Claude Monet Bain à la Grenouillère 1869
Just plain nonsense. If people are smart enough to hack into such systems, they are certainly also smart enough to either leave no trace at all, or to leave traces that point to someone else. So if you find something that points to Russia, you know it wasn’t them. And that’s before you pump a story up like this, where one lonely unconnected laptop becomes a threat to the entire US grid.
A story published by The Washington Post Friday claims Russia hacked the electrical grid in Vermont. This caused hysteria on social media but has been denied by a spokesman for a Vermont utility company. The Post story was titled, “Russian hackers penetrated U.S. electricity grid through a utility in Vermont, officials say.” The story said, “A code associated with the Russian hacking operation dubbed Grizzly Steppe by the Obama administration has been detected within the system of a Vermont utility, according to U.S. officials.” The Post published the story before being able to get comment from the two utility companies in Vermont. The Burlington Electric Department would end up putting out a statement showing the premise of The Washington Post story as being untrue.
“Last night, U.S. utilities were alerted by the Department of Homeland Security (DHS) of a malware code used in Grizzly Steppe, the name DHS has applied to a Russian campaign linked to recent hacks,” a spokesman for the Burlington Electric Department said. “We acted quickly to scan all computers in our system for the malware signature. We detected the malware in a single Burlington Electric Department laptop not connected to our organization’s grid systems.” The Vermont Public Service Commissioner Christopher Recchia told The Burlington Free Press, “The grid is not in danger.” However, this false Washington Post story about a Russian intrusion into the American electrical grid has caused panic among journalists.
“CNN claimed that an unnamed US official who was “briefed on the matter..” Yada yada. And Putin’s decision not to expel Russains was not some stunnning reversal either. He saw this one coming from miles away, it wasn’t some last-minute thing. As I said yesterday on Facebook:
“Stunning reversal”? I beg to differ. Lavrov suggesting earlier that Putin expel 35 US diplomats was a clear set-up. And Obama in turn allowed Putin to take the high road by expelling 35 Russians with just 3 weeks left till Trump.“We reserve the right to retaliate, but we will not sink to the level of this irresponsible ‘kitchen’ diplomacy.” Bye bye Barack. You lost.
As mainstream media continues to push a narrative of problematic “fake news,” on Thursday evening CNN falsely accused Russia of retaliating against American children by closing the Anglo-American School of Moscow. Shortly after the announcement of new US sanctions against Russia, CNN claimed that an unnamed US official who was “briefed on the matter” had reported to them that Moscow was closing the school. “Russian authorities ordered the closure of the Anglo-American School of Moscow, a US official briefed on the matter said. The order from the Russian government closes the school, which serves children of US, British and Canadian embassy personnel, to US and foreign nationals,” reported CNN. The lie was rapidly debunked by a Russian Foreign Ministry spokeswoman.
“US officials ‘anonymously informed’ their media that Russia closed the Anglo-American School in Moscow as a retaliatory measure,” Russian Foreign Ministry spokeswoman Maria Zakharova wrote of CNN’s claims on her Facebook page. “That’s a lie. Apparently, the White House has completely lost its senses and began inventing sanctions against its own children.” On Friday, Russian President Vladimir Putin responded to the new sanctions by “embarrassing” US President Barack Obama and brushing it off, stating that he will wait until President-elect Donald Trump takes office to improve relations between the two countries. Putin also wished Obama a happy new year, and invited US diplomats children to the New Year and Christmas children’s parties at the Kremlin. CNN has not retracted their fake-news story or acknowledged the error.
Even when reporting on it, US media have no qualms about throwing in more false news: ..Edward Snowden, who stole government secrets and later gave them to Russia in exchange for political asylum.. Slander.
President-elect Donald Trump Friday slammed CNN and NBC News for its coverage of the Moscow hacking issue, saying on Twitter that “the Russians are playing” the news organizations “for such fools” and that they “don’t have a clue.” Trump’s post followed an earlier one Friday in which he praised Russian President Vladimir Putin for not expelling American diplomats in retaliation for President Barack Obama’s sanctions on Thursday in response to the breach at the Democratic National Committee and other party operatives. The later post also came as CNN’s Jim Sciutto interviewed former Republican House Intelligence Committee Chairman Pete Hoekstra, who once served as a Trump surrogate, on Putin’s response. Sciutto challenged Hoekstra’s assertions that U.S. intelligence agencies have hacked other world leaders.
“Quite a throw-away line there, Congressman Hoekstra,” the CNN anchor said. “I’m an American and I listen to that, I hear that a foreign actor hacked into political organizations in the U.S. – and they strategically leaked it out during an election campaign. “Whether that’s Republican or Democrat or any other party, that sounds serious. “Are you saying, ‘Heck it’s another part of the Wild West in cyberspace and we as a country should let that pass?” Sciutto asked. “I’m not saying we should let it pass,” Hoekstra responded. He then referenced former NSA contractor Edward Snowden, who stole government secrets and later gave them to Russia in exchange for political asylum. “Snowden clearly demonstrated that the United States hacked into [German Chancellor] Angela Merkel and that we were listening to her conversations,” Hoekstra said.
Obama has opened this vast expanse of high road for Russia.
The US’ decision to expel 35 Russian diplomats has affected 96 people, including the officials themselves and their families, the spokesperson for the Russian Foreign Ministry said. Moscow refrained from responding in kind, to not ruin the New Year for American diplomats. The Russians forced to leave the US includes some pre-school children, Maria Zakharova said. “One can only hope that this was the last thing that the current administration does to spoil bilateral relations – the last strange, unwise decision. It targeted, among other things, ordinary people and their simple human joys – things which unite people all around the world. Practically everyone celebrates the New Year, but this is what the Obama administration did,” she said.
The US declared 35 Russian diplomats accredited in the US persona non grata, giving them 72 hours to leave the country. The foreign ministry spokesperson remarked that while some of the Russian diplomats had been working in the US for years, others arrived as recently as two months ago. This did not prevent Washington from expelling them for allegedly trying to interfere with the US election in 2015 and early 2016, which was the reason stated by the US. The Kremlin decided to send a government plane to the US to evacuate the Russians. Some of them reportedly complained that buying plane tickets on such short notice was problematic.
Zakharova said Moscow hoped that the bad timing of the expulsion and all the troubles it caused to the Russian citizens was an oversight rather than intended malice on the part of the White House. Russia refrained from its usual practice of responding to expulsions of its citizens by a foreign power with mirror expulsions of the respective country’s citizens from Russia. “We took into serious consideration how our American colleagues and their families would feel. Especially their children, who are now preparing for the New Year and are on their Christmas holidays,” Zakharova explained. “They would have been cut off from their school programs and forced to pack their things and go back to their homeland in 72 hours. So we decided against it.”
With 148 pardons, Obama will be the second-least-forgiving president in modern history.
President Barack Obama granted 78 pardons earlier this month, doubling the total for his presidency – and ensuring that it will not go down as the least forgiving in more than a century. Instead, it will probably end up as the second-least forgiving. It’s a strange legacy for a president who has spoken so eloquently about the need for a more fair and rational criminal-justice system. It’s also a missed opportunity to notch a small victory for another issue the president is passionate about: voting rights. There are 50,000 people released from federal prisons each year, and many return to states that either permanently bar them from voting or require them to apply for restoration of their rights. Most of these felons don’t deserve pardons, of course; only 3,000 have applied. And most ex-offenders without voting rights have committed state, not federal, crimes.
None of this should stop Obama from issuing pardons in deserving federal cases. There are other ways for the president to show clemency besides pardons. A commutation, for example, reduces a prisoner’s sentence. Obama has commuted the sentences of more than 1,000 inmates – more than the last 11 presidents combined, a statistic the administration is fond of citing. A less heralded statistic is that Obama has received far more applications – some 31,000 – than his predecessors. The reason is simple: He invited federal prisoners to apply. A frequent critic of the nation’s harsh sentencing laws, he is the first president to organize an official clemency initiative to address the issue.
They make it up as they go along. “They just say, ‘Oh, this is needed to get to 8%,’ as if we all knew the number was 8%, when in fact that’s a completely new number.”
Deutsche Bank, UniCredit and eight other European Union banks would fall short of the ECB’s capital demands on Banca Monte dei Paschi di Siena based on stress-test results, highlighting potential objections to the plan. The ECB told Monte Paschi it needed enough capital to push its common equity Tier 1 ratio to 8% of risk-weighted assets in the adverse scenario of the stress test, the Bank of Italy said in a statement late on Dec. 29. That’s well above the legal minimum of 4.5%. This year’s health check had no pass mark, but in 2014 lenders were held to a CET1 ratio of 5.5%. Monte Paschi was the worst performer in the stress test’s adverse scenario with a CET1 ratio of minus 2.4%, followed by Allied Irish Banks with 4.3%. The Italian government is planning a bailout of Monte Paschi.
Under European Union law, state aid can be given to solvent banks to cover a stress-test shortfall, but the absence of a hurdle means the size of the gap could be disputed when Italy seeks approval for the rescue from the European Commission. “There’s a lot more to be explained,” said John Raymond at CreditSights. “They just say, ‘Oh, this is needed to get to 8%,’ as if we all knew the number was 8%, when in fact that’s a completely new number.” The government in Rome is planning a so-called precautionary recapitalization for Monte Paschi. The Bank of Italy said the ECB’s demands for an 8% CET1 ratio and a total capital ratio of 11.5% translate to a shortfall of 8.8 billion euros ($9.3 billion).
Closing the CET1 gap requires 6.3 billion euros of high-quality capital, 4.2 billion euros of which will come from converting subordinated debt to equity, with the remainder provided by the government, according to the Bank of Italy. Another 2.5 billion euros will be needed to offset capital lost in the debt-to-equity conversion to reach the 11.5% total ratio. A person familiar with the matter said the CET1 premium of 3.5 %age points above the legal minimum is intended to restore market confidence. In the stress test, Deutsche Bank emerged with a CET1 ratio of 7.8%, while UniCredit had 7.1%. The CET1 ratios of Barclays and Societe Generale were 7.3% and 7.5%, respectively.
A private email I got yesterday talked about rumors swirling around in China that the country may ‘close’, and return to the isolation of Mao times, with only ‘official’ companies being allowed to handle dollars, and no Chinese individuals at all, as well as a fixed exchange rate. I don’t see how that would work in a practical sense. As I said a few days ago in my China article, in which I mentioned such capital controls, this too would risk social unrest. People who’ve tasted freedom are not likely to give it up again easily. It would also mean an end to the economic expansion.
China enhanced its ability to stabilize its currency, as the rising dollar threatens to undermine its economy by accelerating the flow of capital out of the country. China’s central bank is adjusting the mix of foreign currencies used in setting the yuan’s official daily value, a change analysts said should help support the weakening currency. The move, which goes into effect Jan. 1, reflects the delicate dance Chinese policy makers face with the yuan. China wants a slightly weaker currency to help exporters and maintain competitiveness with other economies as the dollar rises. But it also worries that a sharp decline in the yuan’s value would raise fears the central bank is losing control, undermine the public’s trust and trigger excessive capital outflows.
By diluting the dollar’s share and bringing in currencies from the Korean won to the Saudi riyal and Swedish krona, the People’s Bank of China is giving itself more room to maneuver to keep the yuan from falling too fast, analysts said. In recent weeks, the yuan has buckled under uncertainty about China’s economic performance, a surging U.S. dollar following Donald Trump’s presidential-election victory and escalating flows of Chinese currency moving offshore. The potential for faster U.S. interest-rate increases could add even more downward pressure on the yuan, with some analysts and investors predicting the currency could break the psychologically important seven-yuan-per-dollar level as soon as next month. The yuan has dropped 7% against the dollar this year, nearly double the decline from the year before.
China’s move is the latest by global policy makers trying to adjust to a powerful dollar rally that has recently lifted the U.S. currency to a 14-year high. In emerging markets, a stronger dollar makes it more expensive for governments and companies to pay back their dollar-denominated loans. In China, how to manage the yuan’s value has become a hot topic in official circles since a nearly 2% devaluation 16 months ago shocked global markets. In the past year the central bank has sought a less abrupt path, constricting channels for moving money out of the country and managing the pace of depreciation.
The central bank controls the mainland trading of the yuan by specifying an official rate against the dollar and then allowing the currency to move 2% above or below the so-called daily fix. Since the beginning of this year, the central bank has been taking into account the yuan’s performance against both the dollar and a wider selection of currencies when determining the daily fix. That move has paved the way for the yuan’s gradual deprecation.
Remember the promises of the imminent global growth recovery ‘next year’? IMF, the leading light of exuberant growth expectations has been at this game for some years now. And every time, turning the calendar resets the fabled ‘growth recovery’ out another 12 months. Well, here’s a simple view of the extent to which the IMF has missed the boat called Realism and jumped onboard the boat called Hope.
Table above posts cumulative 2010-2016 real GDP growth that was forecast by the IMF back in September 2011, against what the Fund now anticipates / estimates as of October 2016. The sea of red marks all the countries for which IMF’s forecasts have been wildly on an optimistic side. Green marks the lonely four cases, including tax arbitrage-driven GDPs of Ireland and Luxembourg, where IMF forecasts turned out to be too conservative. German gap is minor in size – in fact, it is not even statistically different from zero. But Maltese one is a bit of an issue. Maltese economy has been growing fast in recent years, prompting the IMF to warn the Government this year that its banking sector is starting to get overexposed to construction sector, and its construction sector is becoming a bit of a bubble, and that all of this is too closely linked to Government spending and investment boom that cannot be sustained.
Oh, and then there are inflows of labour from abroad to sustain all of this growth. Remember Ireland ca 2005-2006? Yep, Malta is a slightly milder version. Notice the large negative gaps: Greece at -21 percentage points, Cyprus at -18 percentage points, Finland at -15 percentage points and so on… the bird-eye’s view of the IMF’s horrific errors is: • Two ‘programme’ countries – where the IMF is one of the economic policy ‘masters’, so at the very least it should have known what was happening on the ground; and
• IMF’s sheer incomprehension of economic drivers for growth in the case of Finland, which, until the recession hit it, was the darling of IMF’s ‘competitiveness leaders board’.
Median-average miss is between 4.33 and 4.97 percentage points in cumulative growth undershoot over 7 years, compared to IMF end-of-2011 projections. So next time the Fund starts issuing ‘happiness is just around the corner’ updates, and anchoring them to the ‘convincing’ view of ‘competitiveness’ and ‘structural drivers’ stuff, take them with a grain of salt.
As Steve is way ahead of us doing New Year’s in Sydney, one last lesson for 2016.
This is a talk I gave in Amsterdam to launch the Amsterdam Rethinking Economics critique of the current state of economics “education” in the Netherlands. The text of my slides is reproduced below.