G. G. Bain Goose Creek, houses on the water, Jamaica Bay, Long Island 1910
Ambrose dives into history. A shame he can’t see beyond the Cold War when assessing Russia.
Brexiteers should have been prepared for the shattering intervention of the US. The European Union always was an American project. It was Washington that drove European integration in the late 1940s, and funded it covertly under the Truman, Eisenhower, Kennedy, Johnson, and Nixon administrations. While irritated at times, the US has relied on the EU ever since as the anchor to American regional interests alongside NATO. There has never been a divide-and-rule strategy. The eurosceptic camp has been strangely blind to this, somehow supposing that powerful forces across the Atlantic are egging on British secession, and will hail them as liberators. The anti-Brussels movement in France – and to a lesser extent in Italy and Germany, and among the Nordic Left – works from the opposite premise, that the EU is essentially an instrument of Anglo-Saxon power and ‘capitalisme sauvage’.
France’s Marine Le Pen is trenchantly anti-American. She rails against dollar supremacy. Her Front National relies on funding from Russian banks linked to Vladimir Putin. Like it or not, this is at least is strategically coherent. The Schuman Declaration that set the tone of Franco-German reconciliation – and would lead by stages to the European Community – was cooked up by the US Secretary of State Dean Acheson at a meeting in Foggy Bottom. “It all began in Washington,” said Robert Schuman’s chief of staff. It was the Truman administration that browbeat the French to reach a modus vivendi with Germany in the early post-War years, even threatening to cut off US Marshall aid at a furious meeting with recalcitrant French leaders they resisted in September 1950.
Truman’s motive was obvious. The Yalta settlement with the Soviet Union was breaking down. He wanted a united front to deter the Kremlin from further aggrandizement after Stalin gobbled up Czechoslovakia, doubly so after Communist North Korea crossed the 38th Parallel and invaded the South. For British eurosceptics, Jean Monnet looms large in the federalist pantheon, the eminence grise of supranational villainy. Few are aware that he spent much of his life in America, and served as war-time eyes and ears of Franklin Roosevelt. General Charles de Gaulle thought him an American agent, as indeed he was in a loose sense. Eric Roussel’s biography of Monnet reveals how he worked hand in glove with successive administrations. It is odd that this magisterial 1000-page study has never been translated into English since it is the best work ever written about the origins of the EU.
Nor are many aware of declassified documents from the State Department archives showing that US intelligence funded the European movement secretly for decades, and worked aggressively behind the scenes to push Britain into the project. As this newspaper first reported when the treasure became available, one memorandum dated July 26, 1950, reveals a campaign to promote a full-fledged European parliament. It is signed by Gen William J Donovan, head of the American wartime Office of Strategic Services, precursor of the CIA. The key CIA front was the American Committee for a United Europe (ACUE), chaired by Donovan. Another document shows that it provided 53.5% of the European movement’s funds in 1958. The board included Walter Bedell Smith and Allen Dulles, CIA directors in the Fifties, and a caste of ex-OSS officials who moved in and out of the CIA.
Papers show that it treated some of the EU’s ‘founding fathers’ as hired hands, and actively prevented them finding alternative funding that would have broken reliance on Washington. There is nothing particularly wicked about this. The US acted astutely in the context of the Cold War. The political reconstruction of Europe was a roaring success. There were horrible misjudgments along the way, of course. A memo dated June 11, 1965, instructs the vice-president of the European Community to pursue monetary union by stealth, suppressing debate until the “adoption of such proposals would become virtually inescapable”. This was too clever by half, as we can see today from debt-deflation traps and mass unemployment across southern Europe.
Japan cannot take an ever rising yen. It will need to plummet, and quite soon.
Japanese shares sold off and the yen surged against the dollar Thursday after the Bank of Japan’s (BOJ) decision to keep monetary policy steady disappointed a section of the market betting on further stimulus. The benchmark Nikkei 225 was down 3.24%, compared to a 1.41% gain before the decision. The Topix index fell 2.15%. The yen moved sharply higher, with the dollar/yen pair dropping 2.10% to 109.11 as of 12:45 p.m. HK/SIN, compared with the 111 level it traded at before the decision. Australia’s ASX 200 was up 0.54%, boosted by advances in the energy and materials sub-indexes. In South Korea, the Kospi fell 0.61%. In Hong Kong, the Hang Seng index was up 0.50%. Chinese mainland markets retreated, with the Shanghai composite down 0.68%, while the Shenzhen composite dropped 1.04%.
Following the BOJ’s decision and the yen’s strength, major Japanese exporters saw their shares tumble, with Toyota, Nissan and Honda down between 2.74 and 3.55%. A stronger yen is usually a negative for exporters as it reduces their overseas profits when converted into local currency. “However, in the last ten years, Japan’s exporters’ currency sensitivity has been reduced,” Masakazu Takeda at Hennessy Japan Fund told CNBC’s “Capital Connection.” Takeda said as an example, every time the dollar weakened by 10 yen, Toyota’s operating profits declined by about 13%. “That’s down from 20% ten years ago,” he said, adding, “Companies have been making efforts to reduce the currency sensitivity.” Japanese banking stocks also sold off sharply, with shares of Mitsubishi UFJ down 5.06%, SMFG down 5.21% and Nomura tumbling 9.41%. Nikkei index heavyweight Fast Retailing sold off 5.05%.
Where Abenomics fails most spectacularly: “..Household spending in March fell 5.3% from a year earlier..” Note: this was reported prior to the BOJ decision to hold off on stimulus.
Japan’s consumer prices fell in March at the fastest pace in three years and household spending declined at the fastest pace in a year, keeping the Bank of Japan under pressure to implement more stimulus to support the economy. Separate data showed industrial output rose more than expected and labor demand rose to the highest in two decades, but renewed worries about weak private consumption are likely to temper any optimism about the economy. The BOJ is likely to debate expanding monetary stimulus at a policy meeting ending later on Thursday, as sluggish global demand hurts exports and weak wage growth undermines private consumption, sources have told Reuters.. “Oil prices falls and the waning effect from a weak yen pushed down core CPI,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
“We expect the BOJ will ease policy today. It will probably be difficult politically for the BOJ to further cut negative interest rates, so we expect the central bank will focus on qualitative easing such as increasing ETF buying.” The core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, fell 0.3% in March from a year earlier, more than the median forecast for a 0.2% annual decline. That marked the fastest decline since April 2013 due to lower prices for gasoline and slowing gains in prices for durable goods and overseas travel. The core-core CPI, which excludes food and energy, rose 0.7% in the year to March, slower than a 0.8% annual increase in the previous month. Household spending in March fell 5.3% from a year earlier due to lower spending on clothes, leisure activities and gasoline. That was more than the median estimate for a 4.2% annual decline and marked the fastest decline since March 2015.
It’s not just Apple.
Apple, Chipotle and Twitter each got thumped Wednesday after reporting weak or disappointing earnings. Twitter and Chipotle have their own distinct failures, but Apple, like many, is also a victim of the global slowdown. Overall, S&P 500 earnings so far this quarter are down 8%. That marks the third quarterly decline in a row and the worst since 2009, according to S&P Global Market Intelligence. Weak global growth is closing consumers’ wallets, while the strong dollar is only making iPhones and other American goods more expensive for foreign buyers. Add on still-low oil prices and Corporate America is facing major headwinds. “It’s like these companies are trying to play basketball but the tar is melting and sticking to their sneaks. Not fun to watch,” says Jack Kramer, co-founder of MarketSnacks, a financial newsletter.
Apple’s stock quickly fell more than 7% when markets opened Wednesday after it revealed its first annual sales growth decline since 2003. Reeling from its E. coli scare late last year, Chipotle reported its first quarterly loss ever and its stock dropped about 5%. And Twitter’s stock spiraled 15% lower on Wednesday after its results missed estimates. They’re not alone. Big oil, tech and other former bull market studs like Starbucks are getting burned this quarter too. Earnings for energy companies are down a whopping 110% compared to a year ago. Consider this: seven of the 10 major sectors in the S&P 500 are in the red so far this quarter. A year ago, only two sectors suffered profit drops, according to S&P. Tech companies’ earnings are down nearly 6% this quarter. Embodying the trend is Google. It got pounded by the strong dollar, which hurt overseas sales. Microsoft also lost overseas revenue due to the strong dollar.
Stephen Roach says Americans should save more. But the entire economy still ‘stands’ exactly because they either don’t or can’t.
Thanks to fear mongering on the US presidential campaign trail, the trade debate and its impact on American workers is being distorted at both ends of the political spectrum. From China-bashing on the right to the backlash against the Trans-Pacific Partnership (TPP) on the left, politicians of both parties have mischaracterized foreign trade as America’s greatest economic threat. In 2015, the United States had trade deficits with 101 countries – a multilateral trade deficit in the jargon of economics. But this cannot be pinned on one or two “bad actors,” as politicians invariably put it. Yes, China – everyone’s favorite scapegoat – accounts for the biggest portion of this imbalance. But the combined deficits of the other 100 countries are even larger.
What the candidates won’t tell the American people is that the trade deficit and the pressures it places on hard-pressed middle-class workers stem from problems made at home. In fact, the real reason the US has such a massive multilateral trade deficit is that Americans don’t save. Total US saving – the sum total of the saving of families, businesses, and the government sector – amounted to just 2.6% of national income in the fourth quarter of 2015. That is a 0.6-percentage-point drop from a year earlier and less than half the 6.3% average that prevailed during the final three decades of the twentieth century. Any basic economics course stresses the ironclad accounting identity that saving must equal investment at each and every point in time. Without saving, investing in the future is all but impossible.
And yet that’s the position in which the US currently finds itself. Indeed, the saving numbers cited above are “net” of depreciation – meaning that they measure the saving available to fund new capacity rather than the replacement of worn-out facilities. Unfortunately, that is precisely what America is lacking. So why is this relevant for the trade debate? In order to keep growing, the US must import surplus saving from abroad. As the world’s greatest economic power and issuer of what is essentially the global reserve currency, America has had no trouble – at least not yet – attracting the foreign capital it needs to compensate for a shortfall of domestic saving. But there is a critical twist: To import foreign saving, the US must run a massive international balance-of-payments deficit.
The mirror image of America’s saving shortfall is its current-account deficit, which has averaged 2.6% of GDP since 1980. It is this chronic current-account gap that drives the multilateral trade deficit with 101 countries. To borrow from abroad, America must give its trading partners something in return for their capital: US demand for products made overseas.
Some day soon we’ll hear a very loud bang in the Chinese commodities craze. It has effectively turned exchanges into bookmakers. Many ‘investors’ don’t know what they’re buying, they’re just afraid -again- of being left behind.
It’s not just metals caught up in China’s commodity fever. The equivalent of 41 million bales of cotton traded in a single day on the Zhengzhou Commodity Exchange last week, the most in more than five years and enough to make almost 9 billion pairs of jeans, or at least one for every person on the planet. Prices that had slumped to the lowest on record in February surged almost 19% in the four days leading up to the trading spike on Friday. Traders have piled in to Chinese commodity markets, sending volumes of everything from steel to coking coal soaring and prompting exchanges to boost margins and fees or issue warnings to investors. The surge in trading is reminiscent of last year’s equities rally that boosted the stock market before a rout erased $5 trillion. China is the world’s largest consumer of cotton and second-biggest producer.
“Record low levels in February and March sparked buying interest from both inside and outside of the cotton industry and also triggered speculation, which resulted in mounting bets in Zhengzhou futures,” said Liu Qiannan at Galaxy Futures. “With massive investment and encouragement from the crazy steel and iron ore market in China, sentiment then turned to bullish from bearish.” More than 3.6 million contracts of 5 metric tons apiece traded in Zhengzhou on Friday. With Chinese exchanges double counting volume to account for the long and short side of a trade, that’s still about 9 million tons, or 41 million bales. One bale can make 215 pairs of jeans, according to the National Cotton Council of America. On the same day, about 1.6 billion pounds traded on ICE Futures U.S. in New York. That’s about 3.3 million bales, or more than 700 million pairs of jeans, enough to dress only the U.S., Brazil and Japan in denim.
Hollow rhetoric (since there’s no solution), but it does confirm once again how dire China’s situation is : “..one in six of the business loans on Chinese banks’ books — was owed by companies who brought in less in revenues than they owed in interest payments alone.”
China’s leaders need to look beyond the current solutions being floated to tackle the country’s mounting corporate debt problems and come up with a bigger plan to do so, the IMF’s top China expert has warned. The IMF has been expressing growing concern about China’s debt issues and pushing for an urgent response by Beijing to what the fund sees as a serious problem for the Chinese economy. It warned in a report earlier this month that $1.3tn in corporate debt — or almost one in six of the business loans on Chinese banks’ books — was owed by companies who brought in less in revenues than they owed in interest payments alone.
In a paper published on Tuesday, James Daniel, the fund’s China mission chief, and two co-authors, went further and warned that Beijing needed a comprehensive strategy to tackle the problem. They warned that the two main responses Beijing was planning to the problem — debt-for-equity swaps and the securitisation of non-performing loans — could in fact make the problem worse if underlying issues were not dealt with. “Converting NPLs into equity or securitising them are techniques that can play a role in addressing these problems and have been used successfully by some other countries,” Mr Daniel and his co-authors wrote.
“But they are not comprehensive solutions by themselves — indeed, they could worsen the problem, for example, by allowing zombie firms [non-viable firms that are still operating] to keep going.” The plan for debt-for-equity swaps could end up offering a temporary lifeline to unviable state-owned companies, they warned. It could also leave them managed by state-owned banks or other officials with little experience in doing so. Pooling non-performing loans and selling them as securities also presented other potential problems. While it could help clear up debt problems quickly it could also end up helping to prop up struggling state-owned enterprises. Some 60% of non-performing loans in China are owed by SOEs “and are concentrated in a few distressed industries”, they wrote.
This is why China is stockpiling like nuts.
China’s biggest oilfield is suffering huge losses as the government seeks to avoid layoffs despite prices that have dropped below production costs. On April 8, the official Xinhua news agency reported that the Daqing oilfield in northern Heilongjiang province lost over 5 billion yuan (U.S. $769 million) in the first two months of the year. In spite of the costs, production in the first quarter held steady at year-earlier levels of 9.28 million tons (755,800 barrels per day), according to PetroChina, the listed subsidiary of state-owned China National Petroleum Corp. (CNPC). Output has been declining for years at Daqing, China’s mainstay oil resource, which has fueled the economy for over six decades. Annual production of 50 million metric tons (1 million barrels per day) lasted 27 years until 2003 before slipping to the 40-million-ton range, the official English-language China Daily and Global Times said.
In December 2014, PetroChina announced plans to cut output by 1.5 million tons and scale back production at the depleted field to 32 million tons by 2020. But even at lower levels, production at Daqing with enhanced recovery methods is proving uneconomic. Production costs stand at U.S. $45 (292 yuan) per barrel, said Jiang Wanchun, Communist Party secretary of the oilfield, according to The Wall Street Journal. China’s average production cost is $40 (260 yuan) per barrel, China Daily said. With benchmark oil prices falling below $45 since early December, Daqing has been losing money on every barrel it pumps. Prices dipped below U.S. $28 (182 yuan) per barrel in February before staging a partial recovery. Even after international prices approached the $45 range last week, the prospects for profits at Daqing appeared marginal at best.
As a bubble pops.
The slump in crude prices is starting to show up as missed payments by consumers in the oil patch. In states from Oklahoma and Texas to North Dakota and Wyoming, rising unemployment in the energy sector is pushing up loan delinquencies and raising the risk of new losses for banks. Wells Fargo this month reported an increase in borrowers falling behind on payments in areas including Houston and parts of Alaska. J.P. Morgan said auto-loan delinquency rates picked up in some energy-related markets. Overall, energy-dependent states are posting delinquency rates that in many cases exceed the national average, according to data prepared for The Wall Street Journal by credit bureau TransUnion. “In these energy states, we are clearly seeing the impact of the loss of oil jobs,” said Ezra Becker, senior vice president and head of research at TransUnion.
“We don’t expect to see any kind of material improvement in the short term.” Some 119,600 oil and gas jobs nationwide have been eliminated—22% of the total—since September 2014, according to the Federal Reserve Bank of Dallas. The price of U.S.-traded oil, while on the rise this year, has dropped 28% since June. Some analysts have warned that persistent crude oversupply could prevent further price gains. Car loans and credit cards have been affected the most, and there are some early signs of delinquency-rate increases in borrowers who can’t make mortgage payments. Moody’s Investors Service said the share of borrowers in oil-focused areas falling 30 days behind on a pool of Freddie Mac mortgages, while low at 0.38% in December, began to exceed the average elsewhere in the country last summer. The average for other areas was 0.29% in December.
And now hit hard by Apple too.
Hedge funds are getting killed, says hedge fund manager Dan Loeb. Loeb’s Third Point Capital put out its quarterly letter to investors on Tuesday, calling the first three months of 2016 “one of the most catastrophic periods of hedge fund performance that we can remember since the inception of this fund.” Third Point was down 2.3% during the first quarter, which compares with a 1.3% gain for the S&P 500 over the same period. (As bad as that may be, though, it could have been worse — Bill Ackman’s Pershing Square was down more than 25% in the quarter.) Despite the weak performance, Third Point believes it is positioned to do well the rest of the year.
“There is no doubt that we are in the first innings of a washout in hedge funds and certain strategies,” Third Point said. “We believe we are well-positioned to seize the opportunities borne out of this chaos and are pleased to have preserved capital through a period of vicious swings in treacherous markets.” What caused the catastrophe? “Volatility across asset classes and a reversal of certain trends that started last summer caught many investors flat-footed in Q1 2016,” the firm added.
More specifically, Loeb said:
• China is all over the map.
• Hedge funds were long the “FANG” stocks — Facebook, Amazon, Netflix and Google — and those stocks are not doing well.
• “The Valeant debacle in mid-March decimated some hedge fund portfolios.” (The stock lost almost three-quarters of its value during the quarter).
• The collapsed Pfizer-Allergan deal hurt investors.
• A “huge asset rotation” into a “market neutral” strategy.
• He thinks the dollar has peaked, and oil has hit a bottom.
“We believe that the past few months of increasing complexity are here to stay and now is a more important time than ever to employ active portfolio management to take advantage of this volatility,” Loeb concluded. As an industry, hedge funds bounced back in March after a miserable start to 2016. The HFRI Fund Weighted Composite Index gained 1.8% in March, its strongest performance since February 2015. However, hedge funds saw investor redemptions in the first quarter. Investors withdrew $14.3 billion, leaving total assets under management at $3.1 trillion, according to industry tracker Preqin.
What happens when central banks lose the illusion of control, and stocks start falling for real?!
All is calm. All is still. Share prices are going up. Oil prices are rising. China has stabilised. The eurozone is over the worst. After a panicky start to 2016, investors have decided that things aren’t so bad after all. Put your ear to the ground though, and it is possible to hear the blades whirring. Far away, preparations are being made for helicopter drops of money onto the global economy. With due honour to one of Humphrey Bogart’s many great lines from Casablanca: “Maybe not today, maybe not tomorrow but soon.” But isn’t it true that action by Beijing has boosted activity in China, helping to push oil prices back above $40 a barrel? Has Mario Draghi not announced a fresh stimulus package from the ECB designed to remove the threat of deflation?
Are hundreds of thousands of jobs not being created in the US each month? In each case, the answer is yes. China’s economy appears to have bottomed out. Fears of a $20 oil price have receded. Prices have stopped falling in the eurozone. Employment growth has continued in the US. The International Monetary Fund is forecasting growth in the global economy of just over 3% this year – nothing spectacular, but not a disaster either. Don’t be fooled. China’s growth is the result of a surge in investment and the strongest credit growth in almost two years. There has been a return to a model that burdened the country with excess manufacturing capacity, a property bubble and a rising number of non-performing loans. The economy has been stabilised, but at a cost.
The upward trend in oil prices also looks brittle. The fundamentals of the market – supply continues to exceed demand – have not changed. Then there’s the US. Here there are two problems – one glaringly apparent, the other lurking in the shadows. The overt weakness is that real incomes continue to be squeezed, despite the fall in unemployment. Americans are finding that wages are barely keeping pace with prices, and that the amount left over for discretionary spending is being eaten into by higher rents and medical bills. For a while, consumer spending was kept going because rock-bottom interest rates allowed auto dealers to offer tempting terms to those of limited means wanting to buy a new car or truck.
In an echo of the subprime real estate crisis, vehicle sales are now falling. The hidden problem has been highlighted by Andrew Lapthorne of the French bank Société Générale. Companies have exploited the Federal Reserve’s low interest-rate regime to load up on debt they don’t actually need. “The proceeds of this debt raising are then largely reinvested back into the equity market via M&A or share buybacks in an attempt to boost share prices in the absence of actual demand,” Lapthorne says. “The effect on US non-financial balance sheets is now starting to look devastating.” He adds that the trigger for a US corporate debt crisis would be falling share prices, something that might easily be caused by the Fed increasing interest rates.
And this is while the ECB has been buying ABS since 2014. Where would the ‘industry’ be without the ECB? It’s the ‘little things’ that tell the story of where we are, best.
Europe’s securitisation market has experienced its worst quarter for new sales in nearly five years, underscoring the industry’s ongoing decline in spite of efforts from policymakers to revive the sector. During the first three months of the year, €14.3bn of securitisations were sold, marking the lowest quarterly level since mid-2011. Public issuance fell from €19.7bn over the same period a year earlier, according to data from the Association for Financial Markets in Europe. Securitisation — which takes mortgages and other loans, and packages them into bond-like instruments of varying risks — was once a booming industry in Europe but has struggled since the financial crisis. The slide in activity comes in spite of efforts from Brussels to revive the asset class, which it sees as a key source of funding across Europe’s economies.
The ECB has been buying asset-backed securities since late 2014 as part of its asset purchase programmes designed to stimulate the region’s economy. “The market is languishing,” said Richard Hopkin, head of fixed income at the Association for Financial Markets in Europe. “Firms are restructuring and scaling back their securitisation businesses.” Earlier in April, Nomura became the latest investment bank to pare back its securitisation team, amid broader cuts to its European investment banking business. Last summer, Barclays announced job cuts in its team. Market participants have pointed to stringent regulation on the asset class, in particular the capital charges against the products for banks and insurance companies, as a central factor in its decline.
There’s a High Noon fight brewing between Draghi and all of Germany.
The ECB’s ultra-low interest rates could worsen problems for already weak banks in Europe, German Chancellor Angela Merkel said on Wednesday, calling for a tightening of monetary policy. The ECB unveiled a large stimulus package in March that included cutting its deposit rate deeper into negative territory and increasing asset buys, despite the objections of Germany, the largest economy in the euro zone. The ECB stimulus prompted a fresh wave of criticism from German politicians who fear the ultra-easy monetary policy is eroding both the savings of thrifty citizens and also bank margins, putting the banking system at risk. “The risks remain high. There are still too many weak banks in Europe and the low interest rates … will tend to make this problem worse over the coming years,” Merkel said at an event in Duesseldorf for German savings banks.
ECB head Mario Draghi says the policy of printing money and keeping borrowing costs at rock bottom is working and that interest rates will stay at current record lows for a long time. The ECB targets inflation of close to 2% over the medium-term but it is running at just below zero. Merkel said politicians need to press for more structural reforms to help generate stronger growth and private investment, thereby freeing up central banks to pursue a tighter monetary policy. “Central banks, including the ECB, are independent so I think politicians must focus on stimulating growth,” she said.
The likes of Tusk and Dijsselbloem simple enjoy holding a gun to Greece’s head so much they can’t help themselves. It’s what sociopaths derive their pleasures from. So no emergency meeting because of a non-reason: ““There are practical issues that many countries have, with national holidays next week.”
That’s like the old joke of a country being invaded and telling the attackers to come back next week.
Mounting urgency has returned to Greece with the country’s financial predicament igniting fears of a re-run of last summer’s nail-biting drama. Rejecting a Greek request for an extraordinary EU summit to discuss its troubled bailout programme, European council president Donald Tusk instead urged eurozone finance ministers to resume talks that would avert further turmoil. The nation faces default if it fails to receive the necessary loans to cover €3.5 bn in maturing debt in July. “We have to avoid a situation of renewed uncertainty for Greece,” he told reporters after speaking with prime minister Alexis Tsipras on Wednesday. “We need a specific date for a new Eurogroup meeting in the not-so-distant future and I am talking not about weeks but about days.”
In a repeat of last year’s heady days, Athens’ leftist-led government is scrambling to raise funds to ensure payment of salaries and pensions in May. The reserves of state entities and pension funds have effectively been sequestered with officials demanding deposits be placed in the central bank on short-term loan to cover looming shortfalls. “The government is behaving as if it has already run out of money,” said prominent political commentator Pantelis Kapsis. “That in itself signifies there will be no agreement soon. There is great uncertainty. All scenarios are on the table including early elections.” Greece’s embattled prime minister appealed for the emergency EU summit after Athens and its creditors failed late Tuesday to resolve differences over the extent of budget cuts and reforms the debt-stricken state must make in return for rescue loans.
The lack of headway prompted Dutch finance minister and Eurogroup chairman, Jeroen Dijsselbloem, who oversees negotiations, to cancel a scheduled meeting at which it was hoped the talks would finally be concluded on Thursday. Speaking in Paris after talks with his French counterpart Michel Sapin on Wednesday, Dijsselbloem said a new meeting would be lined up in the weeks ahead. “I don’t have a deadline, although there is a sense of urgency that we all share, so we’ll have to see whether it can be next week or ultimately the week after,” he told reporters. “There are practical issues that many countries have, with national holidays next week.”
A bad tourist season could be the last straw for Greece, and another reason for Europe to add more demands.
[..] At its peak last month, close to 14,000 refugees had amassed in Piraeus, posing serious challenges for public order and health. By mid-April, however, attention had turned increasingly to the capital’s erstwhile international airport in Elliniko. Once poised to become Europe’s biggest metropolitan park, the disused airport was transformed into an “official” shelter in March, when it became clear that countries further north had cut off access to Europe for good. If there was a semblance of order to the chaos of Piraeus, there is none here: outside derelict buildings, children play barefoot around overflowing rubbish bins; officialdom comes in the form of a single police car, parked alongside a fence clad with clothes, while up a flight of stairs inside the departure terminal, roughly 2,000 men, women and children – almost double the centre’s capacity – sleep side by side.
Lack of heat or air-conditioning means it is cold at night and stifling during the day; sanitation amounts to five toilets for men and five for women, with showers installed earlier this month. A further 3,000 refugees are crammed into two former Olympic venues – the old hockey and baseball stadiums – at Elliniko, where conditions are said to be so poor that access for NGOs or the media is rare. With hunger reputed to be on the rise, volunteers have openly voiced fears of offering services to people who are increasingly desperate. Last week, following the death of a 17-year-old Afghan girl in the camp, irate local mayors felt compelled to write a letter to prime minister Alexis Tsipras deploring the conditions as unacceptable and inhumane. Calling for immediate measures, the Athens Medical Association warned of a public health emergency.
“So far, Greece has been very lucky,” Papayiannakis noted before news of the Afhgan girl’s death broke. “There have been no serious incidents – but luck, you know, can run out.” Despite record unemployment and poverty levels, Greeks have responded to the influx with compassion and solidarity. Many have brought food and clothes to public squares, harking back to their families’ own experience as refugees when thousands were forcibly expelled from the Anatolian heartland after Greece’s ill-fated attempt to invade Turkey in 1922. For immigrants like Arif Rahman, a businessman who heads the Bangladeshi Chamber of Commerce, that reaction has been heartening – even if the government’s own response has been bungled and chaotic.
A slender man who first came to Greece in the late 1980s, Rahman has all too often witnessed his adopted country’s tough immigration policies – not least its steadfast refusal to offer citizenship to the children of emigres. “Now is the time for Greeks to show what civilisation and democracy means,” he says. “These people don’t want to stay here. We keep telling the government, as foreign community leaders, ‘Ask us for help, we know our people, we know what they need. Don’t let it get uglier than it already has.’”
What a crazy country it is turning into. All in an eery silence. Where are the protests?
More than a million people in the UK are so poor they cannot afford to eat properly, keep clean or stay warm and dry, according to a groundbreaking attempt to measure the scale of destitution in Britain. A study by the Joseph Rowntree Foundation (JRF) found that 184,500 households experienced a level of poverty in a typical week last year that left them reliant on charities for essentials such as food, clothes, shelter and toiletries. More than three-quarters of destitute people reported going without meals, while more than half were unable to heat their home. Destitution affected their mental health, left them socially isolated and prone to acute feelings of shame and humiliation.
Although the study could not demonstrate that destitution had increased in recent years, it said this would be a plausible conclusion because of related evidence showing austerity-era rises in severe poverty, food bank use, homelessness and benefit sanction rates. In 2015, there were 668,000 destitute households containing 1,252,000 people, including 312,000 children. The study said this was an underestimate because the data did not capture poor households who eschewed charity handouts or used only state-funded welfare services Julia Unwin, chief executive of JRF, said: “It is simply unacceptable to see such levels of severe poverty in our country in the 21st century. Governments of all stripes have failed to protect people at the bottom of the income scale from the effects of severe poverty, leaving many unable to feed, clothe or house themselves and their families.”
Researchers called on the government to monitor destitution levels annually to better understand how people in poverty slipped into extreme hardship and to examine what could be done to close the holes in the welfare safety net. Destitution was defined by researchers as reliance on a weekly income so low (£70 for a single adult, £140 for a couple with children after housing costs) that basic essentials were unaffordable. People who met at least two of six measures over the course of a month, including eating fewer than two meals a day for two or more days, inability to heat or light their home for five days or sleeping rough for one or more nights, were also deemed to be destitute.
Australia is trying to outdo the EU in becoming the wasteland of of international law, morals, decency and human values.
Australia’s hardline immigration policy was thrown into turmoil yesterday after Papua New Guinea (PNG) ordered a processing camp to close, leaving the fate of hundreds of asylum-seekers hanging in the balance. The move to shutter the Australian-funded Manus island facility follows a Supreme Court ruling on Tuesday that holding people there was unconstitutional and illegal. Piling further pressure on Canberra, just weeks away from an expected election campaign, an Iranian refugee set himself on fire during a visit by UN officials to Nauru, the other Pacific nation where Australia sends boat people. And four others on the tiny outpost reportedly attempted suicide by drinking washing powder on Tuesday.
“Respecting this (court) ruling, Papua New Guinea will immediately ask the Australian government to make alternative arrangements for the asylum seekers at the regional processing centre,” Prime Minister Peter O’Neill said. Papua New Guinea’s former opposition leader Belden Namah had challenged the Manus arrangement in court, claiming it violated the rights of asylum seekers. The Supreme Court found that detaining them on the island was “contrary to their constitutional right of personal liberty”.
Despite this, Australian Immigration Minister Peter Dutton was adamant that none of the 850 or so men held there would enter his country and that Canberra’s policy – designed to deter others wanting to make the risky journey by boat – would not change. “As I have said, and as the Australian government has consistently acted, we will work with our PNG partners to address the issues raised by the Supreme Court of PNG,” he said in a statement after Mr O’Neill’s decision. Mr O’Neill did not set a timeframe for the closure. He said he did not anticipate asylum seekers being kept for so long at the Manus camp, which was reopened in 2012 by Australia after being closed five years earlier when the then Labor government abandoned offshore processing.