George N. Barnard Atlanta, Georgia. View on Marietta Street 1864
Well done, America.
America’s wealth grew by 60% in the past six years, by over $30 trillion. In approximately the same time, the number of homeless children has also grown by 60%. Financier and CEO Peter Schiff said, “People don’t go hungry in a capitalist economy.” The 16 million kids on food stamps know what it’s like to go hungry. Perhaps, some in Congress would say, those children should be working. “There is no such thing as a free lunch,” insisted Georgia Representative Jack Kingston, even for schoolkids, who should be required to “sweep the floor of the cafeteria” (as they actually do at a charter school in Texas). The callousness of U.S. political and business leaders is disturbing, shocking. Hunger is just one of the problems of our children. Teacher Sonya Romero-Smith told about the two little homeless girls she adopted: “Getting rid of bedbugs, that took us a while. Night terrors, that took a little while. Hoarding food..”
America is a ‘Leader’ in Child Poverty The U.S. has one of the highest relative child poverty rates in the developed world. As UNICEF reports, “[Children’s] material well-being is highest in the Netherlands and in the four Nordic countries and lowest in Latvia, Lithuania, Romania and the United States.” Over half of public school students are poor enough to qualify for lunch subsidies, and almost half of black children under the age of six are living in poverty.
$5 a Day for Food, But Congress Thought it was Too Much. Nearly half of all food stamp recipients are children, and they averaged about $5 a day for their meals before the 2014 farm bill cut $8.6 billion (over the next ten years) from the food stamp program. In 2007 about 12 of every 100 kids were on food stamps. Today it’s 20 of every 100.
For Every 2 Homeless Children in 2006, There Are Now 3 On a typical frigid night in January, 138,000 children, according to the U.S. Department of Housing, were without a place to call home. That’s about the same number of households that have each increased their wealth by $10 million per year since the recession.
The US: Near the Bottom in Education, and Sinking The U.S. ranks near the bottom of the developed world in the percentage of 4-year-olds in early childhood education. Early education should be a primary goal for the future, as numerous studies have shown that pre-school helps all children to achieve more and earn more through adulthood, with the most disadvantaged benefiting the most. But we’re going in the opposite direction. Head Start was recently hit with the worst cutbacks in its history.
Children’s Rights? Not in the U.S. It’s hard to comprehend the thinking of people who cut funding for homeless and hungry children. It may be delusion about trickle-down, it may be indifference to poverty, it may be resentment toward people unable to “make it on their own.” The indifference and resentment and disdain for society reach around the globe. Only two nations still refuse to ratify the UN Convention on the Rights of the Child: South Sudan and the United States. When President Obama said, “I believe America is exceptional,” he was close to the truth, in a way he and his wealthy friends would never admit.
Hunt’s a smart dude.
Global debt has expanded by $35 trillion since the credit crisis and as Lacy Hunt exclaims, “that’s a net negative, debt is an increase in current consumption in exchange for a decline in future spending and we are not going to solve this problem by taking on more and more debt.” Santelli notes that debt will actually keep growth “squashed down” and points out the low rates in Europe questioning the ability of The ECB’s actions to save the economy which Hunt confirms as “longer-term rates are excellent economic indicators” and that is not a good sign for Europe. “This process is far from over,” Hunt concludes, “rates will move irregularly lower and will remain depressed for several years.” Santelli sums up perfectly, “we’re all frogs in boiling water,” as we await the consequences of central planning.
“The laws of the global economy should be written by the United States and not by the likes of China..”
The laws of the global economy should be written by the United States and not by the likes of China according to President Obama, as concern over China’s influence is growing. Washington hopes a Pacific free trade pact will curb Beijing’s investment bank. “When 95% of our potential customers live abroad, we must be sure that we are writing the rules for the global economy, not a country like China,” Obama said in his special message to Congress on Thursday, RIA reports. The statement comes after an agreement by US lawmakers to fast-track international trade bills earlier on Thursday. The White House is now looking forward to completing the Trans-Pacific Partnership agreement this year to remove trade barriers between the participating nations which account for 40% of the global economy and more than a third of global trade.
“Our exports support more than eleven million jobs, and we know that exporting companies pay higher wages than others. Today we have the opportunity to open even more new markets to goods and services backed by three proud words: Made in America,” Obama added. Meanwhile, the US and Japan are the largest economies in the 12 Pacific nations bloc and view it as a strategic economic partnership. The two countries have been voicing concerns over China’s increasing influence in Asia and did not join the Chinese Investment bank (AIIB). The AIIB is expected to challenge the Washington-based World Bank and rival Japan’s Asian Development Bank. It currently has 57 countries from 5 continents as founding members including the biggest European nations. International trade and investment institutions are the latest contest issues between Beijing and the Washington-Tokyo alliance for influence in Asia.
They want to keep them aboard as feudal servants?!
Greece’s major creditors are not ready to let the country drop out of the euro as long as Prime Minister Alexis Tsipras shows willingness to meet at least some key demands, according to two people familiar with the discussions. Chancellor Angela Merkel will go a long way to prevent a Greek exit from the single currency, though only so far, one of the people said. Every possibility is being considered in Berlin to pull Greece back from the brink and keep it in the 19-nation euro, the person said. For all the foot-dragging in Athens, some creditors are willing to show Greece more flexibility in negotiations over its finances to prevent a euro exit, the second person said. The red line is that the Syriza-led government shows readiness to commit to at least some economic reform measures, said both people, who asked not to be named discussing strategy.
“Our view is that Greece is not going to exit the euro,” Stephen Macklow-Smith at JPMorgan Asset Management in London, said in a Bloomberg Television interview on Friday. While both sides have “very entrenched positions” in the negotiations, “if you look at the way the euro-zone crisis has developed, in every case what you’ve seen is in return for firm action you get concessions.” The brinkmanship has sent Greek government bonds heading toward their worst week since Tsipras’s election in January at the head of an anti-austerity coalition. While the public rhetoric has escalated amid a standoff over releasing the last tranche of aid, creditors are willing to cut Greece some slack, the second person said.
Euro-area finance ministers are next due to discuss progress on Greece at their meeting on April 24 in the Latvian capital, Riga. Greece’s government remains confident an interim agreement with its creditors allowing disbursement of bailout funds can be reached by the end of April, a Greek official told reporters in Athens on Friday. “We’re of the view that Greece will hold to the commitments it made to the institutions,” Georg Streiter, Merkel’s deputy spokesman, said when asked about the chancellor’s stance. A deal won’t be ready by April 24 and could come together in the following weeks, Dutch Finance Minister and Eurogroup President Jeroen Dijsselbloem told reporters in Washington. “I don’t believe in this game-of-chicken rubbish,” Dijsselbloem said. “We don’t know what the risks are.”
“If they don’t want to pay what are you going to do, invade and hang them all up?”
Greece is bankrupt and should default, well-known investor Marc Faber told CNBC Friday, arguing that a “geopolitical game of chess” was being played out in the region. The comments by Faber, the editor of the “Gloom, Boom & Doom Report,” came at a time of heightened tensions between Greece and its international creditors. The organizations overseeing the country’s two international bailouts – worth a combined €240 billion – have said the country will not receive a last tranche of aid, worth 7.2 billion euros, until it makes far-reaching reforms. But Faber, a bearish investor known as “Dr. Doom,” said the country’s fiscal situation was unsalvageable. “Even if Greece grows at 10%per annum for the next ten years, it will not be able to pay its debts back,” he told CNBC.
“It’s bankrupt. We better face the reality and not kick the can the can down the road. Greece should default.” Faber said that while Greece could leave the euro zone and adopt a parallel currency, there that geopolitics were coming in to play and there was no appetite in Europe to let the country exit from the single currency bloc. “I personally think it’s not so much of an economic issue as a political issue,” he told CNBC Europe’s “Squawk Box.” “Europe, and in particular NATO and the U.S. do not want Greece to leave (the euro zone) because if they do, other people are going to knock on Greece’s door – like the Russians or the Chinese maybe. It’s very much a geopolitical game of chess that’s being played.” Greece and its creditors disagree on which reforms should be implemented, however, and as such the much-needed aid remains under lock and key.
T his has prompted speculation that the country could soon run out of money and default on its forthcoming debt repayments to the IMF and ECB, which could, in turn, result in the country leaving the euro zone. Greece denies this is the case and ECB President Mario Draghi said earlier this week that he has not even considered a default. On Friday, Greek Finance Minister Yanis Varoufakis will meet Draghi and IMF officials in Washington. The ECB stands to lose a lot if Greece does default, Faber argued, and thus Greece was in strong position to negotiate better terms for its bailout program and debt repayments. “I think that the ECB and European banks will have to take huge losses on their loans to Greece and bond purchases they have made (if it defaults),” he said. “I think Greece is in a very strong negotiating position. If they don’t want to pay what are you going to do, invade and hang them all up?”
Blanchflower can’t stop laughing about the whole thing.
Dartmouth College’s Danny Blanchflower discusses the Greek debt crisis with Bloomberg’s Pimm Fox on “Taking Stock.”
“We’re not actually in a rules based world here, we’re in a politically determined one. If the other eurozone members think that keeping Greece solvent , in the euro and functioning is sufficiently important then they will do that.”
It’s long been true that welshing on debts to the IMF is just something that a civilised country just doesn t do. Thus there’s little surprise when Christine Lagarde, the head of the IMF, points out to Greece that there’s really no mileage in that country thinking about not paying the IMF back the money it s owed. Because, you know, that s just not something that civilised countries do. There is however a sting in the tail here. For there’s no formal method of dunning a country that does fail to repay the IMF on time. It takes at least a month after the payment doesn t appear for the IMF to go through its own internal reporting processes and then another couple of weeks for it to declare actual default.
And there’s politics in there as well: they can, quite happily, say that, well, they re trying to pay, they ve paid a bit perhaps, so we ll not actually say that they are in default. The point being that the rules aren’t hard and fast. What really matters is what other people think of a skipped IMF payment and here it’s the ECB that is most important. Here’s Lagarde:
IMF Managing Director Christine Lagarde warned that she wouldn’t let Greece skip a debt payment to the lender, shutting down a potential avenue to buy the Greek government some financial leeway. We never had an advanced economy actually asking for that kind of thing, delayed payment, Lagarde said in an interview Thursday in Washington with Bloomberg Television. And I very much hope that this is not the case with Greece. I would certainly, for myself, not support it.
It’s almost ritualistic, her saying that of course. But that it has been said does bind in a way future actions. Having gone public with said statement then the IMF can’t really turn around and say Well, it doesn’t matter if Greece is late with a payment.
Christine Lagarde, the head of the International Monetary Fund, said the IMF is worried about the liquidity situation in Greece but made it clear that the institution would not give the country any leeway on ¨ 1bn of debt repayments coming due in early May.
This is almost like the Kremlinology of old of course, looking for the runes in such remarks, but by the standards of these things it’s a fairly firm statement. But it’s really the ECB that matters here. Assume that Greece did delay the IMF payment (as one minister has said they would, if faced with a choice of paying the bank or paying the country s pensions). Not a great deal would happen immediately as a direct result. What would actually matter is what the ECB did:
With Greek sovereign yields blowing wider on Thursday (and pretty much staying there), it s worth revisiting what exactly might happen if, say, May 1 arrives and Greece fails to pay the €200m due to the IMF that day. Received wisdom has it that the ECB will withdraw the ELA emergency liquidity assistance currently propping up the Greek banking system, which will promptly collapse; Tsipras and Co would then be forced to bring back the Drachma (or similar) and Greece would exit the eurozone. But what do the rules here say?
Well, actually, the rules are written in such a flaccid manner that the ECB could do anything it liked. They could conclude that it’s temporary, no biggie, and keep supporting the Greek banks. Or they could conclude that it’s not, it is a biggie, and close them down and thus force default and Grexit. But the point is that a putative default to the IMF doesn’t really change that situation. Because the rules are sufficiently flaccid that pretty much anything can be interpreted as being a reason to withdraw EULA support: or nothing. We’re not actually in a rules based world here, we re in a politically determined one. If the other eurozone members think that keeping Greece solvent , in the euro and functioning is sufficiently important then they will do that. If they don’t they won’t: there’s really no rules here that can insist that they go either way.
“This quarantine was deemed necessary after the aggressive rhetoric of the new Greek government..”
Neighboring countries have effectively quarantined Greece in a bid to minimize the consequences on their credit systems in case of a Greek “accident.” Kathimerini understands that the central banks of Albania, Bulgaria, Cyprus, Romania, Serbia, Turkey and the Former Yugoslav Republic of Macedonia have all forced the subsidiaries of Greek banks operating in those countries to bring their exposure to Greek risk (bonds, treasury bills, deposits to Greek banks, loans etc.) down to zero in order to shield themselves and minimize the danger of contagion in case the negotiations between the Greek government and the eurozone do not bear fruit. This quarantine was deemed necessary after the aggressive rhetoric of the new Greek government – particularly in the first few weeks after the election – regarding a debt restructuring, the non-completion of the creditors’ assessment and so on.
Special care was taken for the subsidiaries of Greek lenders, which have a major presence in neighboring states, to make sure that they would not proceed to new positions in Greek bonds, T-bills, deposits in Greek banks or interbank funding. The Greek government recently put press pressure on banks to think how they could get around the ECB’s ban on the acquisition of more T-bills. Another concern for local bank groups is the threat of a reduction in the Greek element of their subsidiaries in neighboring countries in case of turmoil in Greece. Don’t forget that the Cypriot-owned bank branches in Greece changed hands virtually overnight in March 2013 during the Cyprus bank bail-in process.
“But we are not going to end up ‘being’ compromised. This not what we were elected for.”
US President Barack Obama spoke with Greek Finance Minister Yanis Varoufakis on the sidelines of an event at the White House honoring Greece’s Independence Day with the former stressing the need for flexibility from all sides in ongoing reform negotiations between Greece and its creditors, according to sources. The conversation between Obama and Varoufakis lasted for around 12 minutes, according to sources who said Varoufakis asked Obama to keep pressing European leaders so that a solution is found to Greece’s problem. Varoufakis agreed with Obama that all sides need to show flexibility and also highlighted the need to remain focused on the goal and on the process that Greece is involved in with its creditors. The event at the White House was also attended by US Vice President Joe Biden and Greek Archbishop Demetrios.
Varoufakis is to meet on Friday with US Treasury Secretary Jack Lew at 10.30 p.m. Greek time following a scheduled meeting at 6 p.m. with European Central Bank President Mario Draghi. On Thursday, in a speech at the Brookings Institution, Varoufakis underlined the difficulties in Greek negotiations with its creditors but said Greece was more keen than anyone for a deal to be reached. Nevertheless, Greece will not approve more austerity, he said. “We will not sign up to targets we know our economy cannot meet by means of policies that our partners should not wish to impose,” he said. “We will compromise, we will compromise and we will compromise in order to come to a speedy agreement. But we are not going to end up ‘being’ compromised. This not what we were elected for.”
“..the reforms being demanded from Athens in exchange for a vital €7.2bn in rescue funds should be simplified and slimmed down.”
The IMF has urged EU negotiators to slim down their list of demands in debt talks with Greece amid fears that time is running out to reach a deal. The intervention by one of the country’s three main lenders came as the UK chancellor, George Osborne, said the impasse posed the biggest immediate threat to the global economy. Poul Thomsen, head of the IMF’s European department, said the reforms being demanded from Athens in exchange for a vital €7.2bn (£5.2bn) in rescue funds should be simplified and slimmed down. European finance ministers and senior officials have warned that Greece is running out of time to secure the payment and avert a disorderly exit from the eurozone. Osborne said the situation in Greece was “the most worrying for the global economy”.
Speaking at the IMF’s spring meeting in Washington,he said discussions about Greece had “pervaded every meeting” and that “the mood is notably more gloomy than at the last international gathering”. He added: “It’s clear now to me that a misstep or a miscalculation on either side could easily return European economies to the kind of perilous situation we saw three to four years ago.” Osborne’s German counterpart, Wolfgang Schäuble, repeated his criticism of the radical left Syriza government’s negotiating tactics and warned that it was harming the economy. He said Greece was in a “very difficult situation” after Syriza demanded a new deal with its creditors – the IMF, the EU and the ECB – which had delayed reforms and hit the country’s already struggling economy.
Schäuble said it was unlikely that next week’s deadline for Athens to submit reform proposals would be met. The reforms are scheduled to be discussed at a meeting of eurozone finance ministers in Riga, Latvia next Friday, followed by a further gathering in Brussels on 11 May that is being seen as the crunch point for Athens. Greece is scheduled to make a €747m repayment to the IMF on 12 May and there are fears that Athens will be unable to meet the deadline as cash runs out of state and domestic bank coffers.
“..the so-called adverse scenarios group.”
The ECB has analysed a scenario in which Greece runs out of money and starts paying civil servants with IOUs, creating a virtual second currency within the euro bloc, people with knowledge of the exercise told Reuters. Greece is close to having to repay the IMF about €1 billion in May and officials at the ECB are growing concerned. Although the Greek government has repeatedly said that it wants to honour its debts, officials at the ECB are considering the possibility that it may not, in work undertaken by the so-called adverse scenarios group. Any default by Greece would force the ECB to act and possibly restrict Greek banks’ crucial access to emergency liquidity funding.
Officials fear however that such action could push cash-strapped Athens into paying civil servants in IOUs in order to avoid using up scarce euros. “The fact is we are not seeing any progress… So we have to look at these scenarios,” said one person with knowledge of the matter. A spokesman for the ECB said it “does not engage in speculation about how specific scenarios regarding Greece could unfold.” One Greek government official, who declined to be named, said there was no need to examine such a scenario because Athens was optimistic it would reach a deal with its international lenders by the end of the month. Greece has dismissed a recent report suggesting it would need to tap all its remaining cash reserves across the public sector, a total of €2 billion, to pay civil service wages and pensions at the end of the month.
“But if Greece leaves, all bets are off.”
The conundrum that Greece presents for most investors is simple, but troubling. It is either mostly irrelevant, or one of the biggest threats to markets this year. The war of words over Greece and its attempts to strike a deal with its partners in recent days has deepened. German Finance Minister Wolfgang Schäuble warned that time was “running out” for Greece to strike an accord over its bailout program. European Commission Vice President Valdis Dombrovskis said talks were nowhere near the point where money could be disbursed. And IMF Managing Director Christine Lagarde on Thursday advised Greece to “get on” with fixing the economy. Greece has so far kept up with debt service, and retained access to very short-term market funding. But some very chunky payments come due in the summer months.
Standard & Poor’s this week cut Greece’s rating to triple-C-plus, warning that without deep reforms or further relief, Greece’s obligations would become unsustainable. Fears of a eurozone exit are building again. Financial markets are beginning to feel the jitters. Thursday, Greek bonds fell sharply, with two-year yields rising above 26%. Yields on Italian, Spanish and Portuguese bonds rose, widening the gap with Northern Europe. German bond yields fell to record lows, partly due to the European Central Bank’s bond-buying program, but partly due to nerves about Greece. As long as Greece stays in the eurozone, most investors can afford to pay it little attention. It accounts for just 1.8% of the currency bloc’s economic output.
The lowly rating on Greece’s bonds means they are off-limits for most funds; the volatility of Greek stocks will have deterred others from dipping into the market. The bigger factors affecting markets have been the ECB’s actions, the pickup in eurozone economic data, and the moves in currency markets. But if Greece leaves, all bets are off. The initial impact is probably containable, again due to Greece’s relatively small size economically. The ECB’s bond-purchase program should help stem financial-market contagion. But the second-round effects and political fallout are unknowable. UBS’s economists, for instance, warn that the apparent lack of bond-market concern over Greece is an unreliable indicator of calm; they argue that the real risk would come from bank runs in other highly-indebted countries. Undoubtedly, the remaining members of the eurozone would seek to circle the wagons and declare Greece unique once more, but the credibility of that effort might fall short.
How to destroy an economy. “God help New Zealand.”
A three-bedroom North Shore “do-up” has earned its owner nearly $1000 a day – just shy of the salary of a High Court judge – in Auckland’s red-hot property market. A Weekend Herald investigation into soaring house prices comes amid warnings from the Reserve Bank about the housing market and calls for immediate action by the country’s chief human rights watchdog. Stuart Duncan sold his 1982 fibre-cement home at 116 Oaktree Ave in Browns Bay in November 2013 for $751,000. Now the new owners have on-sold for $1,205,000 – despite doing little work on the property – giving them a 16-month profit of $454,000 – about $940 a day. “I’m still in shock,” Mr Duncan said after learning how much his old property fetched. “It’s just disbelief. “It was an 80s house, three-bedroom do-up. Where is the market going? God help New Zealand.”
The Weekend Herald has analysed annual house sale figures and compared them to wages earned in the country’s 12 regional council areas to calculate whether people’s homes are earning them more than they get from working. In Auckland, the average house earned nearly $230 a day in the past year – about twice the average worker’s pay. That’s about the same as an entry-level doctor or high school head of department with responsibility for 10 teaching staff. The one-bathroom Browns Bay property has a CV of just $800,000 and comes with a garage and carport. It sits on 1043sq m freehold and is zoned for Rangitoto College. Barfoot & Thompson agent Eve Huang said though the vendors had done little work on the property, they had obtained resource consent for the large section to be subdivided into two lots, which increased its value.
Mr Duncan said he couldn’t believe how the market had taken off, and blamed foreign buyers with deep pockets for what was fast becoming a housing crisis. “Every auction you go to, if they want it they just don’t give up. It’s a bottomless pit. It just doesn’t seem right. We’re going to end up with a generation that don’t own property.”
An economy on the verge of implosion. How can these people not have learned from the US et al? They do have TV and papers here after all. Oh, wait, that is the very problem..
A much-anticipated return to surplus somehow metamorphoses into yet another unwelcome deficit; dairy prices slump ever lower; the New Zealand dollar keeps rising ever higher; the overheated Auckland property market makes the South Sea Bubble of the 1700s look like an exercise in financial probity. Is this the so-called rock-star economy? Or the rocky road to recession? It is not raining on John Key and his colleagues. It is pouring. Still smarting at the mass defection of erstwhile supporters which the party took for granted in the Northland byelection, National is currently exhibiting the self-absorbed demeanour of someone who cannot quite work out what is happening to himself or herself and is not sure what to do about it.
Not that National can do much anyway to halt the rise in the currency or stimulate the international milk market. In the past week the Prime Minister and his Finance Minister have also appeared to accept they will fail to meet their long-established target date this year for a resumption of Budget surpluses. As for Auckland house prices, well, the warning from the Reserve Bank on Wednesday of a potential downward, disruptive correction in prices could not have been blunter. The Reserve Bank’s worry is that the trading banks, which have 60% of their lending in residential mortgages, could find themselves in dire straits such that credit dries up with the result that the economy goes into a severe downturn.
Key’s response was literally “crisis, what crisis?” But that hellish scenario ought to chill Key and Bill English to the bone. But the Reserve Bank has not stopped there. It is strongly urging the Government to give “fresh consideration” to ways and means of shutting property speculators attracted by untaxed capital gains out of the Auckland market. Key’s difficulty is that he has long ruled out a capital gains tax. His one consolation is that Labour leader Andrew Little has effectively done likewise. But Little is not in Government. Key is.
We need to stop our own war mongerers, not someone else’s.
There was a sharp increase the intensity of the training of NATO troops near the borders of Russia last year, Russian General Staff said. “In 2014, the intensity of NATO’s operational and combat training activities has grown by 80%,” Lieutenant General Andrey Kartapolov, head of the Main Operation Directorate of General Staff. The leadership of NATO made no effort to hide the clear anti-Russian orientation of these activities, he added. “During this period, NATO created a grouping of its member states’ forces in the Baltic States, consisting of over 10,000 troops, about 1,500 armored vehicles, 80 planes and helicopters and 50 warships,” Kartapolov said during the IV Moscow Conference on International Security.
According to the Lieutenant General, strategic bombers from the US Air Force were used to perform strategic tasks during those exercises. He also said that the US plans to supply its Eastern European allies with JASSM-ER long-range aviation cruise missiles, which will enable NATO warplanes to hit targets 1,300 kilometers inside the Russian territory. “In the case of a military conflict, critical facilities on the territory of almost the entire European part of Russia will be vulnerable to NATO’s air attack, with the flight time of the missiles reduced by half,” Kartapolov warned.
The General Staff official also spoke about increased intelligence activity by NATO in the Black Sea. He said that US Global Hawk drones were spotted in Ukrainian air space in March, with the UAVs increasing “the depth of reconnaissance on the territory of Russia by 250-300 kilometers.” Since Russia’s reunion with Crimea and the start of the military conflict in eastern Ukraine last spring, NATO forces have stepped up military exercises along the Russian border – in the Baltic States and Eastern Europe.
I know, I said no more Hillary, but I’ll make an exception for Taibbi.
Hillary Clinton ran onto the playing field this week, Rock and Roll Part 2 blaring in the background, and started lying within minutes of announcing her entry into the presidential election campaign. “There’s something wrong,” she told a crowd of Iowans, “when hedge fund managers pay lower taxes than nurses or the truckers I saw on I-80 when I was driving here over the last two days.” Oh, right, that. The infamous carried interest tax break, the one that allows private equity vampires like Mitt Romney and Stephen Schwartzman to pay a top tax rate of 15% while all of the rest of us (including the truckers Hillary “saw” – note she didn’t say “hung out with Bill and me over chilled shrimp at the Water Club”) pay income taxes.
The carried interest loophole is an absurd, completely unjustifiable handout to the not merely well-off but filthy rich, and it’s been law in this country for about three decades. Raise your hand if you really think that Hillary Clinton is going to repeal the carried interest tax break. We’ll come back to that in a minute. In the meantime, the reaction to Hillary’s campaign announcement went exactly according to script. Newspapers and news sites ever-so-slightly raised figurative eyebrows at the tone of Hillary’s announcement, remarking upon its “populist” flair. This is no plutocrat who plans to ride to the White House upon a historically massive assload of corporate money, the papers declared, this is a candidate of the people!
“Hillary’s Return: Her Folksy, Populist Re-Entry,” proclaimed Politico. “Populist Theme, Convivial In Tone!” headlined the Los Angeles Times. “Hillary Lifts Populist Spirits,” commented The Hill, hook visibly protruding from its reportorial fish-mouth. Having watched this campaign-reporting process from both the inside and the outside for a long time now, I knew what was coming after the initial wave of “Hillary the Populist!” stories. In presidential politics, every time a candidate on either the left or the right veers in a populist direction – usually with immediate success, since the American populace is ready to run through a wall for anyone who makes the obvious observation that they’re being screwed by someone up above – it takes about two or three days before the “Let’s let cooler heads prevail!” editorials start trickling in.
As I said this week, they want the Bernank not for what he knows, but who he knows: “..it’s fairly clear that what Citadel wants is inside information..”
So Ben Bernanke wants to make a buck. Who can blame him? The guy is one of the most esteemed economists of his generation. He served his country admirably; his term as chairman of the Federal Reserve was probably the single most stressful term in that role in history. He resigned from his tenured professorship at Princeton when he joined the Fed board. What else is the guy going to do? This is, of course, how systemic problems work—few individual cases are obviously unacceptable, but the whole is horrifying. In this case, it’s the “revolving door” of movement between government positions and the financial sector—that is to say, from modestly paying positions in the public sector, overseeing financial firms, to higher-paying jobs in the private sector.
Bernanke is going to work for Citadel, a $25 billion hedge fund that is one of the country’s largest. While Bernanke is a talented economist, he has also never worked in the industry, so it’s fairly clear that what Citadel wants is inside information—either things he knows because he remains close with people in positions of authority, or his insight into ongoing negotiations. That’s why he’s been in high demand by financial-industry powers ever since stepping down last February. For example, The New York Times noted that he analyzed the Fed’s true feelings about inflation at a dinner with hedge funders in Las Vegas—allowing several to make profitable moves. Another lamented that he didn’t pay closer attention: “He gave this stuff out, but I didn’t realize what he was saying at the time, so I didn’t do a great trade.”
Quantifying the revolving door is difficult—it involves a series of subjective choices about what constitutes the revolving door, what level of employees should be counted, and so on. (One study from Notre Dame found a double-digit increase between 2001 and 2013.) But there’s ample anecdotal evidence. In fact, Bernanke isn’t even the first Federal Reserve alum to jump to a hedge fund in the last month. Jeremy Stein, a former governor, was hired by BlueMountain Capital Management in late March. And as Rob Copeland notes, this is just the latest in a stream of prominent government officials: Former Federal Reserve chairman Alan Greenspan and ex-Reagan economic adviser Martin Feldstein accepted paid roles on a now-disbanded economic advisory board at John Paulson’s hedge-fund firm that started in 2008.
More recently, former Obama administration chief of staff William Daley joined Swiss hedge fund Argentiere Capital, while former Treasury Secretary Timothy Geithner and former CIA chief David Petraeus took posts at private-equity firms Warburg Pincus and KKR, respectively. And just this week, former Massachusetts governor Deval Patrick was introduced as a new managing director at Bain Capital. That doesn’t even include non-hedge-fund and private-equity moves. Peter Orszag, who led President Obama’s Office of Management and Budget, took a job with Citigroup when he left. The Obama administration had been closely involved with Citi in the aftermath of the financial collapse, and the bank received nearly $500 billion in bailouts.
Nobody wants GMO, nobody wants the TTIP. So what do we get? And have we forgotten how long DDT was considered safe? Declaring GMO safe is not science. Wait a hundred years.
Seventeen new genetically modified food products will be authorised for import to Europe before the end of May in a significant acceleration of biotech trade, the Guardian has learned. An announcement could be made as early as next week, sources said, when a meeting of EU commissioners has been pencilled in to review adoption of new rules for approving GM imports. Europe currently imports around 58 GM products from abroad, mostly US maize, cotton, soy bean and sugar beet. But Greenpeace said that the US has raised the issue of a large logjam in biotech authorisations in talks over a free trade deal known as TTIP. “With transatlantic trade talks ongoing, pressure has been mounting from the biotech industry and the US government to break open the EU market to GM imports and to speed up authorisation procedures,” Marco Contiero, Greenpeace EU’s agriculture director, told the Guardian.
“The possible authorisation of 17 GM crops by the commission in the next few days is a likely result of this pressure.” “The timing is still being discussed but it is just a question of internal procedure now,” a source familiar with the discussions told the Guardian. “It is clear that the 17 strains will be authorised at the same time as the review meeting or just after. I would say it will happen before the end of May for sure.” Under proposed new GM import rules seen by the Guardian, future authorisations would automatically follow approval of new strains by the European Food and Safety Agency (Efsa). Individual countries would be given a similar opt-out to the one agreed for GM cultivation in a law passed earlier this year.
“It will be up to each member state wanting to make use of this ‘opt-out’ to develop this justification on a case-by-case basis, taking into account the GMO [genetically-modified organism] in question, the type of measure envisaged and the specific circumstances at national or regional level that can justify such an opt-out,” the draft said. Opposition from some EU states to draft GM authorisations is “usually not based on science but on other considerations reflecting the societal debate existing in the country,” the commission argues. So opt-outs will not be granted to EU states who seek it on health or environmental grounds, after Efsa has deemed a product safe. “The scope for the exceptions [opt-outs] will probably be less than in the cultivation proposal because we are talking about the internal market here,” an informed source said. “You will have to have a really solid reason. Otherwise it would be attacked as a disruption to the market.”
“When you’re 400 yards from the lake and you have no water, you’re in trouble..”
Near California’s Success Lake, more than 1,000 water wells have failed. Farmers are spending $750,000 to drill 1,800 feet down to keep fields from going fallow. Makeshift showers have sprouted near the church parking lot. “The conditions are like a third-world country,” said Andrew Lockman, a manager at the Office of Emergency Services in Tulare County, in the heart of the state’s agricultural Central Valley about 175 miles north of Los Angeles. As California enters the fourth year of a record drought, its residents and $43 billion agriculture industry have drawn groundwater so low that it’s beyond the reach of existing wells. That’s left thousands with dry taps and pushed farmers to dig deeper as Governor Jerry Brown vorders the first mandatory water rationing in state history.
“The demand we’re placing on the aquifer and the deep bedrock drilling, which is going on at an alarmingly fast pace, is really scary,” said Tricia Blattler, executive director of the Tulare County Farm Bureau. “Folks are really concerned we’re not going to be able to find water in the groundwater system much longer. We are tapping it way too quickly.” Nowhere has lack of rain been felt more than in Tulare County, in a valley dotted with dairy farms and walnut orchards at the foot of the Sierra Nevada mountains. With 458,000 residents, it’s home to 1,013 dry wells, accounting for more than half of those that have failed in the state since January 2014.
Outside Porterville, in a dusty, unincorporated hamlet populated by many Latino citrus-farm workers, some residents use donated bottled water to drink and cook. About 40 people a day wash in the 26 showers set up in trailers next to the parking lot of Iglesia Emmanuel church. They lug nonpotable water home from county tanks for their toilets. Annette Clonts began bathing at friends’ homes or sneaking middle-of-the-night showers at Lake Success’s recreation area after the well near her trailer ran low two years ago. When the lake showers started sputtering in November, she turned to those at the church. “When you’re 400 yards from the lake and you have no water, you’re in trouble,” said Clonts, a 57-year-old retired cook.
[..] “We’ve got to find a way to survive, to hold on,” said Gallegos, who lives with her husband and two daughters. “Right now, we don’t have the money to drill a deeper well. You’re talking about $15,000.” That’s the starting price for residential wells, which range from 30 to 150 feet (9 to 46 meters) and can cost as much as $45,000, said Blattler, the official with the county’s farm bureau. Agricultural wells, which are about 1,000 to 1,800 feet, run $250,000 to $750,000, she said. There are so many customers, they’ll have to wait as long as two years.
With an El Nino yet to come.
It just keeps getting hotter. March was the hottest month on record, and the past three months were the warmest start to a year on record, according to new data released by the National Oceanic and Atmospheric Administration. It’s a continuation of trends that made 2014 the most blistering year for the surface of the planet, in to records going back to 1880. Thirteen of the 14 hottest years are in the 21st century, and 2015 is on track to break the heat record again. Results from the world’s top monitoring agencies vary slightly. NOAA and the Japan Meteorological Agency both had March as the hottest month on record. NASA had it as the third-hottest. All three agencies agree that the past three months have been the hottest start to a year.
The heat was experienced differently across the world. People in the U.S. and Canadian Northeast had an unusually cool March. But vast swaths of unusually warm weather covered much of the globe, and records were broken from California to Australia. The sweltering start to 2015 may be just the beginning. The National Weather Services predicts that a pattern of unusually warm waters in the Pacific Ocean, known as El Nino, will most likely persist well into the second half of the year. And this El Nino could be a big one. El Nino conditions transfer heat that’s been building in the ocean into the atmosphere, affecting weather around the world. A strong El Nino could possibly bring relief to California’s unprecedented drought in the form of heavy rains, but would likely add yet another year to a pile of broken temperature records.