Apr 272015
 
 April 27, 2015  Posted by at 1:05 pm Finance Tagged with: , , , , , , , , ,


Jack Delano Brakeman H.B. Van Santford on the AT&SF line from Summit to San Bernardino 1943

Debt Addiction Could Send Us The Way Of The Mayans (Satyajit Das )
Negative Interest Rates: The Black Hole of The Financial System (SI)
The S&P 500 Has A Serious Revenue Problem (CNBC)
Boston Fed Admits There Is No Exit, Suggests QE Become “New Normal” (Zero Hedge)
China Inc. Finds Cure to Debt Hangover in Stock-Market Boom (Bloomberg)
Chinese Energy Figures Suggest Much Slower Growth Than Advertised (Cobb)
China Considers Launching QE; Shanghai Stocks Soar (Zero Hedge)
Talking To My Daughter About The Economy (Yanis Varoufakis)
Greece’s Day of Reckoning Inches Closer as Debt Payments Loom
Greeks Add Pressure on Tsipras to Compromise as Talks Resume (Bloomberg)
The “War on Cash” in 10 Spine-Chilling Quotes (Don Quijones)
Deutsche Bank’s Record Fine Reveals Its Rotten Heart (Coppola)
World’s Coolest Economist Hot On His Numbers (NZ Herald)
Putin Says US Helped North Caucasus Militants In The 2000s (Guardian)
Russian Jews Face ‘Grave Dangers’ If Putin Is Ousted, Warns Senior Rabbi (RT)
Chipotle Removes All GMO Ingredients From Menu (WSJ)
Forget The ‘War On Smuggling’, We Need To Be Helping Refugees (Guardian)
Five Billion People ‘Have No Access To Safe Surgery’ (BBC)

“It isn’t that they can’t see the solution. It is that they can’t see the problem.”

Debt Addiction Could Send Us The Way Of The Mayans (Satyajit Das )

Nowadays many countries’ social and political structure relies on debt-driven consumption and increasing levels of entitlements. Blame the policy makers. To drive economic growth, boost living standards, and manage growing inequality, policy makers have used debt and monetary tools to create economic activity. This has resulted in excessive borrowing and imbalances in global trade and capital. Governments played a part, too, allowing the buildup of social entitlements to win or maintain office. Private companies also encouraged the growth of employee benefits to avoid immediate pressure on wages as well as boost current earnings and share prices. But such expensive commitments were rarely fully funded.

Rather than deal with the fundamental issues, policy makers substituted public spending, financed by government debt or central banks, to boost demand. Strong growth and higher inflation, they hoped or believed, would correct the problems. The current state of affairs echoes Archaeologist Arthur Demarest’s observation about the Mayan civilization: “Society had evolved too many elites, all demanding exotic baubles…all needed quetzal feathers, jade, obsidian, fine chert, and animal furs. Nobility is expensive, non-productive and parasitic, siphoning away too much of society’s energy to satisfy its frivolous cravings.” Seven years into this crisis, the level of debt in major economies has increased. Global imbalances have decreased, but primarily as a result of slower economic growth.

Countries such as China and Germany are reluctant to inflate their domestic economies, moving away from their export-driven model. Major borrowers, such as the U.S., refuse to reduce spending and bring their public finances into order. Enthusiasm for fundamental financial reform has dissipated, driven by concern that lower credit growth will decrease economic growth. Policy makers refused to acknowledge that available fiscal and monetary policy tools cannot address the underlying problems. They repeatedly use complex jargon, obscure mathematics and tired ideologies to disguise their failures and limitations. Perhaps, as the writer G. K. Chesterton suggested: “It isn’t that they can’t see the solution. It is that they can’t see the problem.”

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” If this is how the system ends up working, we fear that the effects will be irreversible.”

Negative Interest Rates: The Black Hole of The Financial System (SI)

A black swan event is a metaphor for an enormous problem that develops underneath the surface and then suddenly puts the whole financial system at risk. The financial crisis of 2008 was a black swan event, for example, that slowly developed in the US real estate market where excess had ruled in the years before. Today, market conditions are ideal for a new black swan event to develop. An event like this takes people by surprise, because it matures under the radar in places where no one is looking. Today, for example, everyone is afraid of deflation. That means that everyone is also trying to prepare for deflation.

If everyone takes measures against deflation you get a mass migration to cash and government bonds, however, which are the assets that perform the best in a deflationary environment. Take a look at Japan: the yen had been on the rise for years up until the Japanese central bank took exceptionally aggressive monetary measures to fight the trend (at which they succeeded). Japanese investors historically also like its country’s government bonds, however, ever since deflation tormented the country in the ‘90s. At one point you got a 5% yield on a 10-year Japanese government bond, today you get 0.3% per year for the next 10 years. [..]

Who is going to save money then? Not a single soul, of course. People will start to create debt en masse, because it is the better and cheaper option. The resulting investments will rise in value, moreover, when an increasing amount of people take on debt in search for returns. Things cannot get a lot crazier than this. If this is how the system ends up working, we fear that the effects will be irreversible. It is like a black hole that sucks in more and more matter – read: capital – and never lets go. This financial black hole story will also end with a sudden implosion, a flash of light and a big bang, just like in space, and those who do not own hard assets at that point in time could lose every bit of wealth they’ve ever accumulated.

As Alan Greenspan, former chairman of the Fed and original promoter of monetary expansion, said once: “Or how you can lose your savings in a blink of an eye”. The big issue is that we do not see any measure that can reverse this process. Governments are not moving a finger to turn things around; and why would they? They are on the side of the debt creators; the ones that are profiting enormously from this black hole. Central bankers are frustrated, however, because they do not have a lot of tools other than to make monetary demands more flexible, which has the wrong effect: it accelerates the wildfire of negative interest rates.

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Why make money when stock proces keep rising and you can borrow your way into profit?

The S&P 500 Has A Serious Revenue Problem (CNBC)

The bottom line of earnings season adds up to this: companies are running into big trouble with their top lines. While companies generally tend to beat both earnings and revenue expectations, this year more have missed their first-quarter top-line estimates than beaten. Out of the first 201 S&P 500 Index companies to report first-quarter earnings, only 47% have beaten revenue estimates, according to FactSet. If this number holds, it will be the first time that more companies have missed than beaten earnings expectations since the first quarter of 2013.

Now, analysts on the whole expect to see S&P 500 revenue fall 3.5% year-over-year, whereas they had expected just a 2.6% drop when the first quarter ended. Meanwhile, earnings have surpassed analyst expectations nicely, with 73% of companies beating earnings-per-share estimates, according to FactSet. That’s equal to the five-year averag epercentage of beats. The surging dollar and sliding crude oil have certainly played a role in leading to this divergence.

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“.. the Fed’s exit strategy is that there should be no exit.”

Boston Fed Admits There Is No Exit, Suggests QE Become “New Normal” (Zero Hedge)

Perhaps it was inevitable. After all, the term “QEfinity” entered the financial lexicon long ago and there were already quite a few commentators out there suggesting that it may now be too late to remove the punchbowl, meaning an “exit” will not only prove difficult, but may well be impossible. Take Makoto Utsumi, who oversaw foreign-exchange policy at the Japanese Ministry of Finance from 1989-1991, for example. Utsumi recently said a BoJ QE exit was out of the question “for the foreseeable future” and went on to note that “even the thought of an exit is a nightmare.”

Meanwhile, it’s virtually impossible to say what effect Fed tightening will have in both the Treasury and corporate bond markets given the lack of liquidity in both and then there’s EM where carnage unfolded in 2013 after a certain bearded bureaucrat said the wrong thing about the direction of Fed policy. Given all of this, we’re not surprised to learn that in a new paper entitled “Let’s Talk About It: What Policy Tools Should The Fed ‘Normally’ Use?”, the Boston Fed is now suggesting that QE become a permanent tool at the disposal of the Fed. After all, “financial stability” depends on it…

During the onset of a very severe financial and economic crisis in 2008, the federal funds rate reached the zero lower bound (ZLB). With this primary monetary policy tool therefore rendered ineffective, in November 2008 the Federal Reserve started to use its balance sheet as an alternative policy tool when it began the large-scale asset purchases. Now attention is turning to how the Fed should transition back to a more conventional monetary policy stance. Largely missing from these discussions about the Fed’s “exit strategy” is a consideration that perhaps it should retain, not discard, the balance sheet tools.

Yes, oddly missing from the Fed’s exit strategy is the idea that there should be no exit.

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Sounds like a dangerous cure.

China Inc. Finds Cure to Debt Hangover in Stock-Market Boom (Bloomberg)

China Inc. is turning to the stock market for a cure to its unprecedented debt hangover. As authorities show a newfound tolerance for defaults and debt levels at Shanghai Composite Index members climb to all-time highs, Chinese companies are increasingly tapping the equity market for funds to pay down liabilities and invest in growth. They’ve announced $82 billion of secondary stock offerings in 2015, a figure UBS predicts will increase to a record $161 billion by December. That comes on top of $10 billion already raised through IPOs. Investor appetite for new shares has rarely been stronger after a world-beating rally in the Shanghai Composite added $4.4 trillion to China’s market capitalization over the past year.

While the gains came too late to stave off the first default on domestic debt by a state-run company last week, officials at both China’s securities regulator and the central bank have endorsed the flow of funds into equities as a way to support an economy growing at the slowest pace since 2009. “Valuations are very high now thanks to the stock rally and capital is very cheap,” said Xu Gao, the chief economist at China Everbright. “Companies that have access to the stock market will be able to tap the cheap funds.” Equity fundraising in China surpassed net sales of corporate debt last month for just the third time in the past three years, according to data compiled by Bloomberg. In one of the latest examples of the shift, China Eastern Airlines said on April 23 that it plans to sell as much as 15 billion yuan ($2.4 billion) of stock to fund the purchase of 23 planes and pay off debt. Shares rose 10% in Shanghai after the news as they resumed trading following a two-week halt.

Shanghai Fosun Pharmaceutical, a drugmaker backed by billionaire Guo Guangchang, said April 16 it will raise as much as 5.8 billion yuan from a stock sale and apply more than 60% of the proceeds toward repaying debt. Lingyuan Iron & Steel, whose share price has more than doubled in the past 12 months, said in February it will sell as much as 2 billion yuan of shares in a private placement to repay bank loans. The aggregate debt-to-equity ratio for companies in the Shanghai Composite reached 165% in January, the highest level since Bloomberg began compiling the data in 2005.

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“February data showed a 6.3% decline in electricity consumption from the previous month. March saw another decline of 2.2%.”

Chinese Energy Figures Suggest Much Slower Growth Than Advertised (Cobb)

Last year China reported the slowest economic growth in 24 years, about 7.4%. But the true figure may actually be much lower, and the evidence is buried in electricity figures which show just 3.8% growth in electricity consumption. David Fridley, a staff scientist in the China Energy Group at the Lawrence Berkeley National Laboratory, has been a longtime collaborator with the Chinese on energy management, efficiency and policy. Fridley, who has held Chinese energy-related jobs for 35 years, believes that electricity consumption in China is a better indicator of its economic growth. Historically, electricity consumption and economic growth in China have been very closely linked. “From 2005 to 2013, the average elasticity of electricity demand was 1.09, meaning electricity demand was up about 1.09% for every % rise in GDP,” Fridley wrote.

“In 2014, that number fell to 0.51, the lowest in this 10-year period. During the economic crisis of 2008, it did fall below the average, to 0.60, but quickly rebounded to above 1.” That tells Fridley that something is up. He’s not the only one who thinks the government growth numbers aren’t reliable. China’s premier, Li Keqiang, has said China’s GDP figures are “for reference only.” Bloomberg reported that in a declassified U.S. diplomatic cable from 2007 then-U.S. ambassador Clark Randt related a dinner conversation with Li, secretary general of Liaoning Province at the time, in which Li revealed his preferred indicators of Chinese economic activity: rail cargo volume, loan disbursements and–wait for it–electricity consumption. China’s leaders don’t believe their own government growth numbers.

Fridley notes that electricity consumption figures are considered quite reliable and have suffered only minor revisions over the years. Preliminary numbers for the first quarter of 2015 suggest further slowing of the economy as year-over-year electricity consumption growth decelerated to just 0.8%. February data showed a 6.3% decline in electricity consumption from the previous month. March saw another decline of 2.2%. Fridley also notes that residential electricity growth registered an extraordinary fall: “From 1980 to 2013, residential electricity grew on average 13.5% a year—and last year it fell to 2.2%. From 2005 to 2013, elasticity of residential energy demand was 1.11, and fell to 0.30 in 2014. This is unprecedented.”

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“..finally leading to the terminal phase for fiat currencies.”

China Considers Launching QE; Shanghai Stocks Soar (Zero Hedge)

Nearly two months ago we explained “How Beijing Is Responding To A Soaring Dollar, And Why QE In China Is Now Inevitable” in which we cited Cornerstone who reminded us “that from 2007 to late 2008, U.S. fed funds dropped 500 bp, and then the Fed still needed to do QE? The backdrop for China looks a bit similar. We had a credit bubble, they have a credit bubble. We had a housing bubble, they have a housing/investment bubble. Will China eventually have to go down the same path as the U.S., and the Eurozone? … The PBoC will first cut rates to 0%, before contemplating QE.”

To this we added that “once China, that final quasi-Western nation, proceeds to engage in outright monetization of its debt, then and only then will the terminal phase of the global currency wars start: a phase which will, because global economic growth and that all important lifeblood of a globalized economy – trade – at that point will be zero if not negatve, will see an unprecedented crescendo of money printing by absolutely everyone, before coordinated devaluations mutate into uncoordinated, and when central bank actions morph from “all for one” to “each man for himself.” We may not have long to wait because just hours ago, MarketNews first among the wire services hinted at what we suggested was the endgame.

*PBOC DISCUSSING DIRECT PURCHASES OF LOCAL GOVT BONDS: MNI; *PBOC IS DISCUSSING UNCONVENTIONAL POLICIES: MNI

Bloomberg adds more, citing MNI as saying that the Chinese central bank discussing “adopting unconventional policies to rebuild its balance sheet and reinvigorate economy, including making direct purchases of local government bonds from market.” Of just as we predicted. MNI continues that “although wide range of possibilities tabled about how PBOC operations could change, common thread of discussion involves need to expand balance sheet to ensure supply of liquidity meets economy’s demands, report says.” In other words, China is about to engage in the biggest QE of them all, and drown the world with exported deflation as the global supply glut which we explained yesterday, hits unprecedented levels and ultimately leads to the biggest inventory dumping phase in global history which central bankers will have no choice but to offset with Friedman’s infamous “helicopter drop” of money, finally leading to the terminal phase for fiat currencies.

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“..European peoples [..] to be set apart by a… common currency.”

Talking To My Daughter About The Economy (Yanis Varoufakis)

One of the enduring memories from my early childhood is the crackling sound of Deutsche Welle radio transmissions. Those were the bleak years of our dictatorship (1967-1974) when Deutsche Welle was the Greeks’ most precious ally against the crushing power of state propaganda. Mum and dad would huddle together next to the wireless, sometimes covered by a blanket to make sure that nosy neighbours would not get a chance to call the secret police. Night after night these ‘forbidden’ radio programs brought into our home a breath of fresh air from a country, Germany, that was standing firm on the side of Greek democrats. While I was too young to understand what the radio was telling my mesmerised parents, my child’s imagination identified Germany as a source of hope.

As I am writing this preface to the German edition of a book aimed at another child, my daughter, I feel the urgent need to recount that memory. To turn it into a small homage to the idea of Europe as a realm of shared democratic ideals. A small gesture of defiance against the recent tendency for European peoples, who were hitherto coming closer and closer together, to be set apart by a… common currency. Our European Union began life under the presumption that to achieve political and social union we must first bind together our economic interests; that economics would lead the way to a united European polity. It was a good idea except that, as the years and the decades went by, a problem emerged: our collective understanding of ‘economics’ became increasingly crude.

We slipped into a simplistic mindset according to which the sphere of the economy began decoupling, separating itself from that of politics, of philosophy, of culture. As it did so, the economic sphere acquired massive discursive and social power for itself, thus causing democracy, politics and culture to fade out, to become shadows of their former selves. We economists were, I confess, responsible for this steady erosion of our collective understanding of the economic sphere. Before we knew it, markets were no longer means to be placed in the service of social ends but emerged surreptitiously as ends in themselves.

Under the influence of, on the one hand, financialisation and, on the other, economic theory, we began to resemble Oscar Wilde’s definition of the cynic: one who knows everything about prices and nothing about values. Naturally, our European Union’s institutions also tended towards the conviction that the large decisions should be taken by technocratic committees that constitute ‘politics-free zones’. In an ironic twist the language of economists helped usher in a mindset that jettisoned from the corridors of power and the halls of decision making not only politics and culture but also …economics.

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Daily dose.

Greece’s Day of Reckoning Inches Closer as Debt Payments Loom

Greece will look for ways to assemble enough cash to pay its pensioners and employees this week, after euro area finance ministers on Friday said they won’t disburse more aid until bailout terms are met. Europe’s most-indebted state will use the deposits of local governments, cities and other funds to meet end-of month payments totaling over €1.5 billion.. By doing so, they risk straining liquidity buffers, after households and companies withdrew almost €1.3 billion in savings last week, according to a person who wasn’t authorized to speak publicly on the matter.Greece has fought to unlock aid since striking a deal to extend its bailout program in February. The government has repeatedly expressed confidence that a deal was imminent, only to be rebuffed by euro-area officials seeking concrete steps.

Last week was no different: days after Finance Minister Yanis Varoufakis said views were converging, his counterparts across the region hit him with a volley of criticism.Greek bonds fell on Friday, sending yields on three-year notes up 144 basis points to 26.3%.Greek Prime Minister Alexis Tsipras met with German Chancellor Angela Merkel last week and later told reporters he was “very optimistic we are closer than before.”Still, support for his confrontational strategy fell to 46% in a University of Macedonia poll for Skai TV published on Tuesday, compared with 56% a month earlier. Researchers interviewed 1,007 people between April 15 and 17 and the margin of error was three percentage points.

The consensus at the IMF meetings in Washington this month was increasingly that a Greek default would be systemically manageable, UBS Chairman Axel Weber told the Swiss newspaper Neue Zuercher Zeitung. The Governing Council of the ECB may debate on May 6 whether to raise the haircut on Greek collateral posted against Emergency Liquidity Assistance, a decision that could worsen the country’s cash squeeze. ECB staff have already proposed increasing the discounts imposed on the securities banks post as collateral when borrowing emergency cash from the Bank of Greece. State coffers may be further depleted on the same day when Greece needs to find €200 million for an IMF payment. Bleeding deposits and unable to access ECB’s regular financing operations while the bailout review remains stalled, Greek lenders currently rely on a €75.5 billion ELA lifeline.

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Making it look like the Greeks hate Syriza. Predictable tactic.

Greeks Add Pressure on Tsipras to Compromise as Talks Resume (Bloomberg)

Greece resumed efforts to break a deadlock with its creditors as weekend polls showed a majority of the country’s people want the government to make compromises needed to release funds for its economy. Two opinion polls published over the weekend showed a continuing drop in support for the government’s confrontational stance in talks with the euro area and the IMF. More than half of respondents in an Alco survey in Proto Thema newspaper said the government should compromise even if creditors reject Greek demands.

“The Greek people are absolutely clear that they want to stay in the euro come what may,” said Aristidis Hatzis, associate professor of law and economics at the University of Athens. “They’ve understood that it will require hard compromises, even austerity.”
Greece is struggling to amass cash to pay its pensioners and employees this week. Europe’s most-indebted state is counting on deposits of local governments, cities and other funds to meet end-of-month payments of over €1.5 billion after euro-area finance ministers on Friday said they won’t disburse more aid until bailout terms are met. State coffers will be further strained on May 6, when Greece needs to find €200 million for an IMF payment.

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Cash will stay.

The “War on Cash” in 10 Spine-Chilling Quotes (Don Quijones)

The war on cash is escalating. As Mises’ Jo Salerno reports, the latest combatant to join the fray is JP Morgan Chase, the largest bank in the U.S., which recently enacted a policy restricting the use of cash in selected markets; bans cash payments for credit cards, mortgages, and auto loans; and disallows the storage of “any cash or coins” in safe deposit boxes. In other words, the war has moved on from one of words to actions. Here are ten quotes that should chill the spine of any individual who cherishes his or her freedom and anonymity:

1. Kenneth Rogoff (from the intro to his paper The Costs and Benefits to Phasing Out Paper Currency): “Despite advances in transactions technologies, paper currency still constitutes a notable percentage of the money supply in most countries… Yet, it has important drawbacks. First, it can help facilitate activity in the underground (tax-evading) and illegal economy. Second, its existence creates the artifact of the zero bound on the nominal interest rate.”

In other words, cash (not money) is the source of all evil and must be destroyed because governments can’t trace its every movement, and it represents a limiting factor on central banks’ ability to continue their insane negative-interest-rate experiment.

2. Citigroup’s Chief Economist Willem Buiter responds to the monetary economist Charles Goodhart’s description of abolishing currency as “shockingly illiberal.” “(T)his cost has to be seen against the cost that the anonymity of currency presents to society. Even though hard evidence is hard to come by, it is very likely that the underground economy and the criminal community are among the heaviest users of currency.”

This, I believe, is the hidden intent behind all the excited talk about banning cash: to do away with the personal anonymity it offers.

3. France’s finance minister Michel Sapin adds a dose of scare-mongering, which can do wonders. In the wake of the Charlie Hebdo murders, he put much of the blame for the attacks on the assailants’ ability to buy dangerous things with cash. Shortly thereafter he announced a raft of capital controls that included a €1,000 cap on cash payments, down from €3,000. Such radical counter measures were necessary, he said, to “fight against the use of cash and anonymity in the French economy.”

4. Guillermo de la Dehesa, a Spanish economist, former senior civil servant and current international advisor to Banco Santander and… (cue drum roll) Goldman Sachs, already demonized cash (as opposed to digitalized bank credit) as a source of all crime and evil back in 2007, when he wrote the following in an El Pais article titled “The Great Advantage of a Cashless World”: “Without cash, we would live in a much safer, less violent world with enhanced social cohesion, since the major incentive fuelling all illegal activity [i.e. cash]… would disappear.”

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It’s the entire field. And they get away with it.

Deutsche Bank’s Record Fine Reveals Its Rotten Heart (Coppola)

Deutsche Bank has been issued with the largest fine of any bank for rigging international bank offer rates – what the UK’s Financial Conduct Authority (FCA) calls “IBORs”. There are several of these rates: the best-known is Libor – “London Inter-Bank Offer Rate” – but there are also the EU’s Euribor, China’s Shibor and Japan’s Tibor. Deutsche Bank’s fine is specifically for the manipulation of Libor and Euribor. Libor and its siblings are commonly known as the rates at which banks lend to each other. But that is not their most important purpose. What is far more important is their role as benchmark rates for the pricing of all sorts of financial products. The NY Department of Financial Services has a useful summary:

The London Interbank Offered Rate (“LIBOR”) is a benchmark interest rate used in financial markets around the world. It is the primary benchmark for short term interest rates globally, written into standard derivative and loan documentation, used for a range of retail products, such as mortgages and student loans, and the basis for settlement of interest rate contracts on many of the world’s major futures and options exchanges. It is also used as a barometer to measure the health of the banking system and as a gauge of market expectation for future central bank interest rates.

For traders, a move of a few basis points in a Libor rate could make an enormous difference to their profits. The incentive for them to manipulate rates is obvious. Not that rate manipulation is solely the province of traders at investment banks. Until now, the largest fine issued by the FCA for benchmark rate rigging was issued to the UK retail bank Lloyds, which had the temerity not only to rig the Libor rate but also the repo rate used by the Bank of England to price emergency liquidity provided to, among others, Lloyds. The Guardian newspaper described this as “biting the hand that feeds it”. It is now clear that manipulating benchmark rates has been so widespread in the banking industry that it could be described as “the way we do things round here”. Eradicating this practice will require not just severe penalties, but a fundamental change in attitude.

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Nice little story.

World’s Coolest Economist Hot On His Numbers (NZ Herald)

Michael Pettis must be the world’s coolest economist. That’s a very uncool thing to say of course. He’d probably dispute it too. But it is hard to imagine a much cooler character than the casually dishevelled American who greets me at his hole-in-the-wall underground rock club, buried on an otherwise nondescript street in Beijing’s university district. There’s black paint falling off the walls, there are skateboards parked in the corner and the ashtrays are still full from the night before. If it wasn’t for the hip Chinese indie kids busily working around the place it might have been lifted up in its entirety from the New York post-punk scene and rebuilt in China like some crazy art installation.

In his day job Pettis is a finance professor at the Guanghua School of Management at Peking University. He’s also a highly influential blogger and author when it comes to the Chinese economy. The club is a base for Maybe Mars, his independent record label, and the local avant garde music scene he is fostering. Broadly it’s art rock, he says. Think New York rockers Sonic Youth, a band which the 50-something Pettis – dressed today in black jeans, skater sneakers and unbuttoned business shirt – could easily pass for a member of. He grabs some Tsing Tao beers from behind the bar, we head up a claustrophobic stairway and grab a seat in his loft office where we talk some more about the peculiar administrative difficulties of trying to foster a music scene in Beijing.

“Do you like The Clean,” he asks, making the New Zealand connection via one of Dunedin’s legendary alternative rock acts. It turns out The Clean’s Hamish Kilgour has been producing for Carsick Cars, one of the hottest Beijing bands on Pettis’ label. You get the feeling he could talk all day about the music but of course that’s not what we are here for. We’re here because Pettis is considered one of the smartest and broadest thinkers in the world on the Chinese economic rebalancing act. Pettis is a rare breed in the world of academic finance and economics, he’s a Wall St veteran. Before moving to China in 2001, he was managing director and head of the liability management and Latin American capital markets groups at Bear Stearns. He has also run fixed income trading and capital market teams at CSFB and JPMorgan.

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“..a lot of presidents and prime minister told me later on that they had decided for themselves by then that Russia would cease to exist in its current form..”

Putin Says US Helped North Caucasus Militants In The 2000s (Guardian)

Intercepted calls showed that the US helped separatists in Russia’s North Caucasus in the 2000s, Russian president Vladimir Putin claimed in a new documentary in which he underscored his suspicions of the west. The two-hour documentary, to be aired on the state-owned Rossiya-1 TV channel later on Sunday, is dedicated to Putin’s 15 years in office. It focuses on Putin’s achievements as well as challenges to his rule – which the producers and Putin blame on western interference. Putin was elected Russian president on 26 March 2000, after spending three months as acting president, and was sworn in on 7 May 2000. The documentary shows Putin interviewed at the Kremlin in the dimly lit St Alexander’s Hall.

In excerpts released shortly before the film’s broadcast, Putin said Russian intelligence agencies had intercepted calls between the separatists and US intelligence based in Azerbaijan during the early 2000s, proving that Washington was helping the insurgents. He did not specify when the calls took place. Following a disastrous war in the 1990s, Russia fought Islamic insurgents in Chechnya and neighboring regions in the volatile North Caucasus. “They were actually helping them, even with transportation,” Putin said. Putin said he raised the issue with then-US President George W Bush, who promised Putin he would “kick the ass” of the intelligence officers in question.

But in the end, Putin said the Russian intelligence agency FSB received a letter from their “American counterparts” who asserted their right to “support all opposition forces in Russia”, including the Islamic separatists in the Caucasus. Putin also expressed his fears that the west wishes Russia harm as he recalled how some world leaders told him they would not mind Russia’s possible disintegration. “My counterparts, a lot of presidents and prime minister told me later on that they had decided for themselves by then that Russia would cease to exist in its current form,” he said, referring to the time period around the second conflict in the Caucasus. “The onl question was when it happens and what consequences would be.”

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“..Putin’s government provides more guaranteed support for the Jews than those in Europe and the US..”

Russian Jews Face ‘Grave Dangers’ If Putin Is Ousted, Warns Senior Rabbi (RT)

Russian Jews would be in serious danger if Russian President Vladimir Putin was ever ousted from power, a senior Russian rabbi has stated. He added, the current government guarantees the safety of Jewish people better than many Western powers do. “The Jews of Russia must realize the dangers inherent in the possible collapse of the Putin government, understand the rules of the game and be aware of the limitations,” the head of Russian Federation of Jewish Communities Aleksandr Boroda said at an annual Jewish learning event, which was organized by Limmud FSU. The conference, which saw around 1,400 participants attend, opened on Friday at the state-owned Klyasma resort in the Moscow region.

Boroda mentioned that Putin’s government provides more guaranteed support for the Jews than those in Europe and the US, adding that Russian religious institutions are better protected against anti-Semitism, while other countries don’t provide enough security. “In Russia, there is virtually unlimited freedom of religion and the Jewish community must ensure this situation continues,” Boroda said. “We do not have the privilege of losing what we have achieved and the support of the government for the community.” All Russian Jews, especially those who oppose Putin and his administration “must understand the grave dangers that they take upon themselves and the potential consequences,” he added.

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Let’s make this a wide campaign.

Chipotle Removes All GMO Ingredients From Menu (WSJ)

Chipotle Mexican Grill Inc. said it has finished removing genetically modified ingredients from its foods, becoming the first major restaurant chain to do so amid growing U.S. consumer questions about the agricultural technology. Chipotle, which has 1,831 restaurants, has been working for more than two years to eliminate ingredients made with genetically modified organisms, or GMOs—corn, soybeans and other crops whose DNA is altered to achieve traits like pest-resistance. The company had said it hoped to be done by the end of 2014, but the transition “took a little longer than we thought,” a Chipotle spokesman said late Sunday.

The Food and Drug Administration has approved a number of genetically modified crops, which proponents, including many science groups, argue are safe. Critics claim they cause a variety of environmental ills and could be harmful to human health. The skepticism is part of a wider backlash in recent years among consumers seeking simpler, more natural ingredients. Chipotle in 2013 began telling consumers which of its menu items contained GMOs. Founder and co-Chief Executive Steve Ells has said Chipotle is making the move to avoid GMOs until the science around the technology is more definitive. The effort involved substituting a non-GMO sunflower oil for a genetically modified soybean oil it had been using, and sourcing non-GMO tortillas.

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But we don’t want to.

Forget The ‘War On Smuggling’, We Need To Be Helping Refugees (Guardian)

The crisis in the Mediterranean, which has led to more than 1,700 deaths already this year, has evoked an immediate response from European political leaders. Yet the EU response fundamentally and wilfully misunderstands the underlying causes. It has focused increasingly on tackling smuggling networks, reinforcing border control and deportation. Somehow European politicians have managed to turn a human tragedy into an opportunity to further reinforce migration control policies, rather than engage in meaningful international cooperation to address the real causes of the problem. The deaths in the Mediterranean have two main causes. First, the abolition in November 2014 of the successful Mare Nostrum search-and-rescue programme, which saved more than 100,000 lives last year, immediately led to a reduction in the number of rescues and an increase in the number of deaths.

Second, and most importantly, there is a global displacement crisis. We know that in last week’s tragedy – as with wider data on this year’s Mediterranean crossings – a growing proportion are coming from refugee-producing countries such as Syria, Eritrea and Somalia. These people are fleeing conflict and persecution. Of course, others are coming from relatively stable countries such as Senegal and Mali, but the majority now are almost certainly refugees. Around the world there are currently more displaced people than at any time since the second world war. More than 50 million people are refugees or internally displaced, and the current international refugee regime is being stretched to its absolute limits. For example, there are nine million displaced Syrians, of whom three million are refugees. The overwhelming majority are in neighbouring countries such as Jordan, Lebanon and Turkey.

A quarter of Lebanon’s entire population is now made up of Syrian refugees. Yet the capacity of these states is limited. Faced with this influx, Jordan and Lebanon have closed their borders to new arrivals. But these people have to go somewhere to seek protection and, with few alternatives, increasing numbers are making the perilous journey across the Mediterranean to Europe. In this context, there are no easy solutions. Yet European politicians are taking the easy option of failing to understand the wider world of which Europe is a part. From early last week, Italy’s prime minister, Matteo Renzi, focused on proclaiming a “war on trafficking”. Politicians across Europe followed suit. Yet this fails to recognise that smuggling does not cause migration; it responds to an underlying demand. Criminalising the smugglers serves as a convenient scapegoat, but it cannot solve the problem. Rather like a “war on drugs”, it will simply displace the problem, increase prices, introduce ever less scrupulous market entrants and make the journey more perilous.

The proposals to emerge from last week’s emergency EU meetings in Luxembourg and Brussels have been similarly disappointing. They have focused on destroying the vessels of smugglers and committing to higher levels of rapid deportation, presumably to unstable and unsafe transit countries such as Libya. The humanitarian provisions of the plans have been vague and problematic. The EU has committed to triple funding for Operation Triton. Yet unlike the abolished Mare Nostrum, that operation has never had a search-and-rescue focus. As the head of the EU border agency, Frontex, has explained, it is primarily a border security operation with little capacity to save lives.

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Many of us wouldn’t have survived.

Five Billion People ‘Have No Access To Safe Surgery’ (BBC)

Two-thirds of the world’s population have no access to safe and affordable surgery, according to a new study in The Lancet – more than double the number in previous estimates. It means millions of people are dying from treatable conditions such as appendicitis and obstructed labour. Most live in low and middle-income countries. The study suggests that 93% of people in sub-Saharan Africa cannot obtain basic surgical care. Previous estimates have only looked at whether surgery was available. But this research has also considered whether people can travel to facilities within two hours, whether the procedure will be safe, and whether patients can actually afford the treatment.

One of the study’s authors, Andy Leather, director of the King’s Centre for Global Health, said the situation was outrageous. “People are dying and living with disabilities that could be avoided if they had good surgical treatment,” he said. “Also, more and more people are being pushed into poverty trying to access surgical care.” The study suggests a quarter of people who have an operation cannot in fact afford it. Twenty-five experts spent a year and a half gathering evidence and testimony, from healthcare workers and patients, from more than 100 different countries as part of this report.

They are now calling for a greater focus on, and investment in, surgical care. They say a third of all deaths in 2010 (16.9 million) were from conditions which were treatable with surgery. That was more than the number of deaths from HIV/AIDS, tuberculosis and malaria combined. The authors suggest the cost to the global economy of doing nothing will be more than $12 trillion between now and 2030.

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Home Forums Debt Rattle April 27 2015

This topic contains 3 replies, has 3 voices, and was last updated by  Raleigh 4 years, 2 months ago.

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  • #20754

    Jack Delano Brakeman H.B. Van Santford on the AT&SF line from Summit to San Bernardino 1943 • Debt Addiction Could Send Us The Way Of The Mayans (Saty
    [See the full post at: Debt Rattle April 27 2015]

    #20758

    Nassim
    Participant

    Putin’s claim that the Americans supported the Chechin Islamists is well-known. He has been too polite to bring it up in public and that is all. One of the rules of being on the top is that you don’t openly criticise others at the top of other countries directly. Now, Putin is less reticent.

    Here is an article from the FT of only 3 days ago:

    “Moscow is bringing other parts of the North Caucasus in line with some of Chechnya’s draconian practices. In 2013, Mr Putin replaced the head of Dagestan, who had tried to counter the creeping Islamist insurgency through dialogue with Salafi Muslims. Since then, Dagestan has cracked down on Salafism as Chechnya has. Dagestan authorities have also started using Mr Kadyrov’s practice of punishing insurgents’ families by destroying their houses and expelling them.”

    https://www.ft.com/intl/cms/s/0/e6a4accc-ea4d-11e4-a701-00144feab7de.html

    Whenever the codeword “Salafi” is used, one should understand that it is synonymous with Wahabi. The rulers of Saudi Arabia are Wahabis – it is their thing. They finance all the Salafism in the world. The USA – and Israel – are the other two legs of this stool. There is no way that there would be Salafis in Dagestan and Chechnya unless there was Saudi funding. And there would be no Saudi funding unless the USA and Israel asked for it.

    It is just another version of the old “plausible deniability” meme.

    #20760

    Nassim
    Participant

    “Russian Jews would be in serious danger if Russian President Vladimir Putin was ever ousted from power, a senior Russian rabbi has stated.”

    This is quite true. Many Russians, Ukrainians and East Europeans are not sympathetic to Jews. It is undeniable.

    At the same time, Israel is constantly trying to ensure to more Jews move to Israel. That is what Zionism is supposed to be all about. The Zionists have a vested interest in Jews being forced out of or electing to leave Russia.

    Anyone who has read up about the Russian revolution will quickly realise that Jews were greatly over-represented among the Bolsheviks. They were keen for the aristocracy to collapse – because they were excluded from it. However, by removing Tsarism, they brought in something far worse. I think this Rabbi is trying to remind them of that.

    #20766

    Raleigh
    Participant

    E. Swanson – “What we are seeing here isn’t just a problem for Europe. Whether they are called “refugees”, “migrants” or “illegal immigrants”, the problem is the result of rapid population growth in the tropical regions of the Earth.”

    I was just catching up, looking at World Bank statistics, and as far as I can see, the whole of Africa is pretty much _________! The population in most African countries is set to explode. The Under-5 mortality rate has gone way down, yet the amount of children (0 – 14) living with HIV is sad: 400,000 in Nigeria, 200,000 in Ethiopia, 170,000 in Malawi, 360,000 in South Africa, 250,000 in Tanzania, 190,000 in Uganda.

    https://data.worldbank.org/indicator/SH.HIV.0014

    Mali, Malawi are set to double their populations to 40 million by 2050, Nigeria from 200 million to 400 million by 2050; Eritrea, Somalia, Guinea, Gambia, Congo to double too, and the list goes on.

    https://datatopics.worldbank.org/hnp/popestimates

    I don’t know if there’s any amount of money, time or wishful thinking that could fix this. If you want to call the people escaping to Europe “refugees”, aren’t you essentially saying that the whole of Africa could be considered that? Because once you say that, you are putting a bullseye on Europe and inviting them all in, aren’t you?

    And what good does that do? Even if Europe took 300 million, it would be a drop in the bucket. Europe’s population would swell, creating massive labor surplus. It might alleviate Africa’s problems for all of about five years, and then they’d be back to square one.

    I don’t know what the answer is, but I don’t think it’s solved by calling them all “refugees” and inviting them all in.

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