Wyland Stanley Pedestrians ascending steep grade, San Francisco 1935
Demonstrations as we speak in London for Cameron to stand down. He will release tax files instead. But will that stem the protests?!
An intriguing approach to damage limitation by Panama prat David Cameron, particularly considering the prime minister’s only real life job ever was as a PR. The prime minister appears to have been the last person to realise what everyone else in Westminster could see on Monday. Namely, that he’d be sitting down for an awkward tell-all – or at least a tell-some – by Thursday. My absolute favourite tale from Cameron’s era as press chief for the culturocidal Carlton Television comes courtesy of the Guardian’s then media correspondent, who rang him up on a story. Like all mediocre PRs, a large part of his strategy was ignoring calls, but having accidentally answered this one he was cornered – and consequently pretended to be his own cleaner. “I can’t prove it was him,” the journalist reflected later, “but it certainly sounded a lot like him.”
Well, he does have that central casting cleaner’s voice, so perhaps we ought to leave the case file open. Even so, for the journalists who recall the barefaced whoppers Cameron was able to tell them back in those days, this week has not been an occasion to break out the smelling salts. “I’ve never tried to be anything I’m not,” Cameron claimed to Robert Peston in his belated confession. What about a cleaner? Or a football fan? Evidently the PM judged it the wrong moment to bring up either impersonations of the help, or Aston Villa. Or, indeed, West Ham. Still, at some point, Fortune was always going to collect on the deal Cameron foolishly made when he called the comedian Jimmy Carr’s (also legal) tax arrangements “morally wrong”. Showbiz now joins football on the list of things upon which he ought never to comment again.
Explaining to Peston that “my dad was a man I love and miss every day”, Cameron admitted that he and his wife had in fact invested in Ian Cameron’s offshore firm Blairmore in 1997, then sold their stake in 2010 for “something like £30,000”. That Cameron’s shifty cover-up has been more damaging than his non-crime is almost too insultingly obvious to state. He will not be assisted by the subconscious dismissiveness in that styling – “something like £30,000”. There is a fine line between fastidious precision and sounding like something north of the average British salary is rather forgettable, and the PM fell on the wrong side of it.
Cameron as PM now guarantees a Brexit vote. But who to replace him? Can’t be Osborne.
[..] Three years ago Cameron put the future of the UK – and even its territorial integrity (think Scotland) – at stake by setting off towards an in-out referendum on the EU as a way of managing his own party. It is obvious he has failed to put internal Tory dissent to rest. That Boris Johnson has sided with leave brings to mind how in 2005 Laurent Fabius, one of France’s socialist heavyweights, opted for no against his own party’s leadership in the referendum campaign on the EU constitution. That led to disastrous results – despite a majority of the French media calling for a yes vote. In Britain the media has long been Eurosceptic. Even the BBC seems hesitant these days. The Daily Telegraph describes the EU as either a threatening entity for Britain, or too weak an institution to protect it.
And long gone are the days when authoritative European voices could reach out to British voters in a convincing manner – as when Jacques Delors singlehandedly swayed the British left towards a pro-European position in 1988. The French president, François Hollande, is dismally weak, and Angela Merkel is less politically sturdy than she once was. Populist movements whose leaders believe they stand to benefit from a British exit are on the rise across the continent. The deeper phenomenon at work is a wider one. British society suffers from an identity crisis not unlike those that have hit other western countries in the wake of globalisation and the 2008 financial crisis. Fragmentation is spreading everywhere as nations become more inward-looking and worried about how the world is changing.
In the British case this general sense of disarray now has the opportunity to express itself in a referendum. Britain’s image has often been associated with common decency, sober assessment and cool-headedness. But this is an age of extremes when moderate voices are fast drowned out by radical slogans. Of course, Cassandras have been wrong before about the European project. The eurozone has held together. Grexit didn’t happen. Merkel may be weaker, but she has not lost power. Yet it would be foolish not to see that the omens for Britain remaining in the EU are very poor. But does anyone care? If they do, they need to wake up now and shout stop.
Curious: in defense of tax evaders, saying that they pay so much tax.
Switzerland’s finance minister has defended the use of offshore companies by the world’s wealthy to cut their tax bills, now under scrutiny after publication of the “Panama Papers”. “You have to create these opportunities,” Finance Minister Ueli Maurer, from the right-wing Swiss People’s Party (SVP), told Swiss newspaper Blick in an interview published on Friday. “Rich people pay a lot more tax than me,” said Maurer. “I am not rich – and without the rich I would have to pay more tax.” Four decades of documents from Panamanian law firm Mossack Fonseca, which specializes in setting up offshore companies and has offices in Zurich and Geneva, showed widespread use of those instruments by global banks and triggered investigations around the world.
Maurer’s comments were not echoed by the head of Switzerland’s financial watchdog Mark Branson on Thursday. He said the country’s banks must clamp down on money laundering in the wake of the Panama Papers. The Geneva prosecutor has also opened a criminal inquiry in connection with the millions of documents leaked to the German newspaper Sueddeutsche Zeitung. They then became part of a broader investigation coordinated by the International Consortium of Investigative Journalists. Switzerland is the world’s biggest international wealth management center with around $2.5 trillion in assets and has taken on more wealth of late from emerging markets, from which it is harder determine the origin of assets, Branson said.
Iceland is all of us, on a more practical scale.
In the years since the 2008 financial crisis, Iceland – one of its unlikely epicentres – has recovered far better than most. It is enjoying robust economic growth, low income inequality and a 4 per cent unemployment rate that would make southern Europe’s lost generation salivate. So why are so many Icelanders now trying to topple their government, hurling eggs, Skyr yoghurt and even fish heads at the parliament? The immediate answer is buried within the Panama Papers of the Mossack Fonseca law firm, which this week revealed prime minister Sigurdur David Gunnlaugsson’s links with an offshore company. In so doing, they prompted protests that rocked Reykjavik and eventually forced Mr Gunnlaugsson’s resignation.
Yet the episode has also laid bare the deep divisions and unresolved anger still festering beneath the subarctic island’s social surface since the 2008 crisis. The politics that have flowed from it are all the more intimate on an island of just 330,000 souls. There are two nations in this country, the ones who own everything… and the rest of us, said Kristjan Saevald, a 28-year-old graphic designer and keen participant in demonstrations outside Iceland’s parliament and presidential residence. “We are sick of it. It’s not just a change of government we want, it’s a change of the system,” Mr Saevald said. For him and others who feel that the pain of Iceland’s rebuilding has not been shared equally, the ruling coalition’s replacement of Mr Gunnlaugsson with his fisheries minister, Sigurdur Ingi Johannsson, is unlikely to assuage their anger.
Just minutes after Mr Johannsson’s appointment, Asdis Thoroddsen, a tour guide and film-maker, stood in a chill wind outside Iceland’s presidential residence on a spit of coastal land near Reykjavik to show the new prime minister a symbolic red card. Ms Thoroddsen accused Mr Johannsson’s Progressives and his coalition partner, the Independence party, of presiding over a longstanding political system of patronage and state favour. “The cronyism here is very deep rooted and very hard to get rid of,” she said. Iceland’s ills were papered over by the extraordinary boom that preceded the last crisis, when a fishing-dominated economy suddenly became a global banking hub — sucking in foreign money with promises of high returns. Its citizens suddenly enjoyed among the world’s highest per-capita GDP.
Of course, the country’s overly-leveraged banks ended up crashing in spectacular fashion. This week’s demonstrations have echoed Iceland’s 2009 “pots and pans revolution”, when large crowds bashing kitchen utensils together to make more noise besieged parliament in fury and eventually forced then Independence party-led government to resign.
One delusion fights the other.
There was a time when the German chancellor and the head of the ECB had nice things to say about each other. Mario Draghi spoke of a “good working relationship,” while Angela Merkel noted “broad agreement.” Draghi, said Merkel, is extremely supportive “when it comes to European competitiveness.” These days, though, meetings between the two most powerful politicians in the euro zone are often no different than their face-to-face at the most recent summit in Brussels. She observed that his forced policy of cheap money is endangering the business model of Germany’s Sparkassen savings banks and retirement insurance companies. He snarled back that the sectors would simply have to adapt, just as the American financial sector has. The alienation between Germany and the ECB has reached a new level.
Back in deutsche mark times, Europeans often joked that the Germans “may not believe in God, but they believe in the Bundesbank,” as Germany’s central bank is called. Today, though, when it comes to relations between the ECB and the German population, people are more likely to speak of “parallel universes.” ECB head Draghi doesn’t understand why he is getting so much resistance from the country that has profited from the euro more than any other. Yet Germans blame Draghi for miniscule yields on savings accounts and life/retirement insurance policies. Frustration is growing. Draghi has pushed the prime rate down to zero and now even charges commercial banks a fee for parking their money at the ECB. He has also bought almost €2 trillion worth of bonds from euro-zone member states, making the ECB one of the largest state creditors of all time.
During his most recent appearance before the Frankfurt reporter pool, he went even further. The idea of pumping money directly into the economy, he said, was a “very interesting concept,” with a helicopter to distribute the money across the country if necessary, as economists have half-jokingly recommended. Doing so is seen as a way of boosting the economy. German money being thrown out of a helicopter: It would be difficult to find a more fitting image to show people that the money they have set aside for retirement may soon be worth very little. The criticism of Draghi had already been significant, but his public ruminations about so-called “helicopter money” have magnified it to extreme levels.
Even economists that tend to back the ECB, such as Peter Bofinger, who is one of Merkel’s economic advisors, are now accusing Draghi of constantly “pulling new rabbits out of the hat.” Leading representatives of the banking and insurance sectors are openly speaking of legal violations. And strategists within Merkel’s governing coalition, which pairs her conservatives with the center-left Social Democrats (SPD), are concerned that Draghi is handing the right-wing populist Alternative for Germany (AfD) yet another issue where they can score points with the voters. There is hardly any other issue that enrages Germans at town meetings and political party conventions as much as the disappearance of their savings due to the “unconventional measures” adopted by the ECB in Frankfurt.
“..laissez-faire market experimentation intended to prove a fundamental point about the capacity of free markets to organise the economy without the necessary subjugation of free will..”
What’s the euro really? The collective currency of sovereigns subscribed to the European monetary system? Or an international bridging platform — a no man’s land if you will — for laissez-faire market experimentation intended to prove a fundamental point about the capacity of free markets to organise the economy without the necessary subjugation of free will? The euro-zone, we propose, is not what it seems. And if we see it as something it’s not, it’s mainly because we’ve forgotten the history which made it the thing it is today. That though is the story of the rise and dominance of European-brokered international capital markets from the 1960s onwards, a system itself predicated on the rise of the no-man’s land neutral security: Eurodollars. Euromoney. Eurocurrency. Eurobonds. Eurosecurities.
But also… Offshore arrangements. Through this particular looking glass, offshore doesn’t stand for a safe haven loophole which allows the elite to escape their social duties and obligations. It stands for something entirely different. A honey trap designed to lure capital away from outrageous spending in the consumption markets today, and over to the funding of much riskier development in territories or classes yet to be assimilated to westernised cultural norms. It also provides a neutral territory or common ground were capital can be ranked pari passu irrespective of where it’s come from, for the good of international agreement, trade and neutrality. Hence why the likes of James Quarmby, a wealth structuring expert at law firm Stephenson Harwood, argue the offshore system is the essential “grease on the wheels in international trade”.
Let the price wars begin.
Iran ratcheted up its offense in the oil market after breaking a pricing tradition, signaling it’s seeking to win market share at a time when rival producers are trying to forge a deal on freezing output. State-run National Iranian Oil Co. will sell the Forozan Blend crude for May to Asia below the level offered by rival Saudi Aramco for Arab Medium, the third month the Persian Gulf state is giving the discount after setting it at a premium for almost seven years through February 2016, data compiled by Bloomberg show. NIOC will also sell the Iranian Light grade to Asian customers at 60 cents below Middle East benchmark prices, a company official said on Friday, asking not to be identified because of internal policy.
While producers including Saudi Arabia, OPEC’s biggest member, and Russia are due to meet in Doha on April 17 to discuss a deal to freeze output in a step toward clearing a global glut, Iran is determined to regain market share lost over the past few years due to sanctions over its nuclear program. To pry away customers relishing oil that is cheaper than mid-2014 levels by more than 50 percent, the Persian Gulf state is expected to focus on pricing and boosting supply. “Unquestionably, since the lifting of sanctions, the Iranians have become a force to be reckoned with in global oil markets,” said John Driscoll, chief strategist at JTD Energy Services Pte, who has spent more than 30 years trading crude and petroleum in Singapore. “Their mission is to recapture market share, pure and simple.”
NIOC will sell the Forozan Blend in May for Asian customers at $2.43 a barrel below the average of the Oman and Dubai benchmark grades, according to the company official. That’s 3 cents lower than state-run Saudi Aramco’s price for the similar Arab Medium variety for a third month, data compiled by Bloomberg show. Forozan was at a premium of 7 cents to the Saudi oil for February sales. The Iranian Heavy grade will sell in May to Asia at a discount of $2.60 a barrel to the Oman-Dubai average while the Soroosh variety’s price was set at $5.65 a barrel below Iranian Heavy, according to the official.
How about that consumer society, though?!
China’s uptake of industrial robots is set to rise rapidly in the coming years as higher labour costs and the heightened aspirations of workers push manufacturers to embrace automation. The development may add to fears that workers in poorer countries are most in danger of being displaced by automation, with analysis by Citi and the Oxford Martin School, a research and policy unit of the UK university, published earlier this year suggesting that more than 75% of jobs in China are at a “high risk” of computerisation. Mirae Asset Management, an Asia-focused house with $75bn of assets, predicts that China’s robot army will expand at a compound annual growth rate of 35% until 2020.
Given that the International Federation of Robotics estimates that China had 260,000 industrial robots last year, Rahul Chadha, chief investment officer of Mirae, says: “Using the rule thumb that one industrial robot replaces four to five workers, this suggests that robots have rendered more than 1m people jobless.” This figure is set to rise sharply in the coming years. As the first chart shows, the number of robots per 1,000 employees in China, as of 2013, was just 30% of the level in North America, 11% of the German figure, 9% of Japan’s tally and 7% of that in South Korea. Mirae argues that China’s use of robots is tracing the path blazed by Japan a quarter of a century ago, and still has several years of rapid expansion ahead of it, as the second chart shows.
This concurs with forecasts from the IFR, which says China acquired 57,000 robots in 2014 but is likely to be buying 150,000 a year by 2018. Mr Chadha, who calculates that robots will replace around 3.5m Chinese workers over the next five years, says: “The message that comes from the leadership is on improving productivity via automation. They are paranoid about doing things quickly, they believe they have got to because their competitors will do the same. “When I meet companies on the ground, they say ‘the demand environment is not great, what we can do is improve our processes, improve our productivity’.”
Zhongjin Capital Management made a splash in the past couple of years in Shanghai. The wealth management firm’s imposing branch office on Shanghai’s historic Bund pulled in many eager investors seeking the double-digit returns it promised on short-term financing products. It had a big profile, sponsoring popular Shanghai TV dating program “Saturday Date” and signed up domestic billiards star Pan Xiaoting as a spokesperson. But this week, the image of riches and success that it had cultivated came crashing down. Police said they arrested 21 executives linked to Zhongjin Capital on April 5 on suspicion of “illegal fundraising,” a loosely defined term applied to irregular behavior in China’s energetic but opaque shadow banking sector.
The only person named by Shanghai police so far has been top executive Xu Qin, who local media said had been arrested at the Shanghai airport on his way to get married in the Vatican. Xu has been described by domestic media as a high roller, who is under 30 years of age. Chen Jiajing, the 29-year-old chairwoman of Zhongjin’s parent Guotai Investment Holdings, cannot be located. Public statements issued this week by two Hong Kong-listed companies in which Guotai is a major stakeholder indicated they had been unable to reach her. Zhongjin employees told Reuters that other senior managers had been arrested during a raid on company offices. They were interrogated, allowed to use the bathroom only if they had a police escort, then hauled off, the staff said.
Calls to Zhongjin and Guotai headquarters in Shanghai went unanswered. Both company websites were inaccessible on Friday. The authorities did not provide further information about the case, and what the investigation’s focus is. “The really strange part was that our business hit a new all-time high on April 5, but the next day the offices were closed,” one employee who gave her name as Jiang said in a phone interview, adding that investors had been paid off on schedule the day prior to the arrests, but were unable to withdraw funds that were scheduled to mature on April 6. “The victims are the small investors and the low-level employees. We all got our friends and family to invest in the company’s products,” she said.
Global warming is changing the way the Earth wobbles on its polar axis, a new Nasa study has found. Melting ice sheets, especially in Greenland, are changing the distribution of weight on Earth. And that has caused both the North Pole and the wobble, which is called polar motion, to change course, according to a study published on Friday in the journal Science Advances. Scientists and navigators have been accurately measuring the true pole and polar motion since 1899, and for almost the entire 20th century they migrated a bit toward Canada. But that has changed with this century, and now it’s moving toward England, according to study lead author Surendra Adhikari at Nasa’s Jet Propulsion Lab. “The recent shift from the 20th-century direction is very dramatic,” Adhikari said.
While scientists say the shift is harmless, it is meaningful. Jonathan Overpeck, professor of geosciences at the University of Arizona, who wasn’t part of the study, said that “this highlights how real and profoundly large an impact humans are having on the planet.” Since 2003, Greenland has lost on average more than 272 trillion kilograms of ice a year, and that affects the way the Earth wobbles in a manner similar to a figure skater lifting one leg while spinning, said Nasa scientist Eirk Ivins, the study’s co-author. On top of that, West Antarctica loses 124 trillion kgs of ice and East Antarctica gains about 74 trillion kgs of ice yearly, helping tilt the wobble further, Ivins said. They all combine to pull polar motion toward the east, Adhikari said.
“Monday was an expensive, but meaningless show..”
When the Greek authorities announced last week that they were unable to carry out additional mass deportations because some migrants had suddenly disappeared, they were referring to people like Mohammed. Just as quickly as the deportations had begun, they came to a halt. In the dawn hours on Monday, the EU began implementing the refugee deal it recently reached with Turkey. At least that’s the way things looked. That day, 202 migrants were deported from Lesbos and Chios to Dikili in Turkey. The action was intended to show that the major exchange of refugees had begun. The same day, Syrian refugees arrived in Germany legally on flights from Turkey. By the middle of the week, no more refugees were arriving on the Greek islands. The message appeared to be getting across.
So was the deal working? The short answer is: No. “Perhaps we should wait and see a bit longer,” Dimitris Vitsas, the deputy Greek defense minister responsible for addressing the refugee crisis, says. He says the weather may have played a part and that he doesn’t want to draw premature conclusions. “But the numbers do show that something is working.” But what? Is it the deal with Turkey or the PR machinery that has accompanied it? The deportations that took place on Monday aren’t very telling in terms of whether the mechanism will ultimately work or not. The EU had set April 4 as the day of implementation because it wanted to finally show that it could produce results. The overly hasty operation had one aim: that of sending a strong message.
What went unnoticed by most, though, is that the people sent back to Turkey from Lesbos and Chios on Monday were exclusively migrants who had wanted to continue their journey to Northern Europe and had not submitted applications for asylum in Greece. But Greece had already had the ability to deport these “illegal” migrants to Turkey since 2002 within the scope of a so-called readmission agreement that both countries had agreed to. So the new deal hadn’t even been necessary for the deportations to happen. “Monday was an expensive, but meaningless show,” says Angeliki Dimitriadi, a visiting researcher at the European Council on Foreign Relations in Berlin. “Now the truly delicate work begins.”
Of the more than 3,000 migrants who are still on Lesbos, almost all have since submitted asylum applications. They hope that doing so will enable them to prevent being deported. The refugees are assuming that it will take weeks or months to process their applications. With the submission of the applications, the Greek government no longer has the right to automatically deport them; the country is legally obligated to review every application. Refugees who have applied can only be deported once asylum status has been rejected. The worry now is that thousands of people may be stuck on the island for months to come without any certainty.
Things will get more difficult when Greece soon begins rejecting Syrian refugees as planned and sending them back to Turkey. At that point, a complicated legal dispute is expected to ensue. First, it remains questionable whether Greece will be capable of carrying out the asylum procedures within only a matter of days as planned. The country lacks both money and the necessary personnel. The Greek asylum agency currently has only 295 employees at its disposal across the entire country. It often takes months if not years before decisions are made.
And the beat goes on..
Greece’s coast guard says at least five refugees have drowned in the eastern Aegean Sea after a small plastic boat capsized. The five victims, four women and a child, were found around dawn Saturday northeast of the Greek island of Samos, close to the Turkish coast. A coast guard spokeswoman says there were also five survivors: two women, two men and a child. The spokeswoman spoke on customary condition of anonymity. She says the coast guard has no information about the ages and nationalities of the refugees or the children’s gender. The survivors, who are in a state of shock, told authorities a total of 11 people were aboard the 3.5-meter boat.