Charlotte Brooks Marilyn Monroe and Navy Pilot 1952
Fool me once.
• Global Banks Face 25% Loss-Absorbency Rule in FSB Plan (Bloomberg)
The largest global banks will have to hold more capital and liabilities than previously reported that can automatically be written off in a crisis — as much as a quarter of risk-weighted assets — as regulators take on lenders deemed too big to fail. The Financial Stability Board is developing minimum standards that will limit the double-counting of capital banks use to meet existing international rules, according to an FSB working document sent for comment to Group of 20 governments and obtained by Bloomberg News. The restriction means that, while the basic requirement will be set at 16% to 20% of risk-weighted assets, the final number will be higher because the banks must separately meet “other regulatory capital buffers,” according to the document, dated Sept. 21. The FSB in Basel, Switzerland, declined to comment on the non-public document.
“These standards are an important step in developing a strategy which will limit taxpayers’ exposure to failing banks, but of course a lot of work still has to be done to determine how much flexibility national regulators will have or even need when applying the rules,” said Richard Reid, a research fellow for finance and regulation at the University of Dundee in Scotland. The FSB, which consists of regulators and central bankers from around the world, plans to present the draft rules to a G-20 summit in Brisbane, Australia, next month. The plans, which will be published for comment and completed next year, are part of a package of measures designed to make sure taxpayers are no longer on the hook when banks fail. The FSB maintains a list of globally systemic banks that it updates each November. The latest list included 29 banks and identified HSBC and JPMorgan as the banks whose failure would do the most damage to the global economy.
The FSB plan would force the world’s most systemically important banks to issue junior debt and other securities that could be written down in a straightforward manner and cover costs associated with winding down or restructuring. The rule would fully apply in 2019 at the earliest. Bank of England Governor Mark Carney, the FSB’s chairman, has said that the measure is needed to prevent taxpayer-funded bailouts of banks. “It is essential that systemically important institutions can be resolved in the event of failure without the need for taxpayer support, while at the same time avoiding disruption to the wider financial system,” Carney wrote in a letter to the G-20 last month.
Beware the analysts and experts.
• ‘Nuanced’ Q4 Dollar Gains As Monetary Policy Diverges (CNBC)
The divergence in global monetary policy – as the Federal Reserve prepares for its first rate hike in mid-2015 while counterparts in Japan and Europe consider adding stimulus – will drive the U.S. dollar higher this quarter, a CNBC survey of currency strategists and traders shows. The rise of the dollar index – a gauge of the greenback’s value against a basket of six major currencies – has been virtually unassailable, racking up gains for a record 12 straight weeks – its longest winning streak since its 1971 free float under President Nixon. “We expect a strategically strong dollar over an extended period measured in months and years,” said David Kotok, chief investment officer at U.S. money manager Cumberland Advisors with $2.3 billion in assets under management. “Our central bank is at neutral and unlikely to revert to QE (quantitative easing) again. The rest of the world has not reached that stage.”
Kotok is not alone. Eighty one% of respondents expect the greenback to set new highs, while just under a fifth believes the rally will fade. In a research report on September 30, Deutsche Bank flagged the dollar’s ascent as a major headwind for the commodities complex and predicted that the move has further to go. “A new long-term uptrend in the U.S. dollar is now firmly entrenched and will continue to pose risks to large parts of the commodities complex,” Deutsche Bank strategists said in their Commodities Quarterly. “On our reckoning we are only half way through the current U.S. dollar cycle in duration and magnitude terms.” Fed policymakers last month indicated that they expect faster rate hikes next year and the year after. The central bank in its mid-September meeting pushed up its expected path of interest rate increases – the so-called Fed ‘dots’ forecast. That’s likely to set the tone for further dollar gains, though yields on U.S. treasuries – on short and medium-dated notes – suggest the bond market remains unconvinced.
Obvious.
• Why The Oil Price Decline Is Failing To Boost Europe (CNBC)
Forget quantitative easing by the European Central Bank. Surely the precipitous oil price decline in the last couple of weeks will finally be the catalyst to give the down-trodden European economy the big boost it needs. I mean, after three years of prices north of $100 a barrel surely a big cut in the European energy bill will provide the stimulus effect that ECB President Mario Draghi could only dream of? Well, I’m afraid it appears there will be no energy-induced bonanza as, like many other peculiar aspects of the European economy, consumers will hardly see the benefits of market falls in commodities. To recap, the likes of OPEC are only getting circa $90 per barrel for their oil nowadays compared with around $107 per barrel as recently as June this year. So you could be forgiven for thinking that if the producers are getting less bang per barrel then the consuming nations of Europe would be a major beneficiary. Well that’s not quite the case it seems.
Yes, the big red top headlines talk of the ‘a couple of pence per liter’ off pump prices but the major benefits will never come our way in Europe. Why? Simple. Europe is overwhelmed by taxation, subsidy, over-capacity and green incentivization plans that have conspired make hydrocarbons a dirty and expensive source of energy. Europe’s biggest economy, Germany, is at the heart of the issue in its noble pursuit to reduce greenhouse gases. Great ambition but stunningly expensive. By 2050 the Germans want to have 60% of their energy coming from renewables. This will be an impressive feat but may well seriously dent European competitiveness further.
Daniel Lacalle, Senior Portfolio Manager at Ecofin is worried. “Since the beginning of the crisis in 2008, average European power prices are up 38% whereas wholesale prices have actually fallen. The problem is that we don’t see any of the benefits in Europe of the lower oil prices as we subsidize too many energy industries, we have oversupply and subsidies. In addition, there are so many green taxes that gasoline prices have been going up instead of down.”
Factory orders down 5.7%, capital goods down 8.8%. Europe lost its engine. Get ready for the freefall.
• German Industrial Output Drops Most Since 2009 (AN)
German industrial production declined at the fastest pace since January 2009 underlining that the largest euro area economy is moving further down after contracting in the second quarter. Industrial production fell 4% month-on-month in August following the revised 1.6% rise in July. This was the biggest annual decline since January 2009 and was much larger than the expected fall of 1.5%. Last month, Bundesbank had warned against a decline in August industrial production after the timing of school holidays boosted July output. The drop is too strong to explain it by one-offs, Carsten Brzeski, an economist at ING Bank NV, said. This means that increased uncertainty but also real slowing of the Eurozone economy, Eastern European economies and emerging markets are all currently taking their toll on the German economy, he said. Looking beyond the third quarter, the German industry is looking into a more difficult future, Brzeski said.
Jonathan Loynes, an economist at Capital Economics said the big drop in industrial production underlined the need for both the ECB and the German government to give the economy much more policy support. The European Central Bank kept its key rates unchanged at a record low early this month as economic momentum in the euro area remains subdued. ECB President Mario Draghi unveiled details of its Asset Backed Securities and covered bond buying programs. The Organization for Economic Cooperation and Development, in its interim economic assessment published on September 15, recommended more monetary support to boost demand as slow growth in the euro area was the most worrying feature of the projections. The think-tank projected that the German economy would grow by 1.5% in both 2014 and 2015. Data today showed that production of capital goods declined the most, by 8.8%. Production of intermediate goods and consumer goods slid 1.9% and 0.4%, respectively.
Construction output decreased 2%, while energy production rose 0.3% in August. Industrial production, excluding energy and construction, fell 4.8%. Year-on-year, industrial production fell 2.8% in August in contrast to a 2.7% rise in July. The ministry said the sector is going through a period of weakness. The third quarter is likely to see soft production. Data released on Monday showed that factory orders declined the most since 2009 in August. Orders fell 5.7% after rising 4.9% in July.
Full panic mode soon to come.
• France Cautions Germany Not To Push Europe Too Far On Austerity (AEP)
France has denounced the eurozone’s austerity regime as deeply misguided and issued a blunt warning to Germany and the EU institutions that demands for further belt-tightening may set off a political backlash, endangering European stability. “Be careful how you talk to the countries in the South, and be careful how you to talk to France,” said the French premier, Manuel Valls. “The adjustment has been brutal and it has turned millions of people against Europe. It is putting the European project itself at risk.” Mr Valls said Europe’s fiscal rules have been overtaken by deflationary forces and a protracted slump. “You cannot enforce the Treaty rigidly in these circumstances. The austerity policies are becoming absurd, and we have to examine the situation,” he told journalists in London.
The reformist French premier said the eurozone’s failure to recover risked leaving the region on the margins of the world economy, stuck in a Japanese-style trap. France had pushed through €30bn of fiscal cuts from 2010 to 2012, and another €30bn since then in an effort to comply with EU deficit rules, only to see the gains overwhelmed by the economic downturn. The deficit will remain stuck at 4.3pc of GDP in 2015. A further €50bn of cuts are coming over the next three years. “If they make us reach a 3pc deficit, the country will be totally on its knees. It’s not possible,” he said. The warnings came amid reports the European Commission may strike down France’s draft budget for 2015, refusing to give Paris two extra years until 2017 to meet the 3pc limit. Brussels is also threatening “infringement proceedings”, a process that could ultimately lead to fines. This would put the new Juncker Commission on a dangerous collision course with both France and Italy, two of the eurozone’s big three, now closely aligned in a joint push for EMU-wide reflation and New Deal policies.
[..] “When we came to power, we made a strategic error. We didn’t tell the French people what the condition of the country really was: the level of the deficit, the debt and the trade balance,” he said. “The welfare state and everything the Left stands for has been blown up by the shock of globalisation, which was much greater than people realised. When we were beaten, we fell back on our Old Left ideology. We spent 10 years failing to prepare, and now we have to push through our ideological revolution while in government, which is much more difficult,” he said Mr Valls plays down any suggestion that he is pursuing an Anglo-Saxon market agenda. “We will not get rid of the 35-hour working week. We are not a Thatcherite government,” he said. Yet his aim is to slash the size of the French state from 56pc of GDP to average European levels, a drastic overhaul of the French model..
• France’s Stagnation Is Tragic To Watch (Telegraph)
Most countries would welcome with open arms the prospect of hosting a major theme park attracting millions of tourists every year. Not so France – or at least, not in 1992. When Disneyland Paris opened 22 years ago, the fruit of a major foreign direct investment from Walt Disney, it was slammed as a “cultural Chernobyl” by one commentator and faced the wrath of its left-leaning, anti-American establishment. There were endless rows about dress codes, language and just about everything else, even though the American owners employed thousands of staff and millions of ordinary French families readily embraced the experience. I remember the row well as I grew up in France. These days, it is companies like Amazon that are discriminated against in statist France; the people may love US goods and services but the establishment all too often still sees trade as a form of imperialism, for all of prime minister Manuel Valls’ assurances to the contrary on Monday.
But it is not France’s protectionism – at least not directly – that caused Disneyland Paris’s latest woes and the need for a £783m injection of cash from its shareholders. The problem this time is simply the downturn: visitor numbers are declining on the back of economic growth expected by the OECD to come in at just 0.4pc this year. The unfortunate reality is that Disney would have been far better off building its European resort elsewhere – Germany has hardly boomed either in recent years but it would probably have made for a better base. The French economy is stagnating, with a horrifying 3.4m people out of work and millions more in unviable, state-subsidised jobs.
Maybe a look at debt levels would shine some much-needed light on this claim.
• Europe Cash Pile Signals Savings Glut Sequel for Markets (Bloomberg)
Europe is becoming China without the economic growth. What that means is that the euro area is building history’s biggest current-account surplus. The result: mountains of money likely to buoy the world’s stock and bond markets. Deutsche Bank AG’s George Saravelos has coined a phrase for a pile he estimates has reached $400 billion: the euroglut. “It is Europe’s huge savings glut – what we call euroglut – that will drive global trends for the foreseeable future,” the London-based strategist wrote in a report yesterday. “Via large demand for foreign assets, it will play a dominant role in driving global asset-price trends for the remainder of this decade.” The cash is piling up because the world is buying European goods and services – especially Germany’s – and the euro area’s depressed consumers aren’t buying much of anything from home or abroad. The region’s current-account surplus is now 2.2% of gross domestic product having been in a deficit of almost 2% as recently as 2008.
In dollar terms, Deutsche Bank reckons it’s just above China’s peak last decade. As China learned, there’s a political angle too. The surplus provides a stick for international finance chiefs to beat sclerotic Europe with during the International Monetary Fund’s annual meetings in Washington this week. The pressure will fall mainly on Germany to ramp up domestic demand given its own current-account surplus is 7% of GDP. Since accounting rules dictate a current-account surplus is matched by a capital-account deficit, the implications are for investors around the world. For Deutsche Bank, these include the euro falling to 95 cents against the dollar by the end of 2017 and a cap on U.S. 10-year Treasury yields even if the Federal Reserve raises interest rates. Emerging-market assets are also likely to benefit. Think of it as a new version of what then-Fed Chairman Ben S. Bernanke called a “global savings glut” in 2005 when China’s surplus supported global asset prices.
And people will spend like crazy?
• French PM To Bring In Sunday Shopping As Part Of Reform Program (Guardian)
The French prime minister, Manuel Valls, has told a City audience in London that his drastic reform programme will extend to the introduction of Sunday shopping in Paris, and the major towns of France. Valls is fighting on all fronts to lift the French economy out of the doldrums, and may face a confrontation with the new European commission to tolerate a deficit that breaches EU limits. Valls was in London to meet David Cameron and persuade fellow EU leaders that he is trying to take the French economy on the path to structural reform, including an end to the 35-hour working week. Describing it as “bad news to give you here in London”, Valls said shops would open on Sundays in Paris and promised museums will be open seven days week.
He said socialists were pro-business and he would use his time in power to transform the country. He said he had accepted the apology from the John Lewis managing director who described France as sclerotic, hopeless and downbeat. Valls pointed out that the French economy was the fifth largest in the world and second largest in Europe. Insisting his new government was pro-business, he said the top 75% tax rate would be gone by January. Cameron was told by Valls that he wanted Britain to remain a central figure in the EU but he also said the City of London would lose much if it turned its back on Europe. Cameron, who has mocked the socialist policies of the French president, François Hollande, will probably be delighted by Valls’ overall tone and list him as a potentially ally in any future negotiations on the EU.
• The Reserve Currency’s Exorbitant Burden (Pettis)
This may be excessively optimistic on my part, but there seems to be a slow change in the way the world thinks about reserve currencies. For a long time it was widely accepted that reserve currency status granted the provider of the currency substantial economic benefits. For much of my career I pretty much accepted the consensus, but as I started to think more seriously about the components of the balance of payments, I realized that when Keynes at Bretton Woods argued for a hybrid currency (which he called “bancor”) to serve as the global reserve currency, and not the US dollar, he wasn’t only expressing his dismay about the transfer of international status from Britain to the US. Keynes recognized that once the reserve currency was no longer constrained by gold convertibility, the world needed an alternative way to prevent destabilizing imbalances from developing.
This should have become obvious to me much earlier except that, like most people, I never really worked through the fairly basic arithmetic that shows why these imbalances must develop. For most of my career I worked on Wall Street – at different times running fixed income trading, capital markets and liability management teams at various investment banks, usually focusing on Latin America – and taught classes at Columbia’s business school on debt trading and arbitrage, emerging markets finance and financial history. Both my banking work and my academic work converged nicely on the related topics of global capital flows, financial crises and the structure of balance sheets.
“The number of over-65s in England is expected to increase by 51% over the next 20 years.”
• Retirement Age To Rise By As Much As Six Months Per Year (Telegraph)
Older people will be encouraged to work longer under a Government plan to increase the average retirement age by six months every year. Ministers believe that the retirement age needs to increase dramatically to reflect Britain’s ageing population and to avoid a health care crisis. The average age of retirement is 64.7 for men and 63.1 for women. The Department for Work and Pensions said in its business plan that it would like the average to rise by as much as six months every year. The number of over-65s in England is expected to increase by 51% over the next 20 years, and the numbers of those aged 85 and above will double by 2030. Ministers accept that the trend will hugely increase the costs to the NHS, elderly care and state pensions systems.
Steve Webb, the Liberal Democrat pensions minister, admitted that the target was “ambitious” but said the retirement age had already been rising for women. He said: “If someone works an extra year they can add 10 per cent to their pension for life. What we are doing is catching up with decades of longer living. “We are living longer but the labour market and people’s retirement age has not been keeping up. I have fought against a vague target of trying to get people to work longer to have something more specific.” The target is contained in a document released by the Department for Work and Pensions which makes clear that an increase of six months would be a “meaningful change”. “An increase in the average age of withdrawal of more than around 0.5 years would demonstrate an improvement,” the document states.
Mr Webb has said that the growing numbers of people living into their eighties and nineties would leave taxpayers with a rising bill and meant “the sums” would never add up if people continued to retire in their fifties. George Osborne announced earlier this year that increases in life expectancy will automatically trigger a rise in the state pension age, which is likely to rise to 70 within 50 years. The state pension age is currently 65 for men, and is rising from 60 for women to come into line with men at 66 by 2020. It will continue to rise so people in their late twenties are likely to have to work until their 70th birthdays, according to official projections. The Office for Budget Responsibility said that Coalition policies such as raising the state pension age and further cuts will reduce Britain’s debt as a proportion of national income by two thirds.
Nobody invests?!
• China Private Sector Demand Continues To Decline (Zero Hedge)
China is slowing, mostly due to a gradual, steady decline in private sector activity. One example: the decline in fixed asset investment (e.g., business capital spending) at private sector firms relative to firms that are state-controlled. Premier Li Keqiang’s reforms are aimed at making it easier for entrepreneurs to start private sector firms, but in the current climate, private sector investment growth continues to fall.
The Chinese central bank injected some liquidity into the domestic banking system recently, but it was only for 3 months and not meant to address the more structural issue of declining private sector demand. While export growth and job creation still look pretty good, the overall picture is one of an economy growing at 7%, and that’s with the contribution from government spending. Government spending is set to slow in the second half of the year; the authorities continue to reduce the size of the shadow banking system which extends credit; and the overheated housing market is still in decline as well when looking at national home sales and a 70-city home price average. We expect continued weakness in Chinese data for the rest of 2014 and into next year as well.
Source: JPMorgan
€27 billion is still not exactly a huge number.
• Chinese Investors Surged Into EU At Height Of Debt Crisis (FT)
As investors fled Europe in the worst days of its sovereign debt crisis, China-based companies moved in the other direction and surged in, with cash flowing from China into some of the hardest-hit countries of the eurozone periphery. In 2010, the total stock of Chinese direct investment in the EU was just over €6.1 billion – less than what was held by India, Iceland or Nigeria. By the end of 2012, Chinese investment stock had quadrupled, to nearly €27 billion, according to figures compiled by Deutsche Bank. The buying spree, analysts say, was nothing short of a transformation of the model of Chinese outbound investment. It is expected to increase steadily over the next decade. “We saw a massive spike in Chinese investment in Europe, particularly [mergers and acquisitions] during the height of the debt crisis,” says Thilo Hanemann, an expert in Chinese outbound investment and research director at Rhodium Group, a research consultancy.
“This was partly opportunistic buying because assets were cheap and partly it was a structural secular shift in Chinese outbound investment, from securing natural resources in developing countries to acquiring brands and technology in developed countries.” The Financial Times this week investigates the modern trail of Chinese investment, migration and ambition in Europe. A series of reports from Beijing to Milan to Madrid to Lisbon to Athens reveal the scale of China’s expansion in Europe, the flow of investment and the strategies of Chinese investors and migrants caught up in a national effort – a “going out” policy in place since 1999 – to find new markets and enhance China’s economic strength. The incursion has not been all plain sailing.
When a Chinese state-owned consortium won the bid to build a road from Warsaw to the German border, the government in Beijing presented the deal as a model for Chinese contractors in Europe. But after cost over-runs and repeated breaches of local labour law, the Polish government cancelled the contract with Covec, the Chinese consortium, in 2011 – less than two years into the project. What befuddled the Chinese company most were Polish environmental laws requiring tunnels for wildlife to be built beneath the road and a two-week work stoppage while seven rare species of frogs, toads and newts were moved out of the way.
All you need to know: “… annual growth in electricity demand has fallen sharply to below 4% for the first eight months of 2014, a level recorded previously only in the depths of the global financial crisis”
• Beware a Chinese Slowdown (Rogoff)
While virtually every country in the world is trying to boost growth, China is trying to slow it down to a sustainable level. As the country shifts to a more domestic-demand driven, services-oriented economy, a transition to slower-trend growth is inevitable and desirable. But the challenges are immense, and no one should take a soft landing for granted. As China’s economy grows relative to those of its trading partners, the efficacy of its export-led growth model must inevitably fade. As a corollary, the returns on massive infrastructure investment, much of which is directed toward supporting export growth, must also fade. Consumption and quality of life need to rise, even as China’s air pollution and water shortages become more acute in many areas. But, in an economy where debt has exploded to more than 200% of GDP, it is not easy to rein in growth gradually without triggering widespread failure of ambitious investment projects.
Even in China, where the government has deep pockets to cushion the fall, one Lehman Brothers-size bankruptcy could trigger a major panic. Think of how hard it is to engineer a soft landing in market-based economies. Many a recession has been catalysed or amplified by monetary-tightening cycles; Alan Greenspan, the former US Federal Reserve chairman, was known as the “maestro” in the 1990s because he managed to slow inflation and maintain strong growth simultaneously. The idea that controlled tightening is easier in a more centrally planned economy, where policymakers must rely on noisier market signals, is questionable. If one were to judge by official and market growth forecasts, one would think the risks were modest. China’s official target growth rate is 7.5%. Anyone forecasting 7% is considered a “China bear”, and predicting a downshift to 6.5% makes one a downright fanatic. For most countries, such small differences would be splitting hairs. In the US, quarterly GDP growth has fluctuated between -2.1% and 4.6% in the first half of 2014.
Of course, Chinese growth almost surely fluctuates far more than the official numbers reveal, in part because local officials have incentives to smooth the data that they report to the central authorities. So where is China’s economy now? Most evidence suggests it has slowed significantly. One striking fact is that annual growth in electricity demand has fallen sharply to below 4% for the first eight months of 2014, a level recorded previously only in the depths of the global financial crisis that erupted in 2008. For most of China’s modernisation drive, electricity consumption has grown faster than output, not slower. Weakening electricity demand has tipped China’s coal industry into severe distress, with many mines, in effect, bankrupt. Falling house prices are another classic indicator of a vulnerable economy, though the exact pace of decline is difficult to assess. The main house price indices measure only asking prices and not actual sales prices. Data in many other countries, such as Spain, suffer from the same deficiency.
The LA Times is part of the scam team? Wow.
• Zero Interest Loan Lets Low-income Borrowers Build Equity Fast (?!) LA Times
Two major banks have agreed to originate a new 15-year mortgage under pilot programs aimed at low- and moderate-income borrowers. In addition, the creators of the so-called Wealth Building Home Loan, which allows home buyers to build equity at a much faster clip than they would with a standard 30-year loan, are planning to bring their ideas to 10 other institutions over the next few weeks. Still, Edward Pinto thinks it might take months or even years for the product to become universal, if it becomes a regular offering at all. But Pinto and his co-conspirator, Bruce Marks, generated major buzz when they introduced the Wealth Building Home Loan at a mortgage conference in North Carolina in early September. The loan won the endorsement of several high-profile industry executives, including Lewis Ranieri, generally considered the father of the mortgage-backed security, and Joseph Smith, the former North Carolina bank regulator who was appointed to oversee the National Mortgage Settlement that created new mortgage servicing standards and provided some relief for distressed owners.
So what is everybody so excited about? The Wealth Building Home Loan is a 15-year mortgage with a fixed interest rate that can be bought down to zero. In addition, little or no down payment is required, there are no additional fees, and underwriters will pay far more attention to your residual income than to your credit score. Typically, the monthly payment on a 15-year loan is higher than that on a 30-year loan. But the loan amortizes much more quickly, meaning you build wealth — or equity — faster. To make the payments more affordable, the offering rate will be about three-quarters of a%age point below the 30-year FHA rate. And the rate can be bought down even further. For every 1% of the loan amount the borrower puts up as a down payment, the interest rate will be lowered by half a%age point, which is twice as much as usual. Consequently, a $6,000 down payment on a $100,000 mortgage at 3% would bring the rate down to zero, meaning that every penny spent on the monthly payment would go to principal.
Shut up.
• Ukraine Insists Transit Of Russian Gas To Europe Should Be Revised (RT)
Agreements stipulating deliveries of Russian gas to Europe via Ukraine should be revisited, as they don’t comply with EU standards, insists Ukraine’s Energy Minister Yuri Prodan. “The process of revising the transit contract will be conducted surely, as the current contract does not comply with the European standards,” Prodan said in Brussels on Friday. “We are ready to discuss and reach a compromise agreement even tomorrow. But, once again we require compliance in accordance with European legislation. And we are ready to make any decision in this regard if that will be demanded by the European Commission,” the Minister of Energy added. According to him, there are two ways to resolve the gas problem between Kiev and Moscow: whether the decision will be achieved through the courts or an interim solution, “that we can achieve in the next week.” Initially it was reported that a meeting will take place before the end of this week, but the Russian Ministry of Energy and the European Commission announced that it is delayed to next week.
Prodan said that dates are still not confirmed. On September 26, Russia, Ukraine and the the EU conducted three-way gas negotiations in Berlin where they discussed a so-called “winter plan.” According to it Ukraine will pay Gazprom $2 billion as part of its gas debt by the end of October and an additional $1.1 billion in advance payment by year’s end for 5 billion cubic meters of gas, the EU Energy Commissioner Gunther Oettinger said. However, no final documents have been sealed, as price and payment schedule remain the stumbling blocks in the negotiations. Kiev is offering its own repayment schedule for $3.1 billion debt and does not agree with the proposed $100 per thousand cubic meters discount due to customs duty. Russian Minister of Energy Aleksandr Novak rejected Kiev’s conditions saying it calculated the $3.1 billion cost at its own virtual price at $268.5 per thousand cubic meters of gas.
The land of the free.
• $1,200 3-D Printer For Untraceable Guns Sells Out in 36 Hours (Wired)
Americans want guns without serial numbers. And apparently, they want to make them at home. On Wednesday, Cody Wilson’s libertarian non-profit Defense Distributed revealed the Ghost Gunner, a $1,200 computer-controlled (CNC) milling machine designed to let anyone make the aluminum body of an AR-15 rifle at home, with no expertise, no regulation, and no serial numbers. Since then, he’s sold more than 200 of the foot-cubed CNC mills—175 in the first 24 hours. That’s well beyond his expectations; Wilson had planned to sell only 110 of the machines total before cutting off orders. To keep up, Wilson says he’s now raising the price for the next round of Ghost Gunners by $100. He has even hired another employee to add to Defense Distributed’s tiny operation. That makes four staffers on the group’s CNC milling project, an offshoot of its larger mission to foil gun control with digital DIY tools.
“People want this machine,” Wilson tells WIRED. “People want the battle rifle and the comfort of replicability, and the privacy component. They want it, and they’re buying it.” While the Ghost Gunner is a general-purpose CNC mill, capable of automatically carving polymer, wood, and metal in three dimensions, Defense Distributed has marketed its machine specifically as a tool for milling the so-called lower receiver of an AR-15, which is the regulated body of that semi-automatic rifle. The gun community has already made that task far easier by selling so-called “80-percent lowers,” blocks of aluminum that need only a few holes and cavities milled out to become working lower receivers. Wilson says he’s now in talks with San Diego-based Ares Armor, one of the top sellers of those 80-percent lowers, to enter into some sort of sales partnership.
Scary.
• Nurse In Spain First Ebola Case Contracted Outside Africa (CNBC)
A nurse in Spain has become the first person to contract the potentially deadly Ebola virus outside of West Africa in the latest epidemic, the worst on record, authorities said Monday. The nurse had gone into a room in a Madrid hospital that had been used to quarantine an elderly priest, Manuel Garcia Viejo, who contracted Ebola doing missionary work with victims of the same disease in Sierra Leone. The priest died Sept. 25. About 30 other people who had cared for the missionary are also being monitored, officials said. Also, Monday, President Barack Obama said his administration was developing added protocols for screening airline passengers for Ebola. Obama also said he was ordered increased efforts to educated medical providers on how to handed such cases, and that he would also push other large national to provide financial aid to the West African countries were the epidemic is occurring.
Obama spoke to reporters after briefed on the Ebola situation by health advisers. The White House earlier said Monday it is not considering a ban on travel from the West African countries dealing with the Ebola epidemic, which has killed more than 3,400 people since March. “We feel good about the measures that are already in place,” White House spokesman Josh Earnest said. Meanwhile, the father of a freelance NBC News cameraman being treated in Nebraska said his son suspects he may have contracted the Ebola virus from helping clean a car in Liberia after someone else died from the disease in the vehicle. That journalist, Ashoka Mukpo, is “not certain” how he got Ebola, but “he was around the clinic … and he does remember one instance where he was helping spray-wash one vehicle with chlorine,” said Mukpo’s father, Dr. Mitchell Levy.
What will it take to make Americans wake up? How many bodies?
• CDC Clears US Ebola Victim’s Stepdaughter To Return To Work, She Refuses (DM)
The stepdaughter of Texas Ebola victim, Thomas Duncan, who called 911 and rode in the ambulance with the man she calls ‘Daddy’ has been told she can return to work, MailOnline can reveal. Nursing assistant Youngor Jallah, 35, has been in ‘quarantine’ in her small Dallas apartment along with her husband, Aaron Yah, 43, and their four children ages 2 to 11 since Thomas Duncan’s devastating diagnosis last Monday. MailOnline has reported that Mr Yah, also a nursing assistant, had been told he could return to work at the end of last week. Ms Jallah whose contact with Mr Duncan – who remains in a critical condition – was far more intimate and prolonged than that of her husband, told MailOnline on Monday: ‘The CDC came yesterday. They said I can go back to work but I do not know what I will do. I will not go back yet.’
Doctors say that no-one is at risk of catching the virus unless they come into contact with a sufferer who is exhibiting symptoms. But it is unlikely that Youngor will return to work until the family have gone through the 21 days considered the latest time between exposure and manifestation of Ebola. She does not intend to allow her eldest child to return to school before the October 17. She has no child-care provisions either – as her mother, Louise Troh, 54, the woman who Mr Duncan traveled to the States to marry, provided childcare and remains in quarantine in a secret location along with her 13-year-old son, nephew and a friend.
Reminder: “Libor, a key benchmark against which around $450 trillion of financial contracts are pegged from consumer loans to derivatives”
• Senior Banker In UK Pleads Guilty In Libor Probe (Reuters)
A senior banker at a leading British bank has pleaded guilty to conspiracy to defraud in connection with the manipulation of Libor benchmark interest rates, becoming the first person in the UK to plead guilty to such an offence. The banker submitted the plea on Friday and an English High Court judge on Tuesday lifted court reporting restrictions on the case. Two men have already pleaded guilty in the United States to fraud offences linked to the rigging of Libor, a key benchmark against which around $450 trillion of financial contracts are pegged from consumer loans to derivatives, amid a global investigation.
Paul Robson, a British citizen and former senior trader at Dutch Rabobank and his former colleague, Takayuki Yagami, have pleaded guilty to participating in a scheme to rig the London interbank offered rate. Seven banks and brokerages have so far settled U.S. and UK regulatory allegations of interest rate rigging as a result of a global investigation and 17 men have been charged with fraud-related offences.
“There has never been a crazier moment in history. The weeks before the outbreak of the First World War seem like a garden party compared to the morbid antics of these darkening days. America, you’ve been wishing fervently for the Zombie Apocalypse. What happens when you discover you can’t just change the channel?”
• Must Be the Season of the Witch (Jim Kunstler)
As the Governor goblins at the Federal Reserve whistle past the graveyard of dead Quantitative Easing, and the US dollar magically expands like a prickly puffer fish, and Mario Drahgi does what it takes with Euro duct tape to patch all black holes of unpayable debt from Athens to Dublin, and Japan watches its once-wondrous economy congeal in a puddle of Abenomic sludge (with a radioactive cherry on top), and China chokes on its dollar-peg, and Russia waits patiently with its old friend, Winter, covering its back — and notwithstanding the violent chaos, beheadings, and psychopathic struggles across the old Levant, not to mention the doubling of Ebola cases every 20 days, which the World Health Organization did not have the nerve to project beyond 1.2 million in January (does the doubling just stop there?) — there is enough instability around the globe for the gentlemen of Wall Street to make one last fabulous fortune arbitraging the future before the boomerang of consequence circles this suffering planet and finally accomplishes what the Department of Justice under Eric Holder failed to do for six long years.
It’s the season of witch and you should be nervous. Especially if you live in apart of the world where money is used. Pretty soon nobody will know what any currency is really worth — at least for a while — or what anything else is worth, for that matter. Perhaps the fishermen of India will start using their worthless gold for sinkers. Jay-Z and Diddy will gaze down on their bling in despair, thinking, perhaps, they should have invested in Betamax players instead. In the time of anything-goes-and-nothing-matters, it’s dangerous to expect anything.
Here’s what I expect: the surge of the dollar is the crest of an historic Great Wave. A Great Wave is an awesome event, and its crest is a majestic sight, but soon the foam spits and hisses and the wave breaks and crashes down on the beach — say, out at the Hamptons — where hedge funders stroll to catch the last dwindling rays of a beautiful season, and all of a sudden they are being swept out to sea in the rip-tide that retracts all that lovely green liquidity, and no one is even left on the beach to weep for them. Indeed their Robert A. M. Stern shingled manor houses up behind the dunes are swept away, too, and the tennis courts, and the potted hydrangeas, and the Teslas, and all the temporal bric-a-brac of their uber-specialness.
Home › Forums › Debt Rattle October 7 2014