DPC Levee, Ohio River at Louisville, Kentucky 1905
Seasonable adjustments strike again.
• The US Economy Is Dead In The Water (Stockman)
Here’s a newsflash that CNBC didn’t mention. According to the BLS, the US economy generated a miniscule 11,000 jobs in the month of December. Yet notwithstanding the fact that almost nobody works outdoors any more, the BLS fiction writers added 281,000 to their headline number to cover the “seasonal adjustment.” This is done on the apparent truism that December is generally colder than November and that workers get holiday vacations. Of course, this December was much warmer, not colder, than average. And that’s not the only deviation from normal seasonal trends. The Christmas selling season this year, for example, was absolutely not comparable to the ghosts of Christmas past. Bricks and mortar retail is in turmoil and in secular decline due to Amazon and its e-commerce ilk, and this trend is accelerating by the year.
So too, energy and export based sectors have been thrown for a loop in the last few months by a surging dollar and collapsing commodity prices. Likewise, construction activity has been so weak in this cycle—-and for the good reason that both commercial and residential stock is vastly overbuilt owing to two decades of cheap credit—–that its not remotely comparable to historic patterns. Never mind. The BLS always adds the same big dollop of jobs to the December establishment survey come hell or high water. In fact, the seasonal adjustment has averaged 320,000 for the last 12 years! For crying out loud, folks, every December is different—–and not just because of the vagaries of the weather. Capitalism is about incessant change and reallocation of economic activity and resources.
And now the globalized ebbs and flows of economic activity have only accentuated the rate and intensity of these adjustments. Yet the statistical wizards at the BLS think they can approximate a seasonal adjustment factor for December that at +/- 300k amounts to just 0.2% of the currently reported 144.2 million establishment survey jobs, and an even smaller fraction of the potential adult work force which is at least 165 million. But that’s a pretentious stab in the dark. The December seasonal adjustment (SA) could just as easily be 0.3% of the job base or 0.1%, depending upon the specific point in the business cycle and structural trends roiling the economy.
[..] So what happened to the non-seasonally adjusted (NSA) job count in December at similar points late in the course of prior cycles? Well, in December 1999 about 140,000 jobs were added and in December 2007 there was a NSA gain of 212,000. This time we got the magnificent sum of 11,000, and by the way, last year was only 6,000. The real news flash in the December “jobs” report, therefore, is that even by the lights of the BLS’ rickety, archaic and virtually worthless establishment survey, the domestic economy is dead in the water. We are not on the verge of “escape velocity”, as our foolish monetary politburo keeps insisting; the US economy is actually knocking on the door of recession.
Here come your tax hikes.
• America, Your Credit Rating Stinks (BBG)
They are home to the nation’s credit elite, and they have another thing in common: the tech industry. Certain neighborhoods on the West Coast boast residents with some of the best credit, according to a new report by free credit score site Credit Sesame. Those zip codes1 include the main stomping grounds of Microsoft, Yahoo!, and Google. Between the coasts, and certainly away from the tech plutocracy, the story is different. The average score for all U.S. states combined is a lowly 604, considered subprime by many lenders, said Stew Langille, Credit Sesame’s chief strategy officer. The highest credit score possible is 850, although only a rare few have reached it. Those close to it reside in zip codes of Seattle (Redmond, Wash., to be precise), with an average score of 719 under TransUnion’s FICO rival, VantageScore. They also populate parts of Mountain View, Calif., (748) Sunnyvale, Calif., (730) and San Francisco (707).
[..] While credit scores are supposed to be based on how you manage your credit, Credit Sesame stats show a strong correlation with income. In Mountain View, Calif., median household income is $92,125, the Census Bureau says, and the percentage of people living below the poverty line is just below 11%. Among the lowest-scoring zip codes in Chicago and Detroit, median income is $19,5483 and $26,648, respectively. The percentage of people living in poverty in Chicago’s Southside is 47.4%; it’s 42.8% for Detroit. Those with the top credit scores in the study benefit from a virtuous cycle. They have high incomes and work in growing industries. More money means you can enter more transactions, such as taking out and repaying loans, which strengthen your credit score. Homeowners showed higher overall credit scores than renters, for example.
The highly educated citizens of Silicon Valley are probably more credit savvy, too. “Potentially part of the problem is that if you don’t have a high level of education, and you’re busy working and managing your life, it’s hard to know what to do to get the optimal credit score,” said Langille. You won’t know, for example, that how much of your credit line you use makes up about 30% of your credit score. And speaking of credit usage, whether on a credit card or home equity line of credit, Credit Sesame looked at that too. It graded the pool of 2.5 million users on a scale of A to F, with those using the smallest percentage of available credit getting the best scores. That leaves less than 19% of Americans with an A, using zero to 10% of available credit. And it leaves 57% of Americans with an F, meaning that they use 70% or more of available credit. [..] Many credit experts recommend that people use less than 30% of the credit available to them to avoid having their credit score dinged.
For not finding work…
• Up To A Million Americans Will Be Kicked Off Food Stamps This Year (HuffPo)
As many as a million Americans will be kicked off food stamps this year thanks to the return of federal rules targeting unemployed adults without children. That’s according to a new analysis by the Center on Budget and Policy Priorities, a liberal Washington, D.C. think tank, which finds that no fewer than 500,000 people will lose benefits. “The loss of this food assistance, which averages approximately $150 to $170 per person per month for this group, will cause serious hardship among many,” the Center on Budget says. New Jersey, North Carolina, Georgia and 20 other states will allow able-bodied adults without dependents to receive food assistance for only three months unless they work at least 20 hours per week.
Though states are carrying out the policy, it’s a requirement of federal law that had been waived for the past several years because of widespread joblessness. With unemployment rates tumbling, the rule is returning. Several states brought it back ahead of schedule last year, and by the end of this year, only a handful of states will qualify for waivers from the rule. “It’s inexplicable how anyone could call compliance with a federal policy a punitive action by the state,” a spokesman for New Jersey Gov. Chris Christie (R) told AP last week in response to criticism that the policy punishes poor people. The three-month limit has traditionally been called a “work requirement,” but the Center on Budget quibbles with that characterization because work or qualifying “work activities” are not necessarily available.
“Because this provision denies basic food assistance to people who want to work and will accept any job or work program slot offered, it is effectively a severe time limit rather than a work requirement, as such requirements are commonly understood,” the Center says. “Work requirements in public assistance programs typically require people to look for work and accept any job or employment program slot that is offered but do not cut off people who are willing to work and looking for a job simply because they can’t find one,” it adds.
A great history lesson.
• How Debt Conquered America (Thacker)
The tragedy of the Spaniards’ devastation of untold millions of native lives was compounded by seven million African slaves who died during the process of their enslavement. Another 11 million died as New World slaves thereafter. The Spanish exploitation of land and labor continued for over three centuries until the Bolivarian revolutions of the Nineteenth Century. But even afterward, the looting continued for another century to benefit domestic oligarchs and foreign businesses interests, including those of U.S. entrepreneurs. Possibly the only other manmade disasters as irredeemable as the Spanish Conquest – in terms of loss of life, destruction and theft of property, and impoverishment of culture – were the Mongol invasions of the Thirteenth and Fourteenth centuries.
The Mongols and the Spaniards each inflicted a human catastrophe fully comparable to that of a modern, region-wide thermonuclear war. Unlike Spaniards, Anglo-American colonists brought their own working-class labor from Europe. While ethnic Spaniards remained at the apex of the Latin American economic pyramid, that pyramid in North America would be built largely from European ethnic stock. Conquered natives were to be wholly excluded from the structure. While contemporary North Americans look back at the Spanish Conquest with self-righteous horror, most do not know the majority of the first English settlers were not even free persons, much less democrats. They were in fact expiration-dated slaves, known as indentured servants.
They commonly served 7 to 14 years of bondage to their masters before becoming free to pursue independent livelihoods. This was a cold comfort, indeed, for the 50% of them who died in bondage within five years of arriving in Virginia – this according to “American Slavery, American Freedom: The Ordeal of Colonial Virginia” by the dean of American colonial history, Edmund S. Morgan. Also disremembered is that the Jamestown colony was founded by a corporation, not by the Crown. The colony was owned by shareholders in the Virginia Company of London and was intended to be a profit-making venture for absentee investors. It never made a profit. After 15 years of steady losses, Virginia’s corporate investors bailed out, abandoning the colonists to a cruel fate in a pestilential swamp amidst increasingly hostile natives.
Jamestown’s masters and servants alike survived only because they were rescued by the Crown, which was less motivated by Christian mercy than by the tax it was collecting on each pound of the tobacco the colonists exported to England. Thus a failed corporate start-up survived only as a successful government-sponsored oligarchy, which was economically dependent upon the export of addictive substances produced by indentured and slave labor. This was the debt-genesis of American-Anglo colonization, not smarmy fairy tales featuring Squanto or Pocahontas, or actor Ronald Reagan’s fantasized (and plagiarized) “shining city upon a hill.”
“The S&P 500 endured its worst start to a year since 1928, while European equities suffered their biggest opening year losses for over 45 years.”
• Saudis Told To Prop Up Currency Amid Global Devaluation War Fears (Tel.)
Saudi Arabia should use its massive foreign exchange reserves to defend the riyal, amid fears the world is descending into a new phase of global currency wars, the World Bank has said. The kingdom’s shaky currency peg with the dollar has come under record pressure this week as the price of oil has plummeted to near 12-year lows at $32-a-barrel. With the global stock markets in turmoil, analysts fear a Saudi devaluation could spark a new wave of deflation and competitive “beggar-thy-neighbour” policies in a fragile global economy. But the world’s largest producer of Brent crude should continue to defend its exchange rate by drawing down on its war chest of reserves, according to Franziksa Ohnsorge, lead economist at the World Bank. “For now they have large reserves, and reserves can be used during an adjustment period”, Ms Ohnsorge told The Telegraph.
Oil accounts for more than three-quarters of Saudi Arabia’s government revenues. But a record supply glut has led to the kingdom burning through its reserves at a record pace in order to defend its 30-year-old exchange rate regime. Central bank reserves have dropped from a peak of $735bn to around $635bn this year – a pace of spending which will exhaust the kingdom’s fiscal buffers within five years, Bank of America Merrill Lynch calculate. A fresh round of conflict with rivals Iran and a sustained low oil price world would reduce this cushion substantially, said David Hauner at BaML. The monarchy has vowed to stick by the exchange regime and is instead planning to strengthen its coffers through the unprecedented flotation of its state-owned oil giant, Aramco.
Concerns about the Saudi peg come as fears that China was engineering on its own covert currency devaluation rippled through global markets this week. The S&P 500 endured its worst start to a year since 1928, while European equities suffered their biggest opening year losses for over 45 years. More than £85bn was also wiped off the FTSE 100 in a torrid start to 2016 trading. Investment bank Goldman Sachs has warned Beijing may soon abandon its support for the renminbi and engineer a full-blown devaluation. “Just as the US and European phases of the financial crisis were eventually curtailed by currency devaluation and quantitative easing, the fear is that emerging market economies and even China might need to do the same”, said Peter Oppenheimer at Goldman.
Faced with declining revenues, the Saudi monarchy has been forced to unveil a radical programme of government austerity to compensate for the 70pc decline in Brent prices over the last 18 months. Markets are now betting the kingdom will have to abandon its exchange rate regime – which has fixed the riyal at 3.75 to the dollar since 1986. Forward contracts for the riyal have soared to their highest levels in nearly 20 years – a sign that investors no longer believe in the viability of the peg.
Depends how far Exxon plunges?!
• Could Saudi Aramco Be Worth 20 Times Exxon? (WSJ)
Saudi Arabia’s potential sale of shares in its state-owned oil giant could lead to a publicly listed company valued in the trillions of dollars, more than 10 times Apple’s peak of about $756 billion. Saudi Arabian Oil Co., better known as Saudi Aramco, on Friday held out the prospect of an IPO on the Saudi stock exchange. Aramco said it was considering “the listing in capital markets of an appropriate percentage of the company’s shares and/or the listing of a bundle of its downstream subsidiaries.” That potential drew attention because the company produces more than 10% of the world’s oil supply every day and controls a large chain of refineries and petrochemical facilities to complement its exploration and production operations.
Taken together the business could be valued at more than $10 trillion by some estimates. Exxon, the largest non-state-controlled oil company, has a market value of $317 billion. Mohammad al-Sabban, an independent oil analyst and former senior adviser to the Saudi oil ministry, said it was unlikely the Saudi kingdom would list shares in the parent. That could open it up to scrutiny about financial controls and lift a veil on information that the royal family regards as state secrets. More likely is a Saudi Aramco listing of parts of its refining and chemical operations, Mr. Sabban and others said. That would still be significant given the size of those businesses. A person familiar with the national oil company said Western banks likely are months away from hearing what the Saudis’ decision will be.
There hasn’t been serious discussions with banks about the particulars of any stock offering, that person added. One clue to the scale of Aramco’s domestic refining operations is its Sadara Chemical complex in the eastern city of Jubail. It will be the largest petrochemicals project ever built at one time when it starts full operations in 2017. Built in partnership with Dow Chemical, it has already been earmarked for an IPO this year to raise the funds to pay its $20 billion price-tag.
As if they care.
• Saudi Arms Sales Are In Breach Of International Law, Britain Is Told (Observer)
The government has been put on notice that it is in breach of international law for allowing the export of British-made missiles and military equipment to Saudi Arabia that might have been used to kill civilians. The hugely embarrassing accusation comes after human rights groups, the European parliament and the UN all expressed concerns about Saudi-led coalition attacks in Yemen. Lawyers acting for the Campaign Against the Arms Trade (CAAT) have stepped up legal proceedings against the Department for Business, Innovation and Skills, which approves export licences, accusing it of failing in its legal duty to take steps to prevent and suppress violations of international humanitarian law.
In a 19-page legal letter seen by the Observer, CAAT warns that the government’s refusal to suspend current licences to Saudi Arabia, and its decision “to continue the granting of new licences” for military equipment that may be destined for use in Yemen, is unlawful. The letter cites article two of the EU Council Common Position on arms sales, which would compel the UK to deny an export licence if there was “a clear risk” that equipment might be used in a violation of international humanitarian law. Lawyers for CAAT have given the government 14 days to suspend licences allowing the export of military equipment to Saudi Arabia, pending the outcome of a review of its obligations under EU law and its own licensing criteria.
A failure to comply would see proceedings against the government, which would force it to explain in the high court what steps it has taken to ensure that UK military hardware is not being used in breach of international law. “UK weapons have been central to a bombing campaign that has killed thousands of people, destroyed vital infrastructure and inflamed tensions in the region,” said Andrew Smith of CAAT. “The UK has been complicit in the destruction by continuing to support airstrikes and provide arms, despite strong and increasing evidence that war crimes are being committed.”
Beijing just ordered a new magic wand.
• China Heightens the Contradictions (BBG)
Another tumultuous week for China’s stock markets has dealt yet another blow to global confidence in Beijing’s policy makers. Each tripped circuit-breaker and policy reversal has underscored the inherent contradiction China faces — between the leadership’s desire for the certainty of state control and the benefits of free markets. This contradiction has been part of the Chinese economic system since pro-market reform began in the early 1980s. The government’s model encouraged private enterprise, foreign investment and international trade while keeping the “commanding heights” of the economy – the financial sector, critical industries – firmly in state hands. The system may have run counter to classical economics, but it was effective, transforming China from an impoverished basket case to the world’s second-largest economy, and earning Beijing’s policy makers a reputation for sagacity and infallibility.
The problem is that this tension between state and market becomes more dangerous as an economy advances. We know this is true from the experiences of Japan and South Korea, which both used systems similar to China’s, produced similar results and then suffered similar problems. China’s current woes of high debt, excess capacity and a strained financial sector are all creations of the state-market conundrum. The only way to solve it is for the state to allow the market to hold more and more sway over the economy. That allows resources to be allocated more wisely, productivity to improve and entrepreneurship to flourish. Yet it also requires the party to relinquish control. China’s leaders are not unaware of the need for such change. That’s why they’ve promised to free up capital flows, liberalize the currency, reform the state sector and slash red tape. But that sticky contradiction remains firmly in place.
The Communist Party plenum in 2013 that drew up a long-term road map for economic reform enshrined the state-market conflict as a core principle of Chinese policy. The plenum’s communique declares the twin goals of creating an economy “centering on the decisive role of the market” but “with public ownership playing a dominant role.” That conflict is at the heart of the stock-market fiasco. Setting the expansion of capital markets as a priority, the government made the mistake of propagating equity investments on a wide scale. Then, when prices began to tumble last summer, the government, terrified by the instability, jumped in to “fix” the problem. Now policy makers have trapped themselves – attempting to control a market too big and complex to answer to bureaucrats. Instead of developing a respected stock exchange, the state has undermined its credibility.
A complicated mess.
• Germany’s Sparkassen: Banking On Capital Exports (Coppola)
German households save a very high proportion of their earnings. Unlike the UK and Ireland, where households save principally in the form of pensions and property, German savers like to keep their money in banks. The success of the public savings banks stems from their role as principal savings vehicle for the famously thrifty German savers. In fact, they are a little too successful. Savings banks have excess deposits. Ordinarily, an excess of deposits over lending opportunities would drive down interest rates to zero or below. Interest rates have fallen at Sparkassen, but not as much as might be expected, given Germany’s dismal record of both private and public sector investment. So how do Sparkassen manage to maintain positive returns to savers?
Simple. They place their excess deposits with larger institutions – the regional public banks (Landesbanken), and the Frankfurt-based asset manager Dekabank Group. Landesbanken provide wholesale banking services both within Germany and cross-border, while Dekabank manages an asset portfolio of about 155bn Euros, some of it in Luxembourg and Switzerland. In other words, Sparkassen export their excess deposits. The Sparkassen model depends on there being a tier of compliant larger banks that will find profitable investment opportunities both inside and outside Germany to generate the returns that Sparkassen want to provide to savers. The Landesbanken and Dekabank together act like a giant sump.
The sump used to work well. Landesbanken pooled liquidity for the Sparkassen and lent to larger enterprises, while Dekabank invested excess deposits. But then the Landesbanken over-extended themselves, loading up on – among other things – American subprime MBS, risky investments in the Balkans and Irish property loans. In the 2008 financial crisis, several of the Landesbanken had to be bailed out. Since then, the Sparkassen’s equity stakes in the Landesbanken have gradually shrunk, replaced with municipal government ownership. Without this, the Sparkassen would have taken heavy losses. In 2011, the German Savings Bank Association (the Sparkassen’s umbrella organisation) bought out the Landesbanken’s stake in Dekabank. The Landesbanken are still too damaged to deliver the returns that Sparkassen want, and their new prudent lending model is not going to deliver much in the future either.
So Dekabank, not Landesbanken, should now be regarded as the asset management part of the Sparkassen empire. The sump has changed its nature. But it doesn’t generate the returns that it used to – asset managers have to “reach for yield” to make respectable returns these days, and after their experience with the Landesbanken, the savings banks are understandably not too happy for their asset manager to do anything too risky. So the result is a profits squeeze for Sparkassen. They aren’t getting the returns, either on their own lending or on their assets under management at Dekabank, that they need in order to give positive returns to savers.
Only interesting question that remains: can US risk bankrupting the company?
• VW Proposes Catalytic Converter To Fix US Test Cheating Cars (Reuters)
Volkswagen engineers have come up with a catalytic converter that could be fitted to around 430,000 cars in the United States as a fix for vehicles capable of cheating emissions tests, German daily Bild am Sonntag reported. The converter would be fitted to cars with the first generation of the EA 189 diesel engine, the paper reported on Sunday, without providing information on its sources. A source familiar with the matter told Reuters that the proposal for a technical solution VW has drawn up includes a new catalytic converter system made in part from new materials.
Volkswagen has struggled to agree with U.S. authorities on a fix for vehicles fitted with the emissions test cheating devices, Reuters reported this week, showing how relations between the two sides remained strained four months after the scandal broke. The fix would need to be approved by the U.S. Environmental Protection Authority, and Volkswagen CEO Matthias Mueller hopes to convince EPA officials at a meeting on Wednesday in Washington, Bild am Sonntag further added.
“I’m really good at that stuf..”
• ‘Tax Wall Street,’ Trump Pledges After Worst Market Week Since 2011 (BBG)
Republican presidential front-runner Donald Trump pledged to “tax Wall Street” as he sought to use a severe stock market selloff to plant new seeds of fear among voters during a campaign rally Saturday in Ottumwa, Iowa. At times, the real estate mogul sounded more like Democratic presidential candidate Senator Bernie Sanders, a constant critic of Wall Street, than a billionaire candidate running for the Republican presidential nomination. “There’s a bubble,” Trump told his audience in southeastern Iowa, noting the nation’s high level of debt. “You see the stock market is starting to, you know, see what’s going on,” he said. “It’s starting to have some very bad weeks and some very bad numbers.”
Volatility skyrocketed in financial markets last week as anxiety about global growth increased. The Standard & Poor’s 500 Index tumbled 6 percent on the week, the biggest drop since September 2011 and the steepest slide over five days to begin a year on record. Trump said his financial experience was right for such troubled times. “I’m really good at that stuff,” he said. “I know Wall Street. I know the people on Wall Street. We’re going to have the greatest negotiators of the world, but at the same time I’m not going to let Wall Street get away with murder. Wall Street has caused tremendous problems for us. We’re going to tax Wall Street.” Trump also highlighted his independence from campaign contributions. “I don’t care about the Wall Street guys,” he said. “I’m not taking any of their money.”
How is this not a third world country, private armies, warlords and all?!
• Heavily Armed Men Offer ‘Security’ For Oregon Militia At Refuge (Guardian)
A large group of heavily armed men showed up to the wildlife refuge occupation in eastern Oregon on Saturday, further escalating tensions and causing internal conflicts at the protests. Just as a number of the regular occupiers at the Malheur national wildlife refuge were finishing up a morning press conference, a fleet of more than a dozen vehicles drove up to the site. Men armed with rifles got out of their trucks and began stationing themselves along a road. The men said they were with a group called the Pacific Patriot Network and were a “neutral party”, there to provide security and protection for everyone at the refuge.
LaVoy Finicum, a regular spokesman for the armed militia, which has occupied the federal land since last Saturday, told the men they were not welcome or needed and that the militia was trying to minimize conflicts – not bring more guns to the compound. Ammon Bundy, the leader of the militia, had no idea a new group of armed men would be coming, according to Todd Macfarlane, who said he was acting as a liaison between the militia and the public. “Ammon felt blindsided,” Macfarlane said. “This was not a welcome development. We are trying to de-escalate here – then boom, they all show up.” Many of the men with the so-called Pacific Patriot Network declined to speak to reporters, saying they had orders to abide by a “media blackout”. Some were carrying semi-automatic rifles.
Joe Oshaughnessy, with a group calling itself the North American Coalition of Constitutional Militias, said his organization and the Pacific Patriot Network were trying to provide a “buffer zone” between government officials and the occupation, meaning they could help diffuse any conflicts that might arise. “They do not want to cause any trouble,” he said, adding: “Some of these guys are unarmed.” But the presence of yet another armed group only seemed to create further concerns and disputes as the occupation entered its second week with no end in sight. “We’ve got this image with long guns – that is not what we want,” said Jon Pratt, a Utah resident who has been at the occupation since Friday. “These guys are a third party. They do not represent the Bundys … and if they’re coming to keep the peace, I would’ve left the guns behind.”
• Two-Thirds Of Tory MPs Want Britain To Quit European Union (Observer)
Two-thirds of Conservative MPs now support Britain’s exit from the European Union, despite David Cameron’s clear preference for staying in, according to senior sources within the party. Key figures in Tory high command say analysis of public statements and private views expressed by their 330 MPs shows that at least 210 now believe that the UK would be better off “out”. The surge in support within the parliamentary party for leaving will greatly encourage “out” campaigners, who believe many people will take their lead from local MPs when they decide which way to vote. However, party managers say the total number of Tory MPs who will join the campaign to leave could turn out to be significantly fewer – around 110 – if in the next few months opinion polls begin to point towards a close result or a win for the pro-EU side.
“Certainly at least two-thirds want to leave as it stands,” said a senior party figure. “But if things are very tight some will be bought off by offers of patronage and will be reluctant to take a different line to the prime minister. Plenty will not want their careers blighted by being on the wrong side of such an important debate.” The Observer has also been told that soundings taken by MPs show the “vast majority” of grassroots activists now want to quit the EU – and that most will not be swayed by whatever deal Cameron achieves in his attempt to renegotiate UK membership. Last week Cameron, in effect, conceded that his party was split from top to bottom over Europe when he agreed that members of his government, including cabinet ministers, would be allowed to speak out against the official line during the campaign, which is expected to be later this year.
While the holders of the top offices of state – including the chancellor, George Osborne, the foreign secretary, Philip Hammond and the home secretary, Theresa May – are likely to back staying in, other senior ministers, including the work and pensions secretary, Iain Duncan Smith, the leader of the House of Commons, Chris Grayling, and the Northern Ireland secretary, Theresa Villiers, want to campaign to leave. The spotlight will inevitably now turn to Boris Johnson, who attends cabinet in his role as mayor of London and sees himself as a future leader of the party. A longstanding critic of the EU, Johnson has yet to indicate whether he will campaign to stay in or leave.
What would happen if pensions were cut along ‘Greek lines’ in countries like Holland, France? A two-tier union will not survive.
• EU Eyes Start Of Greek Reforms Review January 18 (Reuters)
European creditors have penciled in Jan. 18 as the start of a review of reforms agreed under Greece’s latest bailout and aim to finish it in February, opening the door to talks on debt relief, euro zone officials said on Friday. “The first review mission is tentatively to start in the week beginning on Jan 18th. In practice, it might probably be a bit later,” one senior official said. A Commission spokesperson confirmed the EU executive expected the review mission to start later in January, but not the exact date. The formal review, the first since the euro zone and Greece agreed on a third bailout package in August, is to include controversial reforms like changes to Greece’s pension system, a plan for which Athens sent to Brussels this week.
Euro zone officials said the broad outline of the Greek pension reform was acceptable, but it was still unclear if the measures would bring the desired fiscal effect. For European creditors, one of the key aims of the reform is to increase incentives for Greeks to work longer. “We don’t have a problem with the broad architecture of the reform. But does it add up? We need to get more numbers and technical data from Athens to be able to tell,” a second official said. The official said that while there was no real urgency to closing the reform review, a pre-requisite for further loan disbursements and for the start of promised talks on debt relief, Greece’s liquidity situation was tightening. Greece will have to pay around €1.4 billion in interest in February, around €470 million of which would be on loans from the euro zone bailout fund EFSF and the rest on other bonds, a third official said. The country’s government also owes around €7 billion to various companies in unpaid invoices, putting some on the edge of bankruptcy.
SYRIZA and Europe’s main problem: Democracy can pass swiftly from the booth to the street.
• ‘Greek Government Has Solid Majority To Pass Pension Reform’ (Reuters)
Greece’s leftist government will be able to push through a crucial pension reform in parliament, part of measures the country has agreed to under its international bailout, the deputy prime minister said in a newspaper interview released on Saturday. Greece has drafted a proposal to overhaul its ailing pension system, which envisages merging all six pension funds into one and a possible cut of future main pensions by up to 30 percent. It plans to submit the proposal to parliament by the end of the month and to hold a vote on it in early February. Prime Minister Alexis Tsipras’s government has a parliamentary majority of just three seats and the reform, which opposition parties and many pensioners and workers oppose, will test its resolve to implement actions agreed with international creditors.
Asked whether Tsipras’ ruling coalition has secured enough support from lawmakers for the reform, Deputy Prime Minister Yannis Dragasakis said in an interview with Avgi newspaper: “The government has a strong and solid (parliamentary) majority.” “But passing the relevant law won’t be enough,” he said, adding that the government should also secure backing from workers and political parties to implement the changes. Hundreds of Greek pensioners and workers marched in central Athens on Friday to protest against the plan, which is part of a package of reforms Athens needs to implement to conclude the first review of its €86 billion bailout and start debt relief talks.
A representative of the country’s international lenders said on Saturday that the review could be wrapped up within a reasonable time frame as long as Greece stuck to its reform program. “The Greek government demonstrated a certain degree of commitment to delivering on its mandate to implement the Memorandum of Understanding (MoU) which was agreed last August with the other euro area governments,” the ECB’s Monetary Policy Strategy division head Rasmus Rueffer said in an interview with Proto Thema newspaper.
This is France, Britain.. What on earth have we become? “Every unaccompanied child the Observer spoke to testified to alleged police brutality. All claimed to have had either pepper sprays, water cannon or truncheons used on them. …”
• Anger Over Fate Of Child Refugees Denied UK Asylum Hearing (Observer)
Under a clause in the EU’s Dublin Regulation covering hearing of asylum claims, refugees who have close family members in a particular EU country can claim asylum there. But according to campaigners, the Home Office has in numerous cases chosen to ignore that right. Masud was among a group of children listed in a legal challenge against the Home Office that will be heard in London on 18 January. Lawyers had handpicked the young Afghan as one of the most desperate cases in Calais – a vulnerable and lonely child who deserved to be urgently reunited with a family member. “Masud was a 15-year-old boy in need of protection, a boy in need of his sister here in the UK,” said the Bishop of Barking, Peter Hill, a spokesperson for campaign group Citizens UK.
“Every single night, desperate children are climbing into lorries and jumping on to train tracks to try and reach their families. Our government must act to honour its obligations and help these children.” On Saturday, Citizens UK launched an online petition demanding that David Cameron act to stop more teenagers from dying as they attempt to reach their relatives. Shadow immigration minister Keir Starmer, who visited the Jungle on Friday, announced that he would be writing to the home secretary, Theresa May, on Monday, asking why pledges she made last year to implement the Dublin Regulation and help the most vulnerable migrants – unaccompanied children – had led to so little action on the ground.
Aid charities have reported a surge in the volume of unaccompanied youngsters living in tents in Calais with no support from the French state. Others warn they are vulnerable to traffickers, describing the child protection issues as enormous. “We are aware that there is an increasing trend for unaccompanied minors to be facilitated into and across the EU,” a Europol spokesman said, adding that about 7,000 had been reported among the flow of refugees – a figure they said was rising. Liz Clegg, who runs an independent women’s and children’s hospital in the Jungle, estimates that there are hundreds of unaccompanied children in the camp at any given point. [..] Provisional work to identify Jungle migrants who have a clear legal right to live in Britain under the Dublin Regulation has tentatively identified 200, scores of them unaccompanied children.
“They all have the right to transfer their claim to Britain, so what is going on? It’s disgusting,” said Clegg. Charities warn that many unaccompanied minors simply disappear from the Jungle, often mysteriously. “We’ve even had siblings who don’t know where the other has gone,” added Clegg. “Sometimes we never hear of them again.” Of the seven refugees who once shared a tent with Masud and Nabi, four are believed to have made it to England, one is in Paris, the youngest is dead and Nabi remains in the Jungle. Elizabeth Fraser, whose charity Miracle Street provides a generator for refugees to use in the Jungle, said: “So many unaccompanied children seem to go missing. I remember once there were three Afghan brothers aged 10, 13, 16, and after a few days they also went. Nobody knows where to.”
Home › Forums › Debt Rattle January 10 2016