow will be ready to defend its interests when that moment arrives. Western nations “have made too many mistakes and will have to pay for them,” he said on the Rossiya 1 TV Channel. “Any confrontation is followed by détente and any crisis situation is resolved at the negotiating table… this is what will happen this time as well,” the spokesman for Russian President Vladimir Putin said, adding that it’s unlikely to occur “soon.” When such talks materialise, Moscow will not hesitate to defend its interests, Peskov added. Russia has acquired “priceless experience” of dealing with the West in recent years and will use it to “conduct dialogue… in such a way that our interests are by no means hurt.”


The Kremlin official listed what he sees as Western errors, citing Germany’s “horrible”decision to send weapons to Ukraine for use against Russian soldiers. He also criticized European nations for supporting a government that allows “Nazis” to openly demonstrate their symbols and stage torchlit processions, calling it “no less horrible.” Peskov also blamed the energy crisis in Europe on “absurd” decisions by European politicians, who have refused to service equipment sold by Western firms to Gazprom. The Russian state energy giant “spent decades” earning its reputation of a reliable natural gas supplier, and has so far done nothing to tarnish it, the Kremlin spokesman claimed. “This is not Gazprom’s fault, this is fault of those politicians, who have taken the decision on sanctions,” he said, referring to the Russian company’s recent decision to indefinitely suspend gas transit through its Nord Stream pipeline, due to technical issues.

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In Germany, the world is upside down. Isn’t there a Brothers Grimm story about that?

Kim Dotcom:
“How to end the war in Ukraine. Germany can end the war in Ukraine single-handedly. The US cannot afford a proxy war with Russia if Germany backs out of sanctions against Russia. Let’s be honest: Russia is not a threat to Germany. It wants good relations with Europe.”

Russia Is Unreliable Energy Partner – Germany (RT)

German Chancellor Olaf Scholz claimed on Sunday that Russia cannot be considered a reliable energy supplier, and accused Moscow of breaching its contractual obligations. Speaking at a news conference with party leaders from the Greens and pro-business FDP, he said Moscow was always a reliable energy partner “even during the Cold War,” but that the rule no longer applies. According to the chancellor, the impact of the Ukraine conflict and related sanctions is being keenly felt in Germany, but Berlin will continue to support Kiev against Russia. Scholz expects Germany to pass through a rough period, but expressed his confidence that the nation will cope with the energy crunch during the upcoming winter season.

Germany is grappling with natural gas supply problems via Nord Stream 1, which has been entirely shut down since August 31. The natural gas pipeline under the Baltic was operating at 40% of capacity from June onwards, providing some 67 million cubic meters per day. The initial supply reduction occurred due to the delayed return of gas turbines after scheduled maintenance in Canada, resulting from Ottawa’s sanctions against Russia. In July, supplies through the pipeline dropped to 20%, as the remaining turbines required an overhaul. Earlier this week, supplies were entirely halted for a scheduled three-day maintenance break, and Gazprom later announced an indefinite shutdown, after an engine oil leak was found in the turbine.

Several EU politicians have accused Moscow of using gas exports as a geopolitical weapon, a claim denied by the Kremlin. Earlier this week, Moscow said only Western sanctions are preventing Nord Stream 1 from working at full capacity. This comes after repeated warnings from Gazprom CEO Alexey Miller that sanctions would obstruct Siemens Energy from carrying out maintenance of the pipeline’s equipment.

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“The latest agreement, which brings total relief to almost 100 billion euros since the start of the Ukraine war, was hammered out overnight into Sunday by Germany’s three-way ruling coalition..”

It’s not enough. Go talk to Putin..

Germany Announces €65 Billion Inflation Relief Package Amid Energy Crisis (F24)

The German government on Sunday unveiled a new multi-billion euro plan to help households cope with soaring prices, and said it was eyeing windfall profits from energy companies to help fund the relief. German businesses and consumers are feeling the pain from sky-high energy prices, as Europe’s biggest economy seeks to extricate itself from reliance from Russian supplies in the wake of Moscow’s invasion of Ukraine. Rapid measures to prepare for the coming cold season will ensure that Germany would “get through this winter,” Chancellor Olaf Scholz said at the unveiling of the €65 billion package. The latest agreement, which brings total relief to almost 100 billion euros since the start of the Ukraine war, was hammered out overnight into Sunday by Germany’s three-way ruling coalition of Scholz’s Social Democrats, the Greens, and the liberal FDP.

Among the headline measures are one-off payments to millions of vulnerable pensioners and a plan to skim off energy firms’ windfall profits. The government’s latest relief package came two days after Russian energy giant Gazprom said it would not restart gas deliveries via the Nord Stream 1 pipeline on Saturday as planned after a three-day maintenance. The government had made “timely decisions” to avoid a winter crisis, Scholz said, including filling gas stores and restarting coal power plants. But preventative measures, including a drive to reduce consumption, have done little to break a sharp increase in household bills.

The latest announcement follows two previous relief packages totalling 30 billion euros, which included a reduction in the tax on petrol and a popular heavily subsidised public transport ticket. But with the expiration of many of those measures at the end of August and consumer prices soaring, the government has been under pressure to provide new support. Inflation rose again to 7.9 percent in August, after falling for two straight months thanks to previous government relief measures. The take-off in energy prices is expected to push inflation in Germany to around 10 percent by the end of the year, its highest rate in decades.

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“..12 billion euros (or 6% of GDP) will be spent on power subsidies this year..”

Greece Unfazed By European Energy Concerns (K.)

Most of Europe is bracing for a tough winter. The war continues to rage in Ukraine and the Kremlin has transformed it into an energy weapon aimed at sinking European economies into recession and creating political upheaval, to Russia’s benefit. New, more transmissible variants of the coronavirus are expected to bring a resurgence of the pandemic and climate change is exacerbating the energy crisis, testing Europe’s mostly aged infrastructure and standing in the way of emissions reduction targets. These factors together paint a rather bleak picture of what the new normal looks like – and to top it all off, the European Commission is a deer caught in the headlights.

President Emmanuel Macron has told the French to prepare for sacrifices (for many these will be greater than for others) and called on his ministers not to succumb to the sirens of populism. Berlin has introduced a radical energy savings plan with cutbacks in private consumption and is reintroducing mandatory testing and masks as of October 1 to manage the pandemic. And concern about the recession – which is a threat to even the most advanced economies – is widespread. Greece appears to be the exception to all this. The messages it is sending is that it is protected from all sides, its economy is booming and Covid-19 is no longer a real problem. Greece, according to this relaxed narrative, is fine, and everything is under control. This is far from true, however. There’s a lot of care being given to subsidies, but the attitude is relaxed where everything else – the big and important issues – is concerned.

Take, for example, the government’s policy on energy: 12 billion euros (or 6% of GDP) will be spent on power subsidies this year, €2 billion of which will come from the budget; everyone will benefit, rich and poor, main residences and holiday homes. No effort is being made to contain electricity consumption, which is simply the right thing to do right now, given that natural gas supplies – and, as a result, power production capabilities – are far from guaranteed. Nothing is being done to bolster transportation and distribution networks either, even though energy from renewable sources can be produced but not adequately transported and what transport networks we do have leak 17% of their load in the process – double the European average.

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Next year, you’re on your own…

Greek Power Subsidy Cap As Of 2023 (K.)

The government plans to put an end to the high state subsidies in 2023 that have up to now covered between 85% and 94% of the electricity rate hikes. As there are no resources to keep subsidizing such high energy costs for households and businesses the government will change the mix of support measures. With the coverage of up to 94% of the increases, some households reached the point of zero bills, while others also secured small refunds. It is impossible to continue such a policy in 2023, government sources say, as the same fiscal conditions will not exist. Inevitably, the government will have to proceed to subsidy cuts, as the budget cannot sustain such spending for such a long period of time.

Alternate Finance Minister Thodoros Skylakakis told Skai Radio on Friday that in 2023 Greece should replace gas (which has very high rates) with other fuels, save energy, and protect the most vulnerable households and businesses. According to sources, the government seems to reject income criteria at this stage as it is an imperfect tool and socially unfair for employees and pensioners, given that tax evasion and concealment of taxable material are on the rise. However, a ceiling on electricity consumption will be considered, as it is no longer in the interest of households to use electricity for heating, given that oil is now significantly cheaper. As Skylakakis mentioned, today gas costs as if oil were at 500 euros per barrel, or gasoline at €6-7 per liter.

The exorbitant rates of natural gas are passed on to electricity bills, since 30-40% of electricity is produced from gas. Based on the above, the margins are frighteningly tight for 2023. According to initial calculations, the surplus from taxes will reach €1.5 billion next year, but this amount will have to finance other previously announced measures, such as the abolition of the solidarity levy for civil servants and pensioners, which entails some €470 million. At the same time, pensioners will get their first raise after many years.

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Elections in 9 months. This is where Erdogan’s most dangerous.

Turkey Likely To Face Bankruptcy, Report Claims (K.)

Turkey’s economy is on the verge of bankruptcy, according to a report submitted by economic experts to opposition leader Kemal Kilicdaroglu, Turkish newspaper Hurriyet reports. The report was prepared with the involvement of officials of Kilicdaroglu’s Republican People’s Party (CHP), Hurriyet says. The report says the difficulty in paying off Turkey’s debt will emerge after the presidential and parliamentary elections, set for June 2023 and claims it is quite likely that payments will be stopped. “Because of the chaos the present government will leave behind, the new government faces the risk of failure in its economic policy,” the report says. The report also says that the Turkish state will have difficulty in paying wages and pensions. The report’s authors say that the support of foreign banks and other financial institutions is necessary for Turkey to avoid bankruptcy.

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“To cope with this crisis situation, demand reduction will be even more important than storage..”

Full Gas Storage Not Enough For EU To Last Through Winter – Reuters (RT)

Fully-stocked gas storage facilities may not be sufficient to sustain European countries during the upcoming heating season, Reuters reported on Wednesday, citing analysts. According to Aurora Energy Research’s calculations, the bloc’s storages can only provide enough gas for up to 90 days of average demand. Modeling by data intelligence firm ICIS also shows that the region’s reserves may run dry by March. Analysts therefore agree that gas consumption should be slashed in order to avoid shortages. “To cope with this crisis situation, demand reduction will be even more important than storage,” Simone Tagliapietra, a senior fellow at the Bruegel think-tank, was cited as saying.


ICIS data shows that, if consumption is reduced 15% below the five-year average each month, the bloc may still have 45% of gas reserves left come spring if Russia continues supplying gas to the region at its current volumes, and 26% if Russia stops deliveries in October. Moreover, the EU’s failure to save gas this winter would affect next year’s storage levels. According to the Oxford Institute of Energy Studies, if Russia cuts gas flows and EU depletes its storages during the upcoming heating season, next year’s storages will be emptied as early as November, before the heating season is even in full swing. “The storage is the safety net, but a very significant demand reduction is what we need as a priority in this crisis,” Matthias Buck, Europe director for Agora Energiewende, told the news outlet.

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All police forces are.

UK Police Preparing For Unrest This Winter – Times (RT)

UK police fear a sharp rise in certain categories of crime and a risk of civil unrest this winter amid a cost of living and energy crisis, the Sunday Times reports, citing a leaked national strategy paper. The document compiled by police chiefs warns that “economic turmoil and financial instability”may lead to an increase in offenses such as shoplifting, burglary, vehicle theft, online fraud and blackmail. More children are likely to join drug gangs and more women may become subject to sexual exploitation. Contingency planning is reportedly underway to deal with the possible fallout from the cost of living crisis. “Prolonged and painful economic pressure”could create a risk of “greater civil unrest,”similar to the London riots of 2011, the paper is quoted as saying.

Police themselves may also be affected. “Greater financial vulnerability may expose some staff to higher risk of corruption, especially among those who fall into significant debt or financial difficulties,” the paper said. The gloomy forecast was revealed the day before the UK finds out the name of its new prime minister. Both candidates, Foreign Secretary Liz Truss and former chancellor Rishi Sunak, have pledged to take decisive action to address soaring energy costs. While Sunak has promised targeted support for the poorest in society, frontrunner Truss has not revealed the details of her strategy. Civil servants have been busy with contingency planning. According to the Financial Times, Whitehall officials are now compiling stocks of carbon paper to reproduce documents in a worst-case scenario of winter blackouts.

The Daily Mail has reported that this winter could see people told not to cook until after 8pm and not to use washing machines or dishwashers between 2pm and 8pm as part of energy rationing. Pubs may be ordered to close at 9pm and schools could switch to three-days weeks. The energy crisis in Europe has been exacerbated by sanctions on Moscow over the Ukraine conflict and a decrease in Russian natural gas supplies. While the UK is not directly dependent on Moscow for fuel, it is still suffering. The typical annual household fuel bill is expected to rise to around £3,500 from October, three times higher than last year. According to the Bank of England’s latest report, inflation will soar to 13% in October and from the fourth quarter of this year, the UK is projected to enter recession.

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A rare sane voice.

“Ukrainian propaganda” should be stopped “under the aegis of the UN and media organizations.”

Kiev Spreading ‘Propaganda By Fear’ – French Ex-presidential Candidate (RT)

A former presidential candidate in France has accused Ukrainian leader Vladimir Zelensky of using ‘war propaganda’ as a tool to obstruct the peace process. Veteran politician Segolene Royal also called on the UN and media associations to fight against such tactics. Royal’s suggestion, that some of the “war crimes” Kiev blames on Russian troops were part of ‘propaganda,’ has made her a target for widespread criticism. Speaking to BFMTV earlier this week, Royal said that “everyone knows that there is war propaganda by fear.” As an example, she cited the alleged shelling of a maternity hospital in Mariupol – the story which made headlines in Western media in early March. Zelensky blamed Russia for the incident that, as local authorities claimed, killed three people, including a child.

The Russian military denied targeting the medical facility and insisted the whole thing was a “completely staged provocation” by the Ukrainian side. “You can imagine that if there had been any victim, any baby with blood, in the age of cell phones we would have seen [their photos],” Royal stressed. The authenticity of the photos presented by Kiev as proof of the claimed Russian attack were questioned by many online. Marianna Vyshemirskaya, one of the pregnant women featured in the images that appeared on the front pages of many major outlets, later claimed that there had been no Russian airstrike on the hospital. She insisted that she told AP journalists about this, but they decided not to mention it in their reportage. Royal, who used to be a long-term partner of France’s former president Francois Hollande, also commented on the events of April in the town of Bucha near Kiev, after which Zelensky claimed that negotiations with Russia became impossible.

Ukrainian authorities accused the Russian forces of multiple atrocities against civilians in the town, including the rape of children. Moscow firmly denied the allegations of war crimes, insisting it was “yet another provocation” by Kiev. “The stories of child rape for seven hours under the eyes of the parents: but it’s monstrous to go and spread things like that only to interrupt the peace process,” the veteran French politician stated, without elaborating She also claimed that Zelensky used accounts of alleged torture of Ukrainian soldiers by Russian troops – which Moscow also vehemently denies – not only to impede any peace process but also to “remobilize” troops. She argued that as “there’s been enough horror of war and casualties” and that “Ukrainian propaganda” should be stopped “under the aegis of the UN and media organizations.” s

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Google translate.

“Fantastic profits are now being made from renewable energy. The billions are pouring into Paris. Europe can change that by saying: “You get a price that is still profitable, but we skim everything between that and the market price.”

Mayor Of Antwerp: ‘Belgium Is Bankrupt, We Are The New Greece’ (AD)

The mayor of Antwerp, Bart De Wever, says Belgium is bankrupt. “We are the new Greece,” he says on Belgian television. “This is of course not a crisis that Putin has caused, but that Europe has brought on itself by phasing out its own primary energy production this century.” “In America people are not in this shit. They have done the opposite of what we have done. They are now exporters of oil and gas, but they certainly weren’t twenty years ago. Climate standards are not of much use if all your companies go to America and China to produce, then you are bankrupt and the climate is not yet saved. This is the green dogmatics. People should start realizing this,” says De Wever in the Flemish current affairs program De Zevende Dag.

“Oil, gas and coal were no longer allowed. No investments were allowed in reserves. Germany does not have a single LNG terminal (a terminal for liquefied natural gas, ed.). The dumbest countries, Germany and Belgium, have phased out nuclear energy in parallel. We have pushed away all energy sources, making ourselves dependent on Putin. Now we hang on to it.” “The biggest power tool has to come from Europe. Von der Leyen is on the right track when she says that non-gas-related energy production must be decoupled from price. Fantastic profits are now being made from renewable energy. The billions are pouring into Paris. Europe can change that by saying: “You get a price that is still profitable, but we skim everything between that and the market price.” That would mean an injection of billions and billions for our country, which you can then give to the consumer.”

We could once have made a lot of profit with the nuclear power plants, now those assets are being given away The previous government, of which De Wever’s party was part, decided that the Belgian nuclear centers Tihange 2 and Doel 3 should close. “It’s a purple-green law. We now have a purple-green government. That is a recipe for catastrophe.” Yet he co-approved that law. “I was lonely then. Elio Di Rupo (ex-Prime Minister of Belgium, ed.) then exclaimed in parliament: “On which planet do the N-VA live, given that they are in favor of nuclear energy?” I cannot be caught not being consistent in positions . I have been defending nuclear energy since the 1980s.” Prime Minister Alexander De Croo says the country is “in an economic war situation”. “Everything has to be on the table,” it sounds.

According to De Croo, the nuclear power plants can only be restarted within five years. Arranging the necessary permits takes a lot of time. De Wever thinks that reaction is ‘a bit late’. “As beggars, we must now appear in Paris. We could once have made a lot of profit with the nuclear power plants, now those assets are being given away. I think it is a bit cheap that people now realize that it is not all that simple.” According to De Wever, it is time ‘for bitter truths’. “This country is bankrupt,” it sounds. “Look at our debt, government spending and deficit. It is worse than in Southern Europe. That has to do with policy. This government has done nothing about it. I have said before that in the next economic shock we will be the new Greece. Unfortunately that is now. Mr De Croo can say a lot, but he can’t do anything. There are no buffers.” s“Especially in the coming budget discussion, it will have to be looked at exactly what can be done”, continues De Wever. “We have many energy-intensive companies in Flanders. They are very vulnerable. In the port of Antwerp, certain factories in the petrochemical port are already shut down.”

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“..our progress as human beings from a standard of living perspective is entirely the result of our exploitation of carbon-based fuels..”

The Truth About Carbon-Based Fuels (Denninger)

Carbon-based fuels are the reason for modern society. Carbon-based fuels have been responsible for lifting every single area of the world out of privation and dependence on the whims of weather and vagaries of wandering consumers of vegetable material (otherwise known as “meat”) one region at a time — without exception. As the use of carbon-based fuels has been further-refined (e.g. from trees to coal to oil to natural gas) the lift in living standards has been dramatically increased, again without exception anywhere in the world. Not one single subset of society has ever moved forward on any other basis in human history. Ever. To obtain nuclear power, for example, one must exploit carbon-based fuels.

You need them to dig up the rock, separate the uranium, isotopically separate the U-235 from the U-238, produce the zirconium cladding for fuel pins (which also requires digging up rock in size and processing said earth), producing the steel for the containment building and pressure vessel, welding it all together, producing all the copper wiring (more digging, smelting, etc.) for the control systems and more. Not one single scintilla of harnessed nuclear energy would have ever been produced without carbon-based fuels. Indeed, without carbon-based fuels the smelting of the lead required for the first reactor pile shielding would have been impossible. To obtain lithium for a battery you must also exploit carbon-based fuels. One half-million pounds of earth must be dug out of the ground and processed to produce one such battery. This is before a single watt-hour of energy goes into it — that’s just to produce the empty pack.

When it wears out, and all things do, you must do that again. We do not use carbon-based fuels because we’re pigs. We use them because they are wildly less-expensive, easy to package, emit enormous amounts of energy for their mass and volume by comparison to all other means of energy storage other than nuclear, are thus easy to transport to where they’re needed compared against all others and can be stored without material degradation for significant periods of time. That means they’re both reliable and have predictable cost structures and the alternatives are not. Without predictable cost structures nobody can produce anything that has a lead time because there’s no way to price it on a forward basis and nobody will buy anything for delivery in the future if they do not know the price.

Whether we like to admit it or not, our progress as human beings from a standard of living perspective is entirely the result of our exploitation of carbon-based fuels. To reduce or replace them with something that has lower density, is more-difficult transport (or is even impossible to transport or store), is higher cost or has unpredictable reliability and forward cost will directly and ratably destroy our standard of living by the difference in contribution that carbon-fuels make and that which is not made up by a stable, reliable and cost-predictable alternative.s

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“..made the President look like he was giving a stump speech from Dante’s Inferno. Indeed, it almost had that High Chancellor Adam Sutler look from V for Vendetta..”

Biden’s Use of the Marines Violated Federal Policies and Regulations (Turley)

President Joe Biden’s speech in Philadelphia has produced sharply different responses from the media. On CNN, it was praised as a rallying cry for patriots. On conservatives sites, it was denounced as hateful and divisive. For many of us, however, the optics was a glaring distraction with the intense red background and prominently placed Marines framing the President. The use of the Marines and the Marine band raised concerns given the clearly political purpose of the speech. Indeed, the networks did not view the speech as an address to the nation and refused to give the White House primetime slots. While White House press secretary Karine Jean-Pierre assured the media that “it’s not a political speech,” it was unabashedly political from calls to get the vote out to direct attacks on “MAGA Republicans” and Donald Trump.

That again raised the legal questions over the use of the Marines in such a speech. Even CNN flagged the concern over the use of the Marines and CNN chief White House correspondent Kaitlan Collins stated the obvious that “it was a very political speech.” The optics of the speech instantly became a source of Internet chatter with the weird red background that made the President look like he was giving a stump speech from Dante’s Inferno. Indeed, it almost had that High Chancellor Adam Sutler look from V for Vendetta. (The comparison ultimately did not end with just the optics. Sutler warned his inner circle that “every day…brings us closer to November” and “I want this country to realize that we stand on the edge of oblivion. I want every man, woman and child to understand how close we are to chaos…to remember why they need us!”).

However, it was the use of the Marine guards that most stood out — framing the President as he declared Trump supporters to be a threat to democracy . Biden denounced “MAGA Republicans” thirteen times as well as repeated references to his past and possible future political opponent, Donald Trump. The speech was obviously political, as noted by CNN’s Collins, as a “full frontal attack” on his political opponents. The United States has long drawn a line between the work of federal employees in public service and the use of such employees for political purposes. The Hatch Act was passed in 1939 to curtail the political activities of civilian federal employees. The Marine Corps expressly forbids personnel from being used or participating in such political events.

“Active duty members will not engage in partisan political activities, and all military personnel will avoid the inference that their political activities imply or appear to imply DoD sponsorship, approval, or endorsement of a political candidate, campaign, or cause.” The other services have also drawn a bright line against such appearances. Army officials, for example, stress that their rules bar such involvement because “actual or perceived partisanship could undermine the legitimacy of the military profession and department.” In Department of Defense Directive 1344.10 the long list of prohibited involvement in political events include: “Attend partisan political events as an official representative of the Armed Forces, except as a member of a joint Armed Forces color guard at the opening ceremonies of the national conventions of the Republican, Democratic, or other political parties recognized by the Federal Elections Committee or as otherwise authorized by the Secretary concerned.”

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Not even human?!

‘Never Seen’ Before: Embalmers Find Numerous Long, Fibrous Clots (ET)

Mike Adams, who runs an ISO-17025 accredited lab in Texas, analyzed clots in August and found them to be lacking iron, potassium, magnesium, and zinc. Adams’s lab uses inductively coupled plasma mass spectrometry (ICP-MS), triple quadrupole mass spectrometer, and liquid chromatography-mass spectrometry, usually testing food for metals, pesticides, and glyphosate. “We have tested one of the clots from embalmer Richard Hirschman, via ICP-MS. Also tested side by side, live human blood from an unvaccinated person,” Adams told The Epoch Times. He found that the clots are lacking key elements present in healthy human blood, such as iron, potassium, and magnesium, suggesting that they are formed from something other than blood.

Adams is joining analytic forces with more doctors and plan to invest out of their own pocket in equipment in order to further determine their composition and probable causation. The string-like structures differ in size, but the longest can be as long as a human leg and the thickest can be as thick as a pinky finger. Richard Hirschman, a licensed funeral director and embalmer in Alabama, recalled that he has been in the trade since the tragedy of 9/11. “Prior to 2020, 2021, we probably would see somewhere between 5 to 10 percent of the bodies that we would embalm [having] blood clots,” Hirschman told The Epoch Times. “We are familiar with what blood clots are, and we’ve had to deal with them over time,” he said. He says that now, 50 percent to 70 percent of the bodies he sees have clots.

“For me to embalm a body without any clots, kind of like how it was in the day, prior to all of this stuff … It’s rare,” Hirschman said. “The exception is to embalm a body without clots,” he noted. [..] “Notice that the key elemental markers of human blood such as iron are missing in the clot (which is just at 4.4 percent of blood). Similar story with magnesium, potassium, and zinc. These are clear markers for human blood. Live human blood will always have high iron, or the person would be dead. These clots have almost no iron, nor magnesium, etc.,” Adams told The Epoch Times. Wade Hamilton, a cardiologist who is familiar with clots, told The Epoch Times: “The fact that the magnesium, potassium, and iron are very low in the samples could suggest that they are not the usual post-mortem clots, that in fact there was no blood flow in these vessels.

These structures raise but do not totally answer some interesting questions.” “The combination of the low electrolytes and the novel very strong string-like structures suggests that these areas where the string-like structures are seen in the blood vessels did not receive circulation. They are not ‘normal’ post-mortem findings according to experienced embalmers bent on obtaining total body vascular access from one site, which because of the unusual ‘clots,’ they were unable to do,” he added.

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Koko

 

 

 

 

 

 


the third-tallest and second-heaviest living bird, the cassowary, during its breeding season, lays bright green or pale green-blue eggs

 

 

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Mar 292019
 


Leonardo da Vinci Vitruvian man c1510

Leonardo wrote: “Vitruvius, architect, writes in his work on architecture that the measurements of man are distributed in this manner”:

The length of the outspread arms is equal to the height of a man.
From the hairline to the bottom of the chin is one-tenth of the height of a man.
From below the chin to the top of the head is one-eighth of the height of a man.
From above the chest to the top of the head is one-sixth of the height of a man.
From above the chest to the hairline is one-seventh of the height of a man.
The maximum width of the shoulders is a quarter of the height of a man.
From the breasts to the top of the head is a quarter of the height of a man.
From the elbow to the tip of the hand is a quarter of the height of a man.
From the elbow to the armpit is one-eighth of the height of a man.
The length of the hand is one-tenth of the height of a man.
The root of the penis [Il membro virile] is at half the height of a man.
The foot is one-seventh of the height of a man.

 

 

It’s almost silly to write anything on Brexit right now, because at right now+1 everything may have changed again. But almost silly is not the same as completely silly. At this point, whatever the outcome will be, it will serve to ridicule the idea and image of the UK as a functioning democracy. Something that ironically all participants in the Kabuki theater claim to be intent on preventing.

Both major parties -and supposedly other politicians too- say that “not respecting” the result of the Brexit referendum would imperil democracy. But “respecting” it at all cost will imperil it just as much, if not more.

On June 23, 2016, people voted on the question: “Should the United Kingdom remain a member of the European Union or leave the European Union?” But nobody knew what they were voting for, and that’s reflected in today’s lack of agreement on what Brexit means, almost 3 years after the vote.

People had been inundated with promises about what Brexit would mean, especially from the Leave side, anxious to paint a vision of a wealthy country ‘finally’ able to sign it own trade deals with the world, free from compulsory contributions to Brussels. But none of these things were facts, they were promises, most of whom have so far turned out to be empty.

The notion that it is the summit of democracy to make people vote on things they don’t understand (because no-one can tell them) is a curious one. And it’s perhaps even more curious to maintain that voting when people have a better idea of what their vote will entail is undemocratic. That would open a “chasm of distrust”, is the claim. In reality that chasm has long been opened, just by the behavior of politicians.

What is happening as we speak is that politicians are free to turn on a dime – and do just that- when it comes to who or what they elect to support, but people are not. And that is being presented, by both left and right, as -more- democratic. They would like you to believe this is how a democracy should function, but none of that is cast in stone. It’s just another idea.

Underlying this idea about democracy is undoubtedly to some extent the fear of violent reactions from the Leave side if there were to be a second referendum, or if Brexit gets postponed “too long”. But do they really expect the country to accept all this cattle trading lying down, where MPs scramble to find something, anything that is accepted by a narrow margin, and that narrow margin will be used to push through Brexit, which itself was voted through by a narrow margin?!

That’s a serious question that no-one seems to ask: do they believe the 6 million people who have signed an anti-Brexit petition, and the over 1 million who marched in London on March 23, and who may come out in even larger numbers on the 30th, to remain peaceful after having witnessed how their interests are being squandered by politicians jockeying for position?

 

In the June 23, 2016 referendum, the Leave side got 17,410,742 votes (51.89%) while Remain got 16,141,241 votes (48.11%). That’s awfully close. In most jurisdictions it would be impossible to hold a vote with so much potential impact on a country, on its legal system, its trade etc., with such margins. Often if not mostly, a 2/3 majority would be needed to make such drastic changes.

There are solid reasons for such legal requirements. Many people would summarize them as guaranteeing the quality of a democracy. To name an example, one would expect a potential petition to get rid of Britain’s royal family to not be decided by just one vote either.

But that’s what is very much possible in the case of Brexit. If one of the 8 indicative votes held in Parliament had gotten a one vote majority, it could have dictated the way forward. The same is true for Theresa May’s deal, even after suffering two historically large losses in the house. Boris Johnson left government because of it, then said he’s sign up anyway, and the day after did a 180º again. Is it that strange that a democracy would want to build in a few safeguards against such shenanigans?

 

But perhaps most of all, what other countries would turn to much sooner when mired in a mess such as Brexit under May has become, is a national government. Because that is the ultimate instrument to make sure your democracy functions. Provided it’s executed in good faith. Such a government need not consist of -only- politicians either. Which fits in nicely with the anonymous comment from the Guardian that I posted under the title The Failure of Party Politics earlier this week:

We are no longer able to govern, we cannot lead and we cannot decide. We must return the question of our place in the world back to the people and once that’s done we must dissolve this house and our parties and a new slate be mined because right now not one of us is fit to stand in this place and claim leadership of this disunited kingdom.

Drag the UK out of the EU on 1 or 2 votes now, after almost 3 years of chaos and incompetence, and you’re pretty much guaranteed to end up with more chaos, at least some of which will not have a peaceful character. In order to prevent that from happening, take a step back and start talking to each other. In a venue other than that Parliament, because it has failed the people.

You can renege on May’s article 50 decision and continue in the EU, just with a lot of broken trust. But push through May’s contorted plans today and you’re stuck outside pretty much forever. There’s a lot wrong with the EU, and there’s little wrong with the idea in itself of leaving it, but people didn’t vote to Leave only to get stuck with even more incompetence than they had with Brussels. And chances are they simply won’t accept it.

So forget about your party politics, that system is dead regardless of any outcomes, you’ve just shown that day after exasperating day. Get a group of judges and lawyers and business people and people from all walks of life together and start a national conversation based on trust. You’re not going to like any of the alternatives.

By sticking to the Brexit process as it’s been developing up to this point you’re not guaranteeing democracy, you’re guaranteeing its demise.

NB: I fully expect you to continue as you have. I have good friends who live in the UK, and many readers, but it’s not where I reside, so it’s not really any skin off my back. But you guys hurt my eyes. As I wrote earlier today: Sometimes I wonder what John Lennon would have said.

 

 

Feb 012017
 
 February 1, 2017  Posted by at 9:21 pm Finance Tagged with: , , , , , , , , ,  5 Responses »


Théodore Géricault The Raft of the Medusa 1819

 

Benoît Hamon won the run-off for the presidential nomination of the Socialist party in France last weekend. The party that still, lest we forget, runs the country; current president François Hollande is a Socialist, even if only in name, but he did win the previous election. Hamon ran on a platform of shortening the workweek from 35 to 32 hours, legalizing cannabis and ‘easing’ the country into a universal basic income of €750/month per capita. He’s way left of Hollande, who has a hilariously low approval rating of 4%.

Hamon doesn’t appear to have much chance of winning the presidency in the two voting rounds taking place on April 23 and May 7, but we all know how reliable election predictions are these days, and in that regard France is as volatile as the next country. With conservative runaway favorite François Fillon accused of having paid his wife $1 million for doing nothing and Marine Le Pen, already desperately short on funds, targeted by the EU over money, who knows what and who will decide the election? Hamon may simply be the only one left standing on the day after the vote.

I bring up Hamon, about whom I know very little, not least because he was more or less a late minute addition to the field that was supposed to have been an easy win for his former boss Manuel Valls, I bring up Hamon because he confirms something I’ve been talking about for a while. That is, the fact that ‘leftist France’ chooses to go even more left than expected, goes a way towards proving my ‘theory’ that voters in many if not most western countries will move away from their respective political centers, and towards extremes.

This is an inevitable consequence of traditional, less extreme, politicians and parties having all become clustered together in shapeless and colorless blobs in the center, both in the US and in most European countries, combined with the fact that all of their policies -especially economic ones- have spectacularly failed vast amounts of people (or voters, if you will).

The failure of their policies has been hidden from sight by interest rates squashed like bugs, ballooning central bank balance sheets, real estate bubbles, fabricated economic data, and fantasy stories in their media that seem(ed) to affirm the ‘recovery’ tales, but they all ‘forgot’ to -eventually- line up reality with the fantasies. They never made 99% of people actually more comfortable. The entire politics-economics-media deus ex machina has failed because it was/is based on lies and fake news, meant to hide economic reality (i.e. negative growth), and this will have grave consequences.

People have started noticing this despite the official and media-promoted data. And they’re not going to “un-notice”. Not only don’t people -once they find out- like having been lied to for years, they dislike worsening living conditions even more. And that’s all they get; the only people who get it better are the rich, because without that the machinery can’t continue pumping up the ‘official’ numbers.

 

And what do you get? People complain about Trump. And they focus on one of his -seemingly- crazy ideas: temporarily closing US borders to refugees from nations with large Muslim populations. Which is a fine thing to resist, because yes, it’s a pretty silly idea, but why haven’t they paid similar attention to how they’ve been lied to for years on both the economy and on Syria, on how Obama became the Drone King and how many innocent people lost their lives because of that?!

To how favorite all-American gal Hillary screwed up Northern Africa when she declared We Came We Saw He Died and the death of Libya’s Gaddafi, who gave his country the highest living standards in the region, free education and free health care, but was murdered by Hillary’s US troops, co-created the chaos that led to so many people wanting to flee their homelands in the first place?

Why is that? Why are there protests when people are halted at an American border crossing but not when American and British and French and Australian forces blow the very same people’s homes to smithereens? Could that have something to do with where the protesters get their information? With how much they know about what’s happening in the world before it reaches their doorsteps?

Yes, people are suffering, and it’s very unfair what’s happening to many caught in the Trump Ban, but does anyone really believe that that’s where it started, that this is the first time (or even a unique time) that protest is warranted, or more so? And if not, why is it happening? Because people only notice stuff when it hits them in the face, I would presume, but who among the protesters would volunteer to agree they live their lives with blinders on? Not many, I would venture. So why do we see what we do? Where were you when Obama ordered yet another child, a family, which hadn’t yet made it to a US airport but might as well have, to be collateral damage?

I get why you’re protesting the Trump ban, but I don’t get why that’s your prime focus. I am guessing that most of the protesters would not have voted Trump in the first place, and would have been much happier -to put it mildly- for Hillary to be president right now. But if you would have paid attention in history class, you would know that it was Hillary who brought the refugees to your welcome mats to begin with.

Take it a step further, like to the January 21 women’s march, and you would realize that the vast majority of the refugees would have much preferred to stay where they grew up, where the women in their families, their sisters and aunts and daughters used to live. Most of whom are gone now, they’re either dead or diaspora-ed to Jordan, Turkey, Alberta, Sweden, Greece. All on account of Obama and his crew. Who of course blamed it on Assad and Putin. “I killed 1000 children, but I had to because those guys are so dangerous….”

This generation of refugees, of the huddled masses that the Statue of Liberty is supposed to teach you about, didn’t come to America because it’s the promised land; they came because America turned their homeland into a giant pile of rubble surrounded by garbage heaps and minefields. I don’t know if you’ve ever seen pictures of Aleppo before it was destroyed, but I dare you to tell me there is even one existing American city today that’s more beautiful than Aleppo was before Americans and their allies reduced it to dust. Here you go. This is Aleppo before America got involved in Syria:

 

 

There’s very little left of that beautiful city, with its highly educated people and their lovely happy children. And none of that has anything at all to do with Donald Trump! I don’t want to give you pics of what Aleppo looks like now. I want you to remember how lovely it was before ‘we’ moved in, years go. Sure, what you hear and see in the west is that Assad and Putin are the bad guys in this story. But now that the US/EU supported ‘rebels’ are gone, dozens of schools are reopening, and medical centers, hospitals. Who are the bad guys now?

And yeah, Trump is an elephant, and elephants are always awkward and they’re messy and they tend to kick things over and when they make mistakes those tend to be huge, but how much valuable china does the US really have left anyway? Isn’t it all perhaps just a sliver off target, the demos, the outrage and indignation? Is the idea that your army can destroy people’s living environments with impunity without you protesting in anything approaching a serious way, and that then you get to demand, through protest, that those same people are allowed entry into your country? That’s way too late to do the right thing.

 

I started out making the point that as our politico-economic systems are failing, voters will move away from the center that devised and promoted those systems, and that this will happen in many countries. The US could have had Bernie Sanders as president, but the remaining powers in the center made that impossible. Likewise, many European countries will see a move towards either further left or further right.

Since the former is mostly dormant at best, while the latter has long been preparing for just such a moment, many nations will follow the American example and elect a right wing figurehead. This will cause a lot of chaos, but that’s not necessarily a bad thing. People need to wake up and become active. The recent US demonstrations may be a first sign of that, even though they look largely out of focus. More than anything else, people need a mirror, they need to acknowledge that because they’ve been in a state of mindless self-centered slumber for so long, they have work to do now.

And that work needs to consist of more than yelling at the top of your lungs that Trump and Le Pen and Wilders are such terribly bad people. For one thing because that will only help them, for another because they were not the people who put you to sleep or were supporting mindless slaughter in faraway nations or were making up ‘official’ numbers as your economies were dumped into handbaskets on their way to hell. So ask yourselves, why did you believe what Obama was saying, or Merkel, or Cameron, Sarkozy, Rutte, you name them, while you could have known they were just making it all up, if only you had paid attention?

Why? What happened? Why did the term ‘fake news’ only recently become a hot potato, even though you’ve been bombarded with fake and false news for years? Is it because you were/are so eager to believe that your economy is recovering that any evidence to the contrary didn’t stand a chance? If so, do realize that for many people that was not true; it’s why they voted for the people you now so despise. Is it perhaps also because you’re so eager to believe your ‘leaders’ do the right thing that you completely miss out on the fact that they’re not? And whose fault is that?

 

In yet another angle, people claim that the planet’s in great peril because Trump doesn’t ‘believe’ in climate change. But it’s not Trump’s who’s the danger when it comes to climate change, you are, because you’re foolish enough to believe that things like last year’s infinitely bally-hood Paris Agreement (CON21) will actually ‘save’ something. That belief is more dangerous than a flat-out denial, because it lulls people into sleep, while denial keeps them awake.

It’s the idea that there’s still time to rescue the planet that’s dangerous, because it’s the perfect excuse to keep on doing what you were doing without having to feel too much guilt or remorse. You’re not going to save a single species with your electric car or whatever next green fad there is, the only way to do that is through drastic changes to your society and your own behavior.

That’s not only true with respect to the climate, it’s just as valid with respect to the refugees on your doorstep. If you want to rescue them, and those who will come after them, the only thing that makes any difference is making sure the bombing stops, that the US and European war machines are silenced. If you don’t do that, none of these protests are of any use. So sure, yeah, by all means, protest, but make sure you protest the real issues, not just a symptom.

That doesn’t mean you should shut the door in the face of these frail forms fainting at the door, that’s just insane, but it does mean that after welcoming your guests, you will also have to make sure what brought them there must stop. If you stop killing and maiming these people, and help rebuild Aleppo and a thousand other places, they won’t need to come to your door anymore.

 

As for the political field, unrest will continue and grow because the end of economic growth means the end of centralization, and our entire world, politically, economically, what have you, is based on these two things. Today, unrest is the only growth industry left. And it’s not going away anytime soon. It’s a new day, a new dawn, it’s just that unfortunately this is not going to be a pretty one.

Still, none of it is unexpected. The Automatic Earth has been saying for years, and with us quite a few others, that this was and is inevitable. Of course there are those who say that we cried wolf, but we’ll take that risk any day. Saw a nice very short video of Mike Maloney saying in 2011 that Obama would have to double US debt between 2008 and 2016 just to keep the entire system from starting to collapse, running to stand still, Alice, Red Queen and all. And guess what?

There’s the recovery as it’s been sold to you. It’s all been borrowed, to the last penny. Will Donald Trump double US debt once again? Will the EU countries do the same? How about Japan and China? And to think that federal debt isn’t even the worst threat, personal debt is, and so many of us carry so much of that, and try to pass off our mortgaged homes as assets, not debt. An increasingly desperate game on all fronts.

Mar 302016
 
 March 30, 2016  Posted by at 8:59 am Finance Tagged with: , , , , , , , , ,  1 Response »


William Henry Jackson Tamasopo River Canyon, San Luis Potosi, Mexico 1890

Yellen Is Worried About Global Growth – And Wall Street Loves It (MW)
Yellen Says Caution in Raising Rates Is ‘Especially Warranted’ (BBG)
The US Is in for Much Greater Civil Unrest Ahead (Dent)
Steel Industry Dealt Hammer Blow As Tata Withdraws From UK (Tel.)
Bonfire of the Commodities Writedowns is Just Starting (BBG)
Japan Industrial Output Drops 6.2% In February, Most Since 2011 (BBG)
China’s True Demand For Copper Is Only Half as Much as You Think (BBG)
China’s Large Banks Wary on Beijing’s Plan for Bad Debt to Equity Swaps (BBG)
Eurozone ‘Flying On One Engine’: S&P (CNBC)
Europe’s Bond Shortage Means Draghi Is About to Shock the Market (BBG)
Oil Explorers Face Challenge to Secure Financing as Oil Prices Fall (WSJ)
The Rise and Fall of Goldman’s Big Man in Malaysia (BBG)
New Student Loans Targeted Straight at Mom and Dad (WSJ)
Free Lunch: Basic Welfare Policy (Sandhu)
Always Attack the Wrong Country (Dmitry Orlov)
European Border Crackdown Kickstarts Migrant-Smuggling Business (WSJ)
UN Chief Urges All Countries To Resettle Syrian Refugees (Reuters)

The price we all will pay for this lousy piece of theater rises by the day.

Yellen Is Worried About Global Growth – And Wall Street Loves It (MW)

Janet Yellen offered up her best impression of a dove Tuesday. In other words, the Federal Reserve chairwoman stressed her intent to gradually lift benchmark interest rates off ultralow levels. Unsurprisingly, Wall Street cheered the prospect of an ever slower approach to raising interest rates as she spoke at a highly anticipated speech at the Economic Club of New York. The Dow Jones and the S&P 500 both posted their highest settlements of 2016. The dollar turned south and yields for rate-sensitive Treasurys touched one-month lows. What is worth taking note of is Yellen’s increased focus on forces outside of the U.S. as she outlines a plan to gingerly normalize interest rates, reiterating an updated March policy statement and the Fed’s reduced expectations for rate increases in 2016 (two versus an earlier projection for four).

In a note, Deutsche Bank chief international economist Torsten Slok pointed out that Yellen & Co. have been more influenced by events in the rest of the world since late May. Mentions of China, the dollar and the term “global” have been more readily used by the Yellen as the emergence of negative interest rates in Japan and Europe have underscored consternation about the state of the world economy and. in particular, a slowdown by the world’s second-largest economy: China. Slok’s bar graph below illustrates the point. The Fed’s mandate, as Yellen reiterated Tuesday, is centered on the twin goals of maximum employment and stable prices, the latter of which the Fed defines as inflation at or near its 2% target level. But lately, fears that storms brewing abroad could wash ashore in the U.S. have come into greater focus, as the excerpt from Yellen’s Tuesday comments show:

“One concern pertains to the pace of global growth, which is importantly influenced by developments in China. There is a consensus that China’s economy will slow in the coming years as it transitions away from investment toward consumption and from exports toward domestic sources of growth. There is much uncertainty, however, about how smoothly this transition will proceed and about the policy framework in place to manage any financial disruptions that might accompany it. These uncertainties were heightened by market confusion earlier this year over China’s exchange rate policy.”

Read more …

How this is any different from interpreting the incoherent utterances of an oracle intoxicated by fumes, I don’t know.

Yellen Says Caution in Raising Rates Is ‘Especially Warranted’ (BBG)

Federal Reserve Chair Janet Yellen said it is appropriate for U.S. central bankers to “proceed cautiously” in raising interest rates because the global economy presents heightened risks. The speech to the Economic Club of New York made a strong case for running the economy hot to push away from the zero boundary for the Federal Open Market Committee’s target rate. “I consider it appropriate for the committee to proceed cautiously in adjusting policy,” Yellen said Tuesday. “This caution is especially warranted because, with the federal funds rate so low, the FOMC’s ability to use conventional monetary policy to respond to economic disturbances is asymmetric.” Fed officials left their benchmark lending rate target unchanged this month at 0.25% to 0.5% while revising down their median estimate for the number of rate increases that will be warranted this year to two hikes, from four projected in December.

U.S. Treasuries advanced following her remarks, while the dollar weakened and U.S. stocks erased earlier losses. The Standard & Poor’s 500 Index was up 0.5% to 2,046.90 at 1:52 p.m. in New York, after falling as much as 0.4%. “Yellen has doubled down on the dovishness from the March statement and press conference,” said Neil Dutta at Renaissance Macro Research. “Global economic developments are cited very prominently.” Yellen said the FOMC “would still have considerable scope” to ease policy if rates hit zero again, pointing to forward guidance on interest rates and increases in the “size or duration of our holdings of long-term securities.”

“While these tools may entail some risks and costs that do not apply to the federal funds rate, we used them effectively to strengthen the recovery from the Great Recession, and we would do so again if needed,” she said. Fed officials’ quarterly economic forecasts for the U.S. didn’t change much in March, while Yellen stressed in a post-FOMC meeting press conference on March 16 that their sense of risks from global economic and financial developments had mounted. Yellen mentioned two risks in her New York speech. Growth in China is slowing, she noted, and there is some uncertainty about how the nation will handle the transition from exports to domestic sources of growth. A second risk is the outlook for commodity prices, and oil in particular. Further declines in oil prices could have “adverse” effects on the global economy, she said.

Read more …

“The politics are more polarized than even the Depression and more like the Civil War – and we have over 300 million guns in this country.”

The US Is in for Much Greater Civil Unrest Ahead (Dent)

I made a confession to our Boom & Bust subscribers last month. While I generally advise against owning most real estate, I have a secluded property in the Caribbean. It’s the only property I own (I rent my home in Tampa) and I know for a fact that its value will likely depreciate in the great real estate shakeout I see ahead, although likely by half as much as a high-end property in Florida. The reason I own this property is because I see rising chances for civil unrest in the inevitable downturn ahead, especially in the U.S. I want a place to go if things get really bad, and it looks increasingly likely that they will. The evidence for that is piling up in this year’s presidential race… What we have now, surprising to most political analysts, is a genuine voter revolt against the rich and the establishment.

Trump is taking over the Republican Party, and Sanders is threatening Clinton beyond what almost anyone would have forecast a year ago, even if he can’t quite seem to win. And it doesn’t matter if Trump can back up most of his statements with facts, or if Sanders’ policies have any chance of being viable economically. They understand what the pundits don’t. The people are angry and they want change. When the U.S. came out of World War II, it emerged with the strongest and most successful middle class in the decades that followed. Never before had there been such a middle class emerge in all of history. We had a vibrant workforce with higher wages… a baby boom… startling innovation… But now we have led the decline of that middle class, with wage competition from Asia, Mexico and other emerging countries, and the rapid rise of the professional and speculative classes.

Meanwhile, many higher-paid manufacturing jobs have moved overseas, and even service jobs like call centers have moved to places like India. More immigrants have come in and competed as well. That’s why a silent “near” majority of Americans are anti-immigrant and free trade… Duh! But here’s the real rub. Higher incomes help you survive at a better standard of living, and real wages have only been declining since 2000. They’ve barely risen even back to 1970s levels. That’s enough to be mad about. The ability to live as you want, to retire longer term, and to have power in society comes more from wealth – and that is way more skewed towards the upper class. And that’s where the middle class in America has lost the most ground. Look at this chart from a recent study by Credit Suisse of the share of wealth held by the middle class. Look at how we compare to the rest of the top countries.

The U.S. is the worst! No wonder the middle class here feels the most dis-empowered! It explains why America’s electorate either wants to nominate a political outsider who talks tough and promises to restore our power in the world… or an avowed socialist to combat income and wealth inequality by attacking Wall Street and the top 1%. I have said for a long time that the two countries I most expect to have the worst potential for civil unrest are China… and the U.S. China because it created the greatest over-expansion and urbanization bubble in modern history. Now, it has 250 million unregistered migrant urban workers from rural areas that will be stuck without jobs (and nowhere to go) after they can’t keep building infrastructures for no one. But the U.S. has the most polarized politics of any major country, and the greatest income and wealth inequality in the developed world. The politics are more polarized than even the Depression and more like the Civil War – and we have over 300 million guns in this country.

Read more …

A minister mentioned temp government ownership of the steel industry this morning. Like China, I guess?!

Steel Industry Dealt Hammer Blow As Tata Withdraws From UK (Tel.)

The steel industry was dealt a hammer blow on Tuesday as it emerged that Tata plans to completely withdraw from its British operation, putting thousands of jobs at risk. The Indian conglomerate’s board decided to pull out of the UK after rejecting a turnaround plan for Port Talbot, the nation’s biggest steelworks. The South Wales plant employs around 4,000 who face an uncertain future as Tata now seeks a buyer for its British steel assets. Steelworks in South Yorkshire, Northamptonshire and County Durham are also set to be put up for sale. A Tata spokesman said: “The Tata Steel Board came to a unanimous conclusion that the [turnaround] plan is unaffordable… the assumptions behind it are inherently very risky, and its likelihood of delivery is highly uncertain.”

Tata said it had ordered its European steel subsidiary to “explore all options for portfolio restructuring including the potential divestment of Tata Steel UK, in whole or in parts”. The decision by Tata placed the Government under pressure to step in to save Britain’s steel industry. Anna Soubry, the industry minister, has said that “in the words of the Prime Minister, we are unequivocal in saying that steel is a vital industry”. As Tata’s decision emerged from Mumbai, officials were looking at options to secure the survival of British steel making under new owners. It is understood they could include similar measures to those taken by the Scottish government to facilitate the acquisition of two former Tata mills by the commodities investor Liberty House. Taxpayers footed the bill to keep workers on standby and the plants were even temporarily nationalised while the deal was finalised.

Read more …

“For energy companies, the price-book ratio is about 31% below its 10-year average, while the discount for miners is 44%.”

Bonfire of the Commodities Writedowns is Just Starting (BBG)

What does $13 billion of burning money smell like? Commodity investors are getting a nose for it. Japanese trading houses Mitsui, Mitsubishi, and Sumitomo have announced 767 billion yen ($6.8 billion) of writedowns on assets this year, including copper, nickel, iron-ore and natural-gas projects. PetroChina wrote 25 billion yuan ($3.8 billion) off the value of oil and gas fields that have “no hope” of making a profit at current prices, President Wang Dongjin said last week, while Citic posted a HK$12.5 billion ($1.6 billion) impairment on an Australian iron-ore mine. Cnooc’s annual results last Thursday count as a good news story against that backdrop, with impairments of 2.75 billion yuan that were lower than the previous year’s.

Investors might hope after all this that we’d be reaching the level where mining and energy assets have been written back to normal levels, allowing companies to start the hard work of rebuilding. It doesn’t look that way. There’s certainly been a reality check of late. The balance sheets of major mining and energy companies have shrunk by $856 billion over the past 12 months, putting the value of their total assets at their lowest level since 2011, according to data compiled by Bloomberg. That looks dramatic until you compare it to the performance of the Bloomberg Commodities index. Companies are still more asset-rich than they were in 2011, which was the peak of a once-in-a-generation commodities boom. This delayed response to lower prices isn’t surprising.

Non-financial companies should have a high bar for reassessing their asset values to prevent manipulation of earnings (revaluations upward count as income, just as writedowns count against profit). That means a degree of inertia: after the 2008 financial crisis, the value of assets in the S&P 500 index didn’t bottom out until June 2010. Even if you blame weak-kneed accountants for that delay, an analogous pattern can be seen in the real economy. Default rates in the U.S. tend to peak well after economic slowdowns begin. To some extent, equity investors are already taking this in their stride. Price-to-book ratios of the Bloomberg World Energy Index and the Bloomberg World Mining Index are at their lowest levels since at least 2003, suggesting the market doesn’t believe companies’ balance sheets are worth as much as they appear on paper. For energy companies, the price-book ratio is about 31% below its 10-year average, while the discount for miners is 44%.

Read more …

And projections for elections indicate Abe could get a 2/3 majority. How weird is that?

Japan Industrial Output Drops 6.2% In February, Most Since 2011 (BBG)

Japan’s industrial production dropped the most since the March 2011 earthquake as falling exports sapped demand and a steel-mill explosion halted domestic car production at Toyota. Output slumped 6.2% in February after rising in January, the trade ministry said on Wednesday. Economists surveyed by Bloomberg had forecast a 5.9% drop. The government projects output will expand 3.9% this month. The data underscores the weakness of Japan’s recovery from last quarter’s contraction, with overseas shipments dropping for the last five months and sluggish domestic demand. With pressure building on policy makers to bolster growth, Prime Minister Shinzo Abe said Tuesday that the government would front load spending after parliament passed a record budget for the 12 months starting April 1. He resisted calls for a supplementary fiscal package.

“The slump in industrial output in February suggests that manufacturing activity will contract this quarter,” Marcel Thieliant, senior Japan economist at Capital Economics, wrote in a note. This means there is a growing risk that the economy won’t expand this quarter after the contraction in the final three months of last year, Thieliant wrote. Junichi Makino, chief economist at SMBC Nikko Securities, was more upbeat about the outlook. Production plans for March and April are strong, and there are signs of stronger demand for cars, electrical equipment and machinery, he said in a note. The size of the drop in February was due to both the fall in production at Toyota and the lunar new year, according to Makino.

Read more …

“For years, traders on the mainland have used copper as collateral to finance trades in which they borrowed foreign currencies and invested the proceeds in higher-yielding assets denominated in renminbi.”

China’s True Demand For Copper Is Only Half as Much as You Think (BBG)

Virtually every aspect of the commodities bust has a China angle. Forecasts for China’s consumption of raw materials have proved wildly optimistic, while domestic production of certain resources have resulted in particularly severe gluts in commodities such as steel and coal. But in one respect, China has been putting an artificial degree of upward pressure on a select resource—copper—sparing it from the worst of the rout in commodities. For years, traders on the mainland have used copper as collateral to finance trades in which they borrowed foreign currencies and invested the proceeds in higher-yielding assets denominated in renminbi. This carry trade with Chinese characteristics allowed them to net a tidy profit.

(As an aside, however, the devaluation of yuan in August prompted analysts to wonder whether this trade has reached its best-before date—something that would have implications for the future global demand for copper, if true. Meanwhile, there have been persistent rumors of regulators cracking down on such trades.) This practice of warehousing copper to help engage in financial arbitrage “inflated demand, kept prices higher, and led miners to raise output,” according to Bloomberg Intelligence Analysts Kenneth Hoffman and Sean Gilmartin, who sought to identify the extent to which demand for copper has been buoyed by its use as collateral for such trades. The decline in Chinese copper demand for household appliances and electronics since 2011 doesn’t jibe with the headline demand statistics, the analysts note, which show the country’s total copper demand increased of 45% from 2011 to 2015.

Moreover, when benchmarked against cement—another material widely used for construction purposes—copper’s rapid rise in China looks particularly suspicious. While cement intensity, or percentage used per square meter, rose 11% in the time period, copper intensity surged an astounding 117%. Putting all this together, Hoffman and Gilmartin conclude that “real Chinese demand may be 54% lower than anticipated” after stripping out the demand for copper tied to the carry trade. That amounts to nearly 7 million metric tonnes of copper procured for use as collateral in 2015 alone, according to the pair’s calculations—equal to the mass of more than 30,000 Statues of Liberty.

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The banks will be stuck with the smelly bits. Lots of them.

China’s Large Banks Wary on Beijing’s Plan for Bad Debt to Equity Swaps (BBG)

China’s proposal to deal with a potential bad-loan crisis by having banks convert their soured debt into equity is meeting with unexpected resistance from some of the biggest potential beneficiaries of the plan – the country’s large banks. Asked about the plan at the Boao Forum last week, China Construction Bank Chairman Wang Hongzhang said he needs to think of his shareholders and wouldn’t want to see a plan that simply converted “bad debt into bad equity.” China Citic Bank’s Vice President Sun Deshun said at a press conference last week that any compulsory conversion of debt into equity would have to be capped. And Bank of China Chairman Tian Guoli said in Boao that it’s “hard to evaluate” how effective debt-equity swaps will be, as so much has changed in China since the tool was used to bail out the banking system during a previous crisis in the late 1990s.

Behind the caution is a lack of clarity about how exactly the government will proceed with the conversion of up to 1.27 trillion yuan ($195 billion) of bad debt owed to the banks mostly by the country’s lumbering state-owned enterprises, and – crucially – about the level of support that will be available from the state. Bank of Communications, the first of China’s large banks to report 2015 earnings, said Tuesday it nearly doubled its bad-debt provisions in the fourth quarter of last year to 7.5 billion yuan. Without backing from the government, in the form of cash injections or easier capital rules for the banks, any debt-equity swaps would simply shift the bad-loan problem from the SOEs to the banks, with potentially disastrous consequences for the stability of the nation’s lenders. On the other hand it will be politically impossible to repeat the approach used in 1999 and again in 2004, when Chinese taxpayers effectively underwrote the bailouts, leaving the banks unscathed.

“You can’t kill three birds with one stone,” said Mu Hua at Guangfa Securities, referring to the need to balance the need to fix bank and SOE bad loans while protecting the interests of Chinese taxpayers. “Voluntary swaps won’t scale up unless the government offers enough incentive, such as lowering the risk weighting or setting up a platform for banks to dump the stakes.” The discussion of debt-equity swaps comes as China’s policymakers scramble for ways to cut corporate leverage that has climbed to a record high, and to clean up the mounting tally of bad loans on the banks’ books. Premier Li Keqiang said at the National People’s Congress earlier this month that the country may use the swaps to cut the leverage ratio of Chinese companies and to mitigate financial risks.

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Growth comes from household debt.

Eurozone ‘Flying On One Engine’: S&P (CNBC)

The euro zone economy is “flying on one engine,” according to the chief European economist at ratings agency Standard and Poor’s, which trimmed its growth and inflation forecasts for the euro zone. In his latest report on Wednesday, S&P’s Chief European Economist Jean-Michel Six likened the 19-country euro zone to a plane “flying on one engine” and “fighting for altitude” and said that while there are reasons to hope that the economy will pick up altitude, a “pre-crisis flight path” of robust growth is not likely. Since the start of the year, Six noted that global market turmoil had caused a “nosedive in financial conditions…(which) had taken some wind out of the euro zone economy” and although regional conditions had since improved – particularly due to what he called a “well-received” set of more accommodative measures from the ECB – the eurozone relied too much on domestic consumption for growth.

While the euro zone had seen its recovery “gathering momentum” over the last two years, Six warned that the “the current upswing in the euro zone has been a one-engine, consumer recovery.” To illustrate his point, Six noted that consumption represents 55% of the region’s GDP and has accounted for a “whopping” 72% of economic growth since 2014. That dependence on consumption entailed risks, he said, although the euro zone might well get away with it. “A recovery that mainly relies on one cylinder is by definition suspicious: It could quickly grind to a halt, as it did in the previous cycle in 2010-2011. Or, it could be a flash in the pan, caused simply by a one-off drop in household energy bills.”

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ECB leaves nothing for others to invest in.

Europe’s Bond Shortage Means Draghi Is About to Shock the Market (BBG)

As ECB Governor Mario Draghi prepares to increase and broaden his bond-buying program, the shrunken market might be in for a shock. While policy makers will expand their asset-purchase plan by €20 billion a month at the start of April, corporate debt won’t be included until later in the quarter. That’s leaving investors to face even higher demand for government bonds with supply unable to keep up and some of Europe’s biggest banks are predicting yields are headed for even more record lows. “All of that is going to be in covered bonds, in govvies, in agencies,” Vincent Chaigneau at Societe Generale in London said in an interview. “That’s going to create a shock on supply-demand in Europe.”

The prospect of increased largess from the ECB has pushed government bonds higher, with the yield on German 10-year bunds headed for their biggest quarterly slide in almost five years. They dropped to 0.15% on Tuesday, half where they were when the ECB announced an increase to its quantitative-easing program on March 10. French bank Societe Generale predicts the bund yield will slide not only to the record low of 0.049% posted in April 2015, but to negative 0.05% by the end of the next quarter. The ECB cut its main interest rates, announced the increase to QE and revealed a new targeted-loan program earlier this month as it ramped up efforts to boost inflation in the 19-member currency bloc. A report on Thursday will show consumer prices in the currency zone probably fell for a second month in March, according to economists surveyed by Bloomberg.

The rate hasn’t touched policy makers’ near-2% goal since 2013.The ECB has said it’s confident it has an “adequate” universe of assets to buy. But even when corporate debt purchases start, some investors are skeptical the ECB will be able to purchase sufficient quantities to alleviate pressure on government securities. Peter Schaffrik at Royal Bank of Canada in London said the consensus is that officials will be able to buy about €5 billion of company bonds, leaving an additional €15 billion of government and agency securities to be acquired each month.

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The defaults are delayed not because of energy firms, but because of their lenders.

Oil Explorers Face Challenge to Secure Financing as Oil Prices Fall (WSJ)

Just a few years ago, when oil sold for about $100 a barrel, banks [in London] were lining up to give international oil explorers access to billions of dollars to finance new drilling and projects. But as oil prices stay mired in a funk, the money is drying up. Senior executives from companies such as Tullow Oil and Cairn Energy have been meeting with their bankers for a biannual review of the loans that allow them to keep drilling and building out projects. For many European companies, it has been a nail-biting experience, as banks worry about the growing pile of debt taken on by oil companies with little or no profits. Several companies said they expect their ability to tap credit lines to be diminished after the reviews. Some lenders have brought in teams that specialize in corporate restructuring to scrutinize companies’ balance sheets, spending and assets, though not at Tullow or Cairn.

In the past, the reviews were generally conducted solely by banks’ energy specialists. The new scrutiny in Europe comes as oil-company debt emerges as an issue across the world with prices for crude near $40 a barrel—down more than 60% from June 2014. Globally, the net debt of publicly listed oil and gas companies has nearly tripled over the past decade to $549 billion in 2015, excluding state-owned oil companies, according to Wood Mackenzie, the energy consultancy. Reviews of these loans have high stakes. If a bank decides a company has already borrowed more than it can afford, the reviews could trigger a repayment, more cost cuts or even a fire sale of assets to raise cash. “There isn’t anyone in the oil independent sector that will be very relaxed at the moment,” said Thomas Bethel at Herbert Smith Freehills.

Oil companies are facing a similar set of biannual reviews in the U.S., where many small and midsize companies borrowed heavily to expand during the shale boom. The number of energy loans deemed in danger of default is on course to breach 50% at several major U.S. banks, The WSJ reported last week. But some American firms have been able to raise cash by issuing new stock or selling new debt, while in recent years Europe-based explorers have come to rely more on bank lending as investors that once pumped up the industry are fleeing in droves. In Europe, the focus is on a specialized type of borrowing known as reserves-based lending that has mushroomed in recent years. Europe’s top 10 non-state-owned oil companies have taken on over $12 billion in such loans, which are particularly exposed to energy prices as they are secured against the value of a company’s petroleum reserves and future production.

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What happens when you plant Goldman’s MO in fertile ground.

The Rise and Fall of Goldman’s Big Man in Malaysia (BBG)

The prime minister of Malaysia had a message for the crowd at the Grand Hyatt San Francisco in September 2013. “We cannot have an egalitarian society – it’s impossible to have an egalitarian society,” Najib Razak said. “But certainly we can achieve a more equitable society.” Tim Leissner, one of Goldman Sachs’s star bankers, enjoyed the festivities that night with model Kimora Lee Simmons, who’s now his wife. In snapshots she posted to Twitter, she’s sitting next to Najib’s wife, and then standing between him and Leissner. Everyone smiled. The good times didn’t last. At least $681 million landed in the prime minister’s personal bank accounts that year, money his government has said was a gift from the Saudi royal family. The windfall triggered turmoil for him, investigations into the state fund he oversees and trouble for Goldman Sachs, which helped it raise $6.5 billion.

Leissner, the firm’s Southeast Asia chairman, left last month after questions about the fund, his work on an Indonesian mining deal and an allegedly inaccurate reference letter. Few corporations have mastered the mix of money and power like New York-based Goldman Sachs, whose alumni have become U.S. lawmakers, Treasury secretaries and central bankers. Leissner’s rise and fall shows how lucrative and fraught it can be when the bank exports that recipe worldwide. In 2002, when the firm made him head of investment banking in Singapore, it had just cleaned up a mess there after offending powerful families. It took only a few years before the networking maestro was helping the bank soar in Southeast Asia – culminating in billion-dollar deals with state fund 1Malaysia Development Bhd., also known as 1MDB. But if his links to the rich and powerful fueled his Goldman career, they also helped end it.

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How to kill an entire education system in a few easy steps.

New Student Loans Targeted Straight at Mom and Dad (WSJ)

As rising tuition costs pile ever-higher debts on students, lenders and colleges are pushing for an alternative: Heap more on their parents. An increasing number of private student lenders are rolling out parent loans, which allow borrowers to get funds to pay for their children’s education without putting the students on the hook. The loans mimic a similar federal program but don’t charge the hefty upfront fee levied by the government, which could make them cheaper and encourage more use. SLM Corp., the largest U.S. private student lender by loan originations and better known as Sallie Mae, will introduce its version of the loan next month. Parents will be able to borrow at interest rates ranging from about 3.75% to 13%, with 10 years to pay it off.

“There’s an opportunity to expand our reach,” said Charles Rocha, chief marketing officer at Sallie Mae. The lender joins banks like Citizens Financial Group, which started offering a similar loan last year. Online lender Social Finance, or SoFi, first rolled one out in 2014 at the request of Stanford University. Stanford spokesman Brad Hayward said the university initiated discussions about the loan to help parents who were looking for more financing options. Colleges including Stanford, Boston College and Carnegie Mellon University are referring parents to the loans through emails or by putting them on lists of preferred loan options. An official at Boston College also said the school approached lenders to create the loans.

Lenders see the new products as an area of growth in an otherwise sluggish lending environment. Colleges are helping push them in part because of a quirk in federal calculations. Unlike ordinary federal student loans, the parent loans don’t count on a scorecard in which the U.S. Education Department discloses universities’ median student debt at graduation. That can ease the pressure to keep tuition increases in check at a time when heavy student debt has become a political issue.

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“..basic income could remove the need for a welfare state that is patronising and humiliating..”

Free Lunch: Basic Welfare Policy (Sandhu)

There are ideas that refuse to die no matter how many times they are rejected. One such idea is Universal Basic Income. Basic income is the proposal to pay all citizens an unconditional regular amount sufficient for basic needs, and then leave them to seek their fortune as best they can in the market. Few trials have been held and those have not led to large-scale adoption, but the proposal keeps recurring in social policy debates. That is largely because it is an excellent idea. In the past century the attraction for thinkers on the left and the right has been that basic income could remove the need for a welfare state that is patronising and humiliating, creates perverse incentives against working, and whose complexity means it often fails to reach those truly in need of help while subsidising the middle class.

Today, with deepening anxiety that we will all be put out of work (or, alternatively, be enslaved) by robots, the appeal of basic income has returned to its roots. More than 200 years ago, Thomas Paine advocated it as a way to fairly distribute the “ground rent” generated by concentrated landholdings to the landless — the idea being that the earth was humanity’s common property. If technological change today means markets tilt the distribution of income towards capital owners and away from workers, a similar argument can be made for the redistribution of “rent” due to humanity’s technological ingenuity equally among every citizen.

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“The reason to want to make problems worse is that problems are profitable..”

Always Attack the Wrong Country (Dmitry Orlov)

There are numerous tactics available to those who aim to make problems worse while pretending to solve them, but misdirection is always a favorite. The reason to want to make problems worse is that problems are profitable—for someone. And the reason to pretend to be solving them is that causing problems, then making them worse, makes those who profit from them look bad. In the international arena, this type of misdirection tends to take on a farcical aspect. The ones profiting from the world’s problems are the members of the US foreign policy and military establishments, the defense contractors and the politicians around the world, and especially in the EU, who have been bought off by them. Their tactic of misdirection is conditioned by a certain quirk of the American public, which is that it doesn’t concern itself too much with the rest of the world.

The average member of the American public has no idea where various countries are, can’t tell Sweden from Switzerland, thinks that Iran is full of Arabs and can’t distinguish any of the countries that end in -stan. And so a handy trick has evolved, which amounts to the following dictum: “Always attack the wrong country.” Need some examples? After 9/11, which, according to the official story (which is probably nonsense) was carried out by “suicide bombers” (some of them, amusingly, still alive today) who were mostly from Saudi Arabia, the US chose to retaliate by attacking Saudi Arabia Afghanistan and Iraq. When Arab Spring erupted (because a heat wave in Russia drove up wheat prices) the obvious place to concentrate efforts, to avoid a seriously bad outcome for the region, was Egypt—the most populous Arab country and an anchor for the entire region. And so the US and NATO decided to attack Egypt Libya.

When things went south in the Ukraine, whose vacillating government couldn’t make up its mind whether it wanted to remain within the Customs Union with Russia, its traditional trading partner, or to gamble on signing an agreement with the EU based on vague (and since then broken) promises of economic cooperation, the obvious place to go and try to fix things was the Ukraine. And so the US and the EU decided fix the Ukraine Russia, even though Russia is not particularly broken. Russia was not amused; nor is it a country to be trifled with, and so in response the Russians inflicted some serious pain on the Washington establishment farmers within the EU.

Who was at fault exceedingly [became] clear once the Ukrainians that managed to get into power (including some very nasty neo-Nazis) started to violate the rights of Ukraine’s Russian-speaking majority, including staging some massacres, in turn causing a large chunk of it to hold referendums and vote to secede. (Perhaps you didn’t know this, but the majority of the people in the Ukraine are Russian-speakers, and there is just one city of any size—Lvov—that is mostly Ukrainian-speaking. Mind you, I find Ukrainian to be very cute and it makes me smile whenever I hear it. I don’t bother speaking it, though, because any Ukrainian with an IQ above bathwater temperature understands Russian.) And so the US and the EU decided to fix things by continuing to put pressure on the Ukraine Russia.

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The exact opposite of what they -pretend to- want.

European Border Crackdown Kickstarts Migrant-Smuggling Business (WSJ)

ATHENS—The leaders of 15 human-smuggling networks gathered behind the closed curtains of an Afghan restaurant here in late February, the air fragrant from grilled lamb and hookahs. It was time to celebrate a boost to their business, people present recall. Police in Macedonia had just stopped letting Afghans cross the border from Greece. Today, the entire human highway to Europe’s north, traveled by nearly a million refugees and other migrants last year, has been closed. The crackdown, complete with razor-wire fences guarded by riot police, has stranded about 50,000 migrants in Greece. Many are desperate to get out but too afraid to turn back. For those with cash left, smugglers are now the best hope.

The combination of closed borders and unrestrained migration has turned Athens’s Victoria Square and the nearby port city of Piraeus into the center of a barely disguised human-trafficking business. In grimy cafes, cheap hotels and dark alleys, business is booming for smugglers who arrange transit around closed borders and into relative safety. They say they even offer a money-back guarantee—most of the time. “If you stay here even for five minutes, you will see it. A human bazaar is taking place,” said Orestis Papadopoulos, owner of a kiosk on Victoria Square that sells cigarettes and magazines. “And when the police clear the square, they just go around the corner and come back minutes later.” One recent afternoon, Ali, who wouldn’t provide his last name, walked into the restaurant that hosted the February celebration. He said he is 33 years old, was born in Afghanistan and lives in Athens. He specializes in smuggling Afghans and Iraqis.

Followed by three associates, Ali grinned broadly, exposing a missing tooth. Then he hugged other men in the restaurant, including a passport forger. Thirty Afghan clients had just reached Germany, meaning Ali’s smuggling syndicate would get about €54,000 ($60,280). “I’m very happy today,” he said. Ali’s smartphone rang as he ate lamb with rice. A prospective customer wanted to reach Germany by plane, using a false passport. “It costs €4,700,” Ali said. He left the noisy restaurant to haggle. When Europe’s refugee crisis exploded last year, demand for smugglers fizzled once migrants had successfully crossed the Aegean Sea from Turkey. German Chancellor Angela Merkel ’s open-door policy for refugees largely made Ali and his rivals obsolete.

Since then, the Balkans and the EUhave clamped down on migration from Greece into the rest of the continent, threatening to turn the country into a giant, open-air refugee camp. The problem will likely be exacerbated by last week’s terrorist attacks in Brussels, which immediately led to toughened security at airports, train stations and borders. Europe is now even less likely to reopen its borders to legal transit for refugees and migrants. For smugglers, the job could get harder, but they can always push the prices they charge higher.

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“If Europe were to welcome the same percentage of refugees as Lebanon in comparison to its population, it would have to take in 100 million refugees.”

UN Chief Urges All Countries To Resettle Syrian Refugees (Reuters)

U.N. Secretary-General Ban Ki-moon called on all countries on Wednesday to show solidarity and accept nearly half a million Syrian refugees for resettlement over the next three years. Ban, kicking off a ministerial conference hosted by the U.N. refugee agency UNHCR in Geneva, said: “This demands an exponential increase in global solidarity.” The United Nations is aiming to re-settle some 480,000 refugees, about 10% of those now in neighboring countries, by the end of 2018, but has conceded it needs to overcome widespread fear and political manipulation. Ban urged countries to pledge new and additional pathways for admitting Syrian refugees, adding: “These pathways can include resettlement or humanitarian admission, family reunions, as well as labor or study opportunities.”

Filippo Grandi, U.N. High Commissioner for Refugees, said the refugees were facing increasing obstacles to find safety. “We must find a way to manage this crisis in a more humane, equitable and organized manner. It is only possible if the international community is united and in agreement on how to move forward,” Grandi said. The five-year conflict has killed at least 250,000 and driven nearly 5 million refugees abroad, mostly to neighboring Turkey, Lebanon, Jordan and Iraq. Grandi said: “If Europe were to welcome the same percentage of refugees as Lebanon in comparison to its population, it would have to take in 100 million refugees.” Ban, referring to U.N.-led efforts to end the war, said: “We have a cessation of hostilities, by and large holding for over a month, but the parties must consolidate and expand it into a ceasefire, and ultimately to a political solution through dialogue.”

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Mar 272016
 
 March 27, 2016  Posted by at 11:24 am Finance Tagged with: , , , , , , , , ,  4 Responses »


NPC Pittsburg Water Heater Co., Washington DC 1920

Hugh Hendry: “If China Devalues By 20% The World Is Over” (ZH)
The Great Deflation: Stocks To Plunge 80-90% – Harry Dent (Maloney)
You Are -Still- Here (ZH)
US Banks Ramp Up Push for Home-Equity Lines (WSJ)
China Warns Officials: No Unrest, Or Lose Your Job (WSJ)
China Coal Use Slides Further On Weakening Industrial Demand (BBG)
Guessing The Future Without Say’s Law (Macleod)
Seven Ugly Latina Sisters In Deep Political Trouble (Bawerk)
California Lawmakers, Unions Reach Deal for $15 an Hour Minimum Wage
The Church of Economism and Its Discontents (EI)
The State Has Lost Control: Tech Firms Now Run Western Politics (Morozov)
Trump Questions US Position On OPEC Allies, NATO, China (NY Times)
Greece Removes Migrants From FYROM Border Camp (AFP)
The Bar at the End of the Road (WSJ)

Hendry finds trouble sticking to his bull position.

Hugh Hendry: “If China Devalues By 20% The World Is Over” (ZH)

For now, as we showed just ten days ago, those short the Yuan have swung to wildly profitable to losing money as both the USD has slid and the Yuan has spiked, although both of these trades appear to be reversing now. Needless to say, Hendry disagrees with the China contrarians and believes that the way to fix the Chinese economy is through a stronger currency, even if there is no logical way how that could possibly work when China’s debt load is 350% of GDP while its NPLs are over 10% and rising.

So, borrowing form a favorite Keynesian trope, one where when the countrfactual to his prevailling – if incorrect – view of the world finally emerges, Hendry is convinced that a 20% devaluation would lead to global devastation; the same way if Paulson did not get Congress to sign off on his three page term sheet that would lead to the “apocalypse.” Only unlike Paulson who only hinted at a Mad Max world, for Hendry the alternative to him being right is a very explicit doomsday scenario, as he explains in the following excerpt from his RealVision interview:

Tomorrow we wake up and China has devalued 20%, the world is over. The world is over. Euro breaks up. The world is over. The euro breaks up. Everything hits a wall. There’s no euro in that scenario. The US economy, I mean everything hits a wall! Everything hits a wall!

The dollar strength that you imagined is devastation because you just eliminated dollars. They’re a scarce commodity. You’ve wiped them out. And China is a pariah state.

It’s a ‘Mad Max’ movie, right. OK, China gets to be the king in ‘Mad Max’ world. How appealing is that? There is no world after the tomorrow where China devalues by 20%. There is no world. Yeah, it’s looney tunes to believe that, people say, ‘oh wow, they needed to catch a break.’

Their share of world trade has never been higher. They’re facing no pressure, immense terms of trade improvement, and you would destroy world trade. World trade is down 25%. You would probably have passport restrictions, the world is over.

And while it is clear on which side of the Yuan Hugh is currently positioned (Hendry’s Eclectica is down 2.1% through March 18 and -5.9% YTD) either directly or synthetically, we can’t wait to see who is right in the end: China and its central bank (as well as Hugh Hendry) or reason and common sense (as well as some of the smartest hedge funds in the world).

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Mike Maloney’s a TAE fan.

The Great Deflation: Stocks To Plunge 80-90% – Harry Dent (Maloney)

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Look out below.

You Are -Still- Here (ZH)

Buybacks blacked out, option expiration ramp over, and real investors fleeingwhat happens next?

Dip, Jawbone, Rip… Repeat…

 

And close-up…


 

But this time it’s different, 150 days of almost perfect correlation and co-movement means nothing – right?

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Insane that this is possible.

US Banks Ramp Up Push for Home-Equity Lines (WSJ)

At hardware stores along the U.S. East Coast in recent weeks, TD Bank has been trying to persuade shoppers to think bigger than paint and plumbing supplies: The bank wants them to start taking cash out of their homes again. The TD Bank tour bus, equipped with a galley kitchen and iPads where homeowners can start the application process, is part of a marketing push unusual for the mortgage industry since the housing bust. As the broader mortgage market remains in the doldrums, banks are again touting home-equity lines of credit, which allow homeowners to draw down the equity in their home as they need the cash, as well as cash-out refinances, which involve taking cash out of a home while refinancing and ending up with a larger mortgage balance.

The effort is gaining steam as banks try to offset faltering mortgage originations and a refinancing wave that is fizzling out. Lenders are betting that offers for home-equity lines of credit, or helocs, will resonate with many borrowers whose home values are higher than they were just a couple of years ago and who need cash for renovations or other expenses after holding on to their homes for longer than expected. Lenders extended just over $156 billion in home-equity lines of credit last year, the largest dollar amount since 2007, the beginning of the housing bust, according to new figures from mortgage-data firm CoreLogic. That marks a 24% increase from 2014 and a 138% spike from 2010 when new approvals hit a low point. The average line amount extended to homeowners last year reached a record $119,790, according to the firm, which tracks the data back to 2002.

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No. 1 worry.

China Warns Officials: No Unrest, Or Lose Your Job (WSJ)

In China, the timing of an announcement is sometimes more significant than the announcement itself. The Communist Party’s Central Committee and the State Council, China’s cabinet, this week warned party and state officials that they will lose their jobs if they fail to control public unrest. That’s not altogether surprising: on one level,it’s just a restatement of longstanding practice. “For more than 10 years, one of the assessment criteria for promotion of regional officials is the extent to which they can minimize protests,” said Willy Lam, a China politics analyst at the Chinese University of Hong Kong. “So most local officials pull out all stops to prevent petitioners going to Beijing.” But this week’s announcement marks the first time authorities have come up with a definitive public statement explicitly warning party and state officials “at all levels” that their jobs are on the line, state media said.

Why the urgency? The policy announcement comes two weeks after hundreds of unpaid coal workers took to the streets in the gritty northeastern city of Shuangyashan, after their provincial governor claimed a troubled coal company there did not owe its miners any wages. The governor, Lu Hao, later said he misspoke. Mr. Lu remains in office. It’s quite likely the Shuangyashan incident was pivotal in galvanizing the State Council and the party’s Central Committee, Mr. Lam and others say. The incident, widely publicized in the media, came in the thick of China’s annual meeting of its top legislature in Beijing, where Mr. Lu made his comments. At the meeting, known as the lianghui or “two sessions,” a battery of top officials including Premier Li Keqiang repeatedly vowed that they would be able to navigate a sharp slowdown in the economy without seriously affecting workers caught in the transition.

Mr. Li’s public positioning percolates through to a wide swathe of policy in the immediate wake of the congress. “In China, the political calendar doesn’t start in January – it starts with the lianghui in March,” human rights activist Hu Jia said. Government officials are likely worried that the Shuangyashan incident and others could inflict a political cost on the leadership by highlighting issues such as the deficit of labor rights in China, Mr. Hu said. Party chiefs face a difficult task. Over the next five years, they need to shut down millions of tons of industrial capacity that’s making China’s economy inefficient. This means downsizing scores of steel, coal and other large industries that currently employ hundreds of thousands of workers. They have promised to do this without large-scale layoffs. Those displaced, Mr. Li said, would be given new jobs or government assistance.

These promises now hang in the balance. The Shuangyashan incident came amid a surge in other forms of public unrest. Data from labor rights watchdog China Labour Bulletin show a 200% increase in the number of strikes, industrial action and other protests occurring in China from July last year to January this year. Disparate groups of Chinese, from jobless migrant workers to angry taxi drivers have taken to the streets to protest a new era of economic dislocation. The slowing economy has wiped out at least 156 billion yuan ($24 billion) worth of investments in wealth management products across the country, mostly involving small investors. Many of these failures have sparked public protests. Dogged by the prospect of more layoffs and deepening economic woes, the question looms: How many officials will China axe?

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Not because it wants to come clean.

China Coal Use Slides Further On Weakening Industrial Demand (BBG)

China’s coal use is forecast to fall a third year as industrial output slows, adding force to President Xi Jinping’s drive to cut overcapacity and dimming the hopes of global miners for an uptick in demand by the world’s biggest consumer. Demand will slide 2% this year and prices will remain at a low level, according to the state-run Xinhua News Agency, citing Xu Liang, deputy secretary general of the China Coal Industry Association. Output by the world’s largest producer will also fall by 2%. Consumption has weakened amid a push to use cleaner fuels and shift a slowing economy away from heavy industry. Demand for coal, which accounted for 64% of the country’s total energy use last year, contracted 3.7% last year, following a 2.9% decline in 2014, according to the National Bureau of Statistics.

“This year’s coal situation is equally bleak,” Xinhua quoted Xu as saying. China’s easing coal appetite has helped push prices in Asia to their lowest since 2006, punishing mining companies and prompting the government to propose capacity cuts that threaten the jobs of 1.3 million coal miners. By cutting capacity in the next two to three years, production could fall to about 3.5 billion to 3.6 billion tons, balancing supply and demand, Xu said. The country aims to eliminate as much as 500 million metric tons of coal capacity by 2020, almost 9% of its total. Coal output dropped 3.3% to 3.75 billion metric tons last year, while consumption slipped to 3.965 billion tons, both sliding from record highs in 2013, according to Xu. Use of the fuel in power generation dropped 6.2% last year, while demand from industries including steel, cement and glass making declined.

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“..when an economist talks of economic growth being above or below trend, he is talking about a measure that has no place in sound economic reasoning, and that is gross domestic product.

Guessing The Future Without Say’s Law (Macleod)

With Japanese and Eurozone interest rates becoming increasingly negative, and the Fed backing off from at least some of the planned increases in the Fed funds rate this year, economists are reassessing the interest rate outlook. Economists lack consensus, with some expecting yet more easing, based on the apparent collapse in cross-border trade last year. The fact that the Bank of Japan and the European Central Bank see fit to pursue increasingly aggressive monetary reflation is taken as evidence of underlying difficulties faced in these key economies. And lingering doubts about the sustainability of China’s credit bubble point to a high risk of a credit-induced slump in the world’s growth engine.

Other economists, citing official US data and relying on the Fed’s statements, point out that unemployment levels have more than satisfied the Fed’s target, and that core inflation has picked up to the point where the Fed would be fully justified to increase interest rates over the course of this year, or risk overheating in 2017. These two opposite camps conflict in their forecasts, but where they fundamentally differ is in expectations of future economic growth. Far from displaying the highest levels of macroeconomic discipline, their diversity of opinion should alert us that their forecasts may lack sound theoretical foundation. The purpose of reasoned theory is to reduce uncertainty, not promote it. And the explanation for most of the failures behind modern macroeconomic thinking is the substitution of market-based economics by economic planning.

The fact that today’s macroeconomics dismisses the laws of the markets, commonly referred to by economists as Say’s law, explains all. Subsequent errors confirm. The many errors are a vast subject, but they boil down to that one fateful step, and that is denying the universal truth of Say’s law. Say’s law is about the division of labour. People earn money and make profits from deploying their individual skills in the production of goods and services for the benefit of others. Despite the best attempts of Marxism and Keynesianism along with all the other isms, attempts to override this reality have always failed. The failure is not adequately reflected in government statistics, which have evolved to the point where they actually conceal it. So when an economist talks of economic growth being above or below trend, he is talking about a measure that has no place in sound economic reasoning, and that is gross domestic product.

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The CIA still has a lot of power to the south.

Seven Ugly Latina Sisters In Deep Political Trouble (Bawerk)

Get beyond endless Latin American headlines burning column inches and you come to far broader strategic conclusion: The seven ‘ugly Latino sisters’, namely Brazil, Venezuela, Ecuador, Bolivia, Colombia, Mexico and Argentina are all deep political trouble from collapsed benchmark prices. It’s merely a case of who’s in more advanced states of political decay where left leaning governments’ can’t hang on much longer vs. those trying to buy a bit of time with more ‘centrist’ positions. In either case, it’s going to be a classic example of too little too late where the seven ugly sisters have committed at least seven deadly sins when it comes to resource mismanagement over the past decade. This isn’t about whether crisis can be avoided, but how bad the impacts will be. Another ‘lost Latino decade’ beckons. The ugliest twins are obviously Brazil and Venezuela right now.

We firmly expect Rousseff to be impeached next month on the back of endless corruption scandals, and the drastically ill-judged return of Lula that poured far more oil on corruption cover up flames. Watch for Michel Temer to take over the reins of a coalition PMDB government, busily negotiating posts behind closed doors with other players to tee up a formal Worker’s Party split to form a caretaker government through to 2018. How much Temer can get done depends on how far the outstanding ‘car wash’ scandal still rubs off on PMDB factions for major economic reforms, where the rot still runs pretty deep. Initial rhetoric (and inevitable market lifts) on supposed ‘structural reforms’ and far broader liberalisation measures remain unlikely to play through. Although it’s possible Petrobras might push through 2017 licencing rounds purely for political appearances, it’s not going to deliver tangible results in current price environments.

Dig just ‘under the salt’, and Petrobras leverage will remain high; local content even higher. Until Brazil can properly clear its electoral decks in 2018 Mr. Temer is going to have a very limited mandate. If anything, his core challenge is trying to make sure his caretaker outfit doesn’t end up ‘washed out’ day one, given Temer is by no means beyond political reproach, with the PMDB basically as corrupt as the ruling PT. The smart move for Brazil would actually be calling fresh elections with the TSE (electoral authority) invalidating the entire Rousseff-Temer 2014 ticket to put a line under what currently shapes up to be the worst commodity driven economic crash Brazil has ever experienced. Regrettably, Brazilian politics has nothing to do with national interests at this stage, and everything to do with narrow self-preservation societies.

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“..most proposals have the wage increasing about a dollar a year until it reaches $15 an hour”

California Lawmakers, Unions Reach Deal for $15 an Hour Minimum Wage

California legislators and labor unions on Saturday reached an agreement aims to raise the state’s minimum wage to $15 from $10 an hour, a state senator said, a move that would make for the highest statewide minimum in the nation. Sen. Mark Leno (D., San Francisco) said the proposal would go before the Legislature as part of his minimum-wage bill that stalled last year. Mr. Leno didn’t confirm specifics of the agreement, but most proposals have the wage increasing about a dollar a year until it reaches $15 an hour. The Los Angeles Times, which first reported the deal, said the wage would rise to $10.50 in 2017, with subsequent increases to take it to $15 by 2022. Businesses with fewer than 25 employees would have an extra year to comply.

At $10 an hour, California already has one of the highest minimum wages in the nation along with Massachusetts. Only Washington, D.C., at $10.50 an hour is higher. The hike to $15 would make it the highest statewide wage in the nation by far, though raises are in the works in other states. The deal means the issue won’t have to go to the ballot, Mr. Leno said. One union-backed initiative has already qualified for the ballot, and a second, competing measure is also trying to qualify. Union leaders, however, said they wouldn’t immediately dispense with planned ballot measures. Sean Wherley, a spokesman for SEIU-United Healthcare Workers West, confirmed that his group was involved in the negotiations. But he said the group would continue pushing ahead with its initiative on the ballot. “Ours is on the ballot. We want to be certain of what all this is,” Mr. Wherley said.

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The Econocene.

The Church of Economism and Its Discontents (EI)

The global human population increased from approximately 1 billion in the year 1800 to 7 billion in 2011. Over this period, the field of economics emerged, transforming political discourse. The institutional conditions for market expansion were put in place, and the success of markets suppressed myriad other ways societies have organized themselves. Economic activity per capita increased somewhere between 10 and 30-fold, resulting in a 70 to 210-fold increase in total economic activity.1 Population growth has slowed significantly in recent decades, but both economic growth through market expansion and its attendant environmental destruction have only continued.

Econocene is a fitting term for this new era because it makes us think about the expanding market economy, the ideological system that supports it, and its impact on society and the environment. Reflecting on environmental boundaries led ecological economist Herman Daly to propose limits on material throughput. Environmental economists propose taxes on greenhouse gas emissions and the creation of markets to resolve environmental conflicts. While acknowledging the importance of making markets work within the limits of nature and for the common good, I will explore how this new dominance of economic thinking, which I will call economism, has reshaped the diverse cultures of the world and come to function as a modern secular religion.

An advantage of the term Econocene is that it evokes the everyday cosmos of modern people. Artifacts of the economy—towering buildings, sprawling shopping malls, and swirling freeways—surround the 50% of the globe’s population who live in cities. A combination of smog and bright lights now obliterates the starry heavens so important to humanity’s historic consciousness and so humbling to our species’s historic sense of importance, focusing our attention on the economic constructs all around us. The cosmos reflected in the term Econocene includes not only the material artifacts of the economy, but also the market relations that bind us and define our place in the system. Urban dwellers are now fully dependent on markets for material sustenance.

They awake to radio announcers discussing supposedly significant changes in exchange rates, stock markets, and the proportion of people looking for work. The dominance of the market is not just an urban phenomenon: its “invisible hand” guides rural life as well. The crops planted reflect expected future prices, and soils reflect their history of economic use. Farmers have become so specialized that they, too, buy most of their food in supermarkets. In order to grapple with the challenges of this new era, we need to give it a name that resonates with people’s lived experiences.

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The role of Google and Facebook clearly warrants more scrutiny.

The State Has Lost Control: Tech Firms Now Run Western Politics (Morozov)

[..] The grim reality of contemporary politics is not that it’s impossible to imagine how capitalism will end – as the Marxist critic Fredric Jameson once famously put it – but that it’s becoming equally impossible to imagine how it could possibly continue, at least, not in its ideal form, tied, however weakly, to the democratic “polis”. The only solution that seems plausible is by having our political leaders transfer even more responsibility for problem-solving, from matters of welfare to matters of warfare, to Silicon Valley. This might produce immense gains in efficiency but would this also not aggravate the democratic deficit that already plagues our public institutions? Sure, it would – but the crisis of democratic capitalism seems so acute that it has dropped any pretension to being democratic; hence the proliferation of euphemisms to describe the new normal (with Angela Merkel’s “market-conformed democracy” probably being the most popular one).

Besides, the slogans of the 1970s that were meant to bolster the democratic pillar of the compromise between capital and labour, from economic and industrial democracy to codetermination, look quaint in an era where workers of the “gig economy” cannot even unionise, let along participate in some broader management of the enterprise. There’s something even more sinister afoot though. “Buying time” no longer seems like an adequate description of what is happening, if only because technology companies, even more so than the banks, are not only too big too fail but also impossible to undo – let alone replicate – even if a new government is elected. Many of them have already taken on the de facto responsibilities of the state; any close analysis of what’s happening with “smart cities” – whereby technology firms become key gateways to essential services of our cities – easily confirms that.

In fact, technology firms are rapidly becoming the default background condition in which our politics itself is conducted. Once Google and Facebook take over the management of essential services, Margaret Thatcher’s famous dictum that “there is no alternative” would no longer be a mere slogan but an accurate description of reality. The worst is that today’s legitimation crisis could be our last. Any discussion of legitimacy presupposes not just the ability to sense injustice but also to imagine and implement a political alternative. Imagination would never be in short supply but the ability to implement things on a large scale is increasingly limited to technology giants. Once this transfer of power is complete, there won’t be a need to buy time any more – the democratic alternative will simply no longer be a feasible option.

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Some questions must be asked. If nobody else does that, you get Trump.

Trump Questions US Position On OPEC Allies, NATO, China (NY Times)

Donald J. Trump, the Republican presidential front-runner, said that if elected, he might halt purchases of oil from Saudi Arabia and other Arab allies unless they commit ground troops to the fight against the Islamic State or “substantially reimburse” the United States for combating the militant group, which threatens their stability. “If Saudi Arabia was without the cloak of American protection,” Mr. Trump said during a 100-minute interview on foreign policy, spread over two phone calls on Friday, “I don’t think it would be around.” He also said he would be open to allowing Japan and South Korea to build their own nuclear arsenals rather than depend on the American nuclear umbrella for their protection against North Korea and China. If the United States “keeps on its path, its current path of weakness, they’re going to want to have that anyway, with or without me discussing it,” Mr. Trump said.

And he said he would be willing to withdraw United States forces from both Japan and South Korea if they did not substantially increase their contributions to the costs of housing and feeding those troops. “Not happily, but the answer is yes,” he said. Mr. Trump also said he would seek to renegotiate many fundamental treaties with American allies, possibly including a 56-year-old security pact with Japan, which he described as one-sided. In Mr. Trump’s worldview, the United States has become a diluted power, and the main mechanism by which he would re-establish its central role in the world is economic bargaining. He approached almost every current international conflict through the prism of a negotiation, even when he was imprecise about the strategic goals he sought.

He again faulted the Obama administration’s handling of the negotiations with Iran last year — “It would have been so much better if they had walked away a few times,” he said — but offered only one new idea about how he would change its content: Ban Iran’s trade with North Korea. Mr. Trump struck similar themes when he discussed the future of NATO, which he called “unfair, economically, to us,” and said he was open to an alternative organization focused on counterterrorism. He argued that the best way to halt China’s placement of military airfields and antiaircraft batteries on reclaimed islands in the South China Sea was to threaten its access to American markets. “We have tremendous economic power over China,” he argued. “And that’s the power of trade.” He did not mention Beijing’s ability for economic retaliation.

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Keep it peaceful.

Greece Removes Migrants From FYROM Border Camp (AFP)

Greece has begun evacuating refugees from the main Idomeni camp on the Macedonia border, while the flow of refugees arriving on the Aegean islands has slowed to a trickle, officials said on Saturday. Eight buses transported around 400 refugees from Idomeni to nearby refugee camps on Friday, police sources said. A dozen more buses were waiting for migrants reluctant to leave the border, which has been shut down since earlier this month. “People who have no hope or have no money, maybe they will go. But I have hope, maybe something better will happen tomorrow, maybe today,” said 40-year-old Fatema Ahmed from Iraq, who has a 13-year-old son in Germany and three daughters with her in the camp. She said she would consider leaving the squalid Idomeni camp – where people are sheltering even on railway tracks – if the Greek government decides to give every migrant family “a simple house”.

Those persuaded to board the first buses were mainly parents with children who can no longer tolerate the difficult conditions. Janger Hassan, 29, from Iraqi Kurdistan, who has been at the Idomeni camp for a month with his wife and two young children, thinks he will probably leave. “There’s nothing to do here. “The children are getting sick. It’s a bad situation the last two days: it’s windy, sometimes it’s raining here,” he said. “We don’t have a choice. We have to move,” he said. Desperation was evident in the camp. One tent bore the slogan: “Help us open the border”. A total of 11,603 people remained at the sprawling border camp on Saturday, according to the latest official count. Giorgos Kyritsis, spokesman of the SOMP agency, which is coordinating Athens’s response to the refugee crisis, said the operation to evacuate Idomeni will intensify from Monday.

“More than 2,000 places can be found immediately for the refugees that are at the Idomeni camp and from Monday on, this number can double,” Kyritsis added, pledging to create 30,000 more places in the next three weeks in new shelters. Meanwhile, the flow of refugees arriving in Greece is slowing. Athens on Thursday said no migrants had arrived on its Aegean islands in the previous 24 hours, for the first time since the controversial EU-Turkey deal to halt the massive influx came into force at the weekend. The agreement, under which all migrants landing on the Greek islands face being sent back to Turkey, went into effect last Sunday. Despite the deal, 1,662 people arrived on Monday, but this fell to 600 on Tuesday and 260 on Wednesday.

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“Today we had little people, but if we have all the people then we will succeed.”

The Bar at the End of the Road (WSJ)

A tiny bar in a rundown train station in a remote Greek town has become the center of the universe for the migrants stuck at the border of Macedonia. When Macedonia shut its border to Greece in early March, the Greek border town of Idomeni, once a quick stopover for migrants on route to Europe became the end of the line for many. At least for now. But that isn’t stopping many migrants from trying to make their way across the border and beyond. On a recent cold and wet few days at the camp, migrants hang out in the bar for the warmth it provides and the food and friendship it offers. People talk over chips, pizza and beer, but mostly take solace in having a temporary escape from the misery of the camp. Out of their cold, muddy tents and playing games like checkers and backgammon, or connecting with distant relatives on their phones.

Groups are usually separated by nationality, but talking about how to get out of Greece and farther into Europe is a topic everyone discusses. One morning, someone had a plan to cross a fast-flowing, ice-cold river to the border, despite the fence and increased police presence. It was a dangerous plan, but any escape would do. Someone had a printout of a map showing the route across the river all the way to the border. People study it and take photos of it. Zakaria, a migrant from Aleppo, Syria, says, “I want to continue my studies. I don’t care which country. It can be Germany or another country so long as I can continue my studies. I will wait here until I cross somehow. I would go back home to Syria if I could. Believe me I don’t want to be here, I want to be home, but I don’t even have a home there. No country and no home.”

By noon that day, hundreds of people amassed at the meeting point on the map. Following the trail through forests and fields, this group of men and women, young and old carry their belongings and eventually come to the river. The water is freezing. People are yelling and crying. Children are terrified. But they made it across. They were lucky. Earlier that morning, a separate group attempted to cross and three people reportedly died attempting the cross. After resting, they continue to the border, but are turned back by the Macedonian army. Back at the camp, they are exhausted and downtrodden, but they have the bar, and talk soon turns to finding another way to escape. Sarwar, a migrant from Lahore, Pakistan, who has been in Idomeni for 16 days and just returned from trying to cross the border says, “They stop us today but we will try again. We are many, many people and more come now. Soon we can run through the fence. Today we had little people, but if we have all the people then we will succeed.”

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Mar 162016
 
 March 16, 2016  Posted by at 9:53 am Finance Tagged with: , , , , , , ,  Comments Off on Debt Rattle March 16 2016


William Henry Jackson Camp wagon on a Texas roundup 1901

Chinese PM Li Keqiang Says It Is ‘Impossible’ to Miss Economic Targets (WSJ)
Chinese Buying In US Rekindles Memories Of Japan’s 1980s Merger Mania (Forbes)
China Mixes Cash, Coercion to Ease Labor Unrest (WSJ)
China To Target Shadow Lending For Housing Down-Payments (BBG)
Asia Hedge Funds Had Worst-Ever Start to Year (BBG)
Retirement Is Impossible With Negative Rates (Mauldin)
JP Morgan Brings Back Mortgage-Backed Securities (WSJ)
Despair Fatigue (Graeber)
Disaster Capitalists Fan Flames Of War In Syria (II)
EU Approves Refugee Support Mechanism For Greece (Kath.)
FYROM Accuses Greece Over the “Exodus” of Refugees (PP)
FYROM Dumps Refugees Back In Greece As EU-Turkey Deal Falters (Reuters)
Refugees On Lesbos Offered Sanctuary Thanks To Brit Couple (Mirror)
UNHCR To Ask World To Take In 400,000 Syrian Refugees (A.)

Not a smart thing to say.

Chinese PM Li Keqiang Says It Is ‘Impossible’ to Miss Economic Targets (WSJ)

Chinese Premier Li Keqiang said it would be “impossible” for China to fall short in meeting its relatively high economic-growth targets even as it pushes ahead with structural reforms. Speaking to reporters at the conclusion of China’s annual legislative session, Mr. Li said China won’t suffer a “hard landing,” or sharp downturn, and can achieve growth and reform simultaneously. “Reform and development aren’t contradictory,” he said. “We should be able to stimulate market vitality and support economic development via structural reforms.” At the opening of the National People’s Congress earlier this month, China set growth targets of 6.5% to 7% for this year and an average benchmark of at least 6.5% from now until 2020.

Economists say this relatively high growth target at a time when the economy is losing momentum suggests China is favoring growth over structural reform, which could prevent massive job losses and social instability but set back the shift of China’s economy from investment and manufacturing to consumption and services. The real test will be in whether tough restructuring steps are implemented, Commerzbank economist Zhou Hao said in a report following Mr. Li’s comments. “China needs to proceed with the deleveraging more decisively, and should prevent the leverage ratio from soaring again,” he wrote. “At the end of the day, policy execution is crucial to restore the market confidence.”

Mr. Li said capital-adequacy ratios at China’s financial institutions are sound, bad loans are well covered by reserves and the nation is making progress in cutting corporate debt using debt-for-equity swaps. Mr. Li signaled that China will do what it takes to maintain its growth targets and that it has a “good reserve” of policy instruments in the event that growth falls outside an acceptable range, He said China will employ “innovative measures” to ensure steady economic progress.

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What could go wrong?

Chinese Buying In US Rekindles Memories Of Japan’s 1980s Merger Mania (Forbes)

Nearly three decades ago, Japanese corporations flooded the United States with a boom of takeover deals, much of it focused on prime U.S. real estate. They snapped up properties like Rockefeller Center and The Plaza Hotel, in addition to Columbia Pictures, causing consternation among those in the U.S. who wondered when, or if, the buying boom would ever end. “If you don’t want Japan to buy it.. don’t sell it,” Akio Morita, founder of Sony , famously said when bidding for Columbia. The buying stopped when a 1980s stock market bubble in Japan popped, depleting the dealmaking currency and animal spirits of overseas acquirers. Within years, targets like Rock Center and The Plaza were in the hands of new ownership and a quarter century later, Japanese corporations are still trying to dig out from under the bubble.

Now, it appears there’s a new foreign buyer rushing into U.S. markets and exhibiting similarities to the heady, 1980s Japanese M&A binge. Chinese corporations have opened 2016 with an unprecedented surge in overseas dealmaking and this frenzy of activity is no coincidence. It comes as China’s currency is in the process of readjusting to account for it slowing economic growth, causing hundreds of billions of dollars in capital outflows. Roughly half a trillion dollars poured out of China in 2015 according to the Institute for International Finance and that pace continues this year. Capital leaving China has found its way into single and multifamily real estate properties in North America – in addition to financial assets like stocks, bonds and currencies.

Now, the money is rushing directly towards large domestic corporations through takeover deals. Just two and a half months into the year, Chinese overseas corporate M&A activity is roughly in line with the $108 billion in outbound M&A conducted all of last year, according to Dealogic. If Chinese corporates are beginning to exhibit similar symptoms to the Japanese merger mania, a set of deals in the works this weekend cements the comparison. Anbang Insurance Group, which is run by Deng Xiaoping’s grandson-in-law, is trying to negotiate what looks to be an unprecedented bonanza of real estate acquisitions, targeted at famous U.S. properties. Anbang ponied up $2 billion to buy the Waldorf-Astoria Hotel from Blackstone-controlled Hilton Hotels in late 2014, and the group is back at it with two deals that would increase its buying by many multiples.

The insurer is reportedly offering to buy Strategic Hotels and Resorts (SH&R) — the owner of properties including Essex House and Hotel del Coronado — from Blackstone. That offer comes just months after the ink dried on the PE giant’s $4 billion takeover of SH&R in September. And Anbang is leading a consortium of investors who are challenging Marriott International’s $12 billion takeover of Starwood Hotels, operator of upscale hotel brands including Westin, W Hotels and Le Meridien.

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How China keeps its zombies alive.

China Mixes Cash, Coercion to Ease Labor Unrest (WSJ)

A protest by Chinese coal workers over unpaid wages drew a swift, expected response: payoffs to get them off the streets and threats of police action if they don’t. The effort underscores the government’s long-standing worries about labor strife and its newly cautious approach to restructuring unprofitable state firms. Unrest in the northeastern city of Shuangyashan appeared to ease as Longmay Mining Holding, a huge employer, started disbursing some back pay on Monday, workers said. Hundreds took to the streets there last week, drawing a large police presence, after the provincial governor said Longmay didn’t owe its miners wages.

The response by Longmay and Heilongjiang province Gov. Lu Hao, who later said he had misspoken about the wage arrears, mirrored past efforts by Chinese officials to ease labor unrest with a mix of cash, coercion and pledges of redress. Chinese call the strategy “buying stability,” part of the government’s well-worn playbook for defusing public anger. Beyond being a troubled coal company, Longmay is a test case for government resolve in carrying out a key economic initiative—the restructuring of uncompetitive state industries whose drain on resources is impeding a transition to an economy driven more by services and consumers. Many Longmay workers in Shuangyashan are among the 1.8 million steel and coal workers Beijing plans to lay off over the next five years.

The retrenchment, and the allocation of 100 billion yuan ($15.4 billion) in restructuring funds to pay for workers’ severance, retraining and relocation, are part of a five-year economic program Chinese lawmakers are set to adopt at the end of their annual session in Beijing on Wednesday. Economists have said China needs deeper cuts to shed excess industrial capacity and divert labor and capital to more productive industries. Instead, the government is encouraging businesses to keep workers on the payrolls, often at reduced hours and pay, avoiding fueling a continuing surge in labor unrest but at the cost of dragging out an economic transition. Some ailing enterprises can expect official support to stay in business, including in Longmay’s case tax cuts and cash incentives that Fitch Ratings says allowed the mining company to avoid defaulting on bonds.

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“His property agent offered him a zero-interest loan, funded entirely online by peer-to-peer lenders, that covered almost half his deposit..”

China To Target Shadow Lending For Housing Down-Payments (BBG)

When Fu Songtao found his ideal home in the suburbs of Shanghai, he faced the typical problem of would-be homebuyers: Coming up with enough cash for a down payment. So Fu turned to an online solution. His property agent offered him a zero-interest loan, funded entirely online by peer-to-peer lenders, that covered almost half his deposit. “Everybody I know took out these loans,” said Fu, a 29-year-old employee of a state-owned enterprise, who borrowed 380,000 yuan ($58,000) a year ago, with interest payments to lenders subsidized by the property agent, for his 3 million yuan apartment, and has seen its value increase to 3.3 million yuan since. “If you can borrow like that, why not?” The lending platform of his real estate agency, E-House China, is one of China’s hundreds of P2P lenders allowing home buyers to seek down-payment loans online.

Total P2P borrowing for home deposits reached 924 million yuan in January, more than three times the level of last July, according to data provider Yingcan. Lending for property down payments, a phenomenon all but unheard of a year ago, has now prompted plans by the government to halt such borrowing. The response underscores the stakes as shadow-banking leverage creeps into China’s housing market – a development similar to the margin financing that fueled last year’s stock market bubble, but with potentially more damaging consequences. “Down-payment financing would definitely cause risks to the financial system, similar to the subprime crisis in the U.S.,” said Hu Xingdou, an economics professor at the Beijing Institute of Technology.

“China has learned a lesson from the U.S. subprime crisis. The Chinese government understands that they have to solve problems like housing and overcapacity. At the same time, they can’t bring further risks to the financial system, as the banks already have a lot of bad debt.” People’s Bank of China Deputy Governor Pan Gongsheng said at a press conference on Saturday that down-payment loans offered by developers, real estate agents, and P2P lenders not only raised leverage of home buyers, they also undermined effectiveness of macroeconomic policies and increased risks to the financial system and property markets. The central bank together with other government departments will soon start a campaign to clean up such activities, he said. New rules being drafted by the central bank, the China Banking Regulatory Commission and other bodies would bar developers, peer-to-peer networks and other non-banks from offering down-payment loans

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Casino’s on steroids.

Asia Hedge Funds Had Worst-Ever Start to Year (BBG)

Hedge funds in Asia, which beat counterparts in the U.S. and Europe in 2015, are off to their worst annual start on record this year, as the region’s stock markets have plunged amid a dimming outlook for growth. Asia hedge funds, excluding those that invest in Japan, fell 1.5% in February, bringing their loss for the first two months of 2016 to 6.6%, according to Singapore-based data provider Eurekahedge. Apart from being the biggest drop ever for the first two months of the year, that’s also the worst start among the world’s major regions, Eurekahedge said. Hedge funds including those from Greenwoods Asset Management and Zeal Asset Management extended declines they suffered in January.

After successfully navigating turbulent markets in 2015, hedge funds in Asia are seeing a reversal this year as worries about a global slowdown have deepened. The Shanghai Composite Index has tumbled 19% this year to rank among the worst-performing equity markets in the world, and most of the region’s benchmarks have been whipsawed by volatility amid scant signs of global growth. “Hedge fund managers in the region, especially those focusing on long-short strategies, had been stung by volatility in underlying markets,” said Mohammad Hassan at Eurekahedge. As it becomes more difficult to post consistent returns, investors are increasingly shifting their money to the largest or most promising managers, prompting many smaller-scale firms to exit the business or return money to investors.

That’s creating a bifurcation in Asia’s hedge fund industry. The losses for hedge funds investing in Asia ex-Japan compares with a decline of 3.2% in Europe through the end of February and a decrease of 1.7% in North America, according to the Eurekahedge website. Last year, Asia ex-Japan hedge funds rose 7.5%, beating rivals in other parts of the world. Greenwoods Asset’s Golden China Fund fell 3.7% in February, bringing its losses to 14.4% so far this year, according to Joseph Zeng, a Hong Kong-based partner at the hedge fund firm. The fund, which managed $1.7 billion as of January, was one of the top performers last year, posting gains of almost 22%.

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“This situation would wreak havoc on every pension fund—but that’s not even the worst part.”

Retirement Is Impossible With Negative Rates (Mauldin)

Since 2008, the Fed has relied on near-zero interest rates to stimulate economic growth, and they still sincerely believe that low interest rates will do the job they’re supposed to. However, the hard evidence of the past few years is that ultra-low rates, combined with quantitative easing, haven’t stimulated much growth. Unemployment has fallen, which is good—but probably not as good as the numbers suggest because people have gone back to work for lower pay and are now even deeper in debt. Personal income growth has stagnated, too. Are we better off now than we were five years ago? The answer is a qualified yes. But it is not entirely clear, at least to your humble analyst, that the halting economic recovery is the result of low interest rates and not other less manipulable factors such as entrepreneurial initiative and good old muddling through.

In fact, an ultra-easy monetary policy may be part of the reason we’ve been stuck with low growth. Witness Japan and Europe. Just saying… Seriously, no one fully understands how all the moving parts influence each other. Years of ZIRP did help businesses and consumers reduce their debt burdens. ZIRP and multiple rounds of QE have also done wonders for stock prices… but not much for the kind of business expansion that creates jobs and GDP growth. If year upon year of ultra-low rates were enough to create an economic boom, Japan would be the world’s strongest economy right now. It obviously isn’t—which says something about ZIRP’s efficacy as a stimulus tool. What isn’t a mystery, however, is that ZIRP has created a massive problem for retirement savers and pension fund managers.

If ZIRP is bad, NIRP will be far worse for retirement planning. Bond-return assumptions will have to be even lower and potentially below zero. This situation would wreak havoc on every pension fund—but that’s not even the worst part. Most asset allocations are generally in the ballpark of 60% equities and 40% bonds, so that is the standard portfolio we will be discussing. Other allocations will make some differences, but not change the general direction. In other words, “your mileage may vary,” but probably not by much. In an ideal world—which is the world that pension consultants live in—equities will return 10% nominal and bonds will return 5%. A 60/40 portfolio blend will then yield an 8% overall return after fees, expenses, and management costs.

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“J.P. Morgan is using the Federal Deposit Insurance Corp.’s safe harbor, which isolates them from the assets and protects investors if the mortgages go bad.”

JP Morgan Brings Back Mortgage-Backed Securities (WSJ)

J.P. Morgan Chase & Co. is trying to sell new securities that would pass along most of the credit risk on $1.9 billion in mortgages, in an attempt to revive a debt market that has been largely left to the government since the financial crisis. The largest U.S. bank by assets is expected to price the residential mortgage-backed deal over the next two weeks. J.P. Morgan would hold 90% of the deal by keeping the safest parts, or the most senior tranches, and plans to sell off the riskier pieces to investors. Government-sponsored entities Fannie Mae and Freddie Mac have dominated the market in their absence. The two companies have recently been selling new securities that use derivatives to unload the risk of default on the mortgages they guarantee.

The new deal is J.P. Morgan’s first “house transaction” since the financial crisis, meaning it is entirely backed by mortgages the bank owns. The pool includes a mix of more than 6,000 mortgages, both newer and refinancings, around 75% of them conforming with the underwriting standards set by Fannie and Freddie. J.P. Morgan could have sold those loans directly to Fannie and Freddie, so the deal indicates it thinks it can get a better deal with private investors or holding parts on its balance sheet.

The New York bank hopes this new method could offer more competitive pricing and help broaden the market for such deals, people familiar with the matter said. J.P. Morgan is using the Federal Deposit Insurance Corp.’s safe harbor, which isolates them from the assets and protects investors if the mortgages go bad. The deal is the first of its kind to be issued by a major bank, according to Fitch Ratings, which gave the securities mostly investment-grade credit ratings. “This is an important step to bring private capital back into the mortgage market,” J.P. Morgan Chief Operating Officer Matt Zames said.

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“.. the historical defeat and humiliation of the British working classes is now the island’s primary export product.”

Despair Fatigue (Graeber)

In the United Kingdom, “finance” is based above all in real estate, and the real estate bubble that sustains the City is itself sustained by the fact that pretty much every billionaire in the world feels they have to maintain at least a flat, and more often a townhouse, in a fashionable part of London. Why? There are plenty of other well-appointed modern cities in the world, most of which have a decidedly more appealing climate. Yet even more than, say, New York or San Francisco, London real estate has become something like U.S. treasury bonds, a basic currency of the international rich. It’s when one asks questions like these that economics and politics become indistinguishable. Those who have investigated the situation find that London’s appeal—and by extension, Britain’s—rests on two factors.

First of all, Russian oligarchs or Saudi princesses know they can get pretty much anything they want in London, from antique candelabras and high-tech spy devices, to Mary Poppins–style nannies for their children, fresh lobsters delivered by bicycle in the wee hours, and every conceivable variety of exotic sexual service, music, and food. What’s more, the boodles will be delivered by a cheerful, creative, and subservient working-class population who, drawing on centuries of tradition, know exactly how to be butlers. The second factor is security. If one is a nouveau riche construction magnate or diamond trader from Hong Kong, Delhi, or Bahrain, one is keenly aware that at home, something could still go terribly wrong: revolution, a sudden U-turn of government policy, expropriation, violent unrest. None of this could possibly happen in Notting Hill or Chelsea.

Any political change that would significantly affect the most wealthy was effectively taken off the table with the Glorious Revolution of 1688. In other words, the historical defeat and humiliation of the British working classes is now the island’s primary export product. By organizing the entire economy around the resultant housing bubble, the Tories have ensured that the bulk of the British population is aware, at least on some tacit level, that it is precisely the global appeal of the English class system, up to and including the contemptuous sneer of the Oxbridge graduates in Parliament chuckling over the impending removal of housing benefits, that is also keeping affordable track shoes, beer, and consumer electronics flowing into the country. It’s an impossible dilemma.

It’s hardly surprising, then, that so many turn to cynical right-wing populists like UKIP, who manipulate the resulting indignation by fomenting rage against Polish construction workers instead of Russian oligarchs, Bangladeshi drivers instead of Qatari princes, and West Indian porters instead of Brazilian steel tycoons. This marketing of class subservience is the essence of Tory economic strategy. Industry may be trounced and the university system turned (back) into a playground for the rich, but even if this leads to a collapse of technology and the knowledge economy, the end result will only seal in more firmly the class system that produces Tory politicians: England will literally have nothing else to sell.

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Lest we forget. Good read, lots of details.

Disaster Capitalists Fan Flames Of War In Syria (II)

If Naomi Klein were to rewrite The Shock Doctrine now, I hope she d agree that the situation in Syria is playing out as a textbook example of her terrifying concept because I believe that’s what we are witnessing. To understand the actions of each nation involved in Syria, you first have to recognise their motivation. It is, as always, fossil fuels and the dollar with human life at a lowly position down the pecking order. The crux of the matter is that Bashar al-Assad put paid to the construction of an oil and gas pipeline, which would have ended Europe s reliance on Russia for its natural gas, by refusing to sign an agreement with Qatar. Instead, he opted for a partnership with Iran (after which the civil war in Syria intensified). While the construction of the pipeline had previously been put on hold, it was quietly announced last July that Iran was forging ahead with a trunkline (IGAT6) to supply Iraq with natural gas; in theory, this could be the beginning of an Iran-Iraq-Syria pipeline or one that goes direct to Turkey.

The Iranian pipeline would be unacceptable to both Washington and Brussels, as it would mean energy co-ordination from Iran, Iraq, Syria and Russia (putting pressure on their Sunni-led cohorts in the region), and also because the product from such would be traded in a basket of currencies not exclusively the petrodollar. Moreover, with Iran now emerging from sanctions (and forecast to produce 3.1mbpd), its gas fields, the second largest reserves on the planet, are up for grabs to exporters. There is, in Syria and across the spectrum of corporate interests of the countries involved, everything to play for and the disaster capitalists are piling into the game, full throttle.

The refugee crisis ostensibly splintering the governments of the EU is set to balloon. Already this year, 133,549 people have reached Europe by sea up more than 10 fold from 2015. The demographic has altered drastically as well: whereas last year, the breakdown of migrants/refugees by gender was 62% male, 16% women and 22% children, so far this year it has been 47%, 20% and 34% respectively. The chaotic propaganda surrounding the refugee crisis continues unabated, each country pointing fingers at the other, for instance, when a NATO general accused Russia and Syria of weaponising the refugee crisis (while simultaneously characterising the people fleeing war as a hotbed of ISIS recruits).

Meanwhile, Greece, in the midst of its own economic turmoil, is left to accommodate 122,000 souls under the UNHCR’s warning of an ‘imminent humanitarian disaster’ unless other EU countries begin to take in these refugees. In effect, the intentional bottleneck in Greece functions as yet another form of shock inflicted by the EU and Troika on an already flailing Syriza administration and its embattled leader Tsipras. With its third bailout looking unsteady amidst mutterings of the IMF pulling out of the deal, the Greek administration has no chips to bargain with, and holds minimal leverage within the EU.

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More disgrace. Greece spends €600 million alone, EU ‘approves’ €300 million in support of the entire ‘refugee effort’.

EU Approves Refugee Support Mechanism For Greece (Kath.)

The presidency of the European Council on Tuesday announced that it has approved a new support mechanism for Greece and other European countries struggling with the bloc’s biggest immigration crisis since World War II. “This Council decision shows that the EU stands by Greece at this difficult time. The Netherlands presidency will do all it can to ensure that the necessary EU funds are mobilized as quickly as possible,” said Dutch Foreign Minister Bert Koenders, whose country holds the six-month rotating presidency of the EU. The European Commission estimates that the refugee effort will require €300 million this year and an additional €200 million each in 2017 and 2018.

The help that will be provided under the new mechanism includes food, shelter, water, medicine and other basic necessities. It will be delivered by the Commission itself or by partner organizations selected in cooperation with Greek authorities. Tuesday’s statement put the number of migrants and refugees currently trapped in Greece due to border closures at 35,000. Government sources estimate that number to be closer to 44,000. The Bank of Greece, meanwhile, on Monday said the cost of the handling the refugee crisis for Greece alone will likely exceed a previous estimate of €600 million.

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Sour and bitter relations. The Greeks say ‘Skopje’. Rumors say accidentally calling the country Macedonia forced the Greek migration minister to resign today.

FYROM Accuses Greece Over the “Exodus” of Refugees (PP)

The Minister of foreign affairs of FYROM, Nikola Poposki, stated that Greece is responsible for the “organised push” of several hundreds of migrants who attempted to cross over yesterday In a series of tweets, Poposki claimed that the growing numbers of migrants at the borders between Greece and FYROM intensifies smuggling while it worsens the human treatment of those living in the refugee camps. He claims that only a united and humane EU reaction will be able to provide a solution for both migrants as well as the involved countries. Those statements came after the effort, on Monday, of almost a thousand refugees to cross the river of Axios and attempt to get into FYROM via an opening in the fence separating the two countries.

While three people were drowned, the rest managed to enter FYROM where they were intercepted by FYROM army and were captured. The refugees decided to make that desperate “exodus” towards FYROM after a flyer was distributed between them, describing in English and Arabic where, and how they could pass over to FYROM. The incident creates further confusion and difficulties in what is already a complex situation between the countries involved. In any case it is not a development which aids Greece, or in fact the efforts of the refugees as it allows those countries which have decided to seal their borders to claim that Greece is not able to control the waves of migrants.

The Greek chief of the Administration for the migrant problem stated that, should FYROM make a petition for the re-entrance of the refugees back to Greece, the Greek side will evaluate and decide on it. It should be noted that there is no formal agreement between FYROM and Greece for the re-acceptance of migrants. At the same time, the Greek government is beckoning to NGOs as well as volunteering organizations to be in close contact with the authorities in order to avoid cases of misinformation. On Monday afternoon the Prime Minister presided over a meeting with all concerned authorities regarding those latest developments.

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That is illegal.

FYROM Dumps Refugees Back In Greece As EU-Turkey Deal Falters (Reuters)

Macedonia dumped about 1,500 migrants and refugees back into Greece overnight after they forced their way across the border, as European nations continued to pass the buck in a migration crisis that risks tearing the European Union apart. The police action was part of a drive by Western Balkans states to shut down a migration route from Greece to Germany used by nearly a million people fleeing war and poverty in the Middle East and Asia over the last year in Europe’s biggest refugee influx since World War Two. EU efforts to conclude a deal with Turkey to halt the human tide in return for political and economic rewards hit a setback on Tuesday when EU member Cyprus vowed to block efforts to speed up Ankara’s EU accession talks unless Turkey meets its obligations to recognize its nationhood.

European Council President Donald Tusk, who will chair an EU summit with Turkey on Thursday and Friday, was flying on to Ankara to discuss the fraying pact with Turkish leaders after tough talks with Cypriot President Nicos Anastasiades. Tusk acknowledged to reporters that the tentative deal put together last week by German Chancellor Angela Merkel and Dutch Prime Minister Mark Rutte with Turkish Prime Minister Ahmet Davutoglu raised legal problems and needed to be “rebalanced” to win acceptance from all 28 EU members. The European Commission meanwhile postponed proposals to reform the bloc’s flawed asylum system, which puts the onus on the state where migrants first arrive, in an attempt to avoid further controversy before the Turkey deal is finalised. Some 43,000 migrants are bottled up in Greece, overstraining the economically shattered euro zone country’s capacity to cope, and more continue to cross the Aegean daily from Turkey despite new NATO sea patrols.

An estimated 1,500 people marched out of a squalid transit camp near the northern Greek town of Idomeni on Monday, hiked for hours along muddy paths and forded a rain-swollen river to get around the border fence. Most were picked up by Macedonian security forces, put into trucks and driven back over the border into Greece late Monday or overnight, a Macedonian police official said. Greek authorities said they could not confirm the return as there had been no official contact from the Macedonian side. Ties between the two neighbors are fraught because of Greece’s long-standing refusal to recognize Macedonia’s name, which is the same as that of a northern Greek province. A second group of about 600 migrants was prevented from crossing into Macedonia and many of them spent the night camping in the Greek mountains.

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The Kempsons are fabulous. But where’s the rest of Britain?

Refugees On Lesbos Offered Sanctuary Thanks To Brit Couple (Mirror)

Many British couples dream of leaving Blighty behind and opening a hotel on an island in the sun. It was no different for Eric and Philippa Kempson when they thought about their future together. But it was the global refugee crisis which pushed them to buy their seafront guest house on the Greek island of Lesbos. And rather than welcoming British tourists, they have opened their doors to the hundreds of fleeing refugees who land on its shores each month. Now, as Turkey and the EU agree their “one in, one out” policy in response to the migrant crisis, Philippa says: “I’m absolutely speechless about these latest measures -they’re farcical. Labels like “irregular migration” are meaningless.” “We need to remember these are human beings fleeing horrific circumstances.

Hotel Elpis, on tranquil Eftalou Beach, gives desperate refugees shelter, somewhere to wash and a meal when they land on Lesbos. The 20-room hotel welcomed its first 110 residents two weeks ago. “In Greek Elpis is the goddess of hope, so it seemed fitting that we called the hotel the Hope Centre“ says Philippa, 43. First and foremost that’s what we provide these people with: hope. We are trying to give the families a few hours of dignity and somewhere where they are treated as people, not as refugees. We hadn’t planned to open our doors so early, as we are still waiting for our health and safety licenses. But last week one of the aid agencies begged us to help 110 people who had just arrived on boats. Every facility on the island was full. Philippa and Eric, 60, got involved in the crisis last summer, when they started handing out water to refugees.

Philippa explains: “We thought bigger agencies would come to help, but when none did, we thought, we have to help these people ourselves”. It was then that they decided to open the hotel. “We ve used our own savings and are working on the project 24/7”, she says. Tourists have been kind enough to leave money at supermarkets so we can buy supplies to hand out. The couple have also been given help with the hotel’s rent by Glasgow housing charity PAIH. Philippa adds: “Eric is an artist and makes oak products we sell. But last summer he didn’t have the time to do that because of our work with refugees. So I don t know how we are going to survive ourselves financially this year, but we will deal with those issues when they come.”

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Good luck.

UNHCR To Ask World To Take In 400,000 Syrian Refugees (A.)

The United Nations High Commissioner for Refugees said on Tuesday he will ask countries to step forward and agree to take in another 400,000 Syrian refugees. On his first visit to Washington since being appointed to head the UN refugee effort, Filippo Grandi said the world must do more to end the crisis. “On March 30, I’m going to chair a meeting in Geneva at which I ask the international community to take 10% of all the Syrian refugees,” he said. “10% is a lot of people. It’s more than 400,000 people,” he told reporters on the fifth anniversary of Syria’s bloody civil war. More than four million Syrians have fled their war-torn country since the conflict erupted, and more than six million are displaced within its borders. Neighboring Turkey, Lebanon and Jordan are struggling to cope with the exodus and the onward flow has created a political and humanitarian crisis in Europe.

Canada and Germany have been praised for stepping up to welcome tens of thousands as refugees, but others, including the United States have been criticized. Historically the United States has been by far the world’s leading host of refugees and it still is for those fleeing many other conflicts around the world. But amid a bitter atmosphere in the run up to November’s presidential election, Washington has struggled to offer new homes to desperate Syrians. US President Barack Obama ordered that 10,000 be admitted during the 2016 fiscal year, but half-way through the period only 1,115 have been processed. Grandi was careful not to criticize his hosts in Washington, praising the leading US role in hosting refugees of other nationalities.

But he lamented the tone of the debate in both the US and Europe, where anti-immigration politicians have claimed that terrorists hide among Muslim refugees. Grandi complained that on a visit to the European parliament he had heard “language we haven’t heard since the 30s” from opponents of resettlement. But he added that the new 400,000 target figure could be met in part by means short of the full resettlement package that the United States offers. Rather than providing Syrian refugees with new lives and permanent residence, some countries may offer temporary jobs, scholarships or humanitarian visas. For this, he said, his office would work with private firms and universities in partnership with states, to try to reduce the pressure on Syria’s neighbors.

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Jan 042016
 
 January 4, 2016  Posted by at 4:27 pm Finance Tagged with: , , , , , , ,  2 Responses »


Marion Post Wolcott Natchez, Mississippi, grocery window 1940

The Chinese stock markets broke through 2 circuit breakers today, breakers that were introduced only a few months ago in response to the market selloff, triggered by a surprise yuan devaluation, in August. The first breaker, at -5%, forced a 15-minute trading halt. The second one, at -7%, halted trading for the rest of the day.

For many people, today’s bust can’t have been a huge surprise, because it’s been known for some time that a ban on stock sales by parties holding a 5% or larger stake in a company, is set to expire on Friday. Beijing may panic again before that date, but it can’t force stakeholders to hold on to large portfolios forever either.

Xi and his crew should have stayed out of the markets from the start, but that’s not how they see the world. They still think like apparatchicks, and don’t understand that markets are opposed, at a 180º angle, to top down control. You can either have a market, or you can have central control.

They pumped up the housing market for all they could, and when that bubble blew they tricked their people into buying stocks. And now that one’s fixing to die too, and that didn’t take nearly as long as the housing bubble. The central control team is frantically looking for the next carnival attraction, but it won’t be easy.

They should have stayed out of all markets. Just like western central banks. All interference by governments and central banks can only make things worse, a fact at best temporarily hidden by the distortions they force upon markets.

And we shouldn’t forget that expectations for China as the world’s economic savior determined western central bank ‘thinking’ to a large extent over the past decade. Like so many others, central bankers too are incapable of spotting a Ponzi when it’s staring them in the face.

Now the Chinese bubble is bursting, and set to spill over into and over the global economy with dire consequences, we are all exposed to that much more than was ever necessary. All the PBoC, Yellen, Kuroda and Draghi managed to accomplish was a dran-out illusion, a slow-motion sleight of hand.

Here’s something I was writing over the weekend, prior to today’s market action:

China underlies all problems the world faces economically today. Since at least 2008, the global economy has been a one-dimensional one-way street, in which all hope was focused on China. Western companies and stock traders were so confident that China would lift the entire planet out of its recessionary doldrums, they leveraged themselves up the wazoo to bet on a China-based recovery. It was the only game in town, and it was merrily facilitated by central banks.

The People’s Bank of China threw some $25 trillion at the illusion, the Fed, ECB and BoJ combined for probably as much again. One way of looking at it is that if you weren’t sure on how bad the recession really was, now you know the numbers.

But today China is close to entering its own recession, whether Beijing will admit it or not. The official GDP growth goal of 6.5% looks downright silly when you see this graph that Charlene Chu sent to BI:


CEIC and the National Bureau of Statistics; Charlene Chu, Autonomous Research

From the article:

Secondary industry comprises about 40-45% of GDP. [..] In China, GDP is classified into three industries, primary (agriculture), secondary (manufacturing and construction), and tertiary (services). [..]

This slowdown in the secondary industry is part of China’s intentional shift toward an economy focused on services and consumer consumption rather than manufacturing.

The first line there is educative, the second is nonsense. Manufacturing in China is plunging because ‘we’ don’t buy their overcapacity and overproduction any longer. And neither do the Chinese themselves. Primary industry, agriculture, may grow a little bit, but certainly not much.

Tertiary industry, services, may also grow a bit, but Beijing can’t just flip a switch and get people to buy services on a scale that can make up for the decline in manufacturing. Neither can it retrain tens of millions of workers for jobs in that illusive services sector, let alone on short notice.

This decline will take years for the Chinese economy to absorb, since so much of it is based on overleveraged overcapacity and overproduction. The spectre of massive job losses hangs over the entire ‘adjustment’ process, both in China itself and in countries that -used to- supply it with commodities. Mass unemployment in China in turn raises the spectre of severe social unrest.

As I said in 2016 Is An Easy Year To Predict, China has got to be the biggest story going forward (rather than oil, for instance), and it would have been already, to a much larger extent than it has, if there were less denial involved. And less debt.

Like the west, China will have to deleverage its enormous debt burden before it can even start thinking of rebuilding its economy. Which is precisely what they all seek to deny, loudly and boisterously, not only as if a recovery were feasible without dealing with the debt, but even as if more debt could mean more recovery.

This debt deleveraging will involve such stupendous amounts of -largely virtual- money that the situation, the bottom, from which rebuilding will need to take place will be one at which today’s societies will be hardly recognizable anymore.

Debt deleveraging comes with deflation. Spending will plummet, unemployment will shoot up, production will grind to a halt. Power will shift from established political and economic parties to others.

Obviously, this will not be a smooth transition. The clarions of war sound in the distance already. What is crucial to realize is that none of it can be prevented, other than perhaps the warfare; the economic parts of the play must must be staged. All we can do is to make it as bearable as possible.

The people on the streets, as always, will bear the brunt of the downfall. We only need to look at Greece today to get a pretty good idea of how these things play out.

It won’t be all straight down from here, but the trend will be crystal clear. It didn’t start all of a sudden today, but China’s double circuit breaker is a useful sign, if not an outright red flag. One thing’s for sure: we’ll make the history books.

Dec 122014
 
 December 12, 2014  Posted by at 11:59 am Finance Tagged with: , , , , , , , , ,  Comments Off on Debt Rattle December 12 2014


Jack Delano Atchison, Topeka & Santa Fe train at Emporia, Kansas Mar 1943

IEA Warns On Social Unrest As It Cuts 2015 Oil Demand Growth Forecast (CNBC)
Oil Drops Below $60 After Saudis Question Need to Cut (Bloomberg)
Oil Pressure Could Sock It To Stocks (CNBC)
Fed Bubble Bursts in $550 Billion of Energy Debt (Bloomberg)
Oil Bust Contagion Spreads to Wall Street and the Banks (WolfStreet)
Ruble Consolation Gets Putin Record Oil Income (Bloomberg)
This Has Never Happened Before Without A Drop In Stock Prices (Napier via ZH)
France Drifts Into Deflation As ECB ‘Pea-Shooter’ Falls Short (AEP)
WTF Chart Of The Day: Explaining The Surge In US Retail Sales (Zero Hedge)
China’s Slowdown Deepens as Factory Output Growth Wanes (Bloomberg)
China Tells Banks To Step Up Lending To Lift Flagging Growth (Reuters)
Skepticism Jumps in Options as VIX Rises 70% in Four Days (Bloomberg)
NY Regulator Probing Barclays And Deutsche Over Forex Algorithms (FT)
US House Narrowly Passes Spending Bill, Averts Government Shutdown (Reuters)
US Prosecutors Face New Fallout From Insider Trading Ruling (Reuters)
Welcome To The UK: DIY Burials And Payday Loans For Kids (CNBC)
Crystal Ball: Top 10 Economic Predictions For 2015 (CNBC)
These Are Lies The New York Times Wants You To Believe About Russia (Salon)
Full Scale Of Plastic In The World’s Oceans Revealed For First Time (Guardian)

“Venezuela needs to fill a capital shortfall of around $29 billion next year ..” “.. a currency devaluation would not do much to alleviate the pain. “This is a country really facing a perfect storm.”

IEA Warns On Social Unrest As It Cuts 2015 Oil Demand Growth Forecast (CNBC)

Weak demand and oversupply in oil markets raise the risk of global social instability and the potential for financial defaults, the International Energy Agency (IEA) warned on Friday, as it cut its forecasts for global oil demand growth in 2015. The report came as oil prices slid to new multi-year lows, with Brent crude hitting a 5.5-year low of $63.33 a barrel on Friday. “Continued price declines would for some countries and companies make an already difficult situation even worse,” the IEA said in its new monthly report. Global oil inventories are projected to build by around 300 million barrels in the first half of 2015 in the absence of any disruption, the group said. It estimated that stocks in major global economies could start to “bump” against storage capacity limits.

“The resulting downward price pressure would raise the risk of social instability or financial difficulties if producers found it difficult to pay back debt,” it said. Singling out Russia and Venezuela, the IEA said that further price drops would heighten the financial risks to “highly leveraged” producers, and countries that are heavily dependent on oil revenues. It warned on the threat to international financial stability should the situation in Russia deteriorate to the point of a default. Bond yields and the cost of insuring Russia against a default have risen in recent weeks amid fears over falling oil prices and intensifying sanctions from the West. Oil the country’s biggest export – is crucial for its economy, and influence in the world.

“Lower oil prices significantly dent potential export revenues in net oil exporting countries, slashing their income streams and in turn denting demand,” it said. “In particularly cash strapped economies, such as Venezuela and Russia, this impact is likely to be magnified as the risk of default escalates,” it said, adding that Venezuela’s capital Caracas was currently struggling to make bond payments, fund social programs and pay debts to oil partners. Venezuela needs to fill a capital shortfall of around $29 billion next year, according to Bradford Jones at hedge fund Sagil Capital. He told CNBC Friday that the country was facing a number of very tough decisions and believed a currency devaluation would not do much to alleviate the pain. “This is a country really facing a perfect storm,” he said.

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“When you see a persistent trend like this you can be sure there are a lot of investors caught on the wrong side ..”

Oil Drops Below $60 After Saudis Question Need to Cut (Bloomberg)

Benchmark U.S. oil prices dropped below $60 a barrel for the first time since July 2009 as Saudi Arabia questioned the need to cut output, signaling its priority is defending market share. West Texas Intermediate crude slid 1.6% in New York. The market will correct itself, according to Saudi Arabian Oil Minister Ali Al-Naimi. Global demand for crude from the Organization of Petroleum Exporting Countries will drop next year by about 300,000 barrels a day to 28.9 million, the least since 2003, the group predicted yesterday. Oil’s collapse into a bear market has been exacerbated as Saudi Arabia, Iraq and Kuwait, OPEC’s three largest members, offered the deepest discounts on exports to Asia in at least six years. The group decided against reducing its output quota at a meeting last month, letting prices drop to a level that may slow U.S. production that’s surged to the highest level in more than three decades.

“The path of least resistance is lower,” Mike Wittner, head of oil research at Societe Generale in New York, said by phone. “This week we’ve had the Saudis cut prices to Asia, OPEC reduced the call on its crude and al-Naimi reiterated that they aren’t cutting output and letting the market do its work. They all reinforce the bearish message.” WTI for January delivery dropped 99 cents to close at $59.95 a barrel on the New York Mercantile Exchange. It was the lowest settlement since July 14, 2009. Total volume was 14% above the 100-day average for the time of day. The U.S. benchmark is down 39% this year. [..] “When you see a persistent trend like this you can be sure there are a lot of investors caught on the wrong side,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $2.4 billion, said by phone. “They are looking for any glimmer of green as an opportunity to get out of positions. Any moves higher will be of short duration.”

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“It’s (oil) actually much weaker than the futures markets indicate. [..] The Canadian crude, if you go into the oil sands, is in the $30s, and you talk about Western Canadian Select heavy crude upgrade that comes out of Canada, it’s at $41/$42 a barrel. Bakken is probably about $54.” Kloza said there’s some talk that Venezuelan heavy crude is seeing prices $20 to $22 less than Brent ..”

Oil Pressure Could Sock It To Stocks (CNBC)

With crude sliding through the key $60 level, oil pressure could stay on stocks Friday. West Texas Intermediate futures for January closed at $59.95 per barrel, the first sub-$60 settle since July 2009. The $60 level, however, opens the door to the much bigger, $50-per-barrel level. Besides oil, traders will be watching the producer price index Friday morning, and it’s expected to be off 0.1% with the fall in energy. Consumer sentiment is also expected at 10 a.m. EST. Consumers stepped up and spent in November, as evidenced in the 0.7% gain in that month’s retail sales Thursday. That better mood should show up in consumer sentiment. Stocks on Thursday gave up sizeable gains after oil reversed course and fell through $60. Traders also were nervously watching the progress of a spending bill in Washington, which was delayed. The Dow was up 63 at 17,596, wiping out much of a 225-point intraday gain.

“Oil has pretty much spooked people,” said Daniel Greenhaus, chief global strategist at BTIG. “There just isn’t a bid. With everything in energy and the oil price collapsing as it is, who is going to step in and be a buyer now? The answer is nobody.” Oil continued to slide in after-hours trading. “The selling appears to have accelerated a little bit after the close with really no bullish news in sight,” said Andrew Lipow, president of Lipow Associates. WTI futures temporarily fell below $59 in late trading. “The big level is going to be $50 now in terms of psychological support. Much as $100 is on the upside,” said John Kilduff of Again Capital. Oil stands a good chance of getting there too. Tom Kloza, founder and analyst at Oil Price Information Service, said the market could bottom for the winter in about 30 days, but then it will be up to whatever OPEC does. The cartel in November voted to keep its production unchanged in an effort to hold market share.

“It’s (oil) actually much weaker than the futures markets indicate. This is true for crude oil, and it’s true for gasoline. There’s a little bit of a desperation in the crude market,” said Kloza. “The Canadian crude, if you go into the oil sands, is in the $30s, and you talk about Western Canadian Select heavy crude upgrade that comes out of Canada, it’s at $41/$42 a barrel. Bakken is probably about $54.” Kloza said there’s some talk that Venezuelan heavy crude is seeing prices $20 to $22 less than Brent, the international benchmark. Brent futures were at $63.20 per barrel late Thursday. “In the actual physical market, it’s fallen by even more than the futures market. That’s a telling sign, and it’s telling me that this isn’t over yet. This isn’t the bottoming process. The physical market turns before the futures,” he said.

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A portrait of a bloodbath.

Fed Bubble Bursts in $550 Billion of Energy Debt (Bloomberg)

The danger of stimulus-induced bubbles is starting to play out in the market for energy-company debt. Since early 2010, energy producers have raised $550 billion of new bonds and loans as the Federal Reserve held borrowing costs near zero, according to Deutsche Bank AG. With oil prices plunging, investors are questioning the ability of some issuers to meet their debt obligations. Research firm CreditSights Inc. predicts the default rate for energy junk bonds will double to 8% next year. “Anything that becomes a mania – it ends badly,” said Tim Gramatovich, chief investment officer of Peritus Asset Management. “And this is a mania.”

The Fed’s decision to keep benchmark interest rates at record lows for six years has encouraged investors to funnel cash into speculative-grade securities to generate returns, raising concern that risks were being overlooked. A report from Moody’s Investors Service this week found that investor protections in corporate debt are at an all-time low, while average yields on junk bonds were recently lower than what investment-grade companies were paying before the credit crisis. Borrowing costs for energy companies have skyrocketed in the past six months as West Texas Intermediate crude, the U.S. benchmark, has dropped 44% to $60.46 a barrel since reaching this year’s peak of $107.26 in June.

Yields on junk-rated energy bonds climbed to a more-than-five-year high of 9.5% this week from 5.7% in June, according to Bank of America Merrill Lynch index data. At least three energy-related borrowers, including C&J Energy Services, postponed financings this month as sentiment soured. “It’s been super cheap” for energy companies to obtain financing over the past five years, said Brian Gibbons, a senior analyst for oil and gas at CreditSights in New York. Now, companies with ratings of B or below are “virtually shut out of the market” and will have to “rely on a combination of asset sales” and their credit lines, he said.

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“Six years of the Fed’s easy money policies purposefully forced even conservative investors to either lose money to inflation or venture way out on the risk curve. So they ventured out, many of them without knowing it because it happened out of view inside their bond funds. And they funded the fracking boom and the offshore drilling boom, and the entire oil revolution in America ..”

Oil Bust Contagion Spreads to Wall Street and the Banks (WolfStreet)

Oil swooned again on Wednesday, with the benchmark West Texas Intermediate closing at $60.94. And on Thursday, WTI dropped below $60, currently trading at $59.18. It’s down 43% since June. Yesterday, OPEC forecast that demand for its oil would further decline to 28.9 million barrels a day next year, after having decided over Thanksgiving to stick to its 30 million barrel a day production ceiling, rather than cutting it. It thus forecast that there would be on OPEC’s side alone 1.1 million barrels a day in excess supply. Hours later, the US Energy Information Administration reported that oil inventories in the US had risen by 1.5 million barrels in the latest week, while analysts had expected a decline of about 3 million barrels. So the bloodletting continues: the Energy Select Sector ETF is down 26% since June; S&P International Energy Sector ETF is down 34% since July; and the Oil & Gas Equipment & Services ETF is down 46% since July.

Goodrich Petroleum, in its desperation, announced it is exploring strategic options for its Eagle Ford Shale assets in the first half next year. It would also slash capital expenditures to less than $200 million for 2015, from $375 million for 2014. Liquidity for Goodrich is drying up. Its stock is down 88% since June. They all got hit. And in the junk-bond market, investors are grappling with the real meaning of “junk.” Sabine Oil & Gas’ $350 million in junk bonds still traded above par in September before going into an epic collapse starting on November 25 that culminated on Wednesday, when they lost nearly a third of their remaining value to land at 49 cents on the dollar. In early May, when the price of oil could still only rise, Sabine agreed to acquire troubled Forest Oil Corporation, now a penny stock. The deal is expected to close in December.

But just before Thanksgiving, when no one in the US was supposed to pay attention, Sabine’s bonds began to collapse as it seeped out that Wells Fargo and Barclays could lose a big chunk of money on a $850-million “bridge loan” they’d issued to Sabine to help fund the merger. A bridge loan to nowhere: investors interested in buying it have evaporated. The banks are either stuck with this thing, or they’ll have to take a huge loss selling it. Bankers have told the Financial Times that the loan might sell for 60 cents on the dollar. But that was back in November before the bottom fell out entirely. As so many times in these deals, there is a private equity angle to the story: PE firm First Reserve owns nearly all of Sabine and leveraged it up to the hilt. [..]

Six years of the Fed’s easy money policies purposefully forced even conservative investors to either lose money to inflation or venture way out on the risk curve. So they ventured out, many of them without knowing it because it happened out of view inside their bond funds. And they funded the fracking boom and the offshore drilling boom, and the entire oil revolution in America, no questions asked.

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Makes it look less awful.

Ruble Consolation Gets Putin Record Oil Income (Bloomberg)

While Russia’s plunging currency is becoming a growing concern for policy makers in Moscow, the benefits for the Treasury are swelling as it receives more and more rubles for each dollar of oil export revenue. The CHART OF THE DAY shows that Brent crude sold for an average 3,759 rubles a barrel this year, the most on record, even after the mean dollar price of $101.74 dropped to the lowest since 2010. Russia’s fiscal accounts are benefiting from this year’s more than 40% decline in the ruble as it kept pace with a similar slide in oil, which is priced in dollars.

The government’s budget surplus is 1.27 trillion rubles ($23 billion) through November, compared with 600 billion rubles in the same period last year and 789 billion rubles in 2012, according to Finance Ministry data. It was 1.34 trillion in 2011. “A weak ruble is good for the government budget,” Dmitry Postolenko, a money manager at Kapital Asset Management in Moscow, said Dec. 10 by e-mail. “It’s in the government’s interest to let the ruble devalue but it should do it in a way that will not lead to a panic among Russians who keep money in rubles.”

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” The consensus, it would seem, views this deflationary move as one without tears. With US equities trading at 27X CAPE , that’s one hell of a bet!!”

This Has Never Happened Before Without A Drop In Stock Prices (Napier via ZH)

The Solid Ground has long flagged the importance of falling inflation expectations when nominal interest rates are so low. The Fed cannot lower nominal rates, so its control over real rates of interest rests entirely with its ability to create actual inflation or manage inflation. After five and a half years of QE, inflation expectations are very near their lows. Over the next five years investors now expect inflation to average just below 1.3%. This level of expected inflation has always previously been associated with a decline in US equity prices. There have been no exceptions until today.

THE PROWLER: Which force is currently depressing the corporations share of GDP? It is a question worth asking, because if such suppression lifts then the corporates share of GDP can go higher and, the likelihood is, share prices will go with it. While most questions in finance are difficult to answer this one is really easy because nobody and nothing is depressing the corporations share of GDP. The usual suspects for depriving the corporation of higher profits — labour, creditors and the state — are all “quiescent”, to use a word favoured by the man formerly known as ‘The Maestro’. Indeed, these forces are so quiescent that most equity investors consider them to be demons which have been slain.

THE SLEEPING TIGER: There is nothing in the historical record to equate dormancy with death when it comes to the future path of wages, interest rates or corporate taxation. For the equity bulls who choose to believe in the prolonged dormancy of labour, creditors and the state, all at the same time, history has a very clear warning that there is another potent force which can drive mean reversion of corporate profits and equity valuations – deflation. [..]

BOOM! Ultimately, just such a shock would come to many places if China tired of the monetary tightening implicit in its link to the world’s strongest currency, the USD. At some stage China will need to relax the monetary reins and this will be virtually impossible if it is tethered to a rising USD. The 1994 devaluation of the RMB wreaked havoc with the finances of China’s competitors and a similar, in fact even more powerful, dynamic is evident today. A devaluation of the RMB would thus be another trigger for a credit crisis. The consensus, it would seem, views this deflationary move as one without tears. With US equities trading at 27X CAPE , that’s one hell of a bet!!

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“The ECB is presiding over a deflationary disaster. They need to act fast and aggressively or else markets will start to attack Italian debt.” Well, and Greece, and Spain etc. Perhaps even France this time. The vigilantes played European whack-a-mole before.

France Drifts Into Deflation As ECB ‘Pea-Shooter’ Falls Short (AEP)

France is sliding into a deflationary vortex as manufacturers slash prices to keep market share, intensifying pressure on the European Central Bank to take drastic action before it is too late. The French statistics agency INSEE said core inflation fell to -0.2pc in November from a year earlier, the first time it has turned negative since modern data began. The measure strips out energy costs and is designed to “observe deeper trends” in the economy. The price goes far beyond falling oil costs and is the clearest evidence to date that the eurozone’s second biggest economy is succumbing to powerful deflationary forces. Headline inflation is still 0.3pc but is expected to plummet over the next three months. French broker Natixis said all key measures were likely to be negative by early next year.

Eurostat data show prices have fallen since April in Germany, France, Italy, Spain, Holland, Belgium, Portugal, Greece and the Baltic states, as well as in Poland, Romania and Bulgaria outside the EMU bloc. Marchel Alexandrovich, from Jefferies, said the number of goods in the eurozone’s price basket now falling has reached a record 34pc. “Eurozone deflation is now inevitable. There is no way around it,” said Andrew Roberts, at RBS. “We think yields on German 10-year Bunds will fall to 0.42pc next year.” “The ECB is presiding over a deflationary disaster. They need to act fast and aggressively or else markets will start to attack Italian debt. Italy’s nominal GDP is falling faster than their borrowing costs and that is pushing them towards a debt spiral,” he added. The Bank of Italy’s governor, Ignazio Visco, said any further falls in prices at this stage could have “extremely grave consequences for economies with very high public debt levels, such as Italy”.

The trade-weighted exchange rate of the euro has risen by 2pc over the past two months as the rouble plummets and currencies buckle across the emerging market nexus, despite the ECB’s efforts to talk it down. This is a form of monetary tightening. The German-led hawks at the ECB are running out of excuses for opposing quantitative easing after demand for the ECB’s second auction of cheap four-year loans (TLTROs) fell short of expectations. “The TLTRO is a peashooter rather than a bazooka,” said Nick Kounis, at ABN Amro.
Lenders took up just €129.8bn of fresh credit, far less than €270bn of old loans due to be repaid. This means that the ECB’s balance will continue to contract – rather than expanding by €1 trillion as intended – unless it embraces full-blown QE.

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Holiday seasonal adjustment?!

WTF Chart Of The Day: Explaining The Surge In US Retail Sales (Zero Hedge)

Confused at how such awesome retail sales headlines can lead to the kind of weakness we are seeing in stocks now that Lending Club’s IPO has started trading? Wondering why bonds are now lower in yield on the day in the face of ‘proof’ that the US consumer is back? Wonder no more, as STA Wealth Management’s Lance Roberts points out, November’s seasonal adjustment for retail sales was – drum roll please – the 3rd largest on record… so maybe, just maybe, the ‘market’ is seeing through that pure riggedness, wondering about the huge surge in continuing claims, and agog at the blowout in credit spreads and collapse in crude… Seriously?!! The 3rd largest November seasonal adjustment on record… why? and remember retail sales only beat by 0.1ppt!

Speechless, yet? Well look at this…

Rigged much?

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“.. factory production will continue to slow in the first quarter of next year, while a gauge of manufacturing activity will fall below the 50 expansion-contraction line ..”

China’s Slowdown Deepens as Factory Output Growth Wanes (Bloomberg)

China’s economy slowed in November as factory shutdowns exacerbated weaker demand, raising pressure on the central bank to add further stimulus. Bloomberg’s gross domestic product tracker came in at 6.78% year-on-year in November, down from 6.91% in October and a fourth month below 7%, according to a preliminary reading. Factory production rose 7.2% from a year earlier, retail sales gained 11.7%, and investment in fixed assets expanded 15.8% in January through November from a year earlier, official data showed. The government ordered some factories to close in Beijing and surrounding provinces during the Asia-Pacific Economic Cooperation forum in early November to curb pollution. China’s central bank cut benchmark interest rates last month as a property slump weighs on the world’s second-biggest economy.

“The major reason for the slowdown is weak demand,” said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong. “Both external and internal demand are relatively weak.” Ding said he expects factory production will continue to slow in the first quarter of next year, while a gauge of manufacturing activity will fall below the 50 expansion-contraction line, prompting the central bank to cut banks’ required reserve ratios. “The data adds to evidence of weakness in China’s economy,” Bloomberg’s Beijing-based economist Tom Orlik wrote in a note. “The People’s Bank of China’s hands may be tied by the speculative surge on the mainland’s equity markets. Fear of adding further fuel to the fire appears to have constrained the PB0C to return to targeted measures, at least temporarily.”

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“The amount of new loans issued by Chinese banks fell by more than a third in October.”

China Tells Banks To Step Up Lending To Lift Flagging Growth (Reuters)

China has told its banks to lend more in the final months of 2014 and relaxed enforcement of loan-to-deposit ratios to expand credit, sources told Reuters, as Beijing prepares to release data that could confirm the relentless slowing of its economy. Figures on inflation, imports and fiscal spending in November have already undershot expectations since the People’s Bank of China (PBOC) sprang a surprise interest rate cut on Nov. 21, raising fears that the bid to boost lending could foreshadow more weak figures on industrial activity for the month, due on Friday, and on lending, due in the next few days. “I wouldn’t be surprised by that at all,” said Andrew Polk, resident economist for the Conference Board in Beijing. “It seems pretty clear activity is continuing to weaken throughout this fourth quarter.” Two sources with knowledge of the matter said China’s central bank increased the annual new loan target to 10 trillion yuan($1.62 trillion) for 2014, up from what Chinese media have said was a previous target of 9.5 trillion yuan.

Banks have disbursed 8.23 trillion yuan of loans between January and October, so they will have to quicken the pace in the last two months if they are to meet the new target. If upcoming data also proves worse than expected, some analysts say the PBOC could cut banks’ reserve requirement ratio (RRR) as soon as this weekend, allowing them to further increase lending. Bank lending is a crucial part of China’s monetary policy as the government instructs commercial banks, most of which are directly or indirectly controlled by the state, how much to lend and when to lend each year. The amount of new loans issued by Chinese banks fell by more than a third in October. “If credit supply is increased, it will certainly help economic growth in the first quarter,” said Chang Chun Hua, an economist at Nomura in Hong Kong. “If this is true, it shows that the government is quite concerned about growth.”

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Inevitable.

Skepticism Jumps in Options as VIX Rises 70% in Four Days (Bloomberg)

Options traders aren’t buying the stock market’s message. While the Standard & Poor’s 500 Index posted its first gain of the week on Dec. 11, rising 0.5%, the Chicago Board Options Exchange Volatility Index also jumped, climbing 8.4% to cap its biggest four-day advance since 2011. The two gauges, one measuring share prices and the other anxiety among traders, only move in unison about 20% of the time. Investors watching oil plunge day after day are growing concerned the decline will destabilize financial markets and that’s boosting demand for hedges, according to Bob Doll, the chief equity strategist at Nuveen Asset Management. Gains in the VIX picked up after House Minority Leader Nancy Pelosi said Republicans lack the votes to pass a $1.1 trillion U.S. spending bill and urged fellow Democrats to force removal of some banking and campaign-finance provisions.

“I’d put oil front and center,” Doll said by phone. “We’ve had a move from $100 to $60, and if that had happened over a year or two that’s one thing, but this has been so much so fast that it creates higher uncertainty, which creates higher volatility, and that’s the reason you’re seeing people buy protection.” The S&P 500 and VIX haven’t posted a bigger lockstep advance since at least 2000, according to data compiled by Bloomberg. They’ve both gained on the same day on only 22 other times this year, the data show.

U.S. stocks rebounded from the worst day in eight weeks as an improvement in retail sales helped overshadow a drop in West Texas Intermediate crude below $60. The S&P 500 rose 0.5% at 4 p.m. in New York, paring an earlier rally of 1.5%. “It is unusual to see stocks rally like they did and premiums rise on the same day,” Jared Woodard, a New York-based equity derivatives strategist at BGC Partners LP, said by phone. “When the index gave back a lot of these gains you saw more demand for put protection. As stocks reversed a bit, people thought there may be another leg down.”

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“The probe into the possible use of algorithms is one of the reasons why DFS, led by Benjamin Lawsky, declined to participate in a broad forex settlement with banks.”

NY Regulator Probing Barclays And Deutsche Over Forex Algorithms (FT)

New York’s top banking regulator is investigating whether Barclays and Deutsche Bank used algorithms to manipulate foreign exchange rates, which could increase the penalties they face, a person familiar with the probe said. The state’s Department of Financial Services is reviewing whether the use of computer algorithms in bank currency trading platforms suggests a systemic problem at the lenders, as opposed to wrongdoing by several rogue traders, the person said. If the algorithms are seen as a bank-wide issue, DFS could seek to impose bigger penalties, the person added. The probe into the possible use of algorithms is one of the reasons why DFS, led by Benjamin Lawsky, declined to participate in a broad forex settlement with banks.

In November, UBS, Citigroup, JPMorgan Chase, HSBC, Royal Bank of Scotland and Bank of America were fined more than $4bn for their role in a forex rate-rigging scandal. The UK’s Financial Conduct Authority and the US’s Commodity Futures Trading Commission were part of that settlement. But the US Department of Justice and DFS did not participate and their investigations are ongoing. The DOJ’s probe includes the six banks that were part of the broad settlement, and the investigation is expected to result in large penalties and criminal findings. DFS is investigating about a dozen banks in its forex probe. Deutsche said it had “received requests for information from regulatory authorities that are investigating trading in the foreign exchange market. The bank is co-operating with those investigations, and will take disciplinary action with regards to individuals if merited.”

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“.. both Obama and JPMorgan chief executive Jamie Dimon were calling Democrats to support it. “It is very strange, very strange that the two of them would be working for the support of this bill ..”

US House Narrowly Passes Spending Bill, Averts Government Shutdown (Reuters)

The U.S. House of Representatives averted a government shutdown on Thursday, narrowly passing a $1.1 trillion spending bill despite strenuous Democratic objections to controversial financial provisions. The vote followed a long day of drama and discord on Capitol Hill that highlighted fraying Democratic unity and featured an uneasy alliance between President Barack Obama and House Speaker John Boehner, enemies in past budget battles but on the same side this time in pushing for passage. A vote on the measure was delayed for hours after Democrats revolted against provisions to roll back part of the Dodd-Frank financial reform law and allow more big money political donations, while conservative Republicans objected because the measure did not block funds for Obama’s immigration order.

Democrats said Republican leaders, flexing their new political muscle after big wins in the midterm elections that will give them control of both chambers of Congress next year, had gone too far in trying to roll back Dodd-Frank. “We have enough votes to show them never to do this again,” Democratic House Leader Nancy Pelosi told members of her party, behind closed doors, according to a source in the room. Some Democrats also demanded the removal of a provision that allows a massive increase in individual contributions to national political parties for federal elections, potentially up to $777,600 a year.

The debate pitted Obama against Pelosi, one of his most loyal allies in Congress, as Obama and his administration waged a last-ditch campaign to persuade Democrats to set aside their objections, arguing that if it failed, the party would get a worse spending deal next year under Republican control. The effort to save the bill angered some Democrats, who complained that both Obama and JPMorgan chief executive Jamie Dimon were calling Democrats to support it. “It is very strange, very strange that the two of them would be working for the support of this bill,” said Representative Maxine Waters, the top Democrat on the House Financial Services Committee. In the 219-206 vote, 67 Republicans rejected the spending bill, largely because it failed to take action to stop Obama’s executive immigration order. But that was offset by 57 Democrats who voted in favor.

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“The three-judge panel not only found that prosecutors needed to prove a trader knew that the original source of non-public information has received a benefit in exchange for the tip, but also narrowed what actually constituted such a benefit.”

US Prosecutors Face New Fallout From Insider Trading Ruling (Reuters)

U.S. prosecutors, already smarting from an appeals court ruling that weakens their ability to crack down on future insider trading, on Thursday faced widening fallout from the decision as some existing cases threatened to unravel. Lawyers for some defendants hinted they might seek to withdraw guilty pleas, and a Manhattan federal judge questioned if four such pleas were affected. The moves were the latest repercussions from the 2nd U.S. Circuit Court of Appeals finding that prosecutors presented insufficient evidence to convict Todd Newman, a former portfolio manager at Diamondback Capital Management, and Anthony Chiasson, co-founder of Level Global Investors. Speaking at a conference, U.S. Securities and Exchange Commission Chair Mary Jo White said Thursday “there is no question it’s a significant decision,” adding her agency was reviewing the Wednesday ruling, which she called “overly narrow.”

Some defendants who cooperated and pleaded guilty in the prosecution of Newman and Chiasson are now considering taking the extraordinary step of withdrawing their pleas, two lawyers said Thursday. The three-judge panel not only found that prosecutors needed to prove a trader knew that the original source of non-public information has received a benefit in exchange for the tip, but also narrowed what actually constituted such a benefit. In several such cases, the defendants were tipped based on information they received third- or fourth-hand, rather than straight from the source, which made it tougher to prove their awareness that source had obtained something tangible in return. The ruling threatens to challenge a broad insider trading crackdown underway since 2009 under Manhattan U.S. Attorney Preet Bharara, whose office during his tenure has secured 82 other convictions.

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As another headline today at the Guardian says: “UK standard of living rises to fourth highest in EU”.

Welcome To The UK: DIY Burials And Payday Loans For Kids (CNBC)

The tight financial conditions faced by Brits were highlighted again this week with reports on how cash-strapped young people are using payday loans and impoverished relatives are burying their loved ones at home. One in eight young people say they have borrowed money from lending firms, according to a new report released Thursday by the U.K. children’s charity Action for Children. The report interviewed 1,058 people in focus groups between the ages of 12 and 18 and found that 41% of those that had borrowed had done so with payday loan providers. The charity also found that store cards are also be used more and more, with over a third of the young people saying they had used them. Its anecdotal evidence suggested that young people were using the debt to replace household goods, set up their first home or to keep up with their friends.

“Baffling financial jargon and a lack of knowledge will dramatically create a vicious circle of debt, increasing the risk of mental health problems and unemployment,” said Tony Hawkhead, the chief executive of Action for Children, in Thursday’s report. Payday loan companies have been heavily criticized by policymakers in the U.K. for the four-figure interest rates they tie to cash advances. Regulators have moved to introduce new rules to cap charges and these firms have made changes to their lending criteria in response. The companies stress they have strict rules on who can receive loans, with the minimum age being 18 years. However the breakdown within Thursday’s study shows that minors are receiving these loans with 46% of the 12-year-old respondents saying they had borrowed money from a payday lender.

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Take your pick. Much more of this to come in the weeks ahead.

Crystal Ball: Top 10 Economic Predictions For 2015 (CNBC)

The global economy muddled along this year, with the resurgence in the U.S. economy helping to offset slowing growth in Europe, Japan and China. So, where does this leave the world economy in 2015? “Positive fundamentals are in place for the momentum in the global economy to improve during 2015,” said Nariman Behraves, Chief Economist at IHS, which expects global growth to pick up to 3% from an estimated 2.7% this year.

IHS outlined its top 10 economic predictions that make up its global outlook:
1. U.S. economy will power ahead
2. Euro zone’s struggle to continue
3. Japan to emerge from recession
4. China will keep slowing
5. EMs: a mixed bag
6. Commodities slide to extend
7. Disinflation threat
8. Fed will be the first to hike rates
9. Dollar will remain king
10. Perennial downside risks easing

The global recovery has been plagued by a multitude of “curses” during the past few years, including high public- and private-sector debt levels that have necessitated deleveraging by households corporates and governments, says IHS. But these obstacles to growth are easing in some countries, notably the U.S and U.K., which explains their better-than-average performance.

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Strong piece from Patrick Smith, former Asia bureau chief of the Herald Tribune.

These Are Lies The New York Times Wants You To Believe About Russia (Salon)

You can look at the Russian economy two ways now and you should. So let’s: It is an important moment in the destruction of something and the construction of something else, and we had better be clear just what in both cases. The world we live in changes shape as we speak. Truth No. 1: Russians are besieged. Sanctions the West has insisted on prosecuting in response to the Ukraine crisis — Washington in the lead, the Europeans reluctant followers — are hitting hard, let there be no question. Oil prices are at astonishing lows, probably if not yet provably manipulated by top operatives in the diplomatic and political spheres.

Truth No. 2: Russians are hot. With an energetic activism just as astonishing as the oil prices, Russian officials, President Putin in the very visible lead but with platoons of technocrats behind him, are forging an extensive network of South-South relationships — East-East, if you prefer — that are something very new under the sun. Some of us were banging on about South-South trade and diplomatic unity as far back as the 1970s; I have anticipated the arriving reality since the early years of this century. But I would never have predicted the pace of events as we have them before us. Stunning. Holiday surprise: There is a Truth No. 3 and it is this: Truth No. 1, the siege of the Russian economy, is proving a significant catalyst in the advance of Truth No. 2, the creative response of a nation under ever-mounting pressure.

Timothy Snyder, the Yale professor whose nitwittery on the Ukraine crisis is simply nonpareil (and praise heaven he has gone quiet), exclaimed some months ago that Putin is threatening to undermine the entire postwar order. I replied in this space the following week, Gee, if only it were so. Already it seems to be. But miss this not: Russia is advancing this world-historical turn with a considerable assist from its adversaries in the West, not alone. For all the pseuds who pretend to know Schumpeter but know only one thing, the creative destruction bit, how is this as a prime example of the phenom? Details in a sec, but this thought first: We are all bound to pay close attention to these events because they matter to everyone, whether this is yet obvious or not. Probably in our lifetimes — and I had it further out until recently — we will begin to inhabit a different planet.

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We deserve all we’ve got coming.

Full Scale Of Plastic In The World’s Oceans Revealed For First Time (Guardian)

More than five trillion pieces of plastic, collectively weighing nearly 269,000 tonnes, are floating in the world’s oceans, causing damage throughout the food chain, new research has found. Data collected by scientists from the US, France, Chile, Australia and New Zealand suggests a minimum of 5.25tn plastic particles in the oceans, most of them “micro plastics” measuring less than 5mm. The volume of plastic pieces, largely deriving from products such as food and drink packaging and clothing, was calculated from data taken from 24 expeditions over a six-year period to 2013. The research, published in the journal PLOS One, is the first study to look at plastics of all sizes in the world’s oceans.

Large pieces of plastic can strangle animals such as seals, while smaller pieces are ingested by fish and then fed up the food chain, all the way to humans. This is problematic due to the chemicals contained within plastics, as well as the pollutants that plastic attract once they are in the marine environment. “We saw turtles that ate plastic bags and fish that ingested fishing lines,” said Julia Reisser, a researcher based at the University of Western Australia. “But there are also chemical impacts. When plastic gets into the water it acts like a magnet for oily pollutants. “Bigger fish eat the little fish and then they end up on our plates. It’s hard to tell how much pollution is being ingested but certainly plastics are providing some of it.”

The researchers collected small plastic fragments in nets, while larger pieces were observed from boats. The northern and southern sections of the Pacific and Atlantic oceans were surveyed, as well as the Indian ocean, the coast of Australia and the Bay of Bengal. The vast amount of plastic, weighing 268,940 tonnes, includes everything from plastic bags to fishing gear debris. While spread out around the globe, much of this rubbish accumulates in five large ocean gyres, which are circular currents that churn up plastics in a set area. Each of the major oceans have plastic-filled gyres, including the well-known ‘great Pacific garbage patch’ that covers an area roughly equivalent to Texas.

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