DPC Broadway from Chambers Street, NYC 1910
“..corporate America will desperately unload inventories, workers and assets to appease the robo-machines of Wall Street.”
• More Proof of Janet Yellen’s Idiocy (David Stockman)
During the last 129 months, the Fed has held 86 meetings. On 83 of those occasions it either cut rates or left them unchanged. So you can perhaps understand why Wednesday’s completely expected (for the last three weeks!) 25 bips left the day traders nonplussed. The Dow rallied over 100 points that day. Traders understandably believe that this monetary farce can continue indefinitely, and that our Keynesian school marm’s post-meeting presser was evidence that the Fed is still their friend. No it isn’t! Janet Yellen’s sing-song gibberish was the equivalent of a monetary DEFCON 1, alerting all except the most addicted Kool-Aid drinkers to get out of the casino.
Our monetary politburo has expanded its balance sheet by a lunatic 22X during the last three decades and in the process has systematically falsified financial asset prices and birthed a mutant debt-fueled of simulacrum of prosperity. But once it begins to withdraw substantial amounts of cash from the canyons of Wall Street as per its newly reaffirmed “normalization” policy, the whole house of cards is destined to collapse. There will be a stock market implosion soon, and that will in turn generate panic in the C-suites as the value of stock options vanish. Like in the fall of 2008 — except on an even more sweeping and long-lasting scale — corporate America will desperately unload inventories, workers and assets to appease the robo-machines of Wall Street. But there is nothing left to brake the casino’s fall.
If the money market rate conforms to the Fed’s latest command and settles at 88 basis points, it is still effectively at the zero bound. Our monetary politburo is thus still out of dry powder — except for the nuclear option of QE4, which Yellen herself made quite clear would never happen until after the next recession is already underway. Yet by then it will be too late — way too late. That’s because the market is priced as if the business cycle has been outlawed and as if the feckless band of Keynesian pretenders who have seized control of financial markets have ushered in the Nirvana of permanent full-employment. World without end. Needless to say, they haven’t because they haven’t repealed the law of supply and demand. That is, if the Fed plans to keep raising until rates until they reach 3.0% by 2019, it will have to suck massive amounts of cash out of the financial markets.
So doing, it will drive long-term yields substantially higher and thereby obliterate the ultra-low cap rate delusion on which the entire regime of Bubble Finance is based. In fact, in a blathering response at her presser about the pace by which the Fed intends to shrink its bloated $4.4 trillion balance sheet, Yellen proved she is clueless about the financial firestorm our rogue central bank is about to unleash. She claimed that the Fed could implement 3-4 money market rate increases a year, while deferring the shrinkage of its balance sheet into the indefinite future. But that it most assuredly cannot do. With a staggering overhang of $2.1 trillion of excess reserves in the financial system, even our vaunted monetary politburo cannot command the tides to recede. If it wants the money rate to rise on its appointed path through 2019, it must drain loads of cash from Wall Street.
“In Australia, the bottom 3.9 million people share the same level of wealth as the top 10 individuals. And the gap is growing.”
• How The Bosses ‘Game’ Workers (Moore)
When was the last time we heard someone talking about economic sustainability? When was the last time an economist was heard talking about equitable sharing of the economic growth? Australia “averted a recession” with 1.1 per cent growth in the December quarter. Let’s celebrate! Good news. Well, good for some. Not so good for others. Increasing disparity! The good news: company profits are “at record levels”. In the December quarter company profits rose by a whopping 20.1 per cent. One of the big winners is mining. Mining! Those same companies who were crying doom and gloom a few years ago when they defeated the government’s attempt to apply some level of taxation on their “super profits”. The bad news: well, that is for wage earners. While profits grew by 20 per cent, average wages dropped.
Tom Kennedy, of JP Morgan, explained to the ABC: “Some of the support for profits in the non-mining economy seems to be from weaker wage payments, which fell 0.5 per cent quarter-on-quarter (annual run rate slowed further to 1 per cent year-on-year) on the precarious combination of weaker wage growth, fewer hours and elevated underemployment.” In simple language Kennedy could have said: business increased profits by cutting workers’ wages, reducing hours and by employing less people. Any number of economic inquiries or reports suggest good ideas about taxation, employment and economic growth. A much smaller number examines what is equitable sharing of wealth. Even in the current climate, where the government is constantly bombarding the community about living within our means, Turnbull’s government is determined to deliver a $50 billion tax break for the corporate sector.
They have a good return on investment for political party donations. In Australia, the bottom 3.9 million people share the same level of wealth as the top 10 individuals. And the gap is growing. Sensible taxation measures are just one method of reducing the disparity by applying straightforward rules that are not subject to exemptions. In a globalised environment, corporations avoid current tax measures by moving money around the world at a touch of a button. One alternative, to provide a fair way to levy the corporate sector and one that is difficult to “game”, is a tax on gross turnover within a country. Such a tax is simple. It is hard to avoid. Big business would pay their share and contribute to community infrastructure from which they draw significant advantage.
Personal income is also “gamed”. American tycoon Warren Buffett noted his secretary paid a higher percentage of income tax than him simply because he could afford better accounting advice. The answer is to apply a “floor level” for high-income earners. It would catch the 77 individuals, identified by the Australian Tax Office in 2015, who earned over $1 million and paid NO tax. With the “Buffett Rule”, this group of selfish leeches would not have been able to avoid their fair contribution to the education, health and infrastructure that they all use. The Australia Institute identifies an injection of $2.5 billion if a 35 per cent “Buffet Rule” level was applied to just the top 1 per cent of salary earners. Surely good government means finding ways to reduce disparity. Inequality is fodder for populist movements around the world. A disparity index is just one way to remind our politicians of their responsibilities.
Thinking about land tax is not a bad thing. But using it to lure more people into mortgage debt is.
• Oz Parliamentary Budget Office Costs Plan To Kill Off Stamp Duty (SMH)
The Parliamentary Budget Office has costed a proposal that would kill stamp duty and replace it with land tax, saving home buyers up to $40,000 in Sydney and $55,000 in Melbourne, while delivering billions of dollars to fund schools and hospitals. The costing will put land tax back up for debate when Parliament returns next week as the government looks to mark its authority on the housing affordability crisis less than two months out from the federal budget. Both the NSW and Victorian governments have thrown their weight behind broader stamp duty tax reform and Treasurer Scott Morrison has indicated his support for a transition to taxing land. “When you talk about tax reform, this is far and away the biggest prize on offer,” said John Daley, the chief executive of independent think tank the Grattan Institute.
Under current regulations, home buyers pay tens of thousands of dollars in stamp duty, creating an additional hurdle for people looking to enter the market amid soaring property prices in Sydney and Melbourne. Removing stamp duty and implementing an annual land tax on all newly purchased homes would help level the playing field and generate billions of dollars in annual returns to the NSW and Victorian budgets, while also relieving federal government spending over a 15-year-period. Under the policy submitted by the Greens and backed by the Grattan Institute and the Council of the Ageing, home buyers would no longer stump up to $40,000 in stamp duty when purchasing a property worth $1 million in Sydney. In Melbourne, a home buyer would save $55,000 stamp duty on a property of the same value.
Research from the Grattan Institute shows an annual tax of $1 per every $1000 of a home’s value would cost the median Sydney household $845 a year in tax and the median Melbourne home $623 a year. To offset the cost of losing lucrative stamp duty payments, the Commonwealth would have to loan money to the states. The loans would peak in 2020 when the hit to the budget bottom line would grow to $800 million. Rising land tax revenues would enable the states to pay back the loan by 2030. The Parliamentary Budget Office estimates that in the next four years alone the tax would generate $2.3 billion in revenue for the states, but warned the overall costings were of low reliability due to the variations in number of properties sold across Australia each year.
“..the senator should have included a clause drawing up a list of books for burning..”
• Russian Parliament Backs Investigation Into US Media (R.)
The Russian lower house of parliament, the State Duma, has approved a proposal to launch an investigation into U.S. media organizations that operate in Russia, it said in a statement posted on its web site late on Friday. The investigation, which will be conducted by the Duma’s information policy, technologies and communications committee, will check whether CNN, the Voice of America, Radio Liberty and “other American media” are complying with Russian law. The statement said the Duma backed the move on Friday evening after Konstantin Zatulin, an MP from the pro-Kremlin United Russia party, proposed an investigation to retaliate for what he called a “repressive” U.S. move against Russian state-funded broadcaster RT.
He said he was referring to an initiative by U.S. Senator Jeanne Shaheen, who has introduced a bill to empower the Justice Department to investigate possible violations of the Foreign Agents Registration Act by RT. Shaheen, a Democrat, cited a U.S. intelligence agency assessment that suggested RT was part of a Russian influence campaign to help Donald Trump win the White House last year. The Kremlin and RT have strongly rejected that allegation. Foreign media in Russia are overseen by the Russian Foreign Ministry, whose spokeswoman Maria Zakharova this week singled out Shaheen’s demarche for criticism, quipping ironically that the senator should have included a clause drawing up a list of books for burning. The U.S. move also solicited the ire of Margarita Simonyan, RT’s editor-in-chief, who on Wednesday told the daily Izvestia it had echoes of the activities of U.S. Senator Joseph McCarthy..
EU nations would never have accepted a nation of 82 million muslims as a member. Turkey’s as far away as ever, not more, not less.
• German Foreign Minister: Turkey Further Away From EU Membership Than Ever (R.)
German Foreign Minister Sigmar Gabriel said in an interview with news magazine Der Spiegel published on Saturday that Turkey has never been less likely to join the European Union than now, as relations between Ankara and Berlin hit a low point. “Today Turkey is definitely further away from becoming a member of the European Union than ever before,” Gabriel said in the interview. He also said that he always had doubts about whether Turkey should join the EU but found himself in the minority in his Social Democrat (SPD) party. Before taking power in Germany in 2005, Chancellor Angela Merkel was an outspoken opponent of Turkey’s membership and instead called for a “privileged partnership”.
Gabriel disliked that idea because he thought it would make Turks feel like second-class Europeans but he said his opinion had changed since Britain’s decision to leave the EU. “Today the situation is totally different due to Brexit. We’d be well advised to bring about a ‘special relationship’ with Great Britain after its exit from the EU,” Gabriel said. “That will be an important learning process for the EU and perhaps some of it can serve as a blueprint for other countries in the long term,” Gabriel said. Turkish President Tayyip Erdogan is courting Turks abroad for support in an April 16 referendum that would grant him sweeping new powers. He infuriated Germany and the Netherlands by describing bans on planned rallies by Turkish ministers as “fascist”. The arrest of a Turkish-German journalist in Ankara has also caused upset.
EU and US still define PKK as a terrorist organization. That should be reconsidered.
• Turkey Furious As Kurds Rally In Frankfurt With PKK Insignia (AFP)
Some 30,000 pro-Kurdish demonstrators rallied in the German city of Frankfurt on Saturday calling for “democracy in Turkey” and urging a “no” vote in an upcoming referendum on expanding Turkish President Recep Tayyip Erdogan’s powers. Turkey angrily denounced the demonstration as “unacceptable”. Many demonstrators carried symbols of the outlawed Kurdistan Workers Party (PKK) which has battled the Turkish state for over three decades in a continuing insurgency. Tensions are already running high between Berlin and Ankara after German authorities refused to allow some Turkish ministers to campaign in the country for a “yes” vote in the April 16 referendum that would hand Erdogan an executive presidency. Significantly more people turned up than organisers had been expecting for the rally, which took place ahead of the annual Newroz festival when Kurds mark the traditional New Year.
Saturday’s protest march in Frankfurt went off peacefully, a police spokesman said. Some of the participants carried flags and banners of the outlawed PKK, as well as portraits of the group’s jailed leader Abdullah Ocalan, who is serving a life sentence in Turkey, calling for his release. Police said no banners or flags were confiscated so as to not provoke the crowd, but added that photos had been taken which could lead to future prosecutions. Erdogan’s spokesman Ibrahim Kalin said in a statement that the presidency “condemned in the strongest terms” the fact that the rally had been allowed to go ahead. “It is unacceptable to see PKK symbols and slogans… when Turkish ministers and lawmakers are being prevented from meeting their own citizens,” he said. He said the “scandal” of the Frankfurt demonstration showed that some EU countries were actively working in favour of a “no” vote in the critical referendum.
For those hailing Merkel for her dealings with Trump, and calling her the leader of the western world: this is what she produced in Europe, where she really is the leader.
• Fear Stalks Refugees Huddled Along Hungary’s Border (G.)
Behind a high metal fence topped with loose curls of barbed wire, the newly positioned blue shipping containers lined neatly along Hungary’s southern border at Röszke provide a glimpse of the new plans of the prime minister, Viktor Orbán, to detain thousands of asylum seekers, including children. Construction on Hungary’s new detention camps and a second electrified fence, which stretches 108 miles along its border with Serbia, are now under way despite virulent opposition from the UN, human rights groups and a European court ruling which it was hoped might halt the country’s determination to imprison refugees. President János Áder signed the bill, which will allow all asylum seekers to be locked up in detention camps, and will also permit police to return asylum seekers from anywhere in the country back to Serbia.
Orbán, leader of the rightwing populist Fidesz party, has described migration as the “Trojan horse for terrorism” and considers Muslim migrants a threat to European identity and culture. More than 7,000 asylum seekers trying to reach western Europe are stuck in Serbia, outside the EU, following Hungary’s decision last summer to introduce strict limits on the number of refugees allowed to enter and began patrolling the borders with a controversial new wing of its police force known as Határvadász, or border hunters. At an open transit camp in Subotica, Serbia, 15 miles from the border crossing, where families and unaccompanied children wait to have their asylum claims processed in Hungary, officials say the new law will cause trouble for Serbia and more hardship for people here.
“We are like storage for the Hungarians,” said Nikola Ljubomirovic, coordinator at the camp, run by Serbia’s commissariat for refugees and migrants. [..] The majority of families at this camp are fleeing conflicts in Syria, Iraq and Afghanistan. They have made arduous journeys but are out of funds which would enable them to try other routes to Europe. Their only option is to claim asylum in Hungary. They face a long wait. Hungary has reduced the number of asylum seekers it accepts per day from Serbia from 200 in 2015 to 10 in January this year. The decision as to which 10 people can enter the country every weekday via two transit zones, Horgos and Kelebija, is arbitrary, far from transparent, and appears to be managed in part by refugee community leaders, leading to uncertainty and confusion among already desperate families.
“..a legitimate objective for the EU Member States to pursue is undermining rather than ensuring the right to asylum..”
• Dirty Deals Done Dirt Cheap (ECRE)
The impact of the EU Turkey – Deal is widely debated and often misrepresented. The triumphant progress reports of the Commission hail the drop in numbers of refugees arriving in Greece and people drowning in the Aegean, but ignore the wider devastating impact of Europe’s containment policy on the international protection regime and beyond. If anything, one-year into its existence the deal has “succeeded” in contributing to problematic developments in four inter-linked ways: It is a key factor in the transformation of the political debate at EU level, which moves towards a consensus that a legitimate objective for the EU Member States to pursue is undermining rather than ensuring the right to asylum (enshrined in the EU Charter of Fundamental Rights) is.
By endorsing this deal, the EU has jeopardized not only its own credibility as a global human rights actor but also the values of democracy, respect for fundamental rights and the rule of law upon which it is based. It has become the blueprint for outsourcing Europe’s protection responsibility to third countries often characterized by instability and with problematic human rights records in exchange for development aid or political favours as if refugees were tradable commodities. Finally, it has transferred substantial political capital from the EU to the regimes in question, leaving the EU beholden –with Turkey itself as the most obvious example of the increasing ability of these third countries to influence Europe rather than the other way around. No, for Europeans who believe in universal human rights there is nothing to celebrate but lots to regret at the one-year anniversary of the EU-Turkey Deal!
There needs to be an EU summit on this, and a UN summit on the whole refugee issue. But I’ve been saying that for a long time, and it still has not happened. It will be done only when chaos rules and it’s too late.
• Desperate Conditions In Greece’s Migration Jails (AlA)
Greece has struggled to implement the controversial EU-Turkey deal agreed last March, and many who arrived on the islands after March 19, 2016, ended up being held in closed detention facilities for months on end. This treatment of new arrivals is likely to only become even more strict. Greek authorities are building new detention facilities for irregular migrants on Samos, Lesvos and Kos, while looking for spaces in the islands of Leros and Chios. Maarten Verwey, coordinator for the implementation of the EU-Turkey agreement, said that new detention facilities in Greece would be temporary. But a year ago, the UN’s refugee agency decided not to back Greek authorities. “We will not provide support to mandatory ‘detention centers’ for refugees in Greece,” said an official announcement from the UNHCR.
Greece is using ex-military camps, police stations and specially built detention centres to house those seeking refuge in the medium term. These are different from the reception and identification centres at the hotspots where newly arrived refugees and migrants are initially held. There are currently six detention centres with a total of 5,215 places in Amygdaleza, Petrou Ralli, Corinth, Paranesti, Xanthi and Orestiada. A new report, titled Forgotten, by Aitima, an Athens-based NGO, says there are some 2,000 “irregular migrants” now detained in Greece – but this number might increase fast in the next few months as pre-departure facilities on the islands are completed. Officials believe that the creation of “closed-structure facilities”, each with a capacity of 150-200 people, will be the key to easing pressure on islands where more than 10,000 new arrivals are stranded.
Conditions inside existing detention facilities in Greece continue to be alarming. Most are without hot water, reports Aitima. They have no heating, there are no interpreters, no social workers and no psychologists. Detained migrants complain about inedible food. No provisions of clothes and shoes from the authorities are given. Doctors visit detention areas only in very urgent cases.
• ‘Exiles in the Aegean’: A Year After The EU–Turkey Deal (Christopoulos)
Bert Birtles, an Australian journalist and poet, arrived in Athens in the fall of 1935 to meet Dora “at sunset under the Parthenon”. Very soon, the interest of the young devoted admirers of classical Greece shifted from the archaeological ruins to contemporary politics. In 1936, following a fascist coup, Bert and Dora started visiting islands of the Aegean that were used as destinations for exiles. In 1938, Birtles published Exiles in the Aegean, his “personal narrative of Greek politics and travel”. The book offers an exciting first-hand chronicle of the experiences and lives of the exiled leftists on the islands of Anafi and Gavdos, but also Leros, Karpathos and Lesvos. These islands continued to operate as spaces of “administrative displacement” throughout the twentieth century, and it was only in 1974, after the end of the colonels’ dictatorship, that this practice came to an end.
Even for my generation, born in the late 1960s, the phrase “to the dry islands” was the synonym of isolation, just as the phrase “to the mountains” was the synonym of resistance against the Axis forces in the 1940s. And then, in the 1980s, the “dry islands” became the ideal tourist resort, one of the must-see destinations of the world: a synonym of pleasure and relaxation. At the dawn of the 21st century, the islands of the eastern Aegean, close to the Turkish coast, became the first entry point to the EU for the thousands fleeing their countries, either for fear of being persecuted, or just in search of a decent life in Europe. Islands became the stepping stone to Athens, and, in turn, Athens a stepping stone to northern Europe. Islands offer a prototype for an exercise in control and biopolitics, as Foucault would put it.
The pre-1974 Greek state, which was not exactly famous for its democratic culture, knew this well. The European Union, on the other hand, only really realised this a year ago, with the infamous EU-Turkey statement addressing what the Europeans labelled a “migration crisis”, i.e. the arrival of a million refugees in a continent of half a billion inhabitants… Islands, both now and then, are regarded as the ideal quarantine zone: first it was for communists so they wouldn’t intoxicate their environment with their ideas, now for migrants and refugees, with a twofold objective. First, to send the message that this is what lies ahead for those who intend to make their way across the Aegean. Second, to send a message to European citizens and to address their primary fear: the buffer zone at the periphery of the EU ensures that no more refugees and immigrants can enter the ‘promised land’.
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