Oct 242014
 
 October 24, 2014  Posted by at 12:52 pm Finance Tagged with: , , , , , , , , , ,


Jack Delano Family of Dennis Decosta, Portuguese Farm Security Administration client Dec 1940

The Zombie System: How Capitalism Has Gone Off the Rails (Spiegel)
Fed’s $4 Trillion Holdings Keep Boosting Growth Beyond End of QE (Bloomberg)
EU Tells Britain To Pay Extra €2.1 Billion Because It Does Well (FT)
EU Agrees To Budget Talks After £1.7 Billion Cash Demand On UK (BBC)
Renzi Vs Barroso Over EU’s Budget Letter (FT)
EU Agrees Target To Cut Greenhouse Gas Emissions by 40% in 2030 (FT)
German Lawmakers Rip ECB Over Corporate Bonds Report (Reuters)
ECB Tries for Third Time Lucky in European Stress Tests (Bloomberg)
World Faces $650 Billion Housing Problem (CNBC)
China’s Economic Growth May Slow Further, Data Show (MarketWatch)
China Local Debt Fix Hangs On Beijing’s Wishful Thinking (Reuters)
China Home-Price Drop Spreads as Easing Fails to Halt Slide (Bloomberg)
China Scores Cheap Oil 14,000 Miles Away as Glut Deepens (Bloomberg)
Saudi Arabia’s Risky Oil-Price Play (BW)
Eastern Europe Shivers Thinking About Winter Without Gas (Bloomberg)
Germany Inc. Scrutinized for Using Labor Like Paper Clips (Bloomberg)
Alabama Man Gets $1,000 In Police Settlement, His Lawyers Get $459,000 (Reuters)
Doctor With Ebola In Manhattan Hospital After Return From Guinea (Reuters)
Mali Becomes Sixth African Country To Report Ebola Case (Bloomberg)

Great, long, 4-part series from German Der Spiegel magazine.

The Zombie System: How Capitalism Has Gone Off the Rails (Spiegel)

Six years after the Lehman disaster, the industrialized world is suffering from Japan Syndrome. Growth is minimal, another crash may be brewing and the gulf between rich and poor continues to widen. Can the global economy reinvent itself?

[..] Politicians and business leaders everywhere are now calling for new growth initiatives, but the governments’ arsenals are empty. The billions spent on economic stimulus packages following the financial crisis have created mountains of debt in most industrialized countries and they now lack funds for new spending programs. Central banks are also running out of ammunition. They have pushed interest rates close to zero and have spent hundreds of billions to buy government bonds. Yet the vast amounts of money they are pumping into the financial sector isn’t making its way into the economy. Be it in Japan, Europe or the United States, companies are hardly investing in new machinery or factories anymore. Instead, prices are exploding on the global stock, real estate and bond markets, a dangerous boom driven by cheap money, not by sustainable growth. Experts with the Bank for International Settlements have already identified “worrisome signs” of an impending crash in many areas.

In addition to creating new risks, the West’s crisis policy is also exacerbating conflicts in the industrialized nations themselves. While workers’ wages are stagnating and traditional savings accounts are yielding almost nothing, the wealthier classes — those that derive most of their income by allowing their money to work for them — are profiting handsomely. According to the latest Global Wealth Report by the Boston Consulting Group, worldwide private wealth grew by about 15% last year, almost twice as fast as in the 12 months previous. The data expose a dangerous malfunction in capitalism’s engine room. Banks, mutual funds and investment firms used to ensure that citizens’ savings were transformed into technical advances, growth and new jobs. Today they organize the redistribution of social wealth from the bottom to the top. The middle class has also been negatively affected: For years, many average earners have seen their prosperity shrinking instead of growing.

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“Boosting growth”. Are we ever going to get real?

Fed’s $4 Trillion Holdings Keep Boosting Growth Beyond End of QE (Bloomberg)

Quantitative easing may turn out to be a gift that keeps on giving for the U.S. economy. As the Federal Reserve prepares to end its third round of bond buying next week, the central bank plans to hang on to the record $4.48 trillion balance sheet it has accumulated since announcing the first round of purchases in November 2008. That will continue to keep a lid on borrowing costs, helping the Fed lift inflation closer to its target and providing support to a five-year expansion facing headwinds abroad, from war in the Mideast to slowing growth in Europe and China. Holding bonds on the Fed’s balance sheet limits the supply of securities trading on the public markets, which helps keep prices up and yields lower than they otherwise would be. That provides stimulus to the economy just as a cut in the Fed’s benchmark interest rate would, according to Michael Gapen, a senior U.S. economist for Barclays in New York and former Fed Board section chief.

“Preserving it will continue to support the economy,” Gapen said. “The Fed message is we think we’ve done enough to generate momentum and keep the economy on the right track. Now we’re going to wait and see how things go.” The Federal Open Market Committee plans to end its purchases of Treasuries and mortgage bonds at the next meeting Oct. 28-29, according to minutes of the last gathering. Chair Janet Yellen opened the door to keeping a multi-trillion-dollar portfolio for years, saying a decision on when to stop reinvesting maturing bonds depends on financial conditions and the economic outlook. Shrinking the balance sheet to normal historical levels “could take to the end of the decade,” Yellen said at her press conference last month. Fed quantitative easing has provided the Treasury market with a steady and consistent buyer, helping to keep yields lower than they otherwise would be. The central bank is now the largest holder of U.S. government securities.

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Don’t even try to tell me you could have made this up: “The surcharge stems from the EU changing the way it calculates gross national income to include more hidden elements such as prostitution and illegal drugs.”

EU Tells Britain To Pay Extra €2.1 Billion Because It Does Well (FT)

Britain has been told to pay an extra €2.1 billion to the EU budget within weeks on account of its relative prosperity, a hefty surcharge that will further add to David Cameron’s domestic woes over Europe. To compensate for its economy performing better than other EU countries since 1995, the UK will have to make a top-up payment on December 1 representing almost a fifth of the country’s net contribution last year. France, meanwhile, will receive a €1 billion rebate, according to Brussels calculations seen by the Financial Times. The one-off bill will infuriate eurosceptic MPs at an awkward moment for the prime minister, who is wrestling with strong anti-EU currents in British politics that are buffeting his party and prompting a rethink of the UK’s place in Europe. Mr Cameron is determined to challenge the additional fee and last night met with Mark Rutte, the Netherlands premier, to discuss the issue. His country is also being required to make a top-up payment, though it is smaller than the UK’s.

A Downing Street source said: “It’s not acceptable to just change the fees for previous years and demand them back at a moment’s notice.” The source added: “The European Commission was not expecting this money and does not need this money and we will work with other countries similarly affected to do all we can to challenge this.” The surcharge stems from the EU changing the way it calculates gross national income to include more hidden elements such as prostitution and illegal drugs. [..] The surcharge comes on top of the net UK contribution to the EU budget, which was £8.6 billion in 2013. Britain faces by far the biggest top-up payment: the preliminary figures show that the Netherlands pays an extra €642 million, while Germany receives a rebate of €779 million, France €1 billion and Poland €316 million.

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It’s a shame the Anglo press make this about Britain. Holland pays far more extra per capita (more expensive hookers?), but what’s really fun is that Greece has to pay more too, and Italy. Let’s give the EU all the room they need to majestically screw this up.

EU Agrees To Budget Talks After £1.7 Billion Cash Demand On UK (BBC)

EU finance finance ministers have agreed to David Cameron’s call for emergency talks after the UK was told it must pay an extra £1.7bn. Mr Cameron interrupted a meeting of EU leaders in Brussels to express dismay at the demand for the UK to pay more into the EU’s coffers on 1 December. He told Commission boss Jose Manuel Barroso he had no idea of the impact it would have, Downing Street said. It will add about a fifth to the UK’s annual net EU contribution of £8.6bn. There has been anger across the political spectrum in the UK at the EU’s demand for additional money, which comes just weeks before the vital Rochester and Strood by-election, where UKIP is trying to take the seat from the Conservatives. EU leaders discussed the issue for an hour in Brussels on Friday, with Mr Cameron due to give a press conference later. Mr Cameron told Mr Barroso, who steps down next month, that the problem was not just press or public opinion but was about the amount of money being demanded.

The surcharge follows an annual review of the economic performance of EU member states since 1995, which showed Britain has done better than previously thought. Elements of the black economy – such as drugs and prostitution – have also been included in the calculations for the first time. The prime minister will do everything he can to show he’s coming out fighting over the EU budget demand. He has buttonholed Commission President Barroso. He has called for an emergency meeting. EU leaders have pondered the problem for a full hour in their meeting. The PM is proud of getting down the EU budget limit in 2013. He says it proves he can get his way in Brussels. Handing over £1.7bn to the EU would sting at any time. Doing it a few days after a crunch by-election scrap with UKIP would be agony. This could still go David Cameron’s way. If he can persuade the EU to tear up the bill, he can come out smiling. If he fails it will hurt the Conservatives badly.

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Nice side fight.

Renzi Vs Barroso Over EU’s Budget Letter (FT)

If you read the EU’s budget rules, it appears to be a cut and dried affair: if the European Commission has concerns that a eurozone country’s budget is in “particularly serious non-compliance” with deficit or debt limits, it has to inform the government of its concerns within one week of the budget’s submission. Such contact is the first step towards sending the budget back entirely for revision. As the FT was the first to report this week, the Commission decided to notify five countries – Italy, France, Austria, Slovenia and Malta – that their budgets may be problematic on Wednesday. Helpfully, the Italian government posted the “strictly confidential” letter it received from the Commission’s economic chief, Jyrki Katainen, on its website today.

But at day one of the EU summit in Brussels, the letter – and Italy’s decision to post it – suddenly became the subject of a very public tit-for-tat between José Manuel Barroso, the outgoing Commission president, and Matteo Renzi, the Italian prime minster. Barroso fired the first shot at a pre-summit news conference, expressing surprise and annoyance that Renzi’s government had decided to make the letter public. For good measure, he took a pop at the Italian press, which in recent days has been reporting that Barroso was the one pushing for a hard line against Rome, and implying he was motivated by his desire to score political points back home in Portugal, where he has long been rumoured as a potential presidential candidate after leaving the Commission:

The first thing I will say is this: If you look at the Italian press, if you look at most of what is reported about what I’ve said or what the Commission has said, most of this news is absolutely false, surreal, having nothing to do with reality. And if they coincide with reality, I think it’s by chance.

Aside from his swipe at Italian newspapers, Barroso was clearly annoyed at the Italian government, saying Katainen’s letter was intended to be private correspondence to begin talks over trying to get Italy’s budget back in line with EU rules:

Regarding the letter from vice-president Katainen yesterday, sent to his Italian colleague, the decision to publish it on the website of the ministry of finance is a unilateral decision by the Italian government. The Commission was not in favour of the publication because we are continuing consultations with various governments. These are informal consultations and in some cases they are quite technical, and we think it’s better to have this kind of consultations in an atmosphere of trust. But the Italian government contacted the Vice President Katainen telling him that he would publish the letter and of course we do not object to the publication, it is their right, but again, this is not true it is the Commission which pressed the government to publish the letter. If we wanted to publish it, the Commission could publish the letter itself.

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Hot air in every sense of the word.

EU Agrees Target To Cut Greenhouse Gas Emissions by 40% in 2030 (FT)

The EU has set the pace for a global climate agreement in Paris next year by overcoming resistance from eastern member states and agreeing a landmark target to cut greenhouse gas emissions. The 28-member bloc has been so riven by divisions over environmental policy in recent months that Brussels risked losing its status as the global leader in the fight against climate change. In the days before an EU summit on Thursday, countries as diverse as Portugal and Poland appeared liable to veto a deal on setting a new target for reducing emissions by 2030. Talks dragged on into the early hours of Friday morning before European leaders finally agreed to a cut of at least 40% from 1990 levels. Environmentalists have slammed this goal as the bare minimum required for the EU to play its role in containing global warming, but diplomats argue that it was the toughest target that could win broad political support across Europe.

“We have sent a strong signal to other big economies and all other countries: we have done our homework, now we urge you to follow Europe’s example,” said Connie Hedegaard, the EU’s climate commissioner. Green groups condemned the deal as a political fudge. Greenpeace had pushed for a cut of 55%. “It’s a deal that puts dirty industry interests ahead of citizens and the planet,” said Brook Riley of Friends of the Earth. The EU said that its 40% target would be reviewed after the UN’s Paris conference next year where a global deal on cutting emissions is expected. Some European countries had been fearful that the EU would set itself too high a target, which the U.S. and China would not follow.

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This fight ain’t over.

German Lawmakers Rip ECB Over Corporate Bonds Report (Reuters)

Senior lawmakers from Chancellor Angela Merkel’s conservative party heaped criticism on the European Central Bank on Wednesday following a Reuters report that it was considering the purchase of corporate bonds to spur growth. The report on Tuesday, citing several sources familiar with the central bank’s thinking, said the ECB could decide as soon as December to go ahead with corporate bond buys on the secondary market, with a view to starting the purchases early next year. ECB officials confirmed on Wednesday that buying corporate bonds was an option for the bank but said no final decision had been taken on whether to go ahead. “The Governing Council has taken no such decision,” an ECB spokesman said. The move would widen out the private-sector asset-buying program that it began on Monday in the hopes of encouraging more lending to businesses in the faltering euro zone economy.

“With its purchase programs, the ECB is taking unforeseeable risks onto its balance sheet,” said Norbert Barthle, a veteran lawmaker for Merkel’s Christian Democrats (CDU) who sits on the Bundestag’s budget committee. The ECB should focus on its main target of price stability and refrain from more “dubious measures” to boost the economy, Barthle warned. Hans Michelbach of the Christian Social Union (CSU), the Bavarian sister party of the CDU, said Draghi was endangering the stability of financial markets with his moves. “The ECB is turning itself into a bad bank for the euro zone’s crisis countries at an increasingly rapid pace,” said the senior conservative member of the finance committee. “The ECB needs a clear change of course.”

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It’ll be fun Sunday at noon EU time. Draft was just leaked that says 25 banks will fail. Numbers get bigger.

ECB Tries for Third Time Lucky in European Stress Tests (Bloomberg)

For the European Central Bank, success as the euro area’s financial supervisor may begin this weekend with a few failures. At noon in Frankfurt on Oct. 26, investors will learn which of the currency bloc’s 130 biggest banks fell short in the ECB’s year-long examination of their asset strength and ability to withstand economic turbulence. After two previous stress tests run by the European Banking Authority didn’t reveal problems at lenders that later failed, the ECB has staked its reputation on getting this exercise right. The two-part audit known as the Comprehensive Assessment forms one pillar of the ECB’s effort to move the euro zone forward after half a decade of financial turmoil by disclosing the extent of the damage. Since the beginning, ECB President Mario Draghi has said banks need to fail to prove the losses of the past have been dealt with.

“There will be enough for policy makers to declare victory, but the full picture will take longer to emerge because this thing is so complicated,” said Nicolas Veron, a fellow at the Bruegel research group in Brussels. “What you don’t want is to sound the all clear and then three to six months later, there’s an unpleasant surprise.” Bank-level data and an aggregate report on the Asset-Quality Review and stress test will be released on the ECB’s website at 12 p.m. Frankfurt time. The ECB stress test was conducted in tandem with the London-based EBA, which will release its results at the same time. The EBA’s sample largely overlaps the ECB’s, though it also contains banks from outside the euro area.

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The $650 billion is what people can’t afford to pay, but have to anyway.

World Faces $650 Billion Housing Problem (CNBC)

A staggering 330 million urban households around the world live in substandard housing or are so financially stretched by housing costs they forgo other basic needs like food and health care, according to McKinsey. Urban dwellers globally fork out $650 billion more per year on housing than they can afford, or around 1% of world gross domestic product (GDP), McKinsey estimated in a new report, highlighting the enormity of the affordability gap. More than two-thirds of the gap is concentrated in 100 large cities. In several low-income cities such as Lagos and Mumbai, the affordable housing gap can amount to as much as 10% of area GDP. McKinsey’s study looked at the cost of housing as a portion of household income in cities around the world to determine where urban residents were most under financial pressure For this study, it defined affordability as housing costs that consume no more than 30% of household income.

Based on current trends in urban migration and income growth, the affordable housing gap would grow to 440 million, or 1.6 billion people, within a decade. This trend will exact an enormous toll on society, the report warned. “For families lacking decent affordable housing, health outcomes are poorer, children do less well in school and tend to drop out earlier, unemployment and under-employment rates are higher, and financial inclusion is lower,” it said. McKinsey estimates that an investment of $9-$11 trillion would be required to replace today’s substandard housing and build additional units needed by 2025. Including land, the total cost could be $16 trillion. The belief that major cities no longer have land for affordable housing is a myth, it added. Even in cities such as New York there are many parcels of under-utilized or idle land—including government-owned land—that could support successful housing development, the report said.

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Bet you it’s already much lower than reported.

China’s Economic Growth May Slow Further, Data Show (MarketWatch)

September data suggest China’s economic growth may well slow further, the Conference Board said late Thursday, citing its Leading Economic Index. The index rose 0.9% in September, after a 0.7% gain in August, but a 1.3% rise in July, the association said. “The six-month growth rate of the Leading Economic Index has eased steadily throughout the third quarter, indicating increased downside risks to economic growth in the months ahead,” Conference Board China Center resident economist Andrew Polk said. “While activity in the property sector stabilized a bit, sharp weakening in demand for both bank credit and real estate point to sluggish private investment in the last quarter of 2014. Recent developments, therefore, confirm our long-term view of a soft fall of the economy,” Polk said.

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It’s the amounts of debt that are the problem, but Beijing wants to solve it by changing the kinds of debt.

China Local Debt Fix Hangs On Beijing’s Wishful Thinking (Reuters)

China is asserting control over once-chaotic local government financing by banning the use of opaque funding vehicles, but filling the gap with a huge expansion of the fledgling municipal bond market will raise a whole new set of problems. Chastened by promiscuous local investment in response to the 2008 global financial crisis, Beijing wants to restore discipline as part of its wider economic reforms, but the muni bond market, be deviled by price distortions and inadequate disclosure standards, is no quick fix. China’s State Council, the country’s cabinet-level political institution, prohibited local government financial vehicles (LGFVs) from raising funds on behalf of local authorities in a decree issued earlier this month. On Tuesday sources told Reuters the Ministry of Finance had circulated a draft document saying localities would be allowed to issue new muni bonds to pay off old debt.

“It’s not an isolated move – rather it’s part of a systematic approach to tackle the local debt issue,” said Bank of America-Merrill Lynch China strategist Tracy Tian. If the draft becomes law and localities are allowed to roll over a substantial portion of their estimated 18 trillion yuan ($3 trillion) of outstanding debt, the muni bond market would have to expand dramatically from the quota of just 109.2 billion yuan that Beijing has set for 2014. “We estimate that as much as 1 trillion yuan of new bonds may be issued to fill the financing gap in 2015,” wrote UBS economist Tao Wang in a research note this month. The market appears ill-equipped for such explosive growth. It got off to a dubious start in 2014, with impoverished and debt-ridden local governments able to issue bonds at yields below even the central government’s sovereign yield.

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It’ll be fine till panic selling starts. Then it will no longer be so fine.

China Home-Price Drop Spreads as Easing Fails to Halt Slide (Bloomberg)

China’s new-home prices fell in all but one city monitored by the government last month as the easing of property curbs failed to stem a market downturn amid tight credit. Prices dropped in 69 of the 70 cities in September from August, the National Bureau of Statistics said in a statement today, the most since January 2011 when the government changed the way it compiles the data. They fell in 68 cities in August. The central bank on Sept. 30 eased mortgage rules for homebuyers that have paid off existing loans, reversing course after a four-year campaign to contain home prices as Premier Li Keqiang seeks to prevent economic growth from drifting too far below the government’s 7.5% annual target. Home sales slumped 11% in the first nine months of this year.

“Prices will continue the downtrend for the rest of the year,” said Donald Yu, Shenzhen-based analyst at Guotai Junan Securities Co. “If sales in the fourth quarter fail to clear inventories as developers want, more price cuts are still likely in the first quarter of next year.” All but five of the 46 cities that imposed limits on home ownership since 2010 have removed or relaxed such restrictions amid the property downturn that has dented local revenues from land sales.

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Bit of ISIS oil with that, perhaps?

China Scores Cheap Oil 14,000 Miles Away as Glut Deepens (Bloomberg)

China is finding oil supplies 14,000 miles away, aided by the global rout in prices that’s left producers vying for new markets. PetroChina Co. said it bought Colombian crude for a northern refinery for the first time because it was good value. The transaction underscores how the world’s second-biggest oil consumer is benefiting as producers from the Middle East to Latin America vie for customers in Asia. Brent oil futures tumbled to the lowest level since 2010 as the highest U.S. output in almost 30 years cuts its consumption of foreign crude. OPEC’s biggest producers are reducing prices to defend their market share. China consumed the second-biggest amount of crude on record in September and imported the largest volume ever for that time of year, customs data show.

“China will just look to get the cheapest crude possible from whatever source it can,” Virendra Chauhan, a London-based analyst at Energy Aspects Ltd., said by phone Oct. 21. “I expect a lot more volumes flowing to China in particular.” The country’s crude imports rose 7.8 percent to 27.6 million tons, or 6.74 million barrels a day, in September from last year, the data show. The number of supertankers sailing toward China’s ports surged to a nine-month high last week, according to IHS Fairplay vessel-tracking signals compiled by Bloomberg as of Oct. 17.

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Lots of curious views and opinions on Saudi oil policy.

Saudi Arabia’s Risky Oil-Price Play (BW)

With the U.S. on track to become the world’s largest oil producer by next year, it’s become popular in Washington and on Wall Street to call America the new Saudi Arabia. Yet the real Saudi Arabia hasn’t relinquished its role as the producer with the most influence over oil prices. Its reserves of 266 billion barrels, ability to pump as many as 12.5 million barrels a day, and, most important, its low cost of extracting crude still make it a formidable rival to the U.S., whose shale wells are hard to exploit. “Saudi Arabia is the only one in the position of putting more oil on the market when they want to and cutting production when they want to,” says Edward Chow, a senior fellow at the Center for Strategic and International Studies in Washington. The Saudis are also the most powerful member of OPEC, the 12-member group that’s increasingly facing off against Russian, U.S., and Canadian production.

In September, despite a global oil glut developing largely because of China’s slowdown and the rapid increase in U.S. production, the Saudis boosted production half a percent, to 9.6 million barrels a day, lifting OPEC’s combined production to an 11-month high of almost 31 million barrels a day. Then, on Oct. 1, Saudi Arabia lowered prices by increasing the discount it offered its major Asian customers. The kingdom might just as easily have cut production to defend higher prices. Instead, the Saudis sent a strong signal that they were determined to protect their market share, especially in India and China, against Russian, Latin American, and African rivals. Iraq and Iran followed Saudi Arabia’s example. The news set off a bear market in oil: Brent crude, the international benchmark, fell from $115.71 a barrel on June 19 to $82.60 a barrel on Oct. 16, the lowest price in almost four years, as investors realized that the big oil states were not going to cut production.

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Better get ready to make that deal.

Eastern Europe Shivers Thinking About Winter Without Gas (Bloomberg)

As winter approaches, former Soviet satellite nations from Poland to Bulgaria are watching Russia and Ukraine’s stalled gas negotiations with growing trepidation. The lack of discernible progress is sending a collective shiver down the spine of Eastern Europe, which retains vivid memories of Russian energy cuts during unusually cold winters in 2006 and 2009. The ensuing shortages led to shuttered factories and a return to wood for heating and cooking in rural areas. Despite the two episodes, little has been done to diversify supplies within a region that remains highly dependent on energy delivery systems dating back to the Soviet era. “Parts of eastern Europe are still quite vulnerable this winter,” said Emily Stromquist, a Eurasia analyst in London. “The problem is that until recently the relations with Russia have generally been good, so perhaps there was no feeling of urgency to build quickly.”

If Moscow and Kiev don’t reach a compromise before winter and OAO Gazprom fails to restart supplies to its western neighbor, Ukraine may resort to siphoning off gas carried through its territory. As in 2009, that could prompt Russia to cut transit through Ukraine altogether, leaving parts of eastern Europe exposed to severe shortages. Poland, Hungary and especially the Balkan peninsula would be most affected. Connected to the old Soviet pipeline system that runs through Ukraine and Moldova, the Balkan countries rely on Russia for close to 100% of their needs. Moreover, they’re poorly connected with their neighbors and their underground storage isn’t sufficient to cover demand for the entire winter.

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German salaries: €48.40 ($61.27) per hour on average. This compares to €4.81 in Romania and €25.63 in the U.S.

Germany Inc. Scrutinized for Using Labor Like Paper Clips (Bloomberg)

Daimler AG is among German companies that have found a way to cut personnel costs in the high-wage country: buy labor like it’s paper clips. By purchasing certain tasks such as logistics services from subcontractors, businesses can legally keep these workers off the payroll and outside of wage agreements with unions. That’s led to growing ranks of contract workers who help boost profit at German companies by lowering labor costs. The downside is abuse of the system, which leaves some workers unprotected and even unpaid. That’s caught the attention of Labor Minister Andrea Nahles, who’s promising a crackdown, and forcing Germany Inc. to defend the practice. “We can’t pay everyone the high wage” in union deals, Wilfried Porth, Daimler’s personnel chief, said in an e-mail to Bloomberg News. “Our cost situation has deteriorated compared to the competition. We can’t afford that.”

Proponents argue hiring subcontractors to provide services keeps Germany, where labor costs in the auto industry are the highest in the world, competitive. Opponents say the widespread practice in industries that include shipbuilding, retail, logistics and construction undermines the German labor model of a partnership between employers and workers. Every third employee in the German auto industry is working either for a subcontractor or as a temporary laborer, according to a poll by IG Metall union published last November. Doing so has helped keep in check already high personnel costs, which amount to €48.40 ($61.27) per hour on average, according to the Berlin-based VDA auto industry group. This compares to €4.81 in Romania and €25.63 in the U.S.

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What a lovely example of a screwed up society. For all sorts of reasons.

Alabama Man Gets $1,000 In Police Settlement, His Lawyers Get $459,000 (Reuters)

An Alabama man who sued over being hit and kicked by police after leading them on a high-speed chase will get $1,000 in a settlement with the city of Birmingham, while his attorneys will take in $459,000, officials said Wednesday. The incident gained public attention with the release of a 2008 video of police officers punching and kicking Anthony Warren as he lay on the ground after leading them on a roughly 20-minute high-speed chase. Warren is serving a 20-year sentence for attempted murder stemming from his running over a police officer during the chase, in which he also hit a school bus and a patrol car before crashing and being ejected from his vehicle.

Under the terms of the settlement of Warren’s 2009 federal suit, in which he accused five Birmingham police officers of excessive force, his attorneys will receive $100,000 for expenses and $359,000 in fees, said Michael Choy, an attorney representing the officers on behalf of the city. The agreement was reached last month and approved on Tuesday by the Birmingham City Council. The city settled to avoid further litigation and the risk of a higher payout, Choy said.

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Riding the subway?!

Doctor With Ebola In Manhattan Hospital After Return From Guinea (Reuters)

A doctor who worked in West Africa with Ebola patients was in an isolation unit in New York on Friday after testing positive for the deadly virus, becoming the fourth person diagnosed with the disease in the United States and the first in its largest city. The worst Ebola outbreak on record has killed at least 4,900 people and perhaps as many as 15,000, mostly in Liberia, Sierra Leone and Guinea, according to World Health Organization figures. Only four Ebola cases have been diagnosed so far in the United States: Thomas Eric Duncan, who died on Oct. 8 at Texas Health Presbyterian Hospital in Dallas, two nurses who treated him there and the latest case, Dr. Craig Spencer. Spencer, 33, who worked for Doctors Without Borders, was taken to Bellevue Hospital on Thursday, six days after returning from Guinea, renewing public jitters about transmission of the disease in the United States and rattling financial markets. Three people who had close contact with Spencer were quarantined for observation – one of them, his fiancée, at the same hospital – but all were still healthy, officials said.

Mayor Bill de Blasio and Governor Andrew Cuomo sought to reassure New Yorkers they were safe, even though Spencer had ridden subways, taken a taxi and visited a bowling alley between his return from Guinea and the onset of his symptoms. “There is no reason for New Yorkers to be alarmed,” de Blasio said at a news conference at Bellevue. “Being on the same subway car or living near someone with Ebola does not in itself put someone at risk.” Health officials emphasized that the virus is not airborne but is spread only through direct contact with bodily fluids from an infected person who is showing symptoms. After taking his own temperature twice daily since his return, Spencer reported running a fever and experiencing gastrointestinal symptoms for the first time early on Thursday. He was then taken from his Manhattan apartment to Bellevue by a special team wearing protective gear, city officials said. He was not feeling sick and would not have been contagious before Thursday morning, city Health Commissioner Mary Travis Bassett said.

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“Others at risk are Benin, Cameroon, Central African Republic, Democratic Republic of Congo, Gambia, Ghana, Mauritania, Nigeria, South Sudan, and Togo.” Add Kenya.

Mali Becomes Sixth African Country To Report Ebola Case (Bloomberg)

Mali became the sixth West African country to report a case of Ebola, opening a new front in the international effort to prevent the outbreak of the deadly viral infection from spreading further. A 2-year-old girl who traveled from Kissidougou, Guinea, with her family to Mali was admitted to a hospital in Kayes yesterday, Malian President Ibrahim Boubacar Keita’s office said in a statement. Test results confirmed she had Ebola. Ebola has infected almost 10,000 people this year, mostly in Sierra Leone, Guinea and Liberia, killing about 4,900. Senegal and Nigeria, which also had cases, are now free of the virus. Disease trackers now must trace everyone the girl came in contact with and monitor them for signs of infection. Mali was one of four countries the World Health Organization said this month was at highest risk of Ebola among a group of African nations the agency said needed to be prepared for cases.

A WHO-led team has been in Mali this week helping to identify gaps in the country’s defenses. “The big issue is getting the response up in those countries so that you can prevent a travel-related case from becoming an outbreak,” Keiji Fukuda, the WHO’s assistant director-general for health security, said in a phone interview today. “We’re working with Mali to try to contain it in the same way that it was contained in Senegal and in Nigeria.” Mali, a nation of about 16.5 million people to the northeast of Guinea, is Africa’s third-largest gold producer. Ivory Coast, Senegal and Guinea Bissau also are at the top of the list of countries that need to be prepared for Ebola cases, the WHO said Oct. 10. Others at risk are Benin, Cameroon, Central African Republic, Democratic Republic of Congo, Gambia, Ghana, Mauritania, Nigeria, South Sudan, and Togo.

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Home Forums Debt Rattle October 24 2014

This topic contains 4 replies, has 4 voices, and was last updated by  NooBoob 4 years, 11 months ago.

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  • #16101

    Jack Delano Family of Dennis Decosta, Portuguese Farm Security Administration client Dec 1940 • The Zombie System: How Capitalism Has Gone Off the Rai
    [See the full post at: Debt Rattle October 24 2014]

    #16106

    khiori
    Participant

    Raul, I thought of you right away when I read 25 banks!!! How many will there be by Sunday? Saw that article in Der Spiegel, very good. Although I catch many of these on my own I do appreciate this list as there is always something interesting I would otherwise miss. Bloomberg hides the best stuff. Front pages can be so much the same!

    #16107

    jal
    Participant
    #16108

    NooBoob
    Participant

    if we hit peak fracking in stride with Naomi Klein’s throbbing divestment fantasies then the financial shit will hit the fan once and for all, thus:

    NEVER MIND DIVESTMENT PORN!
    first, we privatize carbon tax dividends
    with no share for guvs and corps
    with 100% private citizen direct deposit
    in a new world e-currency valued with inverse
    proportionality to atmospheric carbon.
    This will eliminate national regulatory
    asymmetries and capture.
    because the whole world is watching.

    we regulate a new financial ponzi scheme openly
    and honestly creating a banking system
    valued on organic food and atmospheric carbon
    priced in a new world electronic currency
    all currency info openly stored on your phone.

    then we have to pursue a good nuclear policy
    based on thorium and fusion.
    this is the only way to counter peak resources

    i would rather fail than not try
    i would rather fail than not tell you this
    i’m a bit of a green-behind-the-ears dreamer that way
    who cuts grass in a trailer park in Canada

    #16109

    NooBoob
    Participant

    Klein and McKibben are Rockefeller funded stooges who want to give your carbon tax money to corporations and governments to save the planet, good luck with that.

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