Lewis Wickes Hine Child Labor in Magnolia Cotton Mills spinning room, Mississippi Mar 1911
Just yesterday they announced another $500 billion for the repo crisis. Which will take the balance sheet over $4.5 trillion. Everything’s just dandy.
The U.S. economy is doing well and looks set to stay that way next year, two top Federal Reserve policymakers said on Friday, remarks that suggest they are content to leave interest rates where they are. “I think the economy is in a good place. U.S Federal Reserve Vice Chair Richard Clarida said in an interview with Fox Business Network, adding that the consumer has never been in better shape. “We have the strongest labor market in 50 years, we have low and stable inflation, we have solid growth and our baseline outlook for the economy is more of the same in 2020.” Speaking to students and faculty earlier in the day at the Borough of Manhattan Community College, New York Fed President John Williams summed it up this way: “The economy is performing about as well as we have seen in decades.”
Williams and Clarida work closely with Fed Chair Jerome Powell, who on Wednesday announced the U.S. central bank’s well-telegraphed decision to hold interest rates steady in a range of 1.5% to 1.75%, and signaled borrowing costs would remain there for the foreseeable future. The Fed cut rates three times from July to October in a mini-easing cycle, designed to sustain the U.S. economic expansion amid slowing global growth and a drop in business investment caused by uncertainty amid the 17-month long U.S.-China trade war. On Friday the world’s two largest economies announcing a Phase 1 agreement that reduces some U.S. tariffs in exchange for increased Chinese purchases of American farm goods.
“Any resolution of that uncertainty, assuming it’s a good deal, is obviously a positive for the economic outlook,” Clarida said. He added, though, that trade was just a number of risks the Fed will monitor. “This is obviously a negotiation; it looks like it’s going in a positive direction,” Clarida said. “But … global developments more broadly have been something we’ve been monitoring. You’ve had a global slowdown this year, emerging markets have been slowing down, there are muted inflation pressures. So it’s not just any one thing that we are focusing on.”
There is no risk because the Fed jumps in always and everywhere. Except to protect savings and pensions. Those they kill.
“Back up the truck and buy, buy, buy.” That was the advice from Chris Rupkey, chief financial economist at MUFG Union Bank, who sent a rousing note to clients late Thursday, on the heels of trade optimism that is lifting global equities at the week’s end and a decisive election outcome in the U.K. “All over the world, markets are falling love. Buy it. Buy it all,” reads the headline of that note. Rupkey said a pair of geopolitical risks — an elusive U.S.-China trade deal and yearslong wrangling over Brexit — “thought to be strangling world economic growth” incredibly look to be getting resolved in a “big, big way.”
“There is some smoke and mirrors here, but it looks like this is the time for investors around the world to throw months of caution to the winds and take risk off the table, and they are, buying stocks and selling bonds with abandon, as the economic outlook brightens and central banks shelve their plans to cut interest rates further,” he writes. Investors were waiting for more news on a trade deal after reports surfaced Thursday that the U.S. could trim existing import tariffs on Chinese goods, as well as delaying those set to kick in on Sunday. Notably though, China has remained silent on any deal progress in the wake of those developments.
You start out big, so you have room to retreat a little.
The US and China have announced a preliminary trade agreement. The so-called phase one deal will see billions of dollars in tariffs removed or delayed. US stocks hit a fresh record on hopes there will be a continued softening of trade tensions between the world’s two largest economies. A fresh wave of US tariffs on Chinese imports was due to take effect on Sunday. However, this has been cancelled for now. “We will begin negotiations on the phase two deal immediately, rather than waiting until after the 2020 Election,” US President Donald Trump said in a tweet. “This is an amazing deal for all.”
If the new, higher tariffs had gone ahead, Chinese-made goods such as smartphones, clothing and toys would have become more expensive for Americans just ahead of Christmas. US negotiators are reportedly offering to significantly reduce existing tariffs on about $360bn worth of Chinese imports. In return, China has promised to buy large quantities of US soybeans, poultry and other agricultural products. The agreement is a deal in principle, which means if China breaks any part of the agreement, the Trump administration has the ability to re-implement tariffs.
Almost half a trillion in new local bonds. What a great idea.
China plans to set a lower economic growth target of around 6% in 2020 from this year’s 6-6.5%, relying on increased state infrastructure spending to ward off a sharper slowdown, policy sources said. Chinese leaders are trying to support growth to limit job losses that could affect social stability, but are facing pressure to tackle debt risks caused by pump-priming policies. The proposed target, to be unveiled at China’s annual parliamentary session in early March 2020, was endorsed by top leaders at the annual closed-door Central Economic Work Conference this month, according to three sources with knowledge of the meeting’s outcome.
“We aim to keep next year’s growth within a reasonable range, or around 6%,” said a source who requested anonymity. Top leaders pledged to keep economic policies stable while making them more effective to achieve growth targets in 2020, state media said on Thursday. Next year will be crucial for the ruling Communist Party to fulfill its goal of doubling GDP and incomes in the decade to 2020. Economic growth of nearly 6% next year could be enough to meet that goal given the economy is expected to expand about 6.2% this year, policy insiders said.
[..] The government aims to boost infrastructure investment by allowing local governments to issue more special bonds next year, but there is less room for tax cuts, the sources said. The annual budget deficit could rise from this year’s 2.8% of GDP, but is likely to be kept within 3%, they said. Local governments could be allowed to issue special bonds worth some 3 trillion yuan ($426.20 billion) in 2020 to fund infrastructure projects, including 1 trillion yuan front-loaded to this year, they said. “Fiscal policy will provide a key support for the economy,” said one source.
Let’s see it. Bill Barr has said the Durham report won’t be out until spring-summer 2020. Lots of wiggle room.
For the past several weeks, the personal attorney to President Trump has been in Ukraine, interviewing witnesses and gathering evidence to shed light on what the Bidens were up to during the Obama years, and get to the bottom of claims that Kiev interfered in the 2016 US election in favor of Hillary Clinton. He has enlisted the help of former Ukrainian diplomat, Andriy Telizhenko, to gather information from politicians and ask them to participate in a documentary series in partnership with One America News Network (OANN) – which will make the case for investigating the Bidens as well as Burisma Holdings – the natural gas firm which employed the son of a sitting US Vice President in a case which reeks of textbook corruption.
According to the Journal, Giuliani will present findings from his self-described “secret assignment” in a 20-page report. “Trump and Giuliani say then-Vice President Biden engaged in corruption when he called for the ouster of a Ukrainian prosecutor who had investigated a Ukrainian gas company where Hunter Biden served on the board. The Bidens deny wrongdoing, and ousting the prosecutor was a goal at the time of the U.S. and several European countries. -Wall Street Journal. Telizhenko, the former diplomat, tells the Journal that the plan for the series was conceived during the impeachment hearings as a way for Giuliani to tell his side of the story.
The former Ukrainian diplomat flew to Washington on November 20 to film with Giuliani, while in early December he accompanied America’s Mayor on the Kiev trip – stopping in Budapest, Vienna and Rome. Upon his return to New York on Saturday, Giuliani says he took a call from President Trump while his plane was still taxiing down the runway, according to the Wall Street Journal. “What did you get?” Trump asked. “More than you can imagine,” answered the former New York mayor who gained notoriety in the 1980s for taking down the mob as a then-federal prosecutor.
The Dems focus on impeachment, the GOP on the elections.
Hillary Clinton sure got her money’s worth with the Fusion GPS deal: it induced a three-year psychotic break in the body politic, destroyed the legitimacy of federal law enforcement, turned a once-proud, free, and rational press into an infernal engine of bad faith, and is finally leading her Democratic Party to an ignominious suicide. And the damage is far from complete. It’s even possible that Mrs. Clinton will return to personally escort the party over the cliff when, as is rumored lately, she jumps into the primary contest and snatches the gonfalon of leadership from the ailing old man of the sclerotic status quo, Uncle Joe Biden. The citizens of this foundering polity have been subjected to a stunning doubleheader of political spectacle clear through the week.
On Monday, the Horowitz Report was briefly celebrated by the Left for claiming “no bias” and a “reasonable predicate” for the RussiaGate mess — until auditors actually got to read the 400-plus-page document and discovered that it was absolutely stuffed with incriminating details that Mr. Horowitz was too polite, too coy, or too faint-hearted to identify as acts worthy of referral for prosecution. Mr. Barr, the attorney general, and US attorney John Durham immediately stepped up to set the record straight, namely, that this was hardly the end of the matter and that they were privy to fact-trains of evidence that would lead, by-and-by, to a quite different conclusion. This reality-test was greeted, of course, with shrieking for their dismissal from the Jacobin Left.
But then at mid-week, Mr. Horowitz put in a personal appearance before the Senate Judiciary Committee and left no doubt that entire RussiaGate extravaganza was spawned by Fusion GPS’s utterly false Steele dossier and the so-called “Intel Community’s” zeal for weaponizing it to overthrow the president. The shock-waves from all that still pulsate through the disordered collective consciousness of this sore-beset republic, and will disturb the sleep of many former and current officials for months to come as the specter of Barr & Durham transmutes into a nightmare of Hammer & Tongs, perp-walks, and actual prosecutions.
What a weird joke. Yeah, let him do Maddow with a mask on.
The New York Post Editorial Board has named CIA analyst Eric Ciaramella as the whistleblower at the heart of the Trump impeachment saga, confirming an October 30 report by RealClearInvestigation’s Paul Sperry which has been widely cited in subsequent reports. Whistleblower lawyers refuse to confirm or deny Ciaramella is their man. His identity is apparently the worst-kept secret of the Washington press corps. In a sign of how farcical this has become, Rep. Louie Gohmert (R-Texas) said his name as part of a series of names during a live hearing Wednesday night aired on television. He never called him the whistleblower, just said he was someone Republicans thought should testify, yet Democrats angrily denounced the “outing.” If you don’t know the man’s name, how do you know the man’s name?” -New York Post
Ciaramella, a registered Democrat, is a CIA analyst who specializes in Russia and Ukraine, and ran the Ukraine desk at the National Security Council (NSC) in 2016. He previously worked for then-NSC adviser Susan Rice, as well as Joe Biden when the former VP was the Obama administration’s point-man for Ukraine. He also worked for former CIA Director John Brennan, and was reportedly a highly valued employee according to RedState’s Elizabeth Vaughn. He also became former National Security Adviser H.R. McMaster’s personal aide in June 2017, was called out as a leaker by journalist Mike Cernovich that same month.
He also worked Alexandra Chalupa, a Ukrainian-American lawyer and Democratic operative involved in allegations that Ukraine meddled in the 2016 US election by releasing the so-called ‘Black Ledger’ that contained Paul Manafort’s name. In 2017, former White House chief strategist Steve Bannon wanted Ciaramella kicked off the National Security Council over concerns about leaks.
It’s Corbyn’s job to realize this. Or it was.
More voters turned against Labour because of Jeremy Corbyn rather than Brexit, according a poll probing the reasons for the party’s greatest electoral defeat in decades. Pollsters Opinium found that among 2017 Labour voters who defected at last night’s general election, 37 per cent of them cited the leadership of the party as their main reason. Despite Mr Corbyn’s claim the election “was taken over ultimately by Brexit”, 21 per cent said they defected due to the party’s stance on EU membership while just six per cent said their main reason was Labour’s economic policies. It comes as the Labour leader indicated he would step down from his role at the start of the new year, but remain in place for the duration of a leadership contest, which could take several months.
Among Labour voters who switched allegiances to the Tories, 45 per cent cited Mr Corbyn’s leadership as the main issue while 29 per cent of those who defected to the Liberal Democrats did so. Of all respondents who said they did not vote for the Labour Party at the first December election in almost a century, 43 per cent said their main reason was the leadership. A further 17 per cent placed blame with the triangulation on Brexit and 12 per cent of the economic policies put forward in Labour’s manifesto.
“..despite still ultra-low interest rates..”
Canadian households, rated near the top of the most indebted in the world, accomplished something awe-inspiring: They got even more indebted and their leverage rose to a new record, according to data released today by Statistics Canada. The portion of their disposable income (total incomes from all sources minus taxes) that Canadian households spent on making principal and interest payments, including on mortgage debts and non-mortgage debts such as credit card balances, reached a new record of 14.96% in the third quarter, This record beat the prior record of 2007, and this happened despite still ultra-low interest rates:
Mortgage debt was the driver behind this new record, as the portion of disposable income that Canadians spent to make interest and principal payments on their mortgages rose to 6.74%, the highest ever. But these are aggregate numbers, and for some individual households, the burden is a lot higher. Based on data from the 2016 census, 67.8% of Canadian households own their home, and the ratio has been dropping. The remaining households rent, and they do not have a mortgage. And a portion of those who own a home do not have a mortgage either because they’d already paid it off. And another portion of homeowners only carries a relatively small amount of mortgage debt.
But among the remaining homeowners, particularly those who bought in recent years, the burden of their mortgage is heavy. And it’s this portion that everyone is worrying about, not the large number of other Canadian households. In the US, it was this portion that triggered the mortgage crisis — not the renters, and not the one-third of homeowners who’d already paid off their mortgages, and not those homeowners who’d paid down their mortgages significantly. Non-mortgage debt, such as credit-card balances and personal loans, also increased, but did not take out the previous high. In the third quarter, debt service on non-mortgage debts reached 8.23% of disposable income, the highest since Q3 2008. This chart shows the two ratios separately:
Americans were forced to deleverage during the mortgage bust and housing bust, and have never re-leveraged to the full extent, particularly with mortgage debt and credit card debts, which are barely higher than they were at the peak in 2007, but over those 12 years the economy had grown, and the population has grown, and the ratio of mortgage debt and credit card debt to GDP has declined sharply. The exception are student loans, which have totally blown out, and auto loans which have also increased faster than GDP. Canadian households in aggregate never really experienced the full effects of the Financial Crisis in the housing market, and they weren’t forced to deleverage, and there was no lesson to be learned, and they have gone hog-wild on debt to fund their housing bubbles:
Others say because of the US. It’ll end with big promises that remain unfunded.
Global climate talks have been extended into the weekend as nations wrangle over carbon accounting issues, including whether Australia should be able to slash its Paris emissions reduction goals using a surplus from an earlier era. As is typical with Conference of the Parties (COP) events, the gathering in the Spanish capital of Madrid blew past its Friday deadline. Observers expect negotiations on carbon trading rules and other issues to last until at least Sunday, Australian time. International media singled out Australia’s insistence it be allowed to count “over-achievement” during the 2012-20 Kyoto Protocol period to reduce its abatement task during the 2021-30 Paris accord as one brake on progress.
John Connor, chief executive of the Carbon Markets Institute, said a ban on Australia’s use of so-called Kyoto carry-over credits remained an option in final drafts. The use of a “surplus” – effectively halving Australia’s Paris pledge of reducing 2005-levels of emissions by 26 per cent by 2030 – opened the door to India and former Soviet nations to cut their ambition too, he said. “Other countries definitely care … because the Kyoto carryover is a card only developed countries, who had carbon budget commitments under the Kyoto protocol, can play,” Mr Connor said. “To date it remains that only Australia is willing to play that card and it’s not winning them friends.”
This goes back to Condoleeza Rice at least.
The US never promised Syria’s Kurds that it would help them build an autonomous state, Defense Secretary Mark Esper has insisted, despite years of hints to the contrary. So much for the birth pangs of that New Middle East… “Nowhere, at no point in time did we tell the Kurds, we will assist you in establishing an autonomous Kurdish state in Syria, nor would we fight against the longstanding ally Turkey on your behalf,” Esper told reporters on Friday. “We live up to our obligations, and our obligation, our agreement, our understanding with the Kurds was this: that we would work together to fight in Syria to defeat ISIS,” he explained, referring to the Islamic State (IS, formerly ISIS) terrorist group.
But now that ISIS has been declared dead almost as many times as its late leader Baghdadi, is it game over for the US-Kurdish partnership? Esper’s words no doubt came as a shock to anyone expecting a continuation of the Assad-Must-Go policies of the Obama administration, in which it was understood that the Kurdish Syrian Democratic Forces would be rewarded for doing their part to overthrow Syrian President Bashar Assad with their own semi-sovereign state à la Iraqi Kurdistan. US media have long sung the praises of ‘Rojava’ as some sort of feminist utopia, but this “brave social experiment” is now imperiled by the Trump administration’s stubborn refusal to continue waging a war it has all but lost in Syria.
The SDF provided an ideal anti-Assad proxy through which the US could occupy resource-rich areas of Syria, an occupation which would otherwise be considered illegal under international law. But when the US began pulling out of northeast Syria back in September, leaving the surprised Kurds at the mercy of Turkish forces that view them as terrorists, the Kurds were forced to beg the same Assad government they had decried as the devil incarnate while the US was still propping them up for protection. They ultimately swallowed their pride and worked out an arrangement with Syrian and Russian forces along the Turkish border, but this was not the deal they thought they’d made with the US.
From our Comments yesterday:
“Finally, DJ Baraitser asked Gareth Peirce if it would help if Julian #Assange were presented in person on the 19th in order to facilitate a meeting afterwards. Peirce declined saying that “It’s a difficult claustrophobic journey from Belmarsh”
So, the main complaint apparently – and the headline to the story – is that they need more direct access to Assange. But when the Judge offers one thing that IS in her power to order that would give them at least some direct access in person, the lawyers decline with a flimsy excuse.
Now that he is on remand he is supposed to be allowed 2 social visits per week and unlimited legal visits. Those two things are separate, one doesn’t preclude the other. If he isn’t getting that and he was my client I’d be raising merry hell about it and dragging whoever necessary into the appropriate Court TODAY to get an Order fixing it.”
Julian Assange has been blocked from seeing evidence in his extradition case because his lawyers cannot get sufficient access to him, a court has heard. The WikiLeaks founder, 48, appeared at Westminster magistrates court by video link on Friday for a hearing to extend his detention in Belmarsh prison, in south-east London. He is being held in the high-security jail before a full hearing in February when he will fight extradition to the US, where he faces 18 charges including conspiring to hack into a Pentagon computer. Assange is accused of working with the former US army intelligence analyst Chelsea Manning to leak hundreds of thousands of classified documents.
Assange appeared uncomfortable as he sat waiting for the hearing to start, clenching his hands together before putting them inside the sleeves of his grey sweater. He spoke to confirm his name and date of birth and to clarify he was Australian, after the court’s legal adviser mistakenly suggested he was a Swedish national. The court heard that his lawyers had made a request to the judge, complaining about a lack of access to their client behind bars. Gareth Peirce, defending Assange, said the legal team were struggling to prepare documents for the case as Assange had no access to the evidence. “Without Mr Assange’s knowledge, some of it is recently acquired evidence, some of it is subject to months of investigation not always in this country, of which he is unaware because of the blockage in visits,” she said.
“Despite our best efforts, Mr Assange has not been given what he must be given, and we are doing our utmost to cut through this.” Peirce said the governor of Belmarsh had prioritised family visits over legal visits, and she asked the judge to step in. But the district judge, Vanessa Baraitser, said she had no jurisdiction over the Prison Service.= “Can I make it clear that I have no desire to stand in the way of any lawyer having proper access to their client and it’s in the interest of justice that they do,” the judge said. “What I can do and say is to state in open court that it would be helpful to this extradition process that Mr Assange’s lawyers have the access to their client.”
Banksy’s latest in Birmingham
Please put the Automatic Earth on your Christmas charity list. Support us on Paypal and Patreon.
Top of the page, left and right sidebars. Thank you.