Harris&Ewing Car exterior. Washington & Old Dominion R.R. 1930
“It is very strongly indicated .. that we’re looking at a stock market which is something like 80% over-priced.”
If you sold every share of every company in the U.S. and used the money to buy up all the factories, machines and inventory, you’d have some cash left over. That, in a nutshell, is the math behind a bear case on equities that says prices have outrun reality. The concept is embodied in a measure known as the Q ratio developed by James Tobin, a Nobel Prize-winning economist at Yale University who died in 2002. According to Tobin’s Q, equities in the U.S. are valued about 10% above the cost of replacing their underlying assets – higher than any time other than the Internet bubble and the 1929 peak. Valuation tools are being dusted off around Wall Street as investors assess the staying power of the bull market that is now the second longest in 60 years.
To Andrew Smithers, the 77-year-old former head of SG Warburg’s investment arm, the Q ratio is an indicator whose time has come because it illuminates distortions caused by quantitative easing. “QE is a very dangerous policy, in my view, because it has pushed asset prices up and high asset prices, we know from history, are very dangerous,” Smithers, of Smithers & Co. in London, said in a phone interview. “It is very strongly indicated by reliable measures that we’re looking at a stock market which is something like 80% over-priced.” Acceptance of Tobin’s theory is at best uneven, with investors such as Laszlo Birinyi saying the ratio is useless as a signal because it would have kept you out of a bull market that has added $17 trillion to share values. Others see its meaning debased in an economy whose reliance on manufacturing is nothing like it used to be.
To Smithers, the ratio’s doubling since 2009 to 1.10 is a symptom of companies diverting money from their businesses to the stock market, choosing buybacks over capital spending. Six years of zero-percent interest rates have similarly driven investors into riskier things like equities, elevating the paper value of assets over their tangible worth, he said. Standard & Poor’s 500 Index members last year spent about 95% of their profits on buybacks and dividends, with stock repurchases exceeding $2 trillion since 2009, data compiled by S&P Dow Jones Indices show. In the first four months of this year, almost $400 billion of buybacks were announced, with February, March and April ranking as three of the four busiest months ever, according to data compiled by Birinyi Associates Inc.
“Our discussions on the Greek side progressed a lot more easily than the discussions on the European side..”
Since there is no international bankruptcy court, sovereign restructurings always face political challenges as the debtor and creditor countries’ taxpayers, and the shareholders of private lending institutions all duke it out to determine how to distribute the losses. But in this case, it’s further complicated by the close financial integration between eurozone member countries. It brings a heightened level of contagion risk to the table – the idea that investors in other eurozone countries’ bonds will sell them to cover losses incurred in Greece and unleash a vicious cycle of market pressure. To forestall that risk, eurozone authorities were always reluctant to let private-sector creditors suffer big “haircuts” on their investments – which inevitably translated into a bigger burden for taxpayers.
Yet there were no pan-European political institutions to pool fiscal resources and automatically apportion how to share those burdens. Without a U.S.-style centralized federal government, the 17 member states would fight over every dollar. The result was something close to paralysis. “The technological and capital market integration was so advanced, and the world was so fragile after the 2008 crisis, that in order to really create freedom of decision-making in Greece you needed a huge amount of institutional buffers that weren’t there — buffers against contagion,” says Georgetown law professor Anna Gelpern, a long-time scholar of sovereign debt markets.
It’s tempting to suggest that bankers and hedge funds exploited this dysfunction at taxpayers’ expense. But one fund manager who participated in the private sector involvement, or PSI, talks of 2012, complained that even when the creditor committee was poised to sign a deal, the 16 EU finance ministers couldn’t agree on the terms among themselves. “Our discussions on the Greek side progressed a lot more easily than the discussions on the European side,” he said. This tortured process looms over the eurozone’s future, even if Greece finally gets a successful debt restructuring. The same flawed structure means that contagion could rear its head again in Portugal – or worse, in Spain or Italy – currently low bond yields could spike again and the panic that of 2012 could return.
While we are a long ways from those levels, this month’s rapid selloff in the region’s bond markets hints at how quickly things could unwind. For now, the ECB’s massive bond-buying program functions as the de facto institutional buffer that the eurozone politicians failed to build. But its powers aren’t limitless – the ECB can only act within a narrow mandate of achieving price stability and suffers internal political divisions of its own. Such alternative “buffer institutions are cushions to buy space to find a political solution,” said Ms. Gelpern. “If you run through those buffers without getting a political solution, then the system is going to crack. We are closer than ever to that.”
It would if the German attitude towards power doesn’t change.
Yanis Varoufakis rues the day when Greece joined the euro. The Greek finance minister says his country would be better off if it was still using the drachma. Deep down, he says, all 18 countries using the single currency wish that the idea had been strangled at birth but understand that once you are in you don’t get out without a catastrophe. All of that is true, and explains why Greece is involved in a game of chicken with all the other players in this drama: the International Monetary Fund, the European commission, the European Central Bank and the German government. Varoufakis wants more financial help but not if it means sending the Greek economy into a “death spiral”. Greece’s creditors will not stump up any more cash until Athens sticks to bailout conditions that Varoufakis says would do just that.
Things will come to a head this summer because it is clear Greece cannot make all the debt repayments that are coming up. It has to find €10bn (£7.3bn) in redemptions to the IMF, the ECB and other bondholders before the end of August and the money is not there. Greece’s creditors know that and are prepared to let the government in Athens stew. They know that Greece really has only two choices: surrender or leave the euro, and since it has said it wants to stay inside the single currency, they expect the white flag to be fluttering any time soon. Greece’s willingness to go ahead with the privatisation of its largest port, Piraeus, will be seen as evidence by the hardliners in Brussels and Berlin that they have been right to take a tough approach in negotiations with the Syriza-led government.
But before he admits he has lost the game of chicken, Alexis Tsipras, the Greek prime minister, should think hard about Varoufakis’s analysis. Was it a mistake for Greece to join the euro? Clearly, the answer is yes. Would Greece be better off with the drachma? Given that the economy has shrunk by 25% in the past five years and is still shrinking, again the answer is yes. Can you leave the euro and return to the drachma without a catastrophe? Undoubtedly there would be massive costs from doing so, including credit controls to prevent currency flight, and a profound shock to business and consumer confidence. There are also the practical difficulties involved in substituting one currency for another.
In a way, though, this is not the question the Greek government should be asking itself. Greece has been suffering an economic catastrophe since 2010. It is suffering from an economic catastrophe now and will continue to suffer from an economic catastrophe if it stays in the euro without generous debt forgiveness and policies that facilitate, rather than impede, growth. So the real question is not whether leaving the euro would be a catastrophe, because it would. The real question is whether it would be more of a catastrophe than staying in.
Turning into a long endgame.
Greek banks are running short on the collateral they need to stay alive, a crisis that could help force Prime Minister Alexis Tsipras’s hand after weeks of brinkmanship with creditors. As deposits flee the financial system, lenders use collateral parked at the Greek central bank to tap more and more emergency liquidity every week. In a worst-case scenario, that lifeline will be maxed out within three weeks, pushing banks toward insolvency, some economists say. “The point where collateral is exhausted is likely to be near,” JPMorgan Chase Bank analysts Malcolm Barr and David Mackie wrote in a note to clients May 15. “Pressures on central government cash flow, pressures on the banking system, and the political timetable are all converging on late May-early June.”
European policy makers are losing patience with Tsipras who said as recently as May 14 that he won’t compromise on any of his key demands. While talks are centering on whether to give Greece more money, the European Central Bank could raise the stakes if it increases the discount on the collateral Greek banks pledge in exchange for cash under its Emergency Liquidity Assistance program. Such a move might inadvertently prompt a further outflow of bank deposits and pressure Tsipras to choose between doing a deal and putting his country on the road to capital controls. “We are in an endgame,” ECB Executive Board member Yves Mersch said Saturday. “This situation is not tenable.”
The arithmetic goes as follows: Greek lenders have so far needed about €80 billion under the ELA program. Banks have enough collateral to stretch that lifeline to about €95 billion under the terms currently allowed by the ECB, a person familiar with the matter said. With the central bank raising the ELA by about €2 billion every week, that could take banks to the end of June. A crunch will come if the ECB increases the haircut on Greek collateral to levels not seen since last year. That could be prompted by anything from a complete breakdown in talks to a missed debt payment, the official said. A continuation of the current impasse could even be all that’s needed, the official said. An increased haircut would reduce the ELA limit to about €88 billion, the person said. While that gives banks about four weeks before hitting the buffers, the leeway is so limited that Greece might need to impose capital controls, limiting transactions such as ATM withdrawals, to conserve the cushion.
David Cameron and Alexis Tsipras are miles apart politically, but they share more in common than either may care to admit. Both the U.K. and Greek prime ministers took office after elections in which their parties secured just 37% of the vote. Both claim a strong mandate to reform their country’s relationship with the European Union—and boast that their real aim is to reform the EU itself. Both face pressure from party hard-liners who would rather risk a permanent rupture than accept any compromise. And both leaders believe the rest of Europe will do anything to avoid such a rupture and so will ultimately have to accept their demands. Mr. Tsipras will find out soon enough if his assessment was right: Greece’s debt negotiations are approaching their drop-dead moment when failure to agree on a new funding deal will push the government into a messy default.
But Mr. Cameron’s EU odyssey has only just begun: He must now follow through on his election pledge to hold a referendum on Britain’s continued membership of the EU by the end of 2017. The stakes could hardly be higher. Many analysts think a Greek euro exit would be destabilizing but ultimately containable. But a British exit from the EU would diminish the union in the eyes of the world, weakening its capacity to secure trade deals, deepen the European single market and to confront threats from Russia and the Mediterranean. Just as Mr. Tsipras says he wants to keep Greece in the euro, Mr. Cameron has no desire to lead the U.K. out of the EU. And as in Greece, there is little public appetite for an exit. A recent poll showed British voters back EU membership by 45%—against 33% who want out—rising to 56% to 20% if Mr. Cameron can renegotiate the terms of membership.
Like Mr. Tsipras, Mr. Cameron’s problem lies with his party, not the public. Up to a quarter of his 331 parliamentarians look certain to campaign to leave the EU since their demands for opt-outs for large swaths of EU law, a U.K. veto on future EU rules and an end to the right of EU citizens to seek work in the U.K. can never be met. Mr. Cameron’s objective is to avoid an even bigger split that would damage his authority and could become permanent. For a prime minister who has bet his country’s strategic future on his ability to renegotiate the terms of EU membership, the lack of detailed planning is striking. U.K. officials say that as things stand, Downing Street has no clear process, no team, no detailed policy proposals, no clear view on what is needed to declare the renegotiation a success and no decision on the timing of the referendum.
“There is no such thing as an expansionary fiscal contraction.”
In his reply to a letter from the Monetary Policy Committee this week outlining why CPI inflation was 2% below the target he had set for them, the Chancellor made clear there was more austerity heading everyone’s way. “Ultimately, the credibility of our economic policy rests on the strength of our public finances. This new Government now has a clear mandate to take the steps needed to return them to surplus and ensure continued economic security.” Here we go again, and this time he thinks he has a “mandate’ to slash and burn. It really is amazing that he hasn’t learnt from his past errors. In 2010 George Osborne imposed austerity and the economy stalled for two years; he relaxed austerity and went to plan B, and growth picked up.
So Slasher Osborne is back to his old tricks. Sadly for Slasher this time he has a slowing economy to deal with, rather than the rapidly growing one he inherited in 2010. Now the bond markets really do seem to be in free-fall, just as they weren’t in 2010. As the Governor of the Bank of England, Mark Carney, made clear in his press conference this week, “there is persistent fiscal drag … just as there has been over the last several years”. That’s one of the headwinds that weighs on the economy. The headwinds are once again going to become hurricane force. Hurricane Slasher is heading your way. Austerity is likely to smash growth once again. It seems almost inevitable that monetary policy will have to compensate for such tightening, so I fully expect the next interest rate move to be downwards, with another significant round of quantitative easing, if this austerity is implemented.
There is no such thing as an expansionary fiscal contraction. Just to remind readers, GDP growth was 1% in Q2 2010 and 0.3% in Q1 2015, the latest data that we have. To put this in context, the first chart plots quarterly GDP growth rates for the 19 EU countries that to this point have produced estimates. The UK’s growth rate of 0.3% is below both the EU and the eurozone averages of 0.4%, and is growing at half France’s growth rate of 0.6%. The UK ranks joint 11th with Belgium, Germany and Italy. There are several other countries who are yet to report for 2015 but whose growth rates for Q4 2014 were higher than 0.3%: the Czech Republic, Denmark, Luxembourg, Malta, Poland and Sweden, plus two non-EU members, Norway and Switzerland. The UK is now one of the slowest-growing European economies.
A very valuable insight: “You police by consent by having a relationship with local communities.”
Police will be forced to adopt a “paramilitary” style of enforcement if the government inflicts big budget cuts on them, the head of the police officers’ organisation has warned. Steve White, chair of the Police Federation, said his 123,000 members, from police constables to inspectors, fear a move towards a more violent style of policing as they try to keep law and order with even fewer officers than now. White told the Guardian that more cuts would be devastating: “You get a style of policing where the first options are teargas, rubber bullets and water cannon, which are the last options in the UK.” White said cuts would see the bedrock principle of British law enforcement, policing by consent, ripped apart. The week ahead sees the federation stage its annual conference, which starts on Tuesday 19 May.
The key day will be Wednesday when the home secretary, Theresa May, will address rank-and-file officers. Last year May stunned delegates with a speech telling them to reform or be taken over by government, and telling them policing was failing too often. Police leaders have a fine line to walk in opposing cuts. Rank-and-file members are furious at the effects of austerity on their terms and conditions, as well as falling officer numbers nationally. But May and her advisers believe some members of the police force use over-the-top rhetoric in predictions that cuts would lead to chaos on the streets, and instead believe they should squeeze maximum value out of the public money given. White said police had already endured five years of austerity and were braced for more “swingeing cuts” after the election of a Conservative government with a majority.
White said that since 2010, when the Conservative-led coalition started slashing its funding to police by 20%, the service had been cut by 17,000 officers and 17,000 civilian staff, but had managed to limit the effect on the public. He said the service was now “on its knees”, with some internal projections within policing of a further 20% to 25% of cuts by the end of the next parliament in 2020. This would lead to more than 15,000 officers disappearing off the streets, only being seen when responding to crime or serious events such as disorder on the streets. White said: “You are left with a police service who you only speak to in the direst of circumstances, a police service almost paramilitary in style.”
“You police by consent by having a relationship with local communities. “If you don’t have a relationship, because the officers have been cut, you will lose the consent which means the face and style of policing changes. “The whole service, from top to bottom, is deeply concerned about the ability to provide the service that the public have come to expect over the next five years.”
First, falling gas prices were supposed to boost the economy. Now rising prices are to do the same thing.
One argument now being proposed to help bolster the projections that Q2 will be closer to 3% as opposed to the abysmal print of Q1 is (even as the Atlanta Fed. is now predicting the same if not worse) that this jump will be fueled by (wait for it…) “Cap-ex spending relating to the bump up in crude prices over the recent weeks…” (insert rimshot here) This wasn’t coming from some ancillary small fund manager. This line of thought and analysis was coming from one of our “too big to fail” taxpayer-funded bail-out houses of financial acumen. As this “insight” was simultaneously broadcast throughout television and radio, heralded as “This is why we have people like you on – for exactly this type of insightful analysis and perspective.” I couldn’t help myself but to agree.
For this is what “financial” brilliance across the financial media now represents: Financial spin. My analysis? With analysis like this? Taxpayers better get ready – again! This objective “seasoned” analysis is being professed by one of the same that expected the prior GDP print to show “great improvement” based on “the gas savings made possible from lower crude prices.” The result? If the build in inventory hadn’t been “adjusted” in formulations Pythagoras would marvel at – the print would have been negative. So now you’re being led to believe with the recent rise in crude prices: drillers, refiners, etc., etc., are going to load up on cap-ex only months after many have scuttled rigs, buildings, employees, and more? Again, soon enough to effect Q2?
If cap-ex can be effected that soon, and to that degree as to pull GDP prints from near negative to 3% in a single quarter all by itself – as every other macro data point is collapsing? Why would lower gas prices have ever been wanted let alone touted as “good for the economy?”I’ll just remind you that this “insightful analysis” was coming from one of the many who loved to tout endlessly how the U.S. economy is based on “consumer spending” and “more money in consumers wallets based on lower prices at the pump was inevitable.”
All I’ll ask is: when does “inevitable” materialize? Before? Or, after the next revisions? Again, now since it’s been shown that the “inevitable consumer” spent nothing of their gas savings to help prop up the prior GDP. (sorry I forgot, yes they did in higher health insurance costs) Where the case was made to bludgeon any doubters of their analysis: i.e., “lower crude prices resulting in lower gas prices = more consumer spending.” We are now supposed to embrace the inverted narrative where: “GDP for Q2 will show growth of around 3% based on higher crude prices resulting in increased cap-ex?”
Still, nothing the media can’t put a positive spin on.
Average new home prices in China’s 70 major cities dropped 6.1% last month from a year ago, the same rate of decline as in March, according to Reuters calculations based on official data published today. But nationwide prices steadied from March, further narrowing from a 0.1% fall in the previous month. Beijing saw prices rise, albeit modestly, for the second month in a row, while those in Shanghai rose for the first time in 12 months. But prices in many smaller cities, which account for around 60% of national sales, continued to fall. Analysts said that property investment, which comprises around 20% of China’s GDP, may grow less than 5% this year, compared with 10.5% in 2014, knocking 1 %age point off economic growth.
Data last week showed home sales measured by floor area rebounded 7.7% in April from a year ago, the first growth since November 2013. But property investment growth continued to slow in the first four months of 2015 to the lowest since May 2009 as new construction slumped, impacting demand for everything from steel and cement to appliances and furniture. However, government measures seem to be slowing enticing some buyers back into the market. Mortgages rose 2.1% in the months from Janaury to April from the same time a year earlier. China relaxed tax rules and downpayment requirements on second homes in late March. Earlier this month, the central bank cut interest rates for the third time since November to lower companies’ borrowing costs and stimulate loan demand.
“..the interest-cost burden of servicing debt has risen to 15% of GDP.”
China’s latest plan to tackle its local-government-debt problem appears to be pretending there isn’t one. This might actually stave off a wave of unpleasant corporate busts and bankruptcies, but investors need to be alert for other signs of distress in China’s repressed financial system. In recent weeks, plans floated to address local government debt — estimated to be some 22 trillion yuan ($3.54 trillion) — have included swapping loans for bonds and even potential quantitative easing by the central bank. But as these initiatives appeared to lose steam, it emerged Friday that Beijing had reverted to a more traditional plan: Tell banks to keep lending to insolvent state projects and roll over such loans.
The directive was jointly issued by the Ministry of Finance, the banking regulator and the central bank, saying that financial institutions should keep extending credit to local-government projects, even if borrowers are unable to make payments on existing loans. The positive take is that this latest maneuver postpones a painful debt reckoning and will help protect the property market and broader economy from another leg down after more weak economic data for April. Caution is understandable, as local-government debt presents numerous contagion risks. SocGen describes it as the “critical domino” in the chain of China’s credit risk. This is not just because of the size of the problem, but also due to the labyrinth of funding which straddles special-purpose-funding vehicles and the shadow-banking market.
Further, local governments are inextricably linked to the property market, as they rely on land sales for their revenue. So if the implicit guarantee on state debt were to be removed at the local-government level, the potential for a messy unraveling looks high. It’s also easy to see how this represents a larger systematic risk, as Fitch estimates banks’ total exposure to property could exceed 60% of credit if non-loan financing is also taken into account. Yet any relief that funding taps will not be switched off will also be balanced by concerns over the dangers of building up an even larger debt burden. Fitch warns that the more authorities permit loans by weak entities to be rolled over, the greater the build-up and cost of servicing that debt, and the greater the strain on banks and the overall economy. They calculate that the interest-cost burden of servicing debt has risen to 15% of GDP.
Apparently, the BND now claims it was instrumental in catching Osama Bin Laden. Get in line!
The German chancellor, Angela Merkel, is coming under increasing pressure to divulge a list of targets, including the IP addresses of individual computers, that German intelligence tracked on behalf of the US National Security Agency (NSA). Critics have accused Merkel’s staff of giving the BND foreign intelligence agency the green light to help the NSA spy on European firms and officials. The scandal has strained relations between Merkel’s conservative Christian Democratic Union and its junior coalition partner, the Social Democrats, whose leader, Sigmar Gabriel, has publicly challenged her over the affair.
Gabriel told the German newspaper Bild am Sonntag that parliament needed to see the list, which contains names, search terms and IP addresses. The government has said it must consult the US before revealing the list, whose contents are thought crucial to establishing whether the BND was at fault in helping the NSA. Gabriel, who is also Germany’s vice-chancellor, said: “Imagine if there were suspicions that the NSA had helped the BND to spy on American firms. Congress wouldn’t hesitate for a second before looking into the documents.”
Big victory indeed. That’s why we read so little about it.
For Russia, victory came three days after Victory Day, in the form of Secretary of State John Kerry’s visit this week to the Black Sea resort city of Sochi. It was widely interpreted here as a signal of surrender by the Americans — an olive branch from President Obama, and an acknowledgment that Russia and its leader are simply too important to ignore. Since the seizure of Crimea more than a year ago, Mr. Obama has worked aggressively to isolate Russia and its renegade president, Vladimir V. Putin, portraying him as a lawless bully atop an economically failing, increasingly irrelevant petrostate. Mr. Obama led the charge by the West to punish Mr. Putin for his intervention in Ukraine, booting Russia from the Group of 8 economic powers, imposing harsh sanctions on some of Mr. Putin’s closest confidants and delivering financial and military assistance to the new Ukrainian government.
In recent months, however, Russia has not only weathered those attacks and levied painful countersanctions on America’s European allies, but has also proved stubbornly important on the world stage. That has been true especially in regard to Syria, where its proposal to confiscate chemical weapons has kept President Bashar al-Assad, a Kremlin ally, in power, and in the negotiations that secured a tentative deal on Iran’s nuclear program. Mr. Putin, who over 15 years as Russia’s paramount leader has consistently confounded his adversaries, be they foreign or domestic, once again seems to be emerging on top — if not as an outright winner in his most recent confrontation with the West, then certainly as a national hero, unbowed, firmly in control, and having surrendered nothing, especially not Crimea, his most coveted prize.
“..you’ve been had.”
Barack Obama made headlines this week by taking on Sen. Elizabeth Warren in a dispute over our latest labor-crushing free trade deal, the Trans-Pacific Partnership. The president’s anger over Warren’s decision to lead the Senate in blocking his authority to fast-track the TPP was heavily covered by the Beltway media, which loves a good intramural food fight. It was quite a show, which was the first clue that something wasn’t quite right in this picture. The Beltway press made a huge spectacle out of how the “long-simmering” Obama-Warren “feud” had turned “personal.”
And there were lots of suggestions that the president, in his anger toward Warren, simply let his emotions get the best of him – that he let slip impolitic and perhaps sexist words in his attacks on Warren, whom he described as “absolutely wrong” and “a politician like everyone else.” Reuters, taking the cheese all the way with this “it just got personal” storyline that people on both sides of the Warren-Obama spat have been pimping to us reporters all week, quoted observers who put it like this: The president miscalculated in making this about Elizabeth Warren, that backfired badly. It only served to raise awareness of the issue and drive people away from his position,” said Chris Kofinis, a Democratic strategist who has worked with labor unions opposed to the pact. “It never makes sense to make these kinds of issues personal,” he said.
Politicians do get angry. They even sometimes get angry in public. They are, after all, human, in some cases anyway. But politicians mostly only take their masks off when cornered: stuck in a televised argument with an expert irritant, called to speak in a legislative chamber just as that nagging case of intermittent explosive disorder kicks in, surprised by a ropeline question on the campaign trail, etc. But if you think that Barack Obama, one of the coolest cucumbers ever to occupy the White House, sat down for a scheduled interview in front of a professional softballer like ex-Times and current Yahoo pundit Matt Bai – a setup that’s the presidential media equivalent of a spa treatment – and just suddenly “lost it” in a discussion about the TPP, you’ve been had.
GOP praise for Obama. Can’t be a good sign.
Republican majority leader Mitch McConnell said on Sunday the Senate will pass “fast-track” authority to negotiate major trade deals this week, despite opposition to the measure from many of President Barack Obama’s fellow Democrats. “Yes, we’ll pass it. We’ll pass it later this week,” McConnell said in an interview with ABC. The trade issue has made unlikely allies of the Republican majority leader and the Democratic president. McConnell said on Sunday that Obama has “done an excellent job” on the trade issue. The Senate voted last week to consider the fast-track measure, two days after Democrats had blocked debate on the bill, which would clear the way for a 12-nation Pacific trade agreement.
The strong support on the second vote suggested senators were unlikely to reject the trade measure. Heated debate is still expected in the Senate over amendments and later in the House of Representatives, where many Democrats staunchly oppose the Trans-Pacific Partnership on fears trade liberalisation will cost US jobs. The Republican representative Paul Ryan said on CNN that he was confident the measure would pass the House. “We will have the votes,” said Ryan, who is chairman of the House ways and means committee. “We’re doing very well. We’re gaining a lot of steam and momentum.”
How many investigative journalists are left?
Seymour Hersh found himself in the middle of an F-5 shitstorm this week after breaking his biggest blockbuster story of the Obama Era, debunking the official heroic White House story about how Navy SEALs took out Osama Bin Laden in a daring, secret nighttime raid in the heart of Pakistan. According to Hersh’s account, OBL was given up by one of his Pakistani ISI prison wardens—our Pakistaini allies had been holding him captive since 2006, with backing from our Saudi allies, to use for leverage. Hersh’s account calls into question a lot of things, starting with the justification for the massive, expensive, and brutal US GWOT military-intelligence web, which apparently had zilch to do with taking out the most wanted terrorist in the world. All it took, says Hersh, was one sleazy Pakistani ISI turncoat walking into a CIA storefront in Islamabad, handing them the address to Bin Laden’s location, and picking up his $25 million bounty check. About as hi-tech as an episode of Gunsmoke.
The celebrated Navy SEAL helicopter raid and killing of OBL was, according to Hersh, a stage production co-directed by the US military and Pakistan’s intelligence agency, who escorted the SEALs to Bin Laden’s room, pointed a flashlight at the captive, and watched the SEALs unload hot lead on the old cripple, turning him into spaghetti bolognese. (Raising other disturbing questions—such as, why would the White House want to silence forever the one guy with all the names, the most valuable intelligence asset in the world… unless of course that was the whole point of slaughtering him in his Abbottabad cell? Which leads one to wonder why the US wanted to make sure Bin Laden kept his secrets to himself, should one bother wondering.)
Hersh has pissed off some very powerful people and institutions with this story, and that means the inevitable media pushback to discredit his reporting is already underway, with the attacks on Hersh led by Vox Media’s Max Fisher, CNN’s Peter Bergen, and even some on the left like Nation Institute reporter Matthieu Aikins. Yesterday Slate joined the pile-on, running a wildly entertaining, hostile interview with Hersh. Such attacks by fellow journalists on a Sy Hersh bombshell are nothing new—in fact, he used to relish them, and probably still does. He got the same hostile reaction from his media colleagues when he broke his biggest story of his career: The 1974 exposé of the CIA’s massive, illegal domestic spying program, MH-CHAOS, which targeted tens, maybe hundreds of thousands of Americans, mostly antiwar and leftwing dissidents.
Hersh is better known today for his My Lai massacre and Abu Ghraib exposés, but it was his MH-CHAOS scoop, which the New York Times called “the son of Watergate,” that was his most consequential and controversial—from this one sensational exposé the entire intelligence apparatus was nearly taken down. Hersh’s exposés directly led to the famous Church Committee hearings into intelligence abuses, the Rockefeller Commission, and the less famous but more radical Pike Committee hearings in the House, which I wrote about in Pando last year. These hearings not only blew open all sorts of CIA abuses, assassination programs, drug programs and coups, but also massive intelligence failures and boondoggles.
“At the top end, this El Niño could be the strongest in recorded history.”
For the first time since 1998—the year of the strongest El Niño on record, which played havoc with the world’s weather patterns and was blamed for 23,000 deaths worldwide—ocean temperatures in all five El Niño zones have risen above 1 degree Celsius warmer than normal at the same time. That’s the criteria for a moderately strong event, and the latest forecast models are unanimous that it’s going to keep strengthening for the rest of the year. A sub-surface wave of warm water is driving this trend, which has reached off-the-charts levels during the first four months of 2015. That data was enough for Australia’s Bureau of Meteorology to officially upgrade the Pacific Ocean to El Niño conditions this week. David Jones, head of climate monitoring for the BOM, told reporters that the 2015 El Niño is shaping up to be “quite a substantial event … not a weak one or a near miss.”
The U.S. weather service, which uses slightly different criteria, declared official El Niño conditions back in March. The U.S. updated its outlook on Thursday, boosting odds of a continuation of El Niño until this summer to around 90%—what they called a “pretty confident forecast.” Autumn outlooks made this time of year normally have an error of plus-or-minus 0.6 degrees Celsius, meaning the current forecast of a 2.2 degree warming of the tropical Pacific by December essentially locks in a strong event. At the low end, we can expect the biggest El Niño since the last one in 2009-2010, a moderately strong event. At the top end, this El Niño could be the strongest in recorded history.
“The Larsen B ice shelf existed for 12,000 years before it fell apart in 2002..”
A vast Antarctica ice shelf that partly collapsed in 2002 has only a few years left before it fully disappears, according to a new study. Radar data reveals that the Larsen B ice shelf could shatter into hundreds of icebergs by 2020, researchers reported Thursday (March 14) in the journal Earth and Planetary Science Letters. “It’s really startling to see how something that existed on our planet for so long has disappeared so quickly,” lead study author Ala Khazendar, a scientist at NASA’s Jet Propulsion Laboratory in Pasadena, California, told Live Science. An ice shelf is like a floating ice plateau, fed by land-based glaciers. The Larsen B ice shelf existed for 12,000 years before it fell apart in 2002, separate studies showed.
The ice shelf is on the Antarctica Peninsula, the strip of land that juts northward toward South America. Larsen B is about half the size of Rhode Island, some 625 square miles (1,600 square kilometers). Because the ice shelf is already in the ocean, its breakup won’t further boost sea level rise. But Khazendar and his co-authors also discovered that the glaciers feeding into Larsen B’s remaining ice shelf have dramatically thinned since 2002. “What matters is how much more ice the glaciers will dump into the ocean once this ice shelf is removed,” Khazendar said. “Some of these glaciers are most likely already contributing to sea level rise because they are in the process of accelerating and thinning.”
The Leppard and Flask glaciers thinned by 65 to 72 feet (20 to 22 meters) between 2002 and 2011, the new study reported. The fastest-moving part of Flask Glacier sped up by 36%, to a speed of 2,300 feet (700 m) a year. The glaciers that were behind the vanished section of the Larsen B ice shelf sped up by as much as 8 times their former rate after the ice crumbled over a six-week period in 2002, earlier studies showed. The northwestern part of the Larsen B ice shelf is also becoming more fragmented, the researchers said. But the southeastern part is cracking up. A huge rift has appeared just 7.5 miles (12 km) from the grounding line, where the ice loses contact with the ground and starts floating on the ocean, the study reported. This crack marks where the ice shelf may start to break apart, the researchers said.