Raúl Ilargi Meijer

May 222017
 
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Pable Picasso Le Pengouin 1907

 

US Loan Creation Crashes To Six-Year Low (ZH)
UK Has All The Ingredients For A New Credit Crunch (G.)
Media To Trump: Only Cozy Up To The Right Dictators (FAIR)
America’s Cash Cow: ‘Trump Does Not Value The Saudis, Only Their Money’ (RT)
Nassim Taleb Tells Ron Paul: “We’ll Destroy What Needs To Be Destroyed” (ZH)
How Did Russiagate Start? (Matt Taibbi)
Jeremy Corbyn Defies His Critics To Become Labour’s Best Hope Of Survival (G.)
UK Labour Pledges To Abolish Tuition Fees As Early As Autumn 2017 (G.)
China’s Tide Of Internal Migration Is Shifting (BBG)
Commodity Traders Are Stuck in a World Where Everybody Knows Everything (BBG)
Interest-Only Loans Could Be ‘Australia’s Subprime’ (AFR)
Greek Creditors Seek to Break Impasse on Stalled Bailout Review (BBG)
Syphilis Is On The Rise Because Penicillin Isn’t Profitable (Qz)

 

 

Our economies cannot function without constant new money creation by banks on the back of mortgages and other loans.

US Loan Creation Crashes To Six-Year Low (ZH)

According to the latest Fed data, the all-important C&I loan growth contraction has not only continued, but over the past two months, another 50% has been chopped off, and what in early March was a 4.0% annual growth is now barely positive, down to just 2.0%, and set to turn negative in just a few weeks. This was the lowest growth rate since May 2011, right around the time the Fed was about to launch QE2. At the same time, total loan growth has likewise continued to decline, and as of the second week of May was down to 3.8%, the weakest overall loan creation in three years.

Another loan category that has seen a dramatic slowdown since last September, when Ford’s CEO aptly predicted that “sales have reached a plateau.” Since then auto loan growth has been slashed by more than 50% and at this runrate, is set to turn negative some time in late 2017. Needless to say, that would wreak even further havoc on the US car market. For a while, despite numerous attempts at explanation, there was no definitive theory why this dramatic slowdown was taking place. It even prompted the WSJ to inquire “who hit the brakes?” Well, after the latest Fed Senior Loan Officer Survey, we may have the answer.

First, recall that in late April we showed another very troubling trend: consumer credit card default rate as tracked by S&P/Experian Bankcard had surged to the highest level since June 2013, suggesting that contrary to reports otherwise, the US consumer is increasingly unwell. A quick look at the latest Fed Senior Loan officer survey revealed even more disturbing trends. According to the report, “banks reported tightening most credit policies on Commercial Real Estate loans over the past year…. On balance, banks reported weaker demand for CRE loans in the first quarter.” Even more troubling was the continued drop in demand for C&I loans among small, medium and large corporations, with “inquiries for C&I lines of credit remained basically unchanged” staying at a modestly depressed rate.

This stark admission that in addition to declining bank supply due to tighter standard (i.e., worries about further losses), there was less demand by businesses and consumers for loans, has explained once and for all the ongoing collapse in commercial bank loan creation, both total, C&I and auto. Of the two, the declining demand for loans businesses, is by far the most concerning aspect of an economy that is supposedly growing, and where companies should be willing to take out new credit to fund expansion (instead of merely issuing bonds to buyback their stock).

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Position very similar to US. And many others, obviously.

UK Has All The Ingredients For A New Credit Crunch (G.)

A credit crunch is brewing and when it happens, the UK is going to get hurt. That is the message emerging from senior executives in the financial services industry, who do not think Britain has changed that much since the 2008 credit disaster and the devastating crash that followed. Three developments lie at the heart of this disturbing analysis: spectacular growth in the sale of second mortgages, car loans and credit cards. Second mortgages are widely seen as a signal of consumers taking on risky levels of debt that leave them vulnerable to a downturn in the economy. It was the same before the last banking crash. Tens of thousands of households, many of them struggling to pay monthly mortgage payments, used second mortgages to bypass borrowing limits set by their mortgage lender.

The latest industry figures show the number of people opting to saddle themselves with a second mortgage leapt 22% in March to its highest level since 2008. Car loans are already on the regulator’s radar. Like second mortgages, they are considered secured credit on the basis that lenders have a claim against an asset when borrowers can no longer pay monthly instalments. But cars depreciate from the moment they are bought, so they rank low down the scale of secure credit. And loans have turned in recent years into leases that have customers renewing contracts every three years, keeping them in effect permanently hooked. The main consumer regulator for the financial services industry, the Financial Conduct Authority, is reviewing the market for car leasing, which now accounts for more than 90% of car sales, to check for mis-selling to poorer households who will be vulnerable to default.

The Bank of England is also on the case. More importantly, it is also looking at the big picture and what happens if unemployment suddenly rises and a large number of households default on payments. Officials at the Bank have a growing list of concerns. Not only is there the second mortgage problem and the number of car loans: figures show consumer spending on unsecured credit has also rocketed in the last year. In March alone, the amount UK consumers owed on loans and cards grew by £1.9bn, the highest figure in 11 years. Households are known to have increased their reliance on short-term unsecured loans to buy cars and furniture, and to kit out new kitchens. Some use them to maintain their lifestyle in the face of a decade of flat wages.

Unfortunately, another group use credit to pay the monthly rent. Shelter, the homelessness charity, says one in three renters – around half a million people – on low incomes are having to borrow money to pay the rent. It said the borrowing is often from family and friends, but also on credit cards and through loans.

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Why US mainstream media are on their last legs.

Media To Trump: Only Cozy Up To The Right Dictators (FAIR)

After a series of friendly gestures by President Donald Trump toward Filipino President Rodrigo Duterte and Egypt’s Abdel Fattah el-Sisi over the past few months, US media have recoiled with disgust at the open embrace of governments that ostensibly had heretofore been beyond the pale. “Enabling Egypt’s President Sisi, an Enemy of Human Rights,” was the New York Times‘ editorial position (4/4/17)—followed by “Donald Trump Embraces Another Despot” (5/1/17). A week later, Sen. John McCain (R.-Ariz.) lectured Secretary of State Rex Tillerson on the Times op-ed page (5/8/17) on “Why We Must Support Human Rights.” “How Trump Makes Dictators Stronger” was Washington Post columnist Anne Applebaum’s lament (5/1/17). “Trump keeps praising international strongmen, alarming human rights advocates,” reported an upset Philip Rucker (Washington Post, 5/2/17).

Post contributor Tom Toles (5/2/17) added, “Trump invites ruthless dictators to the White House.” Trump had gone too far, was the media message, crossing a line with his enthusiastic outreach to brutal tyrants. So the Trump administration’s announcement of a plan for not just a friendly visit to Saudi Arabia—scheduled for May 20–21—but also the sale of up to $300 billion in weapons to the oppressive regime, must have provoked the same outcry from these critics, right? Actually, no. Thus far, the LA Times, CNN, NBC, MSNBC, CNN, ABC and CBS haven’t reported on Trump’s massive arms deal with Saudi Arabia, much less had a pundit or editorial board condemn it. Saudi Arabia’s war on Yemen has killed at least 10,000 civilians, resulted in near-famine conditions for 7 million people and led to a deadly cholera epidemic—all made possible with US weapons and logistical support.

John McCain, whose New York Times op-ed was unironically shared by dozens of high-status pundits, aggressively backs Saudi Arabia’s brutal bombing of Yemen, and has called for increased military support to the absolute monarchy. The New York Times hasn’t written an editorial about Saudi Arabia since October of last year (10/1/16), when, for the second time in the span of a week, the paper defended the regime against potential lawsuits over its role in the 9/11 attacks. When the Times does speak out on the topic of Saudi Arabia, it does so to run interference for its possible connection to international terrorism.

Nice words to the wrong dictators unleash a torrent of outrage from our pundit class. Nice words to the right dictators—along with billions in military hardware, which unlike nice words will be used to continue to slaughter residents of a neighboring country and suppress domestic dissent–result in uniform silence. Not a word from Anne Applebaum, no condemnation from Philip Rucker, no moral preening from Sen. John McCain, no sense that any line had been crossed from the New York Times editorial board. The US’s warm embrace and arming of the Saudis is factored in, it’s bipartisan, and thus not worthy of outrage.

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NassimNicholasTaleb on Twitter:

“What @realDonaldTrump is doing: sucking in the last $100 billion before the bankruptcy of SaudiBarbaria. If anything, cruel to the Saudis.”

America’s Cash Cow: ‘Trump Does Not Value The Saudis, Only Their Money’ (RT)

RT: Trump signed a $110-billion dollar arms deal with Saudi Arabia. How do you think this is going to be received in the US and in the wider international community?

Sharmine Narwani: Not very well. We’ve seen what the Saudis have done with arms in the last six years or so. To understand why this administration is upping arms sales to the Saudis, we have to go back a little bit. In 2010, 2011 at the start of the Arab Spring, the Saudis signed contracts for over $65 billion at that time, the largest ever. And then here we are a number of years later. And the numbers are 110, possibly up to $300 billion. And the reason behind this is basically after the failures of the US intervention in Iraq and invasion of Afghanistan, the Americans were no longer willing to sacrifice blood and treasure, and moving forward they were going to use local proxies to fight their wars. And Saudi Arabia is willing and able to fight wars in Syria, in Iraq, in Yemen on behalf of the American administration. But unfortunately, to no avail; these are not winnable wars. And at this point, I think Trump is looking at them as a cash cow.

RT: Trump says he wants to help bring peace to the Middle East. But does striking such a huge arms deal right off the bat send the right signal?

SN: Peace is a relative term. What do the Americans and what does the Trump administration mean by peace, for starters? Peace means the status quo, it means the Americans continue to exercise hegemony over the region, and that is not possible with an empire in decline. So, I think right now what we are seeing with the Trump administration headed by Jared Kushner, his son-in-law, spearheading an effort to create what they are calling the Arab NATO, which is a peace deal struck over the Israel-Palestine conflict in which the Saudis and the Gulf States and other Sunni states will agree to some kind of a solution there in order to cooperate with Israel to target Iran. So, in fact, we are going to see an escalation, not peace.

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“We have today so many people sitting in the New York Times Washington office, in an air conditioned office, who can dictate foreign policy with zero risk.”

Nassim Taleb Tells Ron Paul: “We’ll Destroy What Needs To Be Destroyed” (ZH)

Just how homogenous is the U.S. foreign policy elite? Remember that through the end of Hillary Clinton’s tenure as Secretary of State in 2013, either a Bush or a Clinton held one of the three highest offices in the U.S. – the presidency, vice presidency or secretary of state – for eight straight terms. Another reason why interventionist foreign policy often fails is because federal-government bureaucrats and other outsiders don’t have “skin in the game” – an entrenched interest, financial or of another sort, in the conflict – and therefore, are incapable of achieving a comprehensive understanding of the situation. That goes for both elected leaders, beauracrats, and the media. “We have today so many people sitting in the New York Times Washington office, in an air conditioned office, who can dictate foreign policy with zero risk.”

Dr. Paul seized the opportunity to criticize the “Chickenhawks” who advocate interventionism, but avoided serving in the military during Vietnam. “I don’t fault them for trying to avoid the war, but I fault them for advocating war,” Paul said. Many still haven’t internalized the lesson of the 2007-2008 economic crash and how the monetary policy missteps made by former Fed Chairman Alan Greenspan helped cause the crash. As a result, throughout human history, “we’ve never had so many people transferring risk to others,” Taleb asserts. One reason these actors have been allowed to remain in power is that it’s difficult to assign blame to individuals when you’re dealing with “macro” conflicts like the Syrian conflict that involve many different state actors.

This is one reason the policy elite at the State Department – whom Taleb compared to doctors from ancient times, who inflicted more harm than healing on their patients – have managed to stay in power, while a modern-day doctor who was causing an unusual number of patient deaths would quickly be barred from practicing. Turning the conversation toward the asset bubbles that have continued growing since the last crisis, Taleb explained how Greenspan’s discovery that he could stabilize markets by slashing interest rates has led to our current struggle with unprecedented debt creation and a belief in “perpetual wealth and perpetual growth.” “Lowering rates in such a manner leads to distortions. If we didn’t have a Fed, we’d be better off because the price of money would be negotiated between people.”

[..] Whatever happens to the Federal Reserve -if it’s allowed to continue monetizing debt or not – it may not matter. Because digital currencies like bitcoin, which are quickly growing in popularity and value, could one day supplant the use of fiat currencies altogether, Taleb said. During the last U.S. election, people showed that they aren’t “victims of the New York Times.” Moreover, Twitter has helped upend the media power structure in favor of the people and independent thought. “Trump was elected in spite of 264 top newspapers wanting him to lose,” Taleb noted, adding that he believes the future will be “a libertarian dream.” “We will destroy what needs to be destroyed, and build what needs to be built,” he said.

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Taibbi is crawling back a little.

How Did Russiagate Start? (Matt Taibbi)

[..] there was no way to listen to the March 5th interview and not come away feeling like Clapper believed he would have known of the existence of a FISA warrant, or of any indications of collusion between the Trump campaign and Russia, had they existed up until the time he left office on January 20th of this year. Todd went out of his way to hammer at the question of whether or not he knew of any evidence of collusion. Clapper again said, “Not to my knowledge.” Here Todd appropriately pressed him: If it did exist, would you know? To this, Clapper merely answered, “This could have unfolded or become available in the time since I left the government.” That’s not an unequivocal “yes,” but it’s close. There’s no way to compare Clapper’s statements on March 5th to his interviews last week and not feel that something significant changed between then and now.

Clapper’s statements seem even stranger in light of James Comey’s own testimony in the House on March 20th. In that appearance, Comey – who by then had dropped his bombshell about the existence of an investigation into Trump campaign figures – was asked by New York Republican Elise Stefanik when he notified the DNI about his inquiry. “Good question,” Comey said. “Obviously, the Department of Justice has been aware of it all along. The DNI, I don’t know what the DNI’s knowledge of it was, because we didn’t have a DNI – until Mr. Coats took office and I briefed him his first morning.” Comey was saying that he hadn’t briefed the DNI because between January 20th, when Clapper left office, and March 16th, when former Indiana senator and now Trump appointee Dan Coats took office, the DNI position was unfilled.

But Comey had said the counterintelligence investigation dated back to July, when he was FBI director under a Democratic president. So what happened between July and January? If Comey felt the existence of his investigation was so important that he he had to disclose it to DNI Coats on Coats’ first day in office, why didn’t he feel the same need to disclose the existence of an investigation to Clapper at any time between July and January? Furthermore, how could the FBI participate in a joint assessment about Russian efforts to meddle in American elections and not tell Clapper and the other intelligence chiefs about what would seemingly be a highly germane counterintelligence investigation in that direction?

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If Corbyn doesn‘t beat May, it’ll be due to his own party members. Corbyn equals Sanders in many ways. Left wing parties, to avoid oblivion, must be drastically changed and rebuilt. But vested interests make that very hard in both the UK and US.

Jeremy Corbyn Defies His Critics To Become Labour’s Best Hope Of Survival (G.)

In 2009 the Greek Socialist party, Pasok, entered government with 44% of the vote; by 2015 it was down to seventh, with just 5%. The party’s demise coincided with, and was arguably precipitated by, the rise of the more leftwing Syrza, which went from 5% and fifth place to 36% and government within the same period. This dual trajectory gave rise to the term Pasokification: the dramatic decline of a centre-left party that is eclipsed by a more leftwing alternative. A word was needed for it because there’s a lot of it about. Earlier this month the French Socialist party came fifth in the first round of the presidential election with just 6% of the vote, while the hard left won 20%; back in 2012 the Socialists came first with 28% and went on to win the presidency. In Holland the PvdA, the mainstream social democratic party, won 6% in March and came 7th while the GreenLeft coalition won 9%; back in 2012 the PvdA came second, with 25%.

Less pronounced versions of the same dynamic have occurred across the continent. When parties created to represent the interests of working people in parliament decide instead to make working people pay for the crisis in capital they get punished, and ultimately may be discarded. Anyone who believes that Labour is immune from this contagion just needs to take a look at Scotland, where the party went from 41 seats in 2010 to just one in 2015, before Corbyn was elected leader. To understand the Labour party’s fortunes in this election outside of this trend would be like looking at each national uprising during the Arab spring in 2011, or the collapse of Eastern bloc dictatorships in 1989, as being somehow wholly discrete from each other.

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Bold move. But there’s only two weeks left.

UK Labour Pledges To Abolish Tuition Fees As Early As Autumn 2017 (G.)

New university students will be freed from paying £9,000 in tuition fees as early as this autumn if Labour wins the election, Jeremy Corbyn will say on Monday. The Labour leader and Angela Rayner, his shadow education secretary, will say tuition fees will be completely abolished through legislation from 2018 onwards. But students starting courses in September will have fees for their first year written off retrospectively so as not to encourage them to defer their studies for a year. Labour said it would seek to provide free tuition for EU students and push for reciprocal arrangements at EU universities as part of the Brexit negotiations. Students who are partway through their courses would no longer have to pay tuition fees from 2018, meaning those starting their final year of study in September would be the last cohort liable for the £27,000 of debts to be paid back when graduates pass an earnings threshold.

Labour said those students would be protected from above-inflation interest rate rises on their debts and the party would look for ways to reduce the burden for them in future. “The Conservatives have held students back for too long, saddling them with debt that blights the start of their working lives. Labour will lift this cloud of debt and make education free for all as part of our plan for a richer Britain for the many not the few,” Corbyn will say. “We will scrap tuition fees and ensure universities have the resources they need to continue to provide a world-class education. Students will benefit from having more money in their pockets, and we will all benefit from the engineers, doctors, teachers and scientists that our universities produce.”

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And then they run out of ‘cheaper’ areas. But at least there’s new space to build ghost cities in.

China’s Tide Of Internal Migration Is Shifting (BBG)

Growth in China’s economy has long centered on the coast, where Shanghai and the Pearl River Delta form some of the world’s most productive regions on their own. But now that tide of internal migration that drew hundreds of millions of workers from the farm to factory is shifting, and lifting the economic prospects of the country’s interior.As big-city living costs rise and job openings become less abundant, more migrants are now leaving China’s urban centers than new ones arriving, according to Oxford Economics. “Labor costs on the East Coast are now too high for industries further down the value chain to remain competitive internationally,” London-based economist Alessandro Theiss wrote in a report, citing an 8 million decline in the migrant population from 2014 to 2016.

The shift should benefit inland provinces, especially in southwest regions like Sichuan, as companies move production to take advantage of lower costs while remaining connected to coastal export hubs and industrial clusters, he said. Southern and northwestern provinces are are likely to keep expanding relatively fast as they benefit from catch-up growth, fiscal support and geographic location, while the northeast is likely to remain the slowest-growing region as population declines and coal mining consolidates more in inland provinces, according to Theiss. While the east coast was hit by slower global trade in recent years, conditions are now improving. Specialized manufacturing clusters and export hubs are innovating and moving up the value chain, and research activity is boosting the region.

That’s good news for some of China’s biggest drivers: Coastal Guangdong, Jiangsu and Shandong provinces each account for around 10% of national output and all had output last year that exceeded Mexico’s, Theiss said. The future looks favorable for east coast provinces with more mature economies, as well as those in central China.

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If “Everybody Knows Everything”, the markets must be rigged if anyone wants to make any money.

Commodity Traders Are Stuck in a World Where Everybody Knows Everything (BBG)

For commodity traders operating in the Information Age, just good old trading doesn’t cut it anymore. Unlike the stock market in which transactions are typically based on information that’s public, firms that buy and sell raw materials thrived for decades in an opaque world where their metier relied on knowledge privy only to a few. Now, technological development, expanding sources of data, more sophisticated producers and consumers as well as transparency surrounding deals are eroding their advantage. “Everything is transparent, everybody knows everything and has access to information,” Daniel Jaeggi, the president of Mercuria Energy Group, said on Thursday at the Global Trader Summit organized by IE Singapore, a government agency that promotes international trade.

Sitting next to him at a panel discussing ‘What’s Next for Commodity Trading: Drivers, Disruptors and Opportunities’, Sunny Verghese, the chief executive officer of food trader Olam International Ltd., lamented declining margins. “The consumers and producers are trying to eat our lunch. So we got to be smart about differentiating ourselves,” he said. As market participants’ access to information increases, the traders highlighted the need to more than simply buy and sell commodities as profits from arbitrage – or gains made from a differential in prices – shrinks. That means getting involved in the supply chain by potentially buying into infrastructure that’s key to the production and distribution of raw materials, and also providing financing for the development of such assets.

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Interest only loans are deadly weapons. Lots of them in various EU countries too.

Interest-Only Loans Could Be ‘Australia’s Subprime’ (AFR)

High-risk mortgage loans to young families, professionals and other over-extended borrowers amounting to more than six times household incomes could wipe out 20% of the major banks’ equity base, institutional investment fund JCP Investment Partners has warned. The fund manager’s study warns that official estimates of average household indebtedness are depressed by the sizeable number of mortgages that are effectively full paid off. In a proprietary study of the nation’s record high-and-growing household debt mountain, the Melbourne-based fund said Irish-style housing losses for the bigger-than-recognised pool of riskier borrowers could wipe out half of the banks’ equity capital.

Interest-only loans, said JCP – which is one of three Australian equities managers appointed by the Future Fund – could be “Australia’s sub-prime”. As regulators crack down on interest-only lending and the Turnbull government’s decision to introduce a bank levy drives up the cost of loans, “only time will tell if such households can afford the mortgages they have”. The dramatic warning echoes concerns raised by Reserve Bank of Australia governor Philip Lowe this month that rising household debt had made the economy more vulnerable, and that it was unclear how stretched consumers might behave in a crisis.

It also follows a review by Australian Prudential Regulation Authority chairman Wayne Byres of bank capital requirements for housing exposures, given the “notable concentration in housing”, announced at The Australian Financial Review Banking and Wealth Summit last month. Among the biggest concerns is what may happen when households feel they can no longer service their loans, for instance, as borrowing costs are reset higher or those with interest only mortgages are forced to repay the principal as well. That creates a negative feedback loop – experienced by Ireland after the financial crisis – in which stressed borrowers slash their spending, in turn crunching the economy, driving up unemployment and adding to downward pressure on house prices.

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They seek to break Greece, not the impasse.

Greek Creditors Seek to Break Impasse on Stalled Bailout Review (BBG)

Euro-area finance ministers gather in Brussels on Monday to try to clinch a deal on easing Greece’s debt burden, which would resolve a stalled review of the country’s bailout and pave the way for a new set of rescue loans. While Greece and its bailout supervisors have agreed on economic overhauls, the completion of the country’s review has been held back by disagreements between key creditors over how much debt relief is needed. At the heart of the impasse lies the IMF’s reluctance to participate in a bailout unless the euro area takes further steps to ensure the country’s €315 billion ($353 billion) debt load becomes sustainable. Some nations like Germany, which is resisting changes to Greece’s debt profile, won’t release any new funds until the IMF joins the program. Athens needs its next aid installment of around €7 billion before it has to repay lenders in July.

A global agreement on Greek debt “is within reach and it’s vital,” EU Economic and Monetary Affairs Commissioner Pierre Moscovici said in an interview on France Inter radio on Sunday. Additional debt relief is also necessary for the ECB to include Greek bonds in its asset purchases program, which would ease the country’s access to bond markets. EU officials see chances for a deal on Monday at 50-50, and point to a meeting of euro-area finance ministry deputies ahead of the ministers’ gathering, which will determine the likelihood of an accord. A key issue of contention is the outlook for Greece’s economy after 2018, when the current bailout expires. The IMF has raised doubts about Greece’s ability to maintain such an optimistic budget performance for decades, while key creditors have been pushing for a more positive outlook. Less ambitious fiscal targets would increase the amount of debt relief needed.

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Celebrate capitalism. While you’re alive.

Syphilis Is On The Rise Because Penicillin Isn’t Profitable (Qz)

At least 18 countries, including South Africa, the US, Canada, Portugal, France, and Brazil, have faced shortages of benzathine penicillin G over the last three years, according to the World Health Organization (WHO). With only a few companies in the world still manufacturing the medicine, countries can’t find enough supply of the drug that changed modern medicine 76 years ago. Penicillin was discovered in 1928, but it really took off during World War II. In the early 1940s, a US government-led program brought together around 20 commercial firms, plus government and academic research laboratories, who collaborated to scale up penicillin production to supply the military. The goal, according to the book Sickness and Health in America, was to have enough penicillin for the troops landing in France in June 1944.

In March 1945, penicillin was, for the first time, made available for consumers across the US. It’s efficacy made it popular: by 1949, the US annual production of penicillin was 1.3 trillion units—compared to the relative pittance of 1.7 billion units in 1944.\ Penicillin was one of the great achievements of modern medicine. It was the first drug of its kind, considered a miracle, and ushered in the era of antibiotics. Before penicillin, any cut could kill if it got infected; surgeries of any kind could be fatal; and bacterial infections such as strep throat could kill. Gonorrhea, syphilis, and other sexually transmitted illnesses were basically a death sentence. But a single shot of benzathine penicillin G was enough to kill the first stages of syphilis, which had plagued humankind for over 500 years. It could also cure gonorrhea and other infectious disease. Today, benzathine penicillin G is still the most effective drug against deadly diseases such as rheumatic heart disease and syphilis.

[..] Today, just four companies in the world still produce the active ingredient for benzathine penicillin G. Three are in China: North China Pharmaceutical; CSPC Pharmaceuticals; Jiangxi Dongfeng Pharmaceutical. Austria-based Sandoz is the only producer of the active ingredient for benzathine penicillin G in the Western world. Together, these producers have the capacity to deliver up to 600 metric tons of benzathine penicillin G a year, but they produce less than 20% of that. “There is no money in penicillin,” says Amit Sengupta, the New Delhi-based global coordinator of the People’s Health Movement. A shot of benzathine penicillin G typically costs between $0.20 and $2.00, and usually all you need is one—strep throat and syphilis are both cured with a single injection of penicillin.

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May 212017
 
 May 21, 2017  Posted by at 9:29 am Finance Tagged with: , , , , , , , , , ,  No Responses »
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Alfred Buckham Tower of London and Tower Bridge c1920

 

Trump’s $115 Billion Saudi Weapons Deal Ratifies US Support For Yemen War (WE)
A Quarter Of Americans Can’t Pay All Their Monthly Bills (ZH)
U.K. Threatens to Quit Brexit Talks If It Faces Massive Bill (BBG)
Tory Support Wobbles as Labour Attacks May’s Pensioner Plans (BBG)
May’s Plan To End Free School Lunches ‘To Hit 900,000 Struggling Families’ (O.)
Theresa May’s Tory Manifesto Scraps The Ban On Elephant Ivory Sales (EP)
Comey Has Changed His Mind On Trump Trying To Influence Him (ZH)
The Fallacy of Demonizing Russia (CN)
CIA Incompetence Allowed China To Murder A Dozen CIA Assets (ZH)
Those Exposed By WikiLeaks Should Be Investigated, Not Assange (RT)
Varoufakis Reveals Worst Kept Secret In Europe: EU Is A German Empire (MW)
Germany Limits Refugee Family Reunions From Greece (DW)
Schäuble: Germany Will Not Accept Any Greek Debt Cut at Present Time (GR)
Greek State Debt Rises To €326.5 Billion (GR)

 

 

Crazy. In America it is still considered OK to kill people for profit. Has been for ages.

But look at what’s not even being said: talking about Saudi Arabia without mentioning its support for Salafi religion and terrorism paints only part of the picture. To make a buck, and to create more chaos, the US supports the very terrorists it claims to be fighting.

Trump’s $115 Billion Saudi Weapons Deal Ratifies US Support For Yemen War (WE)

President Trump’s newly announced arms agreement with Saudi Arabia ratifies an Obama administration policy that has drawn criticism from a voluble, bipartisan minority of senators. Saudi Arabia, armed with American weapons, fought a proxy war with Iran in Yemen, where the government was overthrown by a rebel group tied to the Iranians. Allegations that Saudi Arabia has bombed civilians and committed other human rights abuses compromised what would otherwise tend to be unanimous U.S. support for the conflict. A $1.15 billion arms deal last year turned controversial, but that pact is dwarfed by the $110 billion pact signed Saturday. “[M]any of the armaments we’re providing to Saudi Arabia will help them be much more precise and targeted with many of their strikes, but it’s important that pressure be kept on the rebels in Yemen,” Secretary of State Rex Tillerson told reporters following meetings in Riyadh.

But Saudi Arabia has attacked civilians intentionally, according to Senate critics of such agreements, rather than by mistakes borne of imprecise airstrike technology. “[T]he country is on the brink of famine in part because the Saudis have intentionally destroyed transit hubs and key bridges, and blocked the delivery of humanitarian aid into Yemen,” Sen. Chris Murphy, D-Conn., wrote in a piece published by the Huffington Post. “By selling the Saudis these precision-guided weapons more — not fewer — civilians will be killed because it is Saudi Arabia’s strategy to starve Yemenis to death to increase their own leverage at the negotiating table. They couldn’t do this without the weapons we are selling them.”

Sen. Todd Young, R-Ind., wanted Tillerson to make a series of demands on the Saudis designed to ease civilian suffering in Yemen, such as ending delays on humanitarian aid at a port city held by the rebels. “First, renounce any intention to conduct a military operation against the Port of Hudaydah,” Young, a former Marine who sits with Murphy on the Senate Foreign Relations Committee, said last week during a colloquy on the Senate floor with the Connecticut Democrat. “Second, redouble efforts to achieve a diplomatic solution. Third, end any delays to the delivery of humanitarian aid caused by the Saudi-led coalition. And, fourth, permit the delivery of much-needed U.S.-funded cranes to the Port of Hudaydah that would permit the quicker delivery of food and medicine. I said it before, with more than 10 million Yemenis requiring humanitarian assistance there is no time to waste.”

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Reports of poverty in America won’t stop coming in.

A Quarter Of Americans Can’t Pay All Their Monthly Bills (ZH)

There was some good news and some not so good news in the Fed’s latest annual Report on the Economic Well-Being of U.S. Households. First the good news. The report, based on the Board’s fourth annual Survey of Household Economics and Decisionmaking conducted in October 2016, presents a “picture of improving financial well-being among Americans”, at least according to the report (read on to see if this is merited). Overall, 70% of the more than 6,600 respondents said they were either “living comfortably” or “doing okay,” up 1% from 2015 and up 8% from the first survey results in 2013. Not surprisingly, the highest percentage, or 92%, of those who responded they were “living comfortably” was among the group with more than $100,000 in family income.

For Americans making less than $40,000 the breakdown was almost evenly split with 49% saying they are “just getting by.” According to the same study, 28% of respondents said that their income in the last 12 months was less than $25,000, and 40% report that their income was less than the key $40,000 cutoff, which suggests that roughly 4 in 10 Americans are “finding it difficult to get by.” The improvements in well-being as reported by the survey respondents were concentrated among high-income adults, with at least some college education, and prompted the WSJ to write that “U.S Household financial health improved in recent years.” Even so, most of the changes reported in the survey were relatively modest, “reflecting a slowly improving economy and an unemployment level at or below 5% throughout 2016.”

Now, the not so good news. Nearly eight years into an economic recovery, nearly half of Americans didn’t have enough cash available to cover a $400 emergency. Specifically, the survey found that, in line with what the Fed had disclosed in previous years, 44% of respondents said they wouldn’t be able to cover an unexpected $400 expense like a car repair or medical bill, or would have to borrow money or sell something to meet it. Troubling as this statistic remains, the overall share of adults who would struggle to come up with $400 in a pinch has declined by 2% from the last survey conducted in 2015, and down 6% since 2013. Of the group that could not pay in cash, 45% said they would go further in debt and use a credit card to pay off the expense over time. while a quarter would borrow from friends of family, and another 27% just couldn’t pay the expense. Others would turn to selling items or using a payday loan.

The breakdown was largely by education attainment: 79% of those with at least a bachelor’s degree said they would still be able to pay all of their other bills in full if hit with a $400 charge. Just 52% of those with no more than a high school diploma said the same. Just as concerning were other findings from the study: just under one-fourth of adults, or 23%, are not able to pay all of their current month’s bills in full while 25% reported skipping medical treatments due to cost in the prior year. Additionally, 28% of adults who haven’t retired yet reported to being grossly unprepared, indicating they had no retirement savings or pension whatsoever.

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Election talk.

U.K. Threatens to Quit Brexit Talks If It Faces Massive Bill (BBG)

The U.K. will quit Brexit talks unless the EU drops its demands of a divorce payment of €100 billion ($112 billion), Brexit Secretary David Davis said. Britain’s negotiations on leaving the EU would otherwise be plunged into “chaos,” and even a £1 billion settlement would be “a lot of money,” Davis said in an interview published in the Sunday Times. The size of Britain’s exit bill, and which types of negotiations can begin before it has been agreed, has been a source of debate for weeks. European Commission President Jean-Claude Juncker has said the U.K. will have to pay about £50 billion, while Luxembourg’s Prime Minister Xavier Bettel has signaled a figure between €40 billion and €60 billion. The Financial Times estimated the cost could balloon to €100 billion, while a study by the Institute of Chartered Accountants in England and Wales put the cost at as little as £5 billion ($6.5 billion).

Prime Minister Theresa May’s government has said it will meet its commitments to the EU, but has questioned how the EU’s preliminary estimates have been reached. “We don’t need to just look like we can walk away, we need to be able to walk away,” Davis said. “Under the circumstances, if that was necessary, we would be in a position to do it.” In an interview with the Sunday Telegraph, May said that “money paid in the past” by the U.K. into joint EU projects and the European Investment Bank ought to be taken account in the final divorce bill. “There is much debate about what the U.K.’s obligations might be or indeed what our rights might be,” she said. “We make it clear that we would look at those both rights and obligations.”

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Is there enough time left for May to alienate enough people? She certainly tries.

Tory Support Wobbles as Labour Attacks May’s Pensioner Plans (BBG)

U.K. Prime Minister Theresa May’s hopes of boosting her parliamentary majority suffered a blow on Saturday, as Jeremy Corbyn’s opposition Labour Party edged closer in the polls and Conservatives faced a backlash over proposed changes to social care. Labour cut the Tories’ lead in the latest Opinium Research survey to 13 points from 15 points a week earlier, and a new YouGov survey in the Sunday Times put Corbyn’s party nine points behind. The last time Labour managed a single-digit deficit in the YouGov series was in September. The tightening polls mark a setback for May as she seeks to strengthen her position ahead of upcoming Brexit negotiations. In another blow, 47% of respondents in a Survation poll said they opposed May’s plan to require people to tap into assets above £100,000 ($130,000), excluding the value of their homes, to pay for the costs of their old-age care.

Attacking May’s social care pledge and manifesto promises to pensioners, a demographic that traditionally votes Conservative, Corbyn labeled the Tories a “nasty” party in a speech in Birmingham on Saturday. He reiterated the accusation in an emailed statement and set out five pledges for how his party would help older voters. “Theresa May and the Conservatives won’t stand up for pensioners,” Corbyn said in the statement. “Their only concern is their billionaire friends.” Labour’s pledges to older voters include preserving a so-called triple lock on pension payments for five years, under which the government guarantees pensions will rise annually by whichever is greatest: the rate of inflation, the rise in earnings, or 2.5%. The Tories say they’ll drop the 2.5% provision starting in 2020.

Corbyn’s party also says it will guarantee winter fuel subsidies for all pensioners, and will not raise the state pension age beyond 66. The Conservative manifesto, unveiled by May on Thursday, would scrap the fuel payments for well-off pensioners, and said the state pension age should reflect increases in life expectancy. In a lengthy Facebook post Saturday, May warned that a lot is “at stake” in the election and said the U.K. has “great challenges,” including the need to provide “security for older people while being fair to the young”. “If I lose just six seats I will lose this election, and Jeremy Corbyn will be sitting down to negotiate with the presidents, prime ministers and chancellors of Europe,” May wrote. Labour’s leader would “bring chaos to Britain,” she said.

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It’s plenty bad enough that it’s needed. And then scrap it? Scrapping it merely confirms that Britain is a third world country run by a cynical elite. Good thing there’s an election right ahead.

May’s Plan To End Free School Lunches ‘To Hit 900,000 Struggling Families’ (O.)

About 900,000 children from struggling families will lose their right to free school lunches under a cut unveiled in the Conservative manifesto. The total includes more than 600,000 young children recently defined as coming from “ordinary working families”, according to analysis for the Observer by the Education Policy Institute. It means that the surprise measure risks undermining Theresa May’s pledge to prioritise families that are “just about managing” – those who are in work, but struggling to make ends meet. May opted to end universal free school lunches for infants, introduced under the coalition government, and replace them with free breakfasts. The money saved will be used to see off a looming Tory rebellion over school funding.

The move risks punishing exactly the kind of families the prime minister has promised to help and will cost families about £440 for every child hit by the cut. It is likely to save about £650m a year. However, the Conservatives pointed to recent evidence that free breakfasts were more cost-effective, adding that the poorest children would still receive a free lunch. After a week in which the parties released their election manifestos, more Tory candidates expressed private reservations about their party’s plan to make people pay for their old-age home care through their estates.

With the large Tory poll lead closing slightly in recent days, some nervous candidates are urging the leadership to make another attempt to explain the policy to voters, while others are planning to lobby for concessions after the election. May has insisted it is a fair measure that ensures only those with estates worth more than £100,000 will pay. Jeremy Corbyn attempted to exploit the row by accusing the Tories of provoking a “war between generations”. He accused May of drawing up an “anti-pensioner package” that weakened protections for the state pension, removed the winter fuel allowance from many and forced thousands to pay huge amounts for home care. Tim Farron, the Lib Dem leader, said May’s social care policy would “go down as her poll tax”.

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“Interestingly, this policy puts the Tories in direct conflict with Prince William, who has been a vocal supporter of a total ban on ivory sales. Will we see the Duke of Cambridge campaigning for Labour – which has pledged to introduce the total ban the Prince has been lobbying for?”

Theresa May’s Tory Manifesto Scraps The Ban On Elephant Ivory Sales (EP)

After heavy lobbying from wealthy antiques dealers, Theresa May has sneakily dropped the proposed outright ban on elephant ivory sales from the Tories’ 2017 manifesto. Following bans in both the US and China, David Cameron had pledged in the 2015 Conservative manifesto to put a complete ban on all ivory trading. However, after huge pressure from rich and powerful antiques dealers, Theresa May has conveniently decided to completely scrap the plans altogether. The Tories did not decide to implement the ban during the two years after it was announced by David Cameron, and even their staunch supporters in the British press were writing negative pieces about the Tories reticence in pushing through the much-needed legislation.

A quote from a Daily Mail article written in March entitled “Tories’ shame over blood ivory”, said: “A much more likely reason (for the Tories dropping the ivory ban) is that they are being swayed by the powerful antiques industry, which fears it will lose millions of pounds if antique ivory sales are stopped, and whose figurehead happens to be Victoria Borwick, Conservative MP for Kensington, and president of the British Antique Dealers’ Association.” The most powerful UK antique traders association is The British Antiques Dealers’ Association, and their President, Lady Victoria Borwick (also the Conservative MP for Kensington) can be seen shaking hands with Theresa May in the image above.

The only mention of the subject in the Conservative Party’s latest 2017 manifesto is a general pledge to work with international organisations to protect endangered species and the marine environment. Meanwhile, the Labour Party’s 2017 manifesto has specifically pledged to introduce a “total ban on ivory trading”. An elephant is killed for its ivory every 15 minutes on average, and their numbers have fallen by almost a third in Africa since 2007. So as well as being in favour of bringing back fox hunting, Theresa May also couldn’t really care about elephants being killed either. Are you seriously going to vote for a woman who bows to lobbyists over a practice as disgusting as elephant poaching?

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Should be quite the event, that Senate testimony of his.

Comey Has Changed His Mind On Trump Trying To Influence Him (ZH)

Clearly disappointed to have been left out of the headline heroics from Friday night (courtesy of The Washington Post and The New York Times), CNN has decided that anon-sourced perspectives on officials’ feelings now warrants reportage. The latest in the sad sage of mainstream media’s downward spiral, as The Hill reports, is that former FBI Director James Comey is expected to testify that he believes President Trump was deliberately trying to meddle in the FBI’s investigation of Russian interference in the presidential election, according to a report late Friday. Despite swearing under oath that he “had never” been influenced during an investigation, and further that if he had he would have reported it immediately… CNN now reports that, according to a source, Comey has come to believe the president intended to influence him…

Former FBI Director James Comey now believes that President Donald Trump was trying to influence his judgment about the Russia probe, a person familiar with his thinking says, but whether that influence amounts to obstruction of justice remains an open question. “You have to have intent in order to obstruct justice in the criminal sense,” the source said, adding that “intent is hard to prove.” Comey will testify publicly before the Senate intelligence committee after Memorial Day, the panel’s leaders announced Friday. The central question at that blockbuster hearing will be whether Comey believed the President was trying to interfere with his investigation.

Sources say Comey had reached no conclusion about the President’s intent before he was fired. But Comey did immediately recognize that the new President was not following normal protocols during their interactions. So to clarify, a disgruntled fired employee, who previously said no effort to influence was undertaken, has now changed his mind, according to sources, and thinks his former boss was trying to influence him (according to sources).

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The west has rewritten WWII history from the start.

The Fallacy of Demonizing Russia (CN)

We entered the monument to the siege of Leningrad from the back. There is a large semi-circle with eternal flame torches at intervals and embedded sculptures of Lenin’s face, and other symbols of the Soviet era. The monument was built in the post-war period so the Soviet iconography is understandable. In the middle is a sculpture of a soldier, a half-naked woman looking forlorn into the distance, and another woman collapsed on the ground with a dead boy in her arms. There are several concentric steps that follow the semi-circle and I sat down on one of them and took in the feel of the area. Classical style music played in the background with a woman’s haunting voice singing in Russian. It was explained to me that it was a semi-circle instead of a full-circle to represent the fact the city was not completely surrounded and ultimately not defeated.

I finally got up and went through the opening in the semi-circle and came out to the front where a tall column with 1941 and 1945 on it stood with a large statue of two soldiers in front of it. There are several statues on either side of the front part of the monument of figures, from soldiers to civilians, who labored to assist in alleviating the suffering of the siege and defending the city. Soldiers and civilians helped to put out fires, retrieve un-exploded ordnance from buildings, repair damage, and built the road of life over a frozen body of water to evacuate civilians and transport supplies. The siege lasted 872 days (Sept. 8, 1941, to Jan. 27, 1944), resulting in an estimated 1.2 million deaths, mostly from starvation and freezing, and some from bombing and illness.

Most were buried in mass graves, the largest of which was Piskarevskoye Cemetery, which received around 500,000 bodies. An accurate accounting of deaths is complicated by the fact that many unregistered refugees had fled to Leningrad before the siege to escape the advancing Nazi army. According to Wikipedia, by the end of the siege: “Only 700,000 people were left alive of a 3.5 million pre-war population. Among them were soldiers, workers, surviving children and women. Of the 700,000 survivors, about 300,000 were soldiers who came from other parts of the country to help in the besieged city.”


sculpture commemorating the defense of Leningrad during World War II. (courtesy of saint-petersburg.com.)

I told Mike that I didn’t think the average American could even begin to fathom this level of suffering. With the exception of a very small percentage of the population sent to fight our myriad and senseless conflicts, war is something that happens to other people somewhere else. It’s an abstraction – or worse yet, fodder for entertainment. [..] it all made me ponder how spoiled Americans have been in this respect, with a vast ocean on either side and weak or friendly neighbors to the north and south. We have not experienced a war on our soil since the 1860’s and have not suffered an invasion since 1812. I can’t help but think that this, along with our youth, goes a long way toward explaining our lack of perspective and humility as a nation. Only those without wisdom would characterize themselves as “exceptional” and “indispensable.”

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Under Obama and Clinton.

CIA Incompetence Allowed China To Murder A Dozen CIA Assets (ZH)

You know what they say about biting the hand that feeds. The NYT just dropped its latest deep-state scoop, and boy is it a doozy. But instead of using the information as more leverage to attack President Trump, the leaks reveal allegedly extreme incompetence at the highest levels of the CIA, what NYT’s “current and former government sources” characterized as the worst intelligence breach in decades. These officials revealed that “the Chinese government systematically dismantled CIA spying operations in the country starting in 2010, killing or imprisoning more than a dozen sources over two years and crippling intelligence gathering there for years afterward.”

The sheer number of U.S. assets lost rivaled those lost to the Soviet Union and Russia during the betrayals of both Aldrich Ames and Robert Hanssen during the 1980s and 1990s, the NYT noted. The timing of the scoop is also curious: Instead of dropping it during the market day, standard practice for anti-Trump revelations from WaPo, NYT and CNN, this story appeared at noon on a Saturday, when global markets were shuttered – almost guaranteeing it won’t dominate the cable-news cycle, which will likely be laser-focused on Trump’s first trip abroad. One possible reason: the head of the CIA from 2010 to 2013 was Mike Morell, an outspoken supporter of Hillary Clinton, who in August of 2016 penned “I Ran the C.I.A. Now I’m Endorsing Hillary Clinton.”

That is explainable: after all Hillary Clinton was Secretary of State at the time when, as we now learn, China was killing CIA spies. Beginning in 2010, CIA operatives meant to collect information on the innerworkings of the Communist Party started disappearing. The NYT reports that between the final weeks of 2010 through the end of 2012, the Chinese killed at least a dozen of the CIA’s sources. According to three sources, one was shot in front of his colleagues in the courtyard of a government building – a grisly killing meant to send a message to any others who might have been working for U.S. intelligence. Still others were imprisoned. All told, the Communist Party killed or imprisoned 18 to 20 of the CIA’s sources.

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Every country is willing to break every law, domestic or international, if it suits them.

Those Exposed By WikiLeaks Should Be Investigated, Not Assange (RT)

Prominent jurist and head of Julian Assange’s legal team Baltasar Garzon told RT that the US has been secretly conducting an investigation into his client and WikiLeaks, arguing that those implicated in crimes should face legal action instead. Garzon, a renowned human rights judge who sat on Spain’s central criminal court and once indicted Chilean dictator Augusto Pinochet, said in an interview to RT Spanish that while Sweden dropping charges against the WikiLeaks co-founder is a welcome step, the main threat to his freedom comes from Washington. “He [Assange] is satisfied, but, in his own words, the war only begins now. We understood that Sweden was merely a tool in the fight against the freedom of speech. This [role] is the main occupation of the US,” Garzon said.

Assange’s legal team has been preparing to use all means available to gain the upper hand in a possible legal battle, including UN resolutions and international law “in the hopes that this country, despite all its power, admits that neither Julian Assange, nor WikiLeaks, nor freedom of speech advocates are to blame for its woes,” Garzon said. Those who should be held accountable are not whistleblowers and their sources, he argued, but those “ham-fisted leaders who neglected their responsibility to protect freedom and security in the society.” The ones who should be “investigated and persecuted” are “those who were exposed by WikiLeaks,” he said.

Not much is known about the clandestine proceedings allegedly underway in Virginia, Garzon said, noting that all the scant data they managed to obtain was received through information leaks and that they continue to be in the dark about the status of the proceedings. “Since 2010, the US has been carrying out a secret investigation against Julian Assange and WikiLeaks for revealing secret materials, for the fight for the freedom of speech and information,” Garzon said, adding that as far as he is aware, no charges have been brought against his client at this point.

As for the UK police warning that Assange would be arrested for failing to surrender to the British courts back in June 2012, Garzon believes it only serves as a pretext to limit his freedom of movement, barring him from leaving the embassy. “I believe that it is against the law, because he did not breach any pre-trial restrictions. He was on the embassy’s territory, because he was granted political asylum. He obtained refugee status. That is to say, this situation goes against the law,” the lawyer said. He went on to say that the British police failed to inform Assange that this sort of proceedings had been opened against him during his five-year stay in the embassy.

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A ‘secret’ I’ve only mentioned 1000 times.

Varoufakis Reveals Worst Kept Secret In Europe: EU Is A German Empire (MW)

Forget all the claims and protestations about “families of nations” and a “new Europe” and “the European project.” The European Union, and especially the eurozone, is a German empire. The new capital of Europe is not Brussels — let alone Strasbourg, the home of the European Parliament — but Berlin. The ultimate power of the EU is not the president of the European Commission, but the chancellor of Germany. That’s the takeaway from “Adults in the Room: My Battle With Europe’s Deep Establishment,” the sensational memoir by the ill-fated, but colorful, former Greek Finance Minister Yanis Varoufakis. His account of his role in the Greek debt crisis of early 2015 is the talk of the town in London, where it has just been published. And it has been tossed into the middle of the Brexit war of words with the EU, and the British election, like a grenade.

Varoufakis gives a detailed and candid account of the shenanigans that went on behind the scenes as he tried, and failed, to prevent the Greek debt crisis from bringing the country to its knees. He doesn’t spare himself, and he comes across — to his own admission — as politically naive and diplomatically inept. It’s a staggering tale of endemic lying in Brussels and corruption in Athens. But what is most fascinating is how, in the end, all roads lead to Berlin. When a roadblock is thrown up to a Greek debt deal, even in a meeting in Brussels or London or elsewhere, it almost always turns out to be the work of Wolfgang Schäuble, Germany’s hard-line finance minister.

[..] Most astonishingly, and outrageously, Varoufakis reveals that Berlin actually went behind the scenes to scupper a rescue deal struck between Athens and Beijing. The Germans didn’t want to let the Greeks off the hook. It was late March 2015. Greece was on the rack. It had just days left before literally running out of money and shutting the banks. And then, miraculously, Beijing stepped in with the offer of help. The Chinese wanted to get their exports to the heart of Europe faster. So they were offering to make major investments in the Athenian Port of Piraeus, and in Greek railways, as part of a “new Silk Road,” or commercial route. And along with the deal, they were willing to buy short-term Greek paper to keep the country afloat.

The Chinese were awash with surplus euros and dollars that needed a home, and Greece’s entire budget shortfall was chicken feed to them anyway. But days after agreeing to the deal, they suddenly, and mysteriously, pulled back. Varoufakis was shocked when they virtually sat out two auctions of short-term Greek government debt. He then discovered that the Chinese ambassador was also surprised, and this was a decision taken secretly at the highest levels in Beijing. Varoufakis recalls: “I told Alexis [Tsipras, the prime minister] what had happened and suggested strongly that he contact the Chinese prime minister. “The next day Alexis relayed the news from Beijing. Someone had apparently called Beijing from Berlin with a blunt message: Stay out of any deals with the Greeks until we are finished with them.”

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Germany wants chaos in Greece. Breaking laws and treaties won’t stop one second.

Germany Limits Refugee Family Reunions From Greece (DW)

German Interior Minister Thomas de Maiziere has reduced the number of asylum-seeker family members allowed into the country from Greece to 70 a month, German news group RedaktionsNetzwerk Deutschland reported on Friday. The group of local papers said the information was provided by Chancellor Angela Merkel’s government following a request from the Left Party. In its response, the Interior Ministry said the decrease in numbers had to do with “limited support and accommodation capacities,” as well as the “considerable logistical coordination effort by state and federal authorities.” Left lawmaker Ulla Jelpke described the explanation as a “miserable excuse,” and accused the government of shirking its responsibilities under the EU’s Dublin regulation.

The law stipulates that separated refugee and asylum-seeking families are entitled to a legal reunion once an immediate relative arrives in a country covered by the Dublin rule. “The federal government is trampling all over EU law and child welfare,” Jelpke said, adding that the cap should be removed because there was a need for as many as 400 refugee family members per month to be reunited with their loved ones in Germany. The EU took in some 1.6 million refugees and migrants – most of them from Syria – between 2014 and 2016. The majority arrived in Germany via frontline states like Italy and Greece. But the scale of the influx prompted many countries to introduce extra controls and to close their borders, blocking the so-called Balkan route and leaving tens of thousands of people stranded in Greece’s refugee camps.

According to information published by Greek newspaper “Efimerida ton Synakton”, around 2,000 refugees are waiting in Greece to be reunited with their families in Germany. It reported that Germany received only 70 Dublin transfers from Greece in April under the new cap, compared to 540 in March and 370 in February.

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This will not stop. It’s a feature of German and therefore Troika behavior.

Schäuble: Germany Will Not Accept Any Greek Debt Cut at Present Time (GR)

“At the present time, Germany will not accept any Greek debt reduction,” said a spokesperson for German Finance Minister Wolfgang Schaeuble, speaking to Bild. The German official also told the German newspaper that Berlin will not accept extending the debt repayment period, neither will accept that the European Stability Mechanism acquires the International Monetary Fund loans to Greece. The representative of Schaeuble said that on Monday the euro zone finance ministers would examine in detail what the Greek government has voted. “We welcome the ratification of the measures, it is an important step. At the Eurogroup on Monday we will look in every detail of what the Greek government has voted on. The goal is to close the second evaluation, but we can not prejudge the outcome of a comprehensive agreement,=” the German official said.

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After years of ever more severe austerity, the debt only keeps going up. How is that possible? What’s the way out? The Troika makes sure there’s no way out. All exits are blocked.

Greek State Debt Rises To €326.5 Billion (GR)

Greece’s central government debt went up in 2017, from €326,258 billion in December to €326,528 billion in March, according to data released on Friday by the Public Debt Management Agency. The Greek government cash reserves stood at €2,908 billion at the end of March, compared with 2,791 billion at the end of December. Two thirds (67.6%) of the total debt has a variable interest rate. The Greek government wants to “lock” that at a fixed interest rate, in view of the new debt settlement. In this case, it will be protected in the long run from the risk of rising interest rates, but in the short term there will be a burden in relation to the very low variable rate of 1% of the bailout loans. Of the total soverign debt, €56.6 billion is in state bonds and 14.9 billion in short-term securities.

To these, must be added another €13.6 billion from public authorities’ repos. Repos increased by €2.3 billion in three months, a trend that shows that the Greek government is pumping from every source of liquidity in the public sector, but with a rather costly interest rate. A total €254.9 billion are loans, mainly from the European Stability Mechanism, received under the country’s economic rescue plans. The average duration of the Greek debt is 18.19 years, but the government seeks to restructure the debt and extend maturities. In 2017, payments for loans and bonds amount to about €8.5-9 billion. According to the medium term debt repayment plan, in 2017 and 2018 the public debt should be reduced to €319-320 billion.

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May 202017
 
 May 20, 2017  Posted by at 9:05 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
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Minor White Windowsill Daydreaming Rochester NY 1958

 

The Housing Moment Investors Dread Is Here (DDMB)
Home Ownership Among Young UK Families Halves In 20 Years (TiM)
A Monster Eating the Nation (Jim Kunstler)
Democrats Are Falling For Fake News About Russia (Vox)
Harvard Study Reveals Extent of Anti-Trump Media Bias (HeatSt.)
Comey’s 2007 Brush With Scandal: Jim’s Loyalty Was More To Chuck Schumer (SD)
Constitutional Crisis In Washington? More Like Attempted Coup (David Goldman)
Brazil Plea-Bargain Testimony Says President Took $4.6 Million In Bribes (R.)
Maduro to Trump: ‘Get Your Dirty Hands Off Venezuela!’ (R.)
Theresa May To Create New, Government Controlled Internet in UK (Ind.)
Arctic Stronghold of World’s Seeds Flooded After Permafrost Melts (G.)
Varoufakis Claims Tsipras Pressured Him To Accept Creditors’ Demands (K.)
‘They Stole My Money’: Greek Dreams Of Retirement Turn Sour (AP)
Teen Refugees Trapped In Greece Turn To Prostitution (Spiegel)

 

 

Cracks in the mirage.

The Housing Moment Investors Dread Is Here (DDMB)

Amid the carnage in the auto sector, economists have sought solace in the comforts of home, sweet home. A recent Census release suggests that Millennials, long sidelined, have finally started to tiptoe into the home-buying market. The reception to the data was so effusive that other reports, suggesting housing has reached a much different sort of turning point, were lost in the fray. The good news is that the trend is unequivocal, based purely on supply and demand. The bad news is in the actual message. The May University of Michigan Consumer Sentiment survey showed a six-year low among those who think it’s a good time to buy a house and a 12-year high among those who say it’s a good time to sell. Disparities of this breadth tend to coincide with break points and that’s just where we’ve landed in the cycle.

The beginning of May officially marked the advent of a buyers’ market, defined simply as sellers outnumbering buyers by a wide enough margin to trigger falling prices. Yes, it’s the moment buyers have been waiting for. It is also the moment private equity investors, those who’ve crowded out natural buyers, have been dreading. Three factors determine home sales: interest rates, unemployment and prices. The recent decline in interest rates has provided some semblance of relief; purchase applications have bounced off April’s levels, when they were down four% over last year. April and May are obviously critical to the spring sales season. The low unemployment rate would seem to be a huge plus if it wasn’t for the stress building around thousands of layoff announcements across the retail and auto sectors that won’t find their way into this most lagging of economic indicators for months.

That is not to say those getting pink slips don’t know their fate, which should influence home sales going forward. Price is the one bright spot, with one glaring caveat: Falling home prices tend to be associated with a negative macroeconomic backdrop, which does not bode well for any buyer of, well, anything. Dig into the Federal Reserve’s recently released first quarter Senior Loan Officer Survey and you will see nothing of note on the residential mortgage side – banks reported that both loan demand and lending standards remained unchanged in the first three months of the year. But that is the here and now. Demand and supply in the auto sector, where pricing has been under pressure for some time, looked quite similar to that for houses several months back.

According to the Fed survey, at minus 13.3%, demand for auto loans flat-lined in deeply negative territory, as was the case in last year’s fourth quarter, the worst levels of the current expansion. This data point corroborated the Michigan survey, which showed that those who said it was a good time to buy a car fell to the lowest level since August 2014. Meanwhile, demand for credit card loans slid to minus 10.2% from minus 8.3% in the last three months of last year. In the event you’re detecting a trend, households are sending out distress signals that have just begun to be picked up in housing, even as household debt levels recapture their pre-crisis highs.

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A radical change to an entire society, and one that will take decades to absorb.

Home Ownership Among Young UK Families Halves In 20 Years (TiM)

The number of young family owning their own homes has halved across large parts of the country in the space of a generation, and the struggle to get on the housing ladder is not restricted to the South East. Research by The Resolution Foundation found that 31% of 25 to 34-year-olds surveyed were home owners in 2016, compared to 58% in 1994. Regionally, 30% of those surveyed in West Yorkshire owned homes last year, compared to 61% in 1994. Similarly, in Greater Manchester, home ownership levels fell to 29% from 59% over the same 22-year period. The South West also suffered a decline, to 36% last year from 62% in 1994, while East Anglia fell to 34% from 61% in the same period. The decrease was most pronounced in outer London, where home ownership dropped to 20% in 2016 from 55% in 1994.

Big falls were also recorded in other areas of the South East including Brighton, Southampton, Reading and Milton Keynes, with home ownership in the younger age group bracket declined from to 34% last year from 64% in 1994. The Resolution Foundation argued that such a ‘seismic shift’ in home ownership puts the younger generation in a very different position from that of the older, baby boomer generation, leaving many more young families living in the private rented sector. Lindsay Judge, a senior policy analyst at the Resolution Foundation, said: ‘London house prices always dominate the headlines, but with all eyes on the capital we’re missing the bigger picture. ‘From Bristol to East Anglia and up to West Yorkshire, large swathes of young families across the country simply cannot afford to buy their own home.’This has implications for their living standards in the here and now, but also in the future when their children grow up and they approach retirement without this key asset to draw upon in old age.

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“Why do you suppose nations employ foreign ministers and ambassadors, if not to conduct conversations at the highest level with other national leaders? And might these conversations include matters of great sensitivity, that is, classified information?”

A Monster Eating the Nation (Jim Kunstler)

Is there any question now that the Deep State is preparing to expel President Donald Trump from the body politic like a necrotic organ? The Golden Golem of Greatness has floundered pretty badly on the job, it’s true, but his mighty adversaries in the highly politicized federal agencies want him to fail spectacularly, and fast, and they have a lot of help from the NY Times / WashPo / CNN axis of hysteria, as well as such slippery swamp creatures as Lindsey Graham. There are more problematic layers in this matter than in a Moldavian wedding cake. America has been functionally ungovernable for quite a while, well before Trump arrived on the scene. His predecessor managed to misdirect the nation’s attention from the cumulative dysfunction with sheer charm and supernatural placidity — NoDrama Obama.

But there were a few important things he could have accomplished as chief exec, such as directing his attorney general to prosecute Wall Street crime (or fire the attorney general and replace him with someone willing to do the job). He could have broken up the giant TBTF banks. He could have aggressively sponsored legislation to overcome the Citizens United SOTUS decision (unlimited corporate money in politics) by redefining corporate “citizenship.” Stuff like that. But he let it slide, and the nation slid with him down a greasy chute of political collapse. Which we find embodied in Trump, a sort of tragicomic figure who manages to compound all of his other weaknesses of character with a childish impulsiveness that scares folks. It is debatable whether he has simply been rendered incompetent by the afflictions heaped on by his adversaries, or if he is just plain incompetent in, say, the 25th Amendment way.

I think we’ll find out soon enough, because impeachment is a very long and arduous path out of this dark place. The most curious feature of the current crisis, of course, is the idiotic Russia story that has been the fulcrum for levering Trump out of the White House. This was especially funny the past week with the episode involving Russian Foreign Minister Lavrov and Ambassador Kislyak conferring with Trump in the White House about aviation security around the Middle East. The media and the Lindsey Graham wing of the Deep State acted as if Trump had entertained Focalor and Vepar, the Dukes of Hell, in the oval office. Why do you suppose nations employ foreign ministers and ambassadors, if not to conduct conversations at the highest level with other national leaders? And might these conversations include matters of great sensitivity, that is, classified information? If you doubt that then you have no understanding of geopolitics or history.

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The writer starts off quite right, but then veers off into this incomprehensible stuff: “There are even legitimate reasons to believe that Trump’s campaign worked with Russian hackers to undermine Hillary Clinton. That may or may not turn out to be true, but it is least plausible and somewhat supported by the available evidence.”

Legitimate reasons that may not be true? “Somewhat” supported by evidence? That’s where I stop reading.

Democrats Are Falling For Fake News About Russia (Vox)

President Donald Trump is about to resign as a result of the Russia scandal. Bernie Sanders and Sean Hannity are Russian agents. The Russians have paid off House Oversight Chair Jason Chaffetz to the tune of $10 million, using Trump as a go-between. Paul Ryan is a traitor for refusing to investigate Trump’s Russia ties. Libertarian heroine Ayn Rand was a secret Russian agent charged with discrediting the American conservative movement. These are all claims you can find made on a new and growing sector of the internet that functions as a fake news bubble for liberals, something I’ve dubbed the Russiasphere. The mirror image of Breitbart and InfoWars on the right, it focuses nearly exclusively on real and imagined connections between Trump and Russia. The tone is breathless: full of unnamed intelligence sources, certainty that Trump will soon be imprisoned, and fever dream factual assertions that no reputable media outlet has managed to confirm.

Twitter is the Russiasphere’s native habitat. Louise Mensch, a former right-wing British parliamentarian and romance novelist, spreads the newest, punchiest, and often most unfounded Russia gossip to her 283,000 followers on Twitter. Mensch is backed up by a handful of allies, including former NSA spook John Schindler (226,000 followers) and DC-area photographer Claude Taylor (159,000 followers). There’s also a handful of websites, like Palmer Report, that seem devoted nearly exclusively to spreading bizarre assertions like the theory that Ryan and Sen. Majority Leader Mitch McConnell funneled Russian money to Trump — a story that spread widely among the site’s 70,000 Facebook fans. Beyond the numbers, the unfounded left-wing claims, like those on the right, are already seeping into the mainstream discourse.

In March, the New York Times published an op-ed by Mensch instructing members of Congress as to how they should proceed with the Russia investigation (“I have some relevant experience,” she wrote). Two months prior to that, Mensch had penned a lengthy letter to Vladimir Putin titled “Dear Mr. Putin, Let’s Play Chess” — in which she claims to have discovered that Edward Snowden was part of a years-in-the-making Russian plot to discredit Hillary Clinton. Last Thursday, Sen. Ed Markey (D-MA) was forced to apologize for spreading a false claim that a New York grand jury was investigating Trump and Russia. His sources, according to the Guardian’s Jon Swaine, were Mensch and Palmer:

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First, media exposure was a main factor in winning Trump the election. Now, not so much.

Harvard Study Reveals Extent of Anti-Trump Media Bias (HeatSt.)

A major new study out of Harvard University has revealed the true extent of the mainstream media’s bias against Donald Trump. Academics at the Shorenstein Center on Media, Politics and Public Policy analyzed coverage from Trump’s first 100 days in office across 10 major TV and print outlets. They found that the tone of some outlets was negative in as many as 98% of reports, significantly more hostile than the first 100 days of the three previous administrations:

The academics based their study on seven US outlets and three European ones. In America they analyzed CNN, NBC, CBS, Fox News, the New York Times, the Washington Post and the Wall Street Journal. They also took into account the BBC, the UK’s Financial Times and the German public broadcaster ARD. Every outlet was negative more often than positive. Only Fox News, which features some of Trump’s most enthusiastic supporters and is often given special access to the President, even came close to positivity. Fox was ranked 52% negative and 48% positive. The study also divided news items across topics. On immigration, healthcare, and Russia, more than 85% of reports were negative. On the economy, the proportion was more balanced – 54% negative to 46% positive:

The study highlighted one exception: Trump got overwhelmingly positive coverage for launching a cruise missile attack on Syria. Around 80% of all reports were positive about that.

The picture was very different for other recent administrations. The study found that President Obama’s first 100 days got a good write-up overall – with 59% of reports positive. Bill Clinton and George W Bush got overall negative coverage, it found, but to a much lesser extent than Trump. Clinton’s first 100 days got 40% positivity, while Bush’s got 43%. Trump has repeatedly claimed that his treatment by the media is unprecedented in its hostility. This study suggests that, at least when it comes to recent history, he’s right.

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Comey has a past.

Comey’s 2007 Brush With Scandal: Jim’s Loyalty Was More To Chuck Schumer (SD)

[..] the current episode is not the first time Comey and his associates plotted to oust a sitting Republican official through highly orchestrated political theater and carefully crafted narratives in which Comey is the courageous hero bravely fighting to preserve the rule of law. To understand how Comey came to be FBI director in the first place, and how he operates in the political arena, it is important to review the last scandal in which Comey had a front-row seat: the 2007 U.S. attorney firings and the fight over the 2004 reauthorization of Stellar Wind, a mass National Security Agency (NSA) surveillance program designed to mitigate terrorist threats in the wake of the 9/11 attacks. The pivotal scene in the Comey-crafted narrative, a drama that made Comey famous and likely paved the road to his 2013 appointment by President Barack Obama to run the FBI, occurred in a Beltway hospital room in early 2004.

In Comey’s view, Comey was the last honest man in Washington, the only person standing between a White House that rejected any restraints on its power, and the rule of law protecting Americans from illegal mass surveillance. A former White House counsel and attorney general with extensive first-hand experience dealing with Comey, however, paints a very different picture of what happened in that hospital room, and disputes numerous key details. In this account, Comey’s actions showcase a duplicitous, secretive schemer whose true loyalties were not to the officials to whom he reported, but to partisan Democrats like Senate Minority Leader Chuck Schumer (D-N.Y.). To fully understand and appreciate Jim Comey’s approach to politics, the writings and testimony of Alberto Gonzales, who served as both White House counsel and attorney general during the events in question and is intimately aware of Comey’s history of political maneuvering, is absolutely essential.

Gonzales’s descriptions of his interactions with Comey, included in his 2016 book “True Faith And Allegiance,” are detailed and extensive. While his tone is measured, the language he uses to describe Comey’s actions in 2004 and 2007 leaves little doubt about the former top Bush official’s views on Comey’s character. Gonzales’s opinion is clearly colored by the fact that Comey cravenly used him to jumpstart his own political career by going public with surprise (and questionable) testimony that Gonzales had attempted to take advantage of a deathly ill man in order to ram through authorization of an illegal surveillance program. Bush’s Attorney General John Ashcroft had taken ill and was in the hospital at a pivotal time. The legal authorization of a surveillance program meant to find and root out terrorist threats was days from expiring.

What happened in Ashcroft’s hospital room in March of 2004 later became political fodder for a hearing in which Senate Democrats used Comey to dredge up the 2004 hospital meeting to tar Gonzales’ credibility and suggest he was unfit to continue serving as attorney general. As the 2004 and 2007 sagas show, Comey is clearly no stranger to using the unarguably legal dismissal of government employees as the backdrop for casting himself as the story’s protaganist standing up to the forces of corruption. “[I] told my security detail that I needed to get to George Washington Hospital immediately. They turned on the emergency equipment and drove very quickly to the hospital,” Comey testified. “I got out of the car and ran up — literally ran up the stairs with my security detail.” “I was concerned that, given how ill I knew the attorney general was, that there might be an effort to ask him to overrule me when he was in no condition to do that,” Comey said.

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It’s a politics and media crisis.

Constitutional Crisis In Washington? More Like Attempted Coup (David Goldman)

This is NOT a Constitutional crisis, contrary to press hype, but an attempted coup, as a senior Republican statesman told a private briefing this week. As Prof. Jonathan Turley of George Washington University wrote yesterday at TheHill.Com, the much-ballyhooed Comey memo is “pretty thin soup” as far as obstruction of justice is concerned. “Encouraging leniency or advocating for an associate may be improper,” Prof. Turley added, but it doesn’t come close to the legal threshold for impeachment, especially because no criminal proceedings were underway or even contemplated against Gen. Flynn. What exactly is going on? The Democrats never accepted the Trump election victory, and neither did the McCain wing of the Republican Party, which was humiliated and sidelined by Trump. The Wall Street Journal editorial page published a signed op-ed yesterday claiming that Trump’s alleged leak of covert intelligence to Russian Foreign Minister Lavrov showed his unfitness for office.

Presidents and Cabinet members leak secret intelligence frequently, but whether they are held to account for it is a political matter. Obama and his then Defense Secretary Leon Panetta leaked the fact that Seal Team 6 had killed Osama bin Laden as well as the fact that a Pakistani physician had tipped the US off to his whereabouts, life-threatening leaks for which Obama was given a free pass. The object of all of this, said the Republican statesman, is to persuade a sufficient number of Republican congressman and senators to abandon Trump and declare him “unfit” for office. Nothing quite like this ever has happened in American politics. Trump will NOT be caught in an impeachable offense, but his detractors will NOT give up–so a prolonged “cold civil war” (Prof. Angelo Codevilla’s phrase) is likely to paralyze policy-making in Washington for some time. That can’t be good for the stock market.

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He shouldn’t last the weekend.

Brazil Plea-Bargain Testimony Says President Took $4.6 Million In Bribes (R.)

Brazil’s top court released plea-bargain testimony on Friday accusing President Michel Temer and his two predecessors of receiving millions of dollars in bribes, the most damaging development yet in a historic political corruption probe. The testimony made public by the Supreme Court is from executives of the world’s largest meatpacking company, and raises serious doubts about whether Temer can maintain his grip on the presidency. The scandals that have engulfed Brazil’s political class and many business elites reduce the chances that Temer, a conservative who took office after leftist former President Dilma Rousseff was impeached last year, can push through economic reforms crucial for Latin America’s biggest country to recover from its worst recession on record.

The Supreme Court on Thursday said it approved an investigation of Temer for corruption and obstruction of justice. Calls for his resignation intensified, including an editorial in the O Globo newspaper, which is normally criticized by leftists for backing conservative politicians. “This is easily the worst moment in Brazil since we returned to democracy,” said Claudio Couto, a political scientist at the Getulio Vargas Foundation, a top university, calling the claims “the mother of all plea bargains.” “This testimony is hitting everyone, all the major political players and, most importantly, a sitting president,” he added.

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How is it possible that in no western media reports on Venezuela the CIA is ever mentioned? Think they left when Chavez died? Think the country implodes like this all by itself?

Maduro to Trump: ‘Get Your Dirty Hands Off Venezuela!’ (R.)

Venezuelan President Nicolas Maduro blasted Donald Trump on Friday after a fresh round of U.S. sanctions and strong condemnation of his socialist government from the U.S. leader. “Enough meddling … Go home, Donald Trump. Get out of Venezuela,” Maduro thundered in a speech carried on live TV. “Get your dirty hands out of here.” The Trump administration imposed sanctions on the chief judge and seven other members of Venezuela’s Supreme Court on Thursday as punishment for annulling the opposition-led Congress in a series of rulings this year. The new sanctions package was aimed at stepping up pressure on Maduro and his loyalists following a crackdown on street protests and efforts to consolidate his rule of the South American oil-producing country. At the White House on Thursday, Trump expressed dismay at how once-booming Venezuela was now mired in poverty, saying “it’s been unbelievably poorly run” and calling the humanitarian situation “a disgrace to humanity.”

Maduro had initially urged the world to give Trump a chance after he was elected in November but his government unleashed its strongest condemnation to date of the Republican president. “President Trump’s aggressions against the Venezuelan people, its government and its institutions have surpassed all limits,” said a government statement that accused Washington of seeking to destabilize Venezuela and foment foreign intervention. The statement also accused Washington of financing the Venezuelan opposition while ignoring problems at home like income inequality and rights violations. “The extreme positions of a government just starting off only confirmed the discriminatory, racist, xenophobic, and genocidal nature of U.S. elites against humanity and its own people, which has now been heightened by this new administration which asserts white Anglo-Saxon supremacy,” the statement said.

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Classic. Using fear, of terrorism, of pornography, etc., to clamp down on everyone’s freedom, according to a certain party’s views. No privacy for you, guys. Use your votes wisely.

Theresa May To Create New, Government Controlled Internet in UK (Ind.)

Theresa May is planning to introduce huge regulations on the way the internet works, allowing the government to decide what is said online. Particular focus has been drawn to the end of the manifesto, which makes clear that the Tories want to introduce huge changes to the way the internet works. “Some people say that it is not for government to regulate when it comes to technology and the internet,” it states. “We disagree.” Senior Tories confirmed to BuzzFeed News that the phrasing indicates that the government intends to introduce huge restrictions on what people can post, share and publish online. The plans will allow Britain to become “the global leader in the regulation of the use of personal data and the internet”, the manifesto claims.

It comes just soon after the Investigatory Powers Act came into law. That legislation allowed the government to force internet companies to keep records on their customers’ browsing histories, as well as giving ministers the power to break apps like WhatsApp so that messages can be read. The manifesto makes reference to those increased powers, saying that the government will work even harder to ensure there is no “safe space for terrorists to be able to communicate online”. That is apparently a reference in part to its work to encourage technology companies to build backdoors into their encrypted messaging services – which gives the government the ability to read terrorists’ messages, but also weakens the security of everyone else’s messages, technology companies have warned.

The government now appears to be launching a similarly radical change in the way that social networks and internet companies work. While much of the internet is currently controlled by private businesses like Google and Facebook, Theresa May intends to allow government to decide what is and isn’t published, the manifesto suggests.

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They never thought about this?

Arctic Stronghold of World’s Seeds Flooded After Permafrost Melts (G.)

It was designed as an impregnable deep-freeze to protect the world’s most precious seeds from any global disaster and ensure humanity’s food supply forever. But the Global Seed Vault, buried in a mountain deep inside the Arctic circle, has been breached after global warming produced extraordinary temperatures over the winter, sending meltwater gushing into the entrance tunnel. The vault is on the Norwegian island of Spitsbergen and contains almost a million packets of seeds, each a variety of an important food crop. When it was opened in 2008, the deep permafrost through which the vault was sunk was expected to provide “failsafe” protection against “the challenge of natural or man-made disasters”. But soaring temperatures in the Arctic at the end of the world’s hottest ever recorded year led to melting and heavy rain, when light snow should have been falling.

“It was not in our plans to think that the permafrost would not be there and that it would experience extreme weather like that,” said Hege Njaa Aschim, from the Norwegian government, which owns the vault. “A lot of water went into the start of the tunnel and then it froze to ice, so it was like a glacier when you went in,” she told the Guardian. Fortunately, the meltwater did not reach the vault itself, the ice has been hacked out, and the precious seeds remain safe for now at the required storage temperature of -18C. But the breach has questioned the ability of the vault to survive as a lifeline for humanity if catastrophe strikes. “It was supposed to [operate] without the help of humans, but now we are watching the seed vault 24 hours a day,” Aschim said. “We must see what we can do to minimise all the risks and make sure the seed bank can take care of itself.”

The vault’s managers are now waiting to see if the extreme heat of this winter was a one-off or will be repeated or even exceeded as climate change heats the planet. The end of 2016 saw average temperatures over 7C above normal on Spitsbergen, pushing the permafrost above melting point. “The question is whether this is just happening now, or will it escalate?” said Aschim. The Svalbard archipelago, of which Spitsbergen is part, has warmed rapidly in recent decades, according to Ketil Isaksen, from Norway’s Meteorological Institute. “The Arctic and especially Svalbard warms up faster than the rest of the world. The climate is changing dramatically and we are all amazed at how quickly it is going,” Isaksen told Norwegian newspaper Dagbladet.

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I don’t know if they still talk.

Varoufakis Claims Tsipras Pressured Him To Accept Creditors’ Demands (K.)

Former finance minister Yanis Varoufakis on Friday hit out at Prime Minister Alexis Tsipras, claiming that the premier had tried to scare him into yielding to creditors’ demands. “In the summer of 2015 Alexis Tsipras told me that I should fear a new Goudi,” Varoufakis told VICE magazine, referring to a military coup that took place in Greece in 1909 amid simmering social tensions. The former minister, who has launched his own party, DiEM25, said the alleged statement struck him as a threat aimed at forcing him to agree with Tsipras’s decision to give in to creditors. In a Skai TV interview last week, Varoufakis said Greece “will become Kosovo, a protectorate run by an employee of the European Union.”

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Greece’s problem is public debt, not private debt. The people did not cause the crisis, they only pay for it.

‘They Stole My Money’: Greek Dreams Of Retirement Turn Sour (AP)

It was supposed to be a time to look forward to. After decades of work, retirement was for many meant to provide a chance to slow down and enjoy life. A holiday, an evening out with old friends, the odd fishing trip. Instead, many Greek pensioners say they are struggling to get by. The government has repeatedly cuts old age benefits as part of the country’s three international bailouts and many retirees now say they are at breaking point financially. Some have unemployed children they try to help on shrinking pensions, others are seeing rising taxes eat into lifetime savings. A new austerity bill approved in parliament early Friday cuts their pensions even further, putting their plight in focus.

Greece once had a generous pension system – too generous to be sustainable, especially with an aging population. Retirement was possible from as early as the age of 55 after 30 years of work. Many had extra perks: public sector employees could retire as early as 52. Some women with young children could retire with a reduced pension at 50. But the financial crisis left Greece reliant on international creditors, who pushed for economic change – not least to pensions. The standard retirement age is now 67. Many early retirement provisions have been abolished. Including pensions, incomes have dropped 40% over the last seven years of crisis. Here is a look at the problem through the stories of four pensioners.

Mina Griva, 78, widow and former factory worker Griva’s husband, who worked in a steel plant in Greece, died eight years ago. Her initial widow’s pension of €998 ($1,110) and a €300 supplementary pension have been cut to €560 and €150 respectively. “They’ve destroyed us,” said Griva, who now helps out daily at a municipal care center for the elderly. “Pensioners are crying.” A mother of five, she uses her pension to help her son, who’s been unemployed for five years. She moved out of her small Athens apartment to give it to him, and lives in a single room on the last floor of the building. Now, she avidly watches political talk shows on TV to figure out how much further her pension will drop.

Griva left Greece in 1964 and worked for 15 years in Germany, initially as a cleaner in a cheese factory and later working an ironing press in a clothing factory. Times were tough in Greece then, and she worked double eight-hour shifts to send money home to her family. She saved, and eventually had enough to secure homes for her children, and a small apartment for herself. She thought she was securing her family’s future. “We left here to build something,” said Griva. Instead, the austerity measures ate into their lives, with new property taxes, layoffs and income cuts. “Now you can’t even buy a bread ring for your grandchildren,” she said. “I don’t know where this will go. Things are very, very hard.”

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Damn you, Brussels. Damn you, Merkel, Rutte, Hollande, Cameron, Renzi. You created this.

Teen Refugees Trapped In Greece Turn To Prostitution (Spiegel)

Mohammed is approached by a middle-aged man wearing greasy beige pants, a blue shirt and a blue baseball cap. Although the man speaks Greek, the 17-year-old boy from Afghanistan knows exactly what he wants. “No,” Mohammad repeatedly says in English, his voice cracking and his eyes filling with tears. But the man keeps pushing. “Come with me. I will give you food, pay you.” The man only stops when he realizes he is being watched. He then grudgingly walks away and sits down on a nearby bench. From there, he starts scouring the field again, searching for another boy. It was broad daylight on a sunny Tuesday morning on Victoria Square in the heart of Athens. The square has been a meeting place and a makeshift home for thousands of migrants since the refugee crisis hit Greece two years ago – and now it is increasingly becoming a prostitution hub for underage refugees.

Mohammad hasn’t gone that far yet, but he says it is only a matter of time until he goes home with a man. He has just 30 euros left in his pocket, and he is quickly losing hope. “When this money runs out, I fear I will have no other choice but do what the others are doing. Have sex with these older men. What should I do? I have no place to stay, nothing to eat. Should I just die in the park?” he says, finally bursting into tears. Mohammed says he lost his parents in an attack in Afghanistan. He has been in Athens for a month, he says, after fleeing his home alone and reaching the Greek island of Lesbos last February, where he registered as a minor. He then claimed to be an adult to escape the violence in the island’s notorious Moria camp. Since then, despite looking very much like a teenager, with pimples, a small stature and thin voice, he has been turned away from shelters for minors.

When night comes, Mohammad rolls himself up in a blanket on a corner of the square. His only possession is a yellow envelope that he guards closely. Inside, he keeps his refugee registration papers and a single-page CV. According to Mohammad’s papers, he applied for asylum in Lesbos in November 2016. The date set for his interview is January 4, 2018. It is mostly boys from Afghanistan, Pakistan and Syria – who either came alone or were separated from their families along their perilous journey to Europe – who are now waiting for their refugee claims to be processed in Greece. In the meantime, the authorities are supposed to look after them, but there are only 53 shelters with 1,272 spots. Of the approximately 2,000 registered minors, about 800 are housed in large camps, are in police custody or are homeless.

[..] Everyone – the authorities, the NGO workers, the police – know what is going on. But nobody seems willing or able to do anything about it. And this despite the fact that the adult clients are breaking the law, despite the fact that various institutions have devoted themselves to protecting young refugees. But prostitution is booming because the system is failing. Because Greece doesn’t have the resources to take care of underage refugees. Because the processing of asylum applications is chaotic and authorities from one agency don’t know what authorities from other agencies are doing. And because the boys need to file criminal complaints before their clients can be prosecuted.

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May 192017
 
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Jean-Michel Basquiat Untitled 1982

 

Swedish Prosecutors Drop Julian Assange Rape Investigation (AP/R.)
Australia Economy Among ‘Walking Dead Of Household Debt’ – Steve Keen (NCA)
US Household Debt Hit Record in First Quarter (WSJ)
Why Government Surpluses Is A Terrible Idea – Steve Keen (Renegade)
How Can The Greeks Save More Money? A Monetary Parable. (Steve Keen)
Greek Parliament Approves More Austerity Measures Amid Protests (DW)
Trump Aims to Balance Budget With Deep Cuts, Bullish Growth Projections (WSJ)
Get Ready for Quantitative Tightening (Rickards)
ECB Tapering to Cause “Disorderly Restructuring” of Italian Debt, Return to Lira (DQ)
Russia-US Relations Have Become ‘Extremely Paranoid’ – Sberbank CEO (CNBC)
Western Democracy – As Represented By The US – Is Crumbling (Global Times)
Secret Plans To ‘Protect’ France In The Event Of Le Pen Victory Emerge (G.)
What Jeremy Corbyn Whispered In My Ear (Ind.)
Study Of Healthcare Quality In 195 Countries Names The Best And Worst (AFP)
50 Years Since Indigenous Australians First ‘Counted’, Little Has Changed (G.)

 

 

Time for legal action against Sweden and the prosecutors.

Swedish Prosecutors Drop Julian Assange Rape Investigation (AP/R.)

Swedish prosecutors said on Friday they would drop a preliminary investigation into an allegation of rape against WikiLeaks founder Julian Assange, bringing to an end a seven-year legal standoff. “Chief Prosecutor Marianne Ny has today decided to discontinue the preliminary investigation regarding suspected rape concerning Julian Assange,” the prosecutors office said in a statement. Assange, 45, has lived in the Ecuadorian Embassy in London since 2012, after taking refuge there to avoid extradition to Sweden over the allegation of rape, which he denies. He has refused to travel to Stockholm, saying he fears further extradition to the US over WikiLeaks’ release of 500,000 secret military files on the wars in Afghanistan and Iraq. In 2015 lawyers for Julian Assange have claimed victory after a Swedish prosecutor bowed to pressure from the courts and agreed to break the deadlock in the WikiLeaks founder’s case by interviewing him in London.

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“Stop making housing into an asset.” “Make housing a place for people to actually live.”

Australia Economy Among ‘Walking Dead Of Household Debt’ – Steve Keen (NCA)

Australia has become the “walking dead of debt” due for a financial reckoning that could shock the housing market “bubble” within months. That’s according to “anti-economist” Professor Steve Keen who defines Australia as a “zombie to be” given soaring personal debt that has created a government-induced property bubble ripe to burst. “Australia has simply delayed its day of reckoning,” he told news.com.au in reference to the global financial crisis that shocked many countries around the world from 2008 but left the lucky country relatively unscathed after a series of government interventions. The Kingston University Professor claims first homeowners grants rolled out by successive governments have artificially kept prices high creating a form of “instant prosperity” that politicians are loath to stop.

“The housing bubble makes the politicians look good because A, people are feeling wealthier, and B … people are borrowing money to spend,” he said. “Then the government runs a balanced budget and looks like it really knows what it’s doing” “It hasn’t got a f***ing clue frankly, because what’s actually happening is the reason it’s making that money is credit is expanding,” he said. “It’s the old classic story, you’re criticising a party because someone’s laced the punchbowl. You try to take the punchbowl away from the party you’re a very unpopular person but you need to because what’s actually happening is people are getting intoxicated with credit”. His latest book, Can We Avoid Another Financial Crisis? argues Australia, along with Belgium, China, Canada and South Korea, is a “zombie” economy sleepwalking into a crunch that could come between 2017 and 2020.

“Both [Australia and Canada] will suffer a serious economic slowdown in the next few years since the only way they can sustain their current growth rates is for debt to continue growing faster than GDP,” he writes. [..] For Prof Keen, the solution for governments to an overheated housing market is obvious: “Stop making housing into an asset.” “Make housing a place for people to actually live. So you go back to saying ‘what’s desirable is affordable houses’ and affordable means it doesn’t cost a first homebuyer more than three or four years’ income to get a property,” he said. As for those struggling to get on the ladder in the meantime? “The only thing you can do in the middle is say I’m just not going to join in, and if it happens on a collective level …. it’s game over for the bubble because the bubble only works if more people keep taking out more leverage.”

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Wait till house prices start falling.

US Household Debt Hit Record in First Quarter (WSJ)

The total debt held by American households reached a record in early 2017, exceeding its 2008 peak after years of retrenchment against a backdrop of financial crisis, recession and modest economic growth. Much has changed over the past 8.5 years. The economy is larger, lending standards are tighter and less debt is delinquent. Mortgages remain the largest form of household borrowing but have become a smaller share of total debt as consumers take on more automotive and student loans. “The debt and its borrowers look quite different today,” New York Fed economist Donghoon Lee said. He added: “This record debt level is neither a reason to celebrate nor a cause for alarm.” The total-debt milestone, announced Wednesday by the Federal Reserve Bank of New York, was a long time coming.

Americans reduced their debts during and after the 2007-09 recession to an unusual extent: a 12% decline from the peak in the third quarter of 2008 to the trough in the second quarter of 2013. New York Fed researchers, looking at data back to the end of World War II, described the drop as “an aberration from what had been a 63-year upward trend reflecting the depth, duration and aftermath of the Great Recession.” In the first quarter, total debt was up about 14% from that low point as steady job gains, falling unemployment and continued economic growth boosted households’ income and willingness to borrow. The New York Fed report said total household debt rose by $149 billion in the first three months of 2017 compared with the prior quarter to a total of $12.725 trillion.

The pace of new lending slowed from the strong fourth quarter. Mortgage balances rose from the final three months of 2016, while home-equity lines of credit were down. Automotive loans rose, as did student loans, but credit-card debt fell along with other types of debt. The data weren’t adjusted for inflation, and household debt remains below past levels in relation to the size of the overall U.S. economy. In the first quarter, total debt was about 67% of nominal gross domestic product versus roughly 85% of GDP in the third quarter of 2008. Balance sheets look different now, with less housing-related debt and more student and auto loans. As of the first quarter, about 68% of total household debt was in the form of mortgages; in the third quarter of 2008, mortgages were roughly 73% of total debt. Student loans rose from about 5% to around 11% of total indebtedness, and auto loans went from roughly 6% to about 9%.

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Can we finally try to understand this, all of us?

Why Government Surpluses Is A Terrible Idea – Steve Keen (Renegade)

In this Renegade Short, Professor Steve Keen explains why the government isn’t supposed to balance its accounts like a household.

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TomDickHaria.

How Can The Greeks Save More Money? A Monetary Parable. (Steve Keen)

The EU’s “Stability and Growth Pact” has as one of its primary rules that “The Member States undertake to abide by the medium-term budgetary objective of positions close to balance or in surplus…” I explore what this objective implies in the context of a model of the economy of “TomDickHaria”: what happens to its collective GDP where one member tries to achieve the surplus goal set out in the “Stability and Growth Pact?

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The Troika makes sure Greece will keep drowning.

Greek Parliament Approves More Austerity Measures Amid Protests (DW)

All 153 lawmakers in Prime Minister Alexis Tsipras’ governing coalition backed the legislation that includes new pension cuts and lower tax breaks, which are expected to save Greece €4.9 billion ($5.4 billion) until 2021. All opposition lawmakers present in the 300-seat chamber rejected the package required by international lenders before the release of more aid. Athens needs the bailout funds to repay €7.5 billion of debt maturing in July this year. Relief measures will only kick in if Greece meets fiscal targets stipulated by its creditors. “Our country is being turned into an austerity colony,” leading opposition conservative Kyriakos Mitsotakis said during debate on the bill, describing added cuts as a “nightmare” for low-earners.

Tsipras countered that its passage would enable Greece from summer next year to stand on its own feet, without the intervention of creditors such as the IMF. He accused the opposition of constantly warning of a catastrophe that “hasn’t come.” Government spokesman Dimitris Tzanakopoulos told Skai TV that Greek creditors the IMF and Germany were “in the final stretch of very tough negotiations” over a compromise that should allow Greece to return to bond markets in 2018. Thursday’s austerity package lowers the income tax exception from €8,600 down to about €5,700 but increases benefits for low-income tenants, parents with children and subsidies for child care. Public stakes are to be reduced through sales of holdings in Greece’s PPC electricity utility, railways, Athens’ international airport and the Thessaloniki port.

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Same as it ever was. Fantasy numbers have ruled the day for many years.

Trump Aims to Balance Budget With Deep Cuts, Bullish Growth Projections (WSJ)

President Donald Trump next week will propose the U.S. can balance the federal budget over 10 years with substantial cuts to safety-net programs such as food stamps and other anti-poverty efforts, combined with a tax and regulatory overhaul that speeds up the nation’s economic growth rate, a senior White House budget official said. The president’s budget, due for release Tuesday, will spare the two largest drivers of future spending—Medicare and Social Security—leaving trillions in cuts from other programs. That includes discretionary spending cuts to education, housing, environment programs and foreign aid already laid out by the administration, in addition to new proposed reductions to nondiscretionary spending like food stamps, Medicaid and federal employee-benefit programs.

The budget release, which will be unveiled while Mr. Trump is visiting Europe and the Middle East, shows how his economic policy team is trying to forge ahead on his agenda even as distracting political controversies, such as the recent firing of FBI director James Comey, swirl around Washington. On Thursday, Treasury Secretary Steven Mnuchin testified on Capitol Hill, his first such appearance since his February confirmation, where he expressed confidence Congress could advance a revamp of the tax code this year. House Republicans held their first hearing on the proposed tax overhaul, following a series of meetings between lawmakers and top administration officials Wednesday.

The White House’s budget proposal next week builds upon an earlier outline in March that called for a nearly 10% boost in defense funding next year, offset by around $54 billion in cuts for nondefense programs. [..] Among the more controversial elements of the budget will be the administration’s growth forecasts. The White House projects the nation’s economic growth rate will rise to 3% by 2021, compared with the 1.9% forecast under current policy by the Congressional Budget Office. It’s unusual to see the White House’s growth forecasts differ from the CBO and other blue-chip projections by such a large margin over such a long stretch of the 10-year budget window.

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Another crazy experiment by the Fed bookworms.

Get Ready for Quantitative Tightening (Rickards)

Despite yesterday’s market sell-off, the Fed is still on track to raise interest rates in June. Wednesday’s action is no more than a speed bump for the Fed. It will not stop the Fed from moving forward with another 0.25% rate increase. The Fed is embarking on a new path, a path that started several years with QE (quantitative easing). QE is the name for the method the Fed uses to ease monetary conditions when interest rates are already zero. Conventional monetary policy calls for interest rate cuts to stimulate growth and inflate asset prices when the economy is in a recession. What does a central bank do when interest rates are already at zero and you can’t cut them anymore? One solution is negative interest rates, although the evidence from Japan and Europe indicates that negative rates do not have the same effect as rate cuts from positive levels. The second solution is to print money! The Fed does this by buying bonds from the big banks.

The banks deliver the bonds to the Fed, and the Fed pays for them with money from thin air. The popular name for this is quantitative easing, or QE, although the Fed’s technical name is long-term asset purchases. The Fed did QE in three rounds from 2008 to 2013. They gradually tapered new purchases down to zero by 2014. Since then, the Fed has been stuck with $4.5 trillion of bonds that it bought with the printed money. When the bonds mature, the Fed buys new ones to maintain the size of its balance sheet. But now the Fed wants to “normalize” its balance sheet and get back down to about $2 trillion. They could just sell the bonds, but that would destroy the bond market. Instead, the Fed will let the old bonds mature, and not buy new ones. That way the money just disappears and the balance sheet shrinks. The new name for this is “quantitative tightening,” or QT. You’ll be hearing a lot about QT in the months ahead.

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Tapering, QT, it’s all just more ‘uncharted territory’.

ECB Tapering to Cause “Disorderly Restructuring” of Italian Debt, Return to Lira (DQ)

Here’s the staggering scale of the Italian government’s dependence on the ECB’s bond purchases, according to a new report by Astellon Capital: Since 2008, 88% of government debt net issuance has been acquired by the ECB and Italian Banks. At current government debt net issuance rates and announced QE levels, the ECB will have been responsible for financing 100% of Italy’s deficits from 2014 to 2019. But now there’s a snag. Last month, the size of the balance sheet of the ECB surpassed that of any other central bank: At €4.17 trillion, the ECB’s assets have soared to 38.8% of Eurozone GDP. The ECB has already reduced the rate of purchases to €60 billion a month. And it plans to further withdraw from the super-expansionary monetary policy. To do this, according to Der Spiegel, it wants to spread more optimistic messages about the economic situation and gradually reduce borrowing.

[..] By the halfway point of 2018 the ECB would have completed tapering and it would then use the second half of the year to move away from negative interest rates. So far, most current ECB members have shown scant enthusiasm for withdrawing the punch bowl. The reason most frequently cited for not tapering more just yet is their lingering concern about the long-term sustainability of the Eurozone’s recent economic turnaround. The ECB’s binge-buying of sovereign and corporate bonds has spawned a mass culture of financial dependence across Europe, while merely serving to paper over the cracks that began forming — or at least became visible — in some Eurozone economies during the sovereign debt crisis. In many places the cracks are even bigger than they were back then. This is the elephant in the ECB’s room, and by now it’s too big to ignore.

In one country alone, the cracks are so large that they could end up fracturing the entire single currency project. That country is Italy. Astellon Capital’s report on Italy’s dependence on ECB bond purchases poses the question: If the ECB tapers its purchase of Italian bonds further, who would pick up the slack? The Italian banks, which are themselves deep in crisis mode and whose balance sheets are already filled to the gills with Italian bonds? Hardly. When QE ends, the banks are more likely to become net sellers, rather than net buyers, of Italian debt. The only way for the game to continue is if over the next six years non-banks increase their purchase activity up to seven times that of the past nine years. In other words, the very same investors who have used QE as the perfect opportunity to offload the immense risk of holding Italian liabilities onto the Bank of Italy’s, and then onto the Eurosystem’s, would need to step back into the market in a massive way, just at a time that the country in question is on the verge of a full-blown banking crisis.

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No kidding.

Russia-US Relations Have Become ‘Extremely Paranoid’ – Sberbank CEO (CNBC)

Diplomatic relations between America and Russia have deteriorated to such an extent that contacts between the two countries have become extremely paranoid of one another, the chief executive of Russia’s largest bank has told CNBC. “From what we see here in Russia and from the programs we see from the U.S., the unfolding situation is fairly complex. And there are certain signs of a certain… paranoid attitude to Russia and to every single contact with Russia real or imagined,” Herman Gref, Sberbank CEO, said via a translator. [..] When asked whether Gref harbored any concerns about the consequences of having met with Trump in the past, he replied, “I think the situation has become extremely paranoid for one to suspect that these sort of contacts could lead to political consequences.”

Speaking in January at the World Economic Forum in Davos, Sberbank’s CEO had predicted the Trump administration could re-establish close ties with the Kremlin and expressed his hope the newly-elected U.S. president could mark a “new beginning” for the two countries. On Friday, Gref suggested it was still too early to judge the success of Trump’s presidency however conceded that, for the time-being at least, relations between American and Russia were unlikely to change for the better. Moscow is currently enduring the sharp end of tough international sanctions from Washington[..] . “Well, I have to say that this has had an effect on us in the last two years… The inability to access international markets is painful for us,” Gref said. “You know, sanctions were put in place for political reasons and most likely their removal will also be motivated by politics…

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China’s official government paper.

Western Democracy – As Represented By The US – Is Crumbling (Global Times)

The American elite still refuse to accept Trump after his 100 days in the Oval Office. He is at odds with the mainstream media; insiders have constantly leaked information to the media. Now some commentators have compared the exposure of the Comey memo to the Watergate scandal. As Congress is under Republican control, few believe there will be a move to impeach the president, but these latest revelations will certainly further erode Trump’s presidential authority. At the beginning of the corruption scandal, few believed that South Korean president Park Geun-hye would be impeached either. Could this be a reference for Trump’s case? But evidence of Park’s illegal activities was solid, while it will be more complicated to make determinations over whether Trump obstructed justice and leaked classified intelligence.

To impeach Trump will need more evidence from further investigation. To completely discredit Trump among voters, the present scandal is not enough as it does not add to the negative image of Trump. Many just think Trump often speaks off the cuff, which ends up in silly blunders. If there is a major substantive scandal over and above him speaking out of turn then that will be another thing. But this is not the case at the moment. Every country has its own troubles. The US model represents Western democracy, but it is crumbling, and the resulting social division has become more and more serious. The US Deputy Attorney General Rod J. Rosenstein appointed a special counsel to oversee the investigation into link between Russia and the 2016 US presidential election and related matters on Wednesday.

More juicy details will continue to appear and the rifts may become wider. Trump will become one of the most frequently accused Americans. The US won’t be engulfed by chaos if its president is caught in a lawsuit. Someone has pointed out that no matter how chaotic the White House and Capitol Hill are, the overall operation of the US will not be a major problem as long as the enterprises and social organizations in the country are stable. This is seen as an advantage of the American system. Although American society is relatively stable, the political tumult can’t be taken as an advantage of the US system. The fact is that US politics is in trouble, and the benefits brought by its system are being squandered.

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Democracy as a threat to the state.

Secret Plans To ‘Protect’ France In The Event Of Le Pen Victory Emerge (G.)

It was never written down and never given a name, but France had a detailed plan to “protect the Republic” if far right leader Marine Le Pen was elected president, French media have reported. “It was like a multi-stage rocket,” an unnamed senior official told l’Obs magazine. “The philosophy, and the absolute imperative, was to keep the peace, while also respecting our constitutional rules.” [..] L’Obs cited three anonymous sources with knowledge of the emergency plan that would have been put into effect had Le Pen reached the Elysée palace, saying it was devised by a small group of ministers, chiefs of staff and top civil servants. The magazine said the plan was aimed mainly at preventing serious civil unrest and “freezing” the political situation by convening parliament in emergency session and maintaining the outgoing prime minister in office.

Police and intelligence services were particularly concerned by the threat of “extreme violence” from mainly far left protesters in the event of a Le Pen victory as the country would have found itself “on the brink of chaos”. Even before the first round of voting on 23 April, a confidential note drawn up by the intelligence services announced that “without exception, every local public safety directorate has expressed its concern”, Le Parisien reported. Regional police chiefs were asked on 21 April to detail their crowd control and deployment plans, l’Obs said. Under France’s ongoing state of emergency, more than 50,000 police and gendarmes and 7,000 soldiers were already on duty. On 5 May, two days before the second round that Macron won by 66% to Le Pen’s 34%, the national public safety directorate warned in another note that protesters were ready to use “fireworks, mortars and incendiary bombs”.

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“If you do what you believe in, you’re strong. It’s when you don’t do what you believe in that you’re weak. And we are strong.”

What Jeremy Corbyn Whispered In My Ear (Ind.)

When I shook his hand, I told him that I work for a charity and freelance as a journalist, writing on politics and social justice issues. I expressed my disappointment that Labour (and particularly Corbyn himself) doesn’t get a fair hearing from many news outlets. He spoke in my ear: “If you do what you believe in, you’re strong. It’s when you don’t do what you believe in that you’re weak. And we are strong.” The unveiling of Labour’s manifesto today was a display of strength. Labour is promising a Britain that works for everyone, where whole swathes of society aren’t left behind. The transformative manifesto will take the financial burden from the shoulders of those who can least afford to carry it, and place it upon the top 5% of earners and arrogantly tax-dodging corporations.

The Britain we currently live in is untenable for young people, university students, teachers, NHS workers, policemen, the disabled, people with long-term illnesses, people who can’t find work, first-time buyers, and those living in rented accommodation. Britain is working for a wealthy few, and Labour’s manifesto highlights the fact, often forgotten, that this is not inevitable. At Bradford University, a huge cheer went up when Corbyn promised to scrap tuition fees and end hospital parking charges. The scandal of zero hours contracts would be a thing of the past under Labour, as will NHS cuts and rises in VAT and income tax for 95% of earners. The manifesto is a document filled with long-overdue, common sense policies.

It addresses the important questions that accompany the Brexit process, including concerns about the protection of jobs and hard-won workers’ rights. It puts children and young people first, promising to invest in them through a National Education Service rather than rely on the failed academies experiment or a ridiculous and divisive reintroduction of grammar schools. In-work poverty is unacceptable. My partner and I both work two jobs and we struggle to make ends meet. We don’t indulge in avocado toast but finding enough for a deposit on a mortgage is sadly out of reach. The pledge to build one million new homes and introduce a £10 living wage by 2020 is crucial for young couples and for anyone working in poorly paid or part-time jobs, notably in care work and service industry roles. If Labour’s manifesto and the promise of more public ownership will transport us to the 1970s, where do we currently live? 1870, perhaps?

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Single payer rules. Supreme.

Study Of Healthcare Quality In 195 Countries Names The Best And Worst (AFP)

Neither Canada nor Japan cracked the top 10, and the United States finished a dismal 35th, according to a much anticipated ranking of healthcare quality in 195 countries, released Friday. Among nations with more than a million souls, top honours for 2015 went to Switzerland, followed by Sweden and Norway, though the healthcare gold standard remains tiny Andorra, a postage stamp of a country nestled between Spain (No. 8) and France (No. 15). Iceland (No. 2), Australia (No. 6), Finland (No. 7), the Netherlands (No. 9) and financial and banking centre Luxembourg rounded out the first 10 finishers, according to a comprehensive study published in the medical journal The Lancet.

Of the 20 countries heading up the list, all but Australia and Japan (No. 11) are in western Europe, where virtually every nation boasts some form of universal health coverage. The United States – where a Republican Congress wants to peel back reforms that gave millions of people access to health insurance for the first time – ranked below Britain, which placed 30th. The Healthcare Access and Quality Index, based on death rates for 32 diseases that can be avoided or effectively treated with proper medical care, also tracked progress in each nation compared to the benchmark year of 1990.

Virtually all countries improved over that period, but many – especially in Africa and Oceania – fell further behind others in providing basic care for their citizens. With the exceptions of Afghanistan, Haiti and Yemen, the 30 countries at the bottom of the ranking were all in sub-Saharan Africa, with the Central African Republic suffering the worst standards of all. “Despite improvements in healthcare quality and access over 25 years, inequality between the best and worst performing countries has grown,” said Christopher Murray, director of the Institute for Health Metrics and Evaluation at the University of Washington, and leader of a consortium of hundreds of contributing experts.

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“Dogs and cats and pigs and sheep were counted in Australia before Aboriginal people”

50 Years Since Indigenous Australians First ‘Counted’, Little Has Changed (G.)

Sol Bellear, a former rugby league player for South Sydney Rabbitohs and Aboriginal rights activist, sits in the soft autumn sunshine at a cafe intersecting Redfern Park and the oval that remains the spiritual home of his beloved club. He sips a Red Bull “heart starter” and English breakfast tea. And he shakes his head while contemplating the anniversaries of what ought to have been transformative moments for Aboriginal and Torres Strait Islander people – starting with the 1967 “citizenship” referendum that first made their existence in Australia “official”. “Things should be so much better for Aboriginal people. I think the country saw 1967 as the end of the fight,” Bellear says.

“Before 1967, we weren’t counted in the census or anything as people. Dogs and cats and pigs and sheep were counted in Australia before Aboriginal people.” Indigenous people had never previously been officially included among the Australian citizenry, nor counted in the Commonwealth census – so the federal government could not legislate for them. But on 27 May 1967, more than 90% of the Australian electorate voted at the “citizenship” referendum to effectively bring Indigenous people into the Commonwealth. “After the referendum, though, it was like the work was done for the rest of the country and governments – when it was actually just the bloody beginning,” Bellear says. “Every little thing we’ve won since, we’ve had to fight for.”

2017 is also the 25th anniversary of two more critical moments in the story: the Mabo decision – a High Court ruling that led to native title land rights, and former prime minister Paul Keating’s landmark “Redfern speech” (“We committed the murders – we took the children from their mothers”). It was Bellear who introduced Keating at Redfern Park. This was the first time an Australian prime minister had frankly, without qualification, acknowledged the violence, sickness, dispossession and ongoing oppression that colonialism had imposed on Indigenous people. Yet a quarter of a century on, Bellear says his country remains deaf to all the non-government reports into Indigenous lives – and to the savage critiques of Commonwealth policies that purported to make them better.

[..] Aboriginal and Torres Strait Islanders constitute some 3% of the country’s overall population – yet in 1991, they comprised 14% of Australia’s prisoners. A quarter of a century later, that figure was up to 27% – while more than 150 Indigenous people had died in custody in the intervening 25 years. In some parts of Australia, many more young Indigenous men complete prison terms than high school. The Indigenous rate of imprisonment is 15 times the age-standardised non-Indigenous rate. As Thalia Anthony pointed out in her 2015 book Indigenous People, Crime and Punishment, rates of Indigenous incarceration in Australia today match those of black imprisonment in apartheid South Africa.

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May 182017
 
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Pablo Picasso Bull plates I-XI 1945

 

Nicole Foss has completed a huge tour de force with her update of the Automatic Earth Primer Guide. The first update since 2013 is now more like a Primer Library, with close to 160 articles and videos published over the past -almost- 10 years, and Nicole’s words to guide you through it. Here’s Nicole:

 

 

The Automatic Earth (TAE) has existed for almost ten years now. That is nearly ten years of exploring and describing the biggest possible big picture of our present predicament. The intention of this post is to gather all of our most fundamental articles in one place, so that readers can access our worldview in its most comprehensive form. For new readers, this is the place to start. The articles are roughly organised into topics, although there is often considerable overlap.

We are reaching limits to growth in so many ways at the same time, but it is not enough to understand which are the limiting factors, but also what time frame each particular subset of reality operates over, and therefore which is the key driver at what time. We can think of the next century as a race of hurdles we need to clear. We need to know how to prepare for each as it approaches, as we need to clear each one in order to be able to stay in the race.

TAE is known primarily as a finance site because finance has the shortest time frame of all. So much of finance exists in a virtual world in which changes can unfold very quickly. There are those who assume that changes in a virtual system can happen without major impact, but this assumption is dangerously misguided. Finance is the global operating system – the interface between ourselves, our institutions and our resource base. When the operating system crashes, nothing much will work until the system is rebooted. The next few years will see that crash and reboot. As financial contraction is set to occur first, finance will be the primary driver to the downside for the next several years. After that, we will be dealing with energy crisis, other resource limits, limitations of carrying capacity and increasing geopolitical ramifications.

The global financial system is rapidly approaching a Minsky Moment:

“A Minsky moment is a sudden major collapse of asset values which is part of the credit cycle or business cycle. Such moments occur because long periods of prosperity and increasing value of investments lead to increasing speculation using borrowed money. The spiraling debt incurred in financing speculative investments leads to cash flow problems for investors. The cash generated by their assets is no longer sufficient to pay off the debt they took on to acquire them.

Losses on such speculative assets prompt lenders to call in their loans. This is likely to lead to a collapse of asset values. Meanwhile, the over-indebted investors are forced to sell even their less-speculative positions to make good on their loans. However, at this point no counterparty can be found to bid at the high asking prices previously quoted. This starts a major sell-off, leading to a sudden and precipitous collapse in market-clearing asset prices, a sharp drop in market liquidity, and a severe demand for cash.”

This is the inevitable result of decades of ponzi finance, as our credit bubble expanded relentlessly, leaving us today with a giant pile of intertwined human promises which cannot be kept. Bubbles create, and rely on, building stacks of IOUs ever more removed from any basis in underlying real wealth. When the bubble finally implodes, the value of those promises disappears as it becomes obvious they will not be kept. Bust follows boom, as it has done throughout human history. The ensuing Great Collateral Grab will reveal just how historically under-collateralized our supposed prosperity has become. Very few of the myriad claims to underlying real wealth can actually be met, leaving the excess claims to be exposed as empty promises. These are destined to be rapidly and messily extinguished in a deflationary implosion.

While we cannot tell you exactly when the bust will unfold in specific locations, we can see that it is already well underway in some parts of the world, notably the European periphery. Given that preparation takes time, and that one cannot be late, now is the time to prepare, whether one thinks the Great Collateral Grab will manifest close to home next month or next year. Those who are not prepared risk losing everything, very much including their freedom of action to address subsequent challenges as they arise. It would be a tragedy to fall at the first hurdle, and then be at the mercy of whatever fate has to throw at you thereafter. The Automatic Earth has been covering finance, market psychology and the consequences of excess credit and debt since our inception, providing readers with the tools to navigate a major financial accident.

 

Ponzi Finance

Nicole: From the Top of the Great Pyramid
Nicole: The Infinite Elasticity of Credit
Nicole: Look Back, Look Forward, Look Down. Way Down
Nicole: Ragnarok – Iceland and the Doom of the Gods
Ilargi: Iceland To Take Back The Power To Create Money
Ilargi: The Only Thing That Grows Is Debt
Ilargi: Central Banks Are Crack Dealers and Faith Healers
Nicole: Promises, Promises … Detroit, Pensions, Bondholders And Super-Priority Derivatives
Nicole: Where the Rubber Meets the Road in America
Ilargi: How Our Aversion To Change Leads Us Into Danger
Ilargi: Debt In The Time Of Wall Street
Ilargi: The Contractionary Vortex Of The Lumpen Proletariat
Ilargi: Hornswoggled Absquatulation

 


Fred Stein Evening, Paris 1934

 

The Velocity of Money and Deflation

Nicole: The Resurgence of Risk
Nicole: Inflation Deflated
Nicole: The Unbearable Mightiness of Deflation
Nicole: Debunking Gonzalo Lira and Hyperinflation
Nicole: Dollar-Denominated Debt Deflation
Nicole: Deflation Revisited: The Studio Version
Nicole: Stoneleigh Takes on John Williams: Deflation It Is
Ilargi: US Hyperinflation is a Myth
Ilargi: Everything’s Deflating And Nobody Seems To Notice
Ilargi: The Velocity of the American Consumer
Ilargi: Deflation, Debt and Gravity
Ilargi: Debt, Propaganda And Now Deflation
Ilargi: The Revenge Of A Government On Its People

 

Markets and Psychology

Nicole: Markets and the Lemming Factor
Ilargi: You Are Not an Investor
Nicole: Over the Edge Lies Fear
Nicole: Capital Flight, Capital Controls and Capital Fear
Nicole: The Future Belongs to the Adaptable
Nicole: A Future Discounted
Ashvin Pandurangi: A Glimpse Into the Stubborn Psychology of 'Fish'
Ashvin Pandurangi: A Glimpse Into the Self-Destructive Psychology of 'Sharks'
Ilargi: Institutional Fish
Ilargi: Optimism Bias: What Keeps Us Alive Today Will Kill Us Tomorrow
Nicole: Volatility and Sleep-Walking Markets

 

Real Estate

Ilargi: Our Economies Run On Housing Bubbles
Nicole: Welcome to the Gingerbread Hotel
Nicole: Bubble Case Studies: Ireland and Canada
Ilargi: Don’t Buy A Home: You’ll Get Burned

 


Berenice Abbott Murray Hill Hotel, New York 1937

 

Metals, Currencies, Interest Rates, and the War on Cash

Nicole: Gold – Follow the Yellow Brick Road?
Nicole: A Golden Double-Edged Sword
Ilargi: Square Holes and Currency Pegs
Nicole: The Special Relativity of Currencies
Nicole: Negative Interest Rates and the War on Cash
Ilargi: This Is Why The Euro Is Finished
Ilargi: The Broken Model Of The Eurozone
Ilargi: Central Banks Upside Down
Ilargi: The Only Man In Europe Who Makes Any Sense

 

China’s Epic Bubble

Nicole: China And The New World Disorder
Ilargi: Meet China’s New Leader: Pon Zi
Ilargi: China Relies On Property Bubbles To Prop Up GDP
Ilargi: Deflation Is Blowing In On An Eastern Trade Wind
Ilargi: China: A 5-Year Plan And 50 Million Jobs Lost
Ilargi: The Great Fall Of China Started At Least 4 Years Ago
Ilargi: Time To Get Real About China
Ilargi: Where Is China On The Map Exactly?

 

Commodities, Trade and Geopolitics

Nicole: Et tu, Commodities?
Nicole: Commodities and Deflation: A Response to Chris Martenson
Nicole: Then and Now: Sunshine and Eclipse
Nicole: The Rise and Fall of Trade
Nicole: The Death of Democracy in a Byzantine Labyrinth
Nicole: The Imperial Eurozone (With all That Implies)
Ilargi: The Troika And The Five Families
Ilargi: Globalization Is Dead, But The Idea Is Not
Nicole: Entropy and Empire
Ilargi: There’s Trouble Brewing In Middle Earth

 


Giotto Legend of St Francis, Exorcism of the Demons at Arezzo c.1297-1299

 

The second limiting factor is likely to be energy, although this may vary with location, given that energy sources are not evenly distributed. Changes in supply and demand for energy are grounded in the real world, albeit in a highly financialized way, hence they unfold over a longer time frame than virtual finance. Over-financializing a sector of the real economy leaves it subject to the swings of boom and bust, or bubbles and their aftermath, but the changes in physical systems typically play out over months to years rather than days to weeks. 

Financial crisis can be expected to deprive people of purchasing power, quickly and comprehensively, thereby depressing demand substantially (given that demand is not what one wants, but what one can pay for). Commodity prices fall under such circumstances, and they can be expected to fall more quickly than the cost of production, leaving margins squeezed and both physical and financial risk rising sharply. This would deter investment for a substantial period of time. As a financial reboot begins to deliver economic recovery some years down the line, the economy can expect to hit a hard energy supply ceiling as a result. Financial crisis initially buys us time in the coming world of hard energy limits, but at the expense of worsening the energy crisis in the longer term.

Energy is the master resource – the capacity to do work. Our modern society is the result of the enormous energy subsidy we have enjoyed in the form of fossil fuels, specifically fossil fuels with a very high energy profit ratio (EROEI). Energy surplus drove expansion, intensification, and the development of socioeconomic complexity, but now we stand on the edge of the net energy cliff. The surplus energy, beyond that which has to be reinvested in future energy production, is rapidly diminishing. We would have to greatly increase gross production to make up for reduced energy profit ratio, but production is flat to falling so this is no longer an option. As both gross production and the energy profit ratio fall, the net energy available for all society’s other purposes will fall even more quickly than gross production declines would suggest. Every society rests on a minimum energy profit ratio. The implication of falling below that minimum for industrial society, as we are now poised to do, is that society will be forced to simplify.

A plethora of energy fantasies is making the rounds at the moment. Whether based on unconventional oil and gas or renewables (that are not actually renewable), these are stories we tell ourselves in order to deny that we are facing any kind of future energy scarcity, or that supply could be in any way a concern. They are an attempt to maintain the fiction that our society can continue in its current form, or even increase in complexity. This is a vain attempt to deny the existence of non-negotiable limits to growth. The touted alternatives are not energy sources for our current society, because low EROEI energy sources cannot sustain a society complex enough to produce them.

We are poised to throw away what remains of our conventional energy inheritance chasing an impossible dream of perpetual energy riches, because doing so will be profitable for the few in the short term, and virtually no one is taking a genuine long term view. We will make the transition to a lower energy society much more difficult than it need have been. At The Automatic Earth we have covered these issues extensively, pointing particularly to the importance of net energy, or energy profit ratios, for alternative supplies. We have also addressed the intersections of energy and finance.

 

Energy, EROEI, Finance and ‘Above Ground Factors’

Nicole: Energy, Finance and Hegemonic Power
Ilargi: Cheap Oil A Boon For The Economy? Think Again
Ilargi: We’re Not In Kansas Anymore
Ilargi: Not Nearly Enough Growth To Keep Growing
Ilargi: Why The Global Economy Will Disintegrate Rapidly
Ilargi: The Price Of Oil Exposes The True State Of The Economy
Ilargi: More Than A Quantum Of Fragility
Ilargi: (Re-)Covering Oil and War
Nicole: Oil, Credit and the Velocity of Money Revisited
Nicole: Jeff Rubin and Oil Prices Revisited
Charlie Hall: Peak Wealth and Peak Energy
Ken Latta: When Was America’s Peak Wealth?
Ken Latta: Go Long Chain Makers
Euan Mearns: The Peak Oil Paradox – Revisited
Ilargi: At Last The ‘Experts’ Wake Up To Oil
Ilargi: Oil, Power and Psychopaths
Nicole: A Mackenzie Valley Pipe-Dream?

 

Unconventional Oil and Gas

Nicole: Get Ready for the North American Gas Shock
Nicole: Shale Gas Reality Begins to Dawn
Nicole: Unconventional Oil is NOT a Game Changer
Nicole: Peak Oil: A (Short) Dialogue With George Monbiot
Nicole: Fracking Our Future
Nicole: The Second UK Dash for Gas: A Faustian Bargain
Ilargi: Jobs, Shale, Debt and Minsky
Nicole (video): Sucking Beer Out Of The Carpet: Nicole Foss At The Great Debate in Melbourne
Ilargi: Shale Is A Pipedream Sold To Greater Fools
Ilargi: The Darker Shades Of Shale
Ilargi: Debt and Energy, Shale and the Arctic
Ilargi: London Is Fracking, And I Live By The River
Ilargi: And On The Seventh Day God Shorted His People
Ilargi: The Oil Market Actually Works, And That Hurts
Ilargi: Drilling Our Way Into Oblivion
Ilargi: Who’s Ready For $30 Oil?
Ilargi: US Shale And The Slippery Slopes Of The Law

 

Electricity and Renewables

Nicole: Renewable Energy: The Vision and a Dose of Reality
Nicole: India Power Outage: The Shape of Things to Come
Nicole: Smart Metering and Smarter Metering
Nicole: Renewable Power? Not in Your Lifetime
Nicole: A Green Energy Revolution?
Nicole: The Receding Horizons of Renewable Energy
Euan Mearns: Broken Energy Markets and the Downside of Hubbert’s Peak

 


Underwood&Underwood Chicago framed by Gothic stonework high in the Tribune Tower 1952

 

In the aftermath of the Fukushima disaster, TAE provided coverage of the developing catastrophe, drawing on an earlier academic background in nuclear safety. It will be many years before the true impact of Fukushima is known, both because health impacts take time to be demonstrable and because the radiation releases are not over. The destroyed reactors continue to leak radiation into the environment, and are likely to do so for the foreseeable future. The vulnerability of the site to additional seismic activity is substantial, and the potential for further radiation releases as a result is similarly large. The disaster is therefore far worse than it first appeared to be. The number of people in harms way, for whom no evacuation is realistic despite the risk, is huge, and the health impacts will prove to be tragic, particularly for the young.

 

Fukushima and Nuclear Safety

Nicole: How Black is the Japanese Nuclear Swan?
Nicole: The Fukushima Fallout Files
Nicole: Fukushima: Review of an INES class 7 Accident
Nicole: Fukushima: Fallacies, Fallout, Fundamentals and Fear
Nicole: Welcome to the Atomic Village

 

The Automatic Earth takes a broad view of the context in which finance, energy and resources operate, looking at issues of how society functions at a macro level. Context is vital to understanding the bigger picture, particularly human context as it relates to the critical factor of scale and the emergent properties that flow from it. We have continually emphasised the importance of the trust horizon; in determining what functions at what time, and what kind of social milieu we can expect as matters evolve.

Expansions are built upon the optimistic side of human nature and tend to lead to greater inclusiveness and recognition of common humanity over time. Higher levels of political aggregation, and more complex webs of trading relationships, come into being and achieve popular support thanks to the benefits they confer. In contrast, contractions tend to reveal, and be driven by, the darker and more pessimistic side of human collective psychology. They are social and are political as well as economic. In both directions, collective attitudes can create their own self-fulfilling prophecies at the societal level.

Trust determines effective organisational scale, extending political legitimacy to higher levels of political organisation during expansions and withdrawing it during periods of contraction, leaving political entities beyond the trust horizon. Where popular legitimacy is withdrawn, organisational effectiveness is substantially undermined, and much additional effort may go into maintaining control at that scale through surveillance and coercion.

The effort is destined to fail over the longer term, and smaller scale forms of organisation, still within the trust horizon, may come to hold much greater significance. The key to effective action is to know at what scale to operate at any given time. As we have said before, while one cannot control the large scale waves of expansion and contraction that unfold over decades or centuries, understanding where a given society finds itself within that wave structure can allow people and their communities to surf those waves.

 

Scale and Society

Nicole: Scale Matters
Nicole: Economics and the Nature of Political Crisis
Nicole: Fractal Adaptive Cycles in Natural and Human Systems
Nicole: Entropy and Empire
Nicole: The Storm Surge of Decentralization
Ilargi: When Centralization Scales Beyond Our Control
Ilargi: London Bridge is (Broken) Down
Ilargi: The Great Divide
Ilargi: Quote of the Year. And The Next
Nicole: Corruption, Culpability and Short-Termism
Ilargi: The Value of Wealth
Ilargi: The Most Destructive Generation Ever
Ilargi: Ain’t Nobody Like To Be Alone

 

Trust and the Psychology of Contraction

Nicole: Beyond the Trust Horizon
Nicole: Bubbles and the Titanic Betrayal of Public Trust
Ilargi: Why There Is Trump
Ilargi: Who’s Really The Fascist?
Ilargi: Ungovernability
Ilargi: Comey and the End of Conversation
Ilargi: Eurodystopia: A Future Divided
Nicole: War in the Labour Markets
Nicole: An Unstable Tower of Breaking Promises
Ilargi: Libor was a criminal conspiracy from the start

 

Affluence, Poverty and Debt and Insurance

Nicole: Trickles, Floods and the Escalating Consequences of Debt
Nicole: Crashing the Operating System: Liquidity Crunch in Practice
Ilargi: The Impossible and the Inevitable
Nicole: The View From the Bottom of the Pyramid
Ilargi: The Lord of More
Ilargi: The Last of the Affluent, the Carefree and the Innocent
Ilargi: The Worth of the Earth
Nicole: Risk Management And (The Illusion Of) Insurance

 


Fred Stein Streetcorner, Paris 1930s

 

Finally, TAE has provided some initial guidance as to how to position one’s self, family, friends and community so as to reduce vulnerability to system shocks and increase resilience. The idea is to reduce the range of dependencies on the large scale, centralised life-support systems that characterise modernity, and also to reduce dependency on the solvency of middle men. The centralised systems we take so much for granted are very likely to be much less reliable in the future. For a long time we have uploaded responsibility to larger scale organisational entities, but this has led to a dangerous level of complacency.

It is now time to reclaim responsibility for our own future by seeking to understand our predicament and take local control of efforts to mitigate its effects. While we cannot prevent a bubble from bursting once it has been blown, we can make a substantial difference to how widely and deeply the impact is felt. The goal is to provide a sufficient cushion of basic essentials to allow as many people as possible to preserve the luxury of the longer term view, rather than be pitched into a state of short term crisis management. In doing so we can hope to minimise the scale of the human over-reaction to events beyond our control. In the longer term, we need to position ourselves to reboot the system into something simpler, more functional and less extractive of the natural capital upon which we and subsequent generations depend.

 

Solution Space, Preparation and Food Security

Nicole: The Boundaries and Future of Solution Space
Nicole: Facing the Future – Mitigating a Liquidity Crunch
Nicole: 40 Ways to Lose Your Future
Nicole: How to Build a Lifeboat
Nelson Lebo: Resilience is The New Black
Nelson Lebo: What Resilience Is Not
Nicole: Sandy: Lessons From the Wake of the Storm
Nicole: Crash on Demand? – A Response to David Holmgren
Nicole: Finance and Food Insecurity
Nicole: Physical Limits to Food Security – Water and Climate
Ilargi: Basic Income in The Time of Crisis
Nelson Lebo: (Really) Alternative Banking Systems
Nicole (video): Interview Nicole Foss for ‘A Simpler Way: Crisis as Opportunity’
Happen Films: A Simpler Way: Crisis as Opportunity (full video)

 

 

May 182017
 
 May 18, 2017  Posted by at 9:10 am Finance Tagged with: , , , , , , , , , ,  4 Responses »
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Paul Klee Fire at Full Moon 1933

 

‘Bobby Three Sticks’ Mueller to Probe Russia-Trump imbroglio (R.)
Trump To Announce $350bn Saudi Arabia Arms Deal – One Of Largest Ever (Ind.)
America’s Reign of Terror: A Nation Reaps What It Sows (Whitehead)
Investors Supercharge Bet Amazon Will Destroy US Retail (BBG)
Fed’s Kashkari Says Don’t Use Rate Hikes To Fight Bubbles (R.)
US Banks Tighten Auto Lending as More Borrowers Fall Into Default (BBG)
Canadian Officials Say Housing Risks Are Contained (BBG)
Prosecutor To Label Deutsche Bank An International Criminal Association (BBG)
Germany Asks US For Classified Briefing On Lockheed’s F-35 Fighter (R.)
Brazil: Explosive Recordings Implicate President Michel Temer In Bribery (G.)
Get Ready For The Franco-German Revival (Pol.)
Greek Parliament Committee Finds Salary, Pension Cuts Unconstitutional (GR)
Deal On Greece Is Touch And Go (K.)
Traffickers, Smugglers Exploit Record Rise In Unaccompanied Child Refugees (G.)

 

 

The echo chamber expands. It’s ironic to see how everyone praises Mueller’s independence, yet many are sure he will be Trump’s undoing. What flack will he get when he doesn’t do what the MSM demand?

‘Bobby Three Sticks’ Mueller to Probe Russia-Trump imbroglio (R.)

Former FBI director and prosecutor Robert Mueller, known for his independence in high-profile government investigations, is taking on a new challenge in the midst of a crisis that threatens the presidency of the United States. Mueller, 72, was named on Wednesday by the Justice Department to probe alleged Russian efforts to sway November’s presidential election in favor of Donald Trump and to investigate whether there was any collusion between Trump’s campaign team and Moscow. President Trump said in a statement there was no collusion between his campaign and “any foreign entity.” Mueller is known by some as “Bobby Three Sticks” because of his full name – Robert Mueller III – a moniker that belies the formal bearing and no-nonsense style of the former Marine Corps officer who was decorated during the Vietnam War.

Democrats and Republicans alike praised his appointment and hailed his integrity and reputation. Mueller was named to the post by Deputy Attorney General Rod Rosenstein. His investigation will run in parallel to those being carried out by the FBI and the U.S. Congress. It would be difficult to fire Mueller, and past special counsel appointments have shown that the job comes with independence and autonomy. Chicago federal prosecutor Patrick Fitzgerald was appointed during the George W. Bush administration in 2003 to a similar role to investigate the leak of the identity of Valerie Plame, an undercover CIA officer whose husband had criticized Bush administration policies. Fitzgerald indicted I. Lewis “Scooter” Libby, a top aide to Vice President Dick Cheney. Bush granted Libby clemency from a prison sentence before he left office.

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If you want to protest Trump, protest this….

Trump To Announce $350bn Saudi Arabia Arms Deal – One Of Largest Ever (Ind.)

Donald Trump will use his upcoming Saudi Arabia trip to announce one of the largest arms sales deals in US history – somewhere in the neighbourhood of $98bn to $128bn worth of arms. That could add up to $350bn over ten years. The deal will be what the Washington Post said is a “cornerstone” of the proposal encouraging the Gulf states to form its own alliance like the NATO military alliance, dubbed “Arab Nato.” Nato is comprised of 28 countries including the US. Mr Trump been an outspoken critic of the organisation but after a face-to-face meeting with Nato Secretary General Jens Stollenberg, he said the alliance was “no longer obsolete.” The White House said the president will propose it as a template for an alliance that will fight terrorism and keep Iran in check.

Saudi Crown Prince Mohammed bin Salman began negotiations on this deal shortly after the 2016 US election when he sent a delegation to Trump Tower to meet with the president’s son-in-law Jared Kushner, who is serving as a senior advisor of sorts to Mr Trump. The idea of an Arab Nato is not new. There was talk in 2015 of a “response force” in Egypt, comprised of approximately 40,000 troops from Egypt, Jordan, Morocco, Saudi Arabia, Sudan, and a few other Gulf nations. The “response force” would have had a Nato-like command structure, with soldiers paid for by their own countries and the Gulf Cooperation Council made up of wealthy oil economies finance operations and management of the force.

President Barack Obama’s administration brokered more arms sales than any US administration since World War II – estimated at $200bn. They sold Saudi Arabia alone $60bn in arms, which sparked criticism by Democrats concerned with Saudi Arabia’s alleged human rights violations. Mr Trump benefits by bringing about a more “fair” deal; he has claimed several times that Nato is unfair to the US because of the amount of contributions and support provided by the US compared to countries like Germany. If Arab Nato succeeds, the White House official said the US could shift the responsibility for security to those in the region and create jobs at home through the arms sales.

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…because that Saudi arms deal is a further expansion of this long-term insanity. Military industrial complex.

America’s Reign of Terror: A Nation Reaps What It Sows (Whitehead)

Who designed the malware worm that is now wreaking havoc on tens of thousands of computers internationally by hackers demanding a king’s ransom? The US government. Who is the biggest black market buyer and stockpiler of cyberweapons (weaponized malware that can be used to hack into computer systems, spy on citizens, and destabilize vast computer networks)? The US government. What country has one the deadliest arsenals of weapons of mass destruction? The US government. Who is the largest weapons manufacturer and exporter in the world, such that they are literally arming the world? The US government. Which is the only country to ever use a nuclear weapon in wartime? The United States. How did Saddam Hussein build Iraq’s massive arsenal of tanks, planes, missiles, and chemical weapons during the 1980s? With help from the US government.

Who gave Osama bin Laden and al-Qaida “access to a fortune in covert funding and top-level combat weaponry”? The US government. What country has a pattern and practice of entrapment that involves targeting vulnerable individuals, feeding them with the propaganda, know-how and weapons intended to turn them into terrorists, and then arresting them as part of an elaborately orchestrated counterterrorism sting? The US government. Where did ISIS get many of their deadliest weapons, including assault rifles and tanks to anti-missile defenses? From the US government. Which country has a history of secretly testing out dangerous weapons and technologies on its own citizens? The US government. Are you getting the picture yet? The US government isn’t protecting us from terrorism. The US government is creating the terror. It is, in fact, the source of the terror.

Just think about it for a minute: almost every tyranny being perpetrated against the citizenry—purportedly to keep us safe and the nation secure—has come about as a result of some threat manufactured in one way or another by our own government. Cyberwarfare. Terrorism. Bio-chemical attacks. The nuclear arms race. Surveillance. The drug wars. In almost every instance, the US government has in its typical Machiavellian fashion sown the seeds of terror domestically and internationally in order to expand its own totalitarian powers.

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Let’s celebrate progress.

Investors Supercharge Bet Amazon Will Destroy US Retail (BBG)

Investors who think Amazon.com Inc. is about to destroy the retail industry as we know it have figured out a way to supercharge that bet – by buying the online giant’s stock and pairing it with a short position in the SPDR S&P Retail ETF, symbol XRT, a foundering fund that primarily holds bricks-and-mortar stores. “If you are long Amazon, wouldn’t it make sense to be short the stocks Amazon will look to decimate?” said Ihor Dusaniwsky, head of research for S3 Partners. “It’s going long the ‘best of the breed’ and shorting the ‘worst of the breed.’” Traders are building up short positions in anticipation of XRT dropping to $40 or $41, Dusaniwsky said. The fund, which is down more than 5% this year, closed at $41.74 on Tuesday.

XRT’s top holdings include furniture stores, supermarkets and groceries, electronics chains and media streaming, all areas where Amazon is spending heavily, Dusaniwsky said. “If Amazon succeeds, it will be at the expense of companies like Wayfair, Sprouts Farmers Market, Whole Foods, Best Buy and Netflix,” Dusaniwsky said. These five companies make up around 7% of XRT, which also holds $3.37 million of Amazon stock, making it 1.2% to the portfolio. So far Amazon is holding up its end of the bet. The world’s largest online retailer beat profit and revenue estimates in the first quarter and said sales may top projections in second quarter, according to an April 27 statement. The stock’s up 28% this year, as the company continues to add subscribers to its $99-a-year Prime program, locking in loyalty and building a moat against competitors.

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Is Kashkari denying the existence of bubbles?

Fed’s Kashkari Says Don’t Use Rate Hikes To Fight Bubbles (R.)

Minneapolis Federal Reserve Bank President Neel Kashkari on Wednesday warned against using interest-rate hikes to address unwanted asset bubbles, saying that bubbles are hard to identify and such hikes would likely do more harm than good. Kashkari is a voting member this year on the U.S. central bank’s policy committee, and in March was the lone dissenter on a Fed vote to raise rates for the third time since the Great Recession. He has previously said he opposed the rate hike because he felt keeping rates low would result in more jobs for Americans who want to work. Some Fed officials have worried that keeping rates too low for too long could create asset bubbles that could set the U.S. economy up for another recession.

But the main reason Fed chair Janet Yellen and others have given for raising rates is not to tamp down bubbles, but to keep a now nearly fully employed economy from going into overdrive. Kashkari’s latest essay argues that keeping a sharp eye out for potential bubbles and using supervisory powers to protect banks from failures are better options than raising rates. “Given the challenges of identifying bubbles with any confidence and the costs of making a policy mistake, I believe the odds of circumstances ever making sense to use monetary policy to try to slow asset prices down are very low,” he wrote. “I won’t say never but a whole lot of evidence would have to line up just right for it to be the prudent course of action.”

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Horse. Barn.

US Banks Tighten Auto Lending as More Borrowers Fall Into Default (BBG)

Lenders are tightening the spigot on new auto loans, making it harder for U.S. consumers with weak credit to buy a car, data from the Federal Reserve Bank of New York show. New car loans for subprime borrowers fell in the first quarter to $25.9 billion, the lowest in two years, according to the New York Fed’s quarterly report on household debt and credit. Drivers with credit scores below 620 now comprise less than 20% of new loans, down from almost 30% a decade ago. Borrowers with the highest credit scores – 760 or more – made up nearly a third of new auto loan originations in the first quarter as lenders target the safer deals. Banks including Fifth Third Bank have been trimming their loan books and cutting back on riskier credit as delinquent auto loan balances surge.

The share of auto debt more than 90 days overdue rose to 3.82% in the first quarter, the highest in four years. While caution may be good for banks’ balance sheets, it doesn’t offer much relief for automakers, who relied on cheap credit to fuel a seven-year stretch of booming sales. Now they’re boosting discounts and cutting production to address swelling inventory on dealer lots. Ford said Wednesday it’s cutting 1,400 jobs in North America and Asia to improve profits as the U.S. auto industry recorded a fourth straight drop in monthly sales in April, after eking out a record year in 2016. Tighter credit “is a big impediment to future strength in auto sales,” said Yelena Shulyatyeva, senior U.S. economist for Bloomberg Intelligence. “A lot of this demand was driven by loose lending standards.”

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Not helping.

Canadian Officials Say Housing Risks Are Contained (BBG)

Canadian government officials delivered a vote of confidence in the country’s housing sector and banking system, telling lawmakers that Vancouver and Toronto’s real estate markets are supported by fundamentals that leave risks well-contained. Senior officials from Canada’s Finance Department testified Wednesday evening to the Senate finance committee, fielding questions about the stability of the housing market, risks posed by high household debt levels in Canada and the recent downgrade of banks by Moody’s Investors Service Inc. The hearing came amid questions about the future of Home Capital and any knock-on effect that a potential failure there could have on Canada’s housing sector, particularly in Vancouver and Toronto.

The core message from the officials was Canada’s market was stable and, despite some risks, policy makers’ measures are taking effect. “We don’t think there’s any systemic risk across the country,” said Phil King, a director at the economic and fiscal policy branch at Finance Canada. “There are specific pockets of concern, which seem to have ameliorated somewhat in the very-near term but we’re keeping a very close eye on those.” Vancouver and Toronto have “very, very strong fundamentals” supporting prices including immigration, strong job creation, strong income gains and high wealth, he said. King described a national housing market with distinct regions — surging Toronto and Vancouver, soft markets in energy-producing regions such as Calgary, and other cities like Montreal and Ottawa where policy makers have “no concerns whatsoever.”

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As Goldman Sachs should be for its activities in Greece.

Prosecutor To Label Deutsche Bank An International Criminal Association (BBG)

Deutsche Bank, on trial in Milan for allegedly helping Banca Monte dei Paschi di Siena conceal losses, must face accusations that it was running an international criminal organization at the time. Prosecutors used internal Deutsche Bank documents and emails to persuade a three-judge panel to consider whether there were additional, aggravating circumstances to the charges the German lender already faces related to derivatives transactions. The material included a London trader’s “well done!” message to a banker who is now on trial, evidence seen by Bloomberg shows. Allowing prosecutors to argue that the alleged market manipulation crimes were committed by an organization operating in several countries could lead to higher penalties if they win a conviction.

Giuseppe Iannaccone, a lawyer for Deutsche Bank and some of the defendants, sought to block the move at Tuesday’s hearing, saying there wasn’t a clear connection between the original charge of market manipulation and the alleged aggravating circumstances. “The trial for Deutsche Bank managers becomes more problematic after the judge’s decision,” said Giampiero Biancolella, an attorney specializing in financial crime who isn’t involved in the case. “If proven, the aggravating circumstance may increase the eventual jail sentence for the market manipulation to a maximum of nine years.” The German bank and Nomura went on trial in Milan in December, accused of colluding with Monte Paschi to cover up losses that almost toppled the Italian lender before its current battle for survival. Thirteen former managers of Deutsche Bank, Nomura and Monte Paschi were charged for alleged false accounting and market manipulation.

Deutsche Bank and Nomura are accused of using complex derivative trades to hide losses at the Italian lender, leading to a misrepresentation of its finances between 2008 and 2012. After the deals came to light in a 2013 Bloomberg News report, Monte Paschi restated its accounts and tapped shareholders twice to replenish capital. Deutsche Bank and six current and former managers were indicted in Milan Oct. 1 for allegedly helping falsify the Siena-based lender’s accounts through a deal known as Santorini. The prosecution’s request to label Deutsche Bank an international criminal association hinged on events that occurred in other parts of the globe, including the possible manipulation of an index, which isn’t the subject of charges in the Milan case.

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History’s biggest ever financial boondoggle. And nobody dares stop it.

Germany Asks US For Classified Briefing On Lockheed’s F-35 Fighter (R.)

The German Air Force this month sent the U.S. military a written request for classified data on the Lockheed Martin F-35 fighter jet as it gears up to replace its current fleet of fighter jets from 2025 to 2035. The letter, sent by the Air Force’s planning command and seen by Reuters, makes clear that the German government has not yet authorized a procurement program and is not committed to any particular aircraft to replace its current warplanes. It said the defense ministry would carry out “an in-depth evaluation of market available solutions, including the F-35, later this year,” with a formal “letter of request” to be issued in coming months.

Germany’s interest in the F-35 – the Pentagon’s most advanced warplane and its costliest procurement program – may surprise some given that it is part of the four-nation consortium that developed the fourth-generation Eurofighter Typhoon, which continues to compete for new orders. The Eurofighter is built by Airbus as well as Britain’s BAE Systems and Leonardo of Italy. Germany will need to replace its current fleet of fourth-generation warplanes – Tornadoes in use since 1981 and Eurofighters – between 2025 and 2035. The F-35 is considered a fifth-generation fighter given stealth capabilities that allow it to evade enemy radars.

Berlin’s letter also comes amid growing tensions between the West and Russia over Moscow’s support for separatists in eastern Ukraine, with NATO officials saying that Russian naval activity now exceeds levels seen even during the Cold War. Britain, the Netherlands, Norway, Turkey and Italy – key NATO allies of Germany – are already buying the F-35 fighter jet to replace their current aircraft, and other European countries such as Switzerland, Belgium and Finland are also looking at purchasing the fifth-generation warplane. Germany’s gesture may be aimed at strengthening its hand in negotiations with its European partners over the scale and timing of development of a next generation of European fighters. Any moves to buy a U.S. built warplane could run into political resistance in Germany, which has strong labor unions.

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Just turn parliament into a prison building. Most effective solution.

Brazil: Explosive Recordings Implicate President Michel Temer In Bribery (G.)

Angry crowds and outraged members of Brazil’s congress have demanded the impeachment of President Michel Temer following reports he was secretly recorded discussing hush money pay-offs to a jailed associate. The tapes were presented to prosecutors as part of a plea bargain by Joesley and Wesley Batista, brothers who run the country’s biggest meat-packing firm JBS, according to O Globo newspaper. They are said to contain conversations that incriminate several leading politicians, including the former presidential candidate Aecio Neves and the former finance minister Guido Mantega. Temer is alleged to have talked with Joesley about cash payments to Eduardo Cunha, the former speaker of the House who has been jailed for his role in the sprawling Petrobras corruption scandal.

Cunha is in the same ruling Brazilian Democratic Movement party as Temer and initiated the impeachment of Dilma Rousseff that allowed him to take over the presidency. He has alluded to the many secrets he knows about his former colleagues. In covert recordings made during two conversations in March, Joesley tells Temer he is paying Cunha to keep him quiet, to which the president allegedly replies: “You have to keep it going, OK?” According to Globo, police also have audio and video evidence that Temer’s aide Rocha Loures negotiated bribes worth 500,000 reais (US$160,000) a week for 20 years in return for helping JBS overcome a problem with the fair trade office.

No audio or transcripts were released. The supreme court has refused to comment on the validity of the alleged leak – but the news has enraged the public. Shouts and pot-banging (a traditional form of protest in Latin America) could be heard when the allegations were aired on TV. Crowds also gathered outside the presidential palace chanting “Fora Temer” (Temer out). Two congressmen submitted impeachment motions in the lower house.

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Macron falls in line with what Berlin wants as much as Hollande did. Where’s the difference? Merkel and Schäuble like it, because now no-one will dare speak up anymore.

Get Ready For The Franco-German Revival (Pol.)

With none of the previous three presidents Merkel has sat across from in the past 12 years did the cautious chancellor achieve the deep mutual understanding and political serendipity that powered European integration in the eras of Konrad Adenauer and Charles de Gaulle, Helmut Schmidt and Valéry Giscard d’Estaing, or Helmut Kohl and François Mitterrand. Macron promised to be a “frank, direct and constructive partner” for Berlin. If he can convince Merkel to revive the frequent, unscripted, plain-speaking meetings between French and German leaders of the past, it will be a crucial step toward setting a joint agenda for Europe. July’s joint cabinet session — where both defense and the economy will be on the agenda — will be a first test of the promised Franco-German revival.

Macron has made it clear he intends to use France’s major contribution to European defense and security as a lever to help secure progress in the eurozone. But his influence in Berlin, as he acknowledged, will depend on his ability to break the rigidities in the French labor market and put the country’s young people to work. He will need to overcome deep-seated resistance to eurozone intervention in national budget policies. The last Socialist government was as defiant as its Gaullist predecessors when the European Commission repeatedly criticized France’s excessive deficits, high tax burden on business and employment, and generous welfare and pension systems. But Macron is committed to the right track. Honoring commitments to EU-supervised economic reforms are part of his vision for a more integrated eurozone, he said in Berlin.

[..] When it comes to the eurozone, Germany will have to end its resistance to further risk-sharing to complete the EU’s banking union. And here progress is likely to be difficult. Macron will need Berlin to lift its blockade on common deposit insurance and a joint fiscal backstop for the European bank resolution fund. Finance Minister Wolfgang Schäuble — who has expressed support for some of Macron’s ideas — will hold both steps hostage at least until after the German general election in September. Schäuble is holding out for a very different form of eurozone governance, in which an inter-governmental (i.e. German-controlled) European Monetary Fund, built on the existing European Stability Mechanism, would impose automatic debt restructuring and an austerity program on any eurozone country that needed assistance.

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Can Tsipras impose cuts when they violate his constitution? Can the Troika?

Greek Parliament Committee Finds Salary, Pension Cuts Unconstitutional (GR)

The Parliamentary Scientific Committee in its new report that accompanies the new omnibus bill expressed concern over the constitutionality of the provisions of Law 4387/2016 that calls for new cuts to pensions and special salaries. According to Professor and former SYRIZA lawmaker Alexis Mitropoulos, the report was posted on the parliament site shortly after midnight on Tuesday. Mitropoulos spoke on Ant1 television on Wednesday saying that, “After the recent Court of Audit decision, and following a long meeting, the committee found that the cuts in special wages, pensions and taxation were found to be unconstitutional.”

The new bill includes deep cuts in pensions and slashes in salaries of army and police personnel, sectors where special salary regulations apply. “The proposed reductions disrupt the balance that must exist between, on the one hand, the pension as a personal asset, which is protected by Article 1 and, on the other, of the public interest,” the report says regarding the pension cuts. As for cuts in special salaries, the report argues that, the cuts “are part of a wider fiscal adjustment program containing a package of measures to revive the Greek economy and consolidate public finances” but their implementation “is a necessary but not sufficient condition for the constitutionality of these cuts.”

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A child can tell that this is nonsense:

Growth predicted at “..2.1% this year and 2.5% in 2018, and continuing at a similar pace until 2060(!)..”. While the demanded budget surplus is 3.5% for the next 5 years. Which guarantees the growth predictions won’t be achieved.

Deal On Greece Is Touch And Go (K.)

A senior eurozone official put on Wednesday the chances of a complete agreement on Greece being reached at this Monday’s Eurogroup meeting at 50%, while many issues remain open and the negotiation battle at this stage is mainly between Berlin and the IMF. The official also reiterated that there will be no tranche disbursement without the IMF agreeing to participate in the Greek program. There are three scenarios on the negotiating table, according to two eurozone officials who took part in last Monday’s Euro Working Group. All three provide for the primary budget surplus to remain at 3.5% of GDP until 2022, showing that this is not negotiable anymore.

The main obstacle to an agreement among Greece’s creditors is that they disagree on the rate of Greek growth in the coming years, a key parameter for the extent of Greek debt easing. The first scenario provides for growth to match the European Commission’s estimates for 2.1% this year and 2.5% in 2018, and continuing at a similar pace until 2060. If there is a primary surplus of 2-2.6% of GDP, then the measures agreed last May will suffice to make the Greek debt sustainable. According to the second scenario, growth will be below even the IMF forecast and will not exceed 1% per year in the long term. That should take the primary surplus down to 1.5% of GDP from 2023, and more measures will be needed to render the debt sustainable. The third scenario is similar to the second, but the growth forecast is slightly higher, at 1.25%.

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Forget about hoping Brussels is looking for a solution NOT located in southern Libya. Just imagine what you would do if this was your child.

Traffickers, Smugglers Exploit Record Rise In Unaccompanied Child Refugees (G.)

A record increase in the number of refugee and migrant children travelling alone has left many exposed to sexual abuse and exploitation at the hands of traffickers and opportunists. At least 300,000 unaccompanied and separated children were recorded in 80 countries in 2015-16, a rise of almost 500% on the 66,000 documented in 2010-2011, according to a Unicef report published on Wednesday. The central Mediterranean passage is one of several migration routes identified as particularly dangerous for children. More than 75% of the 1,600 14- to 17-year-olds who arrived in Italy reported being held against their will or forced to work.

“One child moving alone is one too many and yet, today, there are a staggering number of children doing just that – we as adults are failing to protect them,” said Unicef’s deputy executive director, Justin Forsyth. “Ruthless smugglers and traffickers are exploiting their vulnerability for personal gain, helping children to cross borders, only to sell them into slavery and forced prostitution. It is unconscionable that we are not adequately defending children from these predators.” The sheer number of migrant and refugee arrivals has left states struggling to cope, with children often falling through the cracks.

Border closures, aggressive pushback measures, overcrowded shelters, makeshift camps and heavy-handed authorities have only served to exacerbate the risk of child exploitation, encouraging unaccompanied minors to take highly dangerous routes in a desperate bid to reach their destinations. One 17-year-old girl from Nigeria told Unicef that she was trapped in Libya for three months and sexually assaulted by her smuggler-turned-trafficker as she attempted to travel alone to Italy. “Everything [he] said – that we would be treated well and that we would be safe – it was all wrong. It was a lie,” she said of the man who offered to help her. “He said to me if I didn’t sleep with him, he would not bring me to Europe. He raped me.”

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May 172017
 
 May 17, 2017  Posted by at 8:54 am Finance Tagged with: , , , , , , , , ,  3 Responses »
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Arrest of Gavrilo Princip, the man who shoot Franz Ferdinand June 28 1914

 

Britain’s Labour Party Unveils ‘Radical’ Election Manifesto (AFP)
UK Media Trying Incredibly Hard To Keep Corbyn Out Of Number 10 (Can.)
The American Dystopia Didn’t Begin With Trump (MW)
Democratic Party Image Dips, GOP Ratings Stable (Gallup)
Chelsea Manning Set For Release After 7 Years In Prison (AP)
Hong Kong Rejects Asylum for Snowden Helpers (HRW)
The Everything Bubble: Stocks, Real Estate & Bond Implosion (Mike Maloney)
New Theory Behind Stalled Economy: Retirees Are Hoarding Too Much Cash (ZH)
Australia Needs Housing Slowdown for Stability on AAA – S&P (BBG)
Can China Afford Its Belt and Road? (Balding)
Erdogan’s Bodyguards Beat Up US Protestors in DC After He Met With Trump (Qz)
EU Warns Turkey After It Violates Greek Airspace 141 Times In One Day (EuAct)
Abe Divides Japan With Plan to Change Pacifist Constitution (BBG)
NATO Builds Infrastructure for Permanent Presence Near Russia’s Borders (SCF)
Eastern Europe Turns Its Back On Single Market (Pol.)
Germany and Italy Want EU To Halt Migrants In Libya (EuO)

 

 

Looking at the incredible mess built up by the likes of Trump and Hillary, Farge and Theresa May, Angela Merkel and Marine Le Pen, Jeremy Corbyn looks better all the time. He’s an actual person, and he sticks to his guns.

Maybe what goes against him most is that people in this day and age don’t recognize him as a politician anymore; politicians are supposed to stab backs, tell lies and conspire against anyone threatening their shot at power.

Is there anyone who would argue that the world would have been a worse place with Bernie Sanders in the White House and Jeremy Corbyn at no. 10?

As the left has moved, and become, right, we need a left just for balance in our societies. Nothing to do with if you are a socialist or not, just balance.

Britain’s Labour Party Unveils ‘Radical’ Election Manifesto (AFP)

Britain’s opposition Labour Party pledged to raise taxes on the well-off, renationalise key industries and end austerity in its manifesto on Tuesday, presenting voters with their starkest choice in decades in next month’s election. Labour leader Jeremy Corbyn called the programme “radical and responsible”, saying the country had been run “for the rich, the elite and the vested interests” in seven years of Conservative government. “It will change our country,” he will say in his speech at the presentation of the manifesto in Bradford in northwest England, according to extracts released by the party’s press office. “It will lead us through Brexit while putting the preservation of jobs first,” he said. The manifesto is expected to include a tax increase from 40% to 45% for salaries of between ££80,000 (€94,000, $103,000) and ££150,0000 a year, according to The Times and The Daily Telegraph.

The current 40% tax rate applies to people earning between ££31,500 and ££150,000. There would also be a new top rate of income tax of 50%, the reports said. Labour has said the rise would fund increased investment in the state-run National Health Service (NHS) and would only affect 5% of earners. The Guardian reported that the party was also planning a levy on businesses with staff earning large salaries, set at 2.5% on those earning over ££330,000 and 5.0% on those earning more than ££500,000. Labour will also promise to renationalise the railways, the Royal Mail postal service and water companies, according to various reports. Labour has also promised it will increase corporation tax to 26% by 2022 and impose a “Robin Hood tax” on financial transactions. “It’s a programme that will reverse our national priorities to put the interests of the many first,” Corbyn is expected to say. “This is a programme of hope. The Tory campaign, by contrast, is built on one word: fear.”

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Three weeks before the elections, Corbyn is still reported to lose in a landslide. Will Britain wake up in time? Theresa May is a sure bet for deterioration.

UK Media Trying Incredibly Hard To Keep Corbyn Out Of Number 10 (Can.)

An academic investigation has caught the UK media trying incredibly hard to keep Jeremy Corbyn out of Number 10. The mainstream TV and newspaper media are pushing the agenda of the Conservative Party within their coverage, according to an investigation from Loughborough University. The Conservatives are the “most frequently reported” and “most extensively quoted” party, while issues pushed by Labour are “marginalised”, say the report’s authors. In newspapers, for example, the Conservatives received by far the most direct quotation, exceeding Labour by 45%. One of the most striking findings is how much non-political personality pervades the entire media’s election coverage. Last week, Theresa May made a policy-free appearance on The One Show with her husband Philip May. The BBC hosted the personality-driven chat, despite the sitting Prime Minister refusing to debate her record on TV.

Then, according to the content analysis, the broader media amplified the appearance and sidelined the real issues. And this is precisely the aim of a Conservative Party opting for cosy sofa chats over serious policy debate. The sheer weight of reporting on the sanitised family affair propelled the Conservative leader’s husband into the fifth most covered political figure during the study’s time frame. He received nearly double the coverage of the SNP’s Nicola Sturgeon, who leads a party controlling 56 out of the 59 Scottish seats. The Conservative leader’s husband, a family figure irrelevant to the election, also received nearly as much coverage as Labour’s Shadow Chancellor. John McDonnell was the fourth most covered political figure, reported on in 6.1% of all the election news items analysed. Theresa May was easily the most prominent, featuring in 32.4% – over a third of all news items analysed. Corbyn received much less coverage across TV and newspaper media, appearing in 21.4%.

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And it won’t end there. Someone should be able to write it up better than this though.

The American Dystopia Didn’t Begin With Trump (MW)

Dystopia is here. It’s not just the “imagined place” of the dictionary definition or a future state of dystopian novels. It is very real and right now, at least for those of us trying to follow national politics. And it’s not just Donald Trump. It’s Barack Obama, it’s Ted Cruz, it’s the New York Times, it’s Breitbart News. It is an alternate universe detached from the world we live in but intruding into it in painful and dangerous ways. It is a media narrative of political conspirators colluding with a dictatorial archenemy, of an intemperate and delusional leader overturning the institutions of democracy, of a “deep-state” resistance to constitutional authority. It is a dystopia of rampant hypocrisy, where obstructing legislation, supporting a law-enforcement official who strays beyond the limits of his authority, or boycotting a president’s appointments is evil and undemocratic until it’s your party that wants to do it.

Two dystopian classics have shot back to the top of best-seller lists because the media suggest the authoritarian surveillance societies they portray have arrived. The 1948 novel “1984” and the 1985 novel “The Handmaid’s Tale” are touted as descriptions of where we are headed under Trump. While the author of “Handmaid,” Margaret Atwood, and the cast of the Hulu miniseries based on it see a Trump administration as the realization of the misogyny depicted in the novel, it’s obvious the U.S. is not about to become a Puritanical theocracy like that in the book. Critics on both the left and the right dispute the media meme that “Handmaid” is a depiction of the Trump era. Irish feminist Angela Nagle writes in the left-wing Jacobin magazine that it is neoliberal market forces that are oppressing women, not an imaginary theocratic state.

“The real-world dystopia for the majority of women in the age of Trump is not that they are being forced to have children by a repressive traditionalist state,” she wrote last week, “but that they’re being compelled not to by far more insidious forces, and those that do are financially and socially punished at every turn.” We are ruled by myths, she continues, but not those in the miniseries. “The mythologies of our age in the West are not enforced by repressive theocratic regimes,” Nagle says, “but by the market command to be free, to be creative, to be flexible, to love what you do for even the most uninspiring of jobs.”

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They’re all still well ahead of François Hollande. But imagine what a viable third party could do. Better let that be Bernie.

Democratic Party Image Dips, GOP Ratings Stable (Gallup)

Americans’ opinions of the two major political parties are now similar after the Democratic Party’s ratings slipped to 40% – from 45% last November – while the Republican Party’s image is essentially unchanged at 39%. The latest update on the party’s images is based on a May 3-7 Gallup poll, which asked Americans whether they have a favorable or an unfavorable opinion of each party. Throughout last year’s contentious presidential election campaign, U.S. adults rated neither party highly. In fact, more rated each party unfavorably than favorably. But Democrats maintained a slight edge in favorable ratings, including 45% to 40% in Gallup’s prior measurement, conducted last November after Donald Trump’s victory in the 2016 presidential election.

So far, Trump’s unpopularity as president has done little to erode Americans’ views of the GOP, perhaps because they were already quite negative. However, Americans are now less positive toward the Democratic Party than they were last fall. The decline in Democratic Party favorability is mostly a result of lower ratings from self-identified Democrats. In November, 83% of Democrats had a positive opinion of the Democratic Party; now, 77% do. Independents are also slightly less positive toward the Democratic Party, while Republicans’ negative views of the opposing party are steady.

[..]Americans are quite negative toward both of the major political parties at this time. Trump’s unpopularity and the GOP’s challenges in governing a divided nation have done little to weaken the party’s poor image further. But those same factors have also done little to cast the opposing party, the Democrats, in a more favorable light. If anything, the Democratic Party’s positioning appears weakened, largely because its own supporters now hold a less positive view of the party. That could indicate Democrats are frustrated with the party’s minority status in Washington. Not since 2003 through 2006 have Democrats failed to control the presidency, House of Representatives or Senate. Prior to that, Democrats had control of either Congress or the presidency for more than 50 years.

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Bless you.

Chelsea Manning Set For Release After 7 Years In Prison (AP)

Pvt. Chelsea Manning, the transgender soldier convicted of giving classified government materials to WikiLeaks, is due to be released from a Kansas military prison on Wednesday after serving seven years of her 35-year sentence. President Barack Obama granted Manning clemency in his final days in office in January. Though she’s set to be released from Fort Leavenworth, Manning’s lawyers and the Army have refused to say when and how she’ll be freed due to potential security concerns. Manning, who was known as Bradley Manning before transitioning in prison, was convicted in 2013 of 20 counts, including six Espionage Act violations, theft and computer fraud. She was acquitted of the most serious charge of aiding the enemy.

The Crescent, Oklahoma, native tweeted after being granted clemency that she plans to move to Maryland. Neither she nor her attorneys explained why, but she has an aunt who lives there. Manning, a former intelligence analyst in Iraq, has acknowledged leaking the materials, which included battlefield video. She said she wanted to expose what she considered to be the U.S. military’s disregard of the effects of war on civilians and that she released information that she didn’t believe would harm the U.S. Critics said the leaks laid bare some of the nation’s most-sensitive secrets and endangered information sources, prompting the State Department to help some of those people move to protect their safety. Several ambassadors were recalled, expelled or reassigned because of embarrassing disclosures.

Manning, who was arrested in 2010, filed a transgender rights lawsuit in prison and attempted suicide twice last year, according to her lawyers. Obama’s decision to commute Manning’s sentence to about seven years, including the time she spent locked up before being convicted, drew strong criticism from members of Congress and others, with Republican House Speaker Paul Ryan calling the move “just outrageous.” In a statement last week — her first public comments since Obama intervened — Manning thanked that former president and said that letters of support from veterans and fellow transgender people inspired her “to work toward making life better for others.” “For the first time, I can see a future for myself as Chelsea,” she said.

“I can imagine surviving and living as the person who I am and can finally be in the outside world. Freedom used to be something that I dreamed of but never allowed myself to fully imagine.” Her attorneys have said Manning was subjected to violence in prison and argued the military mistreated her by requiring her to serve her sentence in an all-male prison, restricting her physical and mental health care and not allowing her to keep a feminine haircut. The Army said Tuesday that Manning would remain on active duty in a special, unpaid status that will legally entitle her to military medical care, along with commissary privileges. An Army spokeswoman, Lt. Col. Jennifer Johnson, said Manning will be on “excess leave” while her court-martial conviction is under appellate review.

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Seems like every country punishes its best and bravest.

Hong Kong Rejects Asylum for Snowden Helpers (HRW)

Seven people who sheltered the whistleblower Edward Snowden in June 2013 are at risk of return to torture and persecution at home, Human Rights Watch said today. On May 11, 2017, the Hong Kong Immigration Department rejected their asylum claim; their lawyers are in the process of appealing the decision and pursuing a separate case for entry and asylum in Canada, where sponsors are ready to assist them. “Those who helped Edward Snowden in Hong Kong when he was seeking asylum now find themselves at dire risk if sent back to their countries,” said Dinah PoKempner, general counsel at Human Rights Watch. “Canada has the opportunity to a prevent a terrible outcome and should act immediately.”

The asylum-seekers include two men and a woman from Sri Lanka, and a woman from the Philippines, along with their three children who were born in Hong Kong and are stateless. The adults allege that they suffered torture and persecution in their home countries, and have been pursued by powerful people or officials who have tracked or threatened them. Their asylum lawyer, Robert Tibbo, brought Snowden, another client, to their homes in 2013 after he revealed he had disclosed classified information to the press. The families each freely allowed Snowden to stay with them for a short time after his disclosures became public but before his arrest was sought.

Neither the asylum-seekers nor their lawyer revealed their role in Snowden’s journey. However, journalists independently discovered their identities shortly before the release of an Oliver Stone movie about Snowden that shows him being hidden among asylum-seekers in Hong Kong. At that point, the asylum-seekers went public in an effort to have some control over how they were portrayed in the media.

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The Automatic Earth doesn’t promote any specific kind of investments, but Mike is a good friend of ours, and he’s right here.

The Everything Bubble: Stocks, Real Estate & Bond Implosion (Mike Maloney)

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No, they’re not.

New Theory Behind Stalled Economy: Retirees Are Hoarding Too Much Cash (ZH)

[..] we were somewhat shocked to come across a report from money manager United Income which effectively argues that American retirees are saving too much money rather than too little. To summarize the thesis, United Income argues that retirees become more conservative as they grow older which causes them to save more and allocate less to equities…which is, of course, a somewhat self-serving conclusion but never mind that.

“Innovations in medicine and technology have extended human life by over 30 years since 1900. This has helped to double the amount of time the average adult now spends in retirement compared to several decades ago. But, the benefits of longer lives and retirement may be limited if older households curb their consumption or investment in preventive health measures because they are overly pessimistic about their future financial health. Overly negative viewpoints toward the future may also create self-fulfilling economic problems if it leads to an overly aggressive fixed-income portfolio.”

Unfortunately, when combined with the fact that “Median Net Wealth” is actually shrinking, it’s easy to deduce that while the majority of American retirees are actually spending their retirement income (and then some), there is a group of super wealthy old folks who simply can’t spend enough money to offset annual investment income growth….which speaks more to the growing wealth gap than to some economic fear that is causing retirees to hoard cash. In this context, it’s not too difficult to understand why aggregate YoY spending trends collapse as old folks get older. The most wealthy retirees can only find so many ways to burn their massive nest eggs which means that, at least for these folks, YoY spending doesn’t grow but retirement balances do…while the overwhelming majority of people simply run out of cash and have to cut every corner possible to survive….

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Perfect irony.

Australia Needs Housing Slowdown for Stability on AAA – S&P (BBG)

Australia’s prized AAA rating will only rest on a firm footing once there’s a “meaningful moderation” in housing and credit, S&P Global Ratings said as it maintained a negative outlook on the country’s sovereign score. The country’s rating was affirmed by the credit assessor after the latest federal government budget projected a return to surplus by 2021, although S&P noted that revenue could disappoint and lawmakers may struggle to implement fiscal repair policies. It also highlighted risks stemming from Australia’s high level of external indebtedness. S&P has maintained a negative outlook on the country since last July when it issued a warning in the wake of a knife-edge federal election.

“The ratings could stabilize if we were to see a significant and sustained improvement in the medium-term budget outlook, leading to a return to a general government surplus,” S&P said in a statement Wednesday. “A stabilization of the ratings would also require a meaningful moderation of the credit and house price boom.” Home prices in Sydney and Melbourne have surged in the wake of unprecedented interest-rate cuts by the Reserve Bank of Australia as the country navigates its way through the aftermath of a mining boom. Regulators have progressively tightened lending restrictions amid concerns about financial stability.

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Debt and Road.

Can China Afford Its Belt and Road? (Balding)

China’s just-completed conference touting its Belt and Road initiative certainly looked like a triumph, with Russian President Vladimir Putin playing the piano and Chinese leaders announcing a string of potential deals and massive financial pledges. Underneath all the heady talk about China positioning itself at the heart of a new global order, though, lies in uncomfortable question: Can it afford to do so? Such doubts might seem spurious, given the numbers being tossed around. China claims nearly $900 billion worth of deals are already underway, with estimates of future spending ranging from $4 trillion to $8 trillion, depending on which Chinese government agency is doing the talking. At the conference itself, Chinese President Xi Jinping pledged another $78 billion for the effort, which envisions building infrastructure to link China to Europe through Asia, the Middle East and Africa.

From no other country in the world would such pledges be remotely plausible. Yet even for China, they’ll be difficult to fulfill without clashing with the country’s other objectives. The first question is what currency to use for all this lending. Denominating loans in renminbi would accelerate China’s stated goal of internationalizing its currency. But it would also force officials to tolerate higher levels of offshore renminbi trading and international price-setting. So far, they’ve shown little appetite for either. Additionally, countries along the Belt-and-Road route would need to run trade surpluses with China in order to generate the currency needed to repay such loans. In fact, as Bloomberg Intelligence economist Tom Orlik has noted, China ran a $250 billion surplus with Belt-and-Road countries in 2016.

It will be mathematically impossible for Sri Lanka and Pakistan to repay big yuan-denominated loans when they’re running trade deficits with China close to $2 billion and $9 billion, respectively. Financing projects in dollars is no panacea either. Unless China conducts U.S. dollar bond offerings to fund these investments, it’ll have to tap its official foreign-exchange reserves. Those now hover around $3 trillion. That sounds like a lot. But outside estimates suggest anywhere from a few hundred billion to nearly $1 trillion of that money is illiquid. China needs nearly $900 billion to cover short-term external debt and another $400 to $800 billion to cover imports for three to six months. Pouring additional billions into Central Asian infrastructure projects would only tie up money China needs to defend the yuan.

And, borrowers would need to run significant dollar surpluses in order to repay dollar-denominated loans. Obviously, not every country can do so, or undervalue its currency to try and build up a surplus. Beyond the specific mechanisms, it’s unclear whether China has the financial capacity to lend at these levels to borrowers of dubious creditworthiness. As French bank Natixis S.A. has noted, in order to finance $5 trillion in projects, China “would need to see growth rates of around 50% in cross-border lending.” This would wreak havoc on Chinese creditworthiness and raise external debt from a “very comfortable” level (around 12% of GDP) to “more than 50%” if China can’t bring in other lenders.

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Violence in a myriad forms is being normalized one step at a time.

Erdogan’s Bodyguards Beat Up US Protestors in DC After He Met With Trump (Qz)

“The relations between Turkey and the United States have been erected upon common democratic values and common interests.” That’s what Turkey’s president Recep Tayyip Erdogan said at a White House press conference with US president Donald Trump on Tuesday (May 16). But shortly after the event, Erdogan’s bodyguards proceeded to beat and kick people outside the Turkish ambassador’s residence in Washington DC. The altercation was captured on camera, and resulted in nine people being hurt, Voice of America said.

A photojournalist at the site said it seemed to be a pro-Turkey gathering at first, while some witnesses said the group outside the residence included a person carrying a flag of a Kurdish party in Syria allied with a militia the US plans to aid, over Turkey’s objections. [..] It’s not the first time Erdogan’s security has roughed up protesters on American soil. In 2016, the Washington Post reported clashes between protesters and the Turkish leader’s security detail. And in 2014, in New York, Turkish security threatened and pushed around journalists working for a newspaper perceived to be critical of Erdogan.

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This has been going on for years. And only know Brussels peeps.

EU Warns Turkey After It Violates Greek Airspace 141 Times In One Day (EuAct)

Turkish aeroplanes and helicopters illegally entered Greece’s airspace 141 times yesterday (15 May), the Hellenic National Defence General Staff reported. According to Greek press reports, 20 Turkish F-16, 5 CN-235 maritime surveillance aircraft and 19 helicopters entered the Athens flight information region (FIR) without submitting a flight plan. In all cases, Turkish aircraft were identified and intercepted by Greek fighters, while in nine cases the interception process resulted in near combat situations. In addition, two Turkish missile boats entered Greek territorial waters off the southeast Aegean island of Agathonisi. The vessels, which were taking part in a maritime exercise code-named Denizkurdu (Seawolf), stayed in Greek territorial waters for about 20 minutes.

As Kathimerini journal reported, last month Agathonisi was described as a “Turkish island” by Turkey’s Minister of European Union Affairs Omer Celik. While the EU and the international community recognise the sovereignty of Greece over the Greek Aegean islands, Turkey has a list of issues regarding the delimitation of territorial waters, national airspace, exclusive zones, etc. Ankara also claims “grey zones” of undetermined sovereignty over a number of small islets, most notably the islets of Imia/Kardak. The serious incidents occurred just a few hours after the meeting of Greek premier Alexis Tsipras with Turkish President Tayyip Erdogan in Beijing. The Greek Ministry of Foreign Affairs issued a strong communique saying that the incident “constitutes a flagrant violation of international law”.

“It is clear that there are forces in Turkey that do not want understanding and good neighbourly relations between the two countries,” the Greek ministry added. In the meantime, tensions between Ankara and Berlin also escalated. The German government is exploring the possibility of moving its troops out of Turkey’s Incirlik air base, which is crucial for the fight against ISIS, after a second German parliamentary delegation was prevented from visiting the Incirlik facility. German news agency dpa quoted Wolfgang Hellmich, the chairman of the Bundestag Defense Committee, as saying “we’re not going to be blackmailed” by the Ankara government.

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Another form of violence normalized. Abe is the proverbial nationalist.

Abe Divides Japan With Plan to Change Pacifist Constitution (BBG)

Prime Minister Shinzo Abe’s sudden rush to change the pacifist constitution that has defined Japan’s security policy since World War II risks eroding his popularity before an election due by the end of next year. This month, Abe proposed an amendment to recognize the existence of Japan’s Self-Defense Forces while maintaining Article 9, which renounces the right to war and prohibits land, sea and air forces. He wants the change to take effect by 2020, when Tokyo hosts the Olympics. Rewriting the constitution has been a longstanding goal of the ruling Liberal Democratic Party, whose original members – including Abe’s grandfather, who was a prime minister – saw the document as a U.S. imposition that humiliated Japan after World War II.

For Abe, the timing appears opportune: not only are tensions high over North Korea, but his opponents are weak. Yet it also carries risks. The public is divided on changing the constitution, and even some members of his own party don’t support it. The issue could galvanize the opposition and potentially hurt Abe’s chances of becoming Japan’s longest-serving prime minister. “It’s going to be very difficult for him to pull this off,” said Gerald Curtis, an emeritus professor of political science at Columbia University who is currently in Tokyo. “It will eat away at his support. Whether it eats away enough to threaten his third term – that’s unlikely.”

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Insanity rules.

NATO Builds Infrastructure for Permanent Presence Near Russia’s Borders (SCF)

A group of about 50 combat engineers based at Canadian Forces Base Gagetown were deployed to Latvia on April 29 as part of Operation Reassurance. The mission is to build a town for 500 soldiers. According to commanding officer Lt.-Col. Chris Cotton, the installation will have «everything you would expect in a small town, from its kitchen to its quarters, its electrical distribution system, water distribution system, internet, gym facilities that would allow people to survive over the long term in Latvia». Obviously, this is an element of vast infrastructure to provide for a long-term commitment. In early April, a US-led battle group of 1,350 soldiers for NATO’s Enhanced Forward Presence in Eastern Europe arrived at its base near Orzysz in northeastern Poland.

It took place just a few days after a NATO-Russia Council meeting took place on March 30. Secretary-General Jens Stoltenberg called the talks with Moscow «frank» and «constructive». Then the usual song and dance followed under the slogan of Russian threat. British RAF fighters are scheduled to be stationed to Romania this May. In March the first of 800 UK troops arrived in Estonia supported by around 300 armed vehicles. Along with French and Danish forces they’ll be stationed there on what NATO leadership calls «rotational basis». In January, German and Belgian forces arrived in Lithuania near the Russian enclave of Kaliningrad. The UK leads the Estonia Battlegroup while other NATO members are deploying forces to Latvia, Lithuania and Poland as part of the bloc’s Enhanced Forward Presence battalion.

All in all, 4,000 NATO troops with tanks, armored vehicles, air support, and high-tech intelligence centers deployed to Poland, Latvia, Lithuania, and Estonia. In accordance with the fiscal year 2017 European Reassurance Initiative budget proposal, the US Army is reopening or creating five equipment-storage sites in the Netherlands, Poland, Belgium and two locations in Germany. Last September, the service began to assemble more Army Prepositioned Stocks (APS) for permanent storage in Europe. Those stocks will be sufficient for another armored brigade to fall in on. The rotating brigade will bring its own equipment. The move will add hundreds of the Army’s most advanced weapons systems to beef up the US European Command’s combat capability. It will also free up an entire brigade’s worth of weapons currently being used by US forces training on the continent to enable more American troops to be rushed in on short notice.

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The EU is an instrument for German, Dutch, French power and profits.

Eastern Europe Turns Its Back On Single Market (Pol.)

The EU’s newest members are the fiercest opponents of its single market. As with so many of the toughest fights in Brussels, it all boils down to farmers and food. Central Europeans say big Western European landowners and multinational supermarkets are wiping out their farmers and shopkeepers. Protecting smallholders from powerful investors like banks has leapt to the top of the political agenda. Eastern European governments have rolled out a complex web of new laws to stop foreigners buying out swaths of ultra-cheap farmland. The European Commission regards this new legislation in the former communist countries as an existential threat to the EU’s free flow of goods, people and capital — the single market, in short — and struck back with infringement cases intended to preserve its sanctity.

In Bulgaria, for example, the European Commission launched an infringement proceeding last year over a law that investors should be resident for more than five years before they can buy farmland. In Romania, Brussels objected this year to rules that supermarkets should source 51 percent of fresh produce from local suppliers. There has been no decision on either case. It is in Poland, the regional heavyweight, that the battle over respect for the single market is fought the hardest. Brussels has already ordered the authorities to halt a tax on the retail sector on the grounds it grants a selective advantage to small, local shops with a low turnover over big foreign-owned supermarkets. All eyes are now focusing on how the European Commission will react to a growing chorus of complaints in Poland over the rights of foreigners to buy farmland.

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The ‘safe zones’ notion in northern Libya blew up in their faces. So now they’re moving the empty idea to the south. Meanwhile, people keep drowning, and that serves Europe’s purposes.

Germany and Italy Want EU To Halt Migrants In Libya (EuO)

Italy and Germany are reportedly seeking an EU mission to stabilise Libya’s 5,000km southern border with neighbouring countries and curb migration. German newspaper Welt am Sonntag reported on Sunday (14 May) that the German interior minister, Thomas de Maiziere, and his Italian counterpart, Marco Minniti, want the mission set up between Libya and Niger. The ministers sent a joint-letter last week to the European Commission, saying that an EU mission at the border between the two nations was needed “as soon as possible.” “The first months of this year have shown that our efforts up to this point have been insufficient. We must prevent hundreds of thousands of people who are in the hands of smugglers from risking their lives in Libya and the Mediterranean,” the letter states.

The letter, also seen by the French news agency AFP, says greater development and local support is needed for people living along the border. It also calls for “technical and financial support” to Libyan authorities. Abdulsalam Kajman, the vice president of the UN and EU-backed government seated in Tripoli, had also told Italy’s Corriere della Sera newspaper on Sunday that Libya was willing to launch patrols with the help of other countries. “If we don’t resolve southern Libya’s problems, we will not resolve the migrant issue,” he said. Kajman added that Italy was prepared to help train a new patrol guard for the task. The plans are part of a broader effort to prevent people from leaving Libya on boats towards the EU and crack down on migrant smugglers. The exodus from the coast has increased by over 44% – when compared to the same period last year – with some 45,000 people having disembarked between January and mid-May so far.

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May 162017
 
 May 16, 2017  Posted by at 8:25 am Finance Tagged with: , , , , , , , , , ,  1 Response »
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Fred Stein Chinatown 1944

 

White House: Report Trump Shared Classified Info With Russians is ‘False’ (RT)
Trump’s Classified Disclosure Is Shocking But Legal (BBG)
The ‘Soft Coup’ of Russia-Gate (Robert Parry)
China’s Silk Road Vision: Cheap Funds, Heavy Debt, Growing Risk (R.)
China Banking Regulator Tightens Rules On WMPs, Flags More Curbs (R.)
New Zealand Housing Market Most at Risk of Bust – Goldman (BBG)
Snowden & Chomsky Lead Calls To Drop DOJ Case Against WikiLeaks (RT)
Large Hedge Funds Moved Out Of Financial Stocks In First Quarter (R.)
Ford To Cut North America, Asia Salaried Workers By 10% (R.)
How High Should Congress Let Flood Insurance Rates Rise? (USAT)
Macron Wins Merkel Backing For Bid To Shake Up Europe (AFP)
Germany Must Decide: Budget Rigour Or Europe’s Future (R.)
The Euro Area – A Simple Model Of Savings, Debt & Private Spending (Terzi)
Greek Economy Pays for Drawn-Out Talks With Return to Recession (BBG)

 

 

And here we are: The WaPo, left with almost zero credibility after so many anti-Trump and anti-Russia opinions more often than not disguised as factual reports, can only find a willing ear anymore inside its echo chamber. As usual, the WaPo article is based on anonymous sources. America is trapped inside it own narrative.

White House: Report Trump Shared Classified Info With Russians is ‘False’ (RT)

Multiple White House officials, including National Security Advisor H.R. McMaster, are refuting a Washington Post story claiming that President Donald Trump revealed highly classified information to Russian officials in the Oval Office last week. But some believe McMaster’s statement contained holes. On Monday evening, National Security Advisor McMaster called a report published earlier in the day by the Washington Post “false.” The report that went viral cited unverifiable sources, unnamed current and former US officials, who claimed that Trump disclosed to Russian Foreign Minister Sergey Lavrov and Ambassador to the US Sergey Kislyak “code-word information” relating to Islamic State during a May 10 meeting in the Oval Office at the White House.

The intelligence was reportedly from “a US partner through an intelligence-sharing arrangement” and not authorized to be shared with Russia, US allies or even within much of the US government. “I was in the room. It didn’t happen,” McMaster told reporters outside the White House. Deputy National Security Adviser Dina Powell also called the story “false” Monday. “The president only discussed the common threats that both countries faced,” Powell said. Secretary of State Rex Tillerson, who was also at the meeting, denied the allegation. McMaster told reporters that Trump did discuss civil aviation threats with Lavrov and Kislyak. [..] The Russian Embassy in DC had no comment on the media claim, according to a representative.

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Besides, the WaPo article doesn’t describe anything illegal. But it’ll take a while before that sinks in, if ever.

Trump’s Classified Disclosure Is Shocking But Legal (BBG)

Oh for the days when Donald Trump wasn’t taking the presidential daily brief – and didn’t know highly classified information that he could give to the Russians. But a bit bizarrely, Trump’s reported disclosure of Islamic State plans to two Russian officials during an Oval Office visit last week wasn’t illegal. If anyone else in the government, except possibly the vice president, had revealed such classified information that person would be going to prison. The president, however, has inherent constitutional authority to declassify information at will. And that means the federal laws that criminalize the disclosure of classified secrets don’t apply to him. If this doesn’t make much sense to you, I feel your pain.

To understand the legal structure of classification and declassification requires a brief journey into the constitutional law of separation of powers. That’s not always especially fun. But at this juncture in U.S. history, it’s essential. Not since Richard Nixon’s administration has separation of powers been so central to the fate of the republic. The authority to label facts or documents as classified rests with the president in his capacity as a commander in chief. Or at least that’s what the U.S. Supreme Court said in a 1988 case, Department of the Navy v. Egan. Justice Harry Blackmun, who wrote the opinion, said that the executive’s “authority to classify and control access to information bearing on national security … flows primarily from this constitutional investment of power in the President and exists quite apart from any explicit congressional grant.”

Blackmun’s idea that the president has an inherent right to decide who gets access to classified information seems to imply the converse: that the president has the inherent authority to declassify information, too. Although there’s no case on this point, scholars took that view during the years of the George W. Bush administration, when the president was thought to have declassified some information that was leaked to the news media by White House aide I. Lewis “Scooter” Libby. It makes sense. If it is up to the president to decide what can’t be disclosed, it should be up to him to decide what can be.

[..] If you’re following closely, you’ll have noticed an anomaly: The president can classify and declassify. But the president can’t send people to prison for disobeying his order. That requires a federal law passed by Congress, and a conviction before a judge. Thus, under the separation of powers, the president has inherent authority to fire his own employees for disclosing classified information, but lacks the power to punish them criminally without Congress and the courts. That law exists: 18 U.S. Code Section 798, if you care to look it up. It makes it a federal crime to communicate “classified information” to an “unauthorized person.” The catch is that the law defines classified information as information determined classified by a U.S. government agency, and similarly defines an unauthorized person as someone not determined authorized by the executive branch. That puts Trump in the clear insofar as he has an inherent authority to declare information unclassified.

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And Robert Parry can tell you why things like that WaPo ‘report’ get so blown up.

The ‘Soft Coup’ of Russia-Gate (Robert Parry)

I realize that many Democrats, liberals and progressives hate Donald Trump so much that they believe that any pretext is justified in taking him down, even if that plays into the hands of the neoconservatives and other warmongers. Many people who detest Trump view Russia-gate as the most likely path to achieve Trump’s impeachment, so this desirable end justifies whatever means. Some people have told me that they even believe that it is the responsibility of the major news media, the law enforcement and intelligence communities, and members of Congress to engage in a “soft coup” against Trump – also known as a “constitutional coup” or “deep state coup” – for the “good of the country.”

The argument is that it sometimes falls to these Establishment institutions to “correct” a mistake made by the American voters, in this case, the election of a largely unqualified individual as U.S. president. It is even viewed by some anti-Trump activists as a responsibility of “responsible” journalists, government officials and others to play this “guardian” role, to not simply “resist” Trump but to remove him. There are obvious counter-arguments to this view, particularly that it makes something of a sham of American democracy. It also imposes on journalists a need to violate the ethical responsibility to provide objective reporting, not taking sides in political disputes. But The New York Times and The Washington Post, in particular, have made it clear that they view Trump as a clear and present danger to the American system and thus have cast aside any pretense of neutrality.

The Times justifies its open hostility to the President as part of its duty to protect “the truth”; the Post has adopted a slogan aimed at Trump, “Democracy Dies in Darkness.” In other words, America’s two most influential political newspapers are effectively pushing for a “soft coup” under the guise of defending “democracy” and “truth.” But the obvious problem with a “soft coup” is that America’s democratic process, as imperfect as it has been and still is, has held this diverse country together since 1788 with the notable exception of the Civil War. If Americans believe that the Washington elites are removing an elected president – even one as buffoonish as Donald Trump – it could tear apart the fabric of national unity, which is already under extraordinary stress from intense partisanship.

That means that the “soft coup” would have to be carried out under the guise of a serious investigation into something grave enough to justify the President’s removal, a removal that could be accomplished by congressional impeachment, his forced resignation, or the application of Twenty-fifth Amendment, which allows the Vice President and a majority of the Cabinet to judge a President incapable of continuing in office. That is where Russia-gate comes in. The gauzy allegation that Trump and/or his advisers somehow colluded with Russian intelligence officials to rig the 2016 election would probably clear the threshold for an extreme action like removing a President. And, given the determination of many key figures in the Establishment to get rid of Trump, it should come as no surprise that no one seems to care that no actual government-verified evidence has been revealed publicly to support any of the Russia-gate allegations.

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China wants to own the new Silk Road, and to be the leader. The original one knew neither ownership nor leadership.

China’s Silk Road Vision: Cheap Funds, Heavy Debt, Growing Risk (R.)

Behind China’s trillion-dollar effort to build a modern Silk Road is a lending program of unprecedented breadth, one that will help build ports, roads and rail links, but could also leave some banks and many countries with quite a hangover. At the heart of that splurge are China’s two policy lenders, China Development Bank (CDB) and Export-Import Bank of China (EXIM), which have between them already provided $200 billion in loans throughout Asia, the Middle East and even Africa. They are due to extend at least $55 billion more, according to announcements made during a lavish two-day Belt and Road summit in Beijing, which ends on Monday. Thanks to cheaper funding, CDB and EXIM have helped to unblock what Chinese president Xi Jinping on Sunday called a ‘prominent challenge’ to the Silk Road: the funding bottleneck.

But as the Belt and Road project grows, so do the risks to policy banks, commercial lenders and borrowers, all of whom are tangled in projects with questionable business logic, bankers and analysts say. EXIM, seeking to contain risk, says it has imposed a debt ceiling for each country. CDB says it has applied strict limits on sovereign borrowers’ credit lines and controls the concentration of loans. “For some countries, if we give them too many loans, too much debt, then the sustainability of its debt is questionable,” Sun Ping, vice governor of EXIM, told reporters last week. For now, funds are cheap and plentiful, thanks to Beijing. Belt and Road infrastructure loans so far have been primarily negotiated government to government, with interest rates below those offered by commercial banks and extended repayment schedules, bankers and analysts said.

[..] 47 of China’s 102 central-government-owned conglomerates participated in 1,676 Belt and Road projects, according to government statistics. China Communications Construction alone has notched up $40 billion of contracts and built 10,320 kilometres of road, 95 deepwater ports, 10 airports, 152 bridges and 2,080 railways in Belt and Road countries. China’s central bank governor Zhou Xiaochuan is among those to warn that this reliance on cheap loans raises “risks and problems”, starting with moral hazard and unsustainability. China has been caught out before; it is owed $65 billion by Venezuela, now torn by crisis. “The jurisdictions where many of these loans are going are places that would have difficulty getting loans from Western commercial banks – their credit ratings are not very good, or the projects in question often are not commercially viable,” said Jack Yuan at Fitch in Shanghai. “The broader concern is that capital continues to be mis-allocated by Chinese banks.”

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We’ll believe it when the bankruptcies start accumulating.

China Banking Regulator Tightens Rules On WMPs, Flags More Curbs (R.)

China’s banking regulator is tightening disclosure rules on lenders’ wealth management products (WMP) as it tries to track risky lending practices in the shadow banking sector, the latest in a series of steps by Beijing aimed at defusing financial risks. The China Banking Regulatory Commission (CBRC) said in a notice late on Monday it plans to launch 46 new or revised rules this year, part of which targets risks related to shadowbanking activities. Authorities are trying to better regulate 30 trillion yuan ($4.35 trillion) of WMPs, much of it sitting off-balance sheet in the shadowbanking sector. The WMPS have been used to channel deposits into risky investments, often via many layers of asset management schemes to skirt lending and capital rules.

The CBRC will now require that banks report the underlying assets and liabilities of their WMPs, as well as all layers of investment schemes, on a weekly basis. Previously, banks were required to hand in less detailed information, and on a monthly basis. The new rules – published by a WMP management platform under CBRC – reflect regulators’ desire to have a full picture of banks’ activities, and could slow the growth of WMPs. In March, China’s newly appointment banking regulator Guo Shuqing, vowed to strengthen supervision of the lending sector, underscoring Beijing’s determination to fend off financial risks and push reforms this year. Separately, CBRC unveiled a long list of rules it aims to publish this year, many of these related to risk-management. The rules are to “ensure that (risk) does not become systemic,” CBRC said.

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Useless numbers from Goldman Sachs.

New Zealand Housing Market Most at Risk of Bust – Goldman (BBG)

New Zealand’s housing market is the most over-valued among the so-called G-10 economies and the most at risk of a correction, according to Goldman Sachs. In research published this week, the investment bank said there is about a 40% chance of a housing “bust” in New Zealand over the next two years, which it defines as house prices falling 5% or more after adjustment for inflation. The report looks at housing markets in the G-10 countries – those with the 10 most-traded currencies in the world – and finds they are most elevated in small, open economies such as New Zealand, where house prices have rocketed in recent years. In Auckland, the nation’s largest city, the average price has surged 91% since 2007 to more than NZ$1 million ($688,000).

Goldman compares house-price levels across economies using three standard metrics: the ratio of house prices to rent, the ratio of house prices to household income and house prices adjusted for inflation. “Using an average of these measures, house prices in New Zealand appear the most over-valued, followed by Canada, Sweden, Australia and Norway,” it said. “According to the model, the probability of a housing bust over the next five to eight quarters is the highest in Sweden and New Zealand at 35 to 40%.” A graph in the report shows that New Zealand’s probability of a housing bust is just above 40%, while Sweden’s is just above 35%. The risk of a bust in Australia is about 25%.

Read more …

Chelsea Manning is free as of tomorrow.

Snowden & Chomsky Lead Calls To Drop DOJ Case Against WikiLeaks (RT)

Former intelligence officers, journalists and artists are among more than 100 signatories of an open letter calling on President Trump to close the Grand Jury investigation into WikiLeaks and drop any planned charges against the whistleblower group.
The letter released Monday by the Courage Foundation includes NSA whistleblower Edward Snowden and renowned scholar and activist Noah Chomsky among the original signatories. A significant number of former personnel from US intelligence agencies are backing the letter. Among them are former senior NSA officials Thomas Drake, William Binney and Kirk Wiebe. Daniel Ellsberg, the former State and Defense Department official who released top secret Pentagon Papers in 1971 and retired FBI Special Agent and former Minneapolis Division Legal Counsel Coleen Rowley also signed the letter.

The plea to President Trump is in response to comments made by US Attorney General Jeff Sessions last month, in which he confirmed that the arrest of WikiLeaks founder Julian Assange was a “priority” for the US government. Fears are growing that charges including conspiracy, theft of government property and violating the Espionage Act are being considered against members of WikiLeaks. Several artists are also pushing the call for Trump to drop any proposed charges against the whistleblower organization. Among the big names are Oliver Stone, Ken Loach, Pamela Anderson, Patti Smith, PJ Harvey and Vivienne Westwood.

The letter acknowledges that the Obama administration prosecuted more whistleblowers than all previous presidents combined and opened a Grand Jury investigation into WikiLeaks that had no precedent. “It now appears the US is preparing to take the next step — prosecuting publishers who provide the “currency” of free speech, to paraphrase Thomas Jefferson,” the document states. “A threat to WikiLeaks’ work — which is publishing information protected under the First Amendment — is a threat to all free journalism. If the DOJ is able to convict a publisher for its journalistic work, all free journalism can be criminalized.”

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They know something you don’t.

Large Hedge Funds Moved Out Of Financial Stocks In First Quarter (R.)

Several big-name hedge fund investors trimmed their stakes in financial companies in the first quarter as hopes for immediate tax cuts and loosening of regulations after President Donald Trump’s victory in November began to fade. Adage Capital Management cut its position in Wells Fargo, which has come under fire for its sales practices, by 3.9 million shares, according to regulatory filings, while John Burbank’s Passport Capital cut its stake in the company by 947,000 shares. Third Point cut its stake in JPMorgan Chase by 28%, to 3.75 million shares, while Suvretta Capital Management sold all of its shares of Morgan Stanley, JPMorgan and Citigroup. Overall, financial companies in the S&P 500 were up 2.1% in the first quarter, compared with 5.5% for the index as a whole.

Financials significantly outperformed the broad market following Trump’s Nov. 8 election. Trump had pledged to do a “big number” on the landmark Dodd-Frank financial reform law, which raised banks’ capital requirements and restricted their ability to make speculative bets with customers’ money. The Treasury Department is still filling vacancies and will not be able to complete a review of the law by Trump’s June deadline, sources told Reuters. Quarterly disclosures of hedge fund managers’ stock holdings, in what are known as 13F filings with the U.S. Securities and Exchange Commission, are one of the few public ways of tracking what the managers are selling and buying. But relying on the filings to develop an investment strategy comes with some risk because the disclosures come out 45 days after the end of each quarter and may not reflect current positions.

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Lean and efficient, and losing sales.

Ford To Cut North America, Asia Salaried Workers By 10% (R.)

Ford plans to shrink its salaried workforce in North America and Asia by about 10% as it works to boost profits and its sliding stock price, a source familiar with the plan told Reuters on Monday. A person briefed on the plan said Ford plans to offer generous early retirement incentives to reduce its salaried headcount by Oct. 1, but does not plan cuts to its hourly workforce or its production. The move could put the U.S. automaker on a collision course with President Donald Trump, who has made boosting auto employment a top priority. Ford has about 30,000 salaried workers in the United States.

The cuts are part of a previously announced plan to slash costs by $3 billion, the person said, as U.S. new vehicles auto sales have shown signs of decline after seven years of consecutive growth since the end of the Great Recession. The Wall Street Journal reported Monday evening that Ford plans to cut 10% of its 200,000-person global workforce, but the person briefed on the plan disputed that figure. The source requested anonymity in order to be able to discuss the matter freely. Ford declined to comment on any job cuts but said it remains focused on its core strategies to “drive profitable growth”. “Reducing costs and becoming as lean and efficient as possible also remain part of that work,” it said in a statement. “We have not announced any new people efficiency actions, nor do we comment on speculation.”

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FEMA rules!

How High Should Congress Let Flood Insurance Rates Rise? (USAT)

Congress is considering dramatic changes to the National Flood Insurance Program, which has a $25 billion debt that its director says cannot be repaid. But as a Sept. 30 deadline looms for the program to be renewed, disagreements remain over how much homeowners should be forced to pay for flood insurance to make the program more solvent. If Congress can’t reach an agreement, a lapse in the Federal Emergency Management Agency’s legal authority to write new policies could disrupt real estate sales in flood-prone areas around the country.

Republican Sen. Bill Cassidy of Louisiana and Democratic Sen. Kirsten Gillibrand of New York are circulating draft legislation to renew the program, but it contains provisions – such as vouchers to help low-income homeowners keep the cost of premiums and fees from getting too high — that are not in a draft that Republicans on the House Financial Services Committee plan to release this week. Disputes also remain over how to address wrongdoing by insurance companies and affiliated contractors in the wake of Superstorm Sandy and last year’s floods in Louisiana, and whether older properties that flood repeatedly should still receive discounts. Many in Congress also want to encourage more private insurers to enter the market, but some warn the government could be left with only the riskiest properties.

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Macron has to focus on France. and will do so until well after Merkel is re-elected. Still, these new views could have prevented Brexit.

Macron Wins Merkel Backing For Bid To Shake Up Europe (AFP)

France’s new President Emmanuel Macron secured backing Monday from key ally Chancellor Angela Merkel for his bid to shake up Europe, despite scepticism in Berlin over his proposed reforms. Travelling to the German capital to meet the veteran leader in his first official trip abroad, Macron used the opportunity to call for a “historic reconstruction” of Europe. During his campaign, Macron had thrown up ideas on reforming the eurozone, noting that the currency bloc cannot go on as it is if it wanted to avoid falling prey to protest and populism. Among reforms he wants to see are setting up a separate budget for the 28-member group, as well as giving it its own parliament and finance minister. But the proposals have sent alarm bells ringing in Berlin, and initial relief about his victory against far-right leader Marine Le Pen had quickly given way to fears about his reform plans.

Finance Minister Wolfgang Schaeuble warned that such deep-reaching reforms would require treaty changes, which were “not realistic” at a time when Europe is hit by a surge of anti-euro populism. Saturday’s edition of weekly news magazine Der Spiegel featured a cover picture of Macron with the headline “expensive friend”. But at a joint press conference following their talks, Merkel adopted a conciliatory tone and offered what appeared to be a key concession. “From the German point of view, it’s possible to change the treaty if it makes sense,” she said. “If we can say why, what for, what the point is, then Germany will be ready.” Merkel’s approach underlined her view that it was crucial not only for France, but for Germany, to help Macron succeed – a point that she has repeatedly stressed.

Yet it remains to be seen if her approach would go down well in Germany, which is deeply adverse to shouldering burdens of eurozone laggards. Macron sought to bat away German fears on debt, saying he was opposed to mutualising “old debt” between eurozone countries. However, he signalled readiness to look at sharing future burdens. “I am not a promoter of the mutualisation of old debt” within the eurozone, said Macron after meeting Merkel, adding however that the joint financing of future projects should be considered. Underlining the concerns over Macron’s proposals, Germany’s biggest selling daily Bild warned ahead of the French leader’s meeting with Merkel that before seeking deeper EU integration, “France must once again be at the same level as Germany politically and economically”. “Only then can the EU be reformed or develop deeper integration,” it said.

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Ye olde ‘there is stil time’ delusion: there is still time to make Germany change its stance on the EU, in the same way that there is still time to save the planet. No, there isn’t, if you include the time it will take to turn around what has been the ‘normal’. You need a revolution, not a change.

Germany Must Decide: Budget Rigour Or Europe’s Future (R.)

After Emmanuel Macron’s victory in France’s presidential election, Germany must decide whether it wants to continue its single-minded focus on budget rigour or work with him to ensure the future of the European project, a German diplomat said. In an interview with Reuters hours before the new French president travels to Berlin to meet Chancellor Angela Merkel, Wolfgang Ischinger, chairman of the Munich Security Conference, pushed back against German politicians who have picked holes in Macron’s ideas for Europe since his election win. Among those are Finance Minister Wolfgang Schaeuble, who has come to personify Berlin’s focus on the “Schwarze Null”, or balanced budget. He has suggested Macron’s plans to create a budget and finance minister for the euro zone are unrealistic.

“My wish is that this issue is not used in the (German) election campaign, but that we have a serious discussion over the question: ‘What is more important to us? The Schwarze Null as a categoric imperative or the future of Europe?'” Ischinger said. “If compromises are necessary and make sense, then I would support compromise rather than categorical imperatives.” Mainstream parties in Germany applauded Macron’s victory over far-right leader Marine Le Pen earlier this month. But since then, conservative politicians and media have criticized his plans, suggesting they would lead to a “transfer union” in which German money would be used to pay for uncompetitive member states that are reluctant to reform. Schaeuble has suggested some of Macron’s more ambitious plans would require politically thorny changes to the EU treaty. But Ischinger, a former German ambassador to Britain and the United States, said much could be done on an intergovernmental basis.

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The illusion that the ECB can manage the EU economy.

The Euro Area – A Simple Model Of Savings, Debt & Private Spending (Terzi)

In 2010, with the first casualty (Greece) in the emergency room and the first economic adjustment programme (with financial package) approved, the Eurosystem eventually became an occasional buyer of government debt. Two years later, with three more casualties (Ireland, Portugal, and Spain) and a systemic collapse in sight, the ECB added the newly crafted Outright Monetary Transactions (OMT) to its toolbox. This meant that the ECB had formally become ready to be an unlimited, albeit conditional, outright buyer in the secondary market for Eurozone government debts. The introduction of OMTs was the way to restore systemic liquidity buffers in a monetary system that had become unsustainable, while remaining consistent with the monetary financing prohibition laid down in the Treaty.

As events during the crisis unfolded, and depending on the narrative about its causes, several different meanings have been attached to the notion of the Eurozone crisis. This has been seen, alternatively, as the unwinding of intra-euro lending and borrowing, the consequence of private credit bubbles, the product of unsustainable public debt, the failure of inadequately supervised banking and financial institutions, and, most notably, as a double-dip recession followed by an unusually weak expansion combined with a visibly inadequate policy (and political) response. Today, six years after the crisis erupted, and notwithstanding the modified ECB practice that saved the day, the Eurozone is still visibly failing to enact sustainable policies that can effectively restore economic prosperity.

Accordingly, there have been two distinct phases in the Eurozone crisis. Between 2010 and 2012 the monetary union was in jeopardy of undergoing an operational breakdown up until the change in the operational practice in the market for public sector securities, complemented by the banking union reform. Since 2012, the problems have been the continuing sluggishness of the real economy, the acute lack of demand, vulnerability to internal and external shocks, and, ultimately, the risk of a political implosion. While the ECB has successfully reclaimed one indispensable tool to operationally manage the euro, the deflationary bias of the euro area has not gone away. Effectively, Europe’s economic performance has been vastly disappointing ever since the launch of the euro.

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Greece has no way to escape recession, drawn out talks have nothing to do with it.

Greek Economy Pays for Drawn-Out Talks With Return to Recession (BBG)

Greece’s economy returned to recession in the first quarter as delays in concluding talks between the government and its creditors raised the specter of another debt drama. GDP contracted 0.1% in the first three months of the year after shrinking 1.2% in the previous quarter, the Hellenic Statistical Authority said in a statement on Monday. The seasonally adjusted contraction was 0.5% from a year earlier. Talks between creditors on easing the country’s debt load are accelerating after Greece and officials from the IMF and euro-area institutions ended a months-long impasse over the austerity measures the government needs to take. While that’s prompted a rally in Greek stocks and bonds this month, the delay has taken a toll on the economy. That cost led the government to cut its GDP growth forecast for this year to 1.8% from 2.7% on Saturday. The European Commission reduced its estimate to 2.1% last week.

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May 152017
 
 May 15, 2017  Posted by at 8:18 am Finance Tagged with: , , , , , , , , ,  1 Response »
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Fred Stein Ballfield NY 1946

 

Global Property Bubble Is Ready To Pop (MF)
3 Cities Push Canada To Another Record On House Prices (HPo)
Cyber Attack Aftershocks Disrupt Devices Across Asia on Monday (R.)
Lessons From Last Week’s Cyberattack (Microsoft)
The World Is Getting Hacked. Why Don’t We Do More to Stop It? (NYT)
Peak China: Chinese Data Misses Across The Board (ZH)
Why India Is Cool Towards China’s Belt And Road (SCMP)
China’s Silk Road Summit: India Skips, Warns Of “Unsustainable Debt” (ZH)
Number of Chinese Tourists Visiting Greece to Rise 10-Fold (BBG)
New Zealand Slashes Chinese Tourism Forecast, Denting Outlook (BBG)
Fed Officials Test New Argument for Tightening: Protect the Poor (BBG)
Marc Cohodes, The Scourge Of Home Capital, Reveals His Latest Short (ZH)
Eyes on Euro Fighter Macron (K.)
Germany Will Not Rush Into Euro Area Fiscal Union (CNBC)
What Germany Owes Namibia For Genocide (Econ)

 

 

Only real question: will they all fall together like dominoes?

Global Property Bubble Is Ready To Pop (MF)

Ever since interest rates were slashed to near zero in the wake of the financial crisis, the world has gone property mad. Residential house prices from Abu Dhabi to Zurich have spiralled as hot money travelled the world looking for a home. For those who got in early it has been incredibly rewarding, even if – whisper it – stock markets have actually done far better. The global property bubble cannot blow much bigger. The best we can hope is that it deflates slowly… but it could burst. Property is still going crazy in China, where prices have been pumped up by yet another bout of government stimulus. Guangzhou, close to Hong Kong on the Chinese mainland, leapt a whopping 36% in the past 12 months, according to Knight Frank. Prices rose around 20% in Beijing and Shanghai, as well as in Toronto, Canada.

Seoul in South Korea continues to boom, as does Sydney and Stockholm, both up 10.7% over the last year. Berlin (8.7%), Melbourne (8.6%) and Vancouver (7.9%) are also performing strongly. In most other global cities, property is finally starting to slow. Hong Kong rose a relatively modest 5.3% while Singapore grew 4%, and thereafter price hikes trail away. Half of the 41 countries in the report grew by less than 2%, while nearly one in three saw prices fall, by up to 8.3%. Prime central London was the world’s raciest property market but is now leading the charge in the other direction, falling 6.4%. Former hotspots Zurich, Moscow and Istanbul fell 7% or more over the last 12 months. Cheap money has driven prices ever higher for eight years but is finally losing traction, as affordability is stretched again. Interest rates cannot go any lower and could start rising if the US Federal Reserve continues to tighten. Regulatory authorities are looking to rein in overheated markets, with China only the latest to tighten borrowing requirements. The glory days are over.

Investing in property has one major benefit over stocks and shares – you can leverage up borrowing money to fund your purchase. Thereafter, the advantages are all one way. First, you can trade stocks online within seconds, whereas offloading property can take months (longer in a market crash). You can invest small amounts, rather than the hundreds of thousands of dollars, pounds, euros, yen or renminbi you need to buy a decent property these days. If you buy an investment property you have the effort of doing up and maintaining it, finding tenants, and paying a host of local taxes. You don’t have any of that nonsense with stocks. Best of all, you can invest quickly and easily in a wide spread global stocks, sectors and markets.

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Greater fools and empty bags.

3 Cities Push Canada To Another Record On House Prices (HPo)

Home prices in Canada rose for the 15th straight month in a row in April, according to the Teranet-National Bank house price index, which once again hit its highest levels ever. But virtually all the strength seen over the past year came from just three cities — Toronto, Hamilton and Victoria. The index, which tracks repeat sales of single-family homes over time, found Toronto led the way, with the price index rising 2.6% in April. The city has seen prices jump 7.3% since the start of the year, and 26.3% in the past 12 months. Nearby Hamilton, which is experiencing spillover from Toronto’s housing boom, saw its price index rise 2% in April and 23% over the past year. Vancouver, which as recently as a year ago was showing the fastest price growth in the country, is now showing signs of slowing.

The price index fell 0.1% in April, and compared to a year ago, prices are up 9.7%, slower than the national average of 13.4%. Many market experts say Vancouver’s foreign buyer tax has pushed buyers to other cities, including to Victoria, where the price index rose 1.5% in April, and 19% over the past year. “Based on the cooldown in home sales that began early last year, we expect the Vancouver growth rate to fall much lower over the next few months,” wrote David Madani, senior Canada economist at Capital Economics. But Madani expects Toronto to experience a similar cooling. He noted that the city saw a sudden, 30% spike in new home listings in April. That’s “further evidence that the surge in house price inflation is close to a peak and will drop back sharply before the end of this year,” he wrote in a client note.

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So far not so bad. But if the next generation of the attack has no killswitch that can be triggered, anything is possible.

Cyber Attack Aftershocks Disrupt Devices Across Asia (R.)

Asian governments and businesses reported some disruptions from the WannaCry ransomware worm on Monday but cybersecurity experts warned of a wider impact as more employees turned on their computers and checked e-mails. The ransomware that has locked up hundreds of thousands of computers in more than 150 countries has been mainly spread by e-mail, hitting factories, hospitals, shops and schools worldwide. While the effect on Asian entities appeared to be contained on Monday, industry professionals flagged potential risks as more systems came online across the region. Companies that were hit by the worm may be wary of making it public, they added.

“We’re looking at our victims’ profiles, we’re still seeing a lot of victims in the Asia-Pacific region. But it is a global campaign, it’s not targeted,” said Tim Wellsmore, Director of Threat Intelligence, Asia Pacific at cybersecurity firm FireEye. “But I don’t think we can say it hasn’t impacted this region to the extent it has some other regions.” Michael Gazeley, managing director of Network Box, a Hong Kong-based cybersecurity firm, said there were still “many ‘landmines’ waiting in people’s in-boxes” in the region, with most of the attacks having arrived via e-mail.

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Microsoft blames the NSA, and for good reason, but…

Lessons From Last Week’s Cyberattack (Microsoft)

[..] this attack provides yet another example of why the stockpiling of vulnerabilities by governments is such a problem. This is an emerging pattern in 2017. We have seen vulnerabilities stored by the CIA show up on WikiLeaks, and now this vulnerability stolen from the NSA has affected customers around the world. Repeatedly, exploits in the hands of governments have leaked into the public domain and caused widespread damage. An equivalent scenario with conventional weapons would be the U.S. military having some of its Tomahawk missiles stolen. And this most recent attack represents a completely unintended but disconcerting link between the two most serious forms of cybersecurity threats in the world today – nation-state action and organized criminal action.

The governments of the world should treat this attack as a wake-up call. They need to take a different approach and adhere in cyberspace to the same rules applied to weapons in the physical world. We need governments to consider the damage to civilians that comes from hoarding these vulnerabilities and the use of these exploits. This is one reason we called in February for a new “Digital Geneva Convention” to govern these issues, including a new requirement for governments to report vulnerabilities to vendors, rather than stockpile, sell, or exploit them. And it’s why we’ve pledged our support for defending every customer everywhere in the face of cyberattacks, regardless of their nationality. This weekend, whether it’s in London, New York, Moscow, Delhi, Sao Paulo, or Beijing, we’re putting this principle into action and working with customers around the world.

We should take from this recent attack a renewed determination for more urgent collective action. We need the tech sector, customers, and governments to work together to protect against cybersecurity attacks. More action is needed, and it’s needed now. In this sense, the WannaCrypt attack is a wake-up call for all of us. We recognize our responsibility to help answer this call, and Microsoft is committed to doing its part.

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…Microsoft itself carries part of the blame as well. It doesn’t support XP, but does ask for a lot of money for patches.

The World Is Getting Hacked. Why Don’t We Do More to Stop It? (NYT)

The attack was halted by a stroke of luck: the ransomware had a kill switch that a British employee in a cybersecurity firm managed to activate. Shortly after, Microsoft finally released for free the patch that they had been withholding from users that had not signed up for expensive custom support agreements. But the crisis is far from over. This particular vulnerability still lives in unpatched systems, and the next one may not have a convenient kill switch. While it is inevitable that software will have bugs, there are ways to make operating systems much more secure — but that costs real money.

While this particular bug affected both new and old versions of Microsoft’s operating systems, the older ones like XP have more critical vulnerabilities. This is partly because our understanding of how to make secure software has advanced over the years, and partly because of the incentives in the software business. Since most software is sold with an “as is” license, meaning the company is not legally liable for any issues with it even on day one, it has not made much sense to spend the extra money and time required to make software more secure quickly. Indeed, for many years, Facebook’s mantra for its programmers was “move fast and break things.”

[..] If I have painted a bleak picture, it is because things are bleak. Our software evolves by layering new systems on old, and that means we have constructed entire cities upon crumbling swamps. And we live on the fault lines where more earthquakes are inevitable. All the key actors have to work together, and fast. First, companies like Microsoft should discard the idea that they can abandon people using older software. The money they made from these customers hasn’t expired; neither has their responsibility to fix defects. Besides, Microsoft is sitting on a cash hoard estimated at more than $100 billion (the result of how little tax modern corporations pay and how profitable it is to sell a dominant operating system under monopolistic dynamics with no liability for defects).

At a minimum, Microsoft clearly should have provided the critical update in March to all its users, not just those paying extra. Indeed, “pay extra money to us or we will withhold critical security updates” can be seen as its own form of ransomware. In its defense, Microsoft probably could point out that its operating systems have come a long way in security since Windows XP, and it has spent a lot of money updating old software, even above industry norms. However, industry norms are lousy to horrible, and it is reasonable to expect a company with a dominant market position, that made so much money selling software that runs critical infrastructure, to do more.

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tick tick tick.

Peak China: Chinese Data Misses Across The Board (ZH)

Following months of warnings that China’s economy is slowing down as a result of not only a collapse in China’s credit impulse but also tighter monetary conditions, as well as rolling over loan growth which has pressured both CPI and PPI – i.e., the global “reflation trade” – as the following chart from Bloomberg’s David Ingels shows…

… and culminating over the weekend with a warning in no uncertain terms from Citi, which said that at least four key economic indicators are “starting to wave red flags” among which:
• The Markit PMI is starting to turn over
• China’s Inflation Surprise Index – a leading indicator to global inflation metric – has posted a recent sharp drop
• China’s import trade has likewise tumbled after surging recently
• Chinese Iron Ore imports into Qingado port have plunged

… moments ago China’s National Bureau of Statistics validated the mounting fears, when it reported misses across all key economic categories for the month of April, as follows:
• Retail Sales 10.7% Y/Y, Exp. 10.8%, Last 10.9%
• Fixed Asset Investment 8.9% Y/Y, Exp. 9.1%, Last 9.2%
• Industrial Output 6.5% Y/Y, Exp. 7.0%, Last 7.6%
• Industrial Production YTD 6.7% Y/Y, Exp. 6.9%, Last 6.8%

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Big meeting, Putin, Erdogan et al, but not India, US, Germany and more. Shaky.

Why India Is Cool Towards China’s Belt And Road (SCMP)

It is one of the most imaginative and ambitious programmes ever to be rolled out by a government. It represents a broad strategy for China’s economic cooperation and expanded presence in Asia, Africa and Europe, and has been presented as a win-win initiative for all participating nations. But for India, the connotations of China’s Belt and Road Initiative” are somewhat different. A flagship programme and the most advanced component of the initiative, the China-Pakistan Economic Corridor (CPEC), passes through Pakistan-occupied Kashmir, a region that belongs to India and is under the control of Pakistan. As a country acutely conscious of its own sovereignty-related claims, China should have no difficulty in appreciating India’s sensitivities in this regard.

While investment in the Gwadar port, roads and energy projects is reported to have increased from US$46 billion to US$55 billion, CPEC lacks economic justification for China and its geopolitical drivers cause legitimate anxieties in India. The Belt and Road plan is a practical economic strategy for China’s objectives to connect the region, seek new growth engines for its slowing economy, utilise its surplus capacity, and develop and stabilise its western regions. It may also bring benefits to partner countries. However, it also has a strategic and political agenda which remains opaque. Apart from the CPEC, India also has misgivings about the manner in which the Belt and Road Initiative is being pursued in its neighbourhood. For instance, the development of ports under Chinese operational control as part of the Maritime Silk Road strategy has raised concerns in India which need to be addressed.

India has repeatedly conveyed its strong objections regarding the CPEC to China. The Belt and Road plan is a Chinese initiative rather than a multilateral enterprise undertaken after prior consultation with potential partner countries, and India has not endorsed it. There is an expectation in India that China will take India’s sensitivities into account while formulating its plans. Clearly, there is room for closer consultations between China and India on the objectives, contours and future directions of the Belt and Road. However, India has considered synergy-based cooperation on a case-by-case basis, where its interests for regional development converge with that of other countries, including China.

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India’s right, the Silk road is financed with Monopoly money.

China’s Silk Road Summit: India Skips, Warns Of “Unsustainable Debt” (ZH)

Alas, the meticulously scripted plan to showcase China’s growing economic and trade dominance did not go off quite as smoothly as Xi had planned. First, just hours before the summit opened, North Korea launched its latest ballistic missile, provoking Beijing and further testing the patience of China, its chief ally. Ironically, the United States had complained to China on Friday over the inclusion of a North Korean delegation at the event. Then, in a sign that China’s rampant, credit-fuelled growth is making some just a little uncomfortable, some Western diplomats expressed unease about both the summit and the plan as a whole, seeing it as an attempt to promote Chinese influence globally according to Reuters. They are also concerned about transparency and access for foreign firms to the scheme.

Australian Trade Minister Steven Ciobo said Canberra was receptive to exploring commercial opportunities China’s new Silk Road presented, but any decisions would remain incumbent on national interest. Responding to criticism, Xi said that “China is willing to share its development experience with all countries” and added “we will not interfere in other countries’ internal affairs. We will not export our system of society and development model, and even more will not impose our views on others.” But the biggest surprise was India, the world’s fastest growing nation and the second most populous in the world, which did not even bother to send an official delegation to Beijing and instead criticised China’s global initiative, warning of an “unsustainable debt burden” for countries involved.

Indian foreign ministry spokesman Gopal Baglay, asked whether New Delhi was participating in the summit, said “India could not accept a project that compromised its sovereignty.” India is incensed that one of the key Belt and Road projects passes through Kashmir and Pakistan. The nuclear-armed rivals have fought two of their three wars over the disputed region, Reuters notes. “No country can accept a project that ignores its core concerns on sovereignty and territorial integrity,” Baglay said. Furthermore, he also warned of the danger of debt. One of the criticisms of the Silk Road plan is that host countries may struggle to pay back loans for huge infrastructure projects being carried out and funded by Chinese companies and banks. “Connectivity initiatives must follow principles of financial responsibility to avoid projects that would create unsustainable debt burden for communities,” Baglay said.

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Really, Brussels, Washington, you think it’s a good idea to let China buy up Greece? No security jiggers at all?

Number of Chinese Tourists Visiting Greece to Rise 10-Fold (BBG)

Fosun International, the Chinese conglomerate that’s part of a venture to transform the former Athens airport site into one of the biggest real-estate projects in Europe, is now turning its attention to Greek tourism. Fosun wants to use its stake in tour operator Thomas Cook to start building vacation packages specifically for the vast Chinese market, Senior Vice President Jim Jiannong Qian said in a May 4 interview in Athens. The Chinese government predicts 1.5 million of its citizens will start vacationing in Greece in the medium term. Tourism accounted for over one-quarter of Greece’s GDP in 2016, according to the Greek Tourism Confederation. Visitor numbers in 2016 reached 28.1 million, up 7.6% from 2015. Tourists generated €13.2 billion in travel receipts, according to the Bank of Greece. Of these travelers, 150,000 came from China, Beijing says.

“Greece is a very safe place for visitors,” said Qian who is also president of Fosun’s Tourism and Commercial Group. There are also good opportunities for tourism investments in Greece, he said. Fosun is in discussions to buy existing hotels and resorts, or for the construction of new ones, in Greece by its fully owned portfolio company Club Med. An increase in Chinese visitors to Greece would eventually lead to direct flights from Beijing and Shanghai to Athens, Qian said. The 54 year-old Qian said the situation in Greece has changed since the company first invested in Athens-based luxury goods retailer Folli Follie Group in 2011. “Greece’s economy is recovering now and can also deliver very good opportunities for foreign investors,” he said. “We look at the figures from retail sales and of the tourism sector,” and see the improvement.

Fosun, which manages €64.3 billion in total assets globally, has invested more than €200 million in Greece through its direct holding in Folli Follie and indirectly through Thomas Cook and Club Med, Qian said. “If you can help the economy grow, for example if we have the package product for Greece, then we create more jobs for restaurants, for retail stores, for taxi drivers.” The company, the biggest private Chinese company that invests in Europe, owns German lender Hauck & Aufhaeuser and Portuguese insurance company Fidelidade, and doesn’t rule out an investment in the Greek banking sector if an opportunity arises in the future, Qian said, refuting reports that the group has already made a bid to acquire shares in Greek banks. Fosun has already placed a bid for the acquisition of National Bank of Greece’s insurance unit National Insurance, and according to Qian, has no money ceiling when it comes to investments, as long as the opportunity is worth it.

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Rerouted trips to Greece?

New Zealand Slashes Chinese Tourism Forecast, Denting Outlook (BBG)

New Zealand has slashed its forecast for Chinese tourist spending over the next six years, denting growth expectations for its biggest foreign-exchange earner. Spending by Chinese tourists will rise to NZ$3.73 billion ($2.5 billion) by 2022 from NZ$1.65 billion last year, according to the Ministry of Business, Innovation and Employment’s latest annual forecasts. That’s 30% less than the NZ$5.32 billion expected in last year’s projections. “There is significant geopolitical risk around the China market,” the ministry said in the report, published Friday, adding that indicators like early-2017 visa approvals were “suggesting a short-term slowing in the market.” The downward revision indicates overall revenue from tourists won’t grow as quickly as previously expected, and that Australia will remain the biggest source of tourist dollars until 2021. Last year, officials forecast China would take the top ranking in 2017.

Tourism, which last year overtook dairy as New Zealand’s top export, has been growing faster than expected. Visitor numbers surged to 3.5 million in 2016, four years sooner than had been envisaged in 2014, and are projected to jump to 4.9 million by 2023. Still, the uncertainty around China “adds some risk to both China’s and the national forecast numbers,” the ministry said in its latest report. The slower forecast trajectory for Chinese spending growth reflects fewer visitors and less spending per day than projected 12 months ago. Arrivals from China are expected to reach 812,000 in 2022. That’s less than the 921,000 estimated in last year’s report. Average spending per day is forecast to be NZ$343 in 2022 rather than the NZ$394 estimated a year ago. As a result, total foreign visitor spending will rise to NZ$15.3 billion in 2023, according to the forecasts. The 2016 prediction was that spending would rise to NZ$16 billion by 2022.

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As if we needed any more evidence that credibility is the least of their worries.

Fed Officials Test New Argument for Tightening: Protect the Poor (BBG)

To protect the poorest Americans, should central bankers raise interest rates faster? At least one of them is making that argument. During a speech last month, Federal Reserve Bank of Kansas City President Esther George said she was “not as enthusiastic or encouraged as some when I see inflation moving higher” because “inflation is a tax and those least able to afford it generally suffer the most.” She was referring in particular to rental inflation, which she said could continue rising if the Fed doesn’t take steps to tighten monetary conditions. And while the idea of inflation as a tax that hits the poor the hardest is not a new one, its role in the current debate over what to do with interest rates marks a bit of a twist from recent years.

Widening disparities in income and wealth have over the past several years permeated national politics and helped fuel the rise of populist movements around the developed world. Against this backdrop, there has been a growing body of research, some of it produced by economists at central banks, backing the idea that easier monetary policy tends to be more progressive. That work, set against the notion that a stricter approach toward containing inflation has the best interests of the lowest-income members of society at heart, is thrusting Fed policy makers toward the center of a debate they usually like to leave to politicians. It’s becoming more contentious as Fed officials seek to declare victory on their goal of maximum employment even while the percentage of prime working-age Americans who currently have jobs is still nowhere close to the peaks of the previous two economic expansions.

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“The company, with the unfortunate Toronto Ticker “BAD”..”

Marc Cohodes, The Scourge Of Home Capital, Reveals His Latest Short (ZH)

Having single-handedly hounded Home Capital Group – the company which we predicted in 2015 would be “ground zero” for any potential Canadian financial crisis, and has emerged as the Canada’s equivalent to the infamous New Century which in 2007 presaged the upcoming global financial crisis – into near oblivion, noted chicken-farmer and short-seller, Marc Cohodes, over the weekend revealed the full details behind his latest short thesis: Canadian oil and gas service provider, Badger Daylighting. Badger, for those unfamiliar, is a company which uses a technique called hydrovac excavation, in which pressurized water and a powerful vacuum are used to expose buried pipes and cables. The company, with the unfortunate Toronto Ticker “BAD”, already had a bad day on Friday when it revealed earnings and revenues that badly missed consensus expectations.

Insult was added to injury after Cohodes, who most recently gained prominence for his short bet on Home Capital Group, previewed pages of a negative presentation on Badger to his Twitter feed Friday, saying that the shares are overvalued and that there are low barriers to entry. As a result, BAD shares plunged as much as 28% to C$22 in Toronto, the biggest intraday decline since November 2006, after previously dropping 4.8% YTD. To be sure, on Friday Badger CEO Paul Vanderberg, without in depth knowledge of Cohodes’ thesis, responded to Cohodes saying “my focus on that is really not to focus on it” during the earnings call and adding that “I don’t agree with the thesis.” Obviously, especially since neither he nor anyone else had seen or read it.

Chief Financial Officer Jerry Schiefelbein also responded, saying Badger is working to train new workers and managers on how to operate more efficiently, which should help reduce costs. He said the company’s first-quarter sales were “pretty good” following a couple of tough years. As for Cohodes’ criticism about low barriers to entry, Schiefelbein was quoted by Bloomberg saying tat Badger’s size gives it an advantage over mom-and-pop shops that would seek to compete with the company. Badger can tackle bigger projects for municipalities, has safety systems that larger customers require and it can move assets to markets where there is more demand, he said. “It’s not just digging holes in the ground.”

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Only interesting if his French backers want something Germany doesn’t. But then they all want the eurozone.

Eyes on Euro Fighter Macron (K.)

Macron has taken over from Francois Hollande hoping to reform not just his own country but the euro as well. “We must collectively recognize that the euro is incomplete and cannot last without major reforms,” he said during a speech at Humboldt University in Berlin this January. “It has not provided Europe with a full international sovereignty against the dollar on its rules, it has not provided Europe with a natural convergence between the different member-states.” The centrist politician warned that without reform the euro may be obsolete in 10 years. He has proposed a series of changes to improve the single currency, with the centerpiece being a budget for the eurozone that will be monitored by the European Parliament and backed by borrowing capacity so that it can finance investments, provide emergency loans via the European Stability Mechanism and help eurozone members if they suffer significant economic shocks.

Macron has also suggested the pooling of debt in the eurozone through the issuing of eurobonds, which are anathema to German conservatives. “The establishment of this budget will have to come with a convergence agenda for the eurozone, an anti-dumping agenda that will set common rules for fiscal and social matters,” added Macron in a message to his German hosts that proceeded to become clearer during his speech. “In a monetary union, a country’s success cannot be sustainably achieved to the detriment of another, which is a limit of the competitiveness approach, because competitiveness is always about comparing yourself with a neighbor,” he said. “The difficulties of one are always the problems of all.” Although Macron admits that France must carry out its own labor, market and education reforms and respect fiscal targets, his words are a direct attempt to overturn the logic and policy that has dictated the eurozone’s response to its crises since 2010 and to shape how its overall approach will evolve from this point onward.

In doing so, Macron is taking the fight to Germany, which previous French presidents failed to do. “When you look at the situation, the dysfunctioning of the euro is good news for Germany, I have to say. You benefit from this dysfunctioning,” he told his audience in Berlin. “[The] euro today is a sort of weak Deutschmark, which favors the German industry,” he added. These are views that have rarely been aired publicly by key players in the eurozone and it is little surprise that the initial response from Berlin was to suggest that Macron has enough on his plate at home to be focusing on euro reform. “German support cannot replace French policymaking,” was Merkel’s first comment on the subject after Macron comfortably won last Sunday’s vote in France.

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But Schäuble on Friday said transfers were needed. You need a fiscal union to make that work.

Germany Will Not Rush Into Euro Area Fiscal Union (CNBC)

Now what? “More Europe” say those who believe that problems were caused by an inadequate integration process that allowed policy mistakes by incompetent national governments. To avoid similar mistakes in the future, they are now urging a unified fiscal policy to complete the monetary union. That is what the French call the “fuite en avant” – a semiotic delight roughly translated as fleeing from an unsolvable problem. Here is what that problem looks like: The fiscal union implies a euro area federal state with a common management of public finances. The area’s budget, public debt financing, tax policies, transfer payments, etc. would be managed by a euro area finance ministry. That would also require harmonization of labor, health care and education policies, and a whole range of other social welfare programs. Institutionally, this integration drive cannot stop at the finance ministry. There would also have to be a euro area executive and legislative authority to exercise administrative and democratic controls over tax and spend decisions.

[..] How could Germany, with a budget surplus last year of 0.8% of GDP and the public debt of 68.3% of GDP, accept a fiscal union with Spain running the euro area’s largest budget deficit of 4.5% of GDP and a public debt of 100% of GDP? France and Italy have similar public finance profiles. Last year, France had a second-largest euro area budget deficit of 3.4% of GDP and a public debt of 96% of GDP. During the same period, Italy ran a budget deficit of 2.4% of GDP and a public debt of 133% of GDP. This means that half of the euro area economy (France, Italy and Spain), with serious structural problems of public finances, would become part of a de-facto federal state with a fiscally sound Germany. Hard to imagine, isn’t it? And yet, that’s the program that the new French President Emmanuel Macron will apparently discuss Monday when he visits German Chancellor Angela Merkel in Berlin.

France, Italy and Spain already know the answer. Chancellor Merkel is relieved and delighted that the most dangerous anti-EU parties in France and The Netherlands lost the recent elections, but her government is firmly opposed to the euro area fiscal union. German public opinion fully shares that position. And German media of all political stripes are having a field day lampooning the idea that German taxpayers should be asked to pay for countries that cannot control their debts and deficits. This is also an awkward moment to even talk about the call on the German public purse while the country is gearing up for general elections on Sept. 24, 2017. The best that Germany can offer, under these circumstances, is a strict enforcement of existing euro area fiscal rules: Budget deficits limited to 3% of GDP and the gross public debt to 60% of GDP. About half of the euro area members are now falling far short of these criteria.

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Will the rich world ever come clean? No.

What Germany Owes Namibia For Genocide (Econ)

On October 2nd 1904 General Lothar von Trotha issued what is now notorious as “the extermination order” to wipe out the Herero tribe in what was then German South West Africa, now Namibia. “Within the German borders every Herero, with or without a gun, with or without cattle, will be shot,” his edict read. During the next few months it was just about carried out. Probably four-fifths of the Herero people, women and children included, perished one way or another, though the survivors’ descendants now number 200,000-plus in a total Namibian population, scattered across a vast and mainly arid land, of 2.3m. The smaller Nama tribe, which also rose up against the Germans, was sorely afflicted too, losing perhaps a third of its people, in prison camps or in the desert into which they had been chased.

A variety of German politicians have since acknowledged their country’s burden of guilt, even uttering the dread word “genocide”, especially in the wake of the centenary in 2004. But recent negotiations between the two countries’ governments over how to settle the matter, the wording of an apology and material compensation are becoming fraught. Namibia’s 16,000 or so ethnic Germans, still prominent if not as dominant as they once were in business and farming, are twitchy. The matter is becoming even more messy because, while the German and Namibian governments set about negotiation, some prominent Herero and Nama figures say they should be directly and separately involved—and have embarked on a class-action case in New York under the Alien Tort Statute, which lets a person of any nationality sue in an American court for violations of international law, such as genocide and expropriation of property without compensation.

The main force behind the New York case, Vekuii Rukoro, a former Namibian attorney-general, demands that any compensation should go directly to the Herero and Nama peoples, whereas the Namibian government, dominated by the far more numerous Ovambo people in northern Namibia, who were barely touched by the wars of 1904-07 and lost no land, says it should be handled by the government on behalf of all Namibians. The Namibian government’s amiable chief negotiator, Zedekia Ngavirue, himself a Nama, has been castigated by some of Mr Rukoro’s team as a sell-out. “Tribalism is rearing its ugly head,” says the finance minister, who happens to be an ethnic German.

The German government says it cannot be sued in court for crimes committed more than a century ago because the UN’s genocide convention was signed only in 1948. “Bullshit,” says Jürgen Zimmerer, a Hamburg historian who backs the genocide claim and says the German government is making a mess of things. “They think only like lawyers, not about the moral and political question.” “None of the then existing laws was broken,” says a senior German official. “Maybe that’s morally unsatisfactory but it’s the legal position,” he adds.

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May 142017
 
 May 14, 2017  Posted by at 9:39 am Finance Tagged with: , , , , , , , , , , ,  2 Responses »
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Henri Matisse Sorrow of the King 1952

 

US Says Trump ‘Can’t Imagine Russia Pleased’ With North Korea Missile (R.)
Macron Takes Office As French President (AFP)
Tech Companies Have Become Monopolies, Drag On Economic Growth (AT)
‘We Can’t Do Brexit With Half The Brexiteers Outside The Tent’ (G.)
Schaeuble Says Financial Transfers In Euro Zone Are Necessary (R.)
Ireland Is World’s Fourth-Largest Shadow Banking Hub (ITimes)
London Home Raffled For £3.75m Bought With Right-to-Buy in 2014 For £360k (G.)
Media Blackout On The DNC Lawsuit Proves That It Is Nuclear (Med.)
Patriotism And Conscience: The Edward Snowden Affair (LibR)
Worried About ‘Wannacry’? You Should Have Listened To Julian Assange (Duran)
Steve Keen Defines A Production Function Based On Energy (Res.)
The Rise Of Rentiers And The Destruction Of The Middle Class (Ev)
The Economic School You’ve Never Heard Of (EpT)
The Future of Work, Robotization, and Capitalism’s Useless Jobs (Bregman)
US Much Women More Likely To Die In Childbirth Than 25 Years Ago (ProP)
Africa’s New Slave Trade (G.)

 

 

A more or less subtle way of trying to drag Putin into the situation.

US Says Trump ‘Can’t Imagine Russia Pleased’ With North Korea Missile (R.)

U.S. President Donald Trump “cannot imagine Russia is pleased” with North Korea’s latest missile test on Sunday, as it landed closer to Russia than to Japan, the White House said in a statement. “With the missile impacting so close to Russian soil – in fact, closer to Russia than to Japan – the President cannot imagine that Russia is pleased,” the White House said in its statement. The launch served as a call for all nations to implement stronger sanctions against reclusive North Korea, the White House added.

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Macron takes office in a strange kind of void. On Monday he will appoint a prime minister, and on Tuesday a cabinet. But his party has zero seats in parliament, so what can they do? Whether they can win a majority in the June elections is very much up for grabs. They may wind up needing -and using- support from the Socialist party that was burned down in the presidential elections.

Macron Takes Office As French President (AFP)

Emmanuel Macron becomes France’s youngest ever president on Sunday, taking over from Socialist Francois Hollande in a solemn ceremony. [..] The new president faces a host of daunting challenges including tackling stubbornly high unemployment, fighting Islamist-inspired violence and uniting a deeply divided country. Socialist Hollande’s five years in power were plagued by a sluggish economy and bloody terror attacks that killed more than 230 people and he leaves office after a single term. The 64-year-old launched Macron’s political career, plucking him from the world of investment banking to be an advisor and then his economy minister. “I am not handing over power to a political opponent, it’s far simpler,” Hollande said on Thursday.

Macron’s first week will be busy. On Monday, he is expected to reveal the closely-guarded name of his prime minister, before flying to Berlin to meet German Chancellor Angela Merkel. It is virtually a rite of passage for French leaders to make their first European trip to meet the leader of the other half of the so-called “motor” of the EU. Pro-EU Macron wants to push for closer cooperation to help the bloc overcome the imminent departure of Britain, another of its most powerful members. He intends to press for the creation of a parliament and budget for the eurozone. Merkel welcomed Macron’s decisive 32-point victory over Le Pen, saying he carried “the hopes of millions of French people and also many in Germany and across Europe”. In June, Macron faces what the French media are calling a “third round of the presidential election” when the country elects a new parliament in a two-round vote. The new president needs an outright majority to be able to enact his ambitious reform agenda.

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A huge global problem.

Tech Companies Have Become Monopolies, Drag On Economic Growth (AT)

Once upon a time the US stock market had disruptive challengers changing the economic landscape – Apple, Google, Cisco, Intel and a half dozen other upstarts. The same companies are there, but they have morphed from the equivalent of Luke Skywalker to Jabba the Hut. Tech companies used to be aggressive growth stocks, the kind that young people bought for long-range gain, while retirees stuck to less-volatile instruments like utility stocks. The world officially went topsy-turvy this year, when the volatility of tech stocks fell below the volatility of utility stocks. The graph shows the implied volatility of options on the S&P tech sector ETF (ticker XLK) vs. the implied volatility of options on the S&P utilities sector (XLU). Options on volatile stocks cost more than options on stable stocks, because volatility increases the likelihood of a payout.

Implied volatility is backed out of the prices of traded options, and reflects investor expectations about future stability. Why would investors expect less volatility from tech stocks than from utilities? Because they are utilities, that is, utilities with neither debt nor regulation. Power, water and sewer companies charge a stable fee to a predictable base of customers. They borrow heavily to build facilities, and are subject to public regulation, such that changes in interest rates and public policy can affect their value. Historically, though, they were widow-and-orphan stocks, the least risky sector of the equity market. In the disruptive days of the 1990s tech boom, the volatility of the S&P technology subsector was two to three times the VIX index. Today the implied volatility of XLK, the tech sector ETF, is actually lower than the VIX. The tech companies have brought down the overall level of market volatility.

Tech companies now sit atop a virtual toll booth and impose a charge on a myriad of transactions. Like water and power companies, they have monopolies, although these monopolies are driven by the price of infrastructure and the network effect. Google has the Internet-advertising monopoly. Microsoft has the personal computer software monopoly. Amazon has the Internet sales monopoly. Facebook has the targeted advertising monopoly. And Apple has the oddest monopoly of all: it is the vehicle by which customers assert their individuality by overpaying the largest-capitalization company in the world. [..] They’re all tech companies, and each dominates its corner of the industry: Google has an 88% market share in search advertising, Facebook (and its subsidiaries Instagram, WhatsApp and Messenger) owns 77% of mobile social traffic and Amazon has a 74% share in the e-book market. In classic economic terms, all three are monopolies.”

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“One Brexiter said: “There is no way to unpick Brexit that doesn’t involve civil war. “

Problem 1: Rich people trying to buy seats.

Problem 2: Both left and right across Europe want to “Love Europe Not the EU”. But the EU rules.

‘We Can’t Do Brexit With Half The Brexiteers Outside The Tent’ (G.)

As an investor in a Premier League football club and a collector of steam locomotives, Jeremy Hosking is used to expensive pursuits. The multimillionaire asset manager is under no illusions that his offer to fund well in excess of 100 local campaigns to unseat pro-Remain MPs could prove to be another. “This is going to stretch the bank’s ability to send out cheque books in a timely manner,” he says. “There is going to be a lot of ink involved.” Hosking has already spent in pursuit of securing Britain’s departure from the European Union shows his dedication to the cause. He gave about £1.7m to Vote Leave and even set up his own poster campaign, Brexit Express, as the referendum approached. Now the Crystal Palace co-owner wants to safeguard the result by funding Tory candidates trying to gain seats where most voters backed Brexit. He will do so through his Brexit Express campaign.

“For me, it is a long-running issue about sovereignty and the transfer of power,” he says. “It wouldn’t matter so much if the EU was constitutionalised properly, but one of the great things about being a democracy is we can boot the government out every five years, but we couldn’t boot out the EU. “A lot of the Remainers I know were really reformers – they held their nose and voted Remain in much the same way we are suggesting that traditional Labour voters should on this occasion hold their nose and vote Tory.” Hosking’s project is testing perhaps the most pertinent question posed by this election. Will the political fissure created by the EU referendum convince voters to abandon their traditional affiliations and back a party that more closely represents their views on Brexit?

The candidates eligible for his money must meet two simple tests. They must be a Conservative candidate trying to unseat an opposition MP that backed Remain. They must also be contesting a seat where most voters are believed to have voted in favour of Brexit. His team has come up with a list of 138 constituencies that they think fit the bill. All will be eligible for donations of up to £5,000 each. While there are some Lib Dems, SNP and Plaid Cymru-held seats on the list, the campaign is aimed overwhelmingly at Tories trying to win Labour-held seats in the north and the Midlands. There is a string of such seats that the Tories have a chance of winning. They include Coventry South, Bury South, Dewsbury, Gedling, Halifax and Bishop Auckland – a seat that has returned a Labour MP since 1935.

Hosking says that while Theresa May was not his “number one choice” as leader, he believes she is handling the Brexit issue well so far. He also believes that a cohort of Tory MPs from Brexit-supporting Labour seats could be key in safeguarding the referendum result and prevent any “backsliding”. “We need all the Brexiteers on the same side,” he says. “We can’t do this Brexit thing with half the Brexiteers outside the tent. “The thinking is, it would be strange if the Conservative party was dusting off inveterate Remainers to fight these seats… the Conservative party is more Brexit-orientated than it was a year ago.” Unlike some Brexiteers, Hosking knows there could be some bumpy times ahead. “We need the best team and you need the army fully equipped and as big as possible,” he says.

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He contradicts mis own words with impunity and of course doesn’t get called on it.

Schaeuble Says Financial Transfers In Euro Zone Are Necessary (R.)

German Finance Minister Wolfgang Schaeuble told a magazine he shared French president-elect Emmanuel Macron’s view that financial transfers from richer to poorer states are necessary within the euro zone. Macron, who is due to meet with German Chancellor Angela Merkel in Berlin on Monday, has promised to press ahead with closer European integration. Asked whether Macron was right in believing Europe and the euro zone need a “transfer union”, Schaeuble told Germany’s Der Spiegel magazine: “You can’t build a community of states of varying strengths without a certain balance.” “That’s reflected in the European budget and bailout programmes, for example, and that’s why there are net contributors and net recipients in Europe. A union can’t exist if the stronger members don’t vouch for the weaker ones,” he added in an interview to be published Saturday.

Some conservatives around Merkel worry the euro zone could develop into a “transfer union” in which Germany is asked to pay for struggling states that resist reforms. Schaeuble, a veteran member of Merkel’s party, said if countries wanted to make Europe stronger, it was necessary for each individual country to become stronger first – including France and Italy but also Germany. Schaeuble also signaled he would not object if the European Commission gave its blessing to possible French budget deficits: “It’s up to the European Commission to design the budget rules.” He added: “The German government and I have never objected to a ruling of the Commission on how the deficits of countries like France should be judged.” The European Commission estimates France’s deficit will be 3% of GDP this year, from 2.9% previously forecast, and 3.2% in 2018 from the previous forecast of 3.1%. EU rules say countries should keep their deficits below 3% of GDP.

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Not very useful without solid China data.

Ireland Is World’s Fourth-Largest Shadow Banking Hub (ITimes)

Ireland is home to the world’s fourth-largest “shadow banking” industry, with $2.2 trillion of nonbanking financial assets based in funds, special-purpose vehicles and other little-understood entities in Dublin’s IFSC, according to a report published on Tuesday. The figure equates to almost eight times the size of the Irish economy, as measured by GDP. The US has the world’s largest shadow-banking sector, with $13.8 trillion of assets as of 2015, according to the latest annual review of the sector by the Basel-based Financial Stability Board (FSB) as it searches for potential risks in the increasingly complex world of international finance. The Cayman Islands, which has taken part in the FSB study for first time, is the second-largest, at $4.3 trillion, followed by Japan, at $3.2 trillion.

The G20 major industrialised and emerging economies gave the FSB the job in 2010 of keeping track of the expanding world of financial activities that take place outside of mainstream banks, given the role that the sector played in the 2008 global financial crisis. The key concern is that, as central banks have clamped down on excessive risk-taking in the banking sector in the wake of the 2008 financial crisis, lenders might extend their use of shadow banking to escape the claws of regulators. “Market-based finance provides important diversification of the founding resources which support the real economy,” said Mark Carney, governor of the Bank of England and chairman of the FSB on the release of the latest report.

[..] The FSB said China, which ranked third with Ireland in the last report, published in late 2015, didn’t file data on time to be included in its narrow definition of shadow-banking activities that pose potential risks to global finance. Luxembourg, Ireland’s main rival in nonbanking financial activities in Europe, has not yet taken part in the annual survey. Nonbank financing provides a valuable alternative to bank funding and helps support economic activity, according to the FSB, adding that it can provide a “welcome” alternative supply of credit and provides “healthy competition for banks”.

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Where would we be without bubbles?

London Home Raffled For £3.75m Bought With Right-to-Buy in 2014 For £360k (G.)

A homeowner who tried to raise £3.75m by raffling her home online bought the property three years ago using the controversial right-to-buy scheme, and paid just £360,000. Renu Qadri, who lives in the house in Hardy Road, in south east London’s Blackheath, launched an online raffle on May 7. The dedicated website offered tickets for £5 each, with payments via Paypal. The stated aim was to sell 750,000 tickets, netting her £3.75m. A ticket picked at random would then win the property, including some of the furniture and £12,000 of “lead crystal chandeliers”. The raffle was halted on Thursday after advice from the homeowner’s local council, Greenwich, over “potential” breaches of Gambling Commission rules.

The website was taken down and replaced with a statement that said: “Ticket holders, please be advised that unfortunately we have been contacted by the local council informing us we will no longer be able to continue with this draw. Therefore we will be closing the site and all tickets holders will receive a full refund within 28 days. The five-bedroom flat is still on the market, however, and listed on property portal Rightmove for £1.25m. The owner, who is believed to have lived there since 2002, bought the property under the Government’s right-to-buy scheme three years ago, according to documents lodged with the Land Registry. It is understood that at the time it was valued at £460,000. Land Registry records confirm, however, that the price paid was £360,000, indicating the buyers benefited from a £100,000 right-to-buy discount. This is just under the maximum discount available through the scheme, which in London is currently £104,900.

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The media are too busy attacking Trump.

Media Blackout On The DNC Lawsuit Proves That It Is Nuclear (Med.)

I had the privilege of interviewing my newest personal hero yesterday, attorney Elizabeth Lee Beck, about her legal team’s fraud case against the Democratic National Committee. One of the many useful insights that this straight-shooting mom on fire brought to light during our conversation was her story about a time she reached out to New York Times reporter Michael Barbaro to get some help cracking through the deep, dark media blackout on this extremely important case. Barbaro had previously interviewed Beck and featured her in a front-page story not long ago, so she had every reason to try and contact him. What happened next? “The little piss head blocks me,” Beck said. Why is a journalist for the New York Times blocking a potential source from contacting him? Why is the mainstream media refusing to go anywhere near a legal case that has heavy implications for the future of American democracy?

You already know the answer to this deep down, whether you’re the kind of person who turns and faces reality or the kind of person who dissociates from reality at all costs while watching Samantha Bee and chugging cough syrup on the sofa. The function of the mass media is not to inform the American public of important things that are happening in their country, it is to turn attention away from the important things that are happening in their country and to keep them sleepy and compliant. The DNC lawsuit is one of the greatest threats to America’s power establishment right now, but only if people know about it. If the corporate media were to advance this story with even a fraction of the intensity that they’re advancing their xenophobic anti-Russia nonsense, they’d start waking up the sleeping masses to the fact that there is nothing resembling democracy happening in America at all.

And the DNC’s own lawyers have indeed made it abundantly clear to anyone who’s been listening that there is no democracy in America. You cannot make the case that you are not required to provide real primary elections in a rigidly-enforced two-party system and still say that democracy is happening to any extent within your nation. Being forced to choose between two establishment-selected corporatists is not democracy, and this revolutionary lawsuit has been showing in no uncertain terms that this is exactly what is happening both in practice and in theory. In order to say that there is any sort of democratic process in America at all, there would have to either be a way to run viable independent and third-party candidates, or the people would have to be able to determine who the candidates will be for the two parties that they are permitted to choose from. Currently neither of those things is happening.

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I’ve said it before: in Assange, Snowden, Manning etc., America -and the west- “persecutes, prosecutes, vilifies, condemns, exiles, or murders” its finest.

Patriotism And Conscience: The Edward Snowden Affair (LibR)

Here’s the point: If the NSA were to be abolished today and if Congress were to order all of its documents and records to be released immediately to the public, nothing would happen to the United States. Nothing! The same holds true for the CIA and the military-industrial complex. If all their files and records were to be suddenly disclosed to the people of the world, America would continue to exist as a country. It would not fall into the ocean, and the federal government would continue to operate. In fact, full disclosure of all of the illegal and immoral actions that the U.S. national-security establishment has engaged in during the past 70 years of its existence would be the greatest and healthiest thing that could ever happen to the United States.

Full disclosure of such secrets would be an antiseptic that would help cleanse the federal government and the country of many of the long-lasting stains that the national-security establishment has inflicted on it — an antiseptic that might finally begin to restore trust and confidence in the federal government among the American people. To be sure, the secrecy is always alleged to be justified by “national security,” the two most important words in any nation whose government is a national-security state. But what does that term mean? It has no objective meaning at all. It’s just a bogus term designed to keep nefarious and illegal actions secret. But heaven help those who reveal those secrets to others. They will be persecuted, prosecuted, vilified, condemned, exiled, or murdered. Nothing matters more to a national-security state than the protection of its secrets.

Those who reveal them must be made examples to anyone else who contemplates doing the same thing. In the process, conscience is suspended and stultified. It has no role in a national-security state. Individual citizens are expected to place their deep and abiding trust in the national-security establishment and to unconditionally defer to its judgment and expertise. Its job is to protect “national security” and that’s all that people need to know. Sometimes that entails illegal activity, such as murder, torture, and kidnapping, but that’s just the way it is. What’s important, they say, is that the national-security establishment is on the job, a perpetual sentinel for freedom, protecting “national security.”

Imagine that Edward Snowden voluntarily returned to the United States for trial. Do you think he would be given the opportunity at trial to show why he disclosed the NSA’s illegal and nefarious surveillance schemes? Do you think he would be entitled to argue that he was simply following the dictates of his conscience when he chose to reveal that information to the American people and the world?

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“Perhaps in order to save money, governments should also use prop-planes from the 1940s to conduct recon missions? ”

Worried About ‘Wannacry’? You Should Have Listened To Julian Assange (Duran)

A widespread computer virus attack known as ‘WannaCry’ has been compromising computers with obsolete operating systems across the world. This should be the opening sentence of just about every article on this subject, but unfortunately it is not. The virus does not attack modern computer operating systems, it is designed to attack the Windows XP operating system that is so old, it was likely used in offices in the World Trade Center prior to September 11 2001, when the buildings collapsed. Windows XP was first released on 25 August, 2001. A child born on the release date of Windows XP is now on the verge of his or her 17th birthday. Feeling old yet? The fact of the matter is that governments and businesses around the world should not only feel old, they should feel humiliated and disgraced.

With the amount of money governments tax individuals and private entities, it is beyond belief that government organisations ranging from some computers in the Russian Interior Ministry to virtually all computers in Britain’s National Health Service, should be using an operating system so obsolete that its manufacturer, Microsoft, no longer supports it and hasn’t done for some time. Perhaps in order to save money, governments should also use prop-planes from the 1940s to conduct recon missions? The scathing reality of this attack is that Julian Assange warned both private and public sectors to be on guard against known vulnerabilities in such systems, vulnerabilities Wikileaks helped to expose. Assange even offered to help companies to get their digital security up to date. The fact that Assange’s plea fell on deaf ears must bring further shame to all those impacted by the ‘WannaCry’ attacks who refused to listen to Assange and get with the times.

[..] if only governments and mega-corporations took precautions to ensure actual safety measures were in place, rather than engaging in bogus fear-mongering in order to conceal their own incompetence and lack of modern technology, the people that such bodies are supposed to protect would be safe rather than misled and exposed to threats. The blame for today’s attack can and should be equally shared by the hackers themselves and by those who patently ignored the warnings of Julian Assange, who advised the wider world to get clever, get secure and get modern upon the release of Vault 7 by Wikileaks. When there is a wolf at your door, it is unwise to blame the person pointing out the presence of the hungry wolf. Those who attack Julian Assange for pointing out the wolf of un-secured computer systems are doing just that.

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How many people know and understand that the economic models on which all current policies are based entirely ignore both credit and energy in our economies? How crazy is that?

Steve Keen Defines A Production Function Based On Energy (Res.)

Professor Steve Keen may be the first mainstream economist to address a fatal flaw in economic theory: omitting or minimizing the role of energy. Keen has developed a production formula incorporating energy, not as one factor of production along with capital and labor, but as the indispensable flow activating both. “Labor without energy is a corpse” says Keen; “Capital without energy is a sculpture.” Keen was one of twenty or so economists who made a credible prediction of the 2008-9 crisis, which government economists in the US and abroad declared “unpredictable” – after it blindsided them.

His work draws on contemporary economic theory and generates real-world predictions. He’s the sort of economist who financial commentators, investors and even government economists listen to; folks who haven’t heard of Daly’s steady state economy, Odum’s energy flow analysis of the ecosystem-economy, or Hall’s EROI “cheese slicer” model. Keen’s model implies that economic production is measurable in energy units, as Odum and others argued. Wealth is “nothing but the food, conveniences and pleasures of life,” as the earliest economists recognized. But it results from useful work, which can be measured in kilocalories. (To us weight watchers, just “calories.”) Here is his fundamental equation (the only one here, I promise):

To test his model against real data, Keen correlated its results with historical statistics of US GDP, and then compared correlations of GDP with the key terms individually. Over 40-odd years of data, his function correlated 0.79 with US GDP. The correlations with employment (Labor) alone and energy consumption (E) alone were much lower, at 0.60 and 0.59 respectively. His model might have correlated better if applied to a closed economic system, such as the entire world, or the US prior to 1970, if good data were available. Most of the useful work that supports Americans today is performed in the Far East or in the engines of container ships, and the energy inputs are considerable. Introducing his test data, Keen remarked that government statistics showing minimal unemployment were “just nonsense”. He presented a measure of employment instead. “They ask what Trump is complaining about- here’s what he’s complaining about..” (This was back in November.)

Presenting a chart of industrial energy consumption 1960-present, Keen remarked on the on the long decline since the 1979 peak, his latest values showing consumption comparable to 1967-8. Partly the result of increased efficiency, he said, but also “..becoming intractable because we are moving from highly efficient oil and coal to much less efficient wind and solar.” (Efficiency as energy output per unit of energy input.) I don’t think I’m overstating to say that Keen’s model marks a breakthrough in mainstream economics, though Keen describes it as merely “..the beginnings of a decent equation to explain the role of energy in production.”..demonstrating that wealth is “..fundamentally created by the exploitation of free energy, as the Physiocrats argued two centuries ago.” For those who discount any economic reasoning not expressed in calculus, Keen’s work opens an access to the wisdom of the Physiocrats. Maybe that of Daly, Odum and Hall as well.

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Time to organize. Or keep losing.

The Rise Of Rentiers And The Destruction Of The Middle Class (Ev)

The facts about the decline of the American middle class are increasingly familiar, though startling nonetheless. After growing almost continuously since World War II, U.S. median income stagnated at the end of the 1980s and then, beginning in 2000, declined 11%. Middle-class incomes today are no higher in real terms than they were in 1987. Much of the debt that caused the crisis was accumulated by the middle class as people tried to compensate for stagnant incomes by mortgaging up their homes and running up their credit cards. Then the debt bubble burst and the median family lost nearly $50,000, or 40% of its net wealth, from 2007 to 2010. For the typical middle-class family, the crisis wiped out 18 years of savings and investment. With too much debt before the crisis and their modest savings hammered by the downturn, many middle-class baby boomers are facing a major decline in living standards as they age.

On the other side of the generational divide, this will be the first cohort in modern American history whose children will quite possibly be poorer than their parents. So what do the rise of rentier capitalism and the hollowing out of America’s middle class have to do with each other? It is too simple to say that one directly caused the other. But they are more tightly linked than might be expected. The usual explanations for the woes of the American middle class point to big tectonic forces—namely globalization and technological change. At a superficial level this argument is correct—competition from low-wage countries has depressed wage growth in certain sectors, and technology has eliminated some manufacturing and middle-management jobs. But what this analysis leaves out is what we didn’t do—we didn’t make the long-term investments that would have helped us better adapt to these tectonic shifts.

One of the great historical strengths of both American capitalism and the American political system has been their adaptability. When the Industrial Revolution threatened America’s largely agricultural economy, America adapted and went one better, leapfrogging European industrial production by the early twentieth century. When industrialization then unbalanced America’s political system and strained its social fabric, Teddy Roosevelt unleashed a wave of political and social innovation, busting up trusts and introducing protections for consumers and workers. In the depths of the Depression, another Roosevelt responded with rural electrification, the creation of Social Security, and financial regulation that kept the system stable for 70 years. When the Soviet Union challenged America in the Cold War, we made massive investments in technology, education, and the National Highway System. The benefits of these innovations and investments flowed broadly in American society, not least to the middle class.

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Austrian school.

The Economic School You’ve Never Heard Of (EpT)

Economics was once tasked with describing how man manages the world’s scarce resources, a process far older than economics as a science. But it has morphed into a field that blames the individual and reality for not measuring up to its theories, and then uses the coercive power of the state in an attempt to shape individuals and reality according to its ends. The Austrian school of economics, the once dominant school of economic thought at the turn of the 19th century, focuses on the individual—and his or her actions and motivations—to explain economic life. It derives its name from the many scholars from Austria who developed 19th-century classic liberalism into a coherent explanation of economic life.

“Economics is in reality very simple. It functions in the same way that it did thousands of years ago. People come together to voluntarily engage in commerce with one another for their mutual benefit. People specialize and divide work among themselves to advance their condition,” writes modern Austrian economist Philipp Bagus in his book “Blind Robbery!” A bedrock principle of this understanding is that exchange should occur voluntarily and not under the coercion of the state or any other party. If exchange is voluntary, the individual or company must offer something of value if it wants to obtain something of value. This premise encourages innovative, creative, and productive behavior. It also forces individuals to think about what their fellow humans may appreciate or need. Every decision to allocate capital and labor needs to stand the test of reason, argument, and negotiation.

On aggregate, this decision-making process is much more elaborate and prudent than any central planning decision, which must use force to compel its subjects. “Production is directed either by profit-seeking businessmen or by the decisions of a director to whom supreme and exclusive power is entrusted. . . . The question is: Who should be master, the consumers or the director?” Austrian school economist Ludwig von Mises (1881-1973) writes in his book “Human Action.” This approach to economics can do without the complex mathematical models of the current schools because it admits that perfection doesn’t exist. There is no equilibrium. Things aren’t perfect, but the best possible solution to economic problems will be found by private individuals acting voluntarily, each assessing new situations for themselves.

“This is precisely what the price system does under competition, and which no other system even promises to accomplish. It enables entrepreneurs, by watching the movement of comparatively few prices, as an engineer watches the hands of a few dials, to adjust their activities to those of their fellows,” Nobel laureate Friedrich von Hayek wrote in his 1944 classic “The Road to Serfdom.”

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How any people are still happy in their work? Why do they volunteer to work for others?

The Future of Work, Robotization, and Capitalism’s Useless Jobs (Bregman)

I admit, we’ve heard it all before. Employees have been worrying about the rising tide of automation for 200 years now, and for 200 years employers have been assuring them that new jobs will naturally materialize to take their place. After all, if you look at the year 1800, some 74% of all Americans were farmers, whereas by 1900 this figure was down to 31%, and by 2000 to a mere 3%. Yet this hasn’t led to mass unemployment. In 1930, the famous economist John Maynard Keynes was predicting that we’d all be working just 15-hour weeks by the year 2030. Yet, since the 1980s, work has only been taking up more of our time, bringing waves of burnouts and stress in its wake. Meanwhile, the crux of the issue isn’t even being discussed. The real question we should be asking ourselves is: what actually constitutes “work” in this day and age?

In a 2013 survey of 12,000 professionals by the Harvard Business Review, half said they felt their job had no “meaning and significance,” and an equal number were unable to relate to their company’s mission, while another poll among 230,000 employees in 142 countries showed that only 13% of workers actually like their job. A recent poll among Brits revealed that as many as 37% think they have a job that is utterly useless. They have, what anthropologist David Graeber refers to as, “bullshit jobs”. On paper, these jobs sound fantastic. And yet there are scores of successful professionals with imposing LinkedIn profiles and impressive salaries who nevertheless go home every evening grumbling that their work serves no purpose.

Let’s get one thing clear though: I’m not talking about the sanitation workers, the teachers, and the nurses of the world. If these people were to go on strike, we’d have an instant state of emergency on our hands. No, I’m talking about the growing armies of consultants, bankers, tax advisors, managers, and others who earn their money in strategic trans-sector peer-to-peer meetings to brainstorm the value-add on co-creation in the network society. Or something to that effect. So, will there still be enough jobs for everyone a few decades from now? Anybody who fears mass unemployment underestimates capitalism’s extraordinary ability to generate new bullshit jobs. If we want to really reap the rewards of the huge technological advances made in recent decades (and of the advancing robots), then we need to radically rethink our definition of “work.”

It starts with an age-old question: what is the meaning of life? Most people would say the meaning of life is to make the world a little more beautiful, or nicer, or more interesting. But how? These days, our main answer to that is: through work. Our definition of work, however, is incredibly narrow. Only the work that generates money is allowed to count toward GDP. Little wonder, then, that we have organized education around feeding as many people as possible in bite-size flexible parcels into the employment establishment. Yet what happens when a growing proportion of people deemed successful by the measure of our knowledge economy say their work is pointless? That’s one of the biggest taboos of our times. Our whole system of finding meaning could dissolve like a puff of smoke.

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Painful. 3rd world.

US Much Women More Likely To Die In Childbirth Than 25 Years Ago (ProP)

The ability to protect the health of mothers and babies in childbirth is a basic measure of a society’s development. Yet every year in the U.S., 700 to 900 women die from pregnancy or childbirth-related causes, and some 65,000 nearly die — by many measures, the worst record in the developed world. American women are more than three times as likely as Canadian women to die in the maternal period (defined by the Centers for Disease Control as the start of pregnancy to one year after delivery or termination), six times as likely to die as Scandinavians. In every other wealthy country, and many less affluent ones, maternal mortality rates have been falling; in Great Britain, the journal Lancet recently noted, the rate has declined so dramatically that “a man is more likely to die while his partner is pregnant than she is.”

But in the U.S., maternal deaths increased from 2000 to 2014. In a recent analysis by the CDC Foundation, nearly 60% of such deaths were preventable. While maternal mortality is significantly more common among African Americans, low-income women and in rural areas, pregnancy and childbirth complications kill women of every race and ethnicity, education and income level, in every part of the U.S. [..] The reasons for higher maternal mortality in the U.S. are manifold. New mothers are older than they used to be, with more complex medical histories. Half of pregnancies in the U.S. are unplanned, so many women don’t address chronic health issues beforehand. Greater prevalence of C-sections leads to more life-threatening complications. The fragmented health system makes it harder for new mothers, especially those without good insurance, to get the care they need. Confusion about how to recognize worrisome symptoms and treat obstetric emergencies makes caregivers more prone to error.

Yet the worsening U.S. maternal mortality numbers contrast sharply with the impressive progress in saving babies’ lives. Infant mortality has fallen to its lowest point in history, the CDC reports, reflecting 50 years of efforts by the public health community to prevent birth defects, reduce preterm birth and improve outcomes for very premature infants. The number of babies who die annually in the U.S. — about 23,000 in 2014 — still greatly exceeds the number of expectant and new mothers who die, but the ratio is narrowing. The divergent trends for mothers and babies highlight a theme that has emerged repeatedly in ProPublica’s and NPR’s reporting. In recent decades, under the assumption that it had conquered maternal mortality, the American medical system has focused more on fetal and infant safety and survival than on the mother’s health and well-being.

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Everybody in the west is responsible for this. Our governments willfully create the chaos that generates it.

Africa’s New Slave Trade (G.)

The dangers of attempting to cross the Mediterranean to Europe, in overcrowded, unseaworthy vessels, have been highlighted by a series of desperate rescue missions and thousands of deaths at sea in recent years. Last week, at least 245 people were killed by shipwrecks, bringing the toll for this year alone to 1,300. Less well-known are the dangers of Libya itself for migrants fleeing poverty across West Africa. The country’s slide into chaos following the 2011 death of dictator Muammar Gaddafi and the collapse of the government have made it a breeding ground for crime and exploitation. Two rival governments, an Isis franchise and countless local militias competing for control of a vast, sparsely populated territory awash in weapons, have allowed traffickers to flourish, checked only by the activities of their criminal rivals.

Last year, more than 180,000 refugees arrived in Italy, the vast majority of them through Libya, according to UN agency the International Organisation for Migration (IOM). That number is forecast to top 200,000 this year – and these people form a lucrative source of income for militias and mafias who control Libya’s roads and trafficking networks. Migrants who managed to reach Europe from Libya have long told of being kidnapped by smugglers, who would then torture them to extort cash as they waited for boats. But in recent years this abuse has developed into a modern-day slave trade – plied along routes once used by slaving caravans – that has engulfed tens of thousands of lives.

The new slave traders operate with such impunity that, survivors say, some victims are being sold in public markets. Most, however, see their lives and liberty auctioned off in private. “They took people and put them in the street, under a sign that said ‘for sale’,” said Shamsuddin Jibril, 27, from Cameroon, who twice saw men traded publicly in the streets of the central Libyan town of Sabha, once famous as the home of a young Gaddafi, but now known for violence and brutality. “They tied their hands just like in the former slave trade, and they drove them here in the back of a Toyota Hilux. There were maybe five or seven of them.”

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