Harris&Ewing Washington, DC, Storm damage..” Between 1913 and 1918
“China is no longer buying US Treasuries and global bonds. It has become a net seller, stepping in to offset accelerating outflows of capital.” [..] “The PBOC’s reserve body, SAFE, was still buying $30bn a month of global bonds a year ago. It is now selling an estimated $10bn a month.”
Nobody can fault China’s leaders for lack of bravery. The Politburo has kept its nerve as the world’s most giddy experiment in credit-driven growth faces assault on three major fronts at once. Real interest rates have rocketed. The trade-weighted rise in the yuan over the past two years has been spectacular. Fiscal policy is about to tighten drastically as the authorities clamp down on big-spending local governments. Put together, China is pursuing the most contractionary mix of economic policies in the G20, relative to the status quo ante. Collateral damage is already visible in the sliding global prices of iron ore, copper, nickel, lead and zinc over recent months, as well as thermal coal, oil, corn and even sugar. Zhiwei Zhang, from Deutsche Bank, says China faces a “fiscal cliff” this year as Beijing attempts to rein in spending. “This year, China will likely face the worst fiscal challenge since 1981. This is not well recognised in the market,” he said.
The IMF says China’s budget deficit topped 10pc of GDP in 2014 if measured properly, including borrowing by the regions through “financing vehicles” as well as land sales – a patently unsustainable form of funding that makes up 35pc of local government revenue. This is the highest deficit of any major country in the world, and far above safe levels. A budget squeeze is already emerging as the property slump drags on. Zhiwei Zhang says land revenues fell 21pc in the fourth quarter of last year. “The decline of fiscal revenue is the top risk in China and will lead to a sharp slowdown,” he said. China’s Development Research Centre (DRC) – the brain trust of premier Li Keqiang – has issued a new report on the bankruptcy of California’s Orange County in 1994. “It is a warning to China that the country needs to improve its tax system,” said the paper.
Interestingly, the DRC has also published a report recently on the decline in China’s electrical, mechanical and car industries, a finding that might surprise some in the West. The Chinese tax system is highly leveraged to the property cycle, like Ireland’s before the boom broke in 2007. The scale is epic. A study by the US Federal Reserve found that property investment in China has risen from 4pc to 15pc of GDP since 2008. This is even higher than in Japan in the blow-off years of the late 1980s. The denouement is well under way. Home prices fell 3.1pc in January from a year earlier. Average sales have dropped 7pc from a year ago in the large Tier 1 cities, 22pc for Tier 2 and 15pc for the Tier 3 towns. The inventory overhang has risen to 18 months, three times US levels. New floor space has dropped 30pc on a three-month moving average.
China is not the only country in Asia facing a hangover. Nomura’s Rob Subbaraman says housing booms in India, Hong Kong and Taiwan all match or exceed the US bubble in 2008, with Malaysia not far behind. “Asia is setting itself up for a major credit crunch,” [..] There is another twist to this. The PBOC’s reserve body, SAFE, was still buying $30bn a month of global bonds a year ago. It is now selling an estimated $10bn a month. This is a $40bn a month shift in central bank intervention in the asset markets, a lot more than the extra $15bn a month that the Bank of Japan has been buying since October. Or put another way, Asia is “tapering” at a pace of $25bn a month. You could argue that this neutralises half the quantitative easing soon to come from the ECB.
Hey, everyone can set targets… I got some great ones, and a bridge in Brooklyn too.
China set the lowest economic growth target in more than 15 years as leaders tackle the side effects of a generation-long expansion that has spurred corruption, fueled debt risks and polluted skies and rivers. The goal of about 7% – down from last year’s aspiration of about 7.5% – was given in a work report that Premier Li Keqiang will deliver to the annual meeting of the legislature today in Beijing. The inflation target was set at about 3%. Headwinds that include a property slump, excess capacity in industry and disinflation prompted the second interest-rate cut in three months at the weekend. The government has vowed to move away from expansion at all costs as it tries to clean up the nation’s environment and control a debt surge.
“The government will lower its growth target for 2015 to focus more on the quality than the quantity of growth,” said Nomura Holdings Inc. economists led by Zhao Yang in a note on Feb. 27. “While reiterating that economic development is its primary task, we expect the NPC to also take a hard line on anti-corruption, committing to its clean governance efforts.” Li’s work report, which opens the meeting of the National People’s Congress, is his second since the 59-year-old was named premier toward the end of 2013’s legislative gathering. Along with President Xi Jinping, the pair are seeking to increase efficiencies and strengthen market forces. Policymakers are trying to balance the need to cushion the economy’s slowdown with monetary and fiscal stimulus against longer-term goals.
They’re seeking to increase the role of private business, promote innovation and reshape the fiscal framework as they shift the economy from reliance on debt-fueled investment toward greater consumption and services. Li has said a slower expansion is tolerable as long as enough jobs are created. Even after growth slowed to 7.4% last year, the weakest pace since 1990, the nation created 13.2 million new urban jobs, exceeding a target of 10 million and the previous year’s 13.1 million. The goal of about 7% compares to the IMF’s forecast of a 6.8% expansion this year and the World Bank’s 7.1% estimate.
That has been clear for ages..
This was never said officially before! “They gave money to save German and French banks, not Greece,” Paolo Batista, one of the Executive Directors of the IMF told Greek private Alpha TV on Tuesday. Batista strongly criticized not only the euro zone and the ECB but also the IMF and the Fund’s managing Director Christine Lagarde for defending Europe much too much.. He urged Greece to directly negotiate with the IMF and favored the restructuring of the Greek debt that is been hold by the European partners.
“.. the ECB is now close to running out of ammunition. The true constraints on further ECB intervention lie in the 25% issue limit and 33% issuer limit on its sovereign bond purchases.”
The European Central Bank’s quantitative easing programme announced in January has been well received by financial markets. Its size (€60bn a month) and open-endedness have positively surprised. The fact that 80% of the bond purchases will not be subject to loss sharing between national central banks has rightly been seen as the price worth paying to get a bigger programme and a wider consensus within the ECB governing council. Indeed, this so-called risk-sharing issue has been overemphasised since all the monetary claims created by the programme will remain a joint and several liability of the eurosystem, whatever the loss-sharing arrangement on asset holdings. Having said that, the ECB is now close to running out of ammunition. The true constraints on further ECB intervention lie in the 25% issue limit and 33% issuer limit on its sovereign bond purchases.
These limits are not arbitrary and could not be easily raised or removed: they are the byproducts of the conditions set in January by the European Court of Justice Advocate General in its opinion on the legality of outright monetary transactions (OMTs), the sovereign bond-buying backstop revealed by Mario Draghi, ECB president, in 2012 after he promised to do “whatever it takes” to bring order to sovereign debt markets. Except for Greek debt, the 25% and 33% caps should not prove binding in a scenario where the ECB keeps its monthly asset purchase pace of €60bn. However, the limits could be reached in worst-case scenarios where the ECB would have to boost the size of its QE programme or implement OMTs targeted on specific sovereigns.
The first type of worst-case scenario would be a new global deflationary shock. It might be triggered by faltering US growth or a sharper than expected slowdown in China. The consequence would be fiercer currency wars with balance sheet expansion races among central banks. In this competition, the ECB would be handicapped: it would not have much room to significantly increase the size of its bond purchase programme. For instance, if monthly purchases had to be raised to €100bn, the 25% issue limit would be reached after only eight months in the case of German government debt. Given the narrow size of the eurozone corporate bond market, any substantial further expansion of the asset purchase programme would then have to include equities. But this could prove controversial within the ECB governing council.
“We go into the negotiations with optimism, with especially good preparation, and I believe there won’t be a development..”
As talks over the disbursement of bailout funds for Greece drag on into their seventh consecutive month, the deadlock threatens to pull the country back into a recession this quarter, or even a possible default within weeks. Greece needs to refinance or repay about €6.5 billion euros in debt and interest in the next three weeks, including Treasury bill redemptions, according to data compiled by Bloomberg. To top that, its budget forecasts a €2.1 billion cash deficit in March. A shortfall in tax revenue already opened a cash hole of €217 million in January, derailing budget targets. Having lost market access, Greece’s only lifeline is emergency loans extended by euro-area member states and the IMF.
Failure to secure an agreement on the disbursement of funds by them has triggered a liquidity squeeze, raising doubts about the country’s solvency, as well as the sustainability of its nascent economic recovery. “There’s no chance the quarrel won’t affect the economy” said Haris Theoharis, a lawmaker for Greece’s River party and a former secretary of public revenue. “Every investment has been put on hold, pending the result of the talks,” he said by phone on Wednesday. Greek Finance Minister Yanis Varoufakis said that the country has an alternative plan to plug its financing shortfall in March, without specifying what it was. “We go into the negotiations with optimism, with especially good preparation, and I believe there won’t be a development,” Varoufakis said in Athens, on Wednesday. The answer to the question of whether “there is an alternative is that there is one,” he said.
Greece’s month-old anti-austerity government led by Prime Minister Alexis Tsipras has yet to agree with its creditors on the terms for the disbursement of an outstanding aid tranche totaling about €7 billion. Negotiations that started in Paris in early September between the previous government and the troika of the European Commission, the IMF and the ECB didn’t yield any results. A snap election in January put an abrupt end to the talks. Two officials directly involved in Greece’s €240 billion bailout said the country could potentially use its available reserves to make it past the end of this month. A third official said Greek financing needs, including debt repayments to the IMF, are only safely covered for another two weeks. The officials asked not to be named while negotiations continue. A spokesman for Greece’s finance ministry declined to comment on when the country may run out of cash.
“With so much in play, why did the IMF not clearly put that marker on the record?”
In an otherwise sound critique of Mr. Varoufakis’ list of proposals for Greek government policies last week, Mme. Lagarde’s letter to Mr. Dijsselbloem contains an additional, unremarked, but revealing element. After saying that, in the IMF’s view, the Greek list was sufficiently comprehensive to be a valid starting point for a successful conclusion of the review, she added:
… but a determination in this regard should of course rest primarily on an assessment by Member States themselves and by the relevant European institutions.
One might casually read that phrase as throwaway diplomacy or simply as recognizing the facts of life. But either way, the IMF thereby washed its hands about what might follow if the Europeans determined that the letter was insufficient as a starting point. The message would have been very different had her phrase been:
… and I would [strongly?] encourage you and your European colleagues to reach a similar determination promptly.
With so much in play, why did the IMF not clearly put that marker on the record? The explanation is unlikely to be that it understood via midnight phone calls that the Europeans had pre-approved the letter. At the least, European officials on the other end of such calls had no assurance of how their various parliaments would respond to the IMF’s own substantive and strongly expressed concerns with Greek plans. Instead, the explanation is likely that, in the IMF view, Grexit was unlikely to follow a negative determination or/and that if it did, it would not be systemic even if, as Mme. Lagarde had just publicly stated, it would be disastrous for Greece itself.
The former judgement might have assumed that in the event of a negative determination by Euro parliaments, Mr. Varoufakis would quickly rewrite his letter. But to presume that and that nothing else would occur—despite the heated GreekEuro negotiations, the ongoing bank run, the prospect of ELA suspension, and broader peripheral political contagion—would have been to presume a great deal. The alternative explanation—the judgement that Grexit, if it occurred, would not be systemic—would contradict the IMF’s own detailed analysis of the Eurozone financial system.
WHy should they act like the others, when the others is exactly who they don’t want to be?
Strapped for cash and under pressure to deliver on reforms, Greece’s new radical government has ruffled feathers in Brussels by not respecting the diplomatic niceties of the negotiating table. From 40-year-old Prime Minister Alexis Tsipras downwards, Greek officials have gone into EU meetings in fighting mood, their hard talk taking many by surprise and leaving some aghast. Tsipras startled fellow European leaders on Saturday when he spoke of a “trap by aggressive conservative forces” led by an “axis” of Spain and Portugal to undermine the month-old Greek government by cutting off EU funds. Tsipras’ outburst was termed “unusual foul play” by Berlin, and German Finance Minister Wolfgang Schaeuble this week told the broadcaster ARD: “Greece has made its position worse with a rhetoric that is difficult for someone on the outside to understand.”
Maverick Finance Minister Yanis Varoufakis and bullish Foreign Minister Nikos Kotzias have also been involved in clashes as they insisted on Greece’s right to be treated as an equal partner despite its debts to the other members of the eurozone. “Some people thought that Greece should continue to be slapped around, as it had been for the past five years. We will no longer be slapped around,” Kotzias told Greek radio Alpha last week. A former communist, Kotzias in January forced EU foreign ministers to adopt a more conciliatory statement on Russian sanctions over the crisis in Ukraine. “We have the right to strengthen our relations with whichever state we think would benefit our country. We will not raise our hand for permission, like a pupil in class,” the minister said.
At a series of eurozone finance ministers meetings last month to hammer out a four-month loan extension for Athens, the Greeks again exasperated their peers by leaking draft documents and shedding light on secret negotiations. “It’s terrible – the Greeks seem to live on another planet,” a frustrated European official said after the first of three Eurogroup meetings ended in acrimony. The writing had been on the wall from when new finance minister Varoufakis had his first meeting in Athens with austere Eurogroup chief Jeroen Dijsselbloem on January 30. At the end of a frosty press conference – during which Varoufakis said Greece would no longer cooperate with EU-IMF auditors – Dijsselbloem stormed off to the joy of Greek social media, which had a field day with the spat. “Baldie, bring your crew to the square in Brussels in one hour,” the bespectacled Dutchman tells shaven-headed Varoufakis in a popular mock photo of the scene that did the rounds. “Four-eyes, I’ll break you in two like a twig,” Varoufakis responds.
Going down in the race to the bottom.
Denmark is unleashing huge amounts of ammunition in its battle to prevent the krone from appreciating. The cost of the campaign, though, suggests that any renewed assault by speculators could require an even more aggressive response — capital controls. The nation revealed yesterday that its foreign currency reserves soared by 173 billion kroner ($26 billion) in February – the biggest increase ever. The central bank has been cranking up the printing presses, minting domestic currency for sale on the foreign exchange market to stop the krone from straying too far from its target rate of about 7.46 per euro. As it offloads kroner, the central bank buys foreign currencies, which go into a reserve account that held a record 737 billion kroner last week.
Those sales, combined with four rate cuts this year – driving the benchmark deposit rate to minus 0.75% – are deterring traders from betting they can make money pushing the currency higher: The initial pressure on Denmark’s currency came after Switzerland abandoned its currency peg in January, and as the European Central Bank’s plan to unveil a government bond-buying program discouraged investors from wanting to own the euro. The Danish government says it’s determined not to let its exports take a hit from currency appreciation. But prices in the derivatives market suggest the war isn’t over. Traders who buy and sell contracts to speculate on where the krone will be in a year’s time are still anticipating it will strengthen. The current bet is for a 0.8% variation from the target rate, which is still within the official 2.25% range the central bank says it will tolerate, but outside the 0.5% band it has typically maintained.
The U.S. has so much crude that it is running out of places to put it, and that could drive oil and gasoline prices even lower in the coming months. For the past seven weeks, the United States has been producing and importing an average of 1 million more barrels of oil every day than it is consuming. That extra crude is flowing into storage tanks, especially at the country’s main trading hub in Cushing, Oklahoma, pushing U.S. supplies to their highest point in at least 80 years, the Energy Department reported last week. If this keeps up, storage tanks could approach their operational limits, known in the industry as “tank tops,” by mid-April and send the price of crude — and probably gasoline, too — plummeting.
“The fact of the matter is we are running out of storage capacity in the U.S.,” Ed Morse at Citibank said at a recent symposium at the Council on Foreign Relations in New York. Morse has suggested oil could fall all the way to $20 a barrel from the current $50. At that rock-bottom price, oil companies, faced with mounting losses, would stop pumping oil until the glut eased. Gasoline prices would fall along with crude, though lower refinery production, because of seasonal factors and unexpected outages, could prevent a sharp decline.
I see squatters in your future.
Billions of pounds of corruptly gained money has been laundered by criminals and foreign officials buying upmarket London properties through anonymous offshore front companies – making the city arguably the world capital of money laundering. Some 36,342 properties in London have been bought through hidden companies in offshore havens and while a majority of those will have been kept secret for legitimate privacy purposes, vast numbers are thought to have been bought anonymously to hide stolen money. The flow of corrupt cash has driven up average prices with a “widespread ripple effect down the property price chain and beyond London”, according to property experts cited in the most comprehensive study into the long-suspected money laundering route through central London real estate, by anti-corruption organisation Transparency International.
Some sources claim it has skewed developers towards building high-priced flats and houses rather than ones ordinary people can afford. While corruption and tax evasion are likely to be the biggest sources of the illicit money, drug dealing, people trafficking and sanctions busting are also common, police say. TI’s research, which includes previously unreleased internal figures from the Metropolitan Police Proceeds of Corruption Unit, found that 75% of properties owned by people under criminal investigation for corruption are held through secret offshore companies. London has become a global magnet for corrupt funds, TI said, due to the high prices of property – enabling millions of pounds to be laundered at a time – and Britain’s notoriously lax rules on the disclosure of property ownership.
Any anonymous company in a secret location, such as the British Virgin Islands, can buy and sell houses in the UK with no disclosure of who the actual purchaser is. Meanwhile, TI said, estate agents only have to carry out anti-money-laundering checks on the person selling the property, leaving the buyers bringing their money into the country facing little, if any scrutiny. Anti-corruption activists including Boris Nemtsov, the Russian opposition figure murdered in Moscow last Friday, have repeatedly expressed frustration that the UK does so little to stem the flow of money stolen from their countries. Robert Barrington, executive director of TI, said: “This has a devastating effect on the countries from which the money has been stolen and it’s hard to see how welcoming the world’s corrupt elite is beneficial to communities in the UK.”
Why are we still discussing this? Is anyone denying it?
Yesterday, the Senate Banking Committee held the first of its hearings on widespread demands to reform the Federal Reserve to make it more transparent and accountable. Senator Elizabeth Warren put her finger on the pulse of the growing public outrage over how the Federal Reserve conducts much of its operations in secret and appears to frequently succumb to the desires of Wall Street to the detriment of the public interest. Warren addressed the secret loans that the Fed made to Wall Street during the financial crisis as follows:
“During the financial crisis, Congress bailed out the big banks with hundreds of billions of dollars in taxpayer money; and that’s a lot of money. But the biggest money for the biggest banks was never voted on by Congress. Instead, between 2007 and 2009, the Fed provided over $13 trillion in emergency lending to just a handful of large financial institutions. That’s nearly 20 times the amount authorized in the TARP bailout.
“Now, let’s be clear, those Fed loans were a bailout too. Nearly all the money went to too-big-to-fail institutions. For example, in one emergency lending program, the Fed put out $9 trillion and over two-thirds of the money went to just three institutions: Citigroup, Morgan Stanley and Merrill Lynch. “Those loans were made available at rock bottom interest rates – in many cases under 1%. And the loans could be continuously rolled over so they were effectively available for an average of about two years.”
One of the key reasons that the Fed wanted to keep this information buried from the public is that Citigroup was insolvent during the period it was receiving loans from the Fed. There is also growing distrust of how some Fed personnel appear to cozy up to Wall Street. During Federal Reserve Chair Janet Yellen’s appearance before the Senate Banking Committee a week earlier, Senator Warren severely criticized the actions of Scott Alvarez, the General Counsel of the Federal Reserve. Warren said Alvarez had delivered a speech before the American Bar Association challenging Dodd-Frank’s so-called push-out rule that would bar insured depository banks from holding dangerous derivatives and swaps on their books. Not long thereafter, Citigroup slipped a repeal of the provision into the must-pass spending bill that would keep the government running through this September.
“Zervos says of those who are late to change: ” They will be fleeced! They will be the sheep of Wall Street!”
David Zervos at Jefferies takes a look at negative yielding European sovereign debt in a note sent to clients today. In the note he asks what seems like an obvious question: “Who in their right mind would ever buy this many negative yielding bonds? Or, put another way, how can an investor look themselves in the mirror after a day of hard work buying bonds with a ‘guaranteed’ loss?” His answer to the question, and what that answer means, should be of great interest to investors in the euro zone. He blames the index-driven world in which many investors live. Managers follow benchmarks, set under ” longstanding rules which never anticipated negative nominal yields.” The answer for these managers is to change the rules or mandates of their funds to allow them to ignore the rules that are currently forcing them to guarantee a loss on the funds they manage.
Zervos then argues that this change will turbocharge the portfolio effect in the euro zone. When the highest-rated sovereign debt carries a negative yield, it is no longer a risk-free asset; it is a guaranteed loser. Investors will therefore move into risk assets (e.g. quities).
According to Zervos, this move will happen over the coming quarters rather than over a period of years, as happened in the US. Zervos’s comments come as investors look to the European Central Bank to start sovereign bond purchases after its meeting tomorrow. With already negative yields across much of northern Europe and Mario Draghi saying that the ECB would be happy to buy at negative yields, investors will be rushing to change their investment mandates. Zervos says of those who are late to change: ” They will be fleeced! They will be the sheep of Wall Street!”
Going going gone.
Brazil raised borrowing costs for a fourth straight meeting to the highest level in almost six years after monthly inflation jumped the most since 2003. The board, led by President Alexandre Tombini, maintained the pace of monetary policy tightening with a half-point increase to 12.75%, as expected by 59 of 63 economists surveyed by Bloomberg. Four analysts forecast a quarter-point increase. The vote was unanimous and took into consideration “the macroeconomic scenario and the inflation outlook,” according to the central bank statement. Pledging fiscal consolidation after a record budget deficit last year, President Dilma Rousseff’s new economic team, spearheaded by Finance Minister Joaquim Levy, is unwinding tax breaks and allowing government regulated prices to rise.
While the bank expected the fiscal adjustments to spur a brief pick-up in prices, the threat of faster inflation posed by the real’s plunge to a 10-year low gives the bank no flexibility to address Brazil’s looming recession, said Jankiel Santos, chief economist at BESI Brasil. “With the real at current levels, there’s nothing else the central bank could do, and there’s no good news on other fronts regarding inflation,” said Santos by telephone from Sao Paulo before the decision. Annual inflation accelerated to 7.36% in mid-February as prices surged 1.33% in the month. Policy makers in January raised their 2015 forecast for increases in regulated prices, such as energy, to 9.3% from 6%. They also saw gasoline prices soared 8% because of higher taxes.
Economists surveyed weekly by the central bank have increased their year-end inflation forecast to 7.47%, above the central bank’s target of 4.5%, plus or minus two%age points. Brazil last missed its target in 2003 when prices rose 9.3%. Policy makers’ concern over the pass-through effects of the real’s depreciation was probably key to the bank’s decision, Carlos Kawall, chief economist at Banco Safra, said by telephone. Since the bank’s January meeting, the real has declined 12.7% to extend its six-month slide against the dollar to 25%, the worst performance among the world’s 16-most traded currencies. The currency fell 1.6% Wednesday to 2.9798 per dollar from 2.9316 on Tuesday, its weakest level since 2004.
“..unlike back then when the dream of riches was from a public company, now its from a private company. And there in lies the rub.”
Ah the good old days. Stocks up $25, $50, $100 more in a single day. Day trading was all the rage. Anyone and everyone you talked to had a story about how they had made a ton of money on such and such a stock. In an hour. Stock trading millionaires were being minted by the week, if not sooner. You couldn’t go anywhere without people talking about the stock market. Everyone was in or new someone who was in. There were hundreds of companies that were coming public and could easily be bought and sold. You just pick a stock and buy it. Then you pray it goes up. Which most days it did. Then it ended. Slowly by surely the air came out of the bubble and the stock markets declined and declined till the air was completely gone.
The good news was that some people were able to see it coming and get out. The bad is that others were able to get out, but at significant losses. If we thought it was stupid to invest in public internet websites that had no chance of succeeding back then, it’s worse today. In a bubble there is always someone with a “great” idea pitching an investor the dream of a billion dollar payout with a comparison to an existing success story. In the tech bubble it was Broadcast.com, AOL, Netscape, etc. Today its, Uber, Twitter, Facebook, etc. To the investor, its the hope of a huge payout. But there is one critical difference. Back then the companies the general public was investing in were public companies.
They may have been horrible companies, but being public meant that investors had liquidity to sell their stocks. The bubble today comes from private investors who are investing in apps and small tech companies. Just like back then there were always people telling you their idea for a new website or about the public website they invested in, today people always have what essentially boils down to an app that they want you to invest in. But unlike back then when the dream of riches was from a public company, now its from a private company. And there in lies the rub. People we used to call individual or small investors, are now called Angels. Angels. Why do they call them Angels? Maybe because they grant wishes?
“It’s clear that the White House has been counting on a sharp deterioration in Russians’ standard of living, mass protests..”
Russia’s Security Council accused the U.S. of plotting to oust President Vladimir Putin by financing the opposition and encouraging mass demonstrations, less than a week after a protest leader was murdered near the Kremlin. The U.S. is funding Russian political groups under the guise of promoting civil society, just as in the “color revolutions” in the former Soviet Union and the Arab world, council chief Nikolai Patrushev said in an e-mailed statement Wednesday. At the same time, the U.S. is using the sanctions imposed over the conflict in Ukraine as a “pretext” to inflict economic pain and stoke discontent, he said. U.S. officials have dismissed the suggestion of a plot. Secretary of State John Kerry said this week that Putin “misinterprets a great deal of what the United States has been doing and has tried to do.”
Will Stevens, a spokesman for the U.S. Embassy in Moscow, said by e-mail that sanctions on Russia are aimed at seeking a change in the country’s policies, not its government. More than 50,000 people turned out in central Moscow on Sunday to mourn the death of Boris Nemtsov, a former deputy premier-turned Putin opponent who was gunned down in one of the most heavily guarded areas of the capital late Friday. That was the biggest rally Russia has seen since 2011-2012, when Putin was preparing to return to the presidency for a third term. “It’s clear that the White House has been counting on a sharp deterioration in Russians’ standard of living, mass protests,” Patrushev said. Russia can withstand the pressure, though, thanks to its resilience and “decades of experience in combating color revolutions,” he said. [..]
Patrushev, like Putin an ex-KGB officer and former head of the Federal Security Service, said the U.S. is also working to undermine governments in the Middle East, including by promoting extremism and supporting militant groups. While the U.S. is leading an international coalition to fight the Islamic State in Iraq and Syria, it appears to be slowing its efforts to destroy the terrorist group to avoid bolstering Russia’s biggest ally in the region, Syrian President Bashar al-Assad, Patrushev said. “Our trans-Atlantic partners have a clear goal to divide the Muslim world and to weaken Russia and China at the same time,” Patrushev said.
Why is this person still around?
Assistant secretary of state Victoria Nuland has admitted the US considers Russia’s actions in Ukraine “an invasion”, in what may be the first time a senior American official has used the term to describe a conflict that has killed more than 6,000 people. Speaking before the House committee on foreign affairs, Nuland was asked by representative Brian Higgins about Russia’s support of rebels in eastern Ukraine, through weapons, heavy armor, money and soldiers: “In practical terms does that constitute an invasion?” Nuland at first replied that “we have made clear that Russia is responsible for fielding this war,” until pressed by Higgins to answer “yes or no” whether it constitutes an invasion. “We have used that word in the past, yes,” Nuland said, apparently marking the first time a senior official has allowed the term in reference to Russia’s interference in eastern Ukraine, and not simply its continued occupation of the Crimean peninsula.
Obama administration officials across departments have strenuously avoided calling the conflict an invasion for months, instead performing verbal contortions to describe an “incursion”, “violation of territorial sovereignty” and an “escalation of aggression”. In November Vice-President Joe Biden, who has acted as one of Obama’s primary liaisons with the Ukrainian president, Petro Poroshenko, rapidly corrected himself after breaking from the White House’s careful language on CNN, saying “When the Russians invaded – crossed the border – into Ukraine, it was, ‘My god. It’s over.’” Barack Obama has so far declined to use the term, as have US ambassadors, the secretary of state, John Kerry, and EU leaders such as the German chancellor, Angela Merkel.
The leaders have probably avoided the word to prevent it from complicating already difficult diplomatic efforts, since it would probably exacerbate antagonistic rhetoric between the parties and diminish the Kremlin’s will to compromise. Samantha Power, US ambassador to the UN warned in August that continued Russian intervention would “viewed as an invasion”, but has not used the term since. Major James Brindle, a Pentagon spokesman, declined to characterize Russia’s actions as an invasion, using terms like “serious military escalation” and “blatant violation of international law”. “To be clear we care much less about what you call it, we’ve been focused on how to respond to it,” he said.
America lost its spine.
Oklahoma has been experiencing an earthquake boom in recent years. In 2014, the state had 585 quakes of at least magnitude 3. Up through 2008, it averaged only three quakes of that strength each year. Something odd is happening. But scientists at the Oklahoma Geological Survey have downplayed a possible connection between increasing fracking in the state and the increasing number of tremors. Even as other states (Ohio, for example) quickly put two and two together and shut down some drilling operations that were to blame, OGS scientists said that more research was needed before their state took similar steps.
Now, though, emails obtained by EnergyWire reporter Mike Soraghan reveal that the University of Oklahoma and its oil industry funders were putting pressure on OGS scientists to downplay the connection between earthquakes and the injection of fracking wastewater underground. In 2013, a preliminary OGS report noted possible correlation between the two, and OGS signed on to a statement by the U.S. Geological Survey that also noted such linkages. Soon after, OGS’s seismologist, Austin Holland, was summoned to meetings with the president of the university, where OGS is housed, and with executives of oil company Continental. Continental CEO Harold Hamm was a major university funder, while the university president David Boren serves on Continental’s board, for which he earned $272,700 in cash and stock in 2013. From EnergyWire:
“I have been asked to have ‘coffee’ with President Boren and Harold Hamm Wednesday,” [Holland] wrote in an Nov. 18, 2013, email to a co-worker. The significance was not lost on his colleague, OGS Public Information Coordinator Connie Smith. “Gosh,” Smith responded. “I guess that’s better than having Kool-Aid with them. I guess.” A meeting with such powerful figures in the state would be intimidating for a state employee such as Holland, said state Rep. Jason Murphey of Guthrie. “Wow. That’s a lot of pressure,” said Murphey, a Republican whose district has been rattled by numerous quakes. “That just sends chills up your spine if you’re from Oklahoma.”
Oklahoma geologist Bob Jackman, who has tried to get the word out about the connection between fracking and the quakes, recalls Holland saying last year that he couldn’t do the same. According to Jackman, Holland, when pressed, blurted out, “You don’t understand — Harold Hamm and others will not allow me to say certain things.”
The original headline said 10,000, but that’s a bit much in 2 days. Still, what a disgrace.
More than 1000 refugees have been saved in the Mediterranean north of Libya in the past two days but 10 people died at sea, Italian officials have said. A flotilla of rescue vessels, including from Italy’s coastguard and navy, and three cargo ships saved 941 people in seven separate operations on Tuesday. On Wednesday, the coastguard and two cargo ships rescued 94 migrants whose motorised dinghy was in distress 40 miles (65 km) north of Libya. Survivors were ferried to southern Italian ports. The migrants rescued on Tuesday had been aboard five motorised dinghies and two larger vessels. One of the larger boats capsized and 10 people were later found dead. For months now, hundreds – sometimes thousands – of migrants fleeing conflicts or poverty have been reaching Italy every week on smugglers’ boats from Libya.
Italy’s interior ministry said 7,882 migrants arrived in the first two months of this year, compared to 5,506 over the same time in 2014. A total of 170,000 migrants and asylum seekers were rescued at sea by Italy’s coast guard, navy and other vessels? including cargo ships last year. It is believed the tally will be higher this year. The coastguard said the migrants saved in the latest rescues claimed to be Syrians, Palestinians, Libyans, Tunisians and people from sub-Saharan Africa. More than 30 children were among those rescued. One of the 50 pregnant women aboard was urgently evacuated for medical treatment. A tug deployed at offshore oil platforms raised one of the first alarms before joining in the rescue operations about 50 miles north of Libya, the coast guard said.
For years, Italy has been appealing to the EU to help with ships, aircraft or funding. It points out that most of those rescued intend to reach relatives or jobs in other European countries. This year, an EU patrol mission known as Triton replaced Italy’s Mare Nostrum air and sea mission that had saved tens of thousands of lives. Triton patrols only EU national waters, while the Italians had carried out rescues off Libya’s coast, where many of the unseaworthy and overcrowded vessels founder. Italy says it won’t turn its back on those in danger. “Often the SOS call [arrives] when the migrant boats are outside the Italian rescue zone, 50 or 60 miles from the Libyan coast,” the coastguard commander Filippo Marini told the AP. International law obliges Italy to alert the coastal country with jurisdiction, he said, but calling on Libyan authorities would yield little help due to the country’s chaotic security situation.
“If there is no reaction or intervention for this country, we must rescue these people,” Marini said. The EU’s smaller-scale mission is fodder for rightwing Italian politicians, including Matteo Salvini, the leader of the anti-immigrant, anti-Europe Northern League party. “Ten more dead and 900 clandestine migrants ready to disembark,” Salvini said on Wednesday. “In Rome and in Brussels, there are full pockets and hands stained with blood.” The migrants’ traffickers are reportedly getting even more ruthless. An Italian child protection advocate, Carlotta Bellini of Save the Children, said migrants have recently reported that armed traffickers demanded they jump into the boat and depart even if weather is bad.
Italian lawmakers also demanded the EU do more. Khalid Chaouki, from premier Matteo Renzi’s Democratic party, lamented “this unexplainable European indifference”. In Brussels, the migration commissioner, Dimitris Avramopoulos, told reporters: “Now more than ever we need a comprehensive and long-term strategy.” He spoke after a commission orientation debate on the EU’s new migration policy. Italian officials have expressed concern that militants could mingle among migrants from Libya, where a group affiliating itself with Islamic State (Isis) has gained a foothold.