NPC Walker Hill Dairy, Washington, DC 1921
“..why the consumer has literally gone into hibernation..”
• The Shocker Crushing The Economy Revealed (Zero Hedge)
We are grateful to Alexander Giryavets at Dynamika Capital for pointing us to something which is far more troubling than even the Atlanta Fed’s collapse in Q1 GDP tracking: namely the latest Credit Managers Index for the month of March which “deteriorated significantly over the last two months and current readings stand at the recessionary levels not seen since 2008.” To be sure, we have previously shown the collapse in consumer debt as reported by the Fed, which as we noted, just suffered its worst month for revolving credit since December 2010 and explains “why the consumer has literally gone into hibernation – it has nothing to do with the weather, and everything to do with the unwillingness to “charge” purchases, which in turn is a clear glimpse into how the US consumer sees their financial and economic future.”
It turns out it may not have been just a matter of demand: apparently something very dramatic has been happening in February and especially in March. Instead of spoiling the punchline, we will leave it to the National Association of Credit Managers to explain what happened: From the latest NACM Credit Managers Index: We now know that the readings of last month were not a fluke or some temporary aberration that could be marked off as something related to the weather. There is quite obviously some serious financial stress manifesting in the data and this does not bode well for the growth of the economy going forward. These readings are as low as they have been since the recession started and to see everything start to get back on track would take a substantial reversal at this stage. The data from the CMI is not the only place where this distress is showing up, but thus far, it may be the most profound.
“..house prices are declining at 6% a year, compared with double digit growth a year ago..”
• China’s Economy: Hard Landing Or Welcome Rebalancing? (Guardian)
The worse-than-expected trade data from China on Monday was the latest evidence of the struggleBeijing faces in achieving a soft landing for the world’s second-largest economy. Before the Great Crash of 2008, China’s role as the world’s manufacturing powerhouse, shipping cut-price goods from shoes to smartphones out across the world, seemed like the economic equivalent of alchemy: turning the sweat and toil of hundreds of millions of workers into gold. But seven years later, with eurozone policymakers resorting to quantitative easing to kickstart demand, and US interest rates still at zero, being saddled with a growth model that relies on selling cheap products to the west no longer looks like such a winning strategy.
Global trade growth remains well below the levels that pre-crisis trends would have predicted. Beijing has made clear that after initially cushioning the slowdown with a massive fiscal stimulus, it is now aiming to engineer a shift to a more sustainable growth model, from a dependence on investment and exports towards consumption. On that basis, the sharp decline in exports is to be welcomed as a sign that the rebalancing is working. But some analysts believe it is the latest sign that something is badly amiss. Erik Britton, of City consultancy Fathom, says its analysis, based on rail freight, electricity production and bank lending, suggests growth is running at closer to 3% than the 7% or so suggested by official GDP data.
“China is in a hard landing now,” he says. “They have faced a situation where their previous growth model is not working.” He points out that house prices are declining at 6% a year, compared with double digit growth a year ago — similar to the kind of reversal that plunged the US into the sub-prime mortgage crisis. Furthermore, banks are saddled with non-performing loans and industries are struggling to tackle overcapacity. He believes China will eventually have to accept a drastic depreciation in the renminbi, of perhaps 25%, in order to regain competitiveness and prevent a crash.
“.. the proposed projects could end up “little more than a series of expensive boondoggles..”
• The Risks Behind China’s Silk Road Growth Gamble (CNBC)
China is betting on a massive infrastructure and cross-border trade initiative to cushion the economy as it transitions to a period of slower, more sustainable growth, but experts warn the program could do more harm than good. Years in the making, the ‘One Belt, One Road’ (OBOR) initiative is composed of two primary projects: the “Silk Road Economic Belt” and “21st Century Maritime Silk Road,” a network of road, rail and port routes that will connect China to Central Asia, South Asia, the Middle East, and Europe. President Xi Jinping hopes the plan will spur more regionally balanced growth as annual GDP hovers at a 24-year low. However, OBOR is unlikely to resolve Beijing’s long-term growth problem as it doesn’t address domestic consumption, noted Bank of America in a recent report.
“OBOR tries to export China’s savings and import foreign demand, so it represents a continuation of China’s old growth model (which had brought China to its current predicament in the first place),” it said. “We suspect that many local governments may leverage off OBOR for a new round of infrastructure spending…This, while helpful in holding up short-term investment, will delay the long overdue rebalancing toward consumption in China,” it added. Some of the countries participating in the OBOR scheme have large current account deficits and unfavorable economic fundamentals, making them high-risk borrowers, BoFAML pointed out. This means Beijing is taking on greater default risk by providing them with capital and financing projects in those nations.
“For example, China swaps renminbi for country Z’s currency at the current exchange rate. If country Z uses the funds to buy Chinese rail equipment and China doesn’t immediately spend currency Z to purchase goods from country Z, China would be exposed to the risk of partial default if currency Z depreciates,” the bank said. The Center for Strategic and International Studies (CSIS) agrees. In a note this week, it stated that borrowers’ failure to pay back loans, or businesses’ inability to recoup their investments could place additional stress on the Chinese economy. Beijing’s past difficulties investing in infrastructure abroad, especially through bilateral arrangements, suggest that the proposed projects could end up “little more than a series of expensive boondoggles,” CSIS remarked.
“The real challenge for this market is that it still has lots of supply coming..”
• Citi Analysts Call The ‘End Of The Iron Age’ (CNBC)
Oversupply and a lack of demand growth has led some market analysts to speculate that iron ore prices will never recover to former levels, and warn of a divergence in different base metals going forward. The price of iron ore is now just over $47 a ton, according to The Steel Index (TSI), which measures a benchmark of 62-percent ore. This is its lowest level since the TSI started compiling spot market prices in 2008, according to Reuters. On Monday, analysts at Citi slashed their forecasts for the price of the metal and now expect iron ore to average $45 a ton in 2015 and $40 a ton in 2016. These are downgrades of 23% and 36.6%, respectively. “We believe the upside in the sector is now capped, however the downside is being protected by dividend yield. We think it is going to be a tough 1-2 years for the mining sector until we clear surplus capacity in the bulk commodity prices,” Heath Jansen, metals and mining analyst at Citi, said in a note Monday morning.
Another analyst, Colin Hamilton, head of global commodities research at Macquarie, explained that iron prices needed to fall in lower in the short term to clear an oversupply that isn’t prevalent in other commodity markets. “The real challenge for this market is that it still has lots of supply coming,” Hamilton, who has also downgraded is forecasts for iron ore prices, told CNBC. Caroline Bain, senior commodities economist at Capital Economics, highlighted in a note last week that iron ore output grew by 9% in 2014, while copper mine supply grew by just over 1%. She added that low-cost iron ore producers in Australia and Brazil were continuing to ramp up output despite the fall in prices, and said she believed this would boost iron ore supply again this year.
“..If it’s fast, if it’s steep, there could be a big jump in the market.”
• Shale Oil Boom Could End in May After Price Collapse (Bloomberg)
The shale oil boom that pushed U.S. crude production to the highest level in four decades is grinding to a halt. Output from the prolific tight-rock formations such as North Dakota’s Bakken shale will decline 57,000 barrels a day in May, the Energy Information Administration said Monday. It’s the first time the agency has forecast a drop in output since it began issuing a monthly drilling productivity report in 2013. Deutsche Bank, Goldman Sachs and IHS have projected that U.S. oil production growth will end, at least temporarily, with futures near a six-year low. The plunge in prices has already forced half the country’s drilling rigs offline and wiped out thousands of jobs. The retreat in America’s oil boom is necessary to correct a supply glut and rebalance global oil markets, according to Goldman.
“We’re going off an inevitable cliff” because of the shrinking rig counts, Carl Larry, head of oil and gas for Frost & Sullivan LP, said by phone from Houston on Monday. “The question is how fast is the decline going to go. If it’s fast, if it’s steep, there could be a big jump in the market.” West Texas Intermediate crude for May delivery climbed 27 cents Monday to settle at $51.91 a barrel on the New York Mercantile Exchange. Prices are down 50% from a year ago. The decline in domestic production will come just as U.S. refineries start processing more oil following seasonal maintenance, easing the biggest glut since 1930. The withdrawal from U.S. oil stockpiles is expected to bring relief to a market that’s seen prices drop by more than $50 a barrel since June.
But the industry is going to say they already have it so hard..
• Scrap Fossil Fuel Subsidies, Bring In Carbon Tax – World Bank Chief (Guardian)
Poor countries are feeling “the boot of climate change on their neck”, the president of the World Bank has said, as he called for a carbon tax and the immediate scrapping of subsidies for fossil fuels to hold back global warming. Jim Yong Kim said awareness of the impact of extreme weather events that have been linked to rising temperatures was more marked in developing nations than in rich western countries, and backed for the adoption of a five-point plan to deliver low-carbon growth. Speaking to the Guardian ahead of this week’s half-yearly meeting of the World Bank in Washington DC, Kim said he had been impressed by the energy of the divestment campaigns on university campuses in the US, aimed at persuading investors to remove their funds from fossil fuel companies.
“We have a whole new generation that is interested in climate change”, he said as he predicted that putting taxes on the use of carbon would trigger a wave of clean technology which would lift people out of poverty in the developing world while preventing the global temperature from rising by more than 2C above pre-industrial levels. Kim said it was crazy that governments increased the use of coal, oil and gas by providing subsidies for consumers. He said that in low and middle-income countries, the richest 20% received six times as much from fossil fuel subsidies as the poorest 20%. He added: “We need to get rid of fossil fuel subsidies now.”
Kim insisted that the recent fall in energy prices meant there had never been a better time to reduce the payments made by governments to help people with their fuel bills. Politicians around the globe currently spend around $1tn (£680bn) a year subsidising fossil fuels, but Kim said: “Fossil fuel subsidies send out a terrible signal: burn more carbon.”
“.. the real enemy is the taxpayer..”
• The New Militarism: Who’s The Real Enemy? (Ron Paul)
Militarism and military spending are on the rise everywhere as the new Cold War propaganda seems to be paying off. The new “threats” that are being hyped bring big profits to military contractors and the network of think tanks they pay to produce pro-war propaganda. Here are just a few examples: The German government announced last week that it would purchase 100 more “Leopard” tanks — a 45-percent increase in the country’s inventory. Germany had greatly reduced its inventory of tanks as the end of the Cold War meant the end of any threat of a Soviet ground invasion of Europe. The German government now claims these 100 new tanks, which may cost nearly half a billion dollars, are necessary to respond to the new Russian assertiveness in the region. Never mind that Russia has neither invaded nor threatened any country in the region, much less a NATO member country.
The US Cold War-era nuclear bunker under Cheyenne Mountain, Colorado, which was all but shut down in the 25 years since the fall of the Berlin Wall, is being brought back to life. The Pentagon has committed nearly a billion dollars to upgrading the facility to its previous Cold War-level of operations. U.S. defense contractor Raytheon will be the prime beneficiary of this contract. Raytheon is a major financial sponsor of think tanks like the Institute for the Study of War, which continuously churn out pro-war propaganda. I am sure these big contracts are a good return on that investment.
NATO, which I believe should have been shut down after the Cold War ended, is also getting its own massively expensive upgrade. The Alliance commissioned a new headquarters building in Brussels, Belgium, in 2010, which is supposed to be completed in 2016. The building looks like a hideous claw, and the final cost — if it is ever finished — will be well over one billion dollars. That is more than twice what was originally budgeted. What a boondoggle! Is it any surprise that NATO bureaucrats and generals continuously try to terrify us with tales of the new Russian threat? They need to justify their expansion plans!
So who is the real enemy? The Russians? No, the real enemy is the taxpayer. The real enemy is the middle class and the productive sectors of the economy. We are the victims of this new runaway military spending. Every dollar or euro spent on a contrived threat is a dollar or euro taken out of the real economy and wasted on military Keynesianism. It is a dollar stolen from a small business owner that will not be invested in innovation, spent on research to combat disease, or even donated to charities that help the needy.
Europe will never be like the US.
• Optimising The Eurozone (Frances Coppola)
[..] there is evidently far greater convergence of unemployment rates in the USA than there is in the Eurozone. So if neither is an OCA, why would this be? There are a number of reasons.
Firstly, the USA is a federation. Each state has its own government, but there is also a fully functional fiscal authority at federal level with tax and spending powers. Automatic fiscal stabilisers – unemployment benefit and income taxes – are harmonised across the federation (states have their own unemployment insurance programmes, but these must comply with federal guidelines). There are also federal-level programmes for other major government expenditures such as pensions, education, healthcare and defence. In contrast, the Eurozone has no federal fiscal authority with tax and spending powers. Automatic stabilisers operate at state, not federal, level and there is little attempt to harmonise them – indeed attempts to harmonise tax rates are met with fierce resistance from member states. Similarly, budgets for pensions, education, healthcare and defence are set by the individual states without reference to each other, although Brussels now supervises member state budgets to ensure compliance with fiscal rules.
Secondly, the USA is a transfer union. Richer states support poorer ones by means of federal fiscal transfers. States can borrow on their own account, and they can – and do – go bankrupt. But because of federal programmes and fiscal transfers, living standards tend to be maintained even in states that completely foul up their budgets. In contrast, the Eurozone has little in the way of fiscal transfers: there is development aid to poorer regions, and systematic help for farmers in the Common Agricultural policy, but that’s about all. The lack of federal programmes and fiscal transfers means that living standards can fall catastrophically when states make a mess of their finances (see Greece) or suffer local economic shocks (see Cyprus), while lack of fiscal harmonisation coupled with free movement of capital means that states are vulnerable to “sudden stops” even if they are fiscally responsible (see Spain).
Thirdly, the USA has a monetary authority with a dual mandate. The Fed is responsible for maintaining both price stability and full employment. Consequently, high unemployment can be fought with monetary stimulus as well as fiscal measures. In contrast, the ECB is only responsible for price stability. Provided that inflation is under control, the ECB has no reason to do anything at all about high unemployment. Consequently, the ECB has maintained far tighter monetary conditions than the USA over the last few years despite considerably higher unemployment. This has seriously hampered the efforts of member states, particularly in the distressed periphery, to reduce unemployment.
Finally, the USA – although not an OCA – has a common language and free movement of people both in theory and practice (though parts of the USA can be unfriendly to migrants, as anyone who has read Steinbeck will know). The ease with which people can migrate within the US to find work is a primary cause of the convergent unemployment rates.
This was presented like some big news thing; it’s not.
• Greece Prepares For Debt Default If Talks With Creditors Fail (FT)
Greece is preparing to take the dramatic step of declaring a debt default unless it can reach a deal with its international creditors by the end of April, according to people briefed on the radical leftist government’s thinking. The government, which is rapidly running out of funds to pay public sector salaries and state pensions, has decided to withhold €2.5 billion of payments due to the IMF in May and June if no agreement is struck, they said. A Greek default would represent an unprecedented shock to Europe’s 16-year-old monetary union only five years after Greece received the first of two EU-IMF bailouts that amounted to a combined €245 billion. The warning of an imminent default could be a negotiating tactic, reflecting the government’s aim of extracting the easiest possible conditions from Greece’s creditors, but it nevertheless underlined the reality of fast-emptying state coffers.
Default is a prospect for which other European governments, irritated at what they see as the unprofessional negotiating tactics and confrontational rhetoric of the Greek government, have also begun to make contingency plans. In the short term, a default would almost certainly lead to the suspension of emergency European Central Bank liquidity assistance for the Greek financial sector, the closure of Greek banks, capital controls and wider economic instability. Although it would not automatically force Greece to drop out of the eurozone, a default would make it much harder for Alexis Tsipras, prime minister, to keep his country in the 19-nation area, a goal that was part of the platform on which he and his leftist Syriza party won election in January.
Germany and Greece’s other eurozone partners say they are confident that the currency area is strong enough to ride out the consequences of a Greek default, but some officials acknowledge it would be a plunge into the unknown. Greece’s finance ministry on Monday reaffirmed the government’s commitment to striking a deal with its creditors, saying: “We are continuing uninterruptedly the search for a mutually beneficial solution, in accordance with our electoral mandate.” In this spirit, Greece resumed technical negotiations with its creditors in Athens and Brussels on Monday on the fiscal measures, budget targets and privatisations without which the lenders say they will not release funds needed to pay imminent debt instalments.
The government is trying to find cash to pay €2.4 billion in pensions and civil service salaries this month. It is due to repay €203m to the IMF on May 1 and €770 million on May 12. Another €1.6 billion is due in June. The funding crisis has arisen partly because €7.2 billion in bailout money due to have been disbursed to Greece last year has been held back, amid disagreements between Athens and its European and IMF creditors over politically sensitive structural economic reforms.
“Whether or not the Greeks are deserving of assistance, it is in Europe’s interest to help them..”
• Why Europe Needs to Save Greece (Anders Borg)
The fundamental problem underlying Greece’s economic crisis is a Greek problem: the country’s deep-rooted unwillingness to modernize. Greece was subject to a long period of domination by the Ottoman Empire. Its entrenched political and economic networks are deeply corrupt. A meritocratic bureaucracy has not emerged. Even as trust in government institutions has eroded, a culture of dependency has taken hold. The Greeks, it can be argued, have not earned the right to be saved. And yet a Greek exit from the euro is not the best option for either Greece or for the European Union. Whether or not the Greeks are deserving of assistance, it is in Europe’s interest to help them. The OECD, the EC, the IMF, and the World Bank have emphasized, in report after report, the fundamental inability of Greece’s economy to produce long-term sustainable growth.
The country’s education system is sub-par and underfunded. Its investments in research and development are inadequate. Its export sector is small. Productivity growth has been slow. Greece’s heavy regulatory burden, well described by the World Bank’s indicators on the ease of doing business, represents a significant entry barrier in many sectors, effectively closing off entire industries and occupations to competition. As a result, Greece’s economy struggles to reallocate resources, including workers, given the rigidity of the labor market. After Greece was allowed to enter the eurozone, interest-rate convergence, combined with inflated property prices, fueled an increase in household debt and caused the construction sector to overheat, placing the economy on an unsustainable path.
In the years before the beginning of the financial crisis, current-account deficits and bubbly asset prices pushed annual GDP growth up to 4.3%. Meanwhile, public spending rose to Swedish levels, while tax revenues remained Mediterranean. In the eight years that I served on the EU’s Economic and Financial Affairs Council, I worked alongside seven Greek ministers, every one of whom at some point admitted that the country’s deficit numbers had to be revised upward. Each time, the minister insisted that it would never happen again. But it did. Indeed, the pre-crisis deficit for 2008 was eventually revised to 9.9% of GDP – more than 5% higher than the figure originally presented to the Council. And yet, as bad as Greece’s economy and political culture may be, the consequences of the country’s exit from the euro are simply too dire to consider. In the end, such an outcome would be the result of a political decision, and the European values at stake in that decision trump any economic considerations.
(Anders Borg, a former Swedish finance minister, is Chair of the World Economic Forum’s Global Financial System Initiative.)
“..when the Germans were there during the occupation in the Second World War, the people lived exactly like they are living now.”
• Greece, The Euro’s Greatest “Success” (Constantin Xekalos)
Greece is a social disaster zone. 3 million people are without guaranteed healthcare, 600,000 children are living under the breadline and more than half of them are unable to meet their daily nutritional needs. 90% of families living in the poorer areas rely on food banks and feeding schemes for survival, and unemployment is approaching 30%, with youth unemployment approaching 60%. These are not just numbers, they are real people. In order to show their faces and tell their stories, writer and documentary film maker from Crete and now living in Florence, Constantin Xekalos, decided to make a documentary film entitled: “Greece, the Euro’s greatest success “. In today’s Passaparola he talks about this documentary film and about the suffering of the Greek people that he has encountered in his personal experience. Today it is all happening, but is Italy next?
“Good day to everyone, my name is Constantin Xekalos. I was born in Crete many years ago. I now live in Florence and I will explain why I created this documentary that is doing the rounds on the Web, namely “ Greece, the Euro’s greatest success ” taken from Monti’s statements while he was Prime Minister. My decision was sparked by an Albanian family that was in serious difficulty and was going to Crete in November to pick olives with two tiny children in tow and facing serious financial difficulties. When I saw that the official media was never saying what they should be saying, I said to myself: “do something with your friends in order to report the reality of what Europe is doing”. I shared this idea of mine with a number of friends and bit by bit we formed a group of 5 people, then a sixth person joined us and we got going.
The healthcare tragedy in Greece When we made this documentary it was said that 1/3 of the Greek population, (more than 3 million people,) were without any guaranteed healthcare. In the interim that number has grown. They have been abandoned. If you go to a hospital, obviously a public one, they will treat you and they will accept you if it is an emergency, but if you are admitted, you then have to pay. If you are unable to pay, they send the bill to the Receiver of Revenue’s office and they take it from there. If you have no money, they start with foreclosure, even your home , even if it is your only home!
This is crime against society that is totally unacceptable. In an advanced and so-called democratic Country that is part of the western world, things like this are totally inconceivable, absurd and unacceptable. I repeat, this is crime against society that we absolutely cannot accept! If you are ill, democracy guarantees the treatment you need, otherwise it should be called by some other name. When a child is not guaranteed the nutrition he/she needs, a mere helpless child, or elderly people that are no longer able to look after themselves, then that is no longer democracy. Some of the older Greeks were telling me that when the Germans were there during the occupation in the Second World War, the people lived exactly like they are living now.
“..there’s no way students are going to pay it back..”
• Ackman Says Student Loans Are the Biggest Risk in the Credit Market (Bloomberg)
Bill Ackman says the biggest risk in the credit market is student loans. “If you think about the trillion dollars of student loans we have outstanding, there’s no way students are going to pay it back,” Ackman, who runs $20 billion Pershing Square Capital Management, said today at 13D Monitor’s Active-Passive Investor Summit in New York. The balance of student loans outstanding in the U.S. – also including private loans without government guarantees – swelled to $1.3 trillion as of the second quarter 2014, based on data released by the Federal Reserve in October. The rising level has prompted investors and government officials to draw parallels to the subprime mortgage market before housing collapsed starting in 2006.
About $100 billion of federal student loans are in default, 9% of outstanding balances, according to a Treasury Borrowing Advisory Committee update on student lending trends released in November. Ackman, 48, said “young people are the kind of people that protest” and predicted that one administration or another will forgive student debt. The investor, who last year trounced other money managers with a 40% gain in his public fund, said at the conference he doesn’t like fixed income markets generally because of very low U.S. interest rates and that investors should be wary of aggressive lending terms.
Not a main issue.
• Chavez’s Ghost Haunts Spanish Budget Rebels Podemos in Polls (Bloomberg)
After a meteoric rise before this year’s Spanish election, anti-austerity party Podemos is finding the past might now be catching up with the future. Leader Pablo Iglesias and senior party officials have been embroiled in allegations for the past three months over their ties to the former Venezuelan government of Hugo Chavez. Podemos’s support slipped for a third month to 22% in a Metroscopia poll published on Sunday from a peak of 28% in January. The controversy is forcing Iglesias, who says he worked as an adviser to the Venezuelan government before entering Spanish politics, to decide where he takes the party now.
Embracing the radical label, like his ally in Greece, Prime Minister Alexis Tsipras, may limit Podemos’s broader appeal, while reshaping the policy program toward the mainstream risks alienating some of the activists who’ve powered the party’s rise. “If you want to support Venezuela, it’s very difficult to reach the center of the political spectrum,” said Jose Ignacio Torreblanca, head of the Madrid office of the European Council on Foreign Relations. “The bigger issue is how this will affect Podemos’s grassroots support and its political affinities on its journey toward the center.” Opponents of Podemos including former Prime Minister Jose Maria Aznar said the links with the socialist Chavez undermine Spanish democracy.
YouTube videos of Podemos leaders extolling the virtues of Chavismo have spread across Spain, just as the economy in Venezuela gets hit by falling oil prices and the inflation rate edges toward 70%. Iglesias, his deputy, Inigo Errejon, and Juan Carlos Monedero, the party’s head of policy, studied revolutionary movements in Latin America as part of their academic work and went on to advise governments there, in particular Venezuela. Between 2006 and 2007, Iglesias worked for Chavez’s office in Caracas and led classes on “ideology and constitutional law,” according to his resume. Monedero also worked with Chavez, who died in 2013. Podemos denied reports that the party had received financing from Venezuela in a March 2 statement.
Europe’s going to wish Syriza were their biggest problem.
• Anti-Euro Finnish Party Gets Ready to Rule as Discontent Brews (Bloomberg)
The anti-euro The Finns party, which eight years ago got just 4% of the vote, is now dressing itself up for Cabinet seats as Finnish voters are set to oust the government after four years of economic failure. The Finns, whose support is based on equal parts of anti-euro, anti-immigrant and anti-establishment sentiment, have captured voters on the back of the euro-area’s economic crisis and a home-grown collapse of key industries. In the 2011 election, during the height of the euro crisis, it shocked the traditional parties by winning 19% of the vote. “We can’t be ignored, because a strong majority government won’t be possible without us,” Timo Soini, the party leader, said in a phone interview April 9.
Europeans are seeing their political landscape shifting with the emergence of non-establishment parties from Greece in the south to Finland in the north. In the Hellenic nation, anti-austerity Syriza grabbed power in January elections and in Spain, where an election is due this year, its ally Podemos has topped polls. Almost a third of voters expect The Finns party to be part of government, according to a March 13 survey by the Foundation for Municipal Development.
The country is struggling to emerge from a three-year recession after key industries such as its papermakers have buckled amid slumping demand and Nokia Oyj lost in the smartphone war, cutting thousands of jobs. The government has raised taxes and lowered spending, adding to unpopularity, and on top of that have been bailout costs for Greece and Portugal, among others, which have eroded finances for Finland, still top-rated at Fitch Ratings and Moody’s Investors Service. “Our stance will be very tight, no matter what,” Soini said. “Nothing is forcing Finland to participate in these bailout policies. If we don’t want to take part, we can refuse.”
Nice history lesson.
• The Power of Lies (Paul Craig Roberts)
It is one of history’s ironies that the Lincoln Memorial is a sacred space for the Civil Rights Movement and the site of Martin Luther King’s “I Have a Dream” speech. Lincoln did not think blacks were the equals of whites. Lincoln’s plan was to send the blacks in America back to Africa, and if he had not been assassinated, returning blacks to Africa would likely have been his post-war policy. As Thomas DiLorenzo and a number of non-court historians have conclusively established, Lincoln did not invade the Confederacy in order to free the slaves. The Emancipation Proclamation did not occur until 1863 when opposition in the North to the war was rising despite Lincoln’s police state measures to silence opponents and newspapers. The Emancipation Proclamation was a war measure issued under Lincoln’s war powers. The proclamation provided for the emancipated slaves to be enrolled in the Union army replenishing its losses.
It was also hoped that the proclamation would spread slave revolts in the South while southern white men were away at war and draw soldiers away from the fronts in order to protect their women and children. The intent was to hasten the defeat of the South before political opposition to Lincoln in the North grew stronger. The Lincoln Memorial was built not because Lincoln “freed the slaves,” but because Lincoln saved the empire. As the Savior of the Empire, had Lincoln not been assassinated, he could have become emperor for life.cAs Professor Thomas DiLorenzo writes: “Lincoln spent his entire political career attempting to use the powers of the state for the benefit of the moneyed corporate elite (the ‘one-percenters’ of his day), first in Illinois, and then in the North in general, through protectionist tariffs, corporate welfare for road, canal, and railroad corporations, and a national bank controlled by politicians like himself to fund it all.”
Lincoln was a man of empire. As soon as the South was conquered, ravaged, and looted, his collection of war criminal generals, such as Sherman and Sheridan, set about exterminating the Plains Indians in one of the worst acts of genocide in human history. Even today Israeli Zionists point to Washington’s extermination of the Plains Indians as the model for Israel’s theft of Palestine. The War of Northern Aggression was about tariffs and northern economic imperialism. The North was protectionist. The South was free trade. The North wanted to finance its economic development by forcing the South to pay higher prices for manufactured goods. The North passed the Morrill Tariff which more than doubled the tariff rate to 32.6% and provided for a further hike to 47%. The tariff diverted the South’s profits on its agricultural exports to the coffers of Northern industrialists and manufacturers. The tariff was designed to redirect the South’s expenditures on manufactured goods from England to the higher cost goods produced in the North.
Hillary and the Three Stooges.
[..] what does the flight of Hillary say about party politics in this land? That a more corrupt and sclerotic dominion has hardly been glimpsed since the last Bourbons cavorted in the halls of Versailles? Hence, my view that America will witness a very peculiar spectacle leading up to and perhaps beyond the 2016 election: the disintegration of seeming normality against a background of mounting disorder and insurrection. Hillary will go on caw-cawing platitudes about togetherness, diversity, and recovery while the economy sinks to new extremes of unravelment, and the anger of a swindled people finally boils over.
Neither party shows even minimal competence for understanding the actual crises facing this land, and indeed the project of techno-industrial civilization itself. If the people don’t overthrow them, and grind their pretenses underfoot, then events surely will. In the trying months leading up to the presidential election of 2016, Americans will witness the death of their “energy independence” fantasy — actually a meme concocted by professional propagandists. The shale oil “miracle” will go up in a vapor of defaulting junk bonds. Violence will escalate through North Africa and the Middle East, threatening the world oil supply more generally. I would give a low-percentage chance of survival to King Salman of Saudi Arabia, and to the Saud part of Arabia more particularly as civil war among the rival clans breaks out there, with an overlay of Islamic State mischief seeding even greater chaos, and the very likely prospect of sabotage to the gigantic oil terminal at Ras Tanura on the Persian Gulf.
In comparison, the fiasco of Benghazi will look like a mere Three Stooges episode. If a third party were to arise in all this turmoil, it might not be savior brigade, either. In 1856 the Republicans welled up as the Whigs expired in sheer purposelessness and the Democrats romanced slavery. The nation had to endure the greatest convulsion in its lifetime to get to the other side of that. This time, I’m not at all sure we’ll get to the other side in one piece.
Greenpeace’s crisis is its corporate culture.
• Greenpeace’s Midlife Crisis (Bloomberg)
Greenpeace’s account of its mission to board and occupy an enormous oil-drilling rig in the middle of the Pacific evoked a familiar image of daring environmental activists confronting determined opposition from a corporate titan. The six people who used ropes and harnesses last week to scale the Royal Dutch Shell rig from inflatable rafts dodged “jets of water from high-powered hoses aimed at them by the rig’s crew.” There was only one problem: The encounter involved no hoses. In fact, as a later clarification from Greenpeace made clear, the activists met no resistance at all. It was a small but telling slip-up for Greenpeace, which has been mired in an internal debate over how far to go to capture the public’s attention at a time when its traditional stunts often seem familiar.
Many corporate targets are now savvy enough to avoid the confrontations that hand Greenpeace camera-ready scenes to generate publicity and support. “It’s no longer maybe the mind-blowing tactics that it was in the ’70s or ’80s to go out and take some pictures,” says Laura Kenyon, a Greenpeace campaigner who participated in the latest effort to shadow the Artic-bound Shell rig across the Pacific. “People now expect things from Greenpeace.” It seems scaling a moving oil rig in the middle of an ocean isn’t enough to guarantee attention. The activists managed to spend almost a week aboard Shell’s Polar Pioneer before departing over the weekend. In that time Kenyon’s colleagues set up camp, unfurled a “Save the Arctic” banner, and shot videos of themselves. Shell made no physical attempt to dislodge the Greenpeace team—some crew members could be seen waving to them.
Shell sought a restraining order to keep the activists away, and a federal judge in Alaska granted the measure on April 11. Procter & Gamble was similarly unruffled last year when a Greenpeace team, including one in a tiger suit, used zip lines to hang a banner between two of the company’s Cincinnati office towers in a bid to draw attention to the use of palm oil from rain forests in shampoos. A local police officer rapped on a window and calmly asked the activists when they would be done. Later, in a sign of just how far corporate targets can take nonconfrontational tactics, P&G even persuaded prosecutors to reduce the charges against the activists from felony vandalism and burglary to misdemeanor trespassing.
Highly debatable. Why should they water lawns in the first place? Why have lawns? It’s not as if they’re living in (New) England.
• The Real Reason Californians Can’t Water Their Lawns (Bloomberg)
In response to the ongoing drought, California Governor Jerry Brown has set limits on urban water use—ordering cuts of as much as 25%. Cities across the state will stop watering highway median strips and rip up grass in public places. Golf courses and cemeteries will turn on the sprinklers less frequently, and water rates might rise. In many ways, this is an odd response to a water problem that’s largely about agriculture. But in that, California is a microcosm of an increasing proportion of the world: underpriced water used mainly for agriculture driving shortages that have nasty side effects on urban areas. The difference between California and the world’s poorest regions is that the side effects aren’t browning fairways but diarrhea, dehydration, and tens of thousands of deaths. California has plenty of water for the people who live there—it’s the crops and gardens that are the problem.
Agriculture accounts for about 80% of the state’s water use. The state’s urban residents consume an average of 178 gallons of water per day, compared with 78 gallons in New York City, in large part because of how much they spray on the ground: Half of California’s urban consumption is for landscaping. The big problem with the 90% of California’s water used on soil is that it’s frequently provided below cost and according to an arcane distribution formula. Angelenos do pay more for their water than New Yorkers—at 150 gallons per person per day, a recent water pricing survey suggests they would pay $99 a month for a family of four, compared with $63 in New York. But they’d use less on the garden if water were priced to reflect long-term cost.
And thanks to a skewed system of water rights and underpricing, many of California’s farms are idling land while others are devoted to water-hungry crops like almonds, using wasteful systems. A little under one-half of California farms still use inefficient forms of flood irrigation. The struggle California faces is increasingly common around the world. By 2030, without greater water efficiency, as much as a third of the world’s population will live in areas where water needs will be as much as 50% above accessible, reliable supply. Fixing the problem isn’t that complex: A McKinsey study of water use in India, for example, suggests that about a third of the gap between 2030 water demand and current supply in that country could be met by measures that actually save money—steps like avoiding over-irrigation and introducing no-till farming. The most expensive of measures required would involve costs below one cent per hundred gallons of water. The impact on food costs would be marginal.
And 1,300 more just yesterday.
• Italy Rescues Nearly 6,000 Migrants In A Single Weekend (Guardian)
Italy’s coastguard and navy have rescued nearly 6,000 migrants since Friday, as warm weather and improving sea conditions prompted an even higher number of boats than usual to set off from north Africa. Rescue operations are still under way and at least nine migrants have died after their boat capsized about 80 miles off the coast of Libya, according to reports on Monday morning. About 144 people were saved in that operation. Concerns have already been raised about the logic and morality of Europe’s decision to cut back maritime rescue operations in the Mediterranean last autumn. The EU is expected to announce a review of its policies in early May. The new arrivals bring the total number of migrants who have entered Italy to more than 15,000 since the start of the year, according to the International Organisation for Migration (IOM), which tracks the figures closely.
It was the second weekend in a row in which huge numbers of migrants were rescued crossing the Sicilian channel. The majority of the operations this month have been performed by the Italian coastguard and navy and some commercial ships in international waters, rather than the European-backed Triton mission that patrols waters within 30 miles of the Italian coast. Triton replaced a far more ambitious programme conducted by Italy, the Mare Nostrum mission, at the end of last year. Mare Nostrum was a one-year programme that cost Italy about €9m a month, compared with Triton’s budget of €2.9m, and carried out search and rescue missions over a 27,000 square-mile area. Refugee advocate groups have pointed to this year’s migrant death toll of about 480, compared with 50 at the same time last year, as a sign of Triton’s inability to cope with the scale of the migration crisis.
Home › Forums › Debt Rattle April 14 2015