Russell Lee South Side market, Chicago 1941
“The ‘buyback corporation’ is in large part responsible for a national economy characterized by income inequality, employment instability, and diminished innovative capacity..”
• How The Stock Market Destroyed The Middle Class (MarketWatch)
There’s something seriously wrong with an economy that nurtures a few billionaires but can’t sustain the middle class. Many factors have been blamed for the plummeting fortunes of the American middle class: globalization, technology, deregulation, easy credit, the winner-take-all economy, and even the inevitable tide of history. But one under-appreciated factor is a pervasive business model that encourages top managers of American corporations to loot their company for short-term gains, depriving those companies of the funds they need to build and enlarge, and invest in their workers for the long haul. How do they loot their company? By using large stock buybacks to manage the short-term objectives that trigger higher compensation for themselves.
By using those stock buybacks to manipulate the share price, which allows them to use inside information to time their own stock sales. By using buybacks to funnel most of the company’s profits back to shareholders (including themselves). They use the stock market to loot their companies. “The ‘buyback corporation’ is in large part responsible for a national economy characterized by income inequality, employment instability, and diminished innovative capacity,” wrote William Lazonick, an economics professor at the University of Massachusetts at Lowell in a new paper published by the Brookings Institution. Lazonick argues that corporations — which once retained a sizable share of profits to reinvest (including investing in their workforce by paying them enough to get them to stay) — have adopted a “downsize-and-distribute” model.
It’s not just lefty academics and pundits who think buybacks are ruining America. Last week, the CEOs of America’s 500 biggest companies received a letter from Lawrence Fink, CEO of BlackRock, the largest asset manager in the world, saying exactly the same thing. “The effects of the short-termist phenomenon are troubling both to those seeking to save for long-term goals such as retirement and for our broader economy,” Fink wrote, adding that favoring shareholders comes at the expense of investing in “innovation, skilled work forces or essential capital expenditures necessary to sustain long-term growth.”
Somebody better challenge this as unconstitutional.
• The Trans-Pacific Partnership and the Death of the Republic (Ellen Brown)
“The United States shall guarantee to every State in this Union a Republican Form of Government.” — Article IV, Section 4, US Constitution A republican form of government is one in which power resides in elected officials representing the citizens, and government leaders exercise power according to the rule of law. In The Federalist Papers, James Madison defined a republic as “a government which derives all its powers directly or indirectly from the great body of the people . . . .” On April 22, 2015, the Senate Finance Committee approved a bill to fast-track the Trans-Pacific Partnership (TPP), a massive trade agreement that would override our republican form of government and hand judicial and legislative authority to a foreign three-person panel of corporate lawyers.
The secretive TPP is an agreement with Mexico, Canada, Japan, Singapore and seven other countries that affects 40% of global markets. Fast-track authority could now go to the full Senate for a vote as early as next week. Fast-track means Congress will be prohibited from amending the trade deal, which will be put to a simple up or down majority vote. Negotiating the TPP in secret and fast-tracking it through Congress is considered necessary to secure its passage, since if the public had time to review its onerous provisions, opposition would mount and defeat it. James Madison wrote in The Federalist Papers:
The accumulation of all powers, legislative, executive, and judiciary, in the same hands, . . . may justly be pronounced the very definition of tyranny. . . . “Were the power of judging joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control, for the judge would then be the legislator. . . .”
And that, from what we now know of the TPP’s secret provisions, will be its dire effect. The most controversial provision of the TPP is the Investor-State Dispute Settlement (ISDS) section, which strengthens existing ISDS procedures. ISDS first appeared in a bilateral trade agreement in 1959. According to The Economist, ISDS gives foreign firms a special right to apply to a secretive tribunal of highly paid corporate lawyers for compensation whenever the government passes a law to do things that hurt corporate profits — such things as discouraging smoking, protecting the environment or preventing a nuclear catastrophe. Arbitrators are paid $600-700 an hour, giving them little incentive to dismiss cases; and the secretive nature of the arbitration process and the lack of any requirement to consider precedent gives wide scope for creative judgments.
To date, the highest ISDS award has been for $2.3 billion to Occidental Oil Company against the government of Ecuador over its termination of an oil-concession contract, this although the termination was apparently legal. Still in arbitration is a demand by Vattenfall, a Swedish utility that operates two nuclear plants in Germany, for compensation of €3.7 billion ($4.7 billion) under the ISDS clause of a treaty on energy investments, after the German government decided to shut down its nuclear power industry following the Fukushima disaster in Japan in 2011.
New new deal? Does the US need a Marshall Plan?
• US Bridges Falling Down Get No Help From Record 2015 Muni Sale (Bloomberg)
The cheapest borrowing costs in five decades aren’t enough of an incentive for states and cities to address their crumbling bridges and roads. While municipalities have issued a record $130 billion of long-term, fixed-rate bonds this year, an unprecedented 70% of the deals have gone to refinance higher-cost debt, rather than fund capital expenditures, according to Bloomberg and Bank of America Merrill Lynch data. At about $40 billion, muni sales to finance projects are unchanged from the same period last year – even though the nation’s aging infrastructure has become a problem so dire and obvious that it was the subject of a feature by comedian John Oliver last month on HBO’s “Last Week Tonight.”
“Refunding has taken precedence over infrastructure financing,” said Phil Fischer, head of municipal research at Bank of America in New York. “It’s going to save state and local governments a lot on debt-service costs, and it’s going to help them catch up in terms of their pensions and other fixed obligations.” “That can’t go on forever,” he said. “Infrastructure projects are needed all over the country.” The country requires about $3.6 trillion of investment in infrastructure by 2020, according to the American Society of Civil Engineers. The group’s 2013 report gave the country a “D+” grade.
This year’s issuance mix shows state and local officials are reluctant to add debt even though the recession ended almost six years ago and yields on 20-year general obligations, at about 3.5%, are close to a generational low set in 2012. The $3.6 trillion municipal market shrank in 2014 for the fourth-straight year, the longest stretch of declines in Federal Reserve data going back to 1945. Municipalities often sell bonds that they can refinance after a set period, which is a windfall if interest rates decline. California lowered debt-service payments by about $180 million through a $1 billion refunding this week, according to the state treasurer’s office. Four of the five largest muni deals this year were for refinancing, including tobacco debt from California.
Are the regulators going to claim incompetence?
The first question that arises from the Commodity Futures Trading Commission’s case against Navinder Singh Sarao is: Why did it take them five years to bring it? A guy living with his parents next to London’s Heathrow Airport enters a lot of big, phony orders to sell U.S. stock market futures; the market promptly collapses on May 6, 2010; it takes five years for the army of U.S. financial regulators to work out that there might be some connection between the two events. It makes no sense. A bunch of news reports have suggested that the CFTC didn’t have the information available to it to make the case. After the flash crash, the commission focused exclusively on trades that had occurred that day, rather than orders designed not to trade – at least until some mysterious whistle-blower came forward to explain how the futures market actually worked. But this can’t be true.
Immediately after the flash crash, Eric Hunsader, founder of the Chicago-based market data company Nanex, which has access to all stock and futures market orders, detected lots of socially dubious trading activity that May day: high-frequency trading firms sending 5,000 quotes per second in a single stock without ever intending to trade that stock, for instance. On June 18, 2010, Nanex published a report of its findings. The following Wednesday, June 23, the website Zero Hedge posted the Nanex report. Two days later the CFTC’s chief economist, Andrei Kirilenko, e-mailed Hunsader. “He invited me out to D.C. and I talked with everyone there (and I mean everyone – including a commissioner),” Hunsader says. “The CFTC then flew out a programmer to our offices where we showed him how to work with our data. Took all of a day. We sent him back with our flash crash data, and that was pretty much the last we heard about that project.”[..]
It would also be interesting to know how it occurred to Sarao that his trick might work. There’s a fabulous yet-to-be-told story here, about a smart kid in the U.K. who somehow figures out that the machines that execute the stock market trades of others might be gamed – and so he games them. One day while he is busy trying to trick the U.S. stock market into falling, the market collapses, more sensationally than it has ever collapsed. And instead of digging some hole in Hounslow in which he might hide for a decade or so, or fleeing to Anguilla, where he has squirreled away his profits, he stays in his parents’ home and keeps right on spoofing the U.S. stock market – and then is shocked when people turn up to accuse him of wrongdoing. He’s not some kind of exception to the standard operating procedure in finance. He’s a parody of it.
“..a kid who is spoofing the market with a few thousand e-mini contracts and hence taken money from the front-running computers whose real goal is to rip you off.”
• Flash Crash Trader Sarao Is A ‘Hero’, Says Fund Manager (Telegraph)
Navinder Singh Sarao has been hailed a “hero” who helps make financial markets “safe for ordinary investors” by a respected fund manager. Mr Sarao is accused of making bogus offers to trade on one of the world’s biggest financial markets, helping to bring about a market crash in 2010 from a house in Hounslow. He denies any wrongdoing. John Hempton, manager of Bronte Capital Management, said the trading methods allegedly used by Mr Sarao had actually helped to protect real investors and their clients. In a blog post, Mr Hempton said that it was “ludicrous” to say Mr Sarao could have brought about the crash through the trading of “a few thousand [futures] contracts”.
His comments echo those of former Barings trader Nick Leeson, who said that Mr Sarao may just be a scapegoat. The US Commodity Futures Trading Commission (CFTC) does not directly blame Mr Sarao for the 2010 Flash Crash, but said that his “manipulative activities … contributed to market conditions that led to the flash crash”. The US watchdog listed “at least” 12 days on which Mr Sarao was using his “automated system”. However, there’s only been one flash crash. Mr Hempton said: “I probably will contribute to his [Mr Sarao’s] defence.” The Australian fund manager said that the so-called “spoofing” techniques employed by Mr Sarao helped to fend off high-frequency traders, which he claimed rip off “real investors”.
Many investors believe that spoofing, the practice of creating fake demand or supply in the market to influence prices, could be widespread. But Mr Hempton argued that the losers from this are “front running” high-frequency traders who attempt to capitalise from ordinary investors. High-frequency traders try to place their orders before conventional investors when they see their orders to make a profit. Mr Hempton said: “[Regulators] have arrested a kid who is spoofing the market with a few thousand e-mini contracts and hence taken money from the front-running computers whose real goal is to rip you off.”
“Ultimately, there are two possibilities. Either Sarao’s role in the flash crash is being overstated and the real cause remains a mystery, or it is frighteningly easy to bring the world’s financial markets to its knees.”
• Can The Hound Of Hounslow Really Be A Wolf Of Wall Street? (Telegraph)
You can almost hear the scriptwriters cracking their knuckles over their keyboards. The prospective film even has a catchy title. You’ve watched The Wolf of Wall Street, now meet The Hound of Hounslow. Want something pithier? How about Flash Crash? This story has everything, except (as far as we know) a love interest. A lone trader has been accused of illegally earning millions of pounds and bringing chaos to the world’s financial markets from a computer in his parents’ semi-detached home in Hounslow. US financial regulators claim that Navinder Singh Sarao’s actions contributed to the so-called “flash crash” in May 2010, when hundreds of billions of dollars were wiped off the value of stocks in a matter of minutes.
They believe Sarao may have made more than $40m (£27m) over the past five years, with nearly $900,000 on the day of the flash crash alone. The 36-year-old trader has been arrested on charges of fraud and market manipulation. If extradited to America and convicted, he will spend the better part of the rest of his life in a federal prison. For the US regulators, this is a story with a happy ending. They’ve been searching for answers to what caused the flash crash since it happened. Sarao’s arrest provides a neat denouement. But, for the rest of us, this week’s developments have raised more questions than answers. Art might benefit from ambiguity, but not financial regulation. Here are some of the many things we still don’t know.
How did Sarao contribute to the 2010 flash crash? First, we need to look at what Sarao was supposedly up to. The thing to realise is that traders have access to a huge amount of information. A company’s share price may be, say, $10. But traders can also see how many people are prepared to sell how many shares at $10.01 and $10.02 and so on, or how many people are prepared to buy how many shares at $9.99, $9.98 and so on. That’s because there are open orders in the market, which, in effect, say: “I’ll buy or sell shares in this company but only when the price hits X.” This is what is meant by the term “liquidity” – the sum total of all the different buy and sell orders at different prices in the market. It’s one of the ways that the market works out what something is worth.
But what if some of those orders aren’t what they seem? What if someone said they wanted to buy or sell stock but actually had no intention of doing so? The financial regulators claim Sarao flooded the market with fake sell orders (saying: “I’ll sell at x”, but systematically cancelling the orders as the price approached x). This convinced other market participants that the quoted price was too high and put downward pressure on the relevant securities. It’s called spoofing. The idea is to try to create small but predictable movements in the market from which you can make a little money lots of times. Most definitely not a lot of money once – that would (or should) attract the attention of regulators. Crashing the market would be the very opposite of what a spoofer would be aiming to do.
Strong: “Our task is to convince our partners that our undertakings are strategic, rather than tactical, and that our logic is sound. Their task is to let go of an approach that has failed,..”
• Chances of Greek Deal ‘Virtually Nil’ (CNBC)
Greece appeared no closer to a reforms-for-aid deal after the country’s finance minister met with his euro zone counterparts on Friday. After the talks, which took place in Latvia’s capital city of Riga, the president of the Eurogroup of euro zone finance ministers issued a stark warning to Athens. “A comprehensive and detailed list of reforms is needed,” Jeroen Dijsselbloem, told reporters, according to Reuters. “A comprehensive deal is necessary before any disbursement can take place… We are all aware that time is running out.” According to Reuters, the discussion with Greece lasted little more than an hour, and Dijsselbloem warned that a remaining €7.2 billion in frozen funds would unavailable after June.
After the meeting, Greek Finance Minister Yanis Varoufakis stated that Athens was willing to make compromises to reach a deal. Varoufakis added that “the cost of not having a solution would be huge for all of us, Greece and the euro zone,” according to Reuters. Finding a compromise between Greece and the bodies which have overseen its two bailouts—the IMF, ECB and European Commission—over required reforms is proving difficult, despite numerous meetings on the issue. Ahead of Friday’s meeting, German Finance Minister Wolfgang Schaeuble said he did not believe there would be decisive progress on Greece in Riga, while his Austrian counterpart said he was “quite annoyed” with the lack of progress, Reuters reported.
Lenders want Greece to implement far-reaching pension and labor market reforms, as well as implement privatization programs and more cost-cutting measures. However, Greece’s leftwing government, which was elected in January in large part because of its opposition to austerity measures, is strongly resistant to doing so. Varoufakis said in in a regular blog post on Thursday that Greece’s partners needed to let go of an approach focused on austerity that had “failed.” “Our task is to convince our partners that our undertakings are strategic, rather than tactical, and that our logic is sound. Their task is to let go of an approach that has failed,” he wrote.
And he does it with a smile.
• Greece’s Varoufakis Takes Hammering From Riled EU Ministers (Bloomberg)
Euro-area finance ministers hurled abuse at Greek Finance Minister Yanis Varoufakis behind closed doors as they shut down his bid to find a shortcut to releasing financial aid. Jeroen Dijsselbloem, the Dutch chairman of the euro-zone finance chiefs’ group, categorically ruled out making a partial aid payment in exchange for a narrower program of reforms after a stormy meeting in Riga, Latvia, in which Varoufakis was heavily criticized by his euro-area colleagues over his failure to deliver economic reforms. Euro-area finance chiefs said Varoufakis’s handling of the talks was irresponsible and accused him of being a time-waster, a gambler and an amateur, a person familiar with the conversations said, asking not to be named because the discussions were private.
“It was a very critical discussion and it showed a great sense of urgency around the room,” Dijsselbloem said at a press conference after the meeting. Asked if there was any chance of a partial disbursement, he said, “The answer can be very short: No.” Varoufakis said the two sides have come “much closer together” and Greece is aiming for a deal as soon as possible. European Central Bank President Mario Draghi added to the pressure on the Greek finance chief warning that policy makers may review the conditions of the emergency funding keeping his country’s banks afloat.
Euro-area governors will “carefully monitor” the haircuts imposed on Greek banks’ collateral when borrowing from the Bank of Greece, Draghi said, to take into account the “change in the environment.” “The higher are the yields, the bigger is the volatility, the more collateral gets destroyed,” he said. “Time is running out as the president of the Eurogroup said, and speed is of the essence.” The euro erased an advance against the dollar on the remarks. The single currency had gained earlier after Kathimerini newspaper reported that Greece secured €450 million from local authorities to boost government coffers.
“Grexit in the next few months is not inconceivable, and it is certainly more likely if we consider Grimbo durations of a year or more..”
• The Greek Crisis Has A New Buzzword: Grimbo (CNBC)
If you’ve been following the ongoing Greek solvency crisis, you have probably heard the terms “Grexit” – referring to Greece exiting the euro zone – and “Grexident” – if it accidentally leaves the bloc – being branded about. But now there’s a new term on the block to sum up the current impasse over reforms: a “Grimbo” – or Greece in limbo. The latest buzzword sums up the drawn-out negotiations between the Greek government and its creditors over its bailout program, which was extended by four months in February to give the country time to enact reforms. The word was coined by the same group of Citi economists – led by Chief Economist Willem Buiter – which thought up the now widely-used “Grexit” term in February 2012, when Greece leaving the euro zone first became a possibility.
In a note published this week, the term said “Grimbo” described a possible “drawn-out” process of negotiations between Greece and its lenders that could result in the country leaving the euro zone. “In our view, a last-minute agreement on a new program (and additional funding) without capital controls or a government default remains plausible. But it is similarly plausible that capital controls will be imposed in Greece or a government default takes place before an agreement is struck or that no agreement will be reached,” the economists said. If Greece did default on its debts and capital controls were issued, a Grexit would not necessarily be inevitable, the economists said. But they added that this could lead to a drawn-out process – a Greek limbo that could, if the gridlock persisted, lead to a Grexit. “Grexit in the next few months is not inconceivable, and it is certainly more likely if we consider Grimbo durations of a year or more,” Buiter and his colleagues remarked.
That leaves May 9 open as a Grexit date, though it seems more likely that there’ll be more extend and pretend at the moment. Still, Athens must wonder what the use is of continuing on this path. And the election/referendum timing is a big one as well.
• Greece Said To Get Respite Until May 6 For Next IMF Payment (Bloomberg)
The ECB prepares to debate on May 6 whether to make access to emergency cash for Greece’s banks more difficult if aid talks remain deadlocked, just as the cash-strapped country will be faced with yet another debt payment. While Prime Minister Alexis Tsipras’s government struggles to pay pensions and salaries at the end of the month, Greece may get a brief respite in interest of about €201 million on its IMF loans due on May 1. As the deadline coincides with a holiday, followed by a weekend, the payment can be delayed until May 6, a person familiar with the matter said. The Fund will only send the payment notification on May 4, and Greece will have two days to make the payment, the person said.
The deadline for a principal repayment of about €766 million, which is due May 12, won’t change. The May 6 interest payment will be due on the same day that the ECB’s Governing Council will meet to discuss whether to extend funds from its Emergency Liquidity Assistance lifeline to Greek lenders. If the review of the country’s bailout remains stalled until then, euro area central bank governors may raise the haircut they apply on collateral they accept in exchange for the funds, which may eventually curb ELA access due to insufficient collateral, a separate person familiar with the matter said. Greek banks are being kept afloat thanks to €75.5 billion of ELA provision, subject to weekly review by the ECB. [..]
If talks over the disbursement of bailout funds reach a dead end, the government would consider the options of snap elections or a referendum, according to Greece’s deputy Prime Minister, Yannis Dragasakis. These alternatives are “at the back of our mind, as options to seek a solution, in case of deadlock” Dragasakis was cited as saying in an interview with To Vima newspaper, on April 19. A referendum on measures requested by creditors and euro membership looks to be the most likely way out of current impasse with a probability of 55%, Dimitris Drakopoulos and Lefteris Farmakis, analysts at Nomura said. If Greece were to act on one of these options, time is running short. The constitution dictates a minimum of three weeks after an election is called for the ballot to be held. This would mean that Tsipras would probably have to decide on this option by next week, or risk the country running out cash in the middle of the campaign trail.
The absurdity intensifies.
• ECB Has Started Buying Covered Bonds With Negative Yields (Bloomberg)
The European Central Bank started buying covered bonds with negative yields as its asset-purchase program reduces the supply of the highly rated debt, according to two people familiar with the matter. The central bank bought the debt in the past two weeks, said the people. The notes were from Germany, one of the people said. The ECB has bought €69.7 billion of covered bonds since October as part of its latest measures designed to stimulus growth in the euro area. The accumulation of assets is driving down yields and the central bank now holds about 15% of the market, according to ABN Amro.
“The ECB has caused this situation by being a big buyer and has exacerbated the already negative net supply of covered bonds,” said Joost Beaumont, a fixed-income strategist at ABN Amro in Amsterdam. “If the ECB buys more, yields will go still lower and that’s going to affect the ECB itself.” The ECB, which is also buying government bonds and asset-backed debt, has said it will buy negative-yielding securities up to its cash deposit rate of minus 0.2%. A negative yield means investors buying the securities now will get back less than they paid if they hold them to maturity. Investors are willing to hold the notes because of their relative safety and because they still offer higher rates than top-rated government bonds and the ECB’s deposit rate.
The central bank’s covered-bond purchase program is its third since the financial crisis and has prompted some of the biggest buyers of the notes from Union Investment to MEAG Munich to scale back holdings. Negative-yielding covered notes account for 20% of the €747.4 billion iBoxx Euro Covered Index, a benchmark used by investors in the debt, according to Credit Agricole. “Supply in positive yields is getting scarce and the ECB may have no other choice to fulfill its targeted purchase volume than to buy negative-yielding bonds,” said Tobias Meyer, an analyst at Norddeutsche Landesbank in Hanover, Germany.
Perhaps the biggest question concerning China: how does Beijing plan to eat all the bad debt?
• China Bad Debt Spikes By More Than A Third (CNBC)
Chinese banks face a spike in bad loans amid slowing economic growth, PwC warns in a new report. “There are a variety of indications that credit risk exposure is accelerating,” said PwC China Banking and Capital Markets leader Jimmy Leung in a press release published on Thursday. Asset quality continues to worsen, while the average overdue loan period is constantly increasing, Leung said, noting there is growing pressure on overdue loans to be downgraded to the non-performing loan category. Slowing growth in the world’s second largest economy prompted the People’s Bank of China (PBoC) to stimulate lending, but that has seen the quality of loans deteriorate.
China’s economy expanded at its slowest full-year pace in 24 years in 2014, undershooting the government’s target for the first time since 1998. The economy continued to lose momentum in the first quarter of 2015 with on-year growth marking its slowest pace in six years. The PBoC has undertaken easing measures to prevent the economy from slowing further. Most recently, the central bank cut the reserve requirement ratio (RRR) for banks by 100 basis points on April 19 to stimulate lending – the second RRR cut in as many months. As the economy slows, the loan books at China’s 12 biggest listed banks are growing, but the quality of their loans appears to be deteriorating.
Banks’ combined loan balance grew 11.49% on-year in 2014 to 52.31 trillion yuan ($8.44 trillion), according to PwC. But NPL, or bad loans, rose at a much higher rate of 38.23% to 641.5 billion yuan, the report said. Loans that could turn bad increased at an even faster pace; overdue, but not NPL loans, jumped 112.65% on-year. “The banks need to get to grips with credit asset quality pressures,” said PwC’s Leung. At the same time, interest rate liberalization, the introduction of deposit insurance and the stock market rally “will affect the stability of [banks’] liabilities,” he said.
Housing bubbles tend to bite.
• Sweden’s Debt Headache Grows More Painful as Court Blocks Curbs (Bloomberg)
Sweden’s central bank abandoned its efforts to cool household debt growth and the financial regulator’s plan was killed by a court. That’s left the new government with the responsibility of coming up with an answer no matter how unpalatable it may be for voters. Finance Minister Magdalena Andersson said on Thursday there’s a need for broad talks in parliament to address Sweden’s household debt headache. Measures could include lowering tax deductions on interest payments, a step that’s likely to be unpopular with voters. So far, most politicians, including Andersson, are rejecting such a move even as the subsidy cost could almost double by 2019.
The government was left holding Sweden’s macroprudential hot potato after the Financial Supervisory Authority dropped a plan to force Swedes to pay down their home loans faster after a key court said the proposal could be illegal. “It’s central that we have talks with the right-wing parties, because we need stable conditions,” Andersson said in an interview after a speech in Stockholm. “It’s important that everyone takes responsibility in this area.” The watchdog said the government now needs to act. It’s seeking to protect the economy after household debt rose to a record as home prices surged over the past decade. It has previously capped mortgage lending at 85% of property values and raised bank capital requirements.
Its preference is for tools that affect households directly over using measures such as raising banks’ capital requirements, already among the world’s highest. It also doesn’t want to lower a cap introduced in 2010. “The government and parliament must give us a clearer mandate,” acting Director-General Martin Noreus said, backed up by both the central bank and debt office. “But the government and parliament can also deal with this in other ways, there are also other tools.” “The FSA still thinks the amortization requirement is relevant, but we also need to look at other alternatives,” including the mortgage deductions, Financial Markets Minister Per Bolund told reporters. “If changes are to be made to mortgage interest deduction, it needs to be done at a slow pace that households can handle.”
Not something you’ll see written in the western press.
• Washington Started All Modern Military Conflicts – Russia’s General Staff (RT)
The US is the sole initiator of all modern military conflicts, maintains Russia’s top brass, adding that Washington and its allies have used military force against third parties over 50 times in a matter of just one decade. The central focus of the American administration has been consistent containment of Russia to prevent alternative center of power emerging, said Lieutenant General Andrey Kartapolov, head of the Main Operation Directorate of Russia’s General Staff. In January, Russian President Vladimir Putin warned the support that Washington provides to the Kiev authorities and Ukrainian army is aimed at “achieving the geopolitical goals of restraining Russia.” Now the US has deployed hundreds of military instructors to Ukraine to train troops.
Yet Russia’s Defense Ministry spokesman Major General Igor Konashenkov accused Washington of sending its soldiers not to training ranges, “but directly in the combat zone near Mariupol, Severodonetsk, Artyomovsk and Volnovakha.” “The US appears to be the ultimate instigator of all military conflicts in the world. The Western countries have begun to hold themselves out as ‘architects’ of the international relations system, leaving to the US the role of the world’s only superpower,” Kartapolov said at a military-scientific conference dedicated to the 70th anniversary of Russia’s victory in WWII. In September 2014, RT reported that although the US has not declared war since 1942, Syria became the seventh country that Barack Obama, the holder of the Nobel Peace Prize, has bombed in the years of his presidency.
Since that recent campaign, US allies in the Persian Gulf, Sunni monarchies armed primarily with American-made weapons, launched a military offensive against Shiite Houthi rebels in Yemen, bombing out country’s military depots and infrastructure. Kartapolov stressed that this position of the west has been officially spelled out in the US national security strategy, presented to American Congress by Obama on February 6. The course being pursued by the White House is determined by strategic ambition to keep the leading geopolitical and economic positions, Kartapolov said.
But the US is still ‘disappointed’.
• EU Allows Sale Of More GMO Food Crops (BBC)
The EU has approved the sale of 17 more genetically modified crops – mostly used in animal feed – and two types of GM carnation. The European Commission’s authorisation process is controversial. The latest approvals were condemned by Green MEPs and Greenpeace environmentalists. 58 GM crops are already used in food and animal feed in the EU. But cultivation is restricted to just one – a type of maize. US biotech firms want the rules eased. The 17 new crop authorisations consist of: soybean (five types), cotton (seven types), maize (three types) and oilseed rape (two types). Cottonseed meal and oil is used in animal feed. GM crops are used widely in the US, South America and Asia, but many Europeans are wary of their impact on health and wildlife.
In the EU, 60% of animal feed is imported. The protein-rich soya in that feed comes overwhelmingly from countries that plant GM soybeans – Brazil, Argentina and the US, the Commission says. GM in food is one of the toughest issues at the EU-US talks on a free trade deal, known as TTIP. Green MEP Bart Staes, a food safety specialist, accused the Commission of ignoring widespread opposition to GMOs among EU citizens. “This gung-ho approach to GMOs also has to be seen in the context of the EU-US TTIP negotiations and the long-running US campaign to force their GMOs on to the EU market,” he said. On Wednesday, the Commission proposed a new law allowing individual EU countries to restrict or ban imported GM crops, even if those crops have been authorised EU-wide by the European Food Safety Authority (Efsa).
A country would have to justify its opt-out from a certain GM crop type, stating specific national or regional grounds for the restriction. Social or environmental impact could be cited as justification for a national ban, rather than purely health concerns. US Trade Representative Michael Froman said the proposal left the US “very disappointed” and he called it “hard to reconcile with the EU’s international obligations”. The only GM crop cultivated in the EU – Monsanto’s maize variety MON 810 – is banned in several EU countries. Spain is by far the biggest grower of MON 810 in Europe, but the crop accounts for just 1.56% of the EU’s total maize-growing area. The UK government is among several countries, including Spain and Sweden, calling for the EU’s GM rules to be eased. However, there is strong opposition in many other countries, including in Austria, France and Germany.
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